EALTH-lfaEATION 
 
 BY 
 
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 ^GUSTUS^lONGREDIEN 
 
 WITH INTRODUCTION BY 
 
 SimonSterne.
 
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 WEALTH-CREATION. 
 
 BY 
 
 AUGUSTUS MONGREDIEN, 
 
 AUTHOR OF 
 '''Free Trade and English Commerce,'''' &fc. 
 
 WITH INTRODUCTION BY 
 
 SIMON STERNE, 
 
 Author of " Constitutional History and 
 Political Development of the United States.'^ 
 
 
 Cassell, Petter, Gal pin & Co 
 
 NEIV YORK, LONDON &> PARIS. 
 
 L . -Y^cl/ ^4r. /<;^
 
 Copyright, 
 
 188;^, 
 
 By O. M. DUNHAM. 
 
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 H(3 
 
 The Right Honourable THE EARL GRANVILLE, K.G., 
 
 ETC. ETC. ETC., 
 
 I TAKE THE LIBERTY OF DEDICATING THIS WORK, 
 
 AS A TOKEN OF MY ADMIRATION FOR HIS PUBLIC CAREER, 
 
 OF MY ESTEEM FOR HIS PRIVATE VIRTUES, 
 
 AND OF MY WARM APPRECIATION OF THE FRIENDSHIP 
 
 VVIIH WHICH HE HAS HONOURED ME. 
 
 A. MONGREDIEN. 
 
 213035
 
 PREFACE 
 
 In the preface to a pamphlet entitled "Pleas for 
 Protection Examined," which I published in Feb- 
 ruary of this year, I stated that it formed a part 
 of, and would be re-incorporated in, a larger work 
 on which I was then engaged. Accordingly, it 
 will be found that the greatest portion of that 
 pamphlet is introduced into the present work, of 
 which it occupies 47 pages, viz., p. 169 to 216. 
 
 I also desire to point out that, while, in the 
 chapter on Land at p. 251 of this work, I set forth 
 certain contingent difficulties that may arise out 
 of the limited supply of land and the unlimited 
 growth of population, I have carefully abstained 
 from discussing the remedial measures which may, 
 at some time or other, have to be adopted. I, 
 therefore, disclaim all inferences tending to identify 
 me with any of the theories or schemes that have 
 been, or may be, broached with a view to solve 
 the difficulties in question. 
 
 Augustus Mongredien. 
 
 Forest Hill. S.E.
 
 WEALTH-CREATION, 
 
 INTRODUCTION TO FIRST AMERICAN EDITION. 
 
 Mr. Mongredien has done such excellent work in 
 the cause of free trade and in the dissemination of sound 
 economic doctrines, in essays especially addressed to 
 American readers, that there is fitness in the publication 
 of an American edition of this, the most important work 
 which has, as yet, issued from his pen. 
 
 Our author belongs to a class of writers, which, un- 
 happily, is not a numerous one, composed of men ac- 
 tively engaged in the affairs of life and thereby made 
 daily familiar with the practical sides of exchange, barter, 
 and monetary transactions, and yet capable of reasoning 
 correctly on the subject ntiatters of their occupations. 
 Paradoxical as the remark may seem, it is nevertheless 
 true that familiarity on a small scale with the phenomena 
 of mercantile life is more likely to vitiate correct reason- 
 ing than to aid it. Ricardo was an example to the con- 
 trary, but between him and Mongredien, excepting New- 
 march, there is scarcely a great political economist of 
 England belonging to the purely commercial class. 
 Business men are prone to take too circumscribed an 
 horizon to be led to universally true rules, and make 
 therefore unsafe guides in the domains of politico-eco- 
 nomic science and statesmanship. 
 
 The book which follows this introduction is in many
 
 viii INTRODUCTION. 
 
 respects — particularly for clearness — a noteworthy one. 
 It is unrivaled in demonstrating that all trade is barter, 
 and that the intervention of money is a me^e lubricant 
 to facilitate barter. No step in advance can be taken in 
 the science of Political Economy until that truth is 
 seized, and until it saturates all thought upon the subjects 
 Avhich are embraced within its domain. 
 
 Mill has said that the true theory of value is the poJis 
 asinorum of Political Economy. That may be true for 
 those who desire to become professors 2a\d facile princeps 
 in the theories of the science; but, on the other hand, a 
 man cannot understand the first principles of international 
 exchange, nor rid himself of a false and antiquated bal- 
 ance of trade theory, without making himself master of 
 the fact that all trade is barter. When men or nations 
 exchange commodities or services for money, the money 
 represents the services and the commodities; and the 
 profitableness or unprofitableness of the exchange is only 
 then determined when the money is reinvested for com- 
 modities or services. 
 
 " Maudit argent^ maudit argent" exclaimed the great 
 Bastiat, almost in despair ; and truly not only from the 
 point of view of the moralist, but also of the economist, 
 do the words frequently arise to the lips that money is 
 accursed : because it vitiates all popular thought upon, 
 and hides the truth of, economical facts to such a degree 
 that whole nations have been misled by the intervention 
 of money as a medium of exchange. 
 
 From the Spanish or French monarch who, in the 
 early period of modern history, plunged his nation into 
 war to turn the current of gold into his own country, be- 
 cause he regarded the drain of gold as so much lost to
 
 INTRODUCTION. ix 
 
 the life of the nation and its influx as a return of the 
 elixir of hfe to his ])eople, down to our western farmer, 
 who regards an unUmited supply of greenbacks issued by 
 the government as an addition to the national, and in 
 some degree to his own individual, wealth, the same 
 error has pervaded the minds of prince and peasant, of 
 the noble and the farmer, of regarding means for ends, 
 and the instrument of exchange for the exchange itself. 
 Not only prince and farmer, who in different degrees are 
 removed from the actual business of exchange, but also 
 merchants and bankers, are almost equally imbued with 
 and misled by this error ; and even authors of financial 
 articles in the newspapers and in the more ponderous 
 ephemeral literature write about the balance of trade as 
 though Adam Smith, Quesnay, Turgot, and Genovesi 
 had not laid this figment to rest more than a century ago. 
 
 Error, however, dies hard, particularly when each in- 
 dividual's experience seems to be leagued against the 
 truth, and the truth to be tantamount to the denial of in- 
 dividual experience. Superstition would be everlasting 
 if men were so organized that they had daily hallucina- 
 tions leading them to believe that they saw hobgoblins 
 and ghosts, or that they beheld miracles performed 
 under their very eyes ; and indeed there was a period in 
 the history of mankind when the imaginations of men 
 were so inflamed, upon subjects supernal, that they be- 
 lieved, and swore away the lives of their fellow-beings 
 on the belief, that they saw persons riding through the 
 air on brooms, and that they heard incantations, and 
 traced the mischievous effects from " the casting of the 
 evil eye." 
 
 With but very rare exceptions, the writers of financial
 
 X INTRODUCTION. 
 
 articles in the press of the City of New York never see 
 the national imports in excess of the exports with 
 anything but alarm, nor regard it as anything but a 
 healthy sign when we export more largely than Ave 
 import. They never stop to reflect that if our exports 
 continue in value in excess of our imports, we must 
 necessarily impoverish ourselves just as surely as the 
 longest purse must run dry if it continuously gives out 
 more than it receives, and that if we import more in 
 value than we export, unless we owe the balance which 
 must be made up by future exports, we are growing 
 in wealth. 
 
 Mr. Mongredien, in using his strongest efforts to lift 
 the veil of unreason that rests upon the minds of men in 
 this particular, has done a great service, especially to 
 our own people, who are more prone than others to 
 fall into this error. 
 
 Taking the official Board of Trade reports of England 
 from 1855 to 1878 as a guide, we find that the average 
 excess of imports over exports of Great Britain ranged 
 from $65,000,000 to $500,000,000 annually. 
 
 The figures following are taken from Leonie Levi's 
 History of Commerce, and are doubtless correct : 
 
 Average. Imports. Exports. Excess of imports. 
 
 1855-1859.. ;^i69,54o,ooo ^139,512,000 ;^30,o28,ooo 
 
 1860-1864... 193,415,060 179,969,000 13,446,000 
 
 1865-1869... 286,334,000 229,685,000 56,649,000 
 
 1870-1874... 346,067,000 290,180,000 55,887,000 
 
 1875-1878... 378,071,000 259,055,000 119,016,000 
 
 The excess in 1880 of imports over exports, taking 
 into consideration the specie as well, was, in England, 
 upwards of ^6,000,000 ($30,000,000). As England is
 
 INTRODUCTION. xi 
 
 manifestly a prosperous country and constantly growing 
 in wealth, it is clear that there can be no validity to the 
 balance of trade theory, for the reason that she con- 
 tinues her vicious system of free trade which produces 
 this result, and does not seem to be in the slightest 
 degree anxious to change it. Indeed, all the prosperous 
 countries of the world seem to be in the same con- 
 dition. On the other hand, Peru, for instance, exported 
 $49,000,000 and imported but $30,000,000 in 1878, 
 and therefore should have been a remarkably prosperous 
 country, according to the theories of those who believe 
 that the balance of trade only shows a favorable result 
 when the exports exceed the imports in value. 
 
 A proper understanding of the causes which produce 
 wealth is a great promoter in the production of wealth. 
 In this respect, political economy is to the nation what 
 the principles of hygiene are to an individual. When he 
 knows what to avoid and what to do for the purpose of 
 sound living, considerable is already done in counteract- 
 ing disease and promoting health. 
 
 There are few anomalies so striking as the fact that 
 our nation should be, in its political theories and practices, 
 so sound and yet so backward and wrong-headed in the 
 adoption of politico-economic truth. Yet there is an ex- 
 planation which lies on the surface if we will but see it. 
 The Dutch and English colonists brought with them an 
 intense hatred of political misgovemment and religious 
 intolerance, and had, of course, no knowledge of that 
 which did not then exist — sound views of the laws of 
 exchange ; hence local self-government and freedom of 
 thought and of speech was at an early day instituted 
 in the United States in such a way as to command the
 
 xii INTRODUCTION. 
 
 admiration of students of history. That it was not the 
 function of government to interfere with the poUtical con- 
 victions of men or with their right to move from place to 
 place, and that government from a distance was an evil, 
 were beliefs and principles brought by the colonists with 
 them to be crystallized into law for the purpose of avoid- 
 ing the tyranny from which they suffered at home ; hence 
 the New England " Town System " as a method of de- 
 centralization to insure local self-government was devel- 
 oped, and was the germ of American municipal and 
 representative government. The protest of the Dutch 
 against the religious intolerance of Spain, and of the 
 Puritans against the like intolerance of the Queen of 
 England and of James, led in the Colonies on these sub- 
 jects to more liberal legislation, and American govern- 
 mental institutions expanded in the atmosphere of tole- 
 rance so that it became in matters of freedom of worship 
 or of opinion a model for other nations. 
 
 There are many reasons Avhy upon the subject of ex- 
 change the same development as to freedom of action 
 did not take place, and to some of these it is proper in this 
 introduction to give prominence. England exploited her 
 colonies by impeding their establishment of manufac- 
 tories, and insisting upon supplying their wants exclu- 
 sively from the products of English anvils and looms. 
 In the period from 1765 to 1775, which may be properly 
 tenned the period of irritation between the colonies 
 and the mother country, patriotism on the part of the 
 colonists was mainly displayed by refusing to purchase 
 imported articles and depending upon home manufac- 
 tures. When the contest actually began, and until its 
 close in 1783, they necessarily relied almost wholly upon
 
 INTRODUCTION. xiii 
 
 home products to supply them with clothing and farm- 
 ing utensils. To be clad in the raw and inartistic pro- 
 ducts of American manufacture, and to abstain even 
 from the smuggled goods from abroad, was a badge of 
 patriotism; so that when Hamilton, in the very first 
 congress which met under the newly formed constitution, 
 asked for the moderate aid of ten per cent duty for home 
 manufactures, a sentimental element entered into the 
 cheerful accord which was given to the proposition that 
 American manufacturers during the war enabled the 
 American people to carry on that war, and that they 
 should not be destroyed by competition with the Eng- 
 lish manufacturer who was part and parcel of the common 
 enemy successfully combated by the aid of colonial 
 manufacturers. 
 
 During the Napoleonic wars, the Berlin and Milan 
 Decrees, and the Decrees of Council, considerably im- 
 peded America's foreign trade. When the War of 1812 
 broke out, the United States was again thrown upon its 
 own manufacturing resources. Prior to the War of 1 8 1 2 , 
 the incessant and harassing interferences with ocean com- 
 merce by both the French and English cruisers and 
 privateers, made the seas for merchantmen of either 
 country and of neutral nations insecure, and therefore 
 produced for the people of the United States a condition 
 analogous to war in its effects on trade as to inability 
 to procure foreign commodities. 
 
 A number of hot-house plants were thus created 
 in the manufacturing industries ; and from a mixture of 
 patriotic and interested motives, without much regard to 
 sound economic principles, the country felt impelled to 
 maintain them. During this period, however, and down
 
 xiv INTRODUCTION. 
 
 to 1816, the tariff, although incidently protective, was 
 still, compared with the subsequent tariffs, an extremely- 
 light one. Cotton goods were charged 5 per cent ; iron 
 and iron wares, 7^^ per cent; woolen goods, 5 per cent; 
 silks and luxuries not in excess of 10 per cent. These rates 
 were subsequently slightly increased, but there were no 
 duties beyond i o per cent except upon goods imported 
 in foreign ships. 
 
 The tariff of 181 6 increased the duties on an average 
 about 42 per cent over the previous rates ; and this was 
 done mainly for the purpose of preserving the industries 
 which had been created during the War of 1812, and 
 was intended as a temporary measure only. 
 
 In 1824 a still further increase was made; in 1828 a 
 tariff was passed which again advanced duties; and in 1833 
 what was called a compromise tariff was passed to appease 
 the nullification agitation, by which it was agreed that all 
 duties over 20 per cent should be reduced in each alternate 
 year until 1842, and the duties thereafter should be 20 
 per cent ad valorem. This reduction of tariff continued 
 until 1842, when a new rate of duties of 50 instead of 
 20 per cent was imposed, which tariff lasted until 1846, 
 when, by the introduction of the Walker tariff, duties 
 were again reduced to about 20 per cent. This tariff 
 continued until the one of 1857, which again considera- 
 bly lowered the rates of duties, added largely to the 
 free list, and was, in strictness, a revenue measure. This 
 tariff was in force until 1861, the first year of the War 
 of the Rebellion, when the Morrill tariff became a law, 
 inaugurating a system of protective duties higher than 
 had theretofore been known in the history of our country, 
 and which, in stringency and intricacy, outdid them all,
 
 INTRODUCTION. xv 
 
 and which has been added to, amended, increased, and 
 elaborated until it has become the most stupendous 
 system of incongruities, absurdities, and injustice which 
 exists in the shape of a tariff anywhere in the civilized 
 world. 
 
 At every step taken in this continuously changing fiscal 
 legislation, meretricious circumstances were urged for the 
 increase of the rates. After the close of the war of 1812, 
 it seemed hard that the men who had supplied the iron 
 for our gallant little navy, and the guns and shoes and 
 clothing of our army, should immediately suffer by the 
 close of the war, and have their products brought into 
 competition with those of foreign manufacturers, and 
 more especially with the products of that nation with 
 which we were at war and was our superior in 
 manufacturing industry. Protection and patriotism, and 
 free trade and British sympathy, seemed to go hand in 
 hand. 
 
 The spirit of independence on the part of the American 
 people was so largely increased by success in the wars 
 that naturally a feeling gained prominence to exploit to 
 the uttermost the great resources of our country ; and 
 this sentiment played so prominent a part in the dis- 
 cussion, and found for its insidious suggestions so ready 
 an absorbent in the American's pride of country, that to 
 build our own machines, mine our own coal, and manu- 
 facture our own clothes, at whatever cost, seemed a 
 patriotic and desirable result to be attained. 
 
 When the Southern States, which were almost purely 
 agricultural communities, and possessed in the slaves a 
 vast amount of cheap agricultural labor, found that a 
 protective system operated against their interests, their
 
 xvi INTRODUCTION. 
 
 Statesmen and people became free traders, and from 
 1833 to 1 86 1, with the exception of the interval from 
 1842 to 1846, compelled a constant advance toward a 
 tariff framed mainly with a view to revenue alone. 
 
 Since 1861 the selfishness of the coddled manufacturer 
 of the Eastern, Northern, and Western States used the 
 sentiment against slavery as a means of persuading all 
 those who wers opposed to slavery that there Avas some 
 occult affiliation between slavery and free trade; and 
 when the war broke out between the Northern and 
 Southern States, the northern manufacturers, upon the 
 withdrawal of the representatives of the South from the 
 American Congress, immediately took advantage of the 
 situation and increased the tariff to a high protective 
 point. Thenceforth, free traders, during the continuance 
 of the war, and shortly after its conclusion, were looked 
 upon as unpatriotic citizens who were either in favor of 
 slavery or in favor of Great Britain, whose course during 
 the war (whether justly or unjustly is not to the purpose) 
 was regarded by many as being inimical to the success 
 of the Northern States. 
 
 That this system of protection has created industries 
 of enormous value must be conceded. The city of Pat- 
 erson, N. J., for instance, with its silk industry, has been 
 almost wholly created by protection ; and if protection 
 were to cease to-morrow, there is scarcely any doubt but 
 that the operation of most of its looms would have to 
 cease, but at the same time it is proper to ask at what 
 expense has this artificial prosperity been created ? 
 
 So great has been the forward march of agricultural 
 development, as well as manufacturing, during the same 
 period from 1S60 to 1880, that it is scarcely possible to
 
 INTRODUCTION. xvii 
 
 make an American realize that this development of manu- 
 facturing industries has necessarily been at the expense 
 of its agricultural interests, because during the same 
 period of time the export of cereals has become so very 
 great. America is now the main source of supply for 
 the breadstuffs consumed by European nations. The 
 general prosperity of the United States has so vastly 
 increased, notwithstanding this pernicious system, that, 
 taking into consideration the insufficiency of human 
 nature, it is but natural for the average man to con- 
 clude that this prosperity is largely due to the very 
 vicious system which is gradually sapping and under- 
 mining it. In that respect the American people are 
 very much in the position of a great athlete, who, 
 during the period of his most remarkable growth of 
 strength, is suffering from a tumor, which grows as 
 his strength increases. He very naturally attributes 
 his strength to his tumor. To tell him that the tumor 
 is a source of danger, that if not extirpated it will 
 undermine his health, sap his energies, and eventually 
 destroy his life, is to tell him, from his point of view, ar- 
 rant nonsense. He will probably reply, " I have noticed 
 this tumor from the time when it was no bigger than a 
 small pea ; it is now the size of a goose egg. When the 
 tumor first began, I could lift but two hundred pounds; 
 I can now lift two thousand : therefore, if you attempt to 
 extirpate my tumor, I shall break your head, for the 
 tumor is the source of my strength." He will for the 
 time being be uninfluenced by the fact that he is at the 
 full zenith of his powers. That his strength grew from 25 
 to 35 years by healthy living and constant exercise, and 
 under the impetus of a splendid constitution inherited
 
 xviii INTRODUCTION. 
 
 from vigorous ancestors ; and that therefore, during this 
 period of growth, he was laying up vital strength far su- 
 perior to that which was being drawn from him by the 
 tumor, so that the evils created by the malady were not 
 yet apparent. But the period must come when his ener- 
 gies will fail, or at all events not be so vigorous as now, 
 and when any drain of an abnormal character must be- 
 gin to tell. To make an impression on him we must either 
 wait until his energies are not so exuberant, or until he 
 becomes more conversant with the laws of hygiene. To 
 wait until the former contingency occurs is dangerous 
 to the life of the patient, and it is therefore our duty to 
 instruct him in the laws of physiology. 
 
 To aid the bringing about of a change of mind on the 
 part of our people, it is well to call their attention to a 
 few statistical facts in connection with the growth of their 
 manufacturing industries and agricultural productions 
 during the last thirty years. 
 
 From 1850 to i860 was a period of a strictly revenue 
 tariff, during which, if it be true that manufacturing 
 industries can subsist only under a protective system, 
 that rule would have made itself most manifest. We 
 find, however, that, according to the census of 1850, the 
 total capital invested in manufacturing at that time was 
 $533,245,352; that the total output or product of such 
 manufactories was $1,019,106,616. 
 
 Upon turning to the census of i860, we find that the 
 capital invested was $1,009,855,715, and that the annual 
 value of the products was $1,900,000,000. 
 
 During the period from 1850 to i860, therefore, a 
 period of free trade, the amount invested in manufactur- 
 ing and the output was actually doubled.
 
 INTRODUCTION. xix 
 
 In 1 86 1 began the protective period and the extraor- 
 dinary stimulus given to the northern manufacturing in- 
 dustries by the war. The capital invested in 1870 was 
 $2,118,208,769, and the value of the products was 
 $4,232,325,000, Again an increase in round numbers 
 of 100 per cent, about the same ratio of increase under a 
 protective system as under free trade from 1850 to i860. 
 
 From this increase it is proper to deduct at least 25 
 per cent in consequence of the fact that in 1870 we were 
 still upon an unsound financial basis. In January of 
 1870 gold was worth 20 per cent premium, and all 
 values were inflated at least to the amount of such pre- 
 mium. From 1870 to 1880 the tariff increased in its 
 protective features. Duties upon articles manufactured 
 in the United States were almost universally raised in- 
 stead of lowered, and if there be any virtue in protective 
 tariffs, this was the time in which it should have been 
 made manifest, and yet we find from the census of 1880 
 that the ratio of increase was considerably less than from 
 1850 to i860 and from i860 to 1870. The capital in- 
 vested in 1880 was $2,790,223,506, and the value of 
 the output or product was $5,369,667,706, an increase 
 during that decade of a trifle over 25 per cent. 
 
 From 1850 to i860 America's exports of manufactures 
 increased 170 per cent. From i860 to 1880, a period 
 of twenty years and of protection, the exports of manu- 
 factured goods increased but 90 per cent. 
 
 During the same period the agricultural industry of 
 the country, which is not only unprotected, but which 
 bears the burden of taxation imposed by the protected 
 industries, increased in an entirely different ratio, as the 
 following table of exports will show :
 
 XX INTRODUCTION. 
 
 f 
 
 Exports Cotton. Corn. Flour. Wheat. ^^^^^^'^ 
 
 1850 $71,984,616 $3,892,193 $7,098,570 $643,745 $ 
 
 i860 191,806,55s 2,399,808 15,448,507 4,076,704 2,273,768 
 
 1870 227,027,624 1,287,575 21,169,593 47,171,229 6,123,113 
 
 1880 261,439,683 50,702,673 45,047,257 167,698,485 60,681,869 
 
 The shipping industry of the United States engaged in 
 foreign trade has during the protective period steadily- 
 decreased. The official report of the government of the 
 United States as to its foreign commerce, and so much of 
 it as is carried in American bottoms, is indeed lamentable. 
 Our shipping industry has been protected out of exist- 
 ence. The tonnage of American vessels employed in 
 foreign commerce increased from 751,998 tons in 1828 
 to 2,399,366 tons in i860. From that time forward the 
 iron steam vessel took more and more the place of the 
 wooden sailing vessel ; and Great Britain had so great 
 an advantage over America in building iron ships so 
 long as we maintained our protective tariff, that while the 
 total tonnage of sailing vessels built in the United States 
 during the 15 years, from 1867 to 1882, amounted to 
 but 3,908 tons, and the total tonnage of iron steam 
 vessels built in the United States during the same period 
 amounted to but 291,599 tons, during the same 15 years 
 the total tonnage of iron and steel sailing vessels alone 
 built in Great Britain amounted to 1,415,555 tons, while 
 the total tonnage of iron and steel steam vessels built in 
 that country amounted to 3,598,081 tons, making a total 
 of 5,136,336 tons, as against 305,107 tons American; just 
 1 7 times as great as the total tonnage of iron vessels built 
 in the United States during the same period. 
 
 The total tonnage of foreign vessels entering the 
 ports of the United States increased from 1856 to 1882
 
 INTRODUCTION. xxi 
 
 at the following rates : The British, from 936,000 tons to 
 7,680,000 tons; the German, from 167,000 tons to 
 1,252,000 tons. During that period the American ton- 
 nage, which was in 1856 8,194,275, being largely in 
 excess of the total foreign tonnage, making 7 1 per cent 
 of the whole, decreased to 1,297,035, much more than 
 reversing the figures, which in 1856 showed a per- 
 centage in favor of the Americans, to about 80 per cent 
 in favor of foreign nations in 1882. The British in 1856 
 had but 20 per cent of the total tonnage, while in 1882 
 their percentage had become 52. 
 
 On this subject the National Board of Trade at its 
 meeting, January, 1883, reported as follows: 
 
 " The total tonnage of the United States, on the 30th of 
 June, 1882, was 4,165,933. There was an increase, as 
 compared with the year immediately preceding, of 10,858 
 tons in the tonnage of sailing vessels and of 90,828 tons 
 in steam tonnage. 
 
 " Any slight change for the better which has taken place 
 in American shipping interests during the last fiscal year, 
 has been in connection with the home trade. The ton- 
 nage of that branch of our merchant marine which is 
 employed in the home trade increased from 2,646,011 
 tons on the 30th of June, 1881, to 2,795,776 tons on the 
 30th of June, 1882, showing an increase of 149,765 tons; 
 but the tonnage of that branch employed in commerce 
 with foreign countries decreased from 1,297,035 tons on 
 the 30th of June, 1881, to 1,259,492 tons on the 301!! of 
 June, 1882, showing a falling off of 37,543 tons." 
 
 " Mr. Nimmo, in his interesting Report on Foreign 
 Commerce, of December 30, 1882, points out this differ- 
 ence in the conditions which surround the two branches
 
 xxii INTRODUCTION. 
 
 of the American merchant marine, namely, the tonnage 
 employed in domestic trade, and that engaged in trade 
 with foreign countries." 
 
 " No question as to foreign competition arises with 
 respect to the branch of our merchant marine which is 
 employed in the coastwise, or home trade, as under our 
 laws this trade has, from the organization of the govern- 
 ment, been confined exclusively to vessels built in, and 
 owned by, citizens of the United States. But, notwith- 
 standing the enormous growth of the internal commerce 
 of the United States, the tonnage of that branch of our 
 merchant marine which is employed in the home trade, 
 embracing the coastwise trade upon the ocean, as well 
 as trade upon the great lakes and the western rivers, has, 
 during the last thirty years, exhibited but little increase. 
 This part is shown as follows : 
 
 " On the Tonnage employed 
 
 30th of June. in the home trade. 
 
 1852 2,055,873 
 
 1862 2,606, 716 
 
 1872 2,929,552 
 
 1882 2,795,776." 
 
 If protection carried to the point of prohibition can do 
 it any good, the ship building interest should stand pre- 
 eminent. It appears, however, to have been struck with 
 paralysis by the interference of government. 
 
 Our legislators, in attempting to foster the building of 
 ships in Maine and on the Delaware, have forgotten 
 that by the loss of our tonnage we have lost our freight 
 earning capacity ; and in the hope of increasing, by our 
 protective system and by our prohibitive navigation 
 laws, the profits to be made by our ship builders, which
 
 INTRODUCTION. xxiii 
 
 hope has not been realized, we have actually increased 
 the commerce of other nations, and are compelled to see 
 our exports to Europe carried in foreign bottoms, and 
 our imports brought to us in foreign bottoms. The loss 
 of the freight earning capacity of ships after they are 
 built amounts in a single generation to a very much 
 greater sum than the whole expenditure that would be in- 
 curred in foreign ship yards for all of the implements of 
 commerce necessary to move our products. It is esti- 
 mated that this loss amounts to not less than $60,000,- 
 000 per year, which, added to the loss in ship repairing 
 and the loss of ocean passenger and immigrant carriage, 
 estimated for the year 1881 at not less than $20,000,- 
 000, makes a total annual loss to the United States on 
 this business alone of upwards of $80,000,000, directly 
 attributable to our mischievous legislation. The esti- 
 mates in this particular are based, in addition to of- 
 ficial reports, upon an article published by Mr. Walker, 
 in the Atlantic Monthly, and adopted by Mr. Wells in 
 his book published in 1882 on our Merchant Marine. 
 This authority says " that, with the exception of the 
 railway interest, no branch of business has increased so 
 rapidly within recent years as the ocean carrying trade, 
 and there is probably no branch of industry which, in 
 proportion to the capital invested, has been more profit- 
 able. In comparison with factory investments, a state- 
 ment has recently been published that the industry em- 
 ployed in British shipping returns at present a gross 
 equivalent of ^^300 to each man engaged in it, while 
 the corresponding returns of factory operatives is not in 
 excess of ^190," (pages 43-44)- 
 
 The indirect loss to the American people in being pro-
 
 xxiv INTRODUCTION. 
 
 hibited from engaging in this profitable field of human 
 industry is probably as great as the direct loss, and for 
 this loss there is no equivalent whatever, as no appre- 
 ciable increase of American shippiiig has taken place to 
 offset it. 
 
 How much the industries of the country other than 
 shipping, which are fostered by protection, have diverted 
 from unprotected to protected employments made prof- 
 itable only through the intervention of law, cannot be 
 accurately estimated, as upon that point there are no 
 statistics, and we are left entirely to mere speculation. 
 It is fair to estimate, however, that not less than 
 $300,000,000 or $400,000,000 annually, quite as much 
 as that which flows into the United States treasury, is 
 taken from one class of producers and given to another 
 without the intervention of a tax gatherer, by the mere 
 instrumentality of laAv. This wastefulness in the United 
 States has been hidden from view by the enormous in- 
 crease of immigration, which has enabled a diversion of 
 labor to take place from unprotected to protected in- 
 dustries without the former being crippled thereby. The 
 new immigrant generally devotes himself to agricultural 
 pursuits, and thus fills up the gap which otherwise would 
 be created. Should immigration largely fall off, the mis- 
 chievous course which we are pursuing would instantly 
 make itself felt in decreased agricultural production and a 
 consequent decrease of exports. Our purchasing power 
 would be considerably lessened and our general pros- 
 perity would suffer. 
 
 Great as is our production of cereals and of animal 
 food, we cannot expect for ever to command the world's 
 markets in this particular, unless we make it to the ad-
 
 INTRODUCTION. xxv 
 
 vantage of other nations to take from us our excess of 
 production. Nations, like individuals, will seek to ex- 
 change to advantage commodities for commodities. A 
 free trade community, producing food for the manufac- 
 turing nations, will have a great advantage in supplying 
 such food products as against a protectionist nation. 
 Germany imposes a tariff on our food products for the 
 double purpose of protecting her agricultural laborers 
 and to develop exchange of manufactured goods for 
 food with nations having a more liberal pohcy in the ad- 
 mission of products of German looms. 
 
 The tables published by the British Government for 
 1882, showing Great Britain's trade with the world, are 
 fraught with the impressive warning to us that we cannot 
 hold our export trade in the long run unless we liberal- 
 ize our commerce. These tables show that the importa- 
 tions from the United States to Great Britain increased 
 about 60 per cent between the years 1877 and 1S82; 
 while the increase of imports from Victoria was, as to 
 grain alone, from £6,()']<) to ^490,000 during the same 
 period ; and from India her purchase of wheat increased 
 200 per cent during the same half decade. Russia, 
 Egypt, Australia, India and the States of the Argentine 
 Republic compete with us in food supphes in the mar- 
 kets of the world ; we cannot therefore for ever disre- 
 gard the laws of trade in our dealings with Europe. 
 
 In no country in the world should progress be so 
 steadily onward as in the United States ; and were its 
 manufacturing industry upon a sound and healthy basis, 
 such would be the fact. We have no powerful neigh- 
 bors to produce political complications. The people are 
 not burdened with the maintenance of an army and navy
 
 xxvi INTRODUCTION. 
 
 as a constant drain upon their industry, and yet nowhere 
 in the world is there such a constant repetition of 
 financial complications as in the United States. We 
 are of course subject to all the natural laws wiiich pro- 
 duce a state of stringency and crisis, such as overtrading, 
 speculation, and great extensions of credits, etc. ; but in 
 addition to these natural causes which appear here as 
 elsewhere, we are in a perpetual state of uneasiness 
 so long as the millions invested in manufacturing in- 
 dustries depend for a profitable return upon legislation, 
 and not upon the furnishing of their products at the low- 
 est rate, quality for quality. The annual meeting of 
 Congress necessarily brings with it dangers to such in- 
 dustries by any proposed or even possible changes of the 
 laws under which they exist, sufficiently great to shake 
 confidence and undermine credit, and thus paralyze ef- 
 fort until Congress again adjourns and gives to these 
 pampered industries a new lease of life. 
 
 We have seen that in the period just prior to the civil 
 war, protection was not necessary for the purpose of in- 
 creasing within ten years the manufacturing industries 
 upwards of loo per cent, and there is no reason now 
 why they should not survive an intelligent reduction of 
 the tariff, and why the great majority of them at least 
 would not be able to hold their own. England com- 
 mands her home market and competes in the markets 
 of the world without protection. , 
 
 It is true, each particular industry apprehends evil con- 
 sequences from taking off the protection that is afforded 
 to it, and fears that it cannot, and probably would not, 
 survive unless protection is likewise taken from some 
 other industry which furnishes to it the material con-
 
 INTRODUCTION, xxvii 
 
 verted into a higher form of product by the protected 
 industry; but if all were dealt with equally and justly, 
 the general reduction of prices would not work to the 
 disadvantage of any, and they would soon adapt them- 
 selves to the changed and more equitable conditions 
 of their existence. That some industries which have been 
 mentioned, like the silk industry of Paterson, for in- 
 stance, would be exposed to possible destruction in such 
 a case, must be conceded ; but every change from a bad 
 to a good system involves some sacrifices, and the ques- 
 tion which statesmen are called upon to consider, is 
 whether the advantages resulting from a change from a 
 worse to a better system of legislation are not infinitely 
 to be preferred to the continuance of the evil system. 
 
 In the discussions upon the subject of freeing our trade 
 from the hampering influences of our present tariff legis- 
 lation, we hear considerable of the influence of British 
 gold in inducing Americans to adopt free trade theories. 
 If British gold were expended at all in the United States 
 corruptly to influence our public men and the press, for 
 the purpose of injuring the United States in this particu- 
 lar and to benefit Great Britain, it could not be expended 
 in any more absurd fashion than to induce the American 
 people to adopt a revenue in place of a protective tariff". 
 
 Indeed, if any one is open to the charge of being 
 bribed by British gold, it ought naturafly be the pro- 
 tectionist, for it is clearly to the interest of Great Britain 
 that the United States continue her present system of pro- 
 tection. Our cheap lands feed England's people engaged 
 in manufacturing industries at the lowest rate, while our 
 manufacturers, intelligent and enterprising as they are, 
 and able to cope with the world as to the quality of their
 
 xxviii INTRODUCTION. 
 
 out-put, are by the protective system confined almost 
 exclusively to the home market, and are unable to com- 
 pete with other nations on equal terms in the other 
 markets of the world, as they cannot under a protective 
 system produce as cheaply as Great Britain under a 
 system of free trade. So while it is true that we restrict 
 Great Britain as to exporting to the United States, we 
 leave her free from our competition in all other markets. 
 The exchange stands about as follows : by our tariff 
 legislation, we have substantially agreed with Great 
 Britain that we will leave her unimpeded in supplying 
 manufactures to a thousand millions of people distributed 
 over the globe, in consideration of our controlling the 
 supply of manufactures to the fifty millions of people to 
 be found between the St. Lawrence and the Gulf of 
 Mexico. Were we to put this transaction into the shape 
 of a contract, no protectionist not directly pecuniarily 
 interested in the maintenance of the system, but would 
 recoil from allowing the United States to enter into it. 
 The contract would read after this fashion : that in con- 
 sideration of England consenting to America's imposing 
 rates on goods imported from England, which have for 
 effect the enhancing of the price of English goods from 60 
 to 100 per cent to the American consumer, and thus in- 
 cidentally limiting the supply to the fifty millions of people 
 contained in the United States of the results of the 
 manufacturing industry of England, the people of the 
 United States agrees to transfer all the carrying trade of 
 the United States to the people of England, and agrees 
 that it will not compete with England in freight earn- 
 ings anywhere, nor in supplying all the rest of the inhab- 
 itants of the worid, wherever situated, with manufactured
 
 INTRODUCTION. xxix 
 
 products. A contract such as the one we have supposed 
 would be a profitable one for England to make, and 
 surely not a profitable one for the people of the United 
 States to enter into ; therefore, the protective system of 
 the United States simply protects it against the advan- 
 tages of foreign markets, and confines its manufacturer to 
 the home market exclusively, making him absolutely sub- 
 ject to the conditions of prosperity in the United States 
 alone, instead of equalizing temporary depression in his 
 country by an increased demand for his products in South 
 America, in Europe, or in the East. 
 
 The argument is put forward over and over again that 
 the American manufacturer must be protected to the 
 extent of the difference between the Avages paid in this 
 country and those paid in Europe. But those who urge 
 this argument do not consider that while it is true that 
 the wages in money are higher in the United States, yet 
 when the calculation is made upon the basis of com- 
 modities exchangeable for these wages, the difference is 
 not more than ten or fifteen per cent ; and this difference 
 of ten or fifteen per cent is made up in part by freight, 
 insurance, and risk attending shipments from abroad, 
 and the remainder of such ten or fifteen per cent is more 
 than counterbalanced by the superior intelligence of the 
 American workmen, which enables a given number of 
 , our artisans to produce, as has been estimated, ten to 
 twenty per cent more with the same machinery than the 
 operatives in any foreign country. This is the universal 
 experience of manufacturers who have had occasion 
 to examine the matter fully on both sides of the water. 
 Under a system of free trade, our workmen might be 
 compelled to take somewhat less in money wages; but,
 
 XXX INTRODUCTION. 
 
 on the other hand, they would obtain much more in 
 what their money would buy. 
 
 We have had an unfortunate faculty of taking sound 
 principles by the blade instead of by the handle. We re- 
 strict trade and commerce where we ought to leave them 
 free, and leave them free where we ought to restrict. 
 
 Mr. Mongredien has drawn attention to the many 
 impediments which exist in the way of the production of 
 wealth and its accumulation in European countries, and 
 prominent among these he places their wasteful expendi- 
 tures in the maintenance of their armies. 
 
 In this country we have no such waste of production 
 and impediment to the accumulation of wealth ; but in 
 addition to the protective system, there are causes at 
 work almost as potent in the wrongful distribution of 
 wealth as the armies of European countries, among 
 which, in addition to the navigation laws and the pro- 
 tective system, may be mentioned our wasteful system of 
 government, national, state, and municipal ; the absence 
 of governmental control and supervision, in the interest 
 of the whole community, over the great transportation 
 organizations of the country, such as railways ; and the 
 facilities granted to industrial corporations which are in 
 their nature monopolies to organize a»d exercise their 
 functions without restriction, under the mistaken idea 
 that they are subject to the laws of competition, but which 
 by combination instead of competition extract from the 
 people of the United States sums of money so excessive 
 that it materially interferes with the proper distribution of 
 wealth. Within the limits of this introduction to Mr. Mon- 
 gredien's work, we can but superficially refer to some 
 of the most glaring exanij)les of this general statement.
 
 INTRODUCTION. xxxi 
 
 It is difficult to preserve a philosophical calm when 
 touching upon the enormous waste of capital and wrong- 
 ful distribution of production in the United States, and 
 which go far to counteract that general well being and 
 continuous prosperity which should result from the ex- 
 traordinary productivity of the soil. 
 
 National, State and municipal administrations seem 
 alike to be infected with the virus of reckless extrava- 
 gance and wasteful outlays, and much of it is done with 
 the sanction of the very men who are called upon to pay 
 for them in diminished ease and comfort. 
 
 These expenditures are permitted to be incurred by the 
 people under the double error that posterity, through* the 
 instrumentality of the public debt, are bound to pay for 
 them, and that they are good for trade. 
 
 The new Capitol building at Albany has already cost 
 $14,000,000, and before it will be completed may cost 
 five millions more. The land on which it is built is 
 cheap, and does not to any large degree enter in its cost. 
 Governmental buildings in Europe, when they represent 
 so vast an outlay, are monuments of architectural beauty 
 and grandeur. There is no such compensating gratifica- 
 tion from this expenditure. The New York Court House 
 was erected at an expense of upwards of $20,000,000, and 
 there is no example in American history in which the 
 vulgarity as well as the venality of the worst type of local 
 politicians is so clearly illustrated as in the case of this 
 building. There is not a comfortable, well ventilated 
 room in it. It is constructed in as great defiance of the 
 requirements of decency and cleanliness as it is of the 
 laws of architecture and beauty. The new English law 
 courts, which cost less than one-sixth of the amount, are
 
 xxxii INTRODUCTION. 
 
 three times as spacious, and in more ways than can be 
 set forth in these pages, is a building better adapted to 
 the end had in view. 
 
 A saturnalia of government debt creating set in at the 
 close of the civil war, 1865. So many citizens from patriotic 
 motives talked nonsense of the national debt as a national 
 blessing, that the States, with few exceptions, as well as the 
 municipalities, began to pile up such national blessings for 
 posterity to discharge. Nothing can be more mis- 
 chievous in the way of a politico-economic error than 
 this notion. A nation expends in powder, ar.ms, cannon 
 and ships of war a vast sum of money ; but when these 
 instruments of war are consumed, it is true the bonds or 
 obligations which W3r3 issued to obtain them still remain 
 and appear to be an equivalent for the consumption. The 
 labor which entered into the construction of these instru- 
 ments was diverted from productive to unproductive em- 
 ployment, and the loss to the community is represented 
 by the number of products useful to human comfort and 
 happiness, which such labor would have produced had 
 it not been employed in creating the commodities and in- 
 struments so destroyed, or withdrawn from productive 
 employment. This represents the loss to society by such 
 wasteful expenditure, and the money sum of such ex- 
 penditure is merely the measure of the approximate 
 character of such loss, and the bonds are the credit side 
 of the national ledger account for which taxation is the 
 debit side. 
 
 This loss the community or generation making the ex- 
 penditure must directly and immediately bear. All that 
 can be thrown upon posterity is the settlement of accounts 
 between the members of the community who made the
 
 INTRODUCTION. xxxiii 
 
 advance and those whose property is mortgaged to re- 
 pay that advance. Were this fact better reahzed, national 
 expenditures would be less popular than they now are. 
 This question is independent of the merits or necessity 
 for any particular war, which in its beneficial results may 
 more than compensate for the loss in men and material. 
 
 That these expenditures are good for trade is another 
 error which can best be answered by taking Bastiat's 
 illustration from " ce qu'on voit et ce qii'on ue voit pas" 
 Jacques Bonhommes' mischievous son breaks a pane of 
 glass. " Good for trade," says a neighbor, to console him, 
 "the ' glass put in ' must live." The neighbor sees the 
 six francs which the glazier obtains for the new pane. 
 So far, so good. What he does not see is, if the pane 
 had not been broken Jacques Bonhomme would have 
 had the six francs in hand, which were diverted for the 
 glass, with which he could have bought a much needed 
 pair of shoes, and in the sum total of his possessions 
 would have been pane + shoes— six francs; now it is 
 pane— six francs, as against pane + six francs he had 
 before. This is a simple illustration which removes 
 under various forms a whole host of economic errors. 
 
 Among the other diversions of production in the 
 United States, none is more pernicious than the enormous 
 expenditure incident to the American party system of 
 government. As the doctrine " to the victors belong the 
 spoils," has until most recent times been accepted as the 
 cardinal maxim in relation to the disposition of govern- 
 mental offices, the quadrennial contests for the presi- 
 dency became a mere scramble for office, and every in- 
 cumbent of an office of the federal government was called 
 upon to pay a considerable tax — a percentage of his
 
 xxxiv , INTRODUCTION. 
 
 salary — for the purpose of maintaining the then domi- 
 nant party in power. In every State, municipahty and 
 county of the Union the same system exists, involving 
 a tax upon time and salary for the purpose of preventing 
 the adverse party from getting into power. No accurate 
 estimate can be made of the amount of this expenditure, 
 but it is fair to assume, and in this assumption the per- 
 sonal experience of the writer in the presidential contest 
 of 1876 is taken as a basis for the statement, that each 
 party during every presidential election since 1872 ex- 
 pended not less than from $2,000,000 to $3,000,000, 
 and probably more. 
 
 To a minor degree, but also to an enormous extent, 
 this rate of expenditure is found to exist in State and 
 municipal elections. In the city of New York, the legiti- 
 mate and necessary machinery of elections for municipal 
 officers, in the printing of tickets and for establishing 
 and manning the booths for distributing tickets, together 
 with the absolutely necessary disbursements for adver- 
 tising, are not less thna $50,000 annually for each political 
 party. 
 
 It will thus be seen that the expenses of elections 
 are so great that it becomes extremely difficult to get 
 voluntary aid from citizens to bear this tax ; therefore 
 the regular followers and henchmen of political organiza- 
 tions, the members of which live on public offices, can 
 by setting aside a certain proportion of their improper 
 gains for the purpose of bearing the expenses of maintain- 
 ing themselves in office, obtain a great advantage over 
 citizens who do not feel so direct a pecuniary interest in 
 the result of the election, and are therefore loth to bear 
 the expense of a canvass. Except, therefore, in times of
 
 INTRODUCTION. xxxv 
 
 extraordiiiary excitement, the office holders, through the 
 instrumentaUty of the machinery which they control, are 
 able to maintain themselves in power. 
 
 Now let us take into consideration the waste in our 
 railway system. 
 
 With great pride we speak of the enormous extension 
 of our railways. Within a few years we have added at 
 least 20,000 miles of road to theretofore existing lines of 
 railway, so that now 100,000 miles and upwards repre- 
 sents the system of the country. Many of these 
 roads are built for the sole purpose of contesting for 
 like traffic with older roads, and, as they soon combine 
 instead of compete, there is no public interest subserved 
 in their construction. 
 
 Take the case of the Lake Shore Road and its new 
 rival line, known as the Nickel Plate ; they pass through 
 the same territory and serve the same public. There 
 was no pretense that the Lake Shore Road could 
 not, by simply adding to its rolling stock, have carried 
 for many years to come all through and local traffic of- 
 fered to the line. 
 
 Another $15,000,000 was invested to build a rival line, 
 running through the same towns, and connecting the same 
 terminal points. If, in consequence of the construction 
 of such rival line, the community, by the introduction of 
 the element of competition, would have been served at 
 lower rates than before, the public might have been com- 
 pensated for the expenditure of capital necessary to con- 
 struct such line by obtaining such reduced rates; but 
 shortly after the construction it was purchased in the 
 interest of the older line. Tlie rates were maintained, 
 and the additional capital thus expended is forever mis-
 
 xxxvi INTRODUCTION. 
 
 applied to the performance of a service of no additional 
 substantial value to the community. 
 
 The regulation of the rates charged, and giving the 
 original road exclusive territory under governmental su- 
 pervision, would have answered the community a better 
 purpose than the construction of a rival road to be ab- 
 sorbed by the older road. Or even had the new road 
 not been absorbed, its construction for the purpose of 
 entering into combination as to rates with the older 
 road, would have been no less wasteful in its effects. In 
 this way hundreds of millions have been extravagantly and 
 wastefuUy expended. A like waste of capital is even 
 more clearly illustrated in the case of gas companies. 
 The plant of a gas company consists of a set of works, 
 and of mains through the streets. One company having, 
 under strict regulation as to profits, the exclusive right 
 to supply a great city, can do it with a degree of economy 
 much greater than several companies could do so, 
 because the one company needs but one set of works, 
 and the laying and putting down of the mains through 
 the streets is but one operation. New York has five 
 gas companies, started upon competitive ideas. As gas 
 companies, however, can never be so numerous in a 
 city that they cannot combine, they first fight and then 
 combine, and they combine upon a rate high enough to 
 compensate for the outlay of the five companies, instead 
 of one company. The people of New York, therefore, are 
 compelled to pay for the gas they consume, twice over 
 what they would be obliged to pay, even at the same 
 extravagant rate of profit, were they supplied by one 
 company alone. 
 
