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All othar original copiaa ara filmad baginning on tha firat paga with a printad or illuatratad impraa- sion, snd andlng on tha laat paga with a printad or illuatratad impraaaion. Laa axamplairaa originaux dont la couvartura an papiar aat Imprim4a aont filmAa an commanfant par la pramiar plat at an tarminant soit par la damlAra paga qui comporta una amprainta d'impraaalon ou d'illuatration, aoit par la aacond ptart. aalon la caa. Toua laa autraa axamplairas originaux aont filmfo an commandant par la pramlAra paga qui comporta una amprainta d'impraaalon ou d'illuatration at an tarminant par la darniAra paga qui comporta una talla amprainta. Tha laat racordad frama on aach microficha shall contain tha symbol — »> (moaning "CON- TINUED"), or tha aymbol y (moaning "END"), whichavar appliaa. Un daa aymbolaa suhranta ppparaftra sur la darnlAra imaga da chaqua microficha. salon la caa: la aymbola -^> signifia "A 8UIVRE". la symbola ▼ algnifia "FIN". Maps, plataa, charta. ate., may ba filmad at diffarant raduction ratios. Thoaa too larga to ba antiraly included in ona axpoaura ara filmad baginning in tha uppar laft hand comar. laft to right and top to bottom, aa many framaa aa raquirad. Tha following diagrama illuatrata tha mathod: Laa cartaa. planchaa. tablaaux. ate. pauvant Atra filmte A daa taux da reduction diffAranta. Loraqua la documant aat trap grand pour Atra raproduit an un aaul clichA. 11 aat filmA A partir da I'angia supAriaur gaucha. da gaucha A droita. at da haut an baa. an pranant la nombra d'imagaa nAcaaaaira. Laa dlagrammaa suivants iliuatrant la mAthoda. 1 2 3 1 2 3 4 5 6 KINSSTON. ONTARIO FALSE HOPES: OK FALLACIES, SOCIALISTIC AND SEMI-SOCIALISTIC, BRIEFL Y ANSWERED, %Xi %.Mxtss. BT GOLDWIN SMITH, D.C.L. ^■■: NEW YORK: JOHN W. LOVELL COMPANY, TORONTO: WILLING & WILLIAMSON. •1883. . ^iKuSiA ■■^^r■■ ■ ■ ^-,f■ Copyright, 1883, by JOHN W. LOVELL COMPANY, "-^ FALSE HOPES: OR, FALLACIES, SOCIALISTIC AND SEMI - SOCIALISTIC, BRIEFLY EXAMINED, The belief that the lot of man can be equal- ized by economical change, and the desire to make the attempt, are at present strong : thf.y are giving birth to a multitude of projects, and in Europe are threatening society with convul- sions. Eagerness to grasp a full share of the good things of this world has been intensified by the departure, or decline, of the religious faith which held out to the unfortunate in this t i -"^733 a FALSE HOPES, life the hope of indemnity in another. " If to- morrow we die, and death is the end, to-day le^ us eat and drink; and if we have not the wherewithal, let us see if we cannot take from those who have.** So multitudes are saying in their hearts, and philosophy has not yet fur- nished a clear reply. Popular education has %se of health, strength, and intel- lectual power; and these, almosf inevitably, draw other inequalities with them. The most violent shocks given to the social system- such as the French Revolution — have over^. turned unjust governments and laws, though at the immediate cost of much confusion, im- poverishment, and suffering; but they have failed materially to diminish the inequalities of wealth, as the French Communists them- selves, by their passionate complaints, declare. Injustice is human, and where inequality is the fiat, not of man, but of a power above man, it is idle, for any practical purpose, to assail it as injustice. The difference between a gopd and a bad workman is, partly at least, the act of nature ; and to give the same wages to the good workman and the bad, as Com- 6 FALSE HOPES. munists propose, might be just from some superhuman point of view: from the only point of view to which humanity can attain, it would be unjust. The plans of innovation proposed vary much in character and extent. Those which here will be briefly passed in review are Com- munism, Socialism, Nationalization of Land, Strikes, plans for emancipating Labor from the dominion of Capital, and theories of in- novation with regard to Currency and Banks, the most prominent of which is Greenbackism, or the belief in paper money. This seems a motley group, but it will be seen on exam- ination, that there runs through the whole the same hope of bettering the condition of the masses without increase- of industry, or of the substantial elements of wealth. Through several there runs a tendency to violence and confiscation. It may be safely said, that all the FALSE HOPES. 7 movements draw their adherents from minds of the same speculative class, and that indus- trial revolution is not often recruited from the ranks of steady and prosperous industry. By Communism is here meant the proposal to -abrogate altogether the institution of prop- erty. The reply is that property is not an insti- tution but a fixed element of human nature. A state of things in which a man would not think that what he had made for himself was his own, is unknown to experience and beyond the range of our conceptions. The author of the saying that property is theft affirmed, by his use of the word theft, the rightful existence of property, and it is highly probable that as a literary man he would have asserted his claim to copyright, which is property in its subtlest form. In early times propert)' in land was not individual but tribal; it is so still in Afghanistan, while in Russia and Hindostan it is vested in the village 8 FALSE HOPES. community whicli assigns lots to the individual cultivators : still it is property : squat upon the land of an Afghan tribe, or of a village com- munity, Russian or Hindoo, in the name of hu- manity, and you will be ejected as certainly as if you had squatted on the land of an English Squire. In primitive hunting-grounds and pas- tures, property was less. definite; yet even these would have been defended against a rival tribe. Property in clothes, utensils, arms, must always have been individual. Declare that everything belongs to the community ; still government must allot each citizen his rations ; as soon as he re- ceives them the rations will be his own, and if another tries to take them he will resist, and by his resistance affirm the principle of individual propert3r. Religious societies, in the fervor of their youth, have for a short time sought to seal the brotherhood of their members by instituting Iter. FALSE HOPES, 9 within their own circle a community of goods. The primitive Christians did this, but they never thought of abolishing property or proclaiming the communistic principle to society at large. Paul, in is Epistles, on the contrary, distinctly ratifies the ordinary principle of industry. " While the land remained," says Peter to An- anias, ** did it not remain thine own ; and after it was sold was it not in thy power ? " Christian communism, so-called, was in fact merely a benefit fund or club : it was also short-lived ; as was the communism of the Monastic orders, which soon gave way to individual proprietor- ship on no ordinary scale in the persons of the abbots. Associations, called communistic, have been founded in the United States. But these have