 The absence of regulation under the mistaken idea
 
 INTRODUCTION. xxxvii 
 
 that the subject is open to competition, has caused the 
 community to expend miUions of dollars in the erection 
 of unnecessary works, upon which interest has to be paid 
 by the community in extravagant rates for this necessary 
 service. 
 
 Another great waste of capital in the United States 
 arises from the expensiveness of legislation, both State 
 and Municipal. It is true that nominally the services of 
 these legislative bodies cost the community but little in 
 the way of salaries, but the legislation which they 
 produce from year to year, in so far as it affects private 
 or special interests, is very largely paid for, and the waste 
 arising from bad and careless legislation is beyond com- 
 putation. Frequently, however, legislators become 
 grantees of shares of stock, or other distributive interests 
 in corporations, to which they afford special privileges, 
 and the rights of citizens are sacrificed by such wrongful 
 distribution of interests. 
 
 One of the most striking illustrations of this fact is the 
 building of the elevated railroads in the city of New 
 York. The legislation which authorized their construc- 
 tion was enacted in utter disregard of the rights of 
 abutting land owners, and resulted in the appropriation 
 of certain streets of the city of New York for the purposes 
 of the elevated railroads without providing for compensa- 
 tion for injury done. An alert and honest legislative 
 body, coupled with an alert and honest city administra- 
 tion, would never have consented to any such construc- 
 tion, however needful for city purposes, out of which 
 private parties could make large sums of money, without 
 providing for compensation for the property involved and 
 interfered with, and which, after much shuffling by the
 
 xxxviii INTRODUCTION. 
 
 courts, is at last conceded in this case to be a right which 
 cannot be ignored by legislation. 
 
 The ease with which combinations are made in the 
 United States for the purpose of affecting the prices of 
 securities and commodities, and the facilities afforded by 
 unrestricted transportation companies not under govern- 
 mental control for the making of such combinations, is 
 illustrated by the history of the Standard Oil Company. 
 An organization originally possessing a capital of not more 
 than half a million dollars, was enabled, by a combination 
 with the railroads running from the oil regions to the sea 
 board, to place almost the whole producing interest at 
 the mercy of the Standard Company — substantially the 
 whole of the refining interest was likewise placed in its 
 hands. At 'the time of the railroad investigation in New 
 York in 1879, it was conceded by their advocates that 
 96 per cent of the refining of petroleum in the United 
 States was in the hands of the Standard Oil Company, 
 and that by far the greater part of the crude oil produc- 
 tion was transported and collected by the Standard Com- 
 pany. 
 
 This combination of corporations and individuals 
 known as the Standard Oil Company has now a capital 
 closely approaching to $100,000,000, and has reached 
 beyond its own fields into other domains for the purpose 
 of giving this enormous capital profitable employment. 
 
 State Legislatures were powerless against it, and the 
 interests of the railway corporations seemed to have been 
 sacrificed without hesitation by the railway managers 
 themselves to subserve the interests of this combination. 
 
 The false capitalization of a great many of the indus- 
 trial enterprises of the United States which partake of a
 
 INTRODUCTION. xxxix 
 
 monopoly character, and on which interest must be paid, 
 or is sought to be extorted from the people by the own- 
 ers of the enterprises, creates another considerable diver- 
 sion of the wealth production of the country. 
 
 That the people of the United States are more loosely 
 governed than the people of other countries, is in many 
 respects ah advantage; but, on the other hand, it must 
 not be forgotten that this looseness of government which 
 protects them from the evils of tyranny at the hands of 
 their rulers lays them open to the evils of tyranny a,t the 
 hands of private corporations, which a stronger govern- 
 ment could protect them against. 
 
 Rings and combinations so pervade and permeate the 
 productive enterprises of the United States that, with the 
 exception of the agricultural industry, the sum of whose 
 products is too large to be engrossed or monopolized, 
 most of the great industries are in the hands of combina- 
 tions and rings. 
 
 The manufacturing industries are banded together to 
 maintain a protective tariff, and each particular trade has 
 representation of its own for the purpose of maintaining 
 its particular advantages under the tariff. 
 
 The ship builders are banded together against a repeal 
 of the navigation laws and the right to purchase ships in 
 the cheapest market and run them under the American 
 flag. The sugar producers are banded together against 
 a particular method of levying the tariff on sugars which 
 may militate against their profits. 
 
 The sums of money thus turned aside from the normal 
 production of the community into the hands of monop- 
 olists amounts to a total, compared with which the whole 
 expenditures of the government are light and trifling.
 
 xl INTRODUCTION. 
 
 These facts are, as yet, hidden from view by the enor- 
 mous productive powers of the community, and probably 
 will find their remedy only when a succession of bad 
 years has brought our people to a realizing sense of the 
 very great diversion that is made of their products annu- 
 ally from the many to the few. 
 
 In the course of his interesting work, our author calls 
 attention to the great diversions to which the gross annual 
 products of Europe are subject for the benefit of princes 
 and armies. Let us not lay the flattering unction to our 
 souls that we are free from like diversions in the United 
 States because such mischievous appropriations do not 
 appear in the annual governmental budgets, and the 
 amount thereof known and recognized of all men. It 
 is with us more dangerous and insidious, for the simple 
 reason that it is hidden from view, and is the substitution 
 of individual for public taxation, resulting in a vast diver- 
 sion of capital and wealth for the benefit of combinations 
 which have no direct relation to government, and which 
 the neglect of governmental duties enables them success- 
 fully to accomplish. 
 
 SIMON STERNE. 
 
 New York, February loth, 1883.
 
 CONTENTS 
 
 CHAPTER I. 
 
 Introduction, 
 
 Definition of Wealth— All Wealth is Actually Distributed and 
 Used— The more Wealth there is Created, the more there is 
 for Distribution — Obstacles to the Creation of Wealth should 
 be Removed, and Aids to it Adopted — Money is not Wealth 
 — The Three Factors of Wealth are Land, Labour, and 
 Capital 1 
 
 CHAPTER n. 
 
 Classification qf Aids and Obstacles to Wealth-Creation^Division 
 of Labour — PVee Commercial Intercourse — Loss Inflicted by 
 the Opposite Policy . . -14 
 
 CHAPTER III. 
 
 Capital IntelHgently Employed— Capital and its Earnings go to 
 the Payment of Labour — Machinery and Labour-saving Pro- 
 cesses — Their Influence on the Production of Wealth and on 
 the Welfare of the Labour-sellers 27 
 
 CHAPTER IV. 
 
 Facilities of Inter-communication Promote the Creation of Wealth 
 — Scientific Discoveries Lessen the Expenditure of Human 
 Labour on the Producdon of Given Results, and Largely 
 Increase the Ultimate Demand for Labour .... 42 
 
 CHAPTER V. 
 
 Education and Morality Promote, and are Promoted by, the 
 Creation of Wealth — Erroneous Notions Concerning the 
 Virtues of Industry and Frugality 55
 
 xlii CONTENTS. 
 
 CHAPTER VI. PAGE 
 
 Impediments to Wealth-Creation — Insecurity of Person and 
 Property — Superfluity of Unproductive Consumers — Their 
 Classification 6'? 
 
 CHAPTER VH. 
 
 Government Functionaries — The Professional Classes— The Un- 
 employed Poor ......... 77 
 
 CHAPTER VIII. 
 
 Wars and International Rivalries — Various Modes in which War 
 is Injurious — Annual Expenditure on Armaments in Time of 
 Peace — Vast Number of Unproductive Consumers. . . 92 
 
 CHAPTER IX. 
 
 Annual Cost of the War-system in Time of Peace — Annual Cost 
 of the War-system in Time of War — Economic Results of 
 the Conversion of Soldiers, &c., into Producers . . . 105 
 
 CHAPTER X. 
 
 National Debts Incurred for War Purposes — Their Results and 
 their Limits — General Remarks on the Destructiveness of 
 War 119 
 
 CHAPTER XI. 
 
 The Alleged Necessity for War — Advantages and Disadvantages 
 of Territorial Extension — Where the War Principle Leads 
 when Fully Carried Out — The Democratic Element . . 134 
 
 CHAPTER XII. 
 
 The Principle of Arbitration — Possible Federation of European 
 States for Settlement of International Disputes — Suggested 
 Council of the United States of Euiope — Hero-worship — 
 Pseudo-patriotism 147 
 
 CHAPTER XIII. 
 
 Commercial Isolation — Protectionist Fallacies — Balances Due by 
 One Country to Another are not Paid in Specie — All Com- 
 merce is Barter . 164
 
 CONTENTS. xliii 
 
 CHAPTER XIV. PAGE 
 
 Excess of Imports mostly a Si),^n of Wealth— Imports and Ex- 
 ports (except those for Loans or Repayments) Balance each 
 Other— Protection Discourages Native Industry . . .176 
 
 CHAPTER XV. 
 
 Import Duties on Foreign Goods Fall on the Importers — Free 
 Trade Supplies Native Industry with Cheap Materials and 
 Cheap Living . . 185 
 
 CHAPTER XVI. 
 
 Wages Highest where most Wealth is Created— Protection Frus- 
 trates Division of Labour — If Protected Nations Prosper, it 
 is in Spite of, not Because of, Protection .... 197 
 
 CHAPTER XVII. 
 
 As to Dependence on Foreigners — Free Trade a Boon to a Nation, 
 whether Others .\dopt it or Not — As Knowledge Spreads, so 
 will Free Trade 205 
 
 CHAPTER XVIII. 
 
 Why Free Trade is not yet Universally Adopted — Ignorance and 
 
 Immorality — Their Connection with Poverty .... 217 
 
 CHAPTER XIX. 
 
 Utilisation of Female Labour — Competition ; its Uses and 
 
 Abuses — Communism — Waste on Intoxicants and Narcotics 227 
 
 CHAPTER XX. 
 
 Gluts of Commodities and Labour— National Antipathies— Ten- 
 dencies towartls Confederation 240 
 
 CHAPTER XXI. 
 
 Land — Origin of Private Proprietorship— The World's Supply of 
 Land — Its Gradual Absorption and Consequent Increasing 
 Value 251 
 
 CHAPTER XXII. 
 
 Contempt for Wealth- Producers — The Poor would be largely 
 
 Benefited by Increased Wealth-Creation .... 265
 
 xliv CONTENTS. 
 
 CHAPTER XXIII. 
 
 Raising the Poor to a Condition of Ease and Culture — Are the 
 
 Results at which we aim Chimerical ? 276 
 
 CHAPTER XXIV. 
 
 Expansibility of Man's Productive Power — The Interests Advo- 
 cated are not National, but Universal — Conclusion , . 287 
 
 Appendix (the Council of the United States ol Europe) . . 299
 
 WEALTH -CREATION. 
 
 CHAPTER I. 
 
 Definition of Wealth — All Wealth is actually Distributed and Used 
 — The more Wealth there is Created, the more there is for 
 Distribution — Obstacles to the Creation of Wealth should be 
 removed, and Aids to it adopted — Money is not Wealth — 
 The Three Factors of Wealth are Land, Labour, and Capital. 
 
 By " wealth " we mean all such objects of human 
 desire as are obtained or produced by human 
 exertions. 
 
 The amount of wealth, as above defined, that is 
 at present produced by mankind falls short of satis- 
 fying the needs, physical and mental, of all men. 
 But would it not be possible for the production of 
 wealth to be so increased as to suffice for that 
 purpose .'' And are the obstacles which have 
 hitherto checked that increase insurmountable .'' 
 These are the problems to which wc shall devote 
 our attention in this work. 
 
 It is intended to establish the following four 
 propositions : — 
 
 1. All the wealth that is obtained or produced 
 by human exertions is actually distributed and 
 used. 
 
 2. The more wealth there is created, the more 
 
 B
 
 2 WEALTH-CREATION. 
 
 there is for distribution, and the more "objects of 
 desire " fall to the lot of each human being. 
 
 3. All obstacles to the creation of wealth are 
 injurious, and ought, if possible, to be removed. 
 All aids to the creation of wealth are beneficial, 
 and ought, if possible, to be adopted. 
 
 4. Such obstacles and aids to wealth-creation 
 should be identified, classed, and discussed, with a 
 view to their respective removal or adoption. 
 
 Before we proceed to examine these proposi- 
 tions seriatim, let us say a few words as to the 
 worth and importance of such inquiries. No 
 development of man's intellect, or of his moral 
 sense, can take place until his physical wants are 
 satisfied. The latter is a "condition precedent" to 
 the former. Whatever tends to impart to labour 
 its maximum amount of productiveness, and to 
 prevent needless waste of wealth, tends to procure 
 to the labour-seller more of physical comforts and 
 less of physical toil. It tends to emancipate him, 
 not indeed from the wholesome and ennobling duty 
 of working, but from the drudgery of doing no- 
 thing else but work. All labour and capital, wasted 
 by being directed to useless, unprofitable, or im- 
 proper objects, are utterly thrown away, and by 
 their misapplication the wealth remaining for dis- 
 tribution is unjustifiably diminished. To obviate 
 this wrong against humanity is the mission of the 
 economist, and, involving, as it does, the material 
 as well as the mental and moral welfare of the 
 great bulk of mankind, it is as noble an object as 
 any science can have in view. 
 
 Those who, leading a life of refinement and
 
 ALL WEALTH IS DISTRIBUTED. 3 
 
 culture, affect to look with disdain on studies con- 
 nected with the pursuit of wealth, should remember 
 that they are themselves entirely dependent on 
 its possession, either acquired or inherited, for the 
 indulgence of their tastes. Few writers or painters 
 refuse cheques for their works, and the most fas- 
 tidious of them overlook for the nonce that, as 
 labour-sellers and payment-receivers, they become 
 parties to one of the most commonplace of mer- 
 cantile transactions. We see no loss of real dignity 
 on either side. Neither need sneer at the other. 
 
 Let us now look at the first of the four proposi- 
 tions with which we have started. 
 
 I. All the wealth that is obtained or 
 
 PRODUCED BY HUMAN EXERTIONS IS ACTUALLY 
 DISTRIBUTED AND USED. — The exceptions to this 
 statement are so few, and comparatively so insignifi- 
 cant, that they prove the rule by showing how little 
 it excludes. They chiefly arise from accidents that 
 are more or less remediable. Let us enumerate 
 the most notable instances in which wealth is 
 annihilated without being distributed and used, 
 (i) Destruction through shipwreck. (2) Destruc- 
 tion by fires, inundations, earthquakes, and similar 
 natural causes. (3) Decay while waiting consump- 
 tion (decomposition of fruit, fish, meat, and other 
 perishable articles). (4) Heating and spoiling of 
 grain, cotton, and other cargoes during their con- 
 veyance from one place to another. (5) Occasional 
 over-production from want of market (grain rotting 
 in some parts of roadless Russia ; maize-ears used 
 as fuel in some parts of America, &c.). Besides 
 these, a few still more trivial cases may be adduced ; 
 B 2
 
 4 WEALTH-CREATION. 
 
 but all of them put together, when compared with 
 the enormous volume of continuous production that 
 results from the aggregate labour of all mankind, 
 form so minute a fraction that the truth of our first 
 proposition is thereby far less impugned than con- 
 firmed. 
 
 And it stands to reason that it should be so, 
 Man does not labour to produce unless he derive 
 some benefit from his labour. If, in exchange for 
 what he produces in excess of his own wants, he 
 can obtain from some other producer things that he 
 feels a desire to possess, he will continue to produce 
 in excess of his own wants ; but should no oppor- 
 tunity exist for his making such exchanges, he will 
 confine his production to his own personal require- 
 ments. For he has no inducement, and why 
 should he labour fruitlessly .<* In short, unless 
 wealth be distributed and used, it will cease to be 
 produced. The practice of hoarding (which has 
 greatly diminished and is gradually disappearing), 
 and the unsold stocks of goods in dealers' hands, 
 are causes which delay but do not prevent ulterior 
 distribution. 
 
 On this proposition, which many may regard as 
 a mere truism, we lay great stress, because, simple 
 as it may appear, it is pregnant with important 
 inferences and conclusions. 
 
 2. The more wealth there is created, 
 the more there is for distribution, and 
 the more "objects of desire" fall to the 
 
 LOT OF EACH HUMAN BEING. — That the more 
 wealth there is created, the more there is for 
 distribution, is self-evident. As to possible im-
 
 BENEFITS OF INCREASED WEALTH. 5 
 
 provements in the mode, or in the proportions, of 
 that distribution, such topics do not come within 
 the scope of the present treatise. We are here 
 dealing with things as they are ; and we assert 
 that, even under the existing laws which regu- 
 late distribution, imperfect as they may be, the 
 more wealth there is created, the more there is 
 distributed among all classes of the community. 
 All receive more or less of additional benefit from 
 the increased mass of wealth that is created. If 
 much is produced, there is more for all ; if little is 
 produced, there is less for all. In the former case 
 nobody is pinched ; in the latter case, savings- 
 holders (capitalists) get what they want, while 
 labour-sellers get what they can. Abundance 
 leaves a large, scarcity a small, overflow, after 
 the requirements of the rich are satisfied. It is 
 clearly the interest of all, especially of the non- 
 capitalists, that man's productive powers should be 
 exercised in the most efficient manner, so as to 
 create the largest possible fund of wealth. For it 
 is out of that fund that human wants are supplied, 
 and the more there is for all, the more there ought 
 to be for each. The smaller the fund for dis- 
 tribution, the worse for the weak ; for, in the 
 scramble, the strong prevail and the weak suffer. 
 Our great aim, therefore, should be to secure an 
 abundance of every object that can contribute to 
 man's material, and consequently to his intellectual 
 and moral, well-being. 
 
 In articles of primary necessity distribution is 
 not very unequal, except in cases of absolute 
 destitution. A prince does not consume more food
 
 6 WEALTH-CREATION. 
 
 than a peasant, and the greater the quantity of food 
 raised, the more (since what is produced is dis- 
 tributed) falls to the lot of every man, rich or poor. 
 Similarly, if all other articles, (i) of necessity, (2) of 
 comfort, (3) of luxury, were produced in greater 
 abundance than they now are, then in the proportion 
 of such extra abundance the distribution would 
 extend to a larger circle of consumers. There is 
 no physical hindrance to those articles being pro- 
 duced in such abundance as that the distribution 
 should extend to every member in the community. 
 The hindrance entirely lies in ignorance, bad 
 government, and other remediable causes. The 
 aggregate productive power of man, properly 
 developed and directed, is almost boundless. Its 
 present results are a mere fraction of what they 
 might be were the science of wealth-creation 
 generally understood, and its teachings generally 
 adopted. Let us suppose a state of things in which, 
 with the same number of people, the number of 
 objects of desire created by their labour and capital 
 were on the average multiplied tenfold. It is clear 
 that, as all wealth produced is distributed, the 
 additional enjoyments thus procured would, in a 
 varying degree perhaps, but still in a positive 
 degree, be felt and shared by all classes of the 
 people. 
 
 It may occur to some that such a multiplication 
 of commodities might occasion a " glut." So it 
 would, if all commodities were equally multiplied 
 tenfold, without reference to the relative demand 
 for each. It is for that reason that we used the 
 words " on the average." Some articles would be
 
 ABUNDANCE WITHOUT "GLUTS." 7 
 
 in excess if so multiplied, while others might be 
 multiplied almost indefinitely without sating the 
 desire to possess them. There cannot possibly be 
 a general "glut" of all commodities. A "glut " is 
 simply the over-production of one or more, as com- 
 pared with all other articles ; or, which is the same 
 thing, it is the under-production of other articles as 
 compared with the one or more which are in excess. 
 The moment the balance is restored, the glut 
 ceases. As long as all commodities are produced 
 in that proportion to each other which is indicated 
 by the relative demand for them, there can be no 
 glut. If you preserve that proportion, you may 
 double, or decuple, or centuple the results of the 
 same labour and capital, and there still can be no 
 glut. Every article, however abundantly produced, 
 is counterbalanced by, and is interchangeable with, 
 a similar abundant production of other articles ; 
 and the result is not a glut, but a general abundance 
 of all articles. It is this general abundance which, 
 overlapping the requirements of the rich and strong, 
 overflows on to the wants of the poor and weak ; 
 and it is this general abundance which it is the ob- 
 ject of science to secure and apportion. 
 
 Given that " the more wealth there is created," 
 the more falls " to the lot of each human being," it 
 follows as a necessary consequence that 
 
 3. All OBSTACLES TO THE CREATION OF 
 WEALTH ARE INJURIOUS, AND OUGHT, IF 
 POSSIBLE, TO BE REMOVED. AlL AIDS TO THE 
 CREATION OF WEALTH ARE BENEFICIAL, AND 
 OUGHT, IF POSSIBLE, TO BE ADOPTED. — This seems 
 a simple truism, and yet, while in the abstract it is
 
 8 WEALTH-CREATION. 
 
 recognised, in practice it is ignored. It has been 
 left to individual exertion (based on the acquisi- 
 tiveness inherent to men) to adopt such means of 
 accumulating wealth as lay in the power or satisfied 
 the cupidity of each. True that governments have 
 occasionally interfered in the shape of bounties and 
 prohibitions, monopolies and patents, restrictions 
 and privileges ; but such assistance, while perhaps 
 enriching a few, has only impoverished the com- 
 munity, and paralysed its productive powers. 
 Statesmen have taken no large views of the impor- 
 tant bearings of wealth-creation and wealth-distribu- 
 tion on the physical and moral welfare of the human 
 race. Men cannot rise in the scale of being unless 
 their material wants and spiritual aspirations are 
 both ministered to. When we come to the 
 enumeration of the obstacles and aids to wealth- 
 creation, it will be seen how very many there 
 remain of the former to be removed, and of the 
 latter to be developed, before civilisation has 
 exhausted all the means which are within its reach 
 of benefiting mankind. 
 
 Before going farther, it will be necessary to 
 inquire {a) into the claims of money to be con- 
 sidered as wealth ; and {b) into the sources from 
 which wealth is derived. 
 
 {a) We have defined " wealth " as meaning " all 
 such objects of human desire as are obtained or 
 produced by human exertions." It is clear from 
 this definition that wealth consists of a vast 
 number of things that are not money. But we go 
 farther, and assert that money (whether in the 
 shape of specie or of paper notes) is not wealth.
 
 MONEY IS NOT WEALTH. 9 
 
 Suppose that all the money in the world of every 
 sort were buried in the depths of the Atlantic 
 Ocean, the wealth of the world would remain all 
 but undiminished.v The actual loss to, and deduc- 
 tion from, the mass of the world's wealth would 
 amount to a .few tons of metallic substances of 
 very little use except for ornamental purposes, 
 and a few reams of paper. The real wealth, to 
 which the defunct money merely represented the 
 relative claimants, would remain intact. There 
 would be left just as much of food, clothing, house- 
 accommodation, articles of luxury, land, labour, 
 machinery, &c. &c., as before. It is the distri- 
 bution thereof that would alone be affected. 
 
 On the holders of money such a catastrophe 
 would inflict great injustice and hardship. They 
 would lose the vouchers which entitled them to a 
 defined share in the world's wealth. That wealth 
 would remain as great, but, along with their 
 money, their claim to a share of that wealth would 
 vanish. They would get less, and others would 
 get more, than their rightful proportion. The 
 destruction which we have supposed of the precious 
 metals would also, until some other standard of 
 value were adopted, occasion enormous incon- 
 venience, disturb the course of commercial inter- 
 changes, and necessitate a temporary resort to 
 barter. It would disorganise the trade of the 
 world, and for a time obstruct many of the pro- 
 cesses of wealth-production. But while readily 
 allovying all these evil consequences of the sup- 
 posed annihilation of monej^, the fact still remains 
 that it would not, to any extent worth considering,
 
 lO WEALTH-CREATION. 
 
 diminish the aggregate amount of the world's 
 wealth. It is clear, therefore, that money itself, as 
 money, is not wealth, but that it merely represents 
 the conventional and legal claim which the holder 
 of money has to a certain share of those objects 
 which do constitute wealth. 
 
 If the holder of a guinea ticket to a public 
 dinner loses his ticket, and in consequence loses 
 his dinner, that does not diminish the quantity of 
 the meat and drink provided. The loser of the 
 ticket forfeits his share of the feast, but that share 
 is not, therefore, lost. It is simply distributed in 
 some other way than it would have been if the 
 ticket had not been lost. Money is wealth only in 
 the same figurative sense that the ticket is turtle- 
 soup and venison. Both entitle the bearers to 
 a certain quantity of what they represent ; but 
 neither the destruction of the money nor the 
 destruction of the ticket would diminish the stock 
 of desirable objects, to a portion of which the 
 money or the ticket gave the holders a claim. 
 
 There is no law of nature appointing gold and 
 silver to be standards of value, or privileging them 
 to perform the functions of a circulating medium. 
 It is simply a question of convenience. In some 
 countries, cowrie shells or cakes of salt perform the 
 same functions ; and, indeed, nearly everywhere, 
 those functions are largely performed by bits of 
 paper, with a few words written or printed on them, 
 which have no intrinsic value at all. The adven- 
 titious value of gold and silver arising from the 
 universal consensus of mankind to use them as 
 standards of value, is very great indeed as com-
 
 INTRINSIC METALLIC VALUE. IT 
 
 pared with that which they would intrinsically 
 possess as metals, if they were deprived of that ex 
 ceptional privilege. Supposing other standards of 
 value adopted in their stead, thus limiting their 
 use chiefly to artistic and ornamental purposes, 
 how much more would they be worth than nickel 
 or aluminium ? The gold in a sovereign now 
 exchanges for about thirty quartern loaves ; it 
 may be questionable whether it would then be 
 exchangeable for more than one, if for so much. 
 But however small comparatively may be the in- 
 trinsic value of gold and silver as mere metals, it is 
 only to that extent that they constitute wealth. 
 Beyond that value they are merely counters or 
 tokens, which may be destroyed without destroying 
 the wealth which they conventionally represent; 
 just as the guinea ticket to a dinner, if made, of 
 bronze, worth, say, twopence, would, supposing it 
 dropped in the river, entail the destruction, not of 
 the good cheer which it conventionally represented, 
 but merely of the twopence which formed the 
 intrinsic worth of the ticket. 
 
 It may perhaps be suggested that money does 
 come under our definition of wealth, as being (very 
 decidedly) an " object of human desire." But it 
 will be obvious, on reflection, that it is only the 
 metals themselves, as metals, that are " obtained 
 or produced by human exertions.^' 
 
 The same cannot be said of the conventional 
 privileges superadded to them when used as 
 money. These privileges are not a commodity 
 " obtained or produced," and do not, therefore, 
 come within our definition. Bank notes and bills
 
 12 WEALTH-CREATION. 
 
 of exchange are also " objects of human desire," 
 but they do not constitute, they only represent, 
 wealth. They are desired, not for the sake of the 
 worthless bits of paper of which they consist, but 
 because they are tickets entitling the holders to a 
 certain defined share in the world's wealth. The 
 destruction of these bits of paper might perhaps 
 disturb the relative ownership, but would by no 
 means annihilate the existence, of the wealth 
 which they represented. 
 
 We therefore arrive at this general theorem. 
 Metallic money is not wealth, except to the extent 
 of what the metal it consists of would be worth if 
 it ceased to be used as money ; and paper money 
 is not wealth at all, but merely represents a legal 
 claim to it, 
 
 . (b) The three factors of all wealth are land, 
 labour, and capital. All three are represented in 
 every commodity " obtained or produced by human 
 exertions." No such commodity ever existed, or 
 could exist, without all these three elements, in 
 varying proportions, concurring in its production. 
 The surface of the globe which we inhabit — that is, 
 the land, water, and atmosphere, all of which we 
 shall, throughout this work, include in the generic 
 term " land " — furnishes to scanty bands of savages 
 a precarious supply of fruit, game, and fish, ob- 
 tainable by a minimum amount of labour and 
 capital ; the labour being the acts of hunting or 
 fishing, the capital being the rude implements and 
 weapons which those acts require. In such cases 
 labour and capital have contributed a very small, 
 the land a very large, share. Let us take quite
 
 LAND, LABOUR, AND CAPITAL. 1 3 
 
 an opposite instance. In the case of a picture by 
 Mr. Millais, the few materials furnished by the 
 land for canvas, easel, pigments, &c., contribute 
 the merest fraction to the value of the picture, 
 while the skilled labour of the artist, and the 
 capital expended on his education and studies, 
 form, beyond comparison, the most influential 
 elements. But in each of these extreme cases, all 
 the three factors, though in different proportions, 
 are present. They are, indeed, indispensable to 
 each other, and no two of them can produce wealth 
 without the aid of the third. That without land 
 labour and capital would have nothing to work 
 upon, and could not even exist, is self-evident. That 
 land and capital would be useless without labour is 
 almost as obvious. That land and labour without 
 capital would be totally unproductive is equally 
 true, since absence of capital implies the absence 
 of all tools and implements, and also of food or 
 other stores set apart beyond the consumption of 
 the day. Wha tever is pro duce d by labour in 
 excess of immediate requirements, and laid by for^ a^^ic a.i 
 future use, is capital. The weapons and canoes of 
 the savage quite as much constitute fixed capital 
 as our foundries or steam-ships. Without such 
 capital the miserable biped would have to exist on 
 the berries he might chance to find and pick up 
 during the day, and would contribute no element 
 of wealth. On the other hand, the English 
 labourer, earning three shillings a day and saving 
 one out of them, becomes a capitalist to the extent 
 of that saving, and may, by Mr. Fawcett's ad- 
 mirable provisions, out of a single day's economy,
 
 14 WEALTH-CREATION. 
 
 twelve penny postage stamps, become a creditor 
 of the State to that amount. 
 
 Inference : — Since wealth cannot exist without 
 the combination of every one of these three factors 
 — viz., land, labour, and capital — it follows that they 
 are each of equal indispensability, and that all dis- 
 quisitions as to their comparative importance in 
 the production of wealth are idle and aimless, 
 since their relative potency is indefinable. 
 
 CHAPTER II. 
 
 Classification of Obstacles and Aids to Wealth-Creation — Division 
 of Labour — Free Commercial Intercourse — Loss Inflicted by 
 the Opposite Policy. 
 
 We now come to the 4th proposition laid down at 
 page 2, and we contend that 
 
 All OBSTACLES AND AIDS TO WEALTH-CREA- 
 TION SHOULD BE IDENTIFIED, CLASSED, AND DIS- 
 CUSSED, WITH A VIEW TO THEIR RESPECTIVE 
 REMOVAL OR ADOPTION. 
 
 We fancy that this proposition will meet with 
 ready assent. If it be true that the more of wealth 
 there is created, the greater is the benefit to the 
 human race, it necessarily follows that it is essen- 
 tial to trace the causes that either promote or im- 
 pede wealth-creation. We shall first proceed to 
 consider the chief aids to the creation of wealth, 
 which we may classify as follows : — 
 
 A I. Division of labour, 
 
 A 2. Free commercial intercourse,
 
 DIVISION OF LABOUR. IS 
 
 A 3. Capital intelligently employed, 
 
 A 4. Machinery and labour-saving processes, 
 
 A 5. Facilities of inter-communication, 
 
 A 6. Scientific discoveries, 
 
 A 7. Education and morality. 
 
 We shall then proceed to consider the chief im- 
 pediments to wealth-creation, which may be clas- 
 sified as follows : — 
 
 B I. Insecurity of person or property, 
 
 B 2. Superfluity of unproductive consumers, 
 
 B 3. Wars and international rivalries, 
 
 B 4. Commercial isolation, 
 
 B 5. Ignorance and immorality. 
 
 On the peculiar position of land in regard to its 
 limitation of extent and its immovability, as com- 
 pared with the unlimitable growth and universal 
 adaptation of labour and capital, we shall remark 
 farther on. 
 
 A I. Division of Labour. — It is curious as well 
 as instructive to compare the fecundity of a man's 
 labour, when he is working in intelligent combina- 
 tion with others, with the sterility of the same 
 man's labour when he is working isolatedly. A 
 hive of men, harmoniously co-operating, can, with- 
 out overstrain, produce indefinitely more than 
 their joint requirements ; whereas, all the efforts of 
 a solitary individual can scarcely supply his most 
 pressing wants. To say that in the one case man 
 is a giant, in the other case a child, is a feeble ex- 
 pression of the relative power which the two posi- 
 tions confer on him of producing wealth. It would 
 be nearer the mark to say that in the one case 
 man can do everything, and in the other nothing.
 
 l6 WEALTH-CREATION. 
 
 What is the source of this enormous increase of the 
 wealth-creating powers of men when acting in 
 concert ? If this co-operation of man with man to 
 effect a common purpose were confined to the mere 
 combination of their physical forces, but little 
 would be gained. A heavier weight might be 
 lifted, or a more bulky obstacle might be removed, 
 or the ferocity of wild animals might be more 
 easily subdued — results of no great importance. 
 
 It is a far more subtle and potent influence that 
 comes into play — the reasoning faculty. Through 
 its promptings, the work to be done is distributed 
 into a variety of parts, each of which is assigned to 
 a distinct set of labourers, whose labour is confined 
 to that part. It is this distribution of certain work 
 among certain workers — this division of labour — 
 that renders human exertions a thousand-fold 
 more productive than they otherwise would be. It 
 operates in a multiplicity of ways : by perfecting, 
 through early education and constant practice in one 
 direction, the manual dexterity of each worker ; 
 by training the worker to deftness in the rapid and 
 effective handling of tools ; by stimulating the in- 
 ventive faculty to devise special labour-saving 
 machines ; by ensuring continuity of effort on one 
 object, thus avoiding waste of time in passing from 
 one task to another ; by concentrating the maxi- 
 mum of attention and energy on each separate and 
 subordinate process ; by affording the freest scope 
 for the development of natural aptitudes ; and, 
 generally, by making the efforts of each individual 
 harmoniously subservient to the common benefit of 
 all; so that Nature's peculiar gifts to each part
 
 DIVISION OF LABOUR. IJ 
 
 shall be enjoyed by man in every part of the 
 
 globe. 
 
 Even that simplest of implements, a spade, is 
 not the work of one man, but of some half-dozen 
 distinct sets of workers. The lumberer furnishes 
 the timber, the carpenter shapes it, the miner 
 (perhaps hundreds of miles away) digs the ore, the 
 iron-founder smelts it and beats the metal into 
 shape, the nailer contributes the means of binding 
 the iron to the wood, and the carrier conveys the 
 materials or the articles to their destinations. 
 During the time that it would take an isolated 
 man to make a single spade (and if he could do it 
 at all, it would be a very clumsy and imperfect 
 specimen), one hundred men, by dividing their 
 labour, would probably make one hundred thou- 
 sand or more. But if such be the striking results 
 of the division of labour in the production of so 
 simple an article, imagine its marvellous potency in 
 the case of a complex form of human industry. Let 
 us take as an instance one of those magnificent 
 steamers that act as movable bridges between 
 New York and Liverpool. Here, instead of half-a- 
 dozen sets of workers, the labour of building and 
 equipping that steamer has been divided among, 
 not scores, not hundreds, but thousands of distinct 
 sets of producers. Such is the limitless variety of 
 objects which the construction and outfit of this 
 floating palace embrace, that there is hardly a sec- 
 tion of human industry that has not been made 
 available for, hardly a region of the globe which 
 has not contributed to, and scarcely a science with- 
 in human ken which has not been pressed into the 
 C
 
 1 8 WEALTH-CREATION. 
 
 service of, that glorious creation of man's brains, 
 labour, and capital. It is to the division of labour 
 that we chiefly owe this wonderful achievement. 
 Without it, man's constructive power would hardly 
 go beyond the canoe or the coracle. 
 
 It may be said that the world freely admits 
 the advantages that flow from the division of 
 labour, and that our advocacy is superfluous. We 
 reply that it is not so. The principle of the divi- 
 sion of labour is at present violated, and its benefits 
 discarded by the fiscal ordinances of almost every 
 civilised Government. Whenever the division of 
 labour (whether assisted by other circumstances 
 or not) produces an article more cheaply in one 
 country than in others, the latter refuse to admit 
 such article; and thus ignore and reject the benefits 
 conferred by the division of labour. If its quicken- 
 ing influence on the creation of wealth be " freely 
 admitted," how is it that statesmen circumscribe 
 its operation within the narrow limits of a single 
 country, and forcibly repress its beneficial action 
 by proscribing international division of labour ? 
 Let us briefly examine into this. 
 
 The amount of benefit derivable from the 
 division of labour is in direct proportion to the 
 magnitude of the area and the number of people 
 over which its operations extend. The greater 
 the diversity of the climate and soil, as well as of 
 the aptitudes and personal peculiarities of the 
 populations, the greater is the scope for the pro- 
 fitable operation of the division of labour. In 
 isolated and thinly populated regions, in which 
 families live far apart from each other, and the
 
 DIVISION OF LABOUR IGNORED. 1 9 
 
 means of communication are scanty, each house- 
 hold provides for most of its own wants by its 
 own labour ; and we are reminded of those old 
 primitive times when men " delved " and women 
 " span." Under such conditions, no organisation 
 for the division of labour can take place. Isolation 
 of the region itself from the rest of the world, and 
 isolation of the members of the community from 
 each other, form a double obstacle. 
 
 It is obvious that the full development of the 
 principle of division of labour can only be reached 
 when there is no isolation, and when there is free and 
 unrestricted intercourse and interchange between all 
 men of all nations all the world over. Then does this 
 great wealth-creating agent put forth its full power 
 and efficacy. It has then the greatest possible 
 diversity of elements to work upon, and these give 
 it the greatest possible scope for its operations. 
 Its completeness and perfection depend on its 
 universality. Whatever is short of international — l 
 that is, universal — division of labour, cripples its 
 action, and renders it partial, stunted, and propor- 
 tionately feeble. 
 
 And yet what is the policy adopted in regard 
 to it by almost every country in the world ? A 
 policy of commercial isolation directly opposed to 
 the development of the division of labour. True that 
 the latter principle is recognised and adopted by 
 each country within the limits of its own territory, 
 but, under the so-called protective system, it is 
 ignored and scouted in its relations with the rest 
 of the world. Instead of an international or 
 universal, we have an intra-national or sectional 
 C 2
 
 20 WEALTH-CREATION. 
 
 scheme of division of labour. Instead of that 
 proHfic agency for maximising the productiveness 
 of human toil being allowed a full sweep over the 
 entire industrial world, the surface of the globe is 
 cut up into patches of territory, larger or smaller, 
 each of which is commercially isolated from the 
 rest, and none of which will allow free ingress to 
 the cheap productions of the others. Thus the 
 cheapness achieved by the division of labour in 
 one country is counteracted and rendered unavail- 
 able to the rest by means of import duties, pro- 
 hibitions, &c., enacted for the purpose of raising 
 the cost or prohibiting the admission of cheap 
 goods from foreign countries. Vainly indeed 
 does the division of labour diminish the cost of 
 production as long as statesmen proclaim that 
 cheapness is an iniquity which has to be repressed 
 by legislative enactments. 
 
 Under what mistaken notions statesmen adopt 
 that view, we shall take another opportunity of 
 inquiring ; but meanwhile it must be clear to all 
 that if the benefits which the division of labour 
 confers are great and undeniable, it must be quite 
 as great and undeniable an evil to counteract 
 and nullify them. To intercept the beneficent 
 operations of so powerful a factor in the creation 
 of wealth as the division of labour, is an act as 
 potent for evil as it would be to intercept the 
 quickening action of the sun's rays on the soil, 
 and so to create artificial sterility. It is fortunate 
 that statesmen have not the same power to effect 
 the latter as they have to effect the former purpose, 
 as otherwise, no doubt, some pretexts of State
 
 FREE COMMERCIAL INTERCOURSE, 21 
 
 policy would be invented to justify both. To sum 
 up, the division of labour promotes in an eminent 
 degree the creation of wealth, but its operation is 
 sadly checked and counteracted by the commercial 
 isolation of one country from another. 
 
 A 2. Free Commercial Intercourse is the 
 second of those aids to wealth-creation which we pro- 
 pose to review. We have just seen that this freedom 
 of commerce is an indispensable condition in order 
 to ensure the full development, and reap the full 
 benefits, of the division of labour. It largely in- 
 creases the wealth of the world by securing the 
 rich results of well-applied labour and capital, 
 instead of the poor results of misapplied capital 
 and labour, and by obtaining for the use of each 
 habitable zone the peculiar products which the 
 diversity of climate, soil, geological formations, &c., 
 make special to other habitable zones. It enables 
 all men in all countries to devote themselves to 
 that particular work for which they have special 
 opportunities or aptitudes. This they are, at pre- 
 sent, prevented from doing. Governments, at an 
 enormous expense to the community, compel 
 producers to take their labour and capital away 
 from the work which they are doing better than 
 foreigners can, and to apply the labour and capital 
 so diverted to work which foreigners can do better 
 than they can. By this misdirection of power 
 much of it is wasted. Instead of large results 
 cheaply obtained, we have smaller results obtained 
 at a greater cost. The wealth-creating power of 
 the world is proportionately impaired. It loses 
 the maximum productive force of labour and capital
 
 22 WEALTH-CREATION. 
 
 employed at their best, and in return only gets 
 the feeble productive agency of the same labour 
 and capital directed to objects for which they are 
 less fitted, or under circumstances which tend to 
 hamper their efforts. 
 
 The immense difference between the results 
 respectively obtained by these two opposite modes 
 of applying labour and capital has not, we think, 
 been carefully considered or adequately appreciated. 
 If it be for the benefit of man that the greatest 
 possible abundance of the objects of human desire 
 be created, and, as a consequence, distributed, it 
 must be essential to inquire into the reality and 
 the extent of the " immense difference " referred to. 
 The difficulty is to assess that difference. It would 
 be easy enough in isolated cases. For instance, a 
 carpenter and a bookbinder are both earning five 
 shillings a day : what would be the market value of 
 their labour, supposing that a paternal Government 
 were to enact that they should exchange occupa- 
 tions .'* Would that value be even one-fourth of 
 what it is now ? Under this supposition, the loss 
 occasioned by the act of the " paternal Govern- 
 ment " is obvious enough, and may be measured 
 and computed. But the task is not so easy when 
 it has for subject-matter all the complex conditions 
 of an entire community. Let us make a rough and 
 rude attempt. 
 
 Given that combined labour and capital, under 
 present conditions, are earning an average re- 
 muneration both as to wages and profits, and are 
 yielding an average volume of wealth-production, 
 what would then be the effect of Government pro-
 
 IMPORTS AND EXPORTS BOTH CHECKED. 23 
 
 hibiting the admission of some article hitherto 
 imported from abroad, and thus seducing a certain 
 portion of labour and capital from their present 
 employment into the service, more lucrative for a 
 short time, of a native monopoly for that article ? 
 What would follow ? 
 
 (a) There can be no export without a corre- 
 sponding value of import. Whatever be the amount 
 which you cease importing from abroad, in conse- 
 quence of producing the prohibited article at home, 
 to that same amount will your exports be diminished 
 of other articles. This prohibition is, therefore, " a 
 heavy blow and great discouragement " to your 
 staple industries. To the extent of that diminution 
 of your exports, it throws native labour out of em- 
 ployment and deprives capital of its remuneration. 
 To that extent your foreign trade is cut off, and all 
 the interests connected with it, whether it be work- 
 ing men, manufacturers, merchants, or ship-owners, 
 are proportionately injured. It was probably the 
 intention of the paternal Government to benefit 
 its native industries ; but a paternal Government 
 sometimes make mistakes, and, in this instance, it 
 has, by curtailing imports, curtailed to the same 
 extent those sales to the foreigner by which native 
 industries benefited, and has therefore inflicted on 
 those industries positive and substantial injury. 
 Now, what is there to set off against these evils ? 
 It is merely that the labour and capital thus thrown 
 out of employment are gradually, more or less, 
 absorbed in the new establishments created to 
 supply the prohibited article. The new industry is 
 not a field for the investment of fresh labour and
 
 24 WEALTH-CREATION. 
 
 capital, but an inadequate refuge for the old labour 
 and capital that have been displaced ; and the con- 
 ditions under which that displacement has been 
 effected are these. You have diverted labour and 
 capital from the production of commodities at so 
 cheap a cost that foreigners bought them of you, 
 to the production of an article at so dear a cost 
 that a prohibitory law is necessary to prevent your 
 people from buying it of the foreigner. Is there 
 much to boast of in this result ? 
 
 {b) The higher wages and larger profits which 
 had lured labour and capital away from their old 
 channels into the new monopoly, would prove very 
 transitory and short-lived. For, by the inevitable 
 operation of internal competition, they would 
 rapidly subside into their normal and average scale, 
 while the evils which the change had entailed 
 would prove permanent and cumulative. 
 
 {c) Let us suppose that 40 per cent, be the 
 rate of prohibitory import duty requisite to prevent 
 imports from abroad of the article in question, and 
 to give a monopoly of it to the native producers, 
 then it follows, as a necessary consequence, that 
 the consumers in that country will have to pay 40 
 per cent, more for that article than they paid before. 
 Otherwise, why should a 40 per cent, duty be 
 requisite to keep out the foreign goods .? Note 
 that this estimated percentage is decidedly below 
 the average, for in numerous instances those duties 
 reach 100 per cent, and more, 
 
 [d) This artificial dcarness of even the single 
 article in question bancfully influences the cost of 
 olhcr productions. For instance, the dearness of
 
 EFFECT ON THE WORLD'S WEALTH. 2$ 
 
 iron cripples and checks ship-building, and largely 
 increases railway fares. The dearness of clothing 
 either presses heavily on the working man, or if his 
 wages are raised in exact proportion, he is no 
 better off than before, while the increased cost of 
 labour enhances the cost of every production in the 
 country. 
 
 {e) To take a wider view of the subject, let us 
 inquire what the result would be of such fiscal 
 restrictions on the aggregate substantial wealth of 
 the world. In respect to those articles in every 
 country on which import duties are imposed for 
 other than revenue purposes, whether those duties 
 be prohibitory, or protective, or incidentally pro- 
 tective, such duties afford a fair measure of the 
 extra price which the consumers pay for those 
 articles beyond what they would pay if such duties 
 did not exist. Assuming that 40 per cent, ad 
 valorem be the average of such duties (and that 
 percentage is certainly below the reality), it follows 
 that consumers of the protected articles pay 140 
 pieces of money (whether £s,, or dollars, or francs, 
 &c.) for the same quantity and quality as could be 
 purchased elsewhere for 100. Under prohibitory 
 duties, the whole of these additional 40 coins go to 
 the native producers of these articles, and none ^o 
 the revenue of the State. Under protective duties, 
 some portion of the 40 coins goes, in the shape of 
 customs' duties on imports, to the national revenue, 
 and the rest to the native producers. When those 
 duties are high, the State receives less, because the 
 imports are smaller. The lower the duties, the 
 larger is the portion which accrues to the State.
 
 26 WEALTH-CREATION. 
 
 The more effective the protection, the worse for the 
 revenue, and the nearer protection approaches to 
 prohibition. 
 
 But whether foreign goods be wholly or par- 
 tially excluded, the percentage of duties necessary 
 to enforce such exclusion is evidently the measure 
 of the extra price which consumers have to pay for 
 such goods. If the native producers could pro- 
 duce as cheaply as the foreigner, they would sell as 
 cheaply, and no import duties would be requisite 
 to keep foreign goods away. But taking at 40 
 per cent, the average duties necessary to effect that 
 purpose, it clearly follows that the native pro- 
 ducers must expend 140 coins' worth of labour, 
 &c., to achieve what the foreign producers accom- 
 plish by the expenditure of lOO coins' worth of 
 labour, &c. The difference, which in the aggregate 
 amounts to an enormous sum, is simply waste and 
 misdirection of energy. It is a thriftless applica- 
 tion of power to the wrong object, just as it would 
 be to set a carpenter to make a coat, and a tailor to 
 make a table. It is easy to infer the enormous 
 loss which hence accrues to tl>e wealth-producing 
 power of the country and of the world at large. 
 