been nothing more than common homes for a small number of people, living together as one house- hold on a joint-stock fund. Their relations to 10 FALSE HOPES. the community at large have been of the ordi- nary commercial kind. The Oneida Community owned works carried on by hired labor and dealt with the outside world like any other manufacturer ; nor did it make any attempt to propagate communistic opinions. A religious dictatorship seems essential to the unity and peace of these households ; but where they have prospered economically, the secret of their suc- cess has been the absence of children, which limited their expenses and enabled them to save money. Growing wealthy they have ceased to proselytize, and, if celibacy was kept up, have become tontines. They afford no proof what- ever of the practicability of communism as a universal system. ' 'r^^M^ .y M^dilL Slavery has its whip ; but, saving this, no general incentive to labor other than property has yet been devised. Communists think that they can rely on love of the community, and FALSE HOPES. x\ they point to the case of the soldier who they say does his duty voluntarily from a sense of military honor. It is replied that so far from be- ing voluntary, a soldier's duty is prescribed by a code of exceptional severity, enforced by penal- ties of the sternest kind. That the family and all its affections are closely bound up with property is evident ; and the Nihilist is consistent in seeking to destroy property and the family together. Tracing property to its source, we find it has its origin, as a general rule, not in theft but in labor, either of the hand or of the brain, and in the frugality by which the fruits of labor have been saved. In the case of property which has been inherited, we may have to ^o back genera- tions in order to reach this fact, but we come to the fact at last. Wherever the labor has been honest, good we may be sure has been done, and the wealth of society at large, as well as 12 FALSE HOPES, that of the worker, has been increased in the process. Some property has, of course, been acquired by bad means, such as stock-jobbing or gambling ; and if we could only distinguish this from the rest, confiscation might be just ; for there is nothing sacred in property apart from the mode in which it has been acquired. But discrimination is impossible : all that we can do is to discourage as much as possible bad modes of acquisition. Hereditary wealth, owned by those who have themselves not worked for it, strikes us as injustice. But what can be done ? Bequest is merely a death- bed gift: if we forbid a man to bequeath his wealth, he will give it away in his lifetime, rather than leave it to be confiscated, and a great inducement to saving will be lost. That wealth is often abused, fearfully abused, is too true : so are strength, intellect, power and opportunities of all kinds. It is also true that FALSE HOPES, 13 nothing can be more miserable, or abject, than to live in idleness by the sweat of other men's brows. But this is felt, in an increasing degree, by the better natures ; private fortunes are held more and more subject to the claims of the^ community : a spontaneous communism is thus making way, and notably, as every observer will see, in the United States. In the mean- time, though the sight of wealth, no doubt, adds a moral sting to poverty, its increase, instead of aggravating,' improves the lot even of the poor- est. In wealthy communities, the destitute are relieved : in the savage state they die. By Socialism is meant the theory of those who for free markets, competition, liberty of private contract, and all the present agencies of com- merce, propose in various degrees to introduce the regulation and payment of industry by " the State." What is the State ? People seem to suppose that there is something outside and ii 14 FALSE HOPES, above the members of the community which answers to this name, and which has duties and a wisdom of its own. But duties can attach only to persons, wisdom can reside only in brains. The State, when you leave al)stractions and* come to facts, is nothing but the govern- ment, which can have no duties but those which the Constitution assigns it, nor any wis- dom but that which is ififused into it by the mode of appointment or election. What, then, is the "^government which Socialism would set up, and to which it would intrust powers infin- itely greater than those which any ruler has ever practically wielded, with duties infinitely harder than those which the highest political wisdom has ever dared to undertake ? This is the first question which the Socialist has to answer. His school denounces all existing governments, and all those of the past, as in- competent and unjust. What does he propose FALSE HOPES. 15 to institute in their room, and by what process, elective or of any other kind, is the change to be made ? Where will he find the human ma- terial out of which he can frame this earthly Providence, infallible and incorruptible, whose award shall be unanimously accepted as superior to all existing guarantees for industrial justice ? The chiefs of industry are condemned before- hand as tyrannical capitalists. Will jthe artisan submit willingly to'"the autocratic rule of his brother? This question, once more, presents itself on the threshold and demands an answer. To accept an unlimited and most searching despotism without knowing in whose hands it is to be entrusted would evidently be sheer mad- ness. It is idle to form theories, whether economical or social, without considering the actual circumstances under which they are to b^ applied, and the means and possibilities of carrying them into effect. i6 FALSE HOPES. Despotic the Socialist's government must be, in order to secure submission to its assignment of industrial parts and to its award of wages, which are not to be measured by the amount or quality of the work, but by some higher law of benevolence, as well as to enable it to compel indolence to work at all. Its power, prac- tically, must be made to extend beyond the sphere of industry to those of social, domes- tic and individual life. ""Resistance to its decrees could not be permitted, nor could it be deposed in case of tyranny or abuse. Liberty, in short, would be at an end, and with liberty progress. All Utopias are assumed by their inventors to be the last birth of time. Assignment of manual labor and payment for its performance by a paternal government are conceivable, though not practically feasible. But how could men be told off for intellectual m I labor, for scientific research, for invention? FALSE HOPES. 17 Could the Socialistic ruler pick out a Shake- speare, a Newton, or an Arkwright, set him to his work and pay him while he was about it ? Socialism would be barbarism. Of the artisans who applaud these theories all whose trades minister to literature, art, or refinement would be in danger of finding themselves without work. Socialists often propose to cut up the in- dustrial and commercial world into phalan- steries, or sections of some kind, for the purposes of their organization. But industry and com- merce are networks covering the whole globe. To whal phalanstery would the sailors, the railway men, and the traders between different countries, be assigned ? Take any complex product of human labor, say, a piece of cotton goods worth a cent Let the Socialist trace out, as far as thought will go, the' industries which, in various ways, i6 FALSE HOPES, and in different parts of the world, have con- tributed to the production, including the mak- ing of machinery, ship-building, and all the employments and branches of trade ancillary to these : let him consider how, by the operation of economic law, under the system of industrial liberty, the single cent is distributed among all these industries justly, "even to the estimation of a hair," and then let him ask himself whether his government, or his group of governments, is likely to do better than nature. If it does, it will, indeed, be a miracle of political construc- tion. ^ -' • ' The action of government in regard to in- dustry has been of late a good deal enlarged in the way of Factory Acts, sanitary regulations, and provisions for the safety of workmen. Pos- sibly it may be susceptible of still further enlargement, with benefit to the community. But at each step you incur, especially under FALSE HOPES. \^ the elective and party system, new dangers of error, abuse, and corruption. Division of labor, as Adam Smith has shown, marks the progress of civilization ; and a centralization, which should reduce all functions to those of a single organ, would be not an advance, but a degradation, in the political as in the animal world. The National workshops at Paris were a complete failure, and even the Government dockyards in England, though rendered neces- sary by the exigencies of national defence* are conducted less economically than private ship-yards. A special form of Socialism is Agrarianism, which demands the Nationalization of Land. This has received an impulse from recent legis- lation for Ireland. Not that the Irish tenant farmer is an agrarian socialist, or a socialist ^f any kind : what he wants is to oust the land- lord, and have the farm to himself; if you 20 FALSE HOPES, \A demand, as a member of the community, a • share of his land, he will give you six feet of it; he exacts a heavy rent for a little croft from the farm laborer in his employment. The sirens of Nationalization have sung to him in vain. Nor did the framers of the Land Act intend to abrogate or assail private property in land: they intended only to adjust by legislation a dispute between two classes of property- holders which threatened the peace of the State. But the natural consequences have been a general disturbance of ideas, and an in- crease of hope and activity among the apostles of agrarian plunder. By these theorists it is proposed to confis- cate, either openly, or under the thin disguise of a predatory use of the taxing power, every man's freehold, even the farm which the settler has just reclaimed by the sweat of his own brow from the wilderness ; and it is emphati- FALSE HOPES. 21 cally added, with all the exultation of insolent injustice, that no compensation is to be allowed. That the State has, by the most solemn and repeated guarantees, ratified private proprietor- ' ship and undertaken to protect it, matters nothing;. nor even that it has itself recently sold the land to the proprietor, signed the deed of sale, and received the payment. That such views can be propounded anywhere but in a robber's den or a lunatic asylum, still more, that they can find respectful hearers, is a proof that the economical world is in a state of curi- ous perturbation. In the first place, how do the Nationaliz- ers mean to carry into effect their schemes of confiscation ? They can hardly suppose that large classes will allow themselves to be stripped of all they possess, and turned out with their wives and children to beggary, with- out striking a blow for their freeholds. There 22 FALSE HOPES. will at once be civil war, in which it is by no means certain that the agrarian philosopher and his disciples would get the better of the owners and tillers of land. Utopians forget that they have to deal with the world as it IS. i m- ■ ■ ':i\^ ' - -'::-i ■■?■--'■'" >■ - ■ In the second place, as it is to the govern- ment that all land, or the rent of all land, is to be made over, we must ask the agrarian socialist, as well as the general socialist, what form of government he means to give us ? The theorists themselves denounce, as loudly as any one, the knavery and corruption of the poli- ticians, who would hardly be made pure and upright simply by putting the management of fabulous revenues into their hands. Paying rent for all real estate to the Bosses would cer- tainly be a singular way of regenerating society. Once more, then, what is the form of govern- ment which the Nationalizers have in view? FALSE HOPES, " 23 It would be instructive, if they could furnish us, at the same time, with a sketch of the Land Department of the future, with its staff ^ the use which it will make of its funds, and the means by which it will be controlled and guarded against corruption. Why is property in land thus singled out for forfeiture ; and why are its holders selected for robbery and denunciation ? Because, say the Nationalizers, the land is the gift .of God to mankind, and ought not to be appropriated by any individual owner. This would preclude appropriation by a nation, as well as appropri- ation by a man; but let that pass. In every article which we use, in the paper and t}'pe of the very book which advocates confiscation, there are raw materials and natural forces, which are just as much the gift of God as the land. God made the wool of which your coat is woven to grow on the sheep*s back, and i 24 ' FALSE HOPES. endowed steam with the power to work the engine of the mill. Land is worth nothing, it is worth no more than the same extent of sea, till it is brought under cultivation by labor, which must be that of particular men. This, Canadian Colonization Companies are learning to their cost. If the State, in resuming posses- sion of the land, were compelled, like a land- lord in Ireland, to give compensati6n for im- provements, it would have to pay the full value of the land. The value is the creation of in- dividual labor and capital, in this case, as in the pase of a manufacture. Circumstances, such as the growth of neighboring cities, may favor the landowner. Circumstances may favor any owner or producer. They may also be un- favorable to any owner or producer, as they have been of late to the landowners and agri- cultural producers in England ; and unless the State means to protect the holder of property ' FALSE HOPES, 25 against misfortune it has surely no right to mulct him for his good luck. Nor is there anything specially unjust, or, in any way peculiar, about the mode in which the laborer on land is paid by the landowner or capitalist. Every laborer draws his pay from the moment when he begins his work. He draws it in credit, which