 We shall, however, have occasion to recur to 
 this subject when we come to consider commercial 
 isolation as one of the impediments to wealth- 
 creation ; and we therefore confine ourselves here 
 to showing how largely free commercial intercourse 
 contributes to the goodly work of promoting the 
 creation, and consequently the distribution, of " all 
 such objects of human desire as are obtained or 
 produced by human exertions."
 
 27 
 
 CHAPTER III. 
 
 Capital Intelligently Employed— Capital and its Earnings go to the 
 Payment of Labour— Machinery and Labour-saving Processes 
 — Their Influence on the Production of Wealth and on the 
 Welfare of the Labour-sellers. 
 
 A 3. "Capital Intelligently Applied" is not 
 merely an aid, but indeed a positive necessity, to 
 wealth-creation. At p. 12 we have shown that the 
 three factors of all wealth are land, labour, and 
 capital. The two former — land and labour — are 
 present in greater or smaller proportions, at all 
 times and in all places, but the latter — capital — is 
 the work of human hands, and owes its existence 
 to man's industry, foresight, and self-denial. Let 
 us fram.e a clear notion of what we mean by 
 " capital," and then inquire into its functions and 
 use. 
 
 In the first place, we shall find that, although 
 all capital is wealth, all wealth is not capital — far 
 from it. The wealth which human exertions have 
 obtained or created is used by its possessors in a 
 variety of ways, which we may classify under the 
 following four divisions. Wealth may be devoted 
 
 1. To reproductive purposes ; that is, to the 
 
 creation of fresh wealth, 
 
 2. To purposes which are not reproductive, but 
 
 are necessary or useful ; for instance, to 
 social arrangements for the security of 
 person and property, to the reasonable en- 
 joyment of material comforts, to education,
 
 28 WEALTH-CREATION, 
 
 to intellectual and moral development, to 
 recreation, &c. 
 
 3. To useless purposes, such as a redundancy 
 
 of public servants and other non-productive 
 consumers, or the indulgence in superfluous 
 luxuries, ostentatious displays, &c. 
 
 4. To destructive and evil purposes, such as 
 
 unnecessary wars — the employment of 
 brute force to crush liberty or perpetrate 
 injustice, &c. 
 '/?%/./ It is that portion of the world's wealth which is 
 ' devoted to the first of These four sets of purposes — 
 Kct^/^ viz., to reproductive purposes — which alone colTsti- 
 tutes what we call capital. In the other three 
 ways, wealth is absorbed and consumed ; whereas 
 the wealth which is used as capital is not only not 
 ^' consumed, but continuously yields a large acces- 
 sion of fresh wealth. It is like the seed- wheat that 
 is saved for sowing, and that lays the foundation 
 of future rich harvests. 
 
 Capital, therefore, is that part of wealth which 
 is devoted to reproductive purposes. It consists 
 of the savings effected by means of an excess of 
 production over consumption. The larger that ex- 
 cess, the more rapid the accumulation of capital. 
 Roughly speaking, then, " capital " and " savings " 
 are convertible terms. The working man who 
 puts by half-a-crown out of his weekly wages 
 thereby becomes a capitalist, and not only benefits 
 himself, but the world at large. He is a contri- 
 butor to that reproductive fund by means of which 
 fresh wealth is created. 
 
 To the part which capital plays in the creation
 
 DEPENDENCE OF LABOUR ON CAPITAL. 29 
 
 of wealth we have already made some reference at 
 p. 12. We have there shown that without capital 
 labour must be sterile, and could engage in very 
 little work beyond such as would each day provide 
 food for that day. In order to apply labour to 
 work requiring time to yield results, a stock must 
 be previously laid up to provide subsistence during 
 that time. Such stock is the earliest and simplest 
 form of capital. In this shape we see capital sus- 
 taining labour, while labour is engaged in creating 
 fresh wealth. Under the complex conditions of 
 old civilised communities, the same principle — a 
 principle on which is founded the mutual de- 
 pendence of capital and labour on each other — is 
 carried out, but on a far larger scale, and in a less 
 obvious form. The capitalist (that is, the savings- 
 holder) supplies the labourer (that is, the wage- 
 receiver) with the means of subsistence, &c., during 
 the time that the latter is working for him at a 
 task — let us say constructing a railroad — which 
 will not be completed for a year or two, and will 
 yield no return till completed ; the contract be- 
 tween them being that, in exchange for the wage, 
 the work done shall belong to the wage-payer. 
 Whether the savings thus used belonged to one 
 person, or consisted of contributions made by many 
 persons, is immaterial. Indeed, all the better if 
 the savings of the labourer have, through the 
 medium of banking accumulations, gone towards 
 forming the capital. In such case the labourer is 
 at once earning interest on his savings and wages 
 by his labour. But it is not only subsistence, &c., 
 in the form of wages that the capitalist advances.
 
 30 WEALTH-CREATION. 
 
 He also supplies — taking a cotton factory as an 
 instance — the machinery with which, the raw ma- 
 terials on which, and the costly building in which, 
 the labourer performs his work. 
 
 Not only is capital an indispensable element in 
 the production of wealth, but we may go further, 
 and say that the extent to which fresh wealth is 
 producible depends on, and is strictly proportionate 
 to, the swifter or slower growth of the world's 
 capital. If the accumulation of capital be sus- 
 pended, the productive power of man will be re- 
 pressed in the same ratio. Of the three elements 
 of wealth — land, labour, and capital — the two first 
 have scarcely ever, unless locally and temporarily, 
 been otherwise than superabundant ; whereas 
 capital has, on the other hand, seldom reached the 
 full limit of the requirements for it. It is the want of 
 capital, not the want of land or of labour, that has 
 fixed the bounds of the world's productiveness. 
 As more capital becomes available, more land will 
 be utilised, more labour will be employed, and 
 more wealth will be created. It is where and 
 when population increases faster than capital that 
 labour becomes redundant and wages fall. 
 
 The remedy for the redundancy of labour, and 
 for the consequent competition which depresses 
 wages is therefore to accelerate the growth of capital. 
 In the long-run, be it a little sooner or a little 
 later, capital is sure to find some channel for 
 employment. For it is useless and profitless to its 
 possessors unless it is utilised, and it cannot be 
 utilised without creating a demand for labour. 
 Some one may be found to say that a sum of
 
 DEPENDENCE OF CAPITAL ON LABOUR. 3 1 
 
 money invested in land, or in consols, does not 
 create a demand for labour ; but he overlooks 
 that the money paid for land or consols by one 
 person is received by another, and therefore still 
 remains to be employed, directly or indirectly, 
 in some form of labour. We therefore come 
 to this conclusion — viz., that as long as there re- 
 mains on the globe cultivable land uncultivated, 
 and available labour seeking employment, there 
 can be no redundancy of capital ; and that the 
 greater the abundance of the latter, the greater the 
 amount of land and labour that will be utilised, 
 and the more active will be the creation of 
 wealth. 
 
 But if, on the one hand, labour is dependent on 
 capital for its employment, on the other, capital 
 equally depends on labour for its utilisation. 
 Unused capital gradually shrivels and wastes away: 
 ships rot, mines get inundated, machinery rusts, 
 &c. Labour is the vivifying principle which pre- 
 serves capital from decay. Let us inquire in what 
 shape capital (that part of wealth which is devoted 
 to reproductive purposes) exists. We shall find it 
 to consist chiefly of ships, roads, and railways ; of 
 farm- buildings, factories, and foundries ; of imple- 
 ments, machinery, and tools ; of horses, sheep, and 
 other cattle ; of mines, docks, and harbours ; 
 and of an infinite multitude of other forms of 
 wealth. All these objects we find it convenient to 
 class under the generic name of " fixed capital." 
 A very small and insignificant portion of capital 
 exists in the shape of money (not wealth of itself, 
 but counters entitling the bearer to a definite
 
 32 WEALTH-CREATION. 
 
 quantum of wealth), and this portion is designated 
 " floating capital." 
 
 Without labour, neither of these two classes of 
 capital are in the slightest degree available for the 
 reproduction of wealth. Of the floating capital — 
 that is, the money — every farthing of it goes, 
 directly or indirectly, immediately or mediately, to 
 payments for labour ; that is, to wages. Trace the 
 course of a sum of money carefully, you will find 
 that its eventual destination is the payment of 
 wages. Supposing it placed on deposit in a bank, 
 the bank may with it perhaps discount A's bill ; 
 A may then with it pay his rent to B ; then B may 
 perhaps use it to pay his tailor ; but ultimately, 
 after a few transfers, it will, before long, find its 
 way into the pocket of the labour-seller. It may, 
 like a snow-flake, float a little while in the air, but 
 finally it will drop and melt into wages. 
 
 In the same way, the whole of the earnings of 
 fixed capital are, directly or indirectly, appropriated 
 to the remuneration of labour — that is, to the pay- 
 ment of wages. Take, for instance, a railroad. Of 
 its receipts, a large proportion goes directly to the 
 payment of the men in its service, another portion 
 is appropriated to the purchase of coals, repairs to 
 rolling stock, maintenance of permanent way, &c., 
 of all which purposes wages form the main item 
 of cost, and, on balance, a dividend (probably 
 small) is distributed among the capitalists who 
 have subscribed the money for its construction. 
 But even that dividend itself goes (more or less 
 directly) to the payment of wages in the way we 
 have described above in the case of floating capital.
 
 CAPITAL AND LABOUR ARE JOINT PRODUCERS. 33 
 
 By no device can capital evade the inevitable law 
 that, if it is utilised at all, it must be by the em- 
 ployment of labour, and therefore by the payment 
 of wages. Machinery cannot be used, ships cannot 
 be navigated, mines cannot be worked, except by 
 human hands ; in short, fixed capital is unavail- 
 able and valueless, unless under the condition that 
 it shall devote its earnings, more or less directly, 
 to the hire of labour and the payment of wages. 
 
 It is, we think, essential fully to develop and 
 definitively to establish this principle, in order that 
 it may be clearly seen how much the interests of 
 the labour-sellers are benefited by promoting the 
 growth and accumulation of capital. As yet, this 
 is neither understood nor recognised by a large 
 proportion of those who are most interested in the 
 inquiry. The chief complaint of the labour-sellers is, 
 that in the distribution of the wealth created by 
 combined labour and capital, the capitalist receives 
 an unduly large, and the labour-seller an unduly 
 small, share. That is a legitimate subject for in- 
 vestigation. 
 
 But many go much further, and a great number 
 of honest and truth-seeking working men not only 
 underrate capital as a factor in the creation of 
 wealth, but omit it altogether, and proclaim them- 
 selves the sole producers of all wealth. That this 
 is a great mistake plainly appears, we think, from 
 the foregoing considerations ; and wc shall have 
 done good service to the working men by removing 
 this erroneous impression from their minds. All 
 error is misleading, and it is a very grave one to 
 ignore the joint action of capital in the production 
 D
 
 34 WEALTH-CREATION. 
 
 of wealth. Both capital and labour are indis- 
 pensable agents in the creation of wealth, and both 
 are entitled to participate in the enjoyment of it. 
 The question may arise, in what proportion respec- 
 tively ? By what process, and under what law, is 
 that apportionment to be determined ? We may 
 probably in another work specially consider how far, 
 and in what way, the present competitive system 
 may be reformed, readjusted, or replaced by the 
 co-operative principle. But, meanwhile, we shall 
 proceed to point out how, under the existing com- 
 petitive method, that apportionment does take 
 place, and in what respects it is susceptible of 
 considerable modification. 
 
 The proportion in which the wealth obtained 
 or produced by human exertions is divided between 
 labour and capital — or, in other words, the wage- 
 rate — depends, within certain limits, on, and varies 
 with, the ever-varying relative supply of labour 
 and capital. If labour is abundant in proportion 
 to capital, the labour-sellers, eager to turn their 
 commodity, labour, to account, will compete with 
 and underbid each other, and wages will fall. If, 
 on the other hand, it is capital that is compara- 
 tively abundant, there will be a pressing demand 
 for labour, and wages will rise. There are there- 
 fore two sets of conditions under which an enhance- 
 ment in the market value of labour may occur. 
 One is a diminution in the supply of labour, the 
 other is an increase in the supply of capital. The 
 same effect on the rate of wages is produced by 
 either alternative. In the one case, the rate of 
 increase in the population has to be retarded ; in
 
 CAPITAL CREATES A DEMAND FOR LABOUR. 35 
 
 the other, the rate at which capital is created has 
 to be accelerated. The first process impHes pru- 
 dential restraint, late marriages, emigration, &c., 
 and is at best an unpalatable remedy. The second 
 is quite as efficacious, as we have shown, and entails 
 no hardship on any one. Can there be a doubt 
 as to which of the two courses is the more eligible ? 
 
 It may be objected that, granting the benefits 
 derivable from a more rapid accumulation of capital 
 than now takes place, such rapidity of increase is 
 practically unattainable. This we utterly deny. 
 Indeed, the very aim and scope of this work is to 
 show the contrary. We believe that there is hardly 
 a limit to the possible creation of wealth ; and that 
 there are so many aids to production which are 
 foolishly neglected, and so many obstacles to pro- 
 duction which are foolishly maintained, that the 
 adoption of the former and the removal of the 
 latter would almost indefinitely extend man's power 
 to create wealth. 
 
 It is clearly the interest of mankind, and espe- 
 cially of that large class who live by the sale of 
 their labour, that the largest possible portion of 
 created wealth should be set aside as capital for 
 reproductive purposes, so that the growth of capital! 
 should do more than merely keep pace with the 
 increase of the population. Capital and labour 
 act and re- act on each other, and alternately 
 become cause and effect. The more there is of 
 capital, the more labour will be employed ; the 
 more there is of labour employed, the more wealth 
 there will be created, and the more will be put by 
 as capital ; and then, recommencing the cycle, the 
 D 2
 
 36 WEALTH-CREATION. 
 
 more there is of capital, &c. &c. But if the portion 
 of created wealth set aside as capital for repro- 
 ductive purposes be small, and an undue proportion 
 of that wealth be absorbed for the three consump- 
 tive or evil purposes enumerated at p. 27, then 
 the accumulation of capital becomes slow, the 
 employment of labour is checked, and the amount 
 of wealth created is curtailed. Meantime, the 
 number of the labour-sellers still goes on increasing, 
 while less is produced for distribution among them. 
 
 We conclude, then, that capital is one of the 
 most efficient aids to wealth-creation, and there- 
 fore that all influences are evil which tend {a) to 
 check its increase by devoting too large a propor- 
 tion of wealth to mere consumptive purposes ; 
 (d) to waste capital by using it unintelHgently — that 
 is, by applying it to injudicious and unprofitable 
 enterprises ; and (c) to discourage the local employ- 
 ment of capital by rendering it insecure, or thwart- 
 ing its operations, or minimising its returns, and 
 thus driving it away into other channels. 
 
 A 4. Machinery and Labour-saving Pro- 
 cesses. — It is so self-evident that the wealth- 
 creating power of labour is enormously multiplied 
 by the use of tools, implements, and machines, that 
 proofs are superfluous. It may, however, be useful 
 to advert to the impression that did once almost 
 universally, and does still partially, prevail among 
 working men — that the introduction of machinery 
 is injurious to their interests. That such an im- 
 pression should have existed is perfectly natural. 
 How, indeed, could it have been otherwise .-' We 
 will suppose that in some industrial enterprise,
 
 EFFECT OF MACHINERY ON LABOUR. 37 
 
 whether agricultural or manufacturing, a certain 
 quantity of work which had required the labour of 
 ten hands had suddenly come, by the use of a 
 machine, to be performed by two, and that conse- 
 quently eight men were thrown out of work. Could 
 these eight men by any possibility view the machine 
 that took the bread out of their mouths otherwise 
 than as a curse .-• They had worked, and were 
 willing to work, to gain an honest livelihood by 
 the sweat of their brow ; but here they were sup- 
 planted, ousted, and turned adrift into poverty and 
 despair by this substitution of wood and iron for 
 human hands and human industry. What could 
 they see as the end of it ? — ultimate advantage 
 to working men ? Certainly not. Nothing but 
 (through no fault of theirs) destitute hpmes and 
 starving children. 
 
 The rioters who, in 1 779, destroyed Arkwright^s 
 mill were men whom the rapid introduction of 
 machinery into the manufacture of cotton goods at 
 that stirring period had thrown out of work. To 
 these men the labour-saving processes adopted 
 had brought misery and starvation. Take it from 
 their point of view, what more could they see than 
 this: that the means of earning their daily bread 
 was taken from them, and that the cause of this 
 was the use of machinery ? Is it wonderful that 
 they should have waged war against the machines 
 to which they traced their sufferings ? That their 
 views were erroneous, and that the introduction of 
 machinery has proved an immense benefit to the 
 working class, is now all but universally admitted. 
 But even now, is the process of reasoning that ex- 
 
 213035
 
 38 WEALTH-CREATION. 
 
 plains in what way that benefit accrues to the work- 
 ing class obvious to everybody ? We doubt it 
 very much ; and if our doubt be well founded, who 
 shall blame the working man of a century ago for 
 not seeing that which, even in the present day, is 
 to many not obvious ? 
 
 Of course, on the principles laid down in this 
 work, the explanation is easy. Machinery largely 
 increases the production of wealth ; all that in- 
 creased wealth is distributed and used ; the greater 
 the accumulation of capital, the greater the demand 
 for labour, and the better its remuneration. But 
 abstract considerations of this nature could not 
 possibly enter the minds of the suffering men, and 
 they were left to brood over their wrongs, and to seek 
 redress in their own rough and lawless manner. 
 
 Moreover, it must be noted that, signal and 
 permanent as are the benefits which labour-sellers 
 derive from the wealth-producing power of ma- 
 chinery, it must necessarily, in the first instance, 
 inflict some injury on a certain number of them for 
 a short time. Some interval must elapse before those 
 who are thrown out of work by the adoption of a new 
 machine can dispose of their labour elsewhere, and 
 the interim is necessarily a period of inconvenience, 
 if not of suffering. True that the same amount is 
 '^ I paid away in wages as before — indeed more ; but 
 the wages are no longer paid to the same la- 
 bourers, or for the same kind of labour. The 
 amount of wealth now produced by the labour of 
 the ten men whom we suppose to have been en- 
 gaged in a certain manufacture, and of whom eight 
 were displaced by the adoption of a new machine,
 
 DISPLACEMENT OF LABOUR. 39 
 
 is considerably greater than it was before the 
 change was made. For now, two produce as much 
 as the ten did before, and all that the other eight 
 produce, who now labour at other pursuits, is so 
 much in addition. This increased wealth gives 
 proportionately more for distribution among the 
 producers of it. 
 
 The only drawback from the universal benefit 
 accruing from this enlarged amount of wealth 
 created, is the temporary displacement of a certain 
 number of workers, who have to transfer their 
 labour to other employers — perhaps to other occu- 
 pations. But, ultimately, they, along with the rest 
 of their class, largely profit by the increased 
 demand for labour arising out of increased capital. 
 A similar displacement, most frequently of capital 
 as well as of labour, follows, or rather accompanies, 
 every stage of scientific improvement or of social 
 progress. In olden times, as in modern times, 
 every step forward leaves some few persons be- 
 hind, temporarily entangled in the old arrange- 
 ments which have been departed from. Thousands 
 of honest scribes, who, four centuries ago, gained 
 a livelihood by copying and illuminating manu- 
 scripts, were rudely displaced by the invention of 
 printing, and had to seek other fields for their 
 labours. When, less than a century ago, wigs were 
 discarded for natural hair, thousands of wig- 
 makers, thrown out of work, had to devote them- 
 selves to other pursuits, and, meanwhile, suffered 
 dire distress. So it was with the displacement of 
 stage-coaches by railways, &c. &c. 
 
 Indeed, there will occur to the reader innu-
 
 40 WEALTH-CREATION. 
 
 merable instances, constantly arising, of similar 
 displacements of capital and labour occasioned by 
 acknowledged improvements, accompanied by the 
 same loss or inconvenience to a certain portion of 
 the community. But whereas the advantages of 
 such improvements are permanent and universal, 
 while the evil thereof is only temporary and partial, 
 our duty is to submit to and sympathise with the 
 latter, but by no means to falter in our adoption of 
 the former. To do so would be a grievous mis- 
 take, and yet it is one frequently committed. Pro- 
 tective import duties are only another form of the 
 principle which would compel the population to 
 wear wigs in order to save a few barbers from the 
 inconvenience of shifting their labour into other 
 channels. 
 
 All labour-saving processes tend to the same 
 end — that is, to the production of a given quantity 
 of wealth by means of the smallest possible ex- 
 penditure of capital and labour. The application 
 of the capital thus liberated, and of the labour thus 
 saved, to other industries gives rise to a propor- 
 tionate addition to the sum total of the world's 
 wealth. There is in the aggregate no less labour 
 employed, although less is needed for the produc- 
 tion of a particular article, because the wage-fund 
 is augmented thereby, not diminished, and the 
 whole of it goes to the payment of wages — that 
 is, to the employment of labour. 
 
 Some have argued that, since machinery 
 supersedes and displaces a certain quantity of 
 human labour, then, if the use of it Avere multi- 
 plied in all departments of industrial produc-
 
 ENOUGH FOR ALL IS THE DESIDERATUM. 4 1 
 
 tion, and if its application were, by scientific 
 processes, to become universal, and thus (ex- 
 treme hypothesis!) human wants were supplied 
 without the agency of human labour, a large pro- 
 portion of the working population would be re- 
 dundant, and the pressure of competition among 
 them would be so severe as to reduce wages to the 
 lowest limit compatible with bare existence. The 
 fallacy of this deduction is obvious. The very 
 terms of the supposition — viz., that " human wants 
 were supplied " — argue ample sufficiency for all, 
 which is incompatible with the inferred destitution 
 of the majority. The supposed universal applica- 
 tion of machinery to the production of wealth 
 implies the creation of at least as much wealth as 
 was before produced by human labour, and there- 
 fore human wants would be supplied in at least the 
 same abundance. The correct inference is that 
 there would be sufficient supply for all, without sub- 
 jecting, as now, the majority of mankind to the 
 necessity of devoting a great portion of their 
 existence to mere physical labour. Such a result 
 would surely be beneficial, not injurious. 
 
 In order to make out that the result of the sup- 
 position would be detrimental to mankind, another 
 assumption must be superadded, viz., that the 
 wealth ample to supply human wants, thus created 
 by machinery, would only be partially used for that 
 purpose, and that the balance left, after supplying 
 the wants of the minority, would, instead of being 
 distributed among the majority, be either wilfully 
 destroyed, or remain to rot undistributed ! The 
 first supposition is paradoxical enough, but the
 
 42 WEALTH-CREATION. 
 
 second assumption is utterly monstrous and in- 
 conceivable. As we have before shown at p. 3, 
 " all the wealth obtained or produced by human 
 exertions is actually distributed and used." , 
 
 Machinery (using the term generically for all 
 labour-saving processes) is then a powerful co- 
 efficient to wealth-creation. All honour to those 
 true benefactors of mankind whose scientific dis- 
 coveries and mechanical inventions have supple- 
 mented man's physical weakness, and have added 
 immensely to his power over the material world 
 — who have pressed nature into the service of 
 man, and have placed her forces as instruments in 
 his hands ! 
 
 CHAPTER IV. 
 
 Facilities of Iiitcr-communication Promote the Creation of Wealth — 
 Scientific Discoveries Lessen the Expenditure of Human Labour 
 on the Production of Given Results, and Largely Increase the 
 Ultimate Demand for Labour. 
 
 A 5. Facilities of Inter-communication. — 
 Until the progress of navigation had led to the 
 discovery of America, the inhabitants of the 
 Eastern and Western Hemispheres were as much 
 cut off from all knowledge of and intercourse with 
 each other as though they existed in two different 
 planets. If it be admitted that Columbus has 
 by his achievement benefited the world (though 
 at the cost of partial cruelty and injustice), the 
 admission is tantamount to asserting that the isola- 
 tion of one part of the globe from the other is an
 
 FACILITIES OF INTER-COMMUNICATION. 43 
 
 evil. The opinion of mankind (exceptin^^, perhaps, 
 of the Chinese and, until recently, the Japanese) has 
 been in conformity with that conclusion, and the 
 general principle may, without further discussion, 
 be taken as conceded. 
 
 Our business here, however, is specially to point 
 out in what ways the creation of wealth is 
 promoted by " facilities of inter-communication." 
 One of the most efficient modes in which these 
 facilities act towards that end is by fostering, 
 assisting, and extending the operations of that 
 great contributor to wealth-creation, the division 
 of labour. The full beneficial effects of those 
 operations cannot be realised if the means of con- 
 veying the cheaper and better productions of one 
 country to be bartered for the cheaper and better 
 productions of another country, be slow, cumbrous, 
 and expensive. There will be nothing gained if 
 the advantages of such barter be absorbed and 
 neutralised by the difficulties or dearness of inter- 
 communication. Were it not for rapid transit and 
 low freights, cotton from America or wool from 
 Australia could never have come to England to 
 be wrought into fabrics by English labour and 
 machinery, and to be re-exported in that shape to 
 all parts of the world. The superior cheapness of the 
 manufacture would be overborne and outweighed 
 by the extra cost of dear conveyance. In coun- 
 tries where there are no roads, or few and bad 
 roads, intercourse is restricted, the benefits of divi- 
 sion of labour are hardly felt, and general poverty 
 prevails. The principle (subdivision of labour) 
 works at its maximum rate in densely populated
 
 44 WEALTH-CREATION. 
 
 and freely accessible districts, and in large cities. 
 It is there that the classification of labour into 
 distinct tasks is carried farthest, that its organisa- 
 tion is most complete, that competition most 
 pressingly sharpens invention, that capital obtaining 
 quick returns is satisfied with the smallest profits, 
 and that copiously supplied markets furnish com- 
 modities in every possible variety, and at prices 
 nearest to cost of production. 
 
 On the other hand, among a sparse and scat- 
 tered population, with scanty means of inter-com- 
 munication, the very contrary takes place. Labour 
 instead of being subdivided is cumulated, and one 
 man works clumsily at several trades ; there are 
 no opportunities for organisation, so that each 
 hamlet or family moves in its own little orbit ; 
 there is very little competition and no invention, 
 for who could utilise the invention, and where is 
 the incentive ? In short, the working of division 
 of labour is at its minimum. But introduce among 
 this loose and isolated population facilities of inter- 
 communication, and it will be like breathing life 
 into so many marble statues. Give them the use 
 of roads, canals, railways, ships, telegraphs, and 
 telephones, and this torpid population will gradu- 
 ally develop into action and vigour. The move- 
 ment, slow at first, will acquire momentum. Emula- 
 tion will be aroused, and will beget competition, 
 which is the mother of energy and invention, 
 skilled and special will be substituted for rude and 
 miscellaneous labour ; or, in other words, the divi- 
 sion of labour will again be at its beneficent work, 
 and the whole aspect of things will be changed.
 
 MINNESOTA AND TAMBOFF. 45 
 
 What the inertness of solid ice is to running water, 
 such is the quiescence of stagnant isolation to the 
 activity of easy and rapid intercourse. 
 
 In another and a more direct way do " facilities 
 of inter-communication " also promote the creation 
 of wealth — they make those productions useful, 
 and therefore of value, which, being otherwise out 
 of the reach of consumers, would be unused, and 
 therefore of no value. Let us, for an exemplifica- 
 tion of this, take the case of Minnesota, one of 
 the United States of America, in contrast with 
 Tamboff, one of the most fertile provinces of 
 Russia in Europe. Both are blessed with a soil 
 and a climate exceptionally favourable to wheat- 
 cultivation, viz., a deep alluvial mOuJd and a clear 
 sunny sky. In no other part of the world are cereals 
 raised in greater luxuriance, and with a smaller 
 expenditure of capital and labour. Both produce 
 wheat in very great excess of home consumption ; 
 and both are, unfortunately, situated at a very 
 great distance from a shipping port on the sea- 
 board, through which their surplus produce might 
 find a vent in the outer world. 
 
 But here the parallelism between the two ceases 
 The surplus produce of Minnesota is all utilised 
 abroad, and therefore constitutes wealth. The sur- 
 plus produce of Tamboff is not utilised abroad, but is 
 wasted, and rots unconsumed at home, and there- 
 fore becomes not wealth, but "simply matter in 
 the wrong place." The reasons of this contrast are 
 not far to seek. The paternal and autocratic 
 Government of Russia discourages private enter- 
 prise ; the fraternal and democratic Government of
 
 46 WEALTH-CREATION. 
 
 the United States gives it full scope. The energy 
 and enterprise of free American citizens have 
 extended their railway system to every part of 
 their vast country where there are either passengers 
 or goods to carry. By this time (i88i) the total 
 mileage over which their locomotives run is not far 
 short of one hundred thousand miles. By means 
 of these great " facilities of communication " the 
 large surplus over home consumption of wheat 
 grown in Minnesota is conveyed, rapidly and at a 
 moderate cost, to a distant shipping port, and thus 
 finds a remunerative market in Europe. 
 
 Now let us look at the other side. The distance 
 between Minnesota and the Atlantic sea-board is 
 five times greater than that between Tamboff and 
 the Sea of Azov ; but, nevertheless, the large sur- 
 plus over home consumption of wheat grown in 
 Tamboff is debarred from all access to a shipping 
 port from want of communication, and can there- 
 fore find no market whatever. There are not only 
 no railroads, but even no common roads that can 
 be used for the conveyance of the grain ; and what 
 would be a mass of wealth if it could be trans- 
 ported to Taganrog, or any other port on the Sea of 
 Azov, remains at home to be shovelled into a mound 
 in the open field, for it is not worth even the expense 
 of a shed. There the grain sprouts and decays, the 
 upper stratum germinates into a sickly and ephe- 
 meral vitality, and the whole soon decomposes 
 into a mere heap of manure. We have referred 
 to this waste at p. 3 as an exceptional instance of 
 undistributed wealth. And the reason of its non- 
 distribution is the absence of "facilities for inter-
 
 SCIENTIFIC DISCOVERIES. 47 
 
 communication." This absence of such faciHties 
 is again strikingly illustrated in the case of those 
 local famines in India, of periodical recurrence, 
 which have been known to co-exist with super- 
 abundance of food in districts not very remote, but 
 from which relief was debarred by the difficulties 
 of inter-communication. 
 
 But rapidity and cheapness of locomotion, 
 whether for men or goods, are not the only means 
 by which facilities of communication promote the 
 creation of wealth. Infinite is the variety of ways 
 in which the use of the electric telegraph and of 
 the telephone conduces to a saving of time and 
 labour, both of which, being thus liberated, may be 
 utilised for other wealth-creating purposes. The 
 production of a given result by the smallest 
 possible expenditure of human energies, leaves 
 the more of those energies available for the attain- 
 ment of other beneficial results. 
 
 A 6. Scientific Discoveries. — Every stage 
 in the progress of the exact sciences has contri- 
 buted to furnish man with fresh appliances for 
 utilising the resources of nature, and, as a con- 
 sequence, to increase his capacity for creating 
 wealth. Each fresh scientific discovery furnishes 
 him either with new objects on which, or new 
 agencies by means of which, he may exercise his 
 skill and ingenuity. The additional power which 
 he thus acquires enables him to abridge his work 
 by the substitution of short, cheap, secure, or de- 
 cisive, for long, expensive, dangerous, or uncertain 
 processes, and in several other ways to effect a 
 considerable saving of labour and capital. The
 
 48 WEALTH-CREATION. 
 
 inventors and improvers of machinery could have 
 made but slow advance without the aid of scientific 
 investigation and discovery. Indeed, in many cases 
 the powers of discovery and of invention have been 
 combined in the same individual. But even when 
 they were not, their mission lay in the same direc- 
 tion. Science discovered, and invention applied 
 the discovery to practical purposes. Sometimes a 
 long period elapses between the discovery and its 
 application, as was the case, for instance, with elec- 
 tricity. Franklin's reply to the question, " What is 
 the use of electricity .? " was another question, 
 " What is the use of a baby ? " And he was right ; 
 the baby grew and matured into telegraphy. 
 
 Although science has achieved so much, and 
 has extended our knowledge of the laws of nature 
 a long way beyond the bounds of what was once 
 considered to be the " knowable," far from finding 
 ourselves nearing such bounds, the horizon recedes 
 as we advance, and our expectations of farther 
 progress are livelier than ever. Each fresh dis- 
 covery widens the field for investigation ; and the 
 more we conquer of Nature's secrets, the more 
 eagerly and hopefully do we aspire to fresh con- 
 quests. There are still a vast number of things 
 which we need to know, and of objects which we 
 desire to accomplish ; and just as during the last 
 half-century progress has been more rapid than at 
 any former epoch, so do we hope and anticipate 
 that the advance of scientific discovery during the 
 next fifty years may be proportionately accelerated. 
 Who is there bold enough to prescribe limits to 
 the possibilities that may result from scientific
 
 MENTAL SCIENCE COMPARATIVELY STAGNANT. 49 
 
 investigations ? One thing is certain : that each 
 step forward will increase man's power over ex- 
 ternal nature, and will enable him to obtain larger 
 results with smaller efforts. 
 
 But it is the exact sciences only that have ex- 
 hibited this immense activity of progression. The 
 mental sciences (metaphysics, psychology, &c.) have 
 remained nearly stagnant, and in these Herbert 
 Spencer is only a short way in advance of Aristotle. 
 In the moral sciences, among which religion and 
 politics exercise by far the most powerful direct! 
 influence over the welfare and destinies of man, 
 some slight improvement is visible, but it is in- 
 finitesimal as compared with the rapid progressive 
 movement of the exact sciences. In these, every 
 step is a step forward — one discovery serves as 
 a fulcrum wherewith to elicit another — and the 
 ground once gained is never lost again. For 
 instance, that electricity yields a powerful light 
 with little heat is a fact so easily demonstrable, 
 and so palpable to the senses of a common 
 observer, that no one will be found to dispute it, 
 and it will prove a recognised starting-point to 
 other improvements, such as lighting mines with- 
 out danger of explosion, &c. &c. 
 
 But it is otherwise with the mental and moral 
 sciences. There is hardly a proposition in con- 
 nection with these that is not contested by some 
 one or other. Writer after writer on the subject 
 partially assents to some things, and totally objects 
 to others — to old he substitutes new definitions, 
 which lead to fresh disputes — and at last he finds 
 in the strictures of others upon his own propositioEf 
 E
 
 50 WEALTH-CREATION. 
 
 a parallel to his own strictures upon the proposi- 
 tions of his predecessors. Meanwhile, new and old 
 propositions, new and old definitions, and new and 
 old conclusions, all get mixed up in inextricable 
 confusion, and the result is chaos and inconclusive- 
 ness. All attempts to rear up a solid scientific 
 structure must necessarily fail where there is dis- 
 sension and discordance about the foundation- 
 truths. The fact is that the mental and moral 
 sciences have to deal with man and his ever- varying 
 and erratic volition ; the exact sciences with matter 
 and its fixed and constant properties. It is re- 
 grettable that no universally acknowledged standard 
 of truth in politics, morals, &c., has yet been reached 
 by means of the former class of sciences, but we 
 must accept things as they are, and all we can do 
 is to use the direct material benefits which the 
 exact sciences confer on us for the purpose of in- 
 directly promoting the moral and intellectual wel- 
 fare of our race. 
 
 The operation of scientific discovery on the 
 creation of wealth corresponds very nearly with 
 that of machinery and other labour-saving pro- 
 cesses. It similarly tends to increase the sum of 
 human enjoyments, and, at the same time, to lessen 
 the expenditure of human labour on the production 
 of given results. By way of illustration, let us 
 imagine that science should discover a cheap and 
 easy method of supplying heat for the use of 
 man, thus superseding the employment of coal, 
 wood, and other fuel, and let us sec what would 
 follow. 
 
 I. There would be a demand for labour and
 
 SUPPOSE THE USE OF COAL SUPERSEDED. 5 1 
 
 capital to work the new discovery. This, having 
 supposed it to be " cheap and easy," might require, 
 in order to produce a given quantity of heat, one- 
 tenth, let us say, of the labour required to produce 
 the same quantity of heat through the agency of coal. 
 
 2. The demand for coal would cease, and the 
 coal-miners would be thrown out of employment. 
 
 3. Out of every hundred thousand of these 
 miners, ten thousand might probably be re-absorbed 
 as labourers on the new discovery. The other 
 90,000 would gradually find employment in other 
 industries, for, as we have explained at p. 38, the 
 fund out of which wages are paid would, even at 
 the outset, remain the same, and if less of it were 
 spent on one class of labour, more of it would 
 be spent on other classes. The general demand 
 for labour would be at least as great, and nu- 
 merically as many workers would be employed 
 — only, a little time would be required for the re- 
 adjustment of the old supply to the new demand. 
 
 4. This displacement of workers from coal-mines 
 to other fields of industry would no doubt be pro- 
 ductive of inconvenience and even suffering to the 
 90,000 miners during the period of transition. But 
 would the most zealous protectionist contend that 
 the new discovery should be scouted, and its use pro- 
 hibited, on account of the transient injury which 
 its adoption would inflict on the coal-miners ? If, 
 indeed, the 90,000 displaced miners were per- 
 manently to remain without work and wages, and 
 hence were left to perish in misery and starvation, 
 that would be a catastrophe from which all men 
 would recoil with horror. The erroneous impression 
 
 E 2
 
 52 WEALTH-CREATION. 
 
 that such would truly be the result has led many 
 honest and simple-minded persons to view with 
 misgivings, if not with aversion and condemnation, 
 most innovations and improvements ; they not 
 seeing their way to the avoidance of the catastrophe 
 aforesaid. Their misgivings, however, do more 
 honour to their hearts than to their heads. We, 
 with feeling certainly not less sympathetic towards 
 our fellow-men, know that the evil is exceptional 
 and transient, while the benefit is universal and 
 permanent, and that it would be a miserable weak- 
 ness, not to say an unpardonable crime, to reject 
 the latter in order to avoid the former. It is per- 
 fectly clear to all who reflect that the sum which 
 would have been paid in wages to the 90,000 
 miners, and was not so paid, will, just the same, 
 be expended in wages for labour in some other 
 form ; and that the general demand for labour 
 which will re-absorb the 90,000 miners, will at once 
 be at least as great as before, and eventually be 
 much greater than before, although it may be for 
 labour of a difterent kind. The only evil, therefore, 
 that can result from the new discovery is the partial 
 and temporary displacement of labour and capital. 
 5. Let us now look at the benefits which it con- 
 fers. Through this cheap heat-supplying discovery, 
 the labour of 10,000 men supplies the world with 
 the same quantity of heat which it required 100,000 
 men to supply before ; and, in addition, the world 
 gains all the increased wealth which the labour of 
 the 90,000 disengaged miners will now create by 
 devoting that labour to the production of other 
 commodities. This large addition to the store of
 
 DISPLACED LABOUR SOON RE-ABSORBED. 53 
 
 "such objects of human desire as are obtained or 
 produced by human exertions" is all profit. It is 
 the difference between what the same aggregate 
 quantity of labour produced before and what it 
 produces now. It is a gratuitous boon to mankind. 
 
 It may be objected by some that it is harsh and 
 unjust to the working men to adopt processes that 
 shall throw any of them out of work, that it is our 
 duty to find them employment, not to deprive them 
 of it, and that we ought thus to afford " protection 
 to native industry." The fallacy which underlies 
 this argument against all improvement is simply 
 this. It is therein assumed that the labour-sellers, 
 who, whether by novel mechanical appliances, or 
 by fresh scientific discoveries, or by changes in 
 fashion, or by the repeal of protective duties, are 
 once thrown out of work, are condemned to remain 
 permanently unemployed, to cease to earn a living, 
 and to become unproductive consumers evermore, 
 until they die off in misery and destitution. Now 
 no such thing ever does occur. Both experience 
 and reason show the absurdity of such an assump- 
 tion. The stage-coachmen, stablemen, ostlers, &c., 
 who were " disestablished " by the railway system, 
 did not perish as paupers, but found other channels 
 for honest employment. 
 
 Year after year new processes to abridge labour 
 are adopted in every branch of trade, which, pro- 
 visionally, throw a certain number of men out of 
 employment, but it is only for a short time that 
 their labour is lost to themselves and to the 
 community. It is soon shifted into another groove, 
 and continues its contributions to the national store.
 
 54 WEALTH-CREATION. 
 
 We trust that we have succeeded in demonstrating 
 that the ultimate and permanent issue of all labour- 
 saving improvements is largely to increase the 
 general demand for labour. As we showed at page 
 32, " the whole of the earnings of fixed capital are, 
 directly or indirectly, appropriated to the remunera- 
 tion of labour, that is, to the payment of wages." 
 Whatever portion of the wage-fund might not be 
 wanted for the payment of one kind of labour will 
 be expended on some other kind of labour. All 
 that portion of wealth which is created by the 
 capital and labour set free in consequence of new 
 discoveries or of improved processes is so much 
 added to the world's previous wealth, so much to 
 the good, so much more to distribute towards the 
 supply of man's wants. 
 
 Whenever masses of industrious workers have 
 been permanently deprived of work, it has not 
 been in consequence of improved processes creating 
 the same amount of wealth with the employment 
 of less labour. On the contrary, it has occurred 
 when production, instead of being expanded, has 
 been abridged, when mills, furnaces, and workshops 
 stood idle, when capital, crippled by commercial 
 failures, or paralysed by panic, had withdrawn from 
 its co-operation with labour. Those are the cir- 
 cumstances under which labour-sellers are exposed 
 to prolonged suffering. On the other hand, the 
 happy days of active production and of general 
 prosperity have usually been those immediately 
 following the vigorous impulse to trade given by 
 the adoption of some important discovery tending 
 to save labour. Even the most antiquated advo-
 
 EDUCATION AND MORALITY. 55 
 
 cate for " protection to native industry " would 
 ridicule and ignore a discovery that tended not to 
 save but to increase the labour requisite to pro- 
 duce a given result ! The very men who went 
 about in 1776 breaking up machinery lived to see 
 that same machinery generally adopted, and joy- 
 fully to find that four times as many men were 
 employed at good wages on those machine-worked 
 manufactures as when hand-labour alone was used. 
 
 It must not be said that we dwell too per- 
 sistently on this point. The erroneous assumption 
 that, by labour-saving processes or by cheaper 
 production in other ways, labour is not only dis- 
 placed but destroyed — that the labour-seller once 
 thrown out of work remains for ever out of work, 
 and ceases henceforth to be an agent of production, 
 — is at the root of many economic fallacies, and 
 cannot be too forcibly exposed. 
 
 To sum up, we must enrol scientific discoveries 
 among the most powerful auxiliaries in the noble 
 and beneficent work of wealth-creation. 
 
 CHAPTER V. 
 
 Education and Morality promote, and are promoted by, the 
 Creation of Wealth — Erroneous Notions concerning the 
 Virtues of Industry and Frugality. 
 
 A 7. Education and Morality. — It will hardly 
 be required of us to do much more than simply 
 enunciate the following proposition, viz. : The 
 universal diffusion of sound knowledge tends to
 
 56 WEALTH-CREATION. 
 
 develop all those qualities in man which most 
 efficiently promote the creation of wealth, and to 
 correct and abate those social evils which notably 
 impede it. The idle, the improvident, the intem- 
 perate, and the lawless, are mainly recruited from 
 among those whom no education has rescued from 
 the baneful influence of bad surroundings, or from 
 the mental torpidity of sheer ignorance. This is 
 not the place for referring to the distinction be- 
 tween the preparatory education that teaches the 
 pupil Jiow to think, and leaves his mind open to 
 future inquiries and convictions, and the dogmatic 
 education that teaches the pupil what to think, and 
 grafts on his mind convictions ready-made. We 
 hail with a hearty welcome all work and all 
 workers in the cause of education. Only let the 
 thinking faculty that resides in every human breast 
 be quickened into active life, it will soon find the 
 food on which to grow, and may eventually ex- 
 pand into a vigorous individuality. Education gives 
 every man his chance, and that chance society is 
 bound to afford to him. 
 
 A notion once prevailed among many people, 
 and may still be found lingering in sequestered 
 nooks, that education would turn the heads 
 of the working people and deprive the world of 
 housemaids and cooks, of navigators and scaven- 
 gers. The schoolmaster has been busy for some 
 years, but no such result has occurred, and the 
 more highly educated the people, the less likely 
 we think it is to occur. On the contrary, the pre- 
 vailing and very proper tendency is to recognise 
 the dignity of all honest labour. No kind of useful 
 
 I
 
 THE DIGNITY OF HONEST LABOUR. 57 
 
 work is ignoble, and its faithful performance confers 
 honour, not discredit. Education, by raising the 
 labourer in the social scale, raises the work at the 
 same time to a higher level. Indeed, education may 
 be said to sanctify labour and elevate it to the rank 
 of a sacred duty. The superiority of one task over 
 another can only depend on the greater or lesser 
 amount of intellect, inventiveness or conscientious- 
 ness which each task may respectively involve ; 
 and the superiority of one worker over another 
 can only depend on the greater or lesser thorough- 
 ness and skill which each worker may respectively 
 display. It is on these gradations that the hier- 
 archy of work - performers will eventually be 
 founded. 
 
 In the word " education " we naturally include 
 the idea of " morality," for the latter is always 
 intended to be, and really is as a rule, the outcome 
 of the former. There are, to be sure, many well- 
 educated men who are immoral, many clever 
 rogues, and some sensational Eugene Arams./^^y, / «^ 
 But exceptions must not be construed into types. 
 No one surely will contend that it was the pos- 
 session of a certain amount of instruction that 
 turned these persons into social pests, and that a 
 departure from ignorance is tantamount to a de- 
 parture from virtue. The softening, refining, and 
 elevating influence of education none can gainsay, 
 nor can any thorough training of the intellectual 
 faculties take place without some corresponding 
 development of the moral sense. Knowing what 
 it is right to do is the first step towards doing what 
 is ri<7;ht.
 
 58 WEALTH-CREATION. 
 
 The smallest part of a man's education is that 
 which he receives when a boy from his schoolmaster. 
 The latter only furnishes him with the tools by means 
 of which the man is able, in his after-life, to seek 
 for knowledge, provided he then have at his com- 
 mand the time and the opportunities for so doing. 
 Unless those two conditions are present, he will 
 find it difficult to utilise the elementary knowledge 
 which he gained at school. He may indeed be 
 able to read newspapers and listen to speeches, if 
 he has time, but these only convey to him second- 
 hand impressions on local or ephemeral matters. 
 From that higher scheme of true education which 
 consists in weighing the thoughts of great thinkers 
 on great things, and by reflection, comparison, 
 rejection, and adoption, framing his own inde- 
 pendent convictions on important topics, he will be 
 debarred. And it is to the lack of those conditions 
 and of the higher education which they alone render 
 possible, that the immense majority of the labour- 
 sellers throughout the world appears, under the 
 present regime, condemned. Books and a certain 
 amount of leisure are the requisites for intellectual 
 development ; but books and leisure are inacces- 
 sible to the many millions who now toil all day, 
 and all their days, without any respite except that 
 which is indispensable to recruit their strength for 
 the toil of the morrow. 
 