enables him to get what he wants at the store, if not at once in cash. All land will, of course, fall under the same rule. The lot on which the mechanic has built his house, will be confiscated as wellj as the ranch. Not only so, but the pro- duce, being equally with the land the gift of the Creator, will be exempt from the possibility of lawful ownership, and we shall be justified in repudiating our milk bills because cows feed on grass. Is Poverty the offspring of land-ownership or 26 FALSE HOPES, ' I i« I the land laws? Any one who is not sailing on the wings of a theory can answer that question by looking at the facts before his eyes. Poverty springs from many sources, per- sonal and general, — from indolence, infirmity, • age, disease, intemperance; from the failure of harvests and the decline of local trade ; from the growth of population beyond the means of subsistence. If the influence of the last cause * is denied, let it be shown what impelled the migrations by which the earth has been peo- pled. Poverty has existed on a large scale in great commercial cities, which the land laws could but little affect, and even in cities like Venice, which had no land at all. The sup- posed increase of poverty itself is a fiction; at least, it is a fallacy. The number of people, in all civilized countries, living in plenty and comfort, has multiplied a hundredfold; and though, with a vast increase in numbers, there is sailing er that ore his :es, per- ifirmity, • failure e; from neans of ,st cause lied the een peo- ge scale md laws ties like rhe sup- fiction; E people, :nty and )ld; and ;, there is FALSE HOPES, a; necessarily a certain increase of misfortune, even the poorest are not so ill off now as they were in the times of primitive barbarism, when famine stalked through the unsettled tribes, though there was no " monopoly " of land. We cannot all be husbandmen or personally make any use of land. What we want, as a community, is that the soil shall produce as much food as possible, so that we may all live in plenty; and facts, as well as rea- son, show that a high rate of production can be attained only where tenure is secure. The greater the security of tenure, the more of his labor and capital the husbandman will put into the land, and the larger the harvest will be. The spur which proprietorship lends to. industry, is proverbially keen in the case of ownership of land. Originally, all ownership was tribal; and if tribal ownership has, in all civilized countries, given place to private owner- ii 28 FALSE HOPES. \\ 1 I ship, this is the verdict of experience in favor of the present system. To suppose that a com- pany of land-grabbers aggressed upon the pub- lic property, and set up a monopoly in their own favor, is a fancy as baseless as the figments of Rousseau. That we have all a right to live • upon the land, is a proposition, in one sense, absurd, unless the cities are to be abandoned, and we are to revert to the normal state ; in another sense, true, though subject to the neces- sary limit of population. But what the Nation- alizers practically propose is, that a good many of us, instead of living, shall, by reduced pro- duction, be deprived of bread and die. The first consequence of their universal confiscation will be a universal disturbance of husbandry and thus while their age of improved morality will open with a general robbery, their age of felicity will open with a famine. ^ v, Switzerland, is hard, and almost barbarousi while he can scarcely tide over a bad harvest without falling into the money-lender's hands. On this continent, where the people are more educated, their tendency seems to be, when they can, to exchange life on the farm, which they find dull and lonely, for the more social life of the city. Perhaps the time may come when agriculture will be carried on scientifi- cally, and upon a large scale, to furnish food for an urban population. The life of the staff on a great farm will not be unsocial, while it will exercise far higher intelligence than does spade labor, which, in truth, calls for no intelligence at all. • ', I %) I Liberation of labor from the extortion of the capitalist is the hope of those who set on foot co-operative works. These have hithe^tto failed from inability to wait for the market, FALSE HOPES. 35 and tide over bad times, from want of a guid- ing hand, and from the unwillingness of the artisan to resign his independence and his liberty of moving from place to place ; though the last cause is less operative with the sociable and submissive Frenchman than with his sturdy English compeer. Capital, spelt with a big initial letter, swells into a malignant giant — the personal enemy of labor; spelt in the natural way, it is simply that with which labor starts on any enterprise, and without which no labor can start at all, unless it be that of the savage grubbing roots with his nails. It includes a spade as well as factory plant that has cost millions; it includes everything laid out in education or training. We might as w^ell talk of emancipating ourselves from the ^ tyranny of food or air. Every co-operative asi^ociation must have some capital to begin with, either of its own or borrowed, the lender, I!! 36 FALSE HOPES. in the latter case, representing the power of large capital just as much as any employer. The aggregation of great masses of capital in one man's hands is a social danger, and one against which legislators ought, by all fair means, to guard, though it is sometimes not without a good aspect ; witness the New York Central Railroad, which could hardly have been brought to its present state by managers under the necessity of providing an equally large dividend every year. But the operation of the joint-stock principle, it seems, is evidently pro- ducing a gradual change in this respect. It will often be found that the rate of profit made by a great capitalist is far from excessive, though his total gains may be large. Mr. - Brassey's total gains were large, but the rate of his profits did not exceed five per cent, while it is very certain that without him ten thousand workmen, destitute of capital, scientific skill, and FALSE HOPES. 37 powers of command, could not have built the Victoria Bridge. Co-operative farming seems to hold out more hope than co-operative man- ufactures. Still it would need capital and a head. ' ' * To get rid of competition, and substitute for it fraternity among workers, is the other aim of co-operation. But the co-operative societies must compete with each other, while, as buyers, having regard to cheapness in their purchases, they will themselves be always ratifying the principle of competition, and, at the same time, that of paying the workman not on the frater- nal principle, but according to the amount and value of his work. Every heart must be touched b^ fraternity and wish that co-operation could take the place of competition, which, in its grinding severity, is too like many other tftings in this hard world. But, after all, choose any manufactured article ; • consider the multi- 38 FALSE HOPES, tude of people who in various trades and differ- ent countries have co-operated in the pro- duction, yet have not competed with each ; other ; and you will see that, even as things are, there is more of co-operation than of competi- tion among the workers. , ^; Co-operative stores have nothing but a mis- leading name in common with co-operative works. They simply bring the consumer into direct relation with the producer, and give him the benefit of wholesale prices, which may be perfectly well done, so long as the officers of the association can be trusted to exercise for the society the same degree of skill and in. tegrity in the selection of goods which the retail tradesman exercises for himself. Stores, however, of the ordinary kind, but on a large scale, like that of A. T. Stewart, with low prices, and, best of all, ready-money payment, afford the practical benefits of co-operation. FALSE HOPES, 39 From Unionism and strikes, again, too much has been hoped by the workingman. They have not seldom been the means of enabling him to make a fairer bargain with the Master, and they are perfectly lawful ; though, the com- munity, to save itself from Unionist tyranny an ^. extortion, must steadfastly guard the liberties of the Non-Union men. But the idea that they can, to an unlimited, or, even, to a great extent raise wages, is unfounded. The screw may be put upon the Master, but it cannot be put upon the community; and it is the commu- nity, not the Master, that is the real employer. The community which buys the goods ulti- mately settles the price, and, thereby, finally determines the wages of the producers, not- withstanding any momentary extortion ; nor can it be constrained, by striking, in the end to give a cent more than it chooses and can afford. By strikes, carried beyond a certain 1 V 40 FALSE If OPES. point, capital may be driven away, and the trade may be ruined — as trades have been ruined — but the rate of wages will not be raised. The Master, though commonly taken (or the employer, is the agent through whom the community pays the workmen. Towards the men, his commercial relation is really that of a partner, taking out of the earnings of the business the share which is due for capital, risk, and guidance. Masters are beginning to mark this fact in a kindly way, by gjiving shares in the concern or premiums to the men, while they retain the guidance in their own hands. Strikers ought to remember that they are, themselves, buyers as well as producers, and, therefore, employers as well as employed; so that if they can strike against the rest of the community, the other trades can strike against them, and wages being thus raised all round, nobody will gain anything. They ought also FALSE HOPES, 41 to remember that they are parts of an in- dustrial organism, on the well-being of which, as a whole, that of all its members depends, and which is deranged, as a whole, by the disturbance of any portion of it. A strike in one section of a trade throws out of work hundreds of men, women, and children, in the other sections. A strike in certain depart- ments, such as that of railways, will stop the wheels of civilization ; in others, it will cause incalculable loss and suffering. Suppose, when an artisan had been hurt by the machinery, the surgeons were to put their heads out of the window and say they were on strike. Arti- sans are in the habit of speaking of themselves exclusively as workingmen. Everybody who is not idle is a workingman, whether he works with his brain or with his hands and whatever part he may play in the service of a varied and complex civilization, f ., 1] n 1:1 42 FALSE HOPES, Then, there is the hope of vastly increas- ing the wealth of the world in general, and that of the artisans in particular, by means of an inconvertible Paper Currency. Of this illusion, it may be said, that not even the wildest dreams of the alchemist, or of those adventurers who sailed in quest of an Eldo- rado, were a more extraordinary instance of the human power of self-deception. Among the champions of paper currency there are* no doubt, knaves — many a one — who know very well what they are about, and whose aim is to defraud the creditor, public and private, by paying off the debt with depre- ciated paper, an operation, the sweetness of which, under the Legal Tender Act, has been { already tasted. But there are also honest enthusiasts, not a few, who sincerely believe that a commercial millenium could be opened by merely issuing a flood of promissory notes FALSE HOPJ^S, 43 and refusing payment. This prodigious fal- lacy has its origin simply in the equivocal use of a word. We have got into the habit of applying the name money to paper bank bills as well as to coin. The paper bill, being cur- rent as well as the coin, we fancy that with both alike we buy goods. But the truth is that we buy only with the coin, to which, alone, the name money ought to be applied. The bank bill is like a cheque — not money itself, but an order and a security for a sum of money, which, the bill being payable on demand, can be drawn by the holder from the bank, or the government, when he pleases. When a man receives a bank bill, he has virtually so much gold as the bill represents' put to his account at the bank by which the bill is issued. The bill is a promissory note, and the bank in increasing the number of its bills, like a trader who increases the num. 44 FALSE HOPES, ber of his promissory notes, adds, not to its assets, but to its liabilities, * In the slip of paper itself there is no value or purchasing power; nor can any legislature put value or purchasing power into it. Green- backers point to the case of postage stamps* into which, they say, value has been put by legislation. But a postage stamp is simply a receipt for a certain sum paid to the gov. ernment in gold, and, in consideration of which, the government undertakes to carry the letter to which the receipt is afifixed. ^ "^ ^ 'No paper money, it is believed, has ever yet been issued except in the promissor)> form, ^ pledging the issuer to pay in gold, upon de- mand, so that each bill, hitherto, has borne upon the face of it a flat denial and abjura- tion of the Greenback theory. Suppose the promissory form to be discarded, and the bill to be simply inscribed " one dollar," as the \ FALSE HOPES, 45 Fiat-money men propose, what would " dollar " mWn? It would mean, say the Greenback- ers, a certain proportion of the wealth of the country', upon which, as an aggregate, the currency would be based. What proportion ? Let us know what we have in our purse, and what we can get or exchange for the paper dollar on presenting it at a store ; other- wise commerce cannot go on. This, however, is not the most serious difficulty. The most serious difficulty is that while the coin, which a convertible bank bill represents, is the pro- perty of the bank of issue, the aggregate wealth of the country is not the property of the Gov- ernment, but of a multitude of private owners. The Government is the possessor of nothing except the iublic domain, and a taxing power, the exercise of