 Is the continuance of this state of things the 
 irrevocable doom of mankind ? Is it the irremedi- 
 able and inevitable outcome of our present social 
 organisation ? Are there no means, no hope, no 
 chance of escape from it } Many have given up
 
 IS MANKIND DOOMED TO SUFFERING? 59 
 
 the problem in despair, and while they deplore 
 the lamentable shortcomings of human institutions, 
 they pronounce those shortcomings to be inherent 
 and incurable. " iVll else," they say, " is Utopia. 
 Blood and iron must still rule. Man is, by nature, 
 a pugnacious animal, with great scientific aptitudes 
 for destroying life in large masses. He must follow 
 his destiny. There are no means of striking an 
 average between those who have too much and 
 those who have too little. The present grievous 
 inequalities in the conditions of men are the doom 
 of inexorable fate, and must be submitted to. We 
 must go on in the same groove. All else is Utopia." 
 Heaven forefend that it should be so ! If we 
 assented to these doctrines, we should this instant, 
 disheartened and disgusted, throw down our pen, 
 and despair of the future of mankind. 
 
 But, no ! We are thoroughly and deeply con- 
 vinced that the holders of these doctrines are 
 wrong. They are far too implicitly guided in their 
 views of what may yet be, by the consideration of 
 what has hitherto been. We contend that not only 
 there might possibly, or may probably be, but that 
 there ought to be, and that, some day, there will 
 be, without any dislocation of the present frame 
 of society, such a distribution of the products of 
 human labour and capital as shall leave no deserv- 
 ing person unprovided for. Indeed, whither other- 
 wise is civilisation tending .'' Is it to the physical, 
 mental, and moral welfare of the totality — or of 
 only a small number.'' If of the latter, then such 
 a tendency is towards injustice and cruelty ; for it 
 implies superior enjoyments to the few, and inevi-
 
 6o WEALTH-CREATION. 
 
 table privations to the many. If of the former, 
 then let us proceed in the strenuous endeavour to 
 extend all the advantages of civilisation to that 
 totality ; and if we find this, in its literal sense, 
 unattainable, let us approach to it as nearly as we 
 possibly can. What we want is enough of physical 
 comfort and of mental culture for all ; and these 
 wants can easily be supplied, if human efforts, 
 instead of being as they mostly now are, wasted 
 or misapplied, were properly and intelligently 
 directed. For that purpose we require such 
 measures as will secure the largest possible pro- 
 duction of wealth with the smallest possible ex- 
 penditure of labour. Towards attaining this result 
 the education and morality of the people play a 
 very important part. 
 
 Among the various virtues which are included 
 in the generic term " morality," the two which 
 perhaps have the most direct bearing on the crea- 
 tion of wealth are industry and frugality. It is 
 these virtues (which, duties at first, soon become 
 habits) that mostly convert labour-sellers into 
 capitalists, and that contribute powerfully to the 
 welfare of both the individuals themselves and of 
 the community at large. Yet neither have escaped 
 some vulgar prejudices in regard to them. The 
 converse of industry is idleness, and to be idle was 
 long deemed the enviable prerogative of the rich 
 and the great. Not to do anything that savoured 
 of work constituted the "gentleman." The pursuit 
 of mere amusement, the insolence of false pride, 
 nay, even the indulgence in pleasant social vices 
 (affording perhaps transient gratification but inflict-
 
 INDUSTRY AND FRUGALITY. 6l 
 
 mg lasting pain) were overlooked and even con- 
 doned because they indicated a "person of some 
 consequence." These absurd notions are, however, 
 rapidly passing away. People now look to the 
 personal qualities of a " person of quality ; " and 
 judge of him by a critical, not a conventional, 
 standard. It is by no means so clear to the multi- 
 tude as it formerly was, that industry is degrading 
 and idleness a badge of superiority. 
 
 In regard to frugality, the vulgar delusion 
 assumed another shape. The easy, self-indulgent 
 man, who freely spent what he had (or more than 
 he had), was supposed to be a public benefactor, a 
 liberal, large-souled man, who made money circu- 
 late, and gave a patriotic impulse to trade. On the 
 other hand, the prudent, frugal man was set down 
 as a close-fisted, niggardly churl, whose money was 
 hoarded instead of descending in golden showers 
 on the people around him. This popular fallacy 
 embodied the doctrine preached with such perverse 
 ingenuity by Mandeville in his " Private Vices made 
 Public Benefits." The truth of the matter is 
 simply this. The money of the spendthrift is cir- 
 culated, and so is that saved by the economist. 
 In that respect they both stand upon an exactly 
 equal footing. But the former is absorbed waste- 
 fully, and totally consumed ; the latter mostly 
 becomes reproductive capital. In both cases the 
 money finally goes to pay the wages of labour, but 
 in the first case, the golden showers descend on the 
 caterers of fugitive and barren luxuries ; and in the 
 second, on productive enterprises or on borrowers 
 for reproductive purposes.
 
 62 WEALTH-CREATION. 
 
 Let us take the instance of a miser who saves 
 nineteen-twentieths of his income. The whole of 
 that income goes into circulation just as much as 
 though he spent it all. What he saves, he invests, or 
 lends, or places with a bank on deposit, and it thus 
 becomes capital. That is, it goes to increase that 
 fund which permanently employs labour in the pro- 
 duction of fresh wealth. If he had saved nothing, and, 
 like the spendthrift, had wasted his whole income 
 on personal enjoyment, it would no doubt have 
 gone to pay labour for once ; but only for once, and 
 then vanishing for ever. As an illustration, con- 
 trast the result to a landowner of his spending a 
 given sum on horse-racing with that of his spending 
 the same sum on the drainage of his land. In the 
 former case the money is gone never to return, in 
 the latter he secures a permanent increase of in- 
 come. The misei* does not destroy what he does 
 not spend. Unless he digs a hole and buries his 
 wealth in it, he must dispose of it in some way, and, 
 whatever way that may be, it must of necessity be 
 of more service to the world than if he had spent it 
 in evanescent enjoyments. Frugality, even when 
 it runs into excess and lapses into avarice, does not 
 cease powerfully to promote wealth-creation. 
 
 These two kindred virtues of industry and 
 frugality exercise a very direct influence over the 
 material progress of mankind. Capital is simply 
 unconsumed production. Now, industry enlarges 
 the boundaries of production, while thrift narrows 
 the limits of consumption ; and through their joint 
 operation, the balance, which is capital, receives 
 proportionately greater amplitude. The small
 
 NATIONAL WEALTH FROM INDIVIDUAL THRIFT. 63 
 
 individual savings of the many form a large 
 accumulation of national savings in the aggregate, 
 for the wealth of a community is made up of the 
 combined wealth of its members. Thus, while 
 industry and thrift bring comfort and independence 
 to each household, they build up and aggrandise 
 the national resources. Statesmen have of late 
 years wisely recognised the private and public 
 advantages of these accumulations of minute 
 individual savings, and have encouraged and 
 facilitated them by official banking institutions, 
 in which the smallest deposits are admitted and 
 accounted for. 
 
 Among the labour-sellers in different countries, 
 the relative development of industry and of thrift 
 respectively varies according to race, temperament, 
 education, climate, &c. Thus, we may note that, 
 as a rule, among that mixed race which we call 
 Anglo-Saxon there is more of industry and less of 
 thrift. The men work hard and efficiently, but 
 they lack self-control, and spend too much. With 
 the Latin and Celtic peoples the tendency is the 
 other way. The labour is not so productive, but 
 more self-denial and thrift prevail, so that the 
 balance of their savings is probably nearly as great. 
 The equalising influence of education and free 
 inter-communication will, no doubt, in time, level 
 these differences and establish the proper mean 
 between them. 
 
 The general conclusion to be drawn from what 
 precedes is, that, if education be essential to the 
 full development of wealth-creation, the latter is no 
 less indispensable to the universal spread of educa-
 
 64 WEALTH-CREATION. 
 
 tion in its higher form of intellectual and moral 
 culture. These two factors mutually act and 
 re-act on each other ; and whatever advance is 
 made in either, it will be quickly followed, if not at 
 once accompanied, by a corresponding advance in 
 the other. 
 
 We have now gone through the list of those 
 aids to wealth-creation which we had, at p. 14, 
 proposed to examine. That list, however, was far 
 from an exhaustive one, and numerous other topics 
 readily suggest themselves as tending in the same 
 direction. But some are too general in their scope 
 or too indirect and partial in their connection with 
 the subject to justify, while others are either too 
 obvious or too unimportant to require, a separate 
 reference. It will be observed that of all those aids 
 to wealth-creation of which we have treated, there 
 is not one that it is not in the power of man to 
 adopt and carry out with more or less of complete- 
 ness. It is for him, after inquiry and reflection, 
 to decide whether those are truly the best means 
 of attaining the best ends. If deemed to be so, 
 there is no intrinsic difficulty, nor should there be 
 any avoidable delay, in manfully resorting to them. 
 True, that in the way of this active advance 
 towards universal well-being there intervene cer- 
 tain obstacles, but we contend that, far from being 
 insuperable, they can speedily be removed by the 
 intelligent exercise of human volition. At a farther 
 stage of this inquiry we shall advert to these 
 obstacles, and measure their power of obstruction.
 
 65 
 
 CHAPTER VI. 
 
 Impediments to Wealth-creation — Insecurity of Person and Pro- 
 perty — Superfluity of Unproductive Consumers — Their Classi- 
 fication. 
 
 Having now considered the chief aids, we shall 
 proceed to consider the chief impediments to 
 wealth-creation, as classified at p. 15. 
 
 B I. Insecurity of Person and Property. 
 — To put it in other words, one of the most for- 
 midable obstacles to wealth-creation is bad govern- 
 ment. It is clear that capital will not be brought 
 into existence, or will soon cease to exist, or will 
 take unto itself wings and fly, unless it be secure 
 from robbery or confiscation. Who would care to 
 accumulate capital in a country where, or at a time 
 when, it was liable to spoliation, through either the 
 weakness or the wickedness of the government } 
 Under such baneful influences, not only there is no 
 growth, but there is decadence ; not only the crea- 
 tion of native capital is impossible, but the intro- 
 duction of foreign capital is repelled. 
 
 For instance, there exists a wide and promising 
 field for the employment of capital and labour in 
 the vast and fertile plains and in the latent mineral 
 wealth of Asia Minor, but who would risk either 
 capital or labour under the precarious protection of 
 the feeble and loose-jointed Turkish Government 
 against the red-handed swoop of greedy and un- 
 scrupulous Turkish pashas ? On the other hand, 
 observe the enormous amount of European capital 
 F
 
 66 WEALTH-CREATION. 
 
 that has been attracted, by a sense of the security 
 to person and property that there prevails, to 
 North America, Anglo-India, and our Australian 
 and other colonies, and the rapid creation of 
 wealth that has resulted therefrom. Where capital 
 goes, there also goes labour^ which both feeds upon 
 it and feeds it — labour which consumes indeed, but 
 which, intelligently applied, reproduces infinitely 
 faster than it consumes. This happy combina- 
 tion of capital and labour generates fresh masses 
 of wealth, of which the unspent portion goes to 
 form additional capital, and to sustain additional 
 labour. 
 
 Sometimes, however, lured into extra risks by 
 the temptation of extra profits, capital gets en- 
 tangled into dangerous operations. Among other 
 forms of imprudence large loans have been granted 
 at various times to governments and nations of 
 doubtful solvency, mostly, however, on terms which 
 implied a knowledge of the risk encountered. 
 Through ignorance ordishonesty,mismanagementor 
 misgovernment, the sums thus lent have frequently 
 been misapplied or wasted. The wealth which, if 
 used as reproductive capital, would have been a 
 source of prosperity and improvement, was squan- 
 dered on futile, or sometimes on evil, objects, and 
 the borrowing governments soon became unable to 
 pay either the interest or the principal of their 
 debts. Thus the capitalists lost their money, and 
 the improvident governments lost all the advan- 
 tages which the proper use of that money would 
 have conferred, had it been applied to developing 
 the resources of their country. Made aware by
 
 SECURITY TO PERSON AND PROPERTY. 6/ 
 
 bitter experience of the insecurity of investments 
 made in such countries and with such governments, 
 foreign capitalists henceforward stand aloof from 
 them. They consequently fall to the rear in the 
 march of improvement, and lag languidly behind. 
 Turkey and the South American republics are 
 notable instances, among some others, of confidence 
 so forfeited. 
 
 With trifling exceptions, the only direct means 
 by which a government can promote wealth-crea- 
 tion is by affording complete security to person 
 and property. Whenever it actively interferes, 
 however plausible the motive, with the natural 
 course of trade and industry, such interference is 
 almost always mischievous. Left to themselves, 
 buyers and sellers, producers and consumers, im- 
 porters and exporters, capitalists and wage-re- 
 ceivers, all find out, by long experience and by 
 constant search after new modes of gain, the 
 best conditions under which they can make those 
 interchanges of which trade consists, and of which 
 the individual profits constitute the aggregate 
 profits of the community. Undoubtedly, it is 
 within the province of government to prohibit 
 adulterations, to punish frauds, and to enforce con- 
 tracts. These, however, are mere police duties, 
 indispensable to the security of person and pro- 
 perty. These only define what shall not be done, 
 but do not prescribe how wealth-creators shall do 
 the work which they have to do. Of that, they 
 themselves are the best judges. 
 
 But a government goes beyond its province, 
 and gets out of its depth, when by fiscal regula- 
 F 2
 
 68 WEALTH-CREATION. 
 
 tions it ventures to destroy one class of industry in 
 order to rear another on its ruins. By adopting 
 the protective system, it takes on itself the re- 
 sponsibility of directing the industry of the country 
 into other than its natural channels. In effect, the 
 following is the announcement of its policy : " You 
 manufacturers of articles A and B, which are now 
 exported in exchange for the foreign articles L 
 and M, you must shut up your factories and throw 
 your men out of work, for we are going to pro- 
 hibit the import of the foreign articles L and M, 
 and make them at home. Therefore your articles 
 A and B will no longer be wanted in exchange for 
 them." Is not this a great injustice to the capital 
 and labour engaged in the production of articles A 
 and B ? And all the more so as these latter were 
 produced so cheaply that the foreigner bought 
 them, while articles L and M are produced so 
 dearly that a protective duty is necessary to 
 compel the native consumers to buy them. 
 
 Even from the most comprehensive point of 
 view, this meddlesome interference of governments 
 in such matters must be either inoperative or in- 
 jurious. For if it produces no change in the dis- 
 tribution of industries it is useless and aimless. If 
 it does, it must be for evil, since it implies a dis- 
 turbance of the natural arrangements into which 
 commerce and industry had settled. Protection to 
 an industry that requires protection necessitates 
 the sacrifice of some other industry that requires 
 no protection. All, therefore, that the producers 
 and distributors of wealth really require at the 
 hands of government is protection to person and
 
 SUPERFLUITY OF UNPRODUCTIVE CONSUMERS. 69 
 
 property. Most of what governments volunteer to 
 contribute beyond that is pernicious. On the other 
 hand, such security is indispensable to wealth- 
 creation ; for without that, most of the induce- 
 ments which move men to produce in excess of 
 their daily requirements, and to accumulate capital, 
 are wanting. 
 
 B 2. Superfluity of Unproductive Con- 
 sumers. — If all the adults of a community were 
 (other circumstances being favourable) to contri- 
 bute directly, by every means in their power, to 
 the creation of wealth — or, in other words, if there 
 were no unproductive consumers — it is self-evident 
 that either the wealth thus created would far exceed 
 the wants (amply supplied) of all, or else that the 
 average number of working hours per diem would 
 be reduced far below what they now are. Indeed, 
 in the latter respect, some progress has already 
 been made, and in some countries fewer hours of 
 consecutive labour, and more frequent respites 
 from that labour, now accrue to both physical and 
 mental workers. We are less plodding, but 
 quicker and sharper at our work than our an- 
 cestors. Our facilities of locomotion and inter- 
 communication are infinitely greater, and in 
 England, with few exceptions — such as railway 
 pointsmen, members of Parliament, and fashionable 
 milliners— a somewhat larger proportion than for- 
 merly of the twenty-four hours is devoted to rest, 
 recreation, or refinement. But the general im- 
 provement is very small, and, small as it is, it 
 only reaches a certain number in a few countries, 
 because the aids and impediments to wealth-crea-
 
 70 WEALTI I-CREATION. 
 
 tion have as yet been little considered from a 
 politico-social point of view. 
 
 While, however, it is impossible that all the 
 adults of a community should, as is assumed in 
 the foregoing hypothesis, become productive con- 
 sumers, it is clearly in the interests of wealth-crea- 
 tion that social arrangements should approach that 
 desirable state of things as closely as possible, and 
 that there should be in a state as few unproductivj 
 consumers as is consistent with other considera- 
 tions. The greater the number of those on whom 
 the burden of production may collectively weigh, 
 the smaller will be the strain on each. 
 
 Let us now proceed to analyse and classify the 
 various sections into which civilised societies are 
 divided, and to inquire whether there do not exist 
 among them an unnecessarily large number who 
 consume without producing, and who are with- 
 drawn, without adequate or justifiable cause, from 
 the important work of wealth-creation. 
 
 The following four categories will, we believe, 
 embrace all classes of the community : — 
 
 1. Those who produce and distribute wealth — 
 
 that is, who contribute land, capital, and 
 labour. 
 
 2. Those who govern, and the various func- 
 
 tionaries whom they employ. 
 
 3. Those who are engaged in the learned and 
 
 other professions. 
 
 4. Those who are unemployed, or who have no 
 
 legitimate means of earning a livelihood. 
 The constituents of all civil societies are re- 
 solvable into these four groups, and we shall
 
 PRODUCERS OF WEALTH. 7 1 
 
 examine each seriatim, with, a view to inquire how 
 far in each the relative number of productive and 
 unproductive consumers might be advantageously 
 modified. 
 
 I. Those who produce ajid distribute wealth. — 
 This division primarily includes those persons who 
 contribute to the three factors of all wealth, viz, — 
 land (of course including mines, &c.), capital, and 
 labour. We have shown at p. 12 that all three are 
 indispensable to production, and that no two of 
 them could be efficient without the concurrence of 
 the third. The land-owner, the capitalist, and the 
 labour-seller are co-agents in the work, and so 
 equal in efficacy that neither of them can claim any 
 superiority over the rest. Land and labour without 
 capital are about as helpless as capital and land 
 without labour. Since, then, the production of 
 wealth is impossible without a combination of all 
 three classes — land-owners, capitalists and labour- 
 sellers — it follows that each class is entitled with 
 equal justice to be designated a productive class. 
 The claim often put forward on behalf of the 
 labour-sellers that they are the sole creators of 
 wealth is inadmissible. It is doing them a real 
 service to remove that erroneous impression. 
 Their true, and therefore their best, policy is to 
 withdraw pretensions that cannot be sustained, 
 and to rest their case on other and surer grounds. 
 They may say, " Without us, the other two classes 
 could do nothing." The answer is obvious, " Very i 
 , true, but it is equally true that, without the other / 
 two, you yourselves could also do nothing. If, i 
 indeed, you possessed and contributed the land'^
 
 72 WEALTH-CREATION. 
 
 and the capital, as well as the labour, you would 
 then, in your treble capacity, really be the pro- 
 ducers of wealth ; but that very supposition rather 
 confirms than invalidates our proposition that land, 
 capital, and labour are all three necessary to the 
 production of wealth." 
 
 How the present possessors of land and capital 
 became possessed of them is a question quite 
 beside the present inquiry. As far as concerns the 
 theorem which we propound as to the equal im- 
 portance of all the three elements of production, it 
 matters not in the least in whom, whether in indi- 
 viduals, or in corporations, or in the state itself, the 
 possession of the existing land and capital may 
 be vested. If by a despotic exercise of power, 
 the state could, without dislocating the frame of 
 society, dispossess the present owners, and sub- 
 stitute a fresh set, it would not alter the fact 
 that land, capital, and labour are all three of equal 
 necessity to wealth-creation. 
 
 In not a few instances all three are now 
 concentrated in the same individual. A labour- 
 seller who, through a building society or other- 
 wise, has secured a freehold cottage, and who has 
 a small sum in a savings-bank, while still earn- 
 ing weekly wages at a factory, combines the three 
 qualifications. Lord Shaftesbury, a land-owner 
 by inheritance, and no doubt a capitalist by excess 
 of income over expenditure, is indefatigable, in and 
 out of Parliament, in the noble work of promoting, 
 according to his lights, the welfare of his fellow- 
 men ; he also therefore combines the three qualifi- 
 cations. The merchant or manufacturer who has
 
 DISTRIBUTORS OF WEALTH. 73 
 
 amassed a fortune and bous^ht some land, but who 
 continues to work early and late at his office, equally 
 combines the three qualifications. But it is none 
 the less true that even when each qualification is 
 held singly, the owners of such single qualification 
 are all of them co-ordinate agents of production. 
 One man lives by the rent of his land, the second 
 by the interest of his capital, and the third by the 
 sale of his labour ; but all three are producers, as 
 the land, the capital, and the labour are equally 
 indispensable to the creation of wealth. All three 
 contribute to that end in different ways, but each 
 way subserves the common purpose in an equal 
 degree. 
 
 We have now, we think, adduced valid reasons 
 for classing land-owners, capitalists, and labour- 
 sellers as joint and co-equal producers of wealth. 
 We now come to the classes who distribute the 
 wealth thus produced, and these embrace a very 
 large constituency. They comprise merchants, 
 bankers, brokers, shopkeepers, ship-owners, railway 
 proprietors, and, generally, all persons who are en- 
 gaged in the work of transferring the wealth that 
 has been created into its multifarious channels of 
 consumption. The number of these agents of dis- 
 tribution, together with their assistants, clerks, 
 porters, carters, sailors, and many other labour- 
 sellers employed by them, is very considerable ; 
 and their functions are of world-wide importance. 
 Indeed, the main final cause of production is dis- 
 tribution. Without the latter, the former would 
 either not take place, or would soon be discontinued. 
 Who would go on producing unless, by exchanges,
 
 74 WEALTH-CREATION, 
 
 he could reap some advantage from it ? Now, dis- 
 tribution implies interchange of commodities ; for 
 the goods which the agents of distribution convey 
 from country A to country B, either have been 
 paid for beforehand, in which case they go to ex- 
 tinguish a -debt and close a transaction, or they 
 have to be paid for, in which case, till actually paid 
 for, they go to create a debt and open a transaction. 
 In either case, these transactions are finally balanced 
 by the conveyance of commodities (of bullion in 
 rare instances, and to an insignificant amount) from 
 one country to another by the agents of distribu- 
 tion. 
 
 In this way does commerce resolve itself, 
 directly or indirectly, into barter. Directly, when 
 a merchant exports goods to a country, and in 
 return imports other goods from the same country, 
 so that the two operations about balance each 
 other ; indirectly, when the exporting merchants 
 receive payment, not in other goods, but in bills 
 of exchange ; for these bills of exchange represent 
 either recent purchases or old debts, for which the 
 country on which the bills are drawn has to pay. 
 This indirect barter through the medium of bills of 
 exchange it is the special business of bankers to 
 conduct. They each, within their respective range 
 of operations, perform the same functions as does 
 the bankers' clearing-house in London, by means of 
 which hundreds of millions of debts owing to and 
 owing by a multitude of persons clear each other 
 off, without resorting to any but trifling payments 
 backwards and forwards of coin or bullion. A 
 labour-saving, time-saving, loss-saving device.
 
 DISTRIBUTION OBSTRUCTED. 75 
 
 Since, therefore, without the facilities for inter- 
 change which the operations of distributors afford, 
 nearly all incentives to wealth-creation would be 
 wanting, the use of or indeed the absolute necessity 
 for that class of workers must be readily admitted ; 
 and they certainly cannot be deemed unproductive 
 consumers. It must, however, be observed that 
 their work would be much simplified and could be 
 performed by a much smaller body of men were it 
 not for the complications, uncertainties, and ob- 
 stacles of many kinds, created by national jea- 
 lousies and by state restrictions on free commercial 
 intercourse. For instance, a large quantity of use- 
 less labour (tantamount to digging and filling up 
 unnecessary earth-holes) is now devoted to a com- 
 pliance with the complex and obstructive forms and 
 regulations enforced under the protective system that 
 prevails in so many countries. All deviations from 
 the natural and healthy simplicity of unrestricted 
 interchange necessitate some extra aud special 
 organisation to meet an artificial state of things. 
 Each additional obstacle requires the expenditure 
 of some additional strain to overcome it, and 
 thereby entails a certain amount of unproductive 
 labour. On the w^iole, however, it is, of all classes 
 of society, in the ranks of those who " produce and 
 distribute wealth," that the fewest unproductive 
 consumers are to be found. 
 
 It may be said that the land-owner who spends 
 his income in self-indulgence, and whose only task 
 in life is amusement (a laborious task, too, very 
 frequently), cannot be called a producer in the same 
 sense as is a man who works ten hours a day.
 
 ^6 WEALTH-CREATION, 
 
 Very true. But neither can the ten hours' toiler be 
 called a producer in the same sense as is the con- 
 tributor of that essential element of production, 
 land. What each contributes is different of its kind, 
 but both are indispensable, and neither would be 
 of use without the other. No one is under obliga- 
 tion to furnish both elements. The labourer is not 
 bound to contribute land ; neither is the land- 
 owner bound to contribute labour. The soil must 
 (unless we revert to a state of Nature, which is 
 savagery) be owned by somebody ; and that 
 somebody, whoever it may be, whether a person 
 or a community, is through its cultivation, whether 
 directly or by lessees, a contributor of one of the 
 three indispensable factors of all wealth. Of course 
 such land as is not devoted to productive purposes 
 comes under a different category. Its owner does 
 not contribute to the creation of wealth, and is 
 therefore not a producer. We shall deal with this 
 exceptional case in a subsequent chapter when we 
 come to treat of the peculiar position of land in 
 regard to its limited supply and its irremovability. 
 
 On the other hand, the same persons who 
 complain that the contributor of land does not 
 contribute labour also, are those who frequently 
 complain that the capitalist goes on working long 
 after he has accumulated a fortune, and who say 
 that he should retire and leave the field which has 
 enriched him open to others. Between these two 
 complaints there is a manifest inconsistency. If 
 the land-owner ought to contribute both land and 
 labour, so ought the capitalist to contribute both 
 capital and labour. The truth is that such double
 
 GOVERNMENT FUNCTIONARIES. ^^ 
 
 contribution is entirely optional. Its practice 
 would, of course, subserve the interests of wealth- 
 creation, but there is no obligation on any one 
 either to act upon it or to abstain from it. 
 
 CHAPTER VII. 
 
 Government Functionaries — The Professional Classes — The Un- 
 employed Poor. 
 
 2. Those who govern, and the functionaries whom 
 they employ. — It is this class which furnishes by far 
 the most numerous contingent of unproductive con- 
 sumers, and in which the largest reforms are both 
 necessary and possible. Let us at once start with 
 the following proposition, viz. : — That all those 
 persons whose services are requisite for the 
 due performance of those functions — legislative 
 or executive, civil or military — through which 
 the government of a community discharges the 
 complex duty assigned to it of protecting the 
 person and property of its members, are indispen- 
 sable to the well-being of society, and cannot be 
 spared from the important work to which they are 
 appointed. It is only to those whose services are 
 not requisite for the performance of such functions 
 rightly understood, and who nevertheless are re- 
 tained and paid by the state, that the designation 
 of " unproductive consumers " is applicable. 
 
 Of these, some have no doubt been appointed 
 to their useless tasks by patronage or routine, but
 
 78 WEALTH-CREATION. 
 
 by far the greatest number consists of those whose 
 barren labours are put in requisition by bad laws, 
 mistaken policy, vicious institutions, or the passions 
 and caprices of irresponsible rulers. It is not with 
 the persons so employed that the blame lies. Their 
 duty is to do the work entrusted to them, and the 
 faithful performance of that duty generally forms a 
 fair equivalent for what they receive from the 
 community. It is the system that is responsible 
 for the waste, and it is the rulers and statesmen 
 who are responsible for the system. Let us examine 
 the main features of the system. 
 
 In all existing civilised states the money 
 collected by the government, as revenue from all 
 sources, is expended in v^arious proportions, on the 
 following departments, viz. : — 
 
 General expenses of Civil Government, collection 
 of revenue, public works, salaries, pensions, &c. 
 
 Administration of Law and Justice. 
 
 Subventions for Education, Science, and Art. 
 
 Interest on (and repayment of?) National 
 Debt. 
 
 Army and Navy. 
 
 Whatever portion of the expenditure under 
 these heads is in excess of what is needful is clearly 
 an unnecessary and injurious drain on the resources 
 of the country, and a direct impediment to wealth- 
 creation. The persons who would otherwise be 
 effective agents of production are wasting their 
 energies and their time on inutilities or worse, and 
 have meanwhile to be supported out of the earnings 
 of the producing classes. It is, of course, in those 
 departments which absorb the largest share of the
 
 (fpk. 
 
 CLASSIFICATION OF GOVERNMENT EXPENSES. 79 
 
 national expenditure that the waste (supposing it 
 to exist) would be the greatest, and the retrench- 
 ment (supposing it possible) would be the most 
 efficient. It will be very useful, therefore, to 
 ascertain which are the departments which are 
 most costly, and to which the tax-payer most 
 profusely contributes. 
 
 No doubt the proportions differ in different 
 countries, especially if the United States of America 
 be includedamongthem. The geographical position, 
 the form of government, and the habits and traditions 
 of that republic constitute it a somewhat exceptional 
 case. But if we take European states only, the com- 
 parative amounts paidunder each head by the British 
 Government during the year 1880 may afford us 
 some clew to the proportions respectively absorbed 
 in other countries by the various departments in 
 question. The total expenditure of the British 
 Government in 1880 was ;^84,439,ooo, which was 
 apportioned as follows :— 
 
 To the general expenses of 
 
 the Civil Government ... ;i^i4,637,ooo 
 
 To the administration of Law 
 
 and Justice ... ... 6,372,000 
 
 To Educational purposes ... 3,995, 000 
 
 To the interest, &c., of the 
 
 National Debt 28,763,000 
 
 To the Army and Navy ... 30,672,000 
 
 Total ;^ 84,439,000 
 
 Here then we have in round figures, out of our 
 annual expenditure of 84 millions, no less than 59 
 millions consumed in expenses connected with war,
 
 80 WEALTH-CREATION. 
 
 viz., 29 millions to pay interest, &c., on the national 
 debt contracted by our forefathers to carry on the 
 wars of their time, and 30 millions to meet the 
 expenses of military and naval establishments 
 during a period of peace. The possible distention 
 of these sums in case of a serious war may be 
 more easily imagined than calculated. 
 
 In contrast to these gigantic amounts, we find 
 that all the other departments of government 
 combined, although profusely paid, cost 25 millions 
 — a sum which, in comparison, seems a " fleabite." 
 Roughly speaking, we may say that of England's 
 annual expenditure more than one-third is spent in 
 paying the penalty of former wars, more than one- 
 third is spent in keeping up warlike establishments 
 during peace, and less than one-third is spent on 
 all the combined functions of government in every 
 other department. Not that we are worse off in 
 this respect than most other European states, for 
 some have indeed a more grievous military burden 
 to bear than we have. However, as we shall in a 
 subsequent chapter devote some attention and some 
 space to a consideration of the pernicious influence 
 of war and international rivalries on the creation of 
 wealth, we shall here abstain from further comments 
 on this branch of the subject. 
 
 Reserving, therefore, war and its organs, the 
 army and navy, for future discussion, let us take 
 a glance at the other departments of government. 
 The expenditure in England on these, including 
 the administration of justice and educational pur- 
 poses, amounts, within a trifle, to ;!^2 5,000,000, nearly 
 all of which is paid away in salaries to the various
 
 SUPERFLUOUS PUBLIC FUNCTIONARIES. 8 1 
 
 functionaries who are (and in some cases who have 
 been) employed in the performance of pubHc duties. 
 It has been calculated that the number of persons 
 in the pay of the English Government, exclusive 
 of the army and navy, is not far from 180,000. 
 Neither does this include the numerous staff paid 
 out of the proceeds of local taxation (county, 
 borough, and parochial rates, &c.), which in 1878-9 
 amounted to about ;^30,ooo,ooo. Now, if out of 
 the 180,000 functionaries, high and low, above re- 
 ferred to, a certain number should have been 
 superfluous and others overpaid, that waste, be it 
 more or be it less, is so much positive loss to the 
 community. 
 
 In these elucidations we have taken the case of 
 the English Government simply by way of illustra- 
 tion, for as our theme is wealth-creation not in one 
 country but in all countries, so should our conclu- 
 sion be a general and not a special one. We must, 
 therefore, word it thus, that if out of the civil func- 
 tionaries, high and low, in the pay of all govern- 
 ments, a certain number should be superfluous, and 
 others overpaid, that waste is so much positive loss, 
 and a subtraction to that extent from the world's 
 wealth. There is hardly a country in the world of 
 which it can be truly said that there is no such 
 superfluity or overpayment of public functionaries. 
 In some there is less, in others more, but it must 
 be admitted that in all there is a wide field for 
 retrenchment. We readily grant that the retrench- 
 ment may be carried too far, and that it is a great 
 mistake in a state to underpay, or irregularly pay, 
 its servants. But this extreme, which is compara- 
 G
 
 82 WEALTH-CREATION. 
 
 tively rare, is no justification of the opposite ex- 
 treme, which is common. 
 
 In what way and to what extent the necessary 
 retrenchment is to be effected it is not within the 
 scope of this work to inquire. Our business is to 
 point out how injuriously such waste of public 
 money affects the creation and distribution of 
 wealth and, thereby, the welfare of all men. It is 
 for the practical politician to recognise the evil and 
 apply the remedy. If out of the total number of 
 persons now employed in the civil functions of 
 the state (for we have reserved the army and navy 
 for a separate discussion) by the whole of the 
 civilised governments of the world, it should be 
 found that 400,000 could be spared without detri- 
 ment to the efficiency of administrative operations, 
 then those 400,000 persons, being released (of 
 course on equitable terms) from their useless 
 labours, would be thrown on their own resources — 
 would be compelled to produce in order to live 
 — and would cease to be unproductive consumers. 
 Now if, one with the other, we estimate the value 
 of what they would each produce at an average of 
 only ;^50 per annum, there would be ^20,000,000 
 yearly added to the general stock of wealth of the 
 world, besides saving what they now receive in 
 excess of that yearly sum for superfluous and 
 barren work. 
 
 True that there may be no immediate prospect 
 of so beneficial a reform being accomplished, but 
 we shall certainly hasten the time when the world 
 shall enact its practical adoption, by a forcible 
 exposition of its necessity, by emphatically de-
 
 THE LEARNED AND OTHER PROFESSIONS. 83 
 
 nouncing the evils that it would remove, and by 
 persistently keeping the subject open to public 
 discussion, until its advantages be generally recog- 
 nised and appreciated. Too often, in the history 
 of the world, has the apparent remoteness of a 
 desirable object been used as a dissuasive from 
 even moving in its direction. Its being difficult 
 of attainment has been construed into its being 
 unattainable. The word " impossible " has been 
 most obstructive to human progress. Many a 
 laudable purpose, quite achievable, as subsequent 
 achievement has shown, has been long delayed 
 by being pooh-poohed as not being "within the 
 bounds of the possible." The policy for the advo- 
 cates of a rejected improvement to pursue is never 
 to lose sight of it themselves, never to allow others 
 to lose sight of it, and, above all, never to despair 
 of it. 
 
 3. Those wJio are engaged in the learned and 
 other prof essions. — A very numerous and important 
 class, which we may subdivide into two cate- 
 gories : — 
 
 (a) Those who do not, by direct means, produce 
 wealth, but who are indispensable by reason of the 
 moral and physical shortcomings of man. To this 
 category belong — the clerical profession, whose pro- 
 vince it is to combat our vices and passions ; the 
 legal, to obviate fraud and repress injustice ; the 
 medical, to heal our infirmities ; the political, to 
 administer the affairs of the community ; the miU- 
 tary, to protect the state against attack ; the 
 scientific, to correct error and search for truth ; 
 the scholastic, to remove ignorance, &c. 
 
 G 2
 
 84 WEALTH-CREATION. 
 
 {b) Those whose mission it is, either to cultivate 
 literature and philosophy, or to minister to the art- 
 culture, the refinement, and the recreative enjoy- 
 ments of the community. This last division 
 includes poets and prose-writers of all kinds, 
 journalists, lecturers, &c., as also painters, sculptors, 
 architects, musicians, actors, &c. 
 
 It is the professions comprised in the above two 
 categories that have furnished most of the eminent 
 men, whether as thinkers or doers, of all countries 
 and in all ages. As a rule, these professions re- 
 quire for their successful pursuit great natural abili- 
 ties, developed by close study and reflection. Those 
 who excel in them become the foremost of men, and 
 almost all the illustrious benefactors of mankind 
 have sprung from their ranks. Undoubtedly, of 
 the many who have enlisted in these professions, 
 there are not a few who are more or less unfit for 
 the vocation, and who would be much more useful 
 to their fellow-men (and in most cases to them- 
 selves) by becoming producers, and contributing 
 according to their powers to wealth-creation. 
 
 But no interference with the free choice of a 
 career is permissible, and the natural law of supply 
 and demand must continue to regulate the number 
 of those to whom the professions can afford a 
 livelihood. Unfortunately, the dignity of produc- 
 tive and distributive labour has not yet received 
 due recognition. A prejudice, which had its birth 
 in the rough feudal ages, still exists, though 
 happily waning, which assigns to the professional 
 a higher social rank than to the mercantile and 
 manufacturing classes. The former are supposed
 
 REAL EQUALITY. 85 
 
 to be, in vulgar parlance, " more genteel." This 
 feeling is, no doubt, in some measure founded on 
 the fact that education is more general, because 
 a necessity, with the former, and less general, 
 because only optional, with the latter. But this 
 distinction is also disappearing, and the diffusion 
 of knowledge, which will gradually extend to all 
 classes, will equalise their claims to social rank. 
 As it now is, almost every profession is over- 
 stocked. There are more to do the work than the 
 work to be done requires ; while a sentimental 
 preference foolishly induces many a man to starve 
 on a profession rather than thrive on a trade. 
 
 This false estimate of personal dignity chiefly 
 prevails in old countries, and hardly exists among 
 young communities. In the United States of 
 America there is far more real equality than in 
 the present French Republic, although " £galite " 
 figures as its central motto. Many an English 
 gentleman, who at home would have shrunk from 
 manual labour as a degradation, has emigrated 
 to Australia, and worked as hard there as any 
 common labourer here, and the more honour to 
 him. Let us hope that this healthy tone as to the 
 equal dignity of all honest labour may, sooner or 
 later, pervade all civilised societies, and finally 
 break down the barriers which now partition off 
 European communities into distinct sections very 
 analogous to the castes of the Hindoo nations. 
 
 4. Those who are uncjuployed, or who have no 
 legitimate means of earning a livelihood. — All those 
 persons to whom this description applies are un- 
 productive consumers, and every effort should \>e
 
 86 WEALTH-CREATION. 
 
 made to reduce their number to the lowest possible 
 point, for their existence is, for the most part, an 
 unmitigated evil to the community. They are, 
 however, divisible into two very distinct groups, 
 viz. : {a) Labour-sellers temporarily out of work, 
 who have saved nothing to live upon mean- 
 while ; [b) Non-workers, viz., paupers, mendicants, 
 tramps, &c., and criminals, both those who are at 
 large, and those who are in custody. 
 
 {a) As to the first group: labour-sellers are out 
 of work either because they cannot find any em- 
 ployment at all, or because they cannot find it on 
 terms which they deem acceptable. The former 
 are the victims of " gluts " (see p. 7), of changes 
 in the channels of trade, or of other causes beyond 
 their control. The latter are the outcome of trade 
 disputes, leading to " strikes " and " lock-outs." In 
 the former case the causes are largely (not 
 wholly) prevent! ble by free commercial intercourse, 
 and by non-interference with the natural course of 
 trade. In the latter case, trade disputes should be, 
 and it is beginning to be understood that they can 
 be, arranged by arbitration, or by sliding wage-scales 
 graduated according to the rates of profit, or by other 
 similar pacific devices. Almost anything is pre- 
 ferable to the clumsy and costly brute-force sys- 
 tem now in use of workmen trying to coerce the 
 capitalists by ceasing to work, or of employers 
 trying to coerce the workmen by ceasing to em- 
 T5loy. Under it both parties are heavy losers, the 
 victors as well as the vanquished. It decides 
 nothing as to the relative justice of the conflicting 
 claims; it only adjudges which side is the strongest-
 
 "STRIKES" AND "LOCK-OUTS." . S^ 
 
 It simply becomes a trial as to which can afford to 
 lose most money, and which can face impending 
 ruin with the wildest recklessness. So might two 
 men defy each other as to which would allow 
 their blood to flow for the longest time from a vein 
 opened in the arm of each. One might give way 
 before the other, but both would be terribly ex- 
 hausted and enfeebled. 
 
 In such contests between capital and labour it 
 is generally the longest purse that wins, and, ac- 
 cordingly, they have mostly terminated in favour 
 of the employers. A barren victory truly ! Just 
 by one small degree better than a defeat ! In 
 this species of civil war there is not only the loss 
 of the wealth which would have been created by 
 the labour of the men had they been at work ; 
 there is also the loss occasioned by the disuse of 
 the capital, plant, and machinery of the employers 
 — the loss occasioned by the non-execution of 
 orders, and by turning away customers to deal 
 elsewhere, and sometimes even the permanent loss 
 to the district of the entire trade, which gets di- 
 verted to other localities. By all this the labour- 
 sellers are the chief sufferers, because every dimi- 
 nution of capital is a diminution of the fund out 
 of which the wages of labour are paid. 
 
 But while the wealth - destroying effects of 
 " strikes " and " lock-outs " are undeniable, it is 
 none the less true that properly constituted trades- 
 unions are essential to the interests of the working- 
 classes. Without such organisations there could 
 be neither consultation nor concerted action be- 
 tween them, and the fluctuations of the wage-rate
 
 88 » WEALTH-CREATION. 
 
 in the chief labour-markets of the world, which it 
 is most important for the labour-seller to trace, 
 would hardly ever be known to him. The commo- 
 dity in which he deals, labour, rises and falls in value 
 like every other commodity, and he, the seller of it, 
 should be able to watch and scrutinise the action 
 of the buyer of it (the employer), or otherwise the 
 fall in wages when trade was bad would be rapid 
 and exaggerated, and the rise when trade was good 
 would be tardy and insufficient. Trades-unions 
 afford him the necessary knowledge and power to 
 obviate this ; and he will be the more ready in bad 
 times to submit to a fair decline, when he is assured 
 that he will obtain a fair rise in good times. More- 
 over trades-unions often afford great facilities for 
 negotiation, in virtue of their representative cha- 
 racter, which ensures to any agreement made the 
 adhesion of the general body of men represented. 
 
 But these considerations by no means invalidate 
 our contention that strikes and lock-outs, from 
 their adverse interference with wealth-creation, 
 constitute a form of war that is equally injurious 
 to both sides, and that it would be a disgrace to 
 the human intellect to assume that such a conflict 
 were the only and the inevitable solution to trade , 
 disputes. The avoidance of this irrational mode 
 of ascertaining which is right and which is wrong, 
 when differences arise between masters and men, 
 Vv^ould prevent those large occasional additions to 
 the number of the unemployed which help tC< 
 create a " superfluity of unproductive consumers.''' 
 
 We may here observe in reference to trades- 
 unions that all such of their regulations as tend
 
 PAUPERS AND CRIMINALS. 89 
 
 to restrict or diminish production are suicidal and 
 most injurious to the labour-sellers themselves, 
 by restricting and diminishing the fund out of 
 which labour is paid. We allude to regulations 
 tending to reduce the productive powers of the 
 more industrious or skilful to the level of the in- 
 ferior productive powers of the less industrious or 
 skilful — to interpose obstacles to the adaptation of 
 labour to novel combinations or inventions adopted 
 by the employers, and generally to impair the 
 efficiency of labour in producing the largest results 
 in a oiven time. It should be remembered that 
 the less of capital there is created the less of labour 
 there is employed. 
 
 {b) We now come to the second group of un- 
 productive consumers, consisting chiefly of those 
 who, from various causes, are unable, or who, from 
 perversity, are unwilling, to work for their livelihood ; 
 in other w^ords, of paupers or criminals. Among 
 the paupers there are many able-bodied men who 
 are not prevented from working by infirmity, but 
 decline to work from deliberate choice. Some do 
 indeed indulge in fitful and intermittent spurts of 
 industry, but the greater number are sunk into 
 irredeemable sloth and intemperance, and all of 
 them are consuming non-workers. This descrip- 
 tion applies also to a large proportion of the 
 mendicants and tramps who infest the community, 
 and these are unfortunately encouraged and main- 
 tained by the pernicious practice of indiscriminate 
 alms-giving on the part of well-meaning but, in 
 reality, evil-doing persons. 
 
 Let 'us hasten to say, however, that, in proper-
 
 90 WEALTH-CREATION. 
 
 tion to the discouragement which should be given 
 to the drones and parasites which prey on society, 
 in that proportion should abound the sympathy 
 and tenderness due by the community to those 
 persons who, from infirmity, either mental or 
 bodily, whether natural or accidental, are really 
 unable to contribute their quota to the general 
 stock. These are entitled to receive, without stint 
 and without reproach, their fair portion of the honey 
 stored in the social hive. They are those members 
 of the human family who, through the shortcomings 
 of nature or the sudden wrench of an accident, 
 form the wounded and maimed in the battle of life, 
 and, as such, become lawful pensioners on the 
 resources of the rest. These are the " neighbours " 
 whom we are taught to " love as ourselves." It is 
 not to such that our strictures apply. On the 
 contrary, we not only recognise their claims on 
 their brother-men, but insist that these claims should 
 be met in a hearty and ungrudging spirit. It is 
 more than the bestowal of a favour — it is the fulfil- 
 ment of a duty. A churlish gift is of diminished 
 value to the receiver and of no merit to the giver. 
 
 There is no country which is not more or less 
 burdened with both classes of unproductive con- 
 sumers — the pauper class and the criminal class. 
 Legal and coercive repression checks, but is far 
 from eradicating the evil. It lops the branches, 
 but does not touch the roots of the upas tree. 
 The existence of the evil is traceable partly to 
 the pressure of temptation from hopeless poverty, 
 and to the sway of passions uncontrolled at the first 
 and uncontrollable in the end, but, in greater pro-
 
 CONSUMING NON-WORKERS. QI 
 
 portion, to habits of evil and vice contracted in early 
 youth and strengthened by evil and vicious asso- 
 ciations in after-life. In other words, the mischief 
 is mainly due to the early influence of evil example 
 and evil precept, for which wise and good men are 
 striving, by means of education, to substitute other 
 influences that shall develop the good and curb the 
 bad impulses of man's nature. In this they have 
 already succeeded to some extent, and as they 
 more and more succeed so shall the number of 
 those who eat bread which they might, but do not, 
 earn, or who, worse still, pillage the earnings of 
 others, gradually dwindle down to the lowest point 
 which human imperfection will allow. A consum- 
 mation devoutly to be wished. 
 
 Thus we have taken a review of the four classes 
 into which all civilised communities may be divided, 
 in relation to the superfluity of unproductive con- 
 sumers which exist in each. Omitting the con- 
 sideration of wars and international rivalries of 
 which we shall next proceed to treat, we find that 
 there are in all civilised communities a great 
 number of persons who are doing no work at all, 
 others who are doing useless and barren work, and 
 some even who are doing evil work, and that all 
 these are being supported at the expense of those 
 who are doing productive work. We also find that 
 such a state of things is by no means the necessary 
 result of man's natural condition or inevitable 
 destiny, but is quite remediable by the spread of 
 knowledge and by practicable improvements in 
 human institutions. It is useful to take stock of 
 the obstacles that impede our progress, and en-
 
 92 WEALTH-CREATION. 
 
 couraging to find that they are by no means in- 
 superable. It therefore behoves all men to lend a 
 hand in the good work of overcoming them. 
 
 CHAPTER VIII. 
 
 Wars and International Rivalries — Various Modes in winch War 
 is Injurious — Annual Expenditure on Armaments in time of 
 Peace — Vast Number of Unproductive Consumers. 
 