which it is bound to confine to the actual necessities of the State. la issu- es ing an order for a loaf of bread, a coat, or a 46 FALSE HOPES. leg of mufton, to be taken from the possessions of the community at large, it would be simply signing a ticket of spoliation. / ; Ask the Fiat-money men whether they are prepared to take their own money for taxes^ and you will get an ambiguous reply. Some of them have an inkling of the fatal truth, and answer that the taxes must be paid in gold. The faith of others is more robust. But it has been reasonably inquired why the government if it can with a printing machine coin money at its will ^hould pester citizens for taxes at all. That the foreigner will take the national fiat- money, nobody seems to pretend. Yet, if there is real value in it, why should he not ? All the better, say the Greenbackers ; if hfe will not take our money, he will have to take our goods. Then, you will have to take his goods, and the commercial world will be reducecj again to barter without a common measure are FALSE HOPES, 4f of value, which would not be a great advance in convenience or in civilization. Besides, trade is not merely a direct interchange of commodities between two countries; it is cir- culation of them among all countries — the United States sending cotton to England, En- gland, calico to China, and China, tea to the United States, which, without a common stand- ard of value, would be next to impossible. In one sense, of course, government can, by its fiat, put value into paper. It can make the paper Legal Tender for debts — in other words, it can issue licenses of repudiation, and these licenses will retain a value till all existing debts have been repudiated, and all existing creditors cheated ; but, from that time • * their value will cease, since everybody, from the moment of their issue, will refuse to ad- yance money, or sell on credit. In all the cases known to economical his- 4« FALSE HO^ES. tory in which governments have issued in- convertible paper, depreciation has ensued, and such value as it has retained, has been ex actly in proportion to the hope of resump- tion. When cash payments were suspended in England, at the crisis of the French war, the depreciation was comparatively small, simply because the hope of resumption was strong. The guillotine was plied in vain to arrest the rapid fall of French Assignats, though these were not fiat money, but bonds secured on the national domains, which were good secur- ity for the original" issue. Confederate paper money, with the defeat of the Confederacy, lost the whole of its value, or retained a shadow of it only, through stock-jobbing tricks. In San Domingo, a gentleman having tendered a silver American dollar in payment for his coffee, received from the surprised and de- lighted keeper of the coffee-house an armful . \ FALSE HOPES. 49 of paper change. Washington, while he was saving his country, was being robbed through the operation of inconvertible paper currency ot part of his private estate; and the effects, moral and political, as well as commercial, of the system, during the Revolutionary war, were such that Tom Paine, no timid or squeamish publicist, recommended that death should be made the penalty of any proposal to renew it. In all cases where specie payment has been resumed, the State, in addition to the loss incurred through disturbance and demoraliza- tion of commerce, has paid heavily for the temporary suspension, because its credit has been suspended at the same time, and it has had to borrow on terms far worse than those which it could have obtained in the money market, had its integrity been preserved. The value is in the gold. It is in exchange for the gold that, whenever a sale takes place. (- i I! 50 I'ALSE HOFES. / the commodity is given. Trade was originally barter, and, in the sense of being always an interchange of things deemed really equiva- lent in value, it is barter still. I give a cow (or three sheep, and then give the three sheep for a horse, which it is my tiltimate object to purchase. What the three sheep here do in a single transaction, is done in transactions generally by gold. This fundamental and vital fact is obscured by the language even of some economists who are sound in principle, but who speak of the precious metals as though their value was conventional, and like that of sym- bols or counters. It is nothing of the kind. The first man who gave anything in exchange for gold or silver, must have done so because he deemed gold or silver really valuable; so does the last. The precious metals, probably, attracted at first by their beauty, their rarity, and their intrinsic qualities; then, they were FALSE HOPES. 5 1 felt to have special advantages as mediums of exchange and universal standards of value, on account of their durability, their uniformity, their portability, their capability of receiving a stamp, of being divided with exactness, and of being fused again with ease. Thus they, and, in the upshot, gold, displaced all the other articles, such as copper, iron, leather, shells, whi'^l 'n primitive times, or under pressure ot circumstances, were adopted as mediums of exchange and standards of value, ^ut they have now the additional value de- rived from immemorial and immutable pre- scription, which would render it practically impossible to oust them, even if a substance, promising greater advantages for the purpose, could be found. The French Republicans tried to change the era, and make chronology begin "^ith the first year of the Republic, instead of beginning with the biith of Christ. But 52 FALSE HOPES, they found that they were pulling at a tree, the roots of which were too completely en- twined with all existing customs and ideas, to be torn up. It would not be less difficult to change the medium of exchange and stand- ard of value over the whole commercial world. A value which is moral, or dependent on opin- ion, is not the less real; the value of diamonds, as symbols of wealth and ra*^k, may be de- pendent, not only on opinion, but on fancy, yet, it is real so long as it lasts. An enormous find of gold would, of course, by putting an end to its rarity, destroy its value; this is a risk which commerce runs, but it does not seem to be great. Any inconvenience that might arise from the bulk and weight of the precious metals, is indefinitely diminished, while in use .they are vastly, and in an increasing degree, economized by the employment of bank bills and other paper securities, for gold, FALSE HOPES. 