 B 3. Wars and International Rivalries. — 
 Every one freely admits the destructiveness, the 
 irrationality, and the wickedness of war ; but it is 
 at the same time taken for granted that man is so 
 constituted that war is a condition inseparable from 
 his existence, whether in a state of barbarism or 
 of civilisation. In other words, war is put forth 
 as a deplorable but necessary evil. We readily 
 admit the deplorableness of the evil, but we deny 
 the necessity of its existence. Let us briefly glance 
 at both aspects of the question, and inquire : — (A) 
 As to the extent of the evil ; and (B) As to its 
 necessity. If we find the evil to be great and the 
 necessity for it to be small, we shall at least know 
 in what direction and with what hopes we may 
 steer our course. 
 
 A. The extent of the evil. The calamities of 
 war form one of the most hackneyed of themes ; 
 and every epithet of revilement has been heaped 
 on the system, with but few attempts at practical 
 reform. There is no man who docs not shake his 
 head in condemnation of the wickedness of war, 
 and hardly one who does not at the same time
 
 EVILS OF WAR CLASSIFIED. 93 
 
 shrug his shoulders to signify his sad acquies- 
 cence in its necessity. But while the world is 
 almost unanimous in professing a general, sweeping, 
 and speculative detestation and deprecation of war, 
 few people have closely analysed the subject, or 
 carefully considered : {a) the variety of modes in 
 which it injures mankind ; {b) the constantly grow- 
 ing increase of the evil ; and {c) the tendency of the 
 modern military system in Europe to more and more 
 extend the baneful effects of war over the period 
 of peace. We shall call attention to each of these 
 topics ; for a vague impression prevails that the 
 evils of war mainly resolve themselves into the loss 
 of life and the extra expenditure of money caused 
 by actual hostilities. But it is not so. They inflict 
 other fatal injuries, less intense perhaps individually, 
 but far more wide-spread and permanent, and con- 
 sequently more pernicious to mankind. 
 
 {a) The variety of modes in which war is 
 injurious. These may be classed under three heads, 
 viz.: — I. Destruction of life and property. 2. 
 Conversion of productive labourers into unpro- 
 ductive or destructive consumers. 3. Diversion of 
 capital to unproductive or destructive purposes. 
 On the first head, destruction of life and property, 
 we need say very little, for of all the branches 
 of the subject, this is the most obvious and 
 trite. It is the favourite theme of poets and 
 moralists, and it needs no effort on our part to 
 convince our readers that bloodshed and devastation 
 are atrocious crimes as well as unmitigated evils, 
 unless justified by the sternest necessit}\ We will 
 therefore pass on to the second head, which has
 
 94 WEALTH-CREATION. 
 
 received less attention, although deserving of at 
 least as much. 
 
 2. Conversion of productive labourers into 
 unproductive or destructive consumers. On this 
 topic we shall have rather more to say. It is a fact 
 too obvious to admit of dispute that every member 
 of the naval and military services, whether officers 
 or men, consumes without producing. This does not 
 convey the slightest imputation on them. They 
 are engaged by the state to perform certain duties, 
 which, in most cases, are efficiently, and, in some 
 cases are brilliantly, performed, while they are, in 
 the majority of cases, rather under than over-paid. 
 But it is nevertheless the fact, that those duties do 
 not conduce to the creation of wealth. True that 
 they may be necessary for the protection of the 
 wealth-producers, as in the instance of defensive 
 wars. But of the necessity of war we shall treat as 
 a special topic ; at present we are only treating of 
 its evils. And it is undoubtedly a flagrant evil (be 
 it a necessary one or not) that; a greater or lesser 
 number of men, in the very prime of life, should be 
 made to withdraw from the beneficent work of 
 production, and to exist only as consumers, at the 
 expense of those who do produce. 
 
 In a loose, general way, these evils are freely 
 admitted. " It is no doubt veiy wasteful," people 
 say, " but a soldier must consume, for he must live ; 
 he cannot produce, for he has something else to do ; 
 and he must destroy, for that is what he is paid 
 for." But those who dismiss the subject in this 
 cursory manner have not formed a definite concep- 
 tion of the amount of the evil and loss involved.
 
 SMALL ARMIES OF FORMER TIMES. 95 
 
 Assuming that occasional wars, and continuous 
 preparations for war, are matters of necessity, let us 
 at least try to ascertain approximatively what this 
 "necessity" costs to the civilised communities of 
 Europe. It must surely be a matter of both im- 
 portance and interest to obtain some notion as to 
 the price which civilised Europe has annually to 
 pay for this assumed necessity A man may deem 
 it necessary to keep a carriage, but that is no reason 
 why he should shut his eyes to the annual expense 
 which it entails. We propose, therefore, to frame 
 a rough estimate of the actual amount of wealth 
 absorbed and consumed by the various nations of 
 Europe in consequence of the necessity that is 
 supposed to exist for large military establishments. 
 Before, however, entering on these calculations, 
 there are two considerations which deserve a few 
 words of remark. In the first place, the armies 
 which, in the present day, are deemed necessary for 
 defence or attack, are infinitely larger than those 
 which formerl}' decided the fate of nations. The 
 drift of the prevailing system of military organi- 
 sation is to arm the entire virile population of one 
 country against the entire virile population of 
 another. Governments previous to the nineteenth 
 century pressed into military service only a 
 moderate aliquot part of their people. The armies 
 with which Turenne and Marlborough won their 
 battles and their laurels would scarcely have 
 been sufficient to form a secondary corps in a 
 grand army of the present day. Armies then 
 formed a very small, and now form a very large, 
 percentage of the adult males of every country.
 
 g6 WEALTH-CREATION. 
 
 And this tendency to a constant numerical increase 
 of armed forces is being, every year, developed 
 more and more. Each state is jealous of the other, 
 and a contest arises between them as to which 
 shall, even in time of peace, maintain in arms 
 most soldiers in proportion to its population. 
 This contest is a perennial struggle, little less 
 savage in its intent and less costly in its ex- 
 penditure, than actual war itself. Should this 
 rivalry continue (as appears almost certain) there 
 can be no limit to its development until all the male 
 population in every country, between the ages of 
 eighteen and fifty, shall become soldiers ; and even 
 then it may assume other oppressive forms, till it 
 breaks down under the weight of its own absurdity. 
 In the second place, let us remember that 
 formerly, when a war was terminated, the army was 
 mostly disbanded, and the peace establishment of a 
 country was on a comparatively small scale. But 
 now the military organisation of a state even on the 
 peace footing is on a scale greatly in excess of the 
 war footing of the most bellicose country a century 
 ago. And with the tendency just mentioned to 
 still further increase, and, in great measure, to 
 hold in readiness for action, the military power 
 of each country, we are rapidly nearing the point 
 when there will be little difference between the 
 armaments of Europe in time of war and the 
 same in time of peace. Already, we may almost 
 say that European civilisation is in a perennial 
 and normal state of warlike organisation, and, 
 to a large extent, suffers all the evils of actual 
 war except the secondary and transient ones of
 
 COMPOSITION OF MODERN ARMIES. 97 
 
 life destroyed and property devastated. For, the 
 more wide-spread and durable evils of lives waste- 
 fully spent, and of production wilfully arrested, be- 
 come, under such a scheme, permanent institutions. 
 
 We will now proceed to ascertain, as closely as 
 we can, the number of men composing the army 
 and navy of each European state, as also the annual 
 expenditure of each on military and naval affairs. 
 We may, however, premise that the military or- 
 ganisation that now prevails throughout Europe, ex- 
 cept in England and a few minor states, is founded 
 on the principle that every man between the ages 
 of eighteen and fifty is bound to form part of the 
 national army for a certain number of years, and 
 must be trained to arms accordingly. A given 
 proportion of these are yearly drafted into the 
 permanent standing army which is kept up during 
 peace, and the rest are, under various names and 
 regulations, formed into reserves liable, in time of 
 war, or whenever the Government wills it, to be 
 called into active service. The details vary in dif- 
 ferent countries, but the general principle adopted 
 is the universal liability to serve. Let us take 
 France as an illustration. By a law passed in July, 
 1872, every Frenchman forms part — (i) of the active 
 army for five years ; (2) of the reserve to the active 
 army for four years ; (3) of the territorial army for 
 five years ; and (4) of the reserve to the territorial 
 army for six years. So that the total duration of 
 the military service, active and contingent, for every 
 male adult Frenchman is twenty years. True, all 
 are not called, but all are liable to be called. 
 
 The data comprised in the following table are 
 mostly derived from the " Almanach de Gotha" for 
 H
 
 98 
 
 WEALTH-CREATION. 
 
 1 88 1, corrected and supplemented from various 
 other sources : — 
 
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 WAR EXPENDITURE IN TIME OF PEACE. 99 
 
 From the table that precedes, it is visible at a 
 glance that the various states, of which Europe is 
 composed, maintain under arms, during a time of 
 peace, three and a half millions of men at a yearly 
 cost of ;£" 1 56,000,000. It further shows that, in 
 case of a general war, the number of men that 
 would be withdrawn, in the prime of life, from pro- 
 ductive employment, and devoted to war purposes, 
 would be increased to ten and half millions, with a 
 more than proportionate increase of expenditure. 
 A more than proportionate increase, because war is 
 in the highest degree destructive and wasteful, and 
 entails multitudinous losses and sacrifices, very f^ir 
 beyond those which a full-armed peace propor- 
 tionately occasions. If the number of men required 
 to serve on the peace footing is increased three- 
 fold in time of war, viz., from 3,500,000 men to 
 10,500,000, then the expenditure will be increased, 
 at the very least, six-fold, viz., from ;o 156,000,000 
 per annum to nearly ;^ 1,000, 000, 000. 
 
 It may be said, that a war, so general as to 
 involve in it every European nation, is an event not 
 likely to occur. But this unlikely event did occur 
 during the first Napoleonic era. Moreover, if a war 
 did occur in which only four or five states were 
 engaged, it is all but certain that the contending 
 parties would be the great powers of Europe, whose 
 armies form an overwhelming proportion of the 
 totality. 
 
 We will, however, adopt, as the basis of our 
 calculations and remarks, the permanent scale of 
 armaments on the peace footing, and not their ex- 
 ceptional expansion under war exigences. Let us 
 H 2
 
 lOO WEALTH-CREATION. 
 
 inquire what proportion of the 3,500,000 men now 
 under arms in Europe on the peace footing, and 
 of the ;!^ 1 5 6,000,000 which they cost, would 
 suffice if European international wars could be 
 superseded by some peaceful mode of settling 
 international disputes. Whether, and how far, 
 such a change of system be possible or impossible, 
 is a question which we shall discuss in another 
 chapter. At present, we are simply inquiring 
 what is the additional tax on the resources of 
 Europe which is inflicted in consequence of the 
 supposed necessity for the existing system of war- 
 arbitrament. 
 
 The United States of America afford us a 
 suggestive clew to the solution of this question. 
 This flourishing Federation consists of 38 self- 
 governing states, 50>000)000 of inhabitants, and 
 occupies 3,500,000 square miles of territory. Their 
 army, on a peace footing, numbers 27,000 men, 
 and their total expenditure, in 1880, on every 
 military and naval department, was $52,000,000 
 equivalent to about ^^10,500,000. A contrast with 
 Europe that is most striking and pregnant with 
 meaning ! The extent of territory is about the 
 same ; the self-governing states in the United 
 States are 38 against only 17 in Europe; the 
 population is 50 millions, rapidly increasing, against 
 300,000,000 in Europe, very slowly increasing. 
 Compare these figures with 27,000 men under arms 
 in the United States against 3,500,000 in Europe ; 
 and a war-expenditure of ;^ 10,000,000 in the 
 former, against i^i 56,000,000 in the latter. 
 
 Let us now imagine such arrangements to be
 
 "LITTLE WARS. lOI 
 
 made between the seventeen states of which 
 Europe is composed, in regard to the settlement of 
 international differences between them, as would 
 on questions of peace or war constitute them 
 practically the " United States of Europe." It is 
 evident that only a fractional proportion of the 
 armies and navies now maintained by the aggregate 
 of those states would then be required. It is true 
 that for several reasons European armaments could 
 not be for the present reduced to the level of those 
 which suffice for our American brethren. Of these 
 reasons the chief is that many European states 
 indulge in the expensive luxury of " foreign pos- 
 sessions." Now these " possessions," however much 
 they may conduce to the glory of their proud 
 owners, constitute a heavy and perennial drain 
 upon their resources, and necessitate among 
 other expenses the maintenance of a far much 
 larger army and navy than would otherwise be 
 required. England is the foremost of these owners 
 of foreign possessions. So abundantly are we 
 blessed with them, and so vast is the surface which 
 they present in every part of the globe for contact 
 and collision with adverse or conflicting interests, 
 that the friction is enormous, and the consequence 
 is a constant succession of " little wars " with semi- 
 barbarous nations. And "little" these wars may 
 well be called as to their motives, objects, and 
 results, though they are by no means little as 
 respects their cost to the country. 
 
 Having regard therefore to foreign possessions 
 held (as long as they may think them worth hold- 
 ing) by European states, to the varied forms of
 
 I02 WEALTH-CREATION. 
 
 government under which the latter exist, to the 
 present want of mutual sympathy between the 
 populations which constitute the European family, 
 and to other special conditions, the military estab- 
 lishments of the " United States of Europe " might 
 still have to remain on a somewhat larger scale 
 than those of the United States of America. But, 
 nevertheless, the abrogation of European inter- 
 national warfare would nearly abolish the need for 
 standing armies, and probably one-tenth of the 
 present expenditure of men and money would 
 meet all national requirements. To err, however, 
 on the right side, let us take the estimate at one- 
 seventh. This would still leave 500,000 armed 
 men to be permanently maintained by the aggre- 
 gate states of Europe, at an annual expenditure of 
 ;i6^24,ooo,000 — an allowance which is superfluously 
 large under the assumed circumstances. 
 
 These data supply us with an answer to the 
 inquiry, \\hich we broached at p. lOO, as to " what 
 proportion of the 3,500,000 men now under arms 
 in Europe on the peace footing, and of the 
 iJ^ 1 56,000,000 which they cost, would suffice if 
 European international wars could be superseded 
 by some peaceful mode of settling international 
 disputes." The saving thereby effected would 
 represent three millions of men and ;:^ 132,000,000 
 annually of wealth. Let us look at the signifi- 
 cance of these figures. 
 
 I. As to the money. The extra ;^i42,ooo,ooo 
 now expended is levied by extra taxation from the 
 populations of Europe, and, therefore, if saved, there 
 would be so much the less to be paid by them annu-
 
 SAVING BY ABOLITION OF WAR-SYSTEM. 103 
 
 ally. Now, the population of Europe is 3 1 8,000,000, 
 distributed into about 70,000,000 families. On an 
 average, therefore, each family in Europe would 
 be a gainer of £2 per annum. Or to place the 
 matter in another light, the aggregate wealth of 
 the people of Europe would be annually increased 
 by ;^ 1 32,000,000. But this is by no means the 
 limit of the money-saving, as we shall see from the 
 remarks that follow. 
 
 2. As to the men. Under our hypothesis, three 
 million of men, whose labour is under the existing 
 system utterly unproductive, would be restored to 
 their several fields of productive industry, and 
 each would furnish his quota to the total mass 
 of wealth-creation of the world. In estimating 
 the probable amount of their contributions, we 
 must bear in mind : 
 
 {ci) That these three million men are in the very 
 prime of manhood (between the ages of eighteen 
 and fifty), and in the full maturity of their physical 
 and intellectual powers. 
 
 {U) That from the universal liability of all classes 
 to serve, which is the basis of military organisation 
 throughout continental Europe, the three million of 
 men who would be restored to a career of active 
 productiveness would mostly represent the average 
 productive ability of all classes of society, which is 
 a far higher average than that of soldiers who 
 enlist for a stipend under voluntary enrolment. 
 
 {c) In civilised countries, an average male adult 
 produces by his labour (in conjunction with capital 
 and land, whether supplied by himself or by others) 
 a large excess over his own consumption. For
 
 I04 WEALTH-CREATION. 
 
 even under the present system that excess of pro- 
 duction has sufficed, not only to maintain the 
 women, children, sick, old, and infirm of the com- 
 munity, besides a host of unproductive consumers, 
 but has also sufficed to form out of savings the 
 enormous masses of capital (buildings, ships, rail- 
 roads, &c., &c., &c.) that now exist. Indeed, every 
 man with sound limbs and a sound brain, should 
 be able to produce the equivalent of what would 
 maintain several human beings — more, under a 
 good ; less, under a bad system. 
 
 Taking these facts into account, it will be, we 
 think, a low estimate to value the average excess 
 of production over consumption of these three 
 million of men, whose idleness is changed to in- 
 dustry, at;^5o per man annually, making a total of 
 ;^ 1 50,000,000. Of course it is not their total annual 
 production that we assume as gain, because under 
 the present system their annual maintenance is 
 included in the ^156,000,000 devoted to military 
 and naval expenditure. The profit to the world 
 would be what these 3,000,000 of men would 
 earn in excess of their own maintenance. 
 
 We have seen that the average cost of each 
 European soldier is £^^ ; but it must be ob- 
 served that this sum comprises many other objects 
 besides the maintenance of the soldier in food, 
 clothes, and lodging. It comprises his relative 
 share in all the war material, equipment, and 
 appliances, by means of which his services are 
 utilised — such as artillery, ammunition, horses, 
 ships, fortifications, &c., &c. In a rough way 
 we may assume that about one-half of the
 
 CAPITAL DIVERTED FROM PRODUCTION. I05 
 
 average cost to the state of a soldier goes to 
 his personal maintenance, and the rest to equip- 
 ment, &c. In the case of a sailor the proportion 
 is somewhat different, as his ship, armament, &c., 
 form a heavier percentage of the total cost. We 
 now proceed to the third head under which we 
 have proposed to discuss "the variety of modes in 
 which war is injurious." 
 
 CHAPTER IX. 
 
 Annual Cost of the War-system in time of Peace— Annual Cost of 
 the War-system in time of War — Economic Results of the 
 Conversion of Soldiers, &c., into Producers. 
 
 3. Diversion of capital to unproductive or 
 destructive purposes. In addition to the 
 ;i^ 1 56,000,000 annually spent in Europe on war 
 preparations, a very heavy loss is sustained by the 
 dead capital permanently locked up in fortifica- 
 tions, arsenals, ships, horses, barracks, military 
 schools, &c. This capital, the amount of which 
 it is difficult to estimate, but which must be 
 enormous, is sunk unproductively, and yields no 
 return whatever. The world, therefore, loses all 
 the wealth which would have been created through 
 the instrumentality of that capital, had it been in 
 active employment. We shall not attempt to 
 assess this loss, which is obviously a very large 
 one, but must content ourselves with pointing out 
 its existence. 
 
 There is, however, one item which is susceptible 
 of easy computation ; it is the intercepted earnings
 
 I06 WEALTH-CREATION. 
 
 of the horses used in the armies of Europe. It is 
 obvious that a horse when used for agricultural or 
 other work, produces to its owner a certain amount 
 of yearly profit beyond its keep, or otherwise horses 
 would be of no value except to the wealthy as 
 luxuries. We estimate such yearly excess of 
 earnings over maintenance at ;^20 on the 
 average. By a careful comparison of the number 
 of horses used in the chief armies of Europe, we 
 find that, one with the other, one horse is used for 
 every six soldiers. Now since, under our hy- 
 pothesis of the abolition of international European 
 warfare, 3,000,000 soldiers were set free to embark 
 in productive pursuits, so there would be 500,000 
 horses (now employed unproductively for war pur- 
 poses) set free to earn the equivalent of ;{^20 a year 
 over and above their keep. This constitutes a 
 further sum of iS^ 10,000,000 yearly that is absorbed 
 through the supposed necessity of the war-system. 
 
 Eet us now proceed to sum up the results of 
 the foregoing calculations. We find that if inter- 
 European wars ceased to be " necessary," and were 
 superseded by some other device, it would make a 
 difference annually to the populations which in- 
 habit Europe of 
 
 ^132,000,000 now spent on war preparations in 
 time of peace. 
 150,000,000 which 3,000,000 of men would 
 earn, who now earn nothing. 
 10,000,000 which 500,000 horses would earn, 
 
 which now earn nothing. 
 
 ^^292,000,000 
 Truly an enormous sum ! It is equivalent to a
 
 COST OF WAR IN TIME OF PEACE. I07 
 
 poll-tax of £1 Sterling a year on the head of every 
 man, woman, and child in Europe — from the babe 
 newly born to the centenarian — from the beggar 
 to the millionaire. It is nearly thirty times as 
 much as the entire war expenses of the United 
 States of America, and is double the amount of 
 the loss which that great republic annually in- 
 flicts on herself by her adherence to the protec- 
 tive system. It equals the entire revenues of the 
 four greatest European powers put together, and 
 capitalised at fifteen years' purchase, would form a 
 sum more than sufficient to pay off all the non- 
 repudiated national debts of the entire world. 
 
 This calculation, be it noted, does not include 
 the very large amount of loss occasioned, as we 
 have before explained, by the enormous capital un- 
 productively locked up ; nor a multitude of other 
 sources of loss, waste, and evil which are not 
 susceptible of definite valuation in money. 
 
 And let it not be forgotten that the above 
 picture represents the normal and permanent con- 
 dition of Europe at its very best — that is, during 
 a period of profound peace. Under the present 
 system there cannot possibly be any improvement 
 upon it. Indeed, every change that is at all likely to 
 occur must be for the worse. For, if one power takes 
 a single step forward in the direction of increased 
 military efficiency, all the other powers, jealous 
 and suspicious, immediately do the same, so as to 
 maintain, at least, their previous relative positions. 
 While, on the contrary, if any one country should 
 do such a wise thing as to curtail her military 
 expenditure, none would follow her example unless
 
 I08 WEALTH-CREATION. 
 
 all the rest did ; and of all the rest, each would wait 
 for the others to begin. The tendency is there- 
 fore towards a constantly increasing strain on the 
 resources of every European state, while any 
 relaxation of that strain is out of the question. 
 Consequently, as improvement is impossible, 
 change is to be deprecated, and the utmost we 
 can look for while the war-system prevails is the 
 maintenance of our present state, burdensome as 
 it is. 
 
 Things, therefore, have come to this pass — 
 that, under the present system of war-arbitrament, 
 the position which we have described is the 
 most favourable to which Europe can aspire. 
 This position involves the annual sacrifice, out of 
 the wealth created by European producers, of 
 ;^300,000,ooo for military purposes during a period 
 of profound peace — not, of course, for any actual 
 services rendered beyond reviews and sham fights 
 (unless it may be military repression of the popular 
 voice), since we are assuming a period of profound 
 peace — but for an exhibition on the part of each 
 country of such an extent and readiness of military 
 strength as shall convey a distinct warning not 
 to offend, and a distinct menace to resent offence. 
 This rival display on all sides of military power is 
 the latest and most approved device for preserving 
 peace, as set forth in the hackneyed aphorism. 
 Si vis paccni, bellinn para, or Aitglic^, *' If you wish 
 to avoid fighting, show yourself ready to fight." 
 
 It was on this plausible principle that our fore- 
 fathers acted, when, to deter or resist assailants, they 
 habitually wore swords as part of their dress. This
 
 COST OF WAR IN TIME OF WAR. I09 
 
 practice did not, however, lead to peaceful results 
 in private life, but, on the contrary, to constant 
 broils and frequent bloodshed. Let us hope, if we 
 can, that its application to international intercourse 
 will be more successful. For if it is not, we are 
 drifting into a state of things that must become 
 intolerable. But even if it is, we shall be no better, 
 but simply no worse off. Supposing that all goes 
 right — that these rival parades of brute force (so 
 like the game of " brag ") do really stave off war — 
 that nations may, by showing, like dogs, what 
 formidable teeth they possess, discourage attacks 
 on one another — that each member of the "great 
 European family " may succeed in keeping the 
 others in a peaceful and friendly attitude by 
 significantly brandishing a stout cudgel, and 
 suspiciously watching their movements — well, what 
 then ? Why, then we, the workers and producers 
 of Europe, have simply obtained immunity from 
 war at an annual cost to us (during peace) of 
 
 ;6^300,000,000. 
 
 But, on the other hand, supposing that all does 
 not go right, and that, in spite of the boasted 
 principle that "to be prepared for war prevents 
 war," the great European powers should quarrel, 
 and a general war ensue — what then ? Why, then, 
 the very fact of every country possessing a large 
 available army on a peace footing, together with the 
 outline, quickly filled in, of a* much larger army 
 on a war footing, supplemented by an enormous 
 number of territorial reserves and militia, is of 
 itself an immense additional evil. The more 
 numerous and the better equipped are the masses
 
 I lO WEALTH-CREATION. 
 
 of human beings who, in time of war, are launched 
 from either side to grapple with each other in 
 mortal conflict, the greater must be the slaughter 
 and the waste — the greater the effusion of blood 
 and the sacrifice of treasure. If the preparations 
 for war (which were to preserve peace) cost Europe 
 ;^300,ooo,ooo yearly, how much will the actuality 
 of war cost her .'' 
 
 We have seen at p. 98 that the number of 
 armed men in readiness to serve on the war footing 
 in the various states of Europe was 10,500,000 ; 
 that is, three times the number of those maintained 
 on the peace footing. We also saw that the 
 aggregate expenditure on the armies and navies of 
 Europe on the peace footing was i^ 15 6,000,000. 
 To arrive at the probable expenditure under war 
 conditions, it is obvious that to multiply the above 
 sum only by three, because the number of men was 
 only increased threefold, would be utterly erroneous 
 and insufficient. The increased expenses during 
 war are very far more than in mere proportion 
 to the additional number of men employed. For 
 instance, the conveyance of large bodies of troops 
 from one place to another, whether by land or by 
 sea — the additional cost under those circumstances 
 of the commissariat — the rapid destruction, and 
 consequent necessary replacement, of men, horses, 
 ammunition, artillery, and war materials of all kinds 
 — the additional expense of medical attendants, 
 ambulances, hospitals, &c., for the wounded — in 
 short, a hundred sources of extra expenditure 
 having no existence in time of peace distend the 
 increased amount to proportions not easily
 
 ONE year's cost OF A GENERAL WAR. Ill 
 
 definable. We shall call it double, though it must 
 actually be much more ; but the figures are quite 
 sufficiently impressive, even when computed on the 
 most moderate scale. 
 
 Let us now proceed, on the data which we have 
 been able to collect, to calculate what would be the 
 money loss by a general European war, supposing 
 that it only lasted one year: — 
 Loss of the net earnings of 
 
 10,500,000 men, taken 
 
 away from productive 
 
 labour at ;^50 per annum 
 
 (see p. 104) ^^525,600,000 
 
 Loss of the net earnings of 
 
 1,500,000 horses, used 
 
 for destruction, not for 
 
 production 30,000,000 
 
 European war expenditure 
 
 for one year, taking the 
 
 cost of each fighting man 
 
 at twice that of time of 
 
 peace 945,000,000 
 
 European expenditure in 
 
 one year ;!^ 1,5 00,000,000 
 
 We fancy that we hear many exclaiming, 
 "Absurd! Monstrous! It cannot be!" Well! 
 That the amount is really a monstrous one, and 
 that it does appear absurd, we readily admit. But 
 that "it cannot be" goes for nothing, when we 
 consider the vast multitude of things that " could 
 not be," but which, nevertheless, actually are. If 
 what we state is a fact, or approximatively a fact.
 
 112 WEALTH-CREATION. 
 
 " can't be " melts into a mere querulous exclama- 
 tion, as it has done in the face of a multitude of 
 other facts at various times. " Can't be " is no 
 answer to what is. The question really is, " Where 
 is the error in our calculations .-* " We believe them, 
 after the most careful consideration, to be under, 
 and not over, the truth. If the amount takes us 
 by surprise, it is because we have not hitherto 
 faced the question boldly. We have contented 
 ourselves with vague generalities, and kept clear 
 of details and of figures of arithmetic. We readily 
 agree that it is indeed " absurd and monstrous " 
 that international disputes should cost so enor- 
 mously to settle by the present brute-force method. 
 Whether there may or may not be some other 
 mode of settlement is not the point now under 
 discussion. We are assuming here that the present 
 system of war-arbitrament is the only possible one, 
 and are quietly ascertaining what amount Europe 
 has to pay for the privilege of resorting to it. We 
 hypothetically assume its necessity, and simply 
 desire to know its cost. That cost we find to be 
 ;^300,ooo,ooo per annum in time of peace, and 
 would be iJ" 1, 5 00,000,000 in case of a general Euro- 
 pean war. 
 
 Stupendous sums truly ! The latter of which 
 would make all the difference between privation 
 and comfort to every labour-selling family in 
 Europe. But, of course, if it be clearly made out 
 that war is a positive necessity, we must quietly 
 lie down, grumble, and submit. If it be the only 
 means by which differences of opinion or diver- 
 gences of policy between civilised governments can
 
 IF WAR BE PARTIAL, NOT GENERAL. II 3 
 
 be adjusted, then we must bow sadly to our destiny, 
 and content ourselves with gauging the extent of 
 sacrifice which that necessity extorts from us. If 
 civilised polity cannot exist without the institution 
 of war-arbitrament, it must at least be some small 
 consolation to know what is the price which we 
 have to pay for the blessings of civilisation, as so 
 exemDlified. 
 
 But it may be said that we have exaggerated 
 the number of men and the extent of expenditure 
 required by a European war, since we have taken 
 the extreme limit of both, and have assumed the 
 improbable case of every one of the seventeen 
 states of Europe being involved in war simul- 
 taneously. True ; and some allowance off our 
 calculation may be made, according to the greater 
 or lesser range of the war. But that this allowance 
 cannot be a large one will be evident from the 
 following considerations : i. In case of a Euro- 
 pean war, the five powers which would almost of 
 necessity be engaged in it, especially if it lasted 
 beyond one campaign, are Austria, France, Ger- 
 many, Italy, and Russia. Now of these five powers 
 the aggregate war-contingent is 8,000,000 men, 
 out of the total for Europe of 10,500,000 — a large 
 proportion of the whole. 2. The other twelve 
 states of Europe, though not active belligerents, 
 would most of them, as a matter of precaution and 
 defence, raise their armies to the war footing, and 
 thereby incur the war expenditure. 3. We have 
 not in our estimates of men, money, and loss of 
 production taken into account the territorial levies 
 and the reserves of each state. Their absorption 
 I
 
 114 WEALTH-CREATION. 
 
 in the war movement would be considerable, and 
 would go far to countervail the men, money, and 
 productive power saved by the disconnection of 
 the minor states from actual warfare. But make 
 any reasonable deduction you like, quite enough 
 remains. For, if ;^ 1,5 00,000,000 per annum is 
 "monstrous and absurd," iJ^ 1,2 5 0,000,000 is hardly 
 less so. 
 
 We may also observe that in assessing the 
 extent of wealth-annihilation occasioned by actual 
 war, we have omitted several minor items, to three 
 of which we will briefly advert, i. The destruc- 
 tion of property on the lines of march of the several 
 armies. There is no neutral or desert ground on 
 which contending armies could meet in conflict. 
 Either one country or the other must furnish the 
 battle-field, and woe to the soil that is consequently 
 invaded ! Villages are burned, forced contribu- 
 tions are levied, houses and property are sacked 
 and pillaged, families are ousted from their homes, 
 cattle and forage are confiscated, fields are left 
 uncultivated, factories are shut up, troops are 
 quartered on the inhabitants who are left, and, 
 to say nothing of the personal indignities and 
 outrages inflicted, utter desolation succeeds to 
 comfort and abundance throughout entire provinces. 
 The accruing loss of wealth and of productive 
 power, who can compute .-• 2. Another form of the 
 destruction of productive power is exemplified in 
 the case of the dead, the wounded, the disabled, 
 and of those whom disease, camp-habits, or disuse 
 have rendered unfit for industrial work. 3. The 
 corroding cares, anxieties and terrors which must
 
 THE BRUNT FALLS ON THE POOR. II5 
 
 agitate the family of the bread-winner while on his 
 march to the battle-field, and their unutterable 
 grief and desolation if he should prove one of the 
 victims— are these things not to be taken into 
 account ? The despair-shrieks of the bereft ones 
 never reach the ears of the war-chief, but are they 
 any the less real and poignant ? 
 
 But stay, this is not the place to dwell on the 
 moral or aesthetic view of the subject. That belongs 
 to rhetoric and poetry. Our business is with its 
 severe economic aspect. As wealth dwindles, 
 somebody must suffer, and the suffering mainly 
 falls on the poor and weak. The capitalist is 
 mulcted of part of his wealth, but he can wait. 
 The labour-seller is mulcted of the necessaries of 
 life, and he and his dear ones cannot wait. The 
 less there is produced, the less there is to distribute. 
 Need we say which class it is that will run short ? 
 
 It is on you, labour-sellers of the world ! that 
 the burden chiefly falls. It is you who are the 
 slayers and the slain. You form the rank and file 
 who deal the blows and on whom the blows are 
 dealt. To your chiefs belong the honour and the 
 rewards. As for you, you are under contract to 
 suffer and to cause suffering ; to inflict and to endure 
 death ; to destroy instead of creating wealth ; and to 
 use every effort to suppress the fund out of which 
 labour is paid. The war-system, pernicious to 
 every class, is a special curse to yours. Are you 
 content to view it as a " necessity " ? In this our 
 protest against it, we look for your special assist- 
 ance by thought, word, and pen. Public opinion is 
 made up of assenting units. 
 I 2
 
 1 1 6 WEALTH-CREATION. 
 
 But some one may say, " If, out of the 
 
 European peace-war establishments of 3,500,000 
 men, 3,000,000 were, as you propose, to be dis- 
 banded, this additional supply of 3,000,000 workers 
 would swamp the labour market, depress wages, 
 and, being in excess of demand, cause great dis- 
 tress and destitution/' The answer is easy. 
 Simultaneously, with that disbandment, there 
 would be a reduction of expenditure, and, therefore, 
 of taxes, of ;^i42,ooo,ooo (see p. 102), that having 
 been the sum required to equip and maintain those 
 3,000,000 of soldiers. That sum, no longer levied 
 by the governments, would remain in the 
 pockets of the people, and would be so much 
 more spent by them in wages, for, as we have 
 shown, all money spent goes to the payment of 
 labour. It would mostly find its way to the 
 3,000,000 of men seeking employment, no longer 
 as soldiers, but, far better than that, as pro- 
 ducers in various branches of industry. Thus the 
 ^132,000,000 that had before been spent unpro- 
 ductively would now be spent re productively. 
 While the labour market would be affected one 
 way by the influx of 3,000,000 of labour-sellers, it 
 would be affected in the opposite direction by the 
 influx of iJ" 1 42,000,000 of capital seeking for labour 
 as the means of its utilisation. It must also be 
 borne in mind that both the disbandment of the 
 soldiers and the saving of the expenditure would 
 doubtless be, not sudden but gradual, so that the 
 adaptation of the fresh supply of labour and the 
 fresh supply of capital to each other would be a 
 smooth and almost imperceptible transition.
 
 EFFECTS OF DISBANDING ARMIES. II7 
 
 Fears may also be expressed lest such influx of 
 labour should occasion a glut of commodities. So 
 no doubt it would, if all the disbanded soldiers 
 belonged to the same trade, and all went back to 
 it. But that is quite out of the question. Soldiers 
 are taken promiscuously from all branches of in- 
 dustry — the plough, the loom, the mine, the foundry, 
 the shop, &c. &c. — and naturally each man would 
 endeavour to get back to his old avocation. Thus 
 there would be a fair balance between their labours, 
 and there would simply be more of all kinds of 
 commodities to exchange one with the other. As 
 we have shown at p. 7, no such thing as a general 
 glut of all articles is possible, for each finds some 
 desirable counterpart, and none are redundant ; 
 so that the so-called general glut simply becomes 
 general abundance. A " glut," therefore, does not 
 mean universal over-production, but the special 
 over-production of one or more articles as compared 
 with the rest. Of course, the liability to gluts is 
 much greater when countries are commercially 
 isolated from each other than when commercial 
 intercourse is unrestricted ; just as averages are 
 more regular and constant when taken from wide, 
 than when taken from contracted areas. 
 
 The supposition that the conversion of 3,000,000 
 non-producing into productive consumers might be 
 detrimental to the interests of the labour-sellers, 
 would, if admitted, lead to a curious paradox. 
 " The fewer the workers," it is said, " the smaller 
 the competition among them and the better the 
 wages." Now, let us follow this up. " The fewer 
 the workers the better," means the less there is
 
 Il8 WEALTH-CREATION. 
 
 produced the better — which again means, the less 
 there is to distribute among everybody the better. 
 Is not this a palpable absurdity .-' Why not, then, 
 reduce the number of workers still further ? To 
 travesty an old couplet, to those who say, " Our 
 gain is great because our work is small," we reply, 
 " Then 'twould be greater if none worked at all." 
 The fallacy lies in this. The producers who are so 
 jealous of competition forget that the unproductive 
 consumers (whom they wish to remain so) have to 
 be maintained out of the produce of their (the pro- 
 ducers') labour ; and the greater or lesser the dispro- 
 portion of numbers, the heavier or the lighter the 
 burden. It is just as in a strike for, say 5 per cent, 
 difference in wages. Those at work may ultimately 
 get some benefit, but meanwhile they have to sup- 
 port their mates who are out on strike, at an 
 expense far exceeding the 5 per cent, difference in 
 wages, and the more numerous the non-workers, 
 the greater the expense. To keep the 3,000,000 
 soldiers out of the labour-market, the producers 
 of Europe (combined labour, land, and capital) 
 have to furnish their governments annually with 
 ;i^ 1 3 2,000,000 — an absurdly heavy tax to pay for 
 keeping down the number of producers, and for 
 reducing the amount of production — a costly mode 
 of securing an undesirable object !
 
 119 
 
 CHAPTER X. 
 
 National Debts Incurred for War Purposes — Their Results and 
 their Limits — General Remarks on the Destructiveness of War. 
 
 We now come to another of the " modes in 
 which war is injurious." The various governments 
 of the world are indebted to a number of private 
 individuals in the vast aggregate sum of about 
 ;!^5, 000,000,000. This amount, which was borrowed 
 at various times and under various pretexts, those 
 governments are under engagement to return, and 
 meanwhile to pay annual interest thereon amounting 
 to about ;^2 1 2,000,000. On the other hand, several 
 governments have already declared themselves de- 
 faulters, have ceased paying the interest, and are not 
 likely ever to pay the principal of their debts. De- 
 ducting these, there remain about ;^4,ooo,ooo,ooo of 
 unrepudiated national debts, on which the annual 
 interest payable is about ;^ 170,000,000. Of the 
 enormous principal in question, a portion (chiefly 
 that lent to the United States and to our own 
 colonies) has been borrowed for, and applied to, 
 purposes of internal improvement, but, at the verj'- 
 least, three-fourths has been squandered on war 
 expenses. The money is gone, the debt remains. 
 Governments found it convenient, and deemed it 
 not unjust, to borrow in the name, and for account, 
 of posterity, and to mortgage the earnings of 
 future generations in order to wage present war 
 with greater efficiency. Accordingly, the world 
 (Europe chiefly) has to pay a perpetual annuity 
 of ;^ 1 70,000,000 in redemption of unauthorised
 
 120 WEALTH-CREATION. 
 
 pledges, and in fulfilment of contracts to most of 
 which the present generation has been vicariously- 
 bound. 
 
 We are not here seeking to disclaim our solida- 
 rity in, or to dispute our liability to, those arrange- 
 ments, but we may be permitted to explain their 
 origin and deplore their existence. Had the bor- 
 rowing and funding system never been devised or 
 adopted, wars must have proved infinitely less pro- 
 tracted, expensive, and wasteful, than they actually 
 have been ; and had the war- arbitrament system 
 been superseded long ago (as Henry IV. of France 
 and his wise minister Sullyhad planned) no war-loans 
 would have been needful. These war-debts were 
 to have been repaid in time of peace, but when 
 peace came the debts were left untouched. With 
 the exception of the United States, England, and 
 a few minor instances, hardly any repayments have 
 been made in diminution of these national debts. On 
 the contrary, their tendency even in time of peace is 
 still to increase, and no wonder, for funding is a far 
 easier process than refunding. The present gene- 
 ration appears in no wise disposed to deal with 
 this legacy of debt otherwise than by handing it 
 down to the next. Indeed, in case of a general 
 European war, that legacy would go down to 
 posterity frightfully increased in amount. 
 
 War in the present day is far more a ques- 
 tion of finance and of money expenditure than in 
 former times. Ironclads, improved rifles, and Krupp 
 guns, require cash down. Hundreds of millions 
 of pounds sterling would, in case of war, speedily 
 be called for and absorbed, and the financial
 
 FINANCIAT, STRAIN OF INCREASED DEBTS. 121 
 
 strain on some countries might become so intense 
 as to lead to one of the two following results : — 
 The borrowing belligerent, who would, as his debt 
 increased and his credit declined, pay dearer and 
 dearer for his loans, might burden his people with 
 such a load of annual interest, that (i) either they 
 could not continue to pay it, or that (2) if they did 
 continue to pay it, the drain would absorb nearly 
 all their annual savings — that is, the excess of 
 their national production over national consump- 
 tion. Let us cast a glance at both these contin- 
 gencies. 
 
 In the first case, the indebted country would 
 cease paying dividends on its debt, and would thus 
 declare its insolvency. After this, there would be 
 no more loans and very few wars for that wing- 
 clipped country. Its influence in the " councils of 
 Europe," whatever that may be substantially worth, 
 will become small ; it will lose (if it be a loss) the 
 haughty tone which provoked enmity, and the 
 aggressive spirit which instigated attacks on its 
 neighbours ; it will subside into a " sadder and 
 wiser" country, and it may in time, by cultivating 
 the arts of peace, retrieve its financial fortunes, 
 and finally redeem its forfeited honour. 
 
 In the second case, the honour of the country 
 will have been saved, but its material interests 
 seriously compromised. Let us trace the gradual 
 operation of the war-loan system in a country 
 until it reaches its extreme limit. Of course, if the 
 money borrowed be strictly applied to the internal 
 improvement of a country, as in railways, harbours, 
 roads, &c., the additional taxes levied on the
 
 122 WEALTH-CREATION. 
 
 people to pay the interest are more than counter- 
 balanced by their share in the advantages accruing 
 from such improvements. But it is far otherwise 
 when the money is borrowed for war purposes. 
 Money thus borrowed is no longer reproductive, 
 but rapidly vanishes into gunpowder smoke ; and 
 the additional taxes levied on the people to pay 
 the interest act as drains on the resources of the 
 country for ever. The lenders' annual interest is 
 paid, not out of the country's gains in return for 
 capital reproductively employed, but out of the 
 country's resources in return for money irretrievably 
 squandered. 
 
 The fund-holder is not a producer like the 
 ordinary capitalist. The capital of the latter em- 
 ployed in conjunction with land and labour, fructi- 
 fies and creates wealth. The money of the former 
 has been wastefuUy consumed, and creates nothing 
 but a debt, and this debt, as long as it remains 
 unpaid, constitutes the fund-holder an annuitant 
 upon the loan-ridden country. As fresh exigencies 
 arise, more money is borrowed ; loan succeeds loan 
 on more and more onerous terms ; the number 
 of unproductive annuitants (fund-holders, whether 
 native or foreign) to be paid out of the earnings 
 of the producers is multiplied ; and the strain upon 
 the resources of the country becomes more and 
 more intense, until (for everything must have a 
 term) the extreme limit of endurance is reached. 
 
 That limit we consider to be reached when the 
 annual interest payable on the national debt equals 
 or nearly approaches to the amount of the nation's 
 annual savings. Nations seldom find themselves in
 
 HEREDITARY THRALDOM TO FUND-HOLDERS. 1 23 
 
 that precise position, for they generally collapse, and 
 suspend the payment of their dividends before it 
 is quite reached. But it is quite conceivable that a 
 country should have so much to pay for yearly 
 interest on an excessive debt as nearly to absorb 
 all the surplus of production over consumption in 
 that country. In such a case there would be no 
 savings, no accumulation of capital, no increase 
 of wealth. All beyond the bare necessaries for the 
 consumption of the inhabitants would go to the 
 fund-holders in payment of interest. For the 
 benefit of these alone the producers would be 
 working. In point of fact, they would be the 
 bondsmen of the bond-holders. The condition of 
 their existence would substantially be to hand over 
 the nett produce of their labour, after providing for 
 their bare necessities, to the descendants of those 
 who had lent money to their forefathers to wage 
 war with. It would be a case of hereditary thral- 
 dom to hereditary creditors. If the latter were 
 mostly foreigners, as is likel)', then that country 
 would have every year to export, without any 
 return in imports, goods enough to pay the annual 
 dividends due abroad. Their custom-house records 
 would exhibit large exports and small imports — a 
 state of things which the " balance of trade " 
 doctrine holds to be the highest type of commer- 
 cial prosperity, but which would really be at once 
 the cause and the measure of that country's im- 
 pending collapse and ruin. 
 
 This is the lamentable condition to which all 
 those nations are inevitably tending with more or 
 less rapidity, whose indebtedness is persistently on
 
 124 WEALTH-CREATION. 
 
 the increase. Of course, where the resources are 
 large, the day of reckoning is more distant, but it is 
 only a question of time, and indulgence in the 
 costly luxury of war would materially abridge the 
 interval. In the natural course of events the war- 
 system must sooner or later so distend and inflate 
 the national debts now of one country and now of 
 another, as to make the burdens intolerable, and 
 their continuance impossible, thus giving the 
 death-blow to its peculiar creation, the funding 
 system. Like Saturn, it will have devoured its 
 own progeny. 
 
 This consummation may be accelerated or 
 retarded by a circumstance over which human 
 volition exercises a very limited control; we mean 
 the more or less abundant supply in the future 
 of the precious metals. Under ordinary circum- 
 stances, it would matter very little whether a 
 redundant production of gold and silver raised, or 
 a diminished production of gold and silver lowered, 
 the general prices of commodities throughout the 
 civilised world. Nearly all commodities would be 
 affected at about the same time and in about 
 the same degree — the exchangeable or relative 
 value of each would remain mostly unaltered — and, 
 excepting the case of leases, time contracts, &c., 
 it would be of very small importance whether the 
 wealth of the world were represented by a few more 
 or a few less of gold and silver counters. 
 
 But the terms under which nations have 
 borrowed, and individuals have lent them, money, 
 are such that the rise or fall of prices have become 
 of serious importance to both. The fund-holder
 
 EFFECTS OF RISE OR FALL IN PRICES. 1 25 
 
 is entitled to receive yearly, in payment of his 
 dividends, a fixed and definite sum in money, and 
 it makes an enormous difiference both to him as 
 recipient, and to the community that has to pay it, 
 whether that sum of money represents a large or a 
 small quantity of commodities. Setting aside the 
 repayment of the principal of the loan, and looking 
 only to the interest, a lender might, at the time 
 that he subscribed his share of the loan to the state, 
 become entitled to an amount of annual interest 
 which was then equivalent to, say, 100 quarters of 
 wheat ; but in after-years that same amount of 
 annual interest might, owing to a general rise or 
 fall of prices, have become the equivalent of 200 
 quarters, or of only 50 quarters of wheat. 
 
 If new gold-fields and new silver mines should 
 be discovered, and the precious metals be so 
 abundantly produced as largely to exceed the 
 annual demand for wear and tear, and for yearly 
 increasing circulation requirements, the prices of 
 all commodities would simultaneously rise, and 
 both the value of the yearly interest paid to the 
 fund-holder and its pressure on the taxpayer 
 would diminish in proportion. But, on the other 
 hand, if, as is most probable, the tendency should 
 be towards the gradual exhaustion of the world's 
 metalliferous deposits, and the precious metals 
 became scarcer instead of more plentiful, the 
 reverse process would take place — prices of all 
 commodities would fall — and the fixed annual 
 payments to the fund-holder would yield him a far 
 larger return, measured in commodities, than he 
 had looked for when he made the loan. The debts
 
 1 26 WEALTH-CREATION. 
 
 of all nations, and the annual interest on those 
 debts, have to be paid in metallic moneys and if, 
 through the contingencies just referred to, metallic 
 money became scarcer and more valuable, those 
 debts and the interest thereon would practically 
 expand in proportion, and prove more and more 
 onerous to the debtors. 
 
 The fund-holders would nominally receive no 
 more money from the state than before, but 
 supposing a general fall of prices to one half, he 
 could purchase with that same sum of money twice 
 as many commodities as before. Similarly, a 
 country to which English capitalists had made a 
 loan would always have the same nominal amount 
 of money to remit yearly for interest, but, supposing 
 a general fall of prices to one half, that country 
 would have to export to England, in payment for 
 that interest, twice the quantity of commodities 
 that heretofore sufficed to meet it. It is obvious, 
 therefore, that such a contingency as a short supply 
 of the precious metals lowering prices by fifty per 
 cent, would have the effect of doubling the burden 
 (already hard to bear) of national indebtedness — of 
 increasing the strain on the national power of 
 endurance, and of hastening the final catastrophe 
 of national bankruptcy. 
 
 It may perhaps be said that the payment of 
 interest to the fund-holder is no real loss, for it is a 
 mere transfer, and what is paid by one set of men is 
 received by another set. But we beg to point out 
 that the set of men who pay are producers, and the 
 set of men who receive are (as far as such payments 
 go) non-producers ; and that it is very undesirable,
 
 NON-PRODUCTIVE ANNUITANTS. 12/ 
 
 could it be avoided, that such transfer should be 
 made. It may be unavoidable, but that does not 
 prevent its being regrettable. This money is not 
 handed over to partners like capitalists, who con- 
 tribute along with ourselves to the creation of 
 the wealth out of which it is paid, but is handed 
 over to annuitants to whom a vicious system has 
 given a perpetual first charge on the produce of our 
 labour, and the labour of our descendants. We do 
 not impugn the legality of their claim, but we do 
 strongly condemn the vicious system out of which 
 it has arisen. It is an evil, whether it be a neces- 
 sary one or not, that money should be taken from 
 those who have earned it, to be given to those who 
 have not. 
 
 Infinitely better would it have been for all if the 
 money, instead of being lent to the state to be 
 squandered in war, had been invested (as it other- 
 wise might have been) in reproductive operations. 
 That a mere transfer of property is no loss is, 
 without special explanations or reservations, a very 
 ambiguous and hazardous assertion ; for, as an 
 abstract and isolated proposition, it implies that 
 the five-pound note is not lost which a pickpocket 
 has transferred from your pocket into his own. 
 Substantially this is true, for it is a " mere 
 transfer," and the wealth of the nation remains 
 undiminished ; but this consideration hardly recon- 
 ciles you to your loss. 
 
 But while recognising a nation's obligation to 
 fulfil the engagements entered into by its repre- 
 sentatives, may there not be extreme cases forming 
 exceptions ? Instances are known in which, of
 
 128 WEALTH-CREATION. 
 
 the nominal amount of the loan contracted, a 
 mere percentage has reached the coffers of the 
 borrowing country, and in which the yearly in- 
 terest, if reckoned on the amount which actually 
 came into the hands of the real borrowers, was 
 equivalent to 20, 30, or 40 per cent, per annum. 
 We may easily imagine the case of a despotic 
 ruler, pressed for money to enable him to quell an 
 insurrection, consenting to any terms for a loan, 
 however usurious ; or of a provisional government 
 to a newly-formed state committing a similar ex- 
 travagance, whether from despair, ineptitude, or 
 corruption. Then we will suppose that the despot 
 crushes the popular rising, and that the provisional 
 becomes a permanent government. Are the popu- 
 lations in these cases to go on paying for ever the 
 20, 30, or 40 per cent, interest .'' It seems very 
 hard upon the poor " future " that the " present " 
 should have the power to burden it indefinitely. 
 And then what a seductive temptation to the 
 " present " is the possession of that power ! Fancy 
 the " present," distracted by fears, or maddened by 
 ambition, enabled to obtain immediate relief or 
 assistance through the easy process of drawing a 
 heavy bill on posterity ! Will it exercise self- 
 control and stay its hand ? No ! the bill will be 
 drawn, the present will be gratified at any cost, and 
 the burden will be cast on the poor "future." 
 
 It may be urged that, after all, war cannot be 
 so great an evil, seeing that, in spite of it, the 
 world has gone on increasing in wealth and popu- 
 lation ; and, indeed, that its material progress 
 during the last thirty years has been more rapid
 
 PROGRESS UNDER THE WAR-SYSTEM. 1 29 
 
 than ever, while it is during the same period that 
 the expenditure on war-armaments has been most 
 excessive. A curious mode of reconciHng us to 
 what is bad in itself, by showing that it has not 
 altogether neutralised the good derived from other 
 sources ! This fallacy is the stock argument used 
 in defence of all abuses, and in opposition to all 
 improvements. Its application to our present topic 
 amounts to this, " We have progressed under the 
 war-system, therefore do not alter it." The obvious 
 answer is, " Our small progress towards the extinc- 
 tion of poverty, ignorance, and crime would have 
 been much greater but for the war-system." If an 
 evil only retards, without actually arresting, pro- 
 gress, is it then no evil .? Is an abuse not to be 
 removed because it has not quite caused our abso- 
 lute ruin ? If a man with a heavy burden on his 
 back walks on at the rate of two miles an hour, 
 would it be a good reason for not relieving him of 
 his burden if some were to cry out, " Do not touch 
 the burden, for, see, he is walking on with it!" and 
 would he not walk much faster and freer if his 
 burden were removed ? If a man lives on, though 
 suffering from disease, is the disease to be left 
 unrelieved because he still lives on in spite of it ? 
 
 It is this same fallacy which underlies the 
 argument used by the American protectionists, 
 " The country has flourished under the protective 
 system, therefore let it be maintained ;" ignoring 
 that their country has flourished, not because of, 
 but in spite of, the protective system. The same 
 fallacy underlies the old saying (that motto of 
 stagnation), " Let well alone," which means, " It is 
 
 J
 
 I30 WEALTH-CREATION. 
 
 best to have nothing better than well." And yet 
 "well" frequently indicates a verypoorstateof things. 
 Indeed, if the " well " is to shut out the " better," 
 what chance has the world of progressive improve- 
 ment ? 
 
 We have in the preceding pages endeavoured 
 to shed some faint light on the "evils of wars and 
 international rivalries." We have seen that — not 
 taking into account the numerous modes, imme- 
 diate and reflex, in which wealth is destroyed, 
 indigence is caused, and sufferings inflicted by the 
 brute force system of settling international disputes 
 — not taking into account the heavy burden of 
 taxation required to pay mere interest on national 
 debts incurred by war, and only taking into ac- 
 count the positive, calculable, and yearly- renewed 
 loss to Europe caused thereby, partly through 
 money spent and partly through labour wasted, it 
 is found to amount to ;^300,ooo,ooo in time of 
 peace and to ;;/^ 1,500,000,000 per annum in time of 
 war. 
 
 These sums represent, in the former case, £^, 
 and in the latter case i^20 a year for every family 
 in Europe, from the poorest to the richest. Con- 
 fining ourselves only to the cost during peace, we 
 may well ask how it is possible, with such an 
 enormous abstraction renewed year after year from 
 the available resources of the European communi- 
 ties, that poverty, ignorance, and crime should not 
 largely prevail. That vast sum, if saved instead of 
 being so wasted, would go far towards removing 
 all three. There would exist so much more wealth, 
 that is, so much more of " such objects of human
 
 INCREASE IN ARTICLES USED BY THE POOR. I31 
 
 desire as are obtained or produced by human 
 exertions." And thus, there would be more of 
 these to be distributed, so that more physical 
 comforts and more means of education would fall 
 to the lot of every member of the community. A 
 large surplus would still remain to form fresh 
 capital, which is the fertile fund out of which 
 labour is paid, and by which the reproduction of 
 fresh wage-paying wealth is effected. 
 
 It may be said that the wealth so saved or 
 created will be distributed mostly among the rich, 
 and but little of it among the poor. But, on con- 
 sideration, it will be seen that it cannot be so. 
 For it must be borne in mind (i), that the taxes 
 remitted through the abandonment of the war- 
 system would be so much less abstracted from the 
 earnings of the multitude as well as from the in- 
 comes of the wealthy; and (2), that the labour 
 which was before wasted on soldiering and had now 
 become productive would mostly be employed on 
 articles used by the multitude. There would, no 
 doubt, be more corn, more meat, more cheese, &c., 
 more coal, more iron, &c., more calico, more 
 leather, &c., produced ; but that extra abundance, 
 if distributed at all (and unless destroyed, dis- 
 tributed it must be), would, of necessity, be mostly 
 distributed among the multitude ; for the affluent 
 have already as much as they can consume of those 
 commodities. The rich man would not eat two 
 beef-steaks instead of one, or double his consump- 
 tion of coal because meat and coal were cheap and 
 abundant. The extra supply of all those com- 
 modities in consequence of increased productiveness 
 J2
 
 132 WEALTH-CREATION. 
 
 would, if consumed at all (and consumed they must 
 be, unless wilfully destroyed), be consumed by the 
 multitude, and go to increase either their comforts 
 or their stocks of useful things ; probably both. Of 
 articles of luxury and art, the multiplication chiefly 
 concerns the richer few ; while of articles of utility, 
 the multiplication is specially beneficial to the 
 poorer man}-. 
 
 Before closing this branch of the subject, and 
 proceeding to discuss the alleged necessity for the 
 war-arbitrament system, we desire to place on 
 record and emphatically to state that our unspar- 
 ing condemnation of the system itself by no means 
 implies our non-recognition of the many high 
 qualities evinced by the true soldier in the perform- 
 ance of his duties. .In actual warfare some of the 
 noblest faculties of our nature (as well, we must 
 fain add, some of its worst passions) are developed 
 to the highest point of which they are susceptible. 
 The tension of mind, arising from emulation, 
 danger, and excitement, strains its powers to their 
 utmost. The fine qualities most constantly dis- 
 played by the men are fearless courage, devotion 
 to duty, patient endurance of peril and privation, 
 sacrifice of self-longings to discipline require- 
 ments, &c. 
 
 In addition to these, others are required in their 
 leaders, such as mental capacity, unfaltering pre- 
 sence of mind, rapidity of perception and decision, 
 unbending resolution, the rare union of a power of 
 large combination with a thorough grasp of details, 
 and a number of other qualifications without which 
 no general can be successful. In private life, the
 
 APPRECIATION OF MILITARY VIRTUES. 1 33 
 
 retired warrior usually exhibits favourable traces of 
 the influence exercised by an active military career. 
 In our own intercourse with soldiers who have seen 
 service we have generally found them to be among 
 the most humane and unassuming of men. 
 
 And then, even in the annals of war, there are a 
 few bright spots which break through the prevailing 
 cfloom. Who is there who has not felt a thrill of 
 admiration at the recital of heroic deeds, performed 
 by heroic men ? Or of a glorious, even though 
 unsuccessful, stand made by a few in defence of 
 their right, against the many in the commission of 
 a wrong ? Great difficulties surmounted, or great 
 successes achieved, by prowess and pluck against 
 cfreat odds, cannot but stir the human breast like 
 the sound of a trumpet. Who can without the 
 deepest emotion peruse the scroll on which are 
 inscribed briefly, but therefore all the more pithily, 
 the noble actions which have entitled the per- 
 formers of them to the Victoria Cross .'' 
 
 Thus it will be seen that our detestation of war 
 is quite compatible with our fair appreciation of 
 those whom it presses into its service. We may 
 admire valorous deeds, and yet earnestly deprecate 
 the occasion which calls for them. And let it be 
 remembered that peace also has laurels to be won 
 by brave men. The miners who freely risk their 
 lives to deliver their mates from the living tomb in 
 which a sudden accident has imprisoned them, are 
 but a type of the many noble-minded men and 
 women who are ever ready to rush into danger in 
 order to rescue others from it. We have none 
 the less appreciation of their heroism because we
 
 134 WEALTH-CREATION. 
 
 deplore the necessity for it, and endeavour to avert 
 that necessity in the future. And after all, alas! 
 the horrors and miseries of war receive but slender 
 mitigation from the splendour of exceptional 
 achievements, or from the high personal qualities of 
 those who may prove, when it is over, to have been 
 either its victims or its survivors. 
 
 CHAPTER XL 
 
 The Alleged Necessity for War — Advantages and Disadvantages of 
 Territorial Extension — Where the War Principle leads when 
 fully carried out — The Democratic Element. 
 
 B. As TO THE Necessity for War. — It now 
 becomes our task to analyse the allegation so con- 
 stantly made that international disputes cannot 
 possibly be settled without the arbitrament of 
 war; and that, therefore, wars are necessary and 
 unavoidable. In order to examine into the truth 
 of this allegation, it will be necessary to inquire 
 into the nature of those international disputes 
 which are thus said not to be susceptible of so- 
 lution except through the ordeal of brute force. 
 What are the causes from which have sprung the 
 numerous European wars of the last two centuries.'' 
 We omit insurrectionary and civil wars, which, 
 as our inquiry is confined to international wars, do 
 not, for obvious reasons, come within its scope. 
 We shall find the rest all comprised under some 
 one of the following heads : — i. Wars waged to 
 displace or replace ruling dynasties. 2. Wars of 
 aggrandisement, and for the acquisition of increased
 
 THE VARIOUS CAUSES OF WAR. 1 35 
 
 territory, power, revenue, influence, &c. 3. Wars 
 to maintain the balance of power, and to resist the 
 craving for aggrandisement referred to in the 
 preceding sentence. 4. Wars of redress for alleged 
 injuries or insults. 5, Wars in fulfilment of old 
 treaty guarantees. 6. Wars to arrest the contagion 
 of democratic principles. 7. Wars to protect 
 nationalities forming part of another state. We 
 are not aware of any civilised war that is not 
 referable to some one of the foregoing categories. 
 
 There is not among these a single case of war 
 of peoples against peoples. They are all cases 
 of rulers against rulers — governments against 
 governments — and of statesmen against statesmen. 
 It is the state-machine, as represented by the 
 Napoleon, or the Bismarck, or the Beaconsficld, of 
 the day, that makes war or peace. The people for 
 whose welfare and behoof the state-machine was 
 nominally and ostensibly constructed, have practi- 
 cally no voice in the matter of peace or war. The 
 only wars to which the people constituting a state 
 are direct parties are insurrectionary or civil wars, 
 which are outside of our theme, and which rarely 
 contribute to the enormous pecuniary sacrifices 
 exacted by international war preparations or war 
 actualities. It is the executive department of 
 the state, usually concentrated into a few hands, 
 frequently, indeed, wielded by one man, that 
 threatens war, declares war, and maintains war. If 
 the adult population of a country were polled 
 before the nation were actually committed to a 
 course, few wars would ever take place. Public 
 opinion is generally consulted too late. The
 
 136 WEALTH-CREATION. 
 
 diplomatic threat that has eHcited official defiance 
 
 — the quasi iilth)iaUini that has been submitted and 
 
 rejected — the compromising engagements entered 
 
 into to secure allies — the impossible recall of rash 
 
 utterances — the aggressive attitude sometimes 
 
 assumed by over-zealous subordinates — all these 
 
 and many other precipitate and irritating measures 
 
 have become accomplished facts which the people 
 
 have to accept and abide by, but which, had their 
 
 wishes been consulted in good time, might most 
 
 probably have remained unaccomplished intentions. 
 
 There are no apparent reasons why democracies 
 
 should wage war against democracies. To them, the 
 
 material prosperity of the mass of the people must 
 
 be, as it should be of all governments, the ruling and 
 
 paramount object of concern. The prosperity of 
 
 the people is professedly the final end of political 
 
 institutions. But of all the wars that have raged 
 
 among European states, we do not know one of 
 
 which the real, or even the pretended object, has 
 
 been to promote the material prosperity of the mass 
 
 of the people. The manifestos issued to justify 
 
 declarations of war usually dwell on the very 
 
 intense desire for a peaceful solution which 
 
 animated the issuer, but was frustrated by, &c. — 
 
 on the course of action which became necessary for 
 
 the honour, glory, and dignity of the country — on 
 
 the justice, expediency, and urgency of repressing 
 
 the ambitious views and aggressive policy which, 
 
 &c., &c. — and on a number of ' similar topics 
 
 connected with the position and prospects of the 
 
 state-machine from an external and diplomatic 
 
 point of view.
 
 MOST WARS ARE FOR AGGRANDISEMENT. 1 37 
 
 But we do not remember a single declaration 
 of war that ever announced its objects to be the 
 alleviation of the people's burdens ; the encourage- 
 ment of their labour and industry ; or the further- 
 ance of their physical and moral welfare. It will be 
 said that these are not the class of objects obtain- 
 able through war — that, in fact, war was antago- 
 nistic to and destructive of them. So much the 
 worse for the war-system. If the good of the 
 people — the first, the true, the final end of all 
 government — be, not promoted but obstructed by 
 war, what is the value to the people of those objects 
 which war sometimes more or less succeeds, or 
 oftener more or less fails in accomplishing ? L6t 
 us see. 
 
 We of course set on one side purely defensive 
 wars. Such are sacred, and the crime is the 
 aggressor's. As to other wars, however, it will be 
 seen by a reference to the seven heads under which 
 we have, at p. 134, classified the various causes of 
 modern wars, that none of these bear any reference 
 to either the benefits to be conferred on, or the evils 
 to be averted from, the individual members of the 
 belligerent community. They deal with statesmen's 
 grievances, not with popular requirements. They 
 mostly converge into one focus. Dynastic wars, 
 compensation for injury wars, and treaty wars, are 
 not of frequent occurrence, and when they do occur 
 are often found to be aggrandisement wars in dis- 
 guise, or they lapse from the one into the other. 
 Hence by far the most prolific sources of war are 
 to be found in the avidity of some states for more 
 territory, or more privileges, or more political influ-
 
 138 WEALTH-CREATION. 
 
 ence, &c. ; and in the determination of other states 
 that this avidity shall not be gratified. The chief 
 aim of statesmen seems hitherto to have been to 
 enlarge the boundaries of their own country, and 
 to prevent other countries from enlarging theirs. 
 All this is done for the honour and glory of the 
 nation as a political factor among other nations, 
 not with any view to the substantial benefit of 
 the people in the way of food, clothing, lodging, 
 education, or other improvement. For instance, 
 England has had the honour and glory (such 
 as they are) of conquering Afghanistan, but 
 the only influence over the destinies of indi- 
 vidual Englishmen, of that achievement has been 
 to increase their taxation. France has had the 
 honour and glory (such as they are) of annexing 
 Tunis, but the only difference which that achieve- 
 ment has made to individual Frenchmen is that 
 each of them has to pay something towards the 
 acquisition and the retention of it. 
 
 But in order to keep the topics which we have 
 to discuss separate and distinct from each other, 
 let us classify them. We have to consider — i. The 
 advantages, or disadvantages, of territorial exten- 
 sion. 2. What it is that the principle of war leads 
 to when fully carried out. 3. The effect of the 
 prevailing tendency towai'ds democratic institutions. 
 4. The principle of arbitration. 5. The possible 
 federation of European states for the exclusive 
 purpose of settling international disputes. And 6. 
 Hero-worship and pseudo-patriotism. 
 
 I. As to the advantages or disadvantages 
 of territorial extension. Both past history and
 
 TERRITORIAL EXTENSION. 1 39 
 
 present statistics show that the cost, trouble, and 
 anxiety connected with the acquisition and the 
 maintenance of additional territory far exceed the 
 advantages derivable from it. If the acquired 
 territory is conterminous, then it must have been 
 wrenched by force of arms from some neighbouring 
 state. In that case, it will form a sharp and ever- 
 festering cause of jealousy and dissension, which 
 sooner or later will suppurate into war. How can 
 such an acquisition prove of advantage to the con- 
 quering nation in the face of the following dis- 
 advantages .'' To wit, a deadly and never-sleeping 
 feud with the dismembered country, a restless 
 dread of hostile alliances, a constant necessity for 
 effective and costly war preparations, &c. And 
 what are the counterbalancing advantages accruing 
 to the people of the triumphant country ? Simply 
 the privilege of being heavily taxed to enable the 
 state-machine to keep a tight hold of the appro- 
 priated territory, and the "honour and glory " of 
 having appropriated it. 
 
 Let us, however, take the more common case of 
 possessions in various parts of the world that have 
 been originally wrested from savage or semi-bar- 
 barous nations. We are not talking, be it ob- 
 servedjOf self-supporting colonies which are peopling 
 the waste places of the globe. They are self- 
 governing and growing nations that have nothing in 
 common with the "possessions" and "dependencies" 
 of which we speak. Of the latter there is hardly 
 one that defrays its own expenses, and which does 
 not cost the ruling country a large sum of money 
 annually, and her people an increase of taxation.
 
 I40 WEALTH-CREATION. 
 
 They are possessions of which the possessors 
 would be richer, stronger, and happier, were they 
 without them. Besides the normal drain of money 
 which they annually absorb, there crops up every 
 now and then a " little war " with savages, which 
 is in due time suppressed at the cost of a few 
 millions to the mother-country, and of a correspond- 
 ing increase of her people^s taxes. May the world 
 be saved from any more of such possessions ! Their 
 loss would be a gain, just as the loss of her Italian 
 possessions was a gain to Austria. That empire 
 thereby lost a source of weakness and expense, and 
 gained in compactness, power, and wealth. 
 
 A man who keeps up several expensive establish- 
 ments may fancy that they redound to his " honour 
 and glory," but he is certainly the poorer for them. 
 A notion prevails that the extent and population 
 of a country give the measure of its power, and 
 that its greatness is in proportion to its largeness. 
 Nothing can be less true, but even if it were true, 
 it would lead to a lame conclusion. The final end 
 of civilised society is not the greatness or the power 
 of a nation, but the prosperity and well-being of 
 the people of whom it is composed. The former 
 is a consideration quite subordinate to the latter. 
 If the people be poor, ignorant, and miserable, of 
 what avail is it that the state should externally be 
 powerful and "great".? The greater the contrast 
 between the outward display and the inward 
 wretchedness, the greater the shame and the pity. 
 If territorial extension conduces to the glitter and 
 adds to the poverty, what good is there in it ? 
 
 There arc but few, if any instances, in which
 
 THE PRINCIPLE OF WAR CARRIE!) OUT. I41 
 
 holding sway at a heavy expense over a distant 
 dependency can benefit the people of the mother- 
 country who have to bear that expense. Even 
 supposing that this dependency was at any time 
 worth acquiring, is it expedient to maintain costly 
 military and naval establishments in order to 
 prevent it from becoming independent, or from 
 falling into other hands? Happy those nations 
 which have not a number of similar white elephants 
 to feed and maintain*! And yet it is chiefly the 
 gratification of an unreasoning greediness for terri- 
 tory that the war-system has for its object. It is 
 paying an absurdly exorbitant price to acquire 
 something which is not only worthless but a 
 source of expense and positive loss. In the 
 present day, however, the ideal value of such 
 territory is beginning to be canvassed, and" the real 
 loss which it occasions to be understood. The 
 " honour and glory " when weighed in impartial 
 scales against the " blood and treasure," are found 
 to be as empty words against stern realities. As 
 the people become politically educated, they will 
 cease to be beguiled by the " empty words," and 
 will assign their proper value to the " stern 
 realities." 
 
 2. What it is that the principle of war in- 
 volves when fully carried out, let us now inquire. 
 Like all other false principles, the principle of war 
 when carried out to its full logical outcome, 
 leads to results absurd and untenable. For in- 
 stance, let us take life-destroying machinery. The 
 art of war implies and requires the invention and 
 perfection of the most effective possible lifc-de-
 
 142 WEALTH-CREATION. 
 
 stroying engines. The more successful the per- 
 verse ingenuity of scientific inventors shall prove 
 in slaughtering the greatest number of human 
 beings in a given time and over a given space, the 
 nearer to perfection does the military art attain. 
 All improvements in gunnery, in submarine pro- 
 jectiles, in explosive compounds (such as dynamite, 
 &c.), are fresh means, contributed with cruel im- 
 partiality by science, of immolating human lives in 
 the most wholesale and summary manner. Where 
 are these improvements to stop .'' Why should they 
 stop at all .-' Why should they not advance, and 
 will they not most likely advance, until science has 
 invented some certain mode by which each army 
 shall totally destroy the other ? Science has ac- 
 complished greater feats than this. Perhaps the 
 sooner the " blood and iron" system culminates into 
 this extreme the better, for then the rediiciio ad 
 ahsttrdimi will be complete, and war, having become 
 simply an easy massacre on both sides, would 
 probably fall into disuse. 
 
 Next let us glance at the war-loan system in- 
 satiably devouring wealth as long as victims are to 
 be found. The debts contracted by "glory and 
 aggrandisement " states will of necessity be, sooner 
 or later, heaped up one over the other, till the pile 
 becomes so unwieldly as to topple down altogether. 
 The borrowing system carried out to its full extent 
 means its being carried out until no more lenders 
 are to be found — the necessary goal which all those 
 nations must eventually reach who borrow faster 
 than they pay back. It will then come to pass 
 that the loan system, which is the main-spring of
 
 EXTREME RIGHT OF MIGHT. 1 43 
 
 the war-system, having been subjected to too severe 
 a strain, will snap, and both will succumb together. 
 A consummation devoutly to be wished, and the 
 sooner reached the better. As long as loans are 
 easily raised, the process is delightful to the bor- 
 rowers, since it is posterity which has to repay 
 them. They are to fighting governments even 
 more than what accommodation bills are to a 
 spendthrift ; for they afford the means of immediate 
 enjoyment to themselves at the price of future 
 suffering to others. But this cannot go on for ever. 
 The day of reckoning, whether for individuals or 
 for nations, must come, and it involves, when it does 
 come, both ruin and dishonour. A deplorable 
 climax, yet a desirable one, since it puts an end 
 to a pernicious and immoral practice. 
 
 Then again, as to the extreme right conferred 
 by extreme might, where is its limit f What should 
 prevent the victors from exterminating or enslaving 
 the vanquished ? The very prize contended for 
 in these physical force struggles is the power of 
 inflicting penalties to an indefinite extent on the 
 defeated. Each combatant took his chance as to 
 whether he should impose or bear the yoke. 
 Complete and permanent subjection — the sup- 
 pression of all possible means of recovering liberty 
 — forcible measures for denationalising the subdued 
 — and the confiscation of the fruits of their toil 
 — all these are conditions which victorious brute 
 force might exact if it carried out the principle of 
 war to its full logical deductions. Anything short 
 of those hard terms is a voluntary concession, 
 having nothing to do with the question whether
 
 144 WEALTH-CREATION. 
 
 there are any limits to the right of might, but 
 arising out of quite a different order of considera- 
 tions. It may be owing to the fear of driving the 
 foe to desperation — or to exhaustion — or to views 
 of future policy — or to deference to the feelings and 
 opinions of the world, which the sumniumjiis, the 
 plenary exercise of crushing power, might shock 
 and scandalise. But it is not owing to the tender 
 mercies of the war principle. 
 
 3. The effect of the prevailing tendency towards 
 democratic institutions. In proportion as the go- 
 vernments of the world shall more faithfully repre-' 
 sent, and therefore be themselves more swayed by, 
 public opinion, in that proportion will the probabi- 
 lity of future wars be lessened. Democratic states, 
 such as England (which is substantially a republic 
 with hereditary presidents), the United States of 
 America, republican France, Switzerland, Belgium, 
 &c., are becoming more and more averse to any 
 disturbance, through war, of finance, of commerce, of 
 political improvements, and of the arts of peace ; 
 and were their material interests more closely 
 interwoven with each other by means of free 
 commercial intercourse, they would still more 
 ardently seek to avoid the evils of war. What is 
 the direction which political changes are taking } 
 Despotic and semi-despotic states are in a transi- 
 tional state towards constitutionalism ; while, in 
 constitutional states, in which the people's repre- 
 sentatives possess a share, larger or smaller, of 
 political power, the tendency is to a still increasing 
 infusion of the popular or democratic element. 
 The movement is both hastened and regularised by
 
 THE DEMOCRATIC ELEMENT. 1 45 
 
 the quickening yet restraining influence of a free 
 press. Quickening, because inquiry and discussion 
 are prompted — restraining, because extreme anti- 
 social theories are rendered harmless by full and 
 open examination and analysis. Their worth or 
 worthlessness stands revealed under the fierce light 
 of free public scrutiny. It is in despotic countries 
 that they are repressed and compressed into secret 
 conspiracies. 
 
 As the democratic element shall more strongly 
 prevail in the larger and more powerful states of 
 Europe, so will the personal ambition, the personal 
 interests, and the personal caprices of princes and 
 rulers (those most fertile sources of political 
 provocations and strife) lose their influence, and 
 gradually sink into powerless insignificance. The 
 masses of one country have no quarrel with, or 
 enmity towards, the masses of other countries. It 
 is governments, and chiefly irresponsible govern- 
 ments, which hate, fear, envy, taunt, intermeddle, 
 become embroiled with, and finally declare and 
 wage war against, other governments. Indeed, 
 hostile manifestos are constantly proclaiming that 
 the war which is waged is not against the people, 
 but against their rulers. 
 
 As long as the power of making war or peace is 
 vested in a person or in a few persons, to whom the 
 assent of the people beforehand is unnecessary, and 
 to whom their censure, after the event, is a matter 
 of indifference, so long is a nation exposed to be 
 dragged into war, without wishing it, without 
 expecting it, and almost without knowing it. The 
 last provocation of diplomacy that precedes the 
 K
 
 146 WEALTH-CREATION. 
 
 first act of war is delivered in secret, and is only 
 made known to the public, if ever it is at all, when 
 too late. The fatal blow is struck, and all that 
 remains to the people is to grumble and fight. But 
 all this will be changed when, as political know- 
 ledge becomes more widely spread, the executive 
 as well as the legislative branches shall, in all or 
 most countries, be thoroughly leavened with the 
 democratic spirit. This infusion of the democratic 
 element by no means implies organic changes in 
 such constitutions as ours ; but it does imply the 
 ready continuance of that flexible adaptation of old 
 institutions to new requirements that has been 
 acted upon in England for nearly two centuries. 
 
 It is to such continuous progress that we hope- 
 fully look to avert the possibility that a few men 
 may " with a light heart " plunge a helpless nation 
 into the horrors of a needless war. It is true that 
 even in democracies there will always be a few 
 thoughtless, excitable, and, perhaps, interested 
 persons, who will shout loudly about " honour and 
 glory ; " but it is not they, the noisy hundreds, it is 
 the silent millions who constitute the nation. And 
 when the time comes that it shall be the suffrage of 
 these silent millions by which the question of peace 
 or war will be decided, we confidently hope that 
 international wars among civilised countries will 
 become rarer and rarer as matters of fact, until 
 they gradually dwindle into matters of history. 
 
 But let us now inquire whether there may not 
 be some shorter and speedier way to put an end to 
 the baneful war-system.
 
 147 
 
 CHAPTER XII. 
 
 The Principle of Arbitration — Possible Federation of European 
 States for Settlement of International Disputes — Suggested 
 Council of the United States of Europe — Hero-worship — 
 Pseudo-Patriotism. 
 
 4. The principle of arbitration. There are three 
 ways in which men in private Hfe settle their dis- 
 putes : — (i) by compulsory arbitration through legal 
 tribunals ; (2) by voluntary arbitration ; and (3) by 
 personal combat or duelling. Of these three ways 
 the last is the most illogical, absurd, and idiotic, and 
 has almost fallen into disuse. No one will surely, 
 in the present day, argue that the most proper 
 mode of settling a dispute between two persons as 
 to their respective rights to a piece of land, or to 
 a sum of money, is that they should fight, and 
 that the matter in dispute should be adjudged to the 
 conqueror. And yet of the three ways named, the 
 last, being by far the most preposterous, is the only 
 one that is used in the settlement of international 
 disputes. It is not that any one professes to ad- 
 mire it. It is universally condemned as irrational, 
 clumsy, cruel, 'barbarous, and productive of infinite 
 misery to mankind ; but still it is the only mode 
 resorted to. Any other, it is said, would be prefer- 
 able, but unfortunately there is no other ! What 
 an opprobrium to man's heart and brain should 
 this be true ! He has pressed the mystic forces of 
 nature into his service, and yet he is impotent to 
 improve on the barbaric internationalism of the 
 Goths and Vandals! Truly, a marvellous incon- 
 gruity ! 
 
 K 2
 
 148 WEALTH-CREATION. 
 
 But let us see. Of the two other modes in 
 which private disputes are adjusted, the first, viz., 
 compulsory arbitration through a legal tribunal, is 
 inapplicable to international disputes, for there is 
 at present no tribunal which can compel nations to 
 resort to it, or even if they did, could enforce its 
 decisions. But the second, viz., voluntary arbitra- 
 tion, is quite open to those national litigants who, 
 only seeking what is right and fair, are willing not 
 to be judges in their own cause, but to leave it to 
 the adjudication of disinterested third parties. In 
 a few instances, mostly of recent date, this rational, 
 speedy, and inexpensive mode of settling inter- 
 national differences has been adopted with satis- 
 factory results. Of course, as is always the case, 
 the losers have grumbled. But even they must 
 admit that a defeat, through the arbitrament of 
 able and impartial men, is a thousand-fold pre- 
 ferable to a victory through the arbitrament of a 
 ruinous and sanguinary war. 
 
 It may appear strange that so simple, cheap, 
 and speedy a solution of "difficulties" between 
 nation and nation should not hitherto have been 
 resorted to with more frequency. But a variety of 
 circumstances explain this. Supposing a dispute 
 to arise between a powerful and a comparatively 
 weak nation, it is quite intelligible that the former, 
 confident of victory from superior military force, 
 will hardly forego that advantage and accept 
 arbitration which places both parties on a pre- 
 cisely equal footing. Again, supposing the dis- 
 putants to be, or to fancy that they are, of equal 
 military strength, one of them, at least, may be
 
 RECOURSE TO ARBITRATION. I49 
 
 conscious that his case will prove weak in the eyes 
 of equitable men, and prefer to confide it to the 
 arbitrament of physical force. 
 
 There is no lack of pretexts under which a 
 government may decline arbitration without im- 
 pugning the general principle. It may say, " Our 
 case is so clear that there is nothing to arbitrate 
 about;" or, "the honour of our country is at 
 stake, and we cannot leave that to be adjudicated 
 upon by any third parties;" or, "what guarantee 
 have we that our adversary will be coerced in case 
 that he should refuse compliance with an adverse 
 verdict ? " or it may use other plausible pleas. 
 The probability that the stronger will decline the 
 overtures of the less strong, whatever may be their 
 respective rights or wrongs, is the weak point of 
 the voluntary arbitration system. There is no 
 controlling power either to compel its adoption of 
 to enforce its verdicts. If, of two contending 
 powers, one proposes and the other declines arbi- 
 tration, it may as a rule, be inferred that the 
 former has most confidence in the justice of its 
 cause, and the latter most confidence in the supe- 
 riority of its strength. 
 
 Nevertheless the principle is admitted by all 
 to be sound in the abstract, and its adoption in 
 practice will no doubt become more and more 
 frequent, especially in contentions of secondary 
 importance. In the case of wars of aggrandise- 
 ment (under the pleas of " rectification of frontiers," 
 precautions against future possible aggression, &c., 
 &c.)j or of wars of intervention (under the pleas 
 of the maintenance of the balance of power, the
 
 I50 WEALTH-CREATION. 
 
 repression of anarchy, &c., &c.) ; or of all other 
 wars of which ambition and cupidity are the main- 
 springs, the aggressors are not at all likely to sub- 
 mit their proceedings to the ordeal of arbitration, 
 justly apprehensive lest the award should be against 
 them. And these unfortunately constitute that 
 class of wars which are the most frequent, the 
 most enduring, and the most sanguinary. By what 
 means, then, are we to obtain the agency of some 
 extraneous, over-ruling authority that shall convert 
 voluntary into compulsory arbitration .'' 
 
 5. The possible federation of European states 
 for the exclusive purpose of settling international 
 disputes. If the seventeen states of which Europe 
 is now composed (or most of them) entered into a 
 solemn treaty whereby they agreed to submit all 
 disputes between them to the decision of a Council 
 to consist of representatives appointed by each in 
 fair proportion to their respective populations, the 
 difficulty of making arbitration compulsory would 
 be met, and a mighty problem would be solved. In 
 the Appendix to this work we give a rough sketch 
 of some of the leading features and conditions which 
 the formation of a Council of the United States of 
 Europe might involve. We submit that sketch 
 quite tentatively, and as the merest vague outline. 
 There may be twenty other preferable modes of 
 accomplishing the same object, and of these, which- 
 ever proves the most practicable will be the best. 
 For it is the impracticability of the scheme that is 
 urged as its chief, if not almost its only, objection. 
 " Highly praiseworthy and very philanthropic, and 
 all that,''' it will be said, "but utterly chimerical and
 
 "THE UNITED STATES OF EUROPE." 151 
 
 visionary." To the former we quite agree, but we 
 dissent from the latter. What is there visionary in 
 a treaty between several civilised nations having for 
 its object to secure general and permanent peace 
 between them ? If such a treaty were proposed by 
 two or three of the great powers, is it visionary to 
 suppose that most of the rest would join ? Why, 
 the simultaneous existence of two Grandison- 
 Bismarcks, each swaying one of the leading states 
 of Europe, might at once convert the vision into a 
 fact ! 
 
 But, irrespectively of a combination so de- 
 sirable, our faith is in the constantly increasing 
 influence of popular opinion upon all, even the most 
 autocratic, governments of the world, and the 
 gradual infusion of the popular element into their 
 constitution. In proportion as the schoolmaster 
 and the press are educating the people, so are great 
 changes being wrought. Each country is becoming 
 more of a nation and less of a state. The people 
 are displaying comparative indifference at becoming 
 collectively greater, and increased solicitude for 
 becoming individually happier. The glory and 
 advancement of that abstract entity, the state, are 
 beginning to be subordinated to the paramount 
 object of securing the special well-being of the 
 men, women, and children of which it is composed. 
 These are the important changes to which the 
 democratic tendencies of the age are leading, and 
 every step in that direction is a step towards the 
 adoption of a war-discarding international polity. 
 
 The war-arbitrament s}'stcm would not have 
 endured as long as it has, but for its supposed
 
 152 WEALTH-CREATION. 
 
 indispensability. It has been far too easily taken 
 for granted that there is no escape from the fatal 
 necessity that exists for human beings butchering 
 each other before the survivors can come to an 
 understanding. True that poets and preachers, 
 philosophers and philanthropists, have made war 
 the theme of much eloquent declamation, but none 
 have so stoutly denied its necessity, and so clearly 
 pointed out its remedy or alternative, as to remove 
 from the bulk of mankind the impression that war 
 is inseparably interwoven in the frame of our social 
 organisation, and forms the sine qua non of 
 civilisation. This fallacy is fatal to all improve- 
 ment. To fancy war indispensable is to make 
 it so. But the world is beginning to know better. 
 The moment that war ceases to be regarded as 
 the inevitable destiny 'of man, it is doomed. Its 
 fetichism once destroyed, the wretched old idol 
 will quickly be deposed from its altar. 
 
 What the millions who form the main body of 
 all nations require is a fair share of physical 
 comforts, and of leisure for mental culture. These 
 are the two fundamental conditions of human 
 happiness. With these, every degree, without 
 these, no degree, of elevation in the scale of being 
 can be generally reached. War forms one of the 
 greatest obstacles to the realisation of both these 
 conditions, and the millions, when, and as, they 
 obtain political power, will have to choose between 
 foregoing the requirements, or demolishing the 
 obstacles. Already, thoughtful and far-seeing 
 statesmen are casting their looks forward at the 
 coming changes in the objects of future statesman-
 
 SMALL HAVE MERGED INTO LARGE STATES. 1 53 
 
 ship. More and more, the happiness of the people 
 rather than the glory of the state — attention to 
 domestic improvements rather than to foreign 
 politics — the furtherance of wealth-creation through 
 peace rather than of wealth-destruction through 
 war, will form the leading features in the state- 
 policy of all free nations. The old system of 
 isolating the various communities into which 
 Europe is divided — making their interests, which 
 are naturally identical, artificially conflicting — and 
 so placing each at enmity, if not at war, with the 
 other, has been fully tried and found wanting. 
 
 It is true that in certain respects this old 
 system has undergone some improvement. Things 
 were, for instance, worse still when England was 
 a heptarchy — Italy a bundle of petty dukedoms, 
 or small oligarchies (erroneously called republics) 
 — and when France, Germany, Spain, &c., were 
 torn by intestine wars between the numberless 
 townships, provinces, electorates, and other feudal 
 independencies into which each was split up. In 
 the course of ages much of this has been changed, 
 and numerous small statelets have merged into one 
 large state. The questions that had occasioned 
 frequent and almost hereditary wars between two 
 neighbouring districts were now referred to and 
 decided by the government into which both had 
 merged ; and the differences that had cost the 
 disputants a perennial flow of blood and treasure 
 were finally settled by compulsory arbitration. 
 What we now suggest is that this improvement 
 should continue its course, and that the same 
 remedy, viz., compulsory arbitration, that put a
 
 154 WEALTH-CREATION. 
 
 stop to wars between province and province of the 
 same country, should be appHed to put a stop to 
 wars between country and country of the same 
 continent. 
 
 That the people of the small districts formerly 
 hostile and destructive to each other are far 
 happier now that their incorporation into the 
 same state has suppressed their feuds — that those 
 whom mutual hatred once estranged and who 
 rarely met but in conflict, should now find it much 
 more pleasant and profitable to trade with each 
 other than to fight with each other, who c*an doubt ? 
 And equally, who can doubt that the people con- 
 stituting the nations which are now jealous of, 
 isolated from, and which have interests, not natu- 
 rally but artificially, pitted against each other, 
 would be infinitely happier if arbitration perma- 
 nently settled their differences and thus removed 
 all causes for jealousy and isolation ? But some 
 will say, "That is impossible! National jealousies 
 will never be extirpated." So was it once said 
 of the feuds between Cumberland and the Scot- 
 tish borders, between Normandy and Brittany, 
 between Castile and Arragon, between Florence 
 and Pisa, &c., &c. And yet these irreconcilable 
 foes have now become friendly and fraternal mem- 
 bers of the same state. Beware of fixing the 
 limits of the possible. The "impossible" has 
 come to pass in the instances quoted as well as in 
 many others, and will assuredly come again to 
 pass in the extinction of inter-European war so 
 soon as human volition shall be energetically 
 directed to that end.
 
 DEFINITE BOUNDARIES OF STATES. 155 
 
 That each nation would be contented with its 
 boundaries were they once for all definitely fixed 
 by some recognised authority, such as the suggested 
 Council of the United States of Europe, is not only 
 consonant to reason, but also to experience, as 
 exemplified in the United States of America. No 
 disputes ever arise between any of the latter as to 
 whether a few square miles of territory belong to 
 the one or to the other. Congress has clearly 
 defined once for all their respective limits, and 
 with that demarcation each state is perfectly 
 satisfied. In the same way the people that 
 compose the various nations of Europe would see 
 that they could derive no real accession to their 
 happiness from using brute force at an extrava- 
 gant cost of blood and treasure in order to wrest 
 a province from a neighbouring country. If left 
 to themselves the people would probably not care, 
 and would certainly not go to war, for such addition 
 to their territory. 
 
 It is not the bulk of a nation — that is to say, 
 its peasants, labourers, artizans, shopkeepers, &c. — 
 who threaten with slaughter and devastation the 
 peasants, labourers, artizans, and shopkeepers of 
 another nation. These classes in one country bear 
 no ill-will against the corresponding classes in the 
 other country. To cut each other's throats is 
 the last thing they would think of until com- 
 pelled by their rulers to meet armed for that 
 express purpose. Democracy would gladly hail a 
 permanent and final map of Europe, while state- 
 craft is perpetually patching, cobbling, and tinker- 
 ing it, and thus keeps up an ever-festering sore.
 
 1 56 WEALTH-CREATION. 
 
 As a rule, both the real and the assigned 
 grounds for a war between two countries are 
 slight and easily removable at first. But as ne- 
 gotiations proceed, the discussion assumes a wider 
 range and a less courteous tone ; a word is 
 perhaps inadvertently dropped which is construed 
 into a threat or an affront, the dispute is enve- 
 nomed, the controversy becomes so hot that the 
 veneer of diplomacy blisters off, each party waxes 
 wroth, and finally war ensues. In all these cases a 
 resort to a central and supreme body such as the 
 Council of the United States of Europe, would 
 have settled the dispute long before the intro- 
 duction of disagreeable adjectives had increased 
 the difficulty of the task. Neither could there be 
 any loss of dignity in an appeal to such a tri- 
 bunal or in submission to its decision, since each 
 disputant would be fairly represented in it, and 
 would only be obeying a decree to which he 
 himself, by implication, was a party. He would 
 be, not the judge, but a judge, in his own cause. 
 
 6. Hero-worship and pseudo-patriotism. Both 
 these faults are founded on feelings which, beneficial 
 in their origin and nature, have been so strained and 
 warped as to have become enlisted in the cause of 
 violence and discord. Of violence, by the worship 
 of physical-force heroes — of discord, by a clannish 
 exclusiveness miscalled patriotism. It is natural for 
 average men to admire those who tower above the 
 average ; and it is also natural for us to love with a 
 special fondness our families, friends, and neigh- 
 bours, and the spot of earth which is connected 
 with our earliest associations. But when our
 
 HERO-WORSHIP. 157 
 
 admiration is claimed for so worthless a man 
 as Frederick the Great simply because he was 
 successful, or when our love for those around us 
 merges into aversion and contempt for other 
 men because they live far away, then we object 
 to the unreasoning exaggeration which confounds 
 good and evil. 
 
 Hero-worship is the blind adoration of success 
 by whatever means achieved, and of power for 
 whatever purposes exercised. In most cases, it 
 is through the instrumentality of war that such 
 success and power have been attained, and thus 
 war itself obtains a share of the admiration and 
 worship which they receive. Naseby, Blenheim, 
 and Austerlitz, are identified with the wonderful 
 fortunes of Cromwell, Marlborough, and Na- 
 poleon, and the habit is contracted of glorifying 
 war for its romantic results, without reference to 
 its sinister influence on the destinies of mankind. 
 The abolition of war will fearfully diminish the 
 number of future heroes, and hero- worshippers 
 will be compelled to fall back on their old, 
 hackneyed idols, from Alexander of Macedon to 
 Buonaparte of Corsica. Otherwise they will have 
 to bow to tamer and more beneficent deities, whose 
 rites do not necessitate countless human sacrifices. 
 
 The true patriot entertains a sincere love for 
 his country and for his countrymen, and would 
 undergo much labour, perhaps much suffering, to 
 serve their interests. The pseudo-patriot thinks 
 this not enough. To him, not only is his country 
 dear, but other countries are obnoxious, and he 
 both envies and fears their prosperity. He carries
 
 158 WEALTH-CREATION. 
 
 his love for his own people, which is laudable, to 
 the extent of aversion to all other people, which is 
 absurd and reprehensible. Pseudo-patriotism is 
 founded on a prevalent but pernicious fallacy, viz., 
 that the prosperity of a nation is marred and 
 injured by the prosperity of other nations. This 
 fatal error has largely contributed to perpetuate 
 those jealousies, rivalries, and armed conflicts, out 
 of which it originally sprung. If the intercourse 
 between all nations had been pacific and free, 
 such a notion could never have existed. Abolish 
 jealousy and exclusiveness, and it becomes trans- 
 parently obvious that the more each country pros- 
 pers, the more the entire world prospers. The 
 more universal the activity in creating wealth, the 
 better for all everywhere. 
 