53 which are currency, though money they are not. There ought to be no such thing as Legal Tender, even in the case of convertible paper currency, either on the part of the govern- ment or on the part of private banks. It is rank injustice to compel us to take anybody's paper as gold. If the government is solvent and its security is good, the paper is sure to be taken in preference to carrying about a weight of specie. Legal Tender confuses the ideas of the people, shakes commercial morality, and prepares the way for the attempts of the Fiat-money men, and for all the mischief which they breed. The last ditch of Greenbackism is Bimetal- lism, or the proposal to place silver on a par, as a standard, with gold, which can hardly fail to commend itself to Silver Kings. To 54 FALSE HOPES. force people to take silver for gold, would be to rob them of the difference; and such a measure, if adopted by the State, would be a partial repudiation. Equity would require that the salaries of all politicians should, first of all, be paid in the baser metal. To have two standards is to have none. But it is proposed that a convention of nations shall be called to fix the relation of value between gold and silver. How is it possible for any convention of nations to fix, and to keep fixed, the relation of any two commodities, when, among other determining circumstances, the rate of production varies from year to year? This is the problem, without a practical solu- tion of which it is useless to waste any more thought upon -the question. A great number of different articles, as has been already saidi have been used from time to time by trib«s or nations, as mediums of exchange and stand- 1 ii.. FALSE HOPES. ' 55 ards of value; but the choice of the commer- cial world gradually settled down upon gold, which is now the medium and standard of the great trading communities, silver being used as change. India and China adhere to silver, as some more barbarous races adhere to cowries or wampum, and to their custom commerce has, in dealing with them, to bend — not without very great inconvenience, as any one who has watched Anglo-Indian finance must know. So long as silver is used only as change, a rough equivalent is sufficient. To ask communities whose wealth is stored in gold to go into convention for the purpose of depreciating gold by reducing it to the level of silver, is to presume upon a blind- ness, or weakness, seldom found in commer- cial minds. The movement, accordingly, ap- pears to make but little way. 1: I ^ ;n^ i;( $6 _ • FALSE HOPES, With belief in Fiat-money are often com- bined fancies about the tyranny of banks, and a desire to wreck and plunder them by an exercise of the legislative power, or to seize their business and profits, and place them in the hands of the government. There is nothing, indeed, of which the demagogues are fonder than attacking the banks, and they are able, in this case, to appeal with effect to popular envy — always the breath of the demagogue's life. Especially they propose to take away the circulation of bank bills, and the profits belonginp^ to it. . ^ Banks are vital organs of a commercial com- ^munity, which, in seeking their destruction, ** would show as much wisdom as a man would show in seeking the destruction of his own heart or lungs. They perform for us three in- dispensable functions, of which the first is the iafe-keeping of our money, which, otherwise, we FALSE HOPES, 57 should have to keep in our houses at our own risk, as is still the practice of the ignorant French peasant, who hides his hoard in a hole in the wall. The second function is that of econ- omizing gold, and at the same time sparing u§ the inconvenience of carrying aboUt a mass of specie, by issuing bank bills, which, being secured upon the whole estate of a chartered corporation, may, in general, be accepted with- out scrutiny, and thus form a paper currency, though it can never be too often repeated that they are not money. It is rather hard that those who are always declaiming against metal- lic money for its cumbrousness, and because, as they say, it lies dead and inert, should fail to acknowledge the service rendered by the banks of issue, in thus giving the metal wings, and making it do its work for commerce in a thou- sand places, while it is locally laid up in one. The third function, which is the offspring of 58 FALSE HOPES. comparatively modern times, is that of enabling us to trade on credit. This, the banks do, by discounting paper for the trader, whose re- sources they have examined, or are assured of, and whose commercial character they approve^ In this way,' they both substantiate and regulate credit, neither of which could be done without their agency, merely by the representations of the trader himself, or by private inquiry into his means. To stop the action of the banks in this department, would be to render trading on credit impossible, to arrest all enterprise, and to bring the world back to that state of com- mercial barbarism which, in truth, seems to be the goal of the economical destructives. The financial Nihilist grudges the banks the profits of their circulation, and wishes to trans- fer them to that which he calls the State, but which it is necessary always to bear in mind isi in fact, simply the men who compose the gov- FALSE HOPES. 59 ernment. Why not grudge the banks the profits of the discount business, and propose to transfer that * to government in the same way ? Why not do the same with all other trades by which profit, and often unfair profit, is made? Why not make the issuing of bills of exchange, or promissory notes ; why not make the supply- ing of the community with boots or dry goods ; a monopoly in the hands of the government ? What is there about the money trade in partic- ular to make us desire that it should be put into the power of the politicians ? Judging by experience, it would be about the last branch of* commerce on which we should wish them to lay their grasp. • n ? > It is the busmess of government to put its stamp on the coin, in order to assure the com- munity that the coin is of the right weight and fineness. This public authorities alone can sat- isfactorily do, and they may now be trusted to 6o FALSE HOPES. do it, though, in former times, kings were in the habit of defrauding the subject by debasing the coin, a proceeding which combined the guilt of theft with that of forgery. But here the duty and the usefulness of government in regard to the currency end. The volume of bank bills issued ought to be regulated, like that of all other commercial paper, by the requirements of the day — that is, by the number anJ amount of the transactions, and it will be so regulated while it is in the hands of the banks, which will not fail to issue all the bills for which there is real need, while, if they issue more than are needed, the bills will begin to come back upon their hands. But government can no more de- cide what amount of bills is required than it can decide how many promissory notes or bills of exchange ought, at any given moment, to be afloat. Setting government to settle the circu- it lation of paper, is having the barometer regu- FALSE HOPES. 