 That one community should be poorer cannot 
 make other communities richer ; on the contrary, 
 the latter then have a bad customer instead of a good 
 one. Still less can one country be the wealthier 
 from the rest being in poverty, for its interchanges 
 will be proportionately fewer, and its intercourse 
 with them less fruitful. It might as well be 
 contended that California would flourish all the 
 more if the industries of Alabama were to decay, 
 and its productions were curtailed ; or that it 
 would be an advantage to Kent if Lancashire were 
 unprosperous. No ! rightly understood, there is a 
 solidarity of well-being throughout the nations of 
 the world. None can suffer without the sum of 
 human happiness being diminished, and some glad 
 ray is reflected over all when the welfare of a part 
 is cheered by brighter aspects.
 
 PROSPERITY HATEFUL TO RIVALS. 1 59 
 
 It is true that the significance of this universal 
 identity of human interests cannot be realised to 
 its full extent while nations stand opposed to each 
 other in actual or contingent warfare, or are isolated 
 from each other by restrictions on commercial 
 intercourse. But by making it abundantly clear, 
 and widely known, that these two evil influences 
 form the chief obstacles to the general welfare of 
 mankind, additional strength and stimulus will 
 be given to the efforts which are being made to 
 remove them. 
 
 As regards the first obstacle, as long as nations 
 are likely to be brought into war-collision, owing to 
 the antagonism of supposed political interests, it is 
 quite conceivable that each should view with a 
 pang of regret the prosperity of the rest. What- 
 ever strengthens one party makes the other rela- 
 tively weaker. The comparative happiness of one 
 people is an opprobrium to the rulers of another 
 people who are not happy. A rapid progress 
 in wealth, and therefore in latent power, of some 
 states, is gall and wormwood to those states 
 whose relative political prestige and influence are 
 thereby impaired, and to whom political prestige 
 and influence are the only tests of national great- 
 ness. This feeling is by no means unnatural under 
 the present artificial and hollow system of national 
 rivalry and political antagonism. No doubt it is 
 wicked to rejoice at the calamities of others, and to 
 feel disgusted at their prosperity ; but, wicked or 
 not, it is logical when men are artificially so pitted 
 against each other as that the progress of our 
 neighbours becomes a menace, more or less direct,
 
 l6o WEALTH-CREATION. 
 
 to ourselves. Were it not for the prevalence of 
 the war-arbitrament system, such a feeling, instead 
 of being wicked but logical, would be both wicked 
 and absurd. There would cease to be a contra- 
 diction between what was unconditionally just, 
 and what was, under certain conditions, logical. 
 The anomaly to wliich we object is founded on the 
 doctrines which proclaim that the interests of men 
 are opposed to each other — that their natural and 
 normal state is that of war — and that the less we 
 are assisted by the labours of others the better we 
 are off ourselves. 
 
 So, too, as regards the second obstacle, com- 
 mercial isolation. Besides other adverse economical 
 results, such as the partial annulment of the 
 greatest factor of human productiveness, the 
 division of labour, and the compulsory diversion 
 of industry from naturally fertile to comparatively 
 barren employment, &c., there are other disad- 
 vantages in more immediate connection with the 
 subject on which we are engaged. The population 
 of the world at large, who, left to themselves, 
 would become closely knit together by a mutual 
 inter-dependence on each other for the supply of 
 their wants, are interdicted from these friendly and 
 mutually advantageous relations ; and are forcibly 
 cut up into a variety of districts, some large, some 
 small, called countries, each of which is to supply 
 its own wants, and to have as little commercial 
 intercourse as possible with other districts. This 
 small planet of ours is to be dissected into a 
 certain number of smaller planets, each to be 
 ticketed, " No connection with the planets on
 
 EUROPE CHIEF SEAT OF WAR. l6l 
 
 the other side of the sea, or river, or mountain 
 range (as the case may be). Interchanges strictly 
 forbidden. No barter permitted of what we can 
 produce better than they can for what they can 
 produce better than we can." The more efficient 
 the protective system, the more complete the 
 isolation. It is only its impotence beyond a 
 certain point that permits any international trade 
 whatever to be possible. War isolation and trade 
 isolation assist each other in dividing the world 
 into hostile tribes, and in preventing that natural 
 fusion of their interests under which the good of a 
 part, far from being opposed to, or incompatible 
 with, is the promoter of the good of the whole. 
 
 In discussing the chances of the war-system 
 coming to an end, either through the rednctio ad 
 absiirdum of the expenditure of money and the 
 destruction of life being carried beyond the bounds 
 of human toleration, or through the common accord 
 of civilised nations, we have confined our attention 
 chiefly to Europe. For it is there that the science 
 of war has received its greatest development, and 
 the art of war its most complete and expensive 
 organisation, so that the abolition of the war- 
 system in Europe would be pretty well tantamount 
 to its universal abolition among civilised nations. 
 Indeed, out of Europe (that cradle of modern 
 civilisation) wars are few, and comparatively on a 
 small scale. The English-speaking communities 
 who are gradually filling up the vacant spaces on 
 our globe, most wisely (and may their beneficial 
 wisdom be contagious) devote themselves to the 
 arts of peace. China, with a population exceeding 
 L
 
 1 62 WEALTH-CREATION. 
 
 that of Europe, spends the merest trifle (compared 
 with Europe's peace footing of ;^ 1 66,000,000 per 
 annum) on military establishments. The com- 
 bined inter-tribal wars of all the African races do 
 not probably cost as many lives yearly as were 
 sacrificed in the single battle of Waterloo. It is to 
 Europe, supreme in refinement and culture, that the 
 guilt of bloodthirstiness mostly attaches — and it is 
 to Europe, fertile in intellects of the highest order, 
 that we must look to redeem herself from that 
 frightful sin. Surely the preservation of human 
 life, and the elimination of human misery, should 
 be the primary objects of human efforts. 
 
 We now take leave of a subject of which the 
 importance has led us into a lengthened discussion. 
 We have carefully and thoughtfully considered the 
 question of " Wars and international rivalries " as 
 forming one of the most formidable impediments 
 to wealth-creation. We have depicted the evils of 
 war, and we have gainsaid its necessity. Its evils 
 all admit, though in a vague and general way : 
 here we have catalogued and inventoried them. Its 
 necessity all have assumed, though only in a vague 
 and general way : here we have directly impugned 
 and contested it. We distinctly deny the necessity 
 for war, and we call on all those to whom man's 
 future is an object of interest to investigate the 
 subject boldly and searchingly. It is our thorough 
 conviction that we are right, and that if men will 
 only boldly face the problem it will soon be solved. 
 
 Of one thing we are quite certain, viz. — that 
 thousands and thousands of human hearts will 
 beat in unison with ours, will lovingly cling to
 
 THE ENDS AND AIMS OF CIVILISATION. 163 
 
 the hope that we may be right, and will sufifer a 
 chill of apprehension lest we might chance to be 
 wrong. Good instincts leap forward, while feeble 
 reason slowly creeps. There is hardly a man — 
 certainly not a woman — who would not feel pro- 
 found grief and humiliation if it were clearly de- 
 monstrable that there is no alternative for the 
 settlement of disputes between men and men 
 beyond the savage arbitrament of war — grief, 
 for the cruel evils from which there is to be no 
 relief, and humiliation at the miserable short- 
 comings of human efforts. For what are the ends 
 and aims of our boasted civilisation ? Surely not 
 the mere pursuit of and progress in art and science ! 
 These are only means to the real end. The 
 real end is the physical and mental well-being of 
 mankind — that is, not of any special country, or 
 class, or section, but of all the human beings who 
 are within the pale and sit under the banner of 
 civilisation. A civilisation which endows us with 
 steam and telegraphy, but cannot emancipate us 
 from the horrors of war, is impotent and abortive. 
 It falls short of its mission. It gives us those 
 scientific improvements which man might in truth 
 be happy without, but leaves untouched those 
 social iniquities which man cannot be happy with. 
 Of what avail are the marvellous conquests of 
 science to the great bulk of mankind, while they 
 are condemned to hereditary poverty and ignorance 
 by vicious institutions — such as war, commercial 
 isolation, and other obstacles to wealth-creation ? 
 
 No doubt our progress in science and art 
 tends not only to increase the enjoyments of the 
 L 2
 
 1 64 WEALTH-CREATION. 
 
 rich, but also to alleviate the privations of the poor ; 
 but its beneficent operation in the latter direction is 
 checked and counteracted by the vicious institutions 
 just referred to; and civilisation is incomplete and 
 abortive until those fertile causes of human misery- 
 are abolished. They can be abolished, for they 
 exist through man's volition ; and the power which 
 instituted can annul them. That they will before 
 long be abolished we earnestly trust, and we fer- 
 vently entreat the co-operation of all who read 
 these pages to that end. Every one can contribute 
 something towards it by thought, or word, or deed, 
 or vote. Let us never weary or despond, but 
 pledge ourselves to work, and still to work, and 
 ever to work, according to our means, in so holy a 
 cause. 
 
 CHAPTER XIII. 
 
 Commercial Isolation — Protectionist Fallacies — Balances Due by 
 one Country to Another are not Paid in Specie — All Com- 
 merce is Barter. 
 
 B. 4. Commercial Isolation. — We have fully 
 expatiated in our earlier pages on the manifold 
 advantages afforded by the " Division of labour," 
 and by " Free commercial intercourse." We there- 
 fore shall have the less to say as to the evils of 
 " Commercial isolation." For the evils of the 
 latter mainly consist in ignoring and abjuring the 
 manifold advantages on which we have already so 
 emphatically dwelt. The higher the estimation
 
 COMMERCIAL ISOLATION. 1 6$ 
 
 in which those advanta<^es are held, the greater 
 must be our appreciation of the evils and losses 
 incurred by curtailing our availment of them. 
 That curtailment statesmen have effected by 
 cutting off industrially one country from the 
 other, and substituting narrow and sectional for 
 world-wide international division of labour. Whe- 
 ther countries be large or small, the isolation 
 system (that is to say the protective system), in 
 its logical completeness, decides that the division 
 of labour shall not carry its operations beyond the 
 boundaries of each ; that the people who dwell 
 within those boundaries shall not avail themselves 
 of the co-operation of the people who dwell 
 beyond those boundaries ; and that they shall each 
 supply their own wants as though there were no 
 other countries or people in existence. In this way 
 they will be " independent of foreigners." 
 
 Foreigners ! A term implying a certain mea- 
 sure of contumely and reproach, as though 
 " foreigners " were not brother-men accidentally 
 born under a different longitude and latitude, and 
 accidentally placed, by barbaric mediaeval brute 
 force, in a distinct section of the globe called 
 another country — as though '^ foreigners " were 
 inborn enemies and natural objects of repulsion ! 
 Well, be it so. The isolated nation will be " inde- 
 pendent of foreigners." Very true ; but it will 
 forfeit all the advantages of the division of labour 
 on a large scale. It cannot possibly enjoy at once 
 the incompatible privileges of isolation and of 
 co-operation. Under the isolation system each 
 country is to produce enough of everything for
 
 1 66 WEALTH-CREATION. 
 
 its own wants, and therefore, as it takes nothing 
 from the foreigner, so neither can it give the 
 foreigner anything. Hence follows the abolition 
 of foreign commerce as well as the curtailment of 
 the division of labour, for the essence of both 
 is free interchange. All commerce is substantially 
 barter. 
 
 It is true that such complete isolation as this 
 has seldom rewarded the efforts of Protectionism. 
 But instances are not totally wanting. China 
 and Japan, until recently, had succeeded in being 
 quite "independent of foreigners;" and there 
 are still some savage islands scattered throughout 
 the ocean, the natives of which decline commercial 
 intercourse with other nations, and protect the 
 labour of their own people by refusing admittance 
 to the products of foreign labour. If we accept 
 the Protectionist principle that every country 
 should be self-sufficing, the practice of these 
 islanders is strictly logical. In most countries, 
 however, the practice of Protectionism has fallen 
 short of its principles, and it has succeeded only in 
 curtailing, not in abolishing, commercial inter- 
 changes between people and people. It has, 
 therefore, not been able totally to abolish, but 
 only to curtail, the beneficent operations of the 
 division of labour. The practice of Protectionism 
 has, nevertheless, done infinite mischief, and would 
 have done much more could its principle have 
 been fully carried out. That it should not have 
 been carried out is due, not to the principles ot 
 its supporters, but to the laws of Nature. Nature, 
 by parcelling out the globe into an endless
 
 LOSS FROM COMMERCIAL RESTRICTIONS. 1 67 
 
 diversity of zones, climates, soils, &c., and assigning 
 to each its special productions, has rendered com- 
 pulsory a certain amount of interchanges between 
 man and man, and has thus rebuked the doctrine 
 that each country should be self-sufficing and inde- 
 pendent of others. 
 
 To form a close estimate of the amount by 
 which, had the principle of the division of labour 
 been allowed full and free scope, the aggregate 
 wealth of the world would have been increased, 
 is manifestly impossible ; but we might perhaps 
 arrive at some rough notion of it. In a former 
 chapter (see p. 24) we estimated the average per- 
 centage of the import duties which formed the 
 frontier line between total prohibition from, and 
 partial admission to, a protected country at forty 
 per cent. In some cases it is much more, in others 
 it is much less, but assuming forty per cent, as the 
 average boundary which will, in spite of the duty, 
 allow the admission of a certain quantity of foreign 
 goods, the inference is obvious. Native goods must 
 cost forty per cent, more than foreign goods. Of such 
 articles, it is clear that the native producer can only 
 produce one hundred, with the same expenditure 
 of capital and labour as that with which the foreign 
 producer can produce one hundred and forty. 
 Hence it follows that, with free trade and universal 
 and unimpeded division of labour among the fittest 
 workers, one hundred and forty of such articles would 
 have been produced for every one hundred that 
 have been produced in protected countries, and the 
 world would have been richer in that proportion. 
 We shall not attempt the task of assessing the
 
 1 68 WEALTH-CREATION. 
 
 value of all the commodities that are raised 
 throughout the world under those conditions, and 
 of which the cost is wilfully and uselessly enhanced 
 forty per cent, by state interference with the 
 self-directed flow of industry within its natural 
 channels ; but, without doubt, it must amount to 
 an enormous and almost incredible annual sum. 
 
 The origin of this Protective system, which pro- 
 hibits men from devoting their labour and capital 
 to remunerative, and compels men to misdirect 
 them to losing, pursuits is easily traceable to that 
 war-engendered and war-engendering spirit of 
 hostility between nation and nation, which is at 
 once so needless and so baneful. The continuance 
 of that system rests on the apathy of the multitude, 
 who suffer in silence, because in ignorance of the 
 cause — on its active advocacy by the few whose 
 private are in opposition to the public interests — 
 and on the subservience of statesmen who are far 
 more anxious to propitiate the active few than to 
 thwart them for the sake of the indifferent many. 
 
 That the great bulk of the people in all countries 
 should not be yet aware of the injustice inflicted 
 on them by the system is perhaps hardly to be 
 wondered at. Its evils are not obvious because 
 the losses it occasions are minutely subdivided 
 among the millions. On the other hand, its 
 apparent gains to a small class are made con- 
 spicuous, because they are cumulated upon a few 
 hundreds. Big factories and their busy workmen 
 are, in protected countries, ostentatiously exhibited 
 as the noble results of the system, with the sarcastic 
 question, "Is it then your aim, O ye free-traders,
 
 ESTABLISHMENTS REARED ON SUBVENTIONS. 1 69 
 
 to dismantle these spacious establishments and hush 
 the busy hum of industry into barren silence?'" Well, 
 yes ! it is certain that, as far as these costly estab- 
 lishments are devoted merely to protected industries, 
 they are built out of subventions from the com- 
 munity at large — the workmen have been diverted 
 from profitable work to this which is unprofitable 
 (else, why the protection ?) — and the more striking 
 their vastness and splendour, the greater is the 
 waste and loss which they entail. Every consumer 
 is taxed for their maintenance, and suffers by their 
 continued existence. They are palaces reared out 
 of enforced contributions from the earnings of 
 millions of toilers. 
 
 But the people will not always be blind to their 
 own interests. The more the subject is discussed, 
 the more visible will the truth in regard to it 
 become. Indeed, we hail with joy every speech 
 made, and every page written, by the advocates of 
 Protection, for they contribute to rouse the public 
 from their torpor, they stimulate it to inquiry — and 
 they unwittingly help to unveil the fallacies which 
 they are intended to justify. 
 
 We shall now proceed to collect and pass under 
 review the most prominent or plausible of those 
 pleas which have been adduced to justify the 
 adoption of a Protective policy and the rejection of 
 Free Trade. We shall endeavour to state them, 
 discuss them, and refute them fairly, freely, and 
 briefly. The Protectionist pleas we shall print 
 in italics, to be followed by our remarks on each. 
 
 I. Balances due by one cotintry to another are 
 paid for in specie. Hence, if the balance of trade be
 
 I/O WEALTH-CREATION. 
 
 against us, we shall he drained of our specie to pay 
 for such balance. 
 
 Now, in the first place, there is practically no 
 such thing as a " balance of trade." The trade be- 
 tween two countries entirely consists of a series of 
 commercial dealings between a number of persons 
 in one country and a number of persons in the 
 other ; and there can be no national balance of 
 trade, because each dealing (and it is of these that 
 the totality is formed) is settled for at the time, 
 and balances itself. 
 
 We, the inhabitants of any given country, may, 
 it is true, buy from some countries more than we 
 directly sell to them, but the difference is not paid 
 for in specie ; it is paid for by bills on other 
 countries to which we sell more than we buy from 
 them. On the whole, the commercial dealings of a 
 country with the world at large are self-adjusting, 
 and leave no balance to be paid to or from either 
 side. But although there is no such thing as a 
 " balance of trade," most countries do either im- 
 port more from the rest of the world than they 
 export to it, or vice versa ; and it is this excess, on 
 whichever side it may be, that is ordinarily, though 
 wrongly, termed the balance of trade. 
 
 How such excesses arise we shall shortly see ; 
 here the question is simply whether it be true, as 
 alleged, that if we import more than we export " we 
 shall be drained of our specie to pay " for such ex- 
 cess of imports. Past history and present experi- 
 ence conclusively show that it is not true. Amounts 
 due (from whatever cause) by one country to others 
 are not paid for in specie. In England, our im-
 
 NATIONAL BALANCES NOT PAID IN SPECIE. 171 
 
 ports have exceeded our exports, year after year, 
 for more than a quarter of a century, by an average 
 of about ;^50,ooo,ooo a year ; and yet throughout 
 all those years, instead of our bullion having been 
 drained from us, our import has largely exceeded 
 our export of it. This fact is at once so undeniable 
 and so conclusive, that we shall not waste time 
 upon it. 
 
 The ebb and flow of bullion between various 
 countries has comparatively a very small range, 
 and depends almost entirely on their respective 
 circulation requirements. Even in wealthy Eng- 
 land, the abstraction of a few millions' worth of 
 gold so deranges the circulation as to raise the rate 
 of interest to a point sufficient to bring it back 
 again. How, then, can any one dream of our send- 
 ing away i^ioo,ooo,ooo of it annually to pay for our 
 present annual excess of imports.^ The fact is, that 
 every country possesses and retains as much specie 
 as is required for circulation purposes — sometimes a 
 little less, sometimes a little more, but never much 
 less, nor much more. No country was ever drained 
 of its specie by its foreign commerce. The only 
 way in which a country can ever be denuded of 
 specie is by the adoption of an inconvertible paper 
 currency. The circulation requirements being in 
 that case supplied by paper, the specie becomes 
 surplusage, and is sent abroad, where its value is 
 greater. 
 
 To sum up, the truth is that BALANCES DUE 
 (FROM WHATEVER CAUSE) BY ONE COUNTRY TO 
 ANOTHER ARE NOT PAID FOR IN SPECIE; AND 
 NO COUNTRY HAS EVER BEEN DRAINED OF ITS
 
 1/2 WEALTH-CREATION. 
 
 SPECIE THROUGH THE OPERATION OF FOREIGN 
 TRADE. 
 
 . 2. Commerce is not the exchange of goods for 
 goods, which would be barter ; but of goods for 
 m.o?iey, which is not barter. It will not, we think, 
 be difficult to show that the exchange of goods 
 for money is virtually as much barter as though 
 the goods were directly exchanged for other goods. 
 The only possible value of money consists in 
 its purchasing power. Money is only worth what 
 it can buy. Just consider. Of what possible use 
 can money be if it be not used to purchase some- 
 thing with } Whether that " something " be com- 
 modities, or land, or labour, &c., matters not ; the 
 only worth of money is in its power to purchase 
 such things. True, that it may be melted down 
 and applied to manufacturing purposes, but then it 
 ceases to be money, and becomes only a metal. A 
 dollar may be converted into a pencil-case. In its 
 latter shape it is useful, but has no purchasing 
 power ; in the former shape, it is utterly useless 
 except by reason of its purchasing power. Now, in 
 all commercial transactions, if the money which the 
 seller of the goods receives for them is ever utilised 
 at all, it can only be by the purchase with it of 
 some other commodities. Hence it follows that, 
 virtually, an interchange takes place between the 
 commodities which that seller has sold for money 
 and the other commodities which he has used that 
 money in acquiring. All trade dealings are inevit- 
 ably attended by the same process. No sale is 
 made by any person without his making, sooner 
 or later, a corresponding purchase. The goods so
 
 COMMERCE IS BARTER. 173 
 
 sold are, virtually and substantially, bartered for 
 the goods so purchased, and the money merely 
 serves as the medium of interchange. In most 
 cases the barter is not effected either directly or 
 at once, and is only completed when the money 
 received for the goods is made use of for some 
 definite purpose. It may for a time be depo- 
 sited in a bank, but it will not long remain idle. 
 It may for a time be transferred from one person 
 to another as a loan ; but, soon or late (in most 
 cases, soon), it is used as a payment in exchange 
 for something, and that something is the " thing " 
 for which the goods originally sold are ultimately 
 bartered. 
 
 Occasionally a long time elapses before the 
 barter is completed ; as, for instance, when the 
 receiver of the money, instead of using it at once, 
 puts it in an old stocking and hoards it. The 
 completion of the barter is suspended until the 
 owner takes the money out of the old stocking and 
 utilises it. He may use it, let us say, to pay 
 the wages of labour ; in which case the interchange 
 is perfected, and the goods originally sold are 
 bartered for labour. In point of fact, the money 
 paid by the buyer to the seller is equivalent to a 
 ticket authorising the holder to receive, in exchange 
 for the goods which he has sold, other commodities 
 to the same amount, of any kind which he may 
 choose, and at any time that he may think fit. 
 The moment he utilises that ticket the barter is 
 complete and the commodities which he receives 
 form the counterpart to the goods which he has 
 sold.
 
 174 WEALTH-CREATION. 
 
 The money which the seller receives for his 
 goods would be little more than so many pieces of 
 broken slate were it not for its purchasing power. 
 The consideration for which his goods have been 
 given is not the mere coins, it really is the com- 
 modities which those coins will purchase. The 
 mere money itself is utterly valueless, unless it be, 
 sooner or later, turned into commodities, whatever 
 those commodities may be, whether land or labour, 
 ra^ materials, or manufactured products. 
 
 If you purchase wheat, and pay for it in money, 
 that money may perchance be used for purchasing 
 a horse, in which case the horse has been, indirectly 
 but no less truly, bartered for wheat. To put it 
 into a more general form, every sale or purchase is 
 a barter of the commodities so sold or purchased 
 with the commodities on which the seller may 
 expend the money received. If money, as money, 
 had any other value beyond its purchasing power, 
 it might be said that every sale or purchase is a 
 barter between goods and money. But money, as 
 money, has no real but only a representative value. 
 The barter really is between the definite goods 
 given for the money, and the undefined goods 
 which that money represents, and which it may at 
 any moment realise. Just as when you buy a 
 ticket for a concert, the consideration given for 
 your money is not the piece of paste-board of which 
 the ticket itself consists, but the musical perform- 
 ance which the ticket represents. 
 
 Let us conclude by an illustration. You, being 
 in England, buy, we will say, a cargo of wheat from 
 New York. Against the bill of lading, &c., of this
 
 GOODS, NOT SPECIE, PAY FOR GOODS. 1 75 
 
 shipment you accept a bill drawn on you by the 
 seller, payable in England, and probably you pay 
 for this bill in money before you get possession 
 of the wheat. Now, pray observe. The money 
 which you pay for that bill is not sent over in 
 specie to America. It remains in England, to the 
 credit of the banker in New York to whom the 
 bills drawn on you were endorsed. The usual and 
 natural use which he makes of this credit is to 
 draw bills from New York against it, which bills 
 he will sell in America, for a given number of 
 dollars, to any one who wishes to make a remit- 
 tance to England — perhaps to a man who has 
 ordered some Manchester goods, for which he pays 
 by remitting those bills to Manchester. In such 
 case, it is evident that the specie does not leave 
 England, and that, substantially, the Ameri- 
 can wheat has been bartered for Manchester 
 goods. 
 
 Frequently the process is more indirect and 
 circuitous, but, if analysed, it comes to the same 
 thing. For instance, the bills referred to above, 
 instead of being sent direct to England, may be 
 sent to Rio Janeiro to pay for coffee, and sent 
 from Rio Janeiro to England to pay for Sheffield 
 steelware bought for Brazil. In this case England 
 gets the American wheat, America the Brazilian 
 coffee, and Brazil the English steel. And thus a 
 double barter — something like Capt. Marryat's 
 triangular duel — has taken "place without the 
 slightest displacement of specie Note, moreover, 
 that this is the regular, normal, and nearly uni- 
 versal practice in mercantile operations. Hardly
 
 176 WEALTH-CREATION. 
 
 once in a thousand cases are foreign goods paid for 
 by direct export of specie. 
 
 To sum up, the truth is that ALL COMMERCE IS 
 BARTER ; FOR IT IS AN INTERCHANGE BETWEEN 
 THE COMMODITIES SOLD FOR MONEY AND THE 
 COMMODITIES WHICH THAT MONEY WILL BE USED 
 IN PURCHASING. 
 
 CHAPTER XIV. 
 
 3. Excess of Imports mostly a sign of Wealth — 4. Imports and 
 Exports (except those for Loans or Repayments) balance each 
 other — 5. Protection Discourages Native Industry. 
 
 3. Permanent excess of imports impoverishes, and 
 permanent excess of exports e?iriches, a country. 
 This is the reverse of the fact. It would not be 
 true even if such excess of imports had to be paid 
 for by the receivers, or if such excess of exports 
 imphed a return payment of some kind. But this 
 is never the case. For had such excess to be paid 
 for, the payment must necessarily be either in 
 goods or in specie. Now, it could not be in goods, 
 as then, ex hypothesi, the goods exported would 
 equal the goods imported, and how could there be 
 an excess either way } Neither could that pay- 
 ment be made in specie, for it has been shown over 
 and over again that the displacement of specie 
 between country and country is confined within a 
 very narrow range, that it is almost exclusively 
 governed by circulation requirements, and that 
 balances due by one country to another are never 
 paid, unless to a mere fractional extent, in specie.
 
 NO COUNTRY BUYS MORE THAN IT SELLS. 1 77 
 
 The fact is that these permanent excesses of 
 imports over exports, or rice'versd, consist of non- 
 mercantile operations which are not repayable. 
 They consist of national loans (repayable at in- 
 definite periods, but scarcely ever repaid), of invest- 
 ments in foreign undertakings, of interest and 
 dividends on such loans and investments, of sub- 
 sidies to allies (less in fashion now than formerly), 
 of war indemnities (that of France to Germany in 
 1 87 1 to wit), ocean freight earnings, and other 
 similar disbursements which are outside of, and in 
 addition to, ordinary commercial interchanges. 
 
 " How," the Protectionists ask, " can a nation 
 go on buying more than it sells without at last 
 (like a spendthrift who lives beyond his income) 
 becoming utterly ruined T The answer is simply 
 that no country ever does buy m^ore than it 
 sells, or ever does sell more than it buys. The 
 trade of a country consists of the aggregate 
 operations of individual traders, which are always 
 equal, co-ordinate, and self-balancing ; and which 
 necessitate to a mathematical certainty (with the 
 exception of bad debts) an import as a counter- 
 part to every export, and vice versa. As we 
 have already shown, all commerce is direct or 
 indirect barter. Whatever a country permanently 
 exports beyond what it imports, it gets no return for; 
 whatever it permanently imports beyond what it 
 exports, it gives no return for. Such excess goes 
 either to liquidate old international debts or to 
 contract new ones. Whatever is brought into a 
 country over and above what is sent out from it 
 is either a payment or a loan. If a payment, it is 
 M
 
 178 WEALTH-CREATION. 
 
 retained for ever ; if a loan, it will be retained till 
 repaid at some future indefinite period. Of the 
 rare and exceptional case of a nation paying ofif its 
 foreign indebtedness, we shall treat elsewhere, but 
 it does not invalidate the general principle that a 
 permanent excess of imports over exports is not 
 paid for, and must, therefore, far from impoverish- 
 ing the country, add to its present wealth if the 
 excess represents a loan ; or to its permanent 
 wealth if it represents a payment. 
 
 How it comes to pass that this excess of 
 imports or of exports takes place, we have already 
 in great measure explained. Beside the normal 
 commercial profits which naturally contribute to 
 make what comes in of greater value than what 
 goes out, wealthy nations which have lent money 
 to foreign states, or otherwise invested money in 
 foreign countries, have annually to receive large 
 amounts for dividends on those loans and invest- 
 ments. These amounts are periodically remitted 
 to them in goods (not in specie), which figure in 
 their statistical returns as excess of imports. Let 
 us take the case o^f England. She has yearly to 
 receive about ;6 60,000,000 from abroad for interest 
 on foreign investments. She has also to receive some 
 ;^40,ooo,ooo to ;:{^5 0,000,000 morc for ocean freight 
 (gross) and charges, because two-thirds of the 
 entire ocean-carrying trade of the world is con- 
 ducted by her mercantile navy. Now, since 
 England has to receive about ;^ 100,000,000 per 
 annum from abroad in goods, for which, as they 
 constitute a payment to her, and not a sale, she has 
 to make no return, it is clear that these will figure
 
 EXCESS OF IMPORTS A SIGN OF WEALTH. 1 79 
 
 in the English Board of Trade returns as imports 
 without any corresponding amount of exports. 
 They will appear as an excess of imports over 
 exports to the extent of ^100,000,000. But how 
 can receiving ;^ 100,000,000 a year, and keeping it 
 without making any return, be either a cause or a 
 symptom of impoverishment ? By what peculiar 
 twist of the mind can this be made the subject of 
 regret or alarm } At all events, this excess of 
 imports must continue, and probably increase^ as 
 long as England possesses both an annual income 
 from abroad and the ocean-carrying trade. Even 
 if England were to double or treble her yearly 
 exports, her imports must of necessity continue 
 ahead of them by that ^S" 1 00,000,000, or probably 
 more. 
 
 The converse applies to over-exporting coun- 
 tries ; their excess of exports generally represents 
 the amount which they have to pay to the world, 
 as borrowers, for annual interest, &c. The fact, in 
 brief, is that all lending nations must necessarily 
 import in excess of their exports, and all borrowing 
 nations must export in excess of their imports ; 
 and the alarm which some feel at our over- 
 importations should be converted into exultation 
 at the wealth which they imply, and to which they 
 minister. To sum up, the truth is that THE 
 WEALTHIER A NATION IS, THE GREATER WILL 
 BE THE PERMANENT EXCESS OF HER IMPORTS 
 OVER HER EXPORTS ; AND A PERMANENT 
 EXCESS OF EXPORTS IS A SURE SIGN OF IN- 
 DEBTEDNESS. 
 
 4. Il is false that imports and exports balance 
 M 2
 
 l8o WEALTH-CREATION. 
 
 each other, since many countries import more than 
 they export, and vice vei'sd. Why it is that some 
 countries over-import and others over-export, we 
 have just explained. But if we leave out those ex- 
 ports which are sent to pay a previous debt or to 
 create a new one, we shall find that all other ex- 
 ports are balanced by corresponding imports. For, 
 indeed, how otherwise could they possibly be paid ? 
 That they are not paid for in specie, we have seen ; 
 so that, if they are ever paid for at all, it must be 
 in kind. All commercial transactions resolve them- 
 selves, directly or indirectly, into interchanges of 
 commodities ; so that, as we have said before, all 
 commerce is barter ; and there can (loan and in- 
 vestment payments excluded) be no import without 
 an export to same amount, and vice versa. Every 
 purchase implies a corresponding sale. 
 
 It must be borne in mind that in speaking of 
 the imports or the exports of a country we of course 
 mean the total imports or the total exports of that 
 country from, and to, the world at large, and 
 not those from or to any one particular other 
 country. Some have misapprehended this, and 
 have applied what had reference to the total foreign 
 trade of a country to the special trade between that 
 and a single other country. The aggregate com- 
 mercial imports and exports of each country must, 
 as we have seen (that is, debt-payments excepted), 
 balance each other, but it does not at all follow 
 that the separate dealings between two individual 
 countries will show a similar result. Over-imports 
 from countries A, B, &c., will be counterpoised by 
 over-exports to countries C, D, &c., and, in the
 
 PROTECTION DISCOURAGES NATIVE INDUSTRY. l8l 
 
 aggregate, one will make up for the other, and the 
 equilibrium between the total commercial imports 
 and total commercial exports of each country will 
 be maintained. To sum up, the truth is that FOR 
 EVERY EXPORT OF GOODS TO THE WORLD AT 
 LARGE, EXCEPT WHAT IS SENT TO PAY A 
 PREVIOUS DEBT, OR TO CREATE A NEW ONE, 
 THERE MUST BE AN IMPORT OF GOODS FROM 
 THE WORLD AT LARGE TO THE SAME AMOUNT, 
 AND VICE VERSA. 
 
 5. Protection promotes native industry by providing 
 afresh channels for the employment of native labour. 
 It would be well if this were all, but truth requires 
 the addition of the following words : " It at the 
 same time destroys more of the old channels for 
 the employment of native labour than it provides 
 new." Such is the fact, and in its suppression lies 
 the fallacy. Ceasing to import foreign goods means 
 ceasing to export those native goods which were 
 sent in exchange for the former, and throwing the 
 producers of such native goods out of work. A 
 country that adopts the Protective system ceases to 
 import, and produces for itself, certain articles which 
 we may call X Y Z, and thus capital and labour 
 acquire " fresh channels for employment." So far, 
 so good ; but this good inseparably brings with it 
 an evil that far more than counterbalances it. 
 When the nation in question imported the articles 
 X Y Z, it exported in exchange for them other 
 articled of native manufacture which we may call 
 ABC. But when the nation ceased importing the 
 former, it necessarily (for imports and exports are, 
 as we have seen, correlative) ceased exporting the
 
 1 82 WEALTH-CREATION. 
 
 latter. What is the consequence ? The articles 
 ABC are no longer produced, or are produced in 
 diminished quantity, and the capital and labour 
 which produced them remain idle. The capital 
 may afford to wait ; but what of the labour-sellers 
 who are thrown out of work .'' Instead of " native 
 industry " being " promoted " it is " the old channels 
 for employment" that are " destroyed." 
 
 Eventually, the displacement is partially reme- 
 died by the absorption of the disorganised capital 
 and labour into the new industry. But is the 
 change which has been effected through this dis- 
 placement a benefit ? Certainly not. Quite the 
 contrary. The advantages w^hich the division of 
 labour confers have been set aside. The capital 
 and labour which were employed in the production 
 of articles ABC, with which the foreign producer 
 could not compete, are now diverted to the produc- 
 tion of articles X Y Z which cannot compete (else, 
 why protective duties ?) with the production of 
 foreigners. In other words, men are taken away 
 from what they can do better than others can, and 
 set to work on what others can do better than they 
 can. The capital and labour which used to be em- 
 ployed remuneratively are now producing a loss 
 which has to be made up by a public subvention in 
 the shape of an import tax. 
 
 If, instead of taking the instance of a nation 
 that is adopting the Protective system, we take 
 that of a protected nation that is adopting Free 
 Trade, we arrive at analogous results. Such nation, 
 by abolishing the import duties on certain articles 
 X Y Z, imports them from abroad, where they are
 
 IMPORTING MORE MEANS EXPORTING MORE. 1 83 
 
 cheaper, and discontinues their production at home. 
 Thus capital and labour lose some of their old 
 channels of employment. But let us look at the 
 other side. Now that this same country imports 
 instead of making the articles X Y Z, it necessarily 
 exports in exchange for them (for every increase 
 of imports necessitates a proportionate increase of 
 exports) other articles of native production, which 
 we may call ABC, and thus fresh channels of em- 
 ployment are created. The capital, fixed and 
 floating, and the labour, which have become dis- 
 used by ceasing to produce the articles X Y Z, are 
 utilised in producing the articles ABC, for which 
 an export demand is created by the importation of 
 the articles X Y Z. And now let us inquire — Is 
 the change which has been effected through this 
 displacement a benefit ^ Yes ! and a very decided 
 one. The same capital and labour that was before 
 unprofitably employed in producing the protected 
 articles X Y Z, which the foreigner could produce 
 cheaper or better, are now profitably employed in 
 producing the articles ABC, which suit the 
 foreigner's market, and which he readily takes 
 in exchange for his own. Hence the capital and 
 labour which used to be devoted to losine are 
 now devoted to remunerative industries, the con- 
 sumers enjoy the benefit of cheap goods instead 
 of dear ones, the division of labour is effectually 
 carried out, and a great impulse is given to foreign 
 trade. In this way the producer gains, the con- 
 sumer gains, the national wealth is increased, and 
 the general commerce of the country is extended. 
 The fresh industries which Protection creates
 
 1 84 WEALTH-CREATION. 
 
 are created at the expense of the staple old in- 
 dustries which Protection curtails. The former can 
 only exist by taxing the entire community ; the 
 latter were self-supporting. A country cannot at 
 the same time cease importing foreign articles, and 
 go on exporting the native articles which used to 
 be sent in exchange for them. Free Trade says, 
 " Go on exporting the cheap native article and 
 importing the cheap foreign one." Protection says, 
 " Leave off producing the native article which you 
 produce so cheaply, and turn to producing the 
 foreign article which you can only produce at a high 
 price, and the law will compel the consumers to pay 
 you that extra price by laying a heavy import duty 
 on the cheap foreign article." Were the principle 
 of opening new losing industries at the expense of 
 old profitable ones fully carried out, England 
 might create a fresh industry by producing her own 
 wines, and thus being independent of France ; 
 France, by producing her own cotton, and thus 
 being independent of America ; Germany, by pro- 
 ducing her own silk, and thus being independent 
 of China, &c., &c. The absurdity of such a policy 
 is palpable, but the absurdity is equally positive, 
 though not so palpable, in every case wherein 
 nations discourage the industries for which they 
 are best adapted in order to create others for which 
 they are less fitted. 
 
 Protection, therefore, does not promote native 
 industry, but simply displaces it from a good to a 
 bad position. We have dwelt at some length on 
 this topic because the fallacy of the Protectionist 
 proposition is not immediately obvious, and many
 
 IMPORT DUTIES FALL ON IMPORTERS. 1 85 
 
 honest inquirers have been temporarily misled by 
 it. The key to its solution is in the fact that just 
 in the proportion that a country curtails its imports, 
 in that same proportion it curtails its exports. To 
 sum up, the truth is that PROTECTION DISCOURAGES 
 NATIVE INDUSTRY, BY CLOSING PROFITABLE CHAN- 
 NELS FOR ITS EXERCISE AND SUBSTITUTING FOR 
 THEM UNPROFITABLE ONES. 
 
 CHAPTER XV. 
 
 6. Import Duties on Foreign Goods fall on the Importers. 7. Free 
 Trade supplies Native Industry with Cheap Materials and 
 Cheap Living. 
 
 6. Import duties on foreign goods fall on the 
 foreigner, and are paid by him. This is absolutely 
 the reverse of the fact, but the assertion has been 
 frequently made, with a jaunty indifference as to 
 its truth, in order to coax the consumer into 
 acquiescence with levying duties on foreign goods. 
 He is told, "Let us lay on, say, 10 per cent, 
 import duty on such or such a foreign article. 
 You will not have to pay it ; oh, dear, no ! It is 
 the foreigner who will bear it. He will let you 
 have his goods ten per cent, cheaper than you pay 
 now, so that the duty will make no difference to 
 you, and the revenue will be benefited at the 
 expense of the foreigner." Very tempting, but, 
 alas ! quite untrue. The foreign producer will not, 
 and cannot, make the reduction. Before the duty 
 is laid on, competition between the foreign pro-
 
 1 86 WEALTH-CREATION. 
 
 ducers themselves has already reduced the price of 
 the article as low as it could go without trenching 
 on a fair living profit. Such a profit leaves no 
 margin for such a reduction. The imposition of 
 the duty by no means diminishes the amount of 
 labour and capital expended on the production of 
 the article. The foreign producer may, indeed, if 
 the imposition of duty takes him by surprise and 
 he has a large stock, submit to some deduction for 
 the moment. But permanently he must get the 
 old price, or the importing country must do 
 without the article. If the importing country will, 
 however, have the article, it must itself bear the 
 ten per cent, duty which it imposes. 
 
 Suppose that England laid an import duty of a 
 penny a pound on raw cotton, does any one for a 
 moment imagine that the price of cotton would 
 thereupon fall a penny a pound in America, so 
 that cotton would stand in to English spinners 
 no more than it did before the duty ? Who 
 would have to bear and pay that duty — the 
 American grower or the English consumer .? Can 
 there be a doubt as to the reply.? Again, if 
 putting a duty on foreign imports makes no 
 difference to the consumers of the importing 
 country, then, of course, neither would taking the 
 duty off make any difference to them. So that, 
 according to this doctrine, if England were to 
 aboHsh her import duty on tea, the Chinese would 
 get all the benefit, and the English consumers 
 would still pay the same price as before ! But as 
 the subject is again referred to under the next 
 head, we will not enlarge upon it here. The
 
 IMPOSSIBLE TO TAX FOREIGN INDUSTRY. 187 
 
 proposition implies that the prices which we 
 now pay for foreign goods are so exorbitant, 
 and leave such extraordinary profits, that they 
 could easily be reduced by the amount of import 
 duties which we might levy on them — which is 
 simply absurd. Of course, some slight and tem- 
 porary variations in the relative demand and 
 supply might occasion some slight and temporary 
 variations in prices, but they would be both trifling 
 and transient. To sum up, the truth is that 
 IMPORT DUTIES ON FOREIGN GOODS FALL ON 
 THE CONSUMERS OF THE IMPORTING COUNTRY, 
 AND ARE PAID BY THEM. 
 
 7. Under Free Trade native industry is taxed, 
 while foreign industry is not. If it were possible 
 for a nation to tax foreign industry, it is most 
 wonderful that such a scheme, which would shift 
 the unpleasant burden of taxation from our own to 
 other people's shoulders, should not be universally 
 resorted to. Why should the native be taxed at 
 all, if the necessary taxes can be levied on the 
 foreigner .'* What are statesmen about that they 
 do not raise the entire revenue of the country by 
 taxing foreign industry ^ The fact is that to tax 
 foreign industry is a sheer impossibility, and to 
 fancy that it can be done is one of those delusions 
 which only exist as long as they escape exam- 
 ination. " Oh ! but it is possible," interposes a 
 Protectionist ; " it is done every day. The United 
 States of America tax foreign industry through 
 their import duties on foreign goods, and in 1880 
 they levied from this source a revenue of 
 $186,000,000, equal to ^^3 7,000,000." Here then
 
 1 88 WEALTH-CREATION. 
 
 we join issue. The Protectionist maintains that 
 this enormous amount of Customs' duties levied in 
 the United States on foreign commodities falls 
 upon, and is borne by, the foreign producers ; while 
 we maintain that it falls upon, and is borne by, 
 the American consumers. Evidently one of us 
 must be egregiously wrong. The question is 
 narrowed to a \ery simple issue, and there ought 
 to be no difficulty in solving it. Let us look into 
 it carefully, and, to avoid complexity, let us take 
 some average article as a type of the rest. In i88o 
 the United States imported, chiefly from England, 
 cotton manufactured goods to the value of 
 $25,723,000 (i^ 5, 2 00,000), on which the Customs' 
 duties levied on admission at American ports 
 amounted to §9,976,000 (nearly ^2,000,000), which 
 is equivalent to an average import duty of 38^ per 
 cent, ad valorem on the amount imported. 
 
 Now, then, comes the question, who pays that 
 ;^2,000,ooo of duty.'' If the Protectionist is right, 
 the American consumers do not pay it, but only 
 pay the ;^5, 200,000 which is the current value of 
 the goods imported at their place of production, 
 phis the freight. The iJ^2,ooo,000 of duties " con- 
 stitute a tax on British industry, and are paid by 
 the British producer." The latter consequently only 
 receives ^3,200,000 in net payment for goods of 
 which the current value in Lancashire is ;^5, 200,000. 
 He is actually content to accept in America 
 iJ"3,200,000 for what he can get iJ"5, 200,000 for else- 
 where. This is the Protectionist view. Does it 
 accord with common sense .-' Merely to state it 
 clearly is a refutation. Do English manufacturers
 
 GOODS NOT SENT TO LEAVE LOSSES. 189 
 
 make two prices — one for the general market, and 
 another, 38^ per cent, cheaper, for the American 
 market .'' Or are their profits so enormous that 
 they can allow a discount of 38^ per cent, to the 
 American buyers, and still make sufficient profit 
 to induce them to continue the trade year after 
 year .-• 
 
 Let us take another article. In 1880 the 
 United States imported pig iron to the value of 
 $11,619,000 (;^2, 300,000), on which the Customs' 
 duties amounted to $4,318,000 (^^863,000), equiva- 
 lent. to a duty of 36^ per cent, ad valorem. Can 
 any one for a moment imagine that our iron- 
 masters could afford to supply the American 
 market at prices 36i per cent, below those current 
 at home, and would go on doing so year after year.'* 
 It is patent to all who have any knowledge of 
 trade (i) that the average profits on all our large 
 staple commodities are kept within very moderate 
 limits by the pressure of competition, and (2) that, 
 as a rule, those markets which do not afford that 
 moderate margin of profits cease to be resorted to. 
 But that the producers of such articles will continue 
 to send them to a market where they can only get 
 within 36 or 38 per cent, of what they get else- 
 where is an assertion which, although it may 
 possibly be believed by the assertors themselves, is 
 quite too heavy a demand on average human 
 credulity. 
 
 The instances which we have quoted fairly 
 represent the entire list of the dutiable articles 
 imported by the United States of America. We 
 could easily find instances far more striking. For
 
 190 WEALTH-CREATION. 
 
 instance, steel rails are not admitted into America un- 
 der a duty of 90 per cent, ad valorem ; so that, on 
 the assumption that import duties " constitute a tax 
 on the foreign producers only and are paid wholly by 
 them," the British steel producers are content for 
 every hundred pounds' worth that they send out to 
 receive back only ;;^io! On that assumption, was 
 it generosity or foolishness that induced them to 
 send out to America in 1880, on terms equivalent 
 to giving them away, a quantity of steel rails of no 
 less an amount than $[,644,000? If iron be as 
 cheap in America as it is here — as it ought to be, 
 barring a trifle of freight, if the Protectionist 
 assumption be correct — why have the American 
 ship-building industry and their ocean-carrying 
 trade collapsed ? 
 
 But it is, perhaps, needless to multiply proofs, 
 and we think that all our readers will by this time 
 aerrce that the Protectionist doctrine is erroneous, 
 and that, beyond all doubt, import duties on 
 foreign goods are borne by the consumers in the 
 importing nation. 
 