6i sre in the )asing the le guilt of the duty regard to bank bills hat of all rements of amount of regulated which will ch there is I than are back upon 10 more de- red than it ►tes or bills ment, to be le the circu- meter regu- lated by superior wisdom without reference to atmospheric pressure. The English Bank Charter Act was the offspring of the alarm caused by the failure of a number of private banks of issue. It would have been better to adopt proper safeguan 3 in the way of inspection and other precautionary regulations. The Act has gone into operation only to a limited extent, having put a have an hour of security, or be able to conduct FALSE HOPES. (53 any of her operations in peace and confidence, if the hand of demagogism were all the time upon her heartstrings ? Bank bills, though not legal tender, cannot, in the ordinary course of trade, be refused, unless there is some public reason for mistrust- ing the solvency of the bank. This is the ground for subjecting this particular class of commercial companies to special legislation; and it is the sole ground ; there would, other- wise, be no justification for an interference with the trade in money more than with any other trade. Nor has the government the slightest right to compel the banks to take its bonds, as the condition of permitting them to pursue an honest and indispensable traffic, or to blackmail them in any other way. To do so is confisca- tion, and upon confiscation retribution never fajls to attend. It is not the bank, but the demagogue, that on this continent is the I II ■I '' 1 1 ;,^ 64 FALSE HOPES pest of industry, as well as of public affairs and morality in general. On the other hand, the stockholders of banks must not suppose that they, of all investors in commercial enterprises, are entitled to the intervention of government when their affairs are mismanged by directors of their own choosing. If they invoke such aid, they will once more practically point the moral of the fable of the horse and the stag. The notion that society is an organism or growth has perhaps been carried too far; we have an individuality and a power of acting on the general frame, which the parts of an organ- ism have not. But this view is, at least, nearer the truth than the fancy which underlies all Socialism, that society can be completely meta- morphosed by the action of the State — an imaginary power outside all personalities, supe- rior to all special interests, and free from all chss passions. Nothing, indeed, can be less free n affairs and hand, the ippose that enterprises, ;overnment ►y directors nvoke such y point the the stag. organism or too far; we of acting on of an organ- least, nearer underlies all pletely meta- 2 State — an lalities, supe- from all chss be less free ' FALSE HOPES. 65 from class passions than the movements which have been here passed in review. Social hatred is a bad reformer, and the struggles to which it has given birth have almost always brought to the community, and even to the most suffering members of it, ten times as much lo«s as gain. To speak of Protection, would be open- ing a wide subject, and one which, perhaps, scarcely falls within the scope of this paper. There are men, sensible in other things, who imagine that they can increase the wealth of a country by taxation. So long as govern- ments and armaments are maintained on the present scale of expenditure, every country will need import duties, and must have its tariff. Absolute free trade, therefore, is at present out of the question, and the differ- ent tariffs must be regulated according to th^ circumstances and the special industries of each community. Every nation will claim 65 FALSE HOPES. .1 this right. England, who has her tariff like the rest, wisely lets in free the raw mate- rials of her special industries and the food of her innumerable workmen, while she taxes finished articles of luxury, such as tea, wine and tobacco. Free traders, British free traders, especially, have left this too much out of sight, and have comprcrised their theory by that error. But, that taxation can add to wealth ; that governments can increase pro- duction by forcing capital and labor out of their natural channels ; that the interest of the people will be promoted by forbidding them to buy the best and cheapest article wherever it can be found; are notions which, if reason did not sufficiently confute them, have been confuted by experience. Under the free system, the industries of England have been developed, and her wealth has increased out of all proportion to the growth of her popu- Ave' '. tariff like raw mate- the food she taxes tea, wine ree traders, ch out of eir theory n can add icrease pro- ,bor out of interest of forbidding )est article ions which, them, have ier the free have been Teased out her popu- > . FALSE HOPES, 6/ A' iation, and to an extent perfectly unrivalled. The verdict of economical history through all the ages is the same. Nobody proposes to draw Customs lines across the territory of any nation, and the commercial advantages of free- dom of exchange know no political limits though in passing from nation to nation, fiscal necessity intervenes. The workman does not gain by Protection ; he is only transferred to an artificial industry from a natural industry, which would otherwise develop itself, and in which, as it would be more remunerative, employment would be more abundant. The master manufacturer is the only man who gains ; to him the community, under the Pro- tective system, pays tribute; accordingly, he is generally a Protectionist, and uses not argu- ment alone, but the Lobby, and influences of all sorts, to keep up the tariff ; he will do his utmost to encourage national expenditure. 6S FALSE HOPES. • rather than taxes shall go down. Nor can he be much blamed, when the government has induced him to put his capital into the favored trade, and stake his future on the continuance of the tavor. Political or social motives there may conceivably be for Protec- tion, as well as for any other sacrifice of commercial interest, such as war itself ; but the commercial sacrifice is a fact which cannot be denied. To foster by protective duties or bonuses infant industries, which may after- wards sustain themselves, and perhaps draw * emigration to a new country, is in itself a perfectly rational and legitimate policy, if the nation can really keep the experiment in its own hands. But artificial interests are created, ; j a Ring is formed, and the nation loses control j* over its tariff. Such, at least, is the'case with i communities governed as are those of this continent ; and again, in concluding, we would I • FALSE HOPES. 69 strive to impress the necessity of regarding the field of political economy as a region not in the air but on the earth, and of treating the society with which the economical legislator deals, its tendencies, its capabilities and its forces, as they really are. The connection of political economy with politics is a blank page in the treatises of the great writers. Steady industry aided by the ever-growing powers of practical science is rapidly augment- ing wealth. Thrift, increased facilities for sav- ing and for the employment of small capitals will promote equality of distribution. Let governments see that labor is allowed to enjoy its full earnings, untaxed by war, waste or pro- tective tariffs. For the unfortunate, of whom, in a great community, however prosperous, there must always be some, charity, which is daily becoming more active and bountiful, will provide. '