 To revert, however, to the ;i^5, 200,000 worth of 
 English cotton goods imported into America in 
 1880, on which an import duty of ^^"2,000,000 had 
 to be paid, it is perfectly clear that those goods 
 were not sent to America to make a loss of 
 ;^2,ooo,000, but they were sent becaiuse the current 
 prices ruling in America for such goods made it 
 probable that they would realise there an amount 
 sufficient to cover (1) the cost, (2) the duty levied 
 on them in America, (3) the freight and charges, 
 and (4) an average trade profit. Otherwise, where
 
 BUYERS PAY COST, FREIGHT, AND DUTY. I9I 
 
 are the madmen to be found who would, year after 
 year, send out that amount of goods to bear a large 
 amount of loss ? The trade would not be carried 
 on at all unless the American consumers paid for 
 those goods at least ;^7,700,ooo ; viz. :^- 
 
 ;i^5, 200,000 for the cost of the goods in England. 
 2,000,000 paid for import duty to the Customs in America. 
 500,000 (at least) freight, charges, and profits. 
 
 ;^7, 700,000 
 
 At anything less than that the goods would leave 
 no profit, and a trade that leaves no profit quickly 
 dies out. The same process of reasoning applies 
 to all cases, and to all countries, in which an im- 
 port duty is levied on foreign commodities. The 
 duty is paid, not by the producers in the exporting 
 countries, but by the consumers in the importing 
 country. 
 
 It is clear that the American producers of that 
 class of cotton goods which we above referred to 
 as imported from England were unable to produce 
 them for less than ^7,700,000 ; or else why should 
 the American consumers have paid, as they must 
 have paid, that amount for British goods ? Hence 
 it follows that if, from any cause, such importation 
 of those British goods were to cease, the American 
 consumers would still have to pay ;^7, 700,000 for 
 them to the native manufacturer, while the United 
 States Government would lose the i^2,ooo,000 per 
 annum which it now receives for import duties. 
 In other words, the American consumers who now 
 pay for those goods ^5,700,000 cost and freight, 
 and ;^2,ooo,ooo duty to their Government, would
 
 192 WEALTH-CREATION. 
 
 then pay the whole of the ^7,700,000 to the native 
 manufacturers. Nor would these benefit much out 
 of the i5"2,ooo,ooo thus lost to the revenue. They 
 would increase their sales by ^7,700,000 annually, 
 on which, assuming their net profits to be 6 per 
 cent, they would realise;;^ 460,000, leavingi^i, 540,000 
 (or three-fourths of the ^2,000,000 duties lost to 
 the revenue) as a dead loss, owing to capital and 
 labour being diverted to losing trades which the 
 consumer is taxed to maintain. 
 
 In all countries which impose import duties 
 on foreign merchandise these duties Avill assume 
 one of three forms. These three forms are (i) 
 purely revenue duties, (2) protective duties, and (3) 
 prohibitory duties. Now, (i) pure revenue duties 
 are those which are levied on such commodities as 
 are not produced at home, but are wholly imported 
 from abroad ; as well as upon such commodities as 
 are partly produced at home, but on which the 
 native producers pay precisely the same percentage 
 of internal or Excise taxation as the foreign im- 
 portation does of import duties. In these cases, 
 whatever the consumers pay extra in consequence 
 of those duties goes, in its entirety, to the revenue. 
 (2) Protective duties are those levied on such com- 
 modities as are partly produced (free) at home, and 
 partly imported (under duty) from abroad. In 
 these cases, whatever the consumers pay extra in 
 consequence of the duties goes in part to the 
 revenue and in part to the native producers, who 
 could not withstand foreign competition were it not 
 for the tax so paid by the consumers. (3) Pro- 
 hibitory duties are those which are too high to allow
 
 IMPORT DUTIES CLASSIFIED. 193 
 
 of importations from abroad, and leave the con- 
 sumers entirely at the mercy of the native pro- 
 ducers. In this latter case, the revenue gets nothing, 
 and whatever the consumer pays extra for the 
 prohibited commodities goes entirely to the native 
 producer, who could not withstand foreign com- 
 petition were it not for the tax so paid by the 
 consumers. In none of these cases do the foreign 
 producers bear any part of the import duty. It 
 falls entirely on the native consumers. In the 
 first of these cases, the whole of the extra price 
 which the consumers pay in consequence of the 
 import duties goes to their own Government, and 
 relieves them to that extent from other taxes. 
 In the second case a part, and in the third 
 case the whole, of such extra charge to the 
 consumers goes to cover the losses of the 
 protected producers. From such portions, there- 
 fore, of that extra charge the national revenue 
 derives no benefit, and the deficiency has to be 
 made up by some othei tax in some other form on 
 the poor consumers, who thus have to pay two 
 taxes instead of one. 
 
 Some, in reply, have said, " Admitted that 
 heavy import duties are borne by the importing 
 country, but a small duty is a different thing ; the 
 foreigner will lower his price to that extent sooner 
 than lose his market." The answer is easy. Say 
 that you tax a foreign article A, i per cent. The 
 foreign producer will certainly not lower his price 
 as long as you continue to take from him the same 
 quantity of that article A as you did before. Price 
 is regulated by relative supply and demand. If 
 N
 
 194 WEALTH-CREATION. 
 
 that relation remains unaltered, the price will also 
 remain unaltered. The only chance of buying that 
 article cheaper would be to sensibly diminish your 
 purchases of it from the foreigner. But to do so, 
 and yet meet the consumptive demand, you must 
 to the same extent increase the native production 
 of that article. Now, at the price hitherto current, 
 the native producer has produced all that he 
 could produce at a profit, and he can be stimu- 
 lated to increase his production only by being 
 paid an increased price. But the proposition stipu- 
 lates that the price to the consumer is to remain 
 the same. How are these two incompatibilities to 
 be adjusted .'' By what process is the native pro- 
 ducer to get a higher price for his article A, and 
 yet, at the same time, is the price of it to the con- 
 sumer to remain the same .'' If the native producer 
 does not get that higher price, he can produce no 
 larger quantity than he did before ; you will take 
 from the foreigner the same quantity as you did 
 before ; in which case, as the relative supply and 
 demand will remain unaltered, he will obtain from 
 you the same price as he did before, and the i per 
 cent, duty will, against your proposition, fall upon 
 tke consumer. 
 
 If the consumer does pay the i per cent, duty, 
 it then becomes a common case of Protection to 
 that extent. The native is enabled to produce a 
 little more than he did ; the foreigner will supply 
 a little less than he did ; your exportation of other 
 articles will diminish a little ; the consumer will 
 have to pay a little more than he did ; and, 
 generally, the same effects will take place, though
 
 ALL DUTIES PAID BY IMPORTERS. 1 95 
 
 on a small scale, as though the import duty, 
 instead of i per cent., were 10 per cent, or 40 per 
 cent. In every case, import duties, whether they 
 be small or whether they be large, will equally fall 
 upon the consumers. 
 
 " You will, however, grant,'' says a Protectionist, 
 "that if not the whole, at least some part of the 
 import duty is paid by the foreigner." We regret 
 that truth will not allow us to be so complaisant. 
 The average profits made in a regular trade between 
 two countries are, as a rule, kept down by competition 
 to a certain level, below which the trade would not 
 be continued. Under the additional burden of an 
 import duty, that trade would first droop and soon 
 die, unless prices rose in the importing country so as 
 to cover the import duty. No merchant (unless for 
 a short time and as a mere experiment) will go on 
 employing his capital in a trade which does not 
 yield him the average profits which capital earns 
 in other channels. Now, if prices rise in the 
 importing country so as to cover the duty, and 
 thus allow the trade to continue, it clearly must be 
 at the expense of the importing consumers, and 
 not of the foreign traders. 
 
 But Free Trade is blamed not only for not 
 taxing foreign industry, which we have shown to 
 be impossible, but also for taxing native industry. 
 This is a totally unfounded accusation. Not only 
 it is false that Free Trade specially taxes native 
 industry, but, on the contrary, Free Trade assists and 
 promotes it in the most eftective manner. Both 
 these assertions we will in a few words make good. 
 It is obvious that Free Trade imposes no special 
 N 2
 
 196 WEALTH-CREATION. 
 
 tax on native industry. All nicuibcrs of a com- 
 munity, whether under Free Trade or Protection, 
 are subject to the general taxation deemed 
 necessary to defray the Government expenditure, 
 and they are liable to exactly the same burdens 
 under both systems. This we think clear and 
 incontrovertible. Now, on the other hand, Free 
 Trade greatly assists and fosters native industry 
 by supplying it with all the foreign materials which 
 it needs to work with, or to work upon, at the 
 cheapest possible cost, and unburdened by any 
 import duties whatever. It at the same time 
 lessens the cost of living, and increases the 
 comforts obtainable for the same expenditure. 
 
 It is hardly possible to over-estimate the 
 enormous advantages which this cheapness confers 
 on, or the strong stimulus which it aftbrds to, 
 native industries. The cheap products of such 
 industries will, of course, find a vent in all neutral 
 markets, since the dear products of protected 
 countries cannot possibly compete with them. 
 Where the materials on which productive industry 
 is exercised are enhanced in cost by protective 
 import duties, it is impossible that the product 
 should not be enhanced in cost in the same pro- 
 portion. But the cheapness arising from untaxed 
 materials not only fosters a demand from abroad, 
 but also lessens the cost to the native consumers, 
 and the benefit is thus twofold. It is, therefore, 
 abundantly clear that native industry is largely 
 promoted and developed by having, as a conse- 
 quence of Free Trade, cheap untaxed materials 
 to work with and to work upon. If the United
 
 ADVANTAGE OF CHEAP RAW MATERIALS. 1 97 
 
 States had had cheap untaxed iron, they would 
 not have lost their valuable share of the ocean- 
 carrying trade. 
 
 We must apologise for devoting so much time 
 to the refutation of a fallacy so easy to refute ; but 
 this we thought necessary from the frequency of 
 the allegation, and from the number of honest- 
 minded men who, not having a ready answer, have 
 been mystified by it. To sum up, the truth is that 
 FREE TRADE TAXES NO INDUSTRY, WHETHER 
 NATIVE OR FOREIGN ; BUT, AMONG OTHER 
 ADVANTAGES, IT GREATLY FOSTERS NATIVE IN- 
 DUSTRY, BY AFFORDING IT CHEAP, UNTAXED 
 MATERIALS WHEREWITH AND WHEREON TO 
 WORK, AND BY ALLOWING IT TO FLOW IN ITS 
 NATURAL AND MOST PROFITABLE CHANNELS. 
 
 CHAPTER XVI. 
 
 8. Wages highest where nqost Wealth is Created. 9. Protection 
 frustrates Division of Labour. 10. If Protected Nations prosper, 
 it is in spite of, not because of, Protection. 
 
 8. If the labour-seller in protected countries pays 
 more for what he consumes, on the other hand his 
 wages are proportionately higher. It does not at all 
 follow. The present average rate of wages in 
 Free Trade England, now that everything is cheap, 
 is at least 50 per cent, higher than it was formerly 
 in protected England, when everything was dear. 
 Indeed, if the statement that heads this paragraph 
 be correct, how comes it that our Protectionist
 
 iqS wealth-creation. 
 
 friends so persistently warn us that we arc being, 
 or are going to be, undersold by our foreign com- 
 petitors in consequence of the lower rate of wages 
 and the longer hours of labour that prevail abroad? 
 How is it that they so loudly call on Govern- 
 ment to protect the British workman by import 
 duties, to prevent him from being reduced to the 
 low wages and long hours of his protected 
 continental fellow-workmen ? Here is surely a 
 curious contradiction. Wages in protected coun- 
 tries cannot be at the same time higher and lower 
 than they are here. If higher, what need is there 
 to protect the British labour-seller against his 
 higher-paid foreign competitor ? If lower, then 
 Protection in foreign countries, while it enhances 
 the cost of living, does not enhance the rate of 
 wages. How are these utter discordances to be 
 resolved .'* This is how it is done. Division of 
 labour is resorted to. One set of the Protectionist 
 party uses statement No. i, and another set uses 
 statement No. 2. There is the " higher wages 
 abroad " division and the " lower wages abroad '■' 
 division. If the one fails to convince you, you are 
 handed over to the other, who proceeds on a 
 diametrically opposite tack ; and it will go hard if, 
 between the two, you can help being, if not con- 
 vinced, at least mystified. 
 
 The fact is that the money rate of wages does 
 not depend (except when it is at the famine level) 
 on the cost of living, but on the relative demand 
 for, and supply of, labour. Wages are higher than 
 with us in protected America, and lower than with 
 us in the protected continental States of Europe.
 
 WAGES RAISED THROUGH WEALTH-CREATION. I99 
 
 It is where there is abundance of cheap capital, as 
 in England, or abundance of cheap land, as in 
 America and Australia, that there will be the 
 greatest demand, and consequently the highest 
 remuneration, for labour. Capital is the fund out 
 of which the wages of labour are paid, and the 
 larger that fund, compared with the number of 
 labour-sellers, the higher will be the rate of wages. 
 The increase of that fund depends on increased 
 production, and there are no more powerful agen- 
 cies in the production of wealth than free com- 
 mercial intercourse, general and international divi- 
 sion of labour, and such an application of capital 
 and labour as will produce a waximuni result. 
 To sum up, the truth is thg,t WAGES are NOT 
 REGULATED (EXCEPT AT STARVATION POINT) BY 
 THE COST OF LIVING, BUT BY THE GREATER OR 
 LESSER DEMAND FOR LABOUR, WHICH IS GREATEST 
 WHERE WEALTH IS MOST RAPIDLY CREATED. 
 
 9. Protection promotes diversity of industries in 
 the protected country. So much the worse. It is a 
 matter of regret, not of boast. The greater the 
 diversity of industries in a given locality, the less 
 scope there is for division of labour. This fer- 
 tilising and wealth-creating principle is crippled 
 in proportion to the smallness of its sphere of 
 operations. By whatever it is short of being inter- 
 national and world-pervading, by so much is its 
 efficacy impaired. It is merely sectional and intra- 
 national in those countries where great diversifica- 
 tion of industries prevails. Nowhere does the 
 diversity of industries exist in a higher degree than 
 among the Pitcairn islanders, unless it might have
 
 200 WEALTH- CREATION 
 
 been among the country people of the olden times, 
 when each family raised its own food and spun its 
 own garments. 
 
 No doubt Protection does promote sectional 
 diversity of industries, since it discourages com- 
 mercial interchanges between nation and nation. 
 If it were possible for each country to have within 
 itself such a diversity or universality of industries 
 as that all its wants could be supplied by native 
 capital and labour, there would at once be an end 
 to all foreign commerce ; for as all countries would 
 have their needs supplied out of their own resources 
 and exertions, no one of them would take anything 
 from the other, and, of course, no one of them 
 would raise or produce anything beyond its own 
 wants, since there would be no outlet for such 
 surplus. The more perfect the system of self-suffic- 
 ing diversity of industries, the more complete 
 would be the isolation. It has not been the fault of 
 man's fiscal enactments that this complete isolation 
 is not attained ; it has been the fault of nature's laws. 
 Not only does each nation want something which 
 other countries can, but which itself cannot, pro- 
 duce, but each nation has through its aptitudes, 
 natural or acquired, certain surplus productions for 
 which it desires to find a vent, and for which it 
 must — positively and inevitably must — take in 
 exchange the products of other nations. 
 
 Suppose, for instance, a country A, blest with a 
 fertile soil, with a genial climate, and with land, 
 abundant and cheap, cultivated by an energetic 
 and industrious race of men ; the result will be the 
 production of agricultural commodities far in excess
 
 DIVERSIFICATION OF INDUSTRIES. 201 
 
 of the requirements of that country itself. If for 
 that surplus produce the producers find a vent in 
 the other countries of the world, they will have to 
 take in payment for it the world's commodities of 
 other kinds ; for there is no other mode of pay- 
 ment. But if country A, in its determination to be 
 self-sufficing, were totally to prohibit the admission 
 of any foreign goods whatever, its surplus of food 
 productions could not be sent abroad at all, since 
 nothing foreign was admitted in exchange for it. 
 Its vent would be confined to the home demand, 
 and the production would have to be cut down to 
 the limit of that demand. The diversity of indus- 
 tries fostered by the self-sufficing system would 
 exercise a blighting and fatal influence on the 
 great staple industry of that country. 
 
 If this diversity of industries is promoted by 
 Protection, it would be still far more completely 
 promoted by total prohibition. Indeed, it would 
 be yet farther promoted by cutting up the country 
 into small districts, each to supply its own wants by 
 its own industries. In this case, each little com- 
 munity would have its occupations diversified to 
 the fullest extent, and the division of labour would 
 be effectively impeded. The antagonism between 
 the diversification of industries and the divison of 
 labour may be exemplified thus : — If 3,000 men be 
 set to produce pins, needles, and thread, the former 
 system diversifies the industries by setting each 
 man to produce as many pins, as many needles, 
 and as much thread as he can, by his separate and 
 individual efforts, produce in a given time ; whereas 
 the division of labour sets i ,000 of these men con-
 
 ^ 
 
 202 WEALTH-CREATION. 
 
 jointly to produce nothing but pins, 1,000 to pro- 
 duce nothing but needles, and the remaining 1,000 
 to produce nothing but thread. By which of these 
 two processes will the greatest quantity of pins, 
 needles, and thread be produced within that given 
 time ? Can any one doubt the result ? Will it not 
 be 100,000 to I in favour of the latter ? If the 
 greatest possible diversification of industries be 
 right, then the division of labour must be a mistake, 
 and we must go back to the good old times when 
 each family combined within itself a diversity of 
 industries, raised its own food, spun its own clothes, 
 and reared its own hovel. 
 
 Under a system of perfect freedom of commercial 
 intercourse between country and country there would 
 be such a distribution of industries as was consonant 
 with the aptitudes, natural or incidental, peculiar to 
 each country, and on these the productive energies 
 of each country would be concentrated. The total 
 productiveness of each would be enormously greater, 
 although there would be a smaller diversity in the 
 species of articles produced. 
 
 Nature says, " Devote your efforts to producing 
 abundantly those things which you can produce 
 best." Protection says, " Produce a little of every- 
 thing, whether they be things which you are most 
 fitted, or things that you are least fitted, to pro- 
 discover and promptly adopt those ind ustries from^ 
 
 ^ce." Left to themselves, capital andlabour easily 
 
 /^ which they derive the most productive results, and 
 
 the diversity of industries which they thus naturally 
 
 attain furnishes them with ample remunerative 
 
 employment. On the other hand, Protection diverts
 
 PROTECTION VERSUS DIVISION OF LABOUR. 203 
 
 them, to a greater or lesser extent, from that profit- 
 able employment, to other industries which can only 
 flourish by the imposition of a tax on the community 
 at large ; and to that extent, while the diversity of 
 industries is enlarged, the wealth of the country is 
 diminished. All diversification of industries which 
 goes beyond its natural boundary, and which, 
 instead of being the result of the regular course of 
 things, is artificially extended by State ordinances, 
 is an encroachment on the division of labour, and 
 therefore an evil. To sum up, the truth is that 
 PROTECTION FRUSTRATES THE DIVISION OF 
 LABOUR BY ARTIFICIALLY LOCALISING THE 
 GREATEST POSSIBLE DIVERSITY OF INDUSTRIES 
 WITHIN LIMITED AREAS, WITHOUT REGARD TO 
 THEIR NATURAL DISTRIBUTION. 
 
 I O. Some protected nations arc prosperous, there- 
 fore Protection is a benefit. In this sentence, the 
 word " therefore " is entirely out of place. It in- 
 volves a no7i seqiiitur. It might just as well be said 
 that whereas some ignorant persons are clever, 
 therefore ignorance is a benefit. We hold, on the 
 contrary, that those protected nations which are 
 prosperous are prosperous n-ot because of, but in 
 spite of, Protection — ^just as we hold that the 
 ignorant persons who are clever, are clever not 
 because of, but in spite of, their ignorance. No 
 doubt, protected nations may and do attain a certain 
 degree of prosperity in spite of Protection, for its 
 evil influence only stunts without destroying their 
 productive power. What we contend is, that they 
 would be far more prosperous if they adopted Free 
 Trade, We have never said that protected nations
 
 204 WEALTH- CREATION. 
 
 accumulate no wealth, but simply that they would 
 accumulate it much faster if they abandoned the 
 protective system. If a property being badly 
 managed yields an income of ^i,ooo per annum, 
 whereas under good management it would yield 
 iJ^i,500, it does not follow that the owner is utterly 
 ruined by his bad management, but it does follow 
 that, through it, his income is ;^500 per annum less 
 than it might be. Neither does it follow that, 
 because a badly-managed property yields a com- 
 fortable income, " therefore bad management is a 
 benefit." The owner is prosperous not because of, 
 but in spite of, his bad management. By adopting 
 a better system, he might add 50 per cent, to his 
 income. 
 
 The mere fact of a nation's comparative pros- 
 perity is surely no bar to improvements that may 
 render that nation more prosperous still. It will be 
 time enough to scout improvements and arrest 
 progress, when we have reached (if ever we shall 
 reach) the extreme limits of human perfectibility. 
 Till then it is irrational to say, " We are prospering, 
 and we therefore decline entertaining any scheme 
 for the increase of our prosperity." To allege that 
 the Free Trade scheme will not conduce to such 
 increase of prosperity, affords a fair and legitimate 
 subject for discussion. We contend that it will, and 
 have adduced our reasons for coming to that con- 
 clusion. But to contend that Free Trade is an evil 
 merely because a certain amount of prosperity has 
 attended the opposite system, is an obviously incon- 
 clusive inference, since it does not exclude the proba- 
 bility that a much greater amount of prosperity
 
 IN SPITE OF, NOT BECAUSE OF. 205 
 
 might have attended the Free Trade system ; in 
 which case, Free Trade would have been a benefit. 
 No argument against Free Trade is deducible from 
 such a style of reasoning. Nations progressed at a 
 certain rate before the application of steam to loco- 
 motion by sea or land, but after that improvement 
 the rate of their progress was greatly accelerated. 
 So do we say that nations may prosper to a certain 
 extent before the application of F'ree Trade to their 
 international relations, but that when so applied that 
 prosperity will increase in a greatly accelerated ratio. 
 The Protectionist proposition is a mere state- 
 ment of opinion, unaccompanied by any proof, and 
 therefore our contradiction of it must partake of 
 similar vagueness. The truth or fallacy of either 
 opinion must be reasoned out on other grounds. 
 Indeed, the issues raised have been fully discussed 
 by us in other shapes. Mere assertion can only be 
 met by counter-assertion, and therefore, to sum up, 
 the truth is that SOME PROTECTED NATIONS ARE 
 PROSPEROUS ; BUT THEY WOULD BE FAR MORE 
 PROSPEROUS STILL UNDER FREE TRADE ; THERE- 
 FORE PROTECTION IS AN EVIL. 
 
 CHAPTER XVII. 
 
 I. As to dependence on foreigners — 12. Free Trade a boon to a 
 nation, whether others adopt it or not — 13. As knowledge 
 spreads so will Free Trade. 
 
 1 1 . Protection renders a cojiutry mdependent of 
 foreigners. This is only another form of that 
 principle of isolation which, if fully carried out,
 
 206 WEALTH-CREATION. 
 
 would convert the various nations of the world into 
 so many hostile tribes. In what possible way could 
 mankind be benefited if each country were really 
 to be commercially independent of every other .? 
 The evils and privations which all would suffer 
 from such mutual estrangement are too obvious to 
 require pointing out, but what would be the counter- 
 balancing advantages ? "VVe can see but this soli- 
 tary one — that, in case of war, the country that had 
 no commercial intercourse with other countries 
 would be free from any inconvenience that might 
 be caused by hostile interference with such inter- 
 course. This might, perhaps, have some weight if 
 every nation were perpetually at war with every other 
 nation. But such a state of things never did and 
 never could exist. Even under the present very 
 imperfect system of international relations, wars 
 are only occasional, and are never universal. Where, 
 then, is the wisdom of a nation voluntarily inflicting 
 on itself for all time the evils and inconveniences of 
 isolation merely to avoid their possible temporary 
 infliction by an enemy in case of war at some 
 future uncertain period ? It is thus that the 
 coward commits suicide from fear of death. Is a 
 man to deny himself all present enjoyments because 
 he may some day or other be deprived of them by 
 illness or misfortune .'' Are you never to carry 
 about you in the streets a watch, or a purse, or a 
 handkerchief, because it is possible that, sooner or 
 later, they may be purloined by a pickpocket .'' If 
 the mere fear of some future war is to divest us for 
 ever of the benefits of commercial intercourse with 
 other nations, it is one more to be added to the
 
 DEPENDENCE ON FOREIGNERS. 20/ 
 
 long train of evils which the war system inflicts on 
 mankind. 
 
 Moreover, it is to be noted that full and free 
 commercial intercourse does not imply the depen- 
 dence of one country on the rest — it implies the 
 mutual and equal interdependence upon each other 
 of all countries. Interchanges presuppose benefit 
 to both parties, or they would not be entered into. 
 In the same way, the interruption which war would 
 cause to such interchanges would prove equally 
 injurious to both parties — to one just as much as 
 to the other. The stronger the ties of mutual in- 
 terest and the more numerous the points of pleasant 
 and profitable contact, the greater will be the inter- 
 dependence of nations upon each other. But 
 that mutual interdependence does not place any 
 one of them at special disadvantage as compared 
 with the rest. If there be any disadvantage when 
 war supervenes, it will be common to all. They will 
 occupy in this respect the same relative positions 
 which they would have occupied if they all had, 
 during the time that they were at peace, deprived 
 themselves of the advantages of foreign trade. It 
 is true that the more nations are knit together by 
 the ties of mutual interest, the greater will be the 
 reluctance to break through them, and the more 
 they will each of them lose by substituting hostile 
 collision for peaceful commerce. But the reluctance 
 will be felt, and the loss will be shared alike by all 
 of them. 
 
 If there be a shade of difference between them, 
 it may perhaps consist in this. The more largely 
 and closely a nation is in connection with the rest
 
 208 WEALTH-CREATION. 
 
 of the world, the more independent will that 
 nation be, supposing that its foreign commerce 
 were partially disturbed by war with one or more 
 other countries. That commerce would still con- 
 tinue, and would be carried on partly through its old 
 and partly through fresh channels. What articles it 
 might no longer procure from its enemies would, 
 through its organised intercourse with neutrals, be 
 abundantly poured in by the latter. Either from 
 them or through them its wants would be supplied ; 
 and either by them or through them its productions 
 would be taken in exchange. 
 
 In reference to this subject, we may quote a 
 speech delivered by Macaulay in 1842. In answer 
 to the argument that England ought only casually 
 to be dependent on other countries for food supply, 
 he said that he " preferred constant to casual 
 dependence, for constant dependence became 
 mutual dependence. . . . As to war inter- 
 rupting our supplies, a striking instance of the 
 fallacy of that assumption was furnished in 18 10, 
 during the height of the continental system, when 
 all Europe was against us, directed by a chief who 
 sought to destroy us through our trade and com- 
 merce. In that year (18 10) there were 1,600,000 
 quarters of corn imported, one-half of which came 
 from France itself." Napoleon's Berlin decrees 
 were far more oppressive and intolerable to the 
 continental nations from which they nominally 
 emanated than they were to England, against 
 whom they were directed. 
 
 Thus that "independence of foreigners," on 
 which Protectionists lay such stress, is a privilege
 
 WHEN FREE TRADE IS A GENERAL BOON. 209 
 
 acquired at an immense sacrifice of annual wealth, 
 and which, when war supervenes to test its value, 
 is found to be worthless. To secure it we are, 
 according to this doctrine, to do without foreign 
 trade during peace in order to teach us to do 
 without it during war. We are to forego it when 
 we can reap its benefits in order to inure us to the 
 privation when we cannot. To sum up, the truth 
 is that INDEPENDENCE OF FOREIGNERS REALLY 
 MEANS COMMERCIAL ISOLATION, WHICH NUL- 
 LIFIES INTERNATIONAL DIVISION OF LABOUR, 
 DISCOURAGES PRODUCTION, AND FOMENTS A 
 HOSTILE SPIRIT AMONG NATIONS. 
 
 12. Free Trade would be a special boon to 
 England if all nations adopted it ; but till then it 
 is a disadvantage to that country. We maintain, on 
 the contrary, (i) that if all nations adopted Free 
 Trade it would be, not a special boon to England, 
 but a general and equal boon to all mankind ; 
 and (2) that meanwhile, till other nations adopt 
 Free Trade, it is a special boon to England. Let 
 us examine these propositions. 
 
 (i) Free Trade simply means unrestricted, and 
 therefore far more frequent and extensive, commer- 
 cial interchanges than exist at present, between the 
 various populations that tenant this globe of ours. 
 Now, all such interchanges, whether they be few or 
 many, are quite voluntary. None need either buy 
 or sell unless he reaps, or hopes to reap, some 
 benefit from the transaction. Self-interest guides 
 both parties in every commercial dealing. Both 
 expect and believe that they are gainers by it. 
 To forbid, or to curtail, or to discourage com- 
 O
 
 210 WEALTH-CREATION. 
 
 mercial interchanges is to deprive both the parties 
 (not one of them only) of the advantages which 
 they would, if let alone, reap from them. To 
 remove all impediments to such interchanges 
 between the people of all countries, and to leave to 
 the parties dealing together full and free scope for 
 their operations, is to allow both these parties (not 
 one of them only) to reap the advantages which 
 such operations afford. How, then, can this latter 
 policy be said to be a special boon to any one 
 country ? We know that such a notion does exist, 
 but it is none the less an absurd, misleading, and 
 pernicious error. England can only share with 
 other nations, and not one jot more than other 
 nations, the benefits which these extended inter- 
 changes v/ould confer. 
 
 It may be said that, if Free Trade were 
 universally adopted, England would export more 
 goods to the world at large. Very true ; but the 
 world at large would at the same time export more 
 goods to England. For what could England take 
 in return for her increased exports ? Gold ? 
 Certainly not. It has been demonstrated over and 
 over again that specie only migrates from country 
 to country in homoeopathic quantities as compared 
 with the amount of commercial dealings. It would 
 be goods, then, that England would take in 
 exchange. In that case the foreign producers, 
 sellers, and exporters of those goods would reap at 
 least as much profit from them as the English 
 would from the goods for which they would be 
 exchanged. Where is the special boon to Eng- 
 land ? A policy by which all parties benefit
 
 WHEN FREE TRADE IS A SPECIAL BOON. 2 1 I 
 
 equally is a universal boon to all — not a special 
 boon to any one of them. 
 
 (2) While other nations are debarring them- 
 selves from the advantages of Free Trade, those 
 advantages are being specially enjoyed by us 
 Englishmen. From a number of such advantages 
 thus accruing to us, we shall content ourselves with 
 specifying three, (a) Cheapness of living to our 
 people, who, while they earn higher wages than 
 their continental comrades, have their wants sup- 
 plied at a cheaper rate. {d) Cheapness of pro- 
 duction ; for as all the materials which we work 
 upon or work with come to us untaxed, we can 
 undersell our rivals in neutral markets, and 
 thus secure all but a monopoly in these, {c) 
 Cheapness in naval construction and equipment, 
 which gives to us almost another monopoly of the 
 lucrative ocean-carrying trade. Lack of space 
 prevents us from detailing the numerous other 
 direct and indirect advantages which we enjoy 
 through our present monopoly of Free Trade. 
 Indeed, some able men have argued that we derive 
 greater advantages from being the only Free 
 Trade country than we should enjoy if all other 
 nations were also to become Free Traders. While 
 dissenting from this view, it is undeniable that, 
 under the present system of Free Trade here and 
 Protection everywhere else, we have secured an 
 unexampled pre-eminence in international com- 
 merce. Our foreign trade (combined imports and 
 exports) now forms no less than one-fourth of the 
 total foreign trade of the world at large. To sum 
 up, the truth is that FREE TRADE WOULD BE A 
 O 2
 
 2 1 2 WEALTH-CREATION. 
 
 GENERAL BOON TO ALL NATIONS IF THEY DID 
 ADOPT IT; AND MEANWHILE IT IS A SPECIAL 
 BOON TO ENGLAND, THAT HAS ADOPTED IT. 
 
 13. Other countries are too wise to follow the 
 example of England, and adopt Free Trade. We 
 submit that for the words " too wise/' we ought 
 to substitute " not wise enough." But, indeed, 
 " wisdom " has had Httle to do with the discussion 
 of the subject abroad. The great bulk of the 
 people composing civilised nations have never 
 studied, never considered, and perhaps hardly ever 
 heard the name of, Free Trade ; and yet it is the 
 great bulk of the people who are most interested in 
 it, and to whose welfare it would most conduce. 
 Of the wealthier and more leisured classes, part 
 are the capitalists who have embarked their 
 fortunes in, and identified their interests with, the 
 protected industries, and all their influence is 
 directed against any change ; while the rest are, 
 for the most part, indifferent to the subject, 
 absorbed in other pursuits, and averse to trouble 
 themselves with dry questions of political economy. 
 As to the governing classes, they chiefly devote 
 their attention to those topics which more imme- 
 diately press on them — such as party triumphs or 
 defeats, foreign politics, financial devices, religious 
 contentions, dynastic intrigues, and other matters 
 of statecraft. As to whether the people they 
 govern would prosper better under Free Trade 
 than under Protection, why should they trouble 
 themselves about that, since the people, who are 
 the greatest sufferers, do not move in it .? Why 
 should they lose votes, and perhaps power, to
 
 FREE TRADE PRINCIPLES ABROAD. 21 3 
 
 introduce changes which the many whom these 
 changes would benefit do not ask for, and the 
 few whom they would inconvenience loudly cry , 
 against ? 
 
 Nevertheless, from all these various social strata 
 there come forth in every nation a certain number 
 of thoughtful, truth-seeking men who do study the 
 subject, and whom that study has made Free 
 Traders. These men, whose convictions are 
 founded on research, are by no means inactive 
 in promulgating the truth. But they are as yet 
 comparatively few, and their voice only reaches 
 a small part of the multitude whose earnings 
 are being clipped and pared by protective taxes. 
 Gradually and steadily, however, nations are becom- 
 ing leavened by Free Trade doctrines. A small 
 but increasing number of active politicians in every 
 country are clustering into a compact Free Trade 
 party, and their labours in the cause are entitled to 
 our warmest appreciation and sympathy. They 
 have up-hill work before them. In their endea- 
 vours to benefit their countrymen they meet with 
 obloquy on the part of those interested in the 
 abuse which they wish to correct, with indifference 
 on the part of the many whom that abuse injures, 
 and with neglect on the part of the rulers whose 
 policy they wish to influence. All honour to 
 their glorious efforts ! This passing tribute is 
 amply due from us Englishmen, who have gone 
 through the struggle, to our brother Free 
 Traders in protective countries who are going 
 through it. That they will succeed in breaking 
 through the barriers of ignorant indifference and
 
 214 WEALTH-CREATION. 
 
 interested opposition, no one who sees how irre- 
 sistibly the wave of progress is rolHng onward 
 throughout the world, can for a moment doubt. To 
 sum up, the truth is that THE MOiMENT THE MASS 
 OF THE PEOPLE IN ALL COUNTRIES SHALL BECOME 
 AWARE THAT PROTECTION TAXES THE MANY FOR 
 THE BENEFIT OF THE FEW, FREE TRADE WILL 
 BECOME UNIVERSAL. 
 
 14. Englmid, ivhich alone has adopted Free Tirade, 
 has iiot prospered wider it, and is living on her 
 former capital. Both statements are the reverse of 
 true. As to the first, the marvellous expansion of 
 England's prosperity and wealth within the last 
 thirty years is so notorious, and has been so clearly, 
 amply, and conclusively shown by statistical records, 
 that it is mere waste of time to dwell upon it. The 
 great wonder to us is that any man should be found 
 so blind as not to recognise, or so bold as to deny, 
 the fact. As to the second, the only ground on 
 which the statement is based is the permanent 
 excess of our imports over our exports — a fact 
 which, far from proving, effectually disproves the 
 statement that England " is living on her former 
 capital." For, as we have before put it, how can 
 receiving a hundred millions per animm more 
 from abroad than we send away be a cause of 
 impoverishment .-' Or, rather, how can it be 
 other than a splendid and continuous accession to 
 our wealth and capital .'' 
 
 It is said that this excess of imports has been 
 partly paid for by the redemption of American 
 Government bonds, and that consequently the in- 
 debtedness of the world to England is to that
 
 THE WORLD S INDEBTEDNESS TO ENGLAND. 21$ 
 
 extent less. Let us examine this assertion. It is 
 quite true that the United States have paid off a 
 portion of their national debt, some of which was 
 held in England ; and all honour be to them for it ! 
 But how can the creditable liquidation of their 
 debts prove a source of impoverishment and dimi- 
 nution of capital to us ? " They now owe us less," 
 is your feeble moan. Why not ? How can it be a 
 loss and a grievance to you that a high-minded 
 debtor should take the earliest opportunity of 
 repaying what he owes you ? If it be an injury to 
 you to have solvent debtors, then long live the 
 Turks and Egyptians ! As regards them, you will 
 ever be free from the nuisance of having the world's 
 indebtedness to you diminished. But how the 
 repayment of a loan can injure a creditor passes 
 conception. Because our Anglo-Saxon brethren 
 in the other hemisphere have repaid a portion of 
 their national debt, does it follow that the aggre- 
 gate indebtedness of the world to you (on which 
 you lay such stress) has diminished ? Not at all. 
 Both in financial circles and on the Stock Ex- 
 change (the best and indeed the only authorities 
 on the subject) the verdict is (i) that a larger sum 
 than has been repaid to us by the United States in 
 one form has, during the same period, been invested 
 by us in other American securities, and (2) that, in 
 addition, England has been year by year making 
 fresh loans to and large investments in other coun- 
 tries (chiefly her own colonies). The result is — and 
 it will relieve the fears of our timorous friends to 
 know it — that the present indebtedness to England 
 of the world at large is greater than it has ever
 
 2l6 WEALTH-CREATION. 
 
 been before. Paying us off is a very rare operation ; 
 borrowing from us a very frequent one. 
 
 There are also other proofs patent to every one 
 who looks around him that, far from England's 
 living on her capital, that capital is yearly in- 
 creasing at a rapid rate ; for it is accumulating 
 before his eyes. Every year the fixed capital of 
 the countr)' is, visibly and tangibly, receiving a 
 vast accession by the construction of new dwelling- 
 houses, new ships, new factories, new railways, new 
 harbours, new docks, new warehouses, &c., &c., of 
 which the aggregate value is enormous. Every 
 year vast sums are invested in new commercial 
 enterprises, both at home and abroad. Every year 
 our population increases at the rate of about i,000 
 a day ; while food, clothing, lodging, &c., are more 
 easily and abundantly supplied to them than ever, 
 for paupei'ism has decreased 19 per cent, since 
 1870. And it is in the face of these facts that we 
 are told that England is living on her capital ! Out 
 of what fund, then, if not from our annual savings 
 (excess of income over expenditure), does the 
 money come to provide these enormous annual 
 additions to our national wealth .-• To sum up, the 
 truth is that UNDER FREE TRADE ENGLAND HAS 
 ACCUMULATED WEALTH WITH UNPRECEDENTED 
 RAPIDITY, AND IS YEARLY MAKING VERY LARGE 
 ADDITIONS TO HER CAPITAL. 
 
 We might indefinitely prolong this list of 
 Protectionist fallacies, but we will rest content with 
 those given as being the most important, the most 
 plausible, and the most frequontly used. These 
 once clearly understood, refuted, and put on one
 
 " ERRORS FOR THE AVOIDANCE OF MANKIND." 2 [7 
 
 side, with the label "errors for the avoidance of 
 mankind " affixed thereto, the remaining numerous 
 but minute fry of Protectionist mistakes will lose 
 their significance and wither away, as leaves do 
 when the branch that bears them is lopped off. 
 Truth alone is undecaying and eternal. 
 
 CHAPTER XVIII. 
 
 Why Free Trade is not yet universally adopted — Ignorance and 
 Immorality — Their connection with Poverty. 
 
 We have now said enough to show how grievous 
 an impediment to the process of wealth-creation is 
 that " commercial isolation " which the theory of 
 protection recommends, and which its practice 
 enforces. We do not contend that, by such 
 isolation, production is totally arrested, but only 
 that it is seriously checked — ^just as we do not 
 contend that grain cannot be threshed by a flail, 
 but only that it will be far more quickly and 
 thoroughly threshed by a machine. But this 
 check to production^ arising as it does from the 
 mis-direction (and therefore waste) of human 
 energies, largely curtails the creation, and therefore 
 the distribution among us all, of those " objects of 
 human desire as are obtained or produced by 
 human exertions " which we call wealth. Man's 
 productive energies properly directed, or, what is 
 the same thing, self-directed, achieve their 
 maximum results ; whereas, when state-directed
 
 2l8 WEALTH-CREATION. 
 
 their natural aptitudes are ignored, they are set to 
 state-supported, not self-supporting, tasks, and 
 their efficiency is largely impaired. Hence a 
 heavy deficiency in wealth-production, by which 
 the people, and especially the labour-sellers, are 
 the chief sufferers. How it is that this pernicious 
 impediment to wealth-creation is still suffered to 
 exist we have elsewhere explained, but the topic 
 deserves a few further remarks. Why is a remov- 
 able evil not removed } 
 
 The only country, so far, that has substituted 
 Free Trade for Protection is England ; and as the 
 experiment has there proved successful beyond all 
 anticipation, it was natural to expect that other 
 countries would follow her example. At present 
 they have not. Why ? Certainly not because 
 those men in every country who have studied the 
 subject entertain the least doubt of the truth of 
 Free Trade principles. There is universal con- 
 sensus among the experts. There does not exist a 
 single serious and argumentative work on the other 
 side. Science is unanimous. Now and then there 
 appear a few newspaper articles, speeches, and 
 short, scanty pamphlets, in which political econo- 
 mists are reviled but not refuted ; but there is no 
 systematic treatise in which the principles of 
 Protection are explained and demonstrated. Why, 
 then, this practical adherence to exploded errors ? 
 Simply because the few protected producers object 
 to have their monopolies disturbed, while the many 
 injured consumers are not sufficiently alive to 
 the fact that these monopolies are maintained at 
 their expense. If the mass of the people did but
 
 PEOPLE TAXED TO MAINTAIN A. B. AND CO. 219 
 
 know that each family in every protected countr)- 
 is paying a heavy tax to support a vicious system, 
 both the system and the tax would speedily disap- 
 pear together. Their continued existence depends 
 on that ignorance, and consequent indifference, on 
 the part of the public, which cannot last for ever ; 
 and it is only until knowledge shall shed its full light 
 on the subject that, meanwhile, Protectionism 
 prevails. 
 
 It is to enlightened democracy that we must 
 look to make an effectual move in the matter. No 
 effort must be spared to rouse the attention of the 
 people in all countries to a subject which is of such 
 material interest to them. If they were asked in 
 an overt manner to hand over a certain portion of 
 their weekly earnings, they would naturally wish to 
 know for what purpose. And if told that it was to 
 help to maintain A. B. and Co.'s silk factory 
 situated ten miles off, because without such help 
 it could not compete with C. D. and Co.'s silk 
 factory situated a thousand miles off, is it likely 
 that the demand would be voluntarily acceded to ? 
 As it is, that same portion of their weekly earnings 
 is taken from them for that same purpose, not only 
 without their consent but without their knowledge. 
 It is slily subducted from them in the shape of 
 import duties which compel them to pay enhanced 
 prices for their food, their clothes, and their 
 lodging. Every mouthful they swallow, or every 
 garment they wear, contributes its little driblet 
 towards making up the sum total. Did they but 
 know it, they would strongly object. They ought 
 therefore be made to know it. It must be clearly
 
 220 WEALTH-CREATION. 
 
 shown to them that their money is taken to support 
 A. B. and Co.'s silk factory. At present the system 
 goes on because A. B. and Co. shriek loudly against 
 any change, while the people, in their ignorance, 
 remain silent. Naturally, governments pacify the 
 shriekers and neglect the silent. It was ever thus. 
 Those who, wanting a thing, do not ask for it must 
 not be surprised if they do not get it. But the 
 first step must be for the bulk of the people to 
 know what it is that is wanted. 
 
 In every country there is a certain number of 
 thinking men who, having studied the subject, 
 know the truth, and seek to promulgate it. Theirs 
 is a noble task, but to overcome the vis inertics of 
 ignorance and apathy requires vigorous and pro- 
 longed efforts. We call on all thinkers in all 
 countries to co-operate in these efforts. Every one 
 can do something, either by his tongue or by his 
 pen. Each pupil, when he is taught, may in his 
 turn become a teacher, and thus, in the same way 
 that many torches may be lighted at one torch, 
 one mind may be the means of enlightening many ; 
 and the truth received may be handed on to others. 
 
 Meanwhile, the matter briefly stands thus. The 
 protected class is active and clamorous ; the 
 victimised classes (which form the bulk of the 
 nation) are, through ignorance, inert and dumb; 
 and the ruling class sides with the active and 
 clamorous. And that is why the removable evil is 
 not yet removed. 
 
 We now proceed to consider the last of the 
 five chief impediments to wealth-creation, of which 
 we had proposed to treat, viz. : —
 
 IGNORANCE AND IMMORALITY. 221 
 
 B5. Ignorance and Immorality. By 
 bracketing these two evils together, we by no 
 means intend to convey the notion that they are 
 inseparable companions. Far from it. Of the 
 ignorant, it is but a small proportion that are 
 vicious, while, of the vicious, a considerable number 
 are not ignorant. There is, however, a certain con- 
 nection between them, inasmuch as ignorance is 
 sometimes the cause, and, quite as frequently, the 
 effect of immorality. But, whether combined or 
 apart, they are very prejudicial to the true interests 
 of mankind in various ways, and among others, by 
 checking and impeding the creation of wealth. 
 Ignorance neither discerns the right thing to do, 
 nor the best way to do it. Vice may or may not 
 discern the right thing to be done, but deliberately 
 prefers to do the wrong thing. Both seek imme- 
 diate fruition, at the expense of permanent future 
 enjoyment — the one not knowing, the other not 
 caring how bad a bargain it really is. Those ^\•ho 
 do know and do care, owe that knowledge and dis- 
 crimination to their having been educated, partly 
 perhaps by direct tuition, and partly by attendant 
 circumstances and surroundings. They certainly 
 do not owe them to any innate superiority of 
 intellect. Apart from some special tendencies due 
 to blood or race, the children born to every class of 
 society in a country, exhibit the same average con- 
 formation of the brain — the same average impressi- 
 bility to the operation of external influences. 
 
 The great mass of the peasantry and labour- 
 sellers throughout Europe remain more or less 
 plunged in ignorance, hence many of them are
 
 222 WEALTH-CREATION. 
 
 rough and vulgar, some of them are intemperate 
 and addicted to low pursuits, and few of them are 
 other than homely and unpolished in their address 
 and manners. But you, Sir, who read these lines, 
 elegant, refined, and cultured as you are, would 
 doubtless have exhibited the same deficiency of ele- 
 gance, refinement, and culture, had you been subject 
 to the same depressing influences. And, on the 
 other hand, most of those who have been kept down 
 by poverty and ignorance, would doubtless, had 
 they possessed your advantages of education, leisure, 
 and pecuniary competence, have risen to your level. 
 Is then the possession of these advantages irre- 
 vocably confined to the favoured few, and by a fatal 
 necessity, interdicted to the great bulk of mankind .■* 
 Is it one of the conditions under which civilisation 
 exists that its blessings shall be unequally distributed 
 — many of them to the few — few of them to the 
 many ? Is this all that civilisation can do for man .'' 
 Not only we do not think so, but we consider that 
 there is a certain amount of moral cowardice in so 
 readily yielding to the belief, and so tamely sitting 
 down helpless under its influence. It is not the 
 laws of nature, but the laws of man which are at 
 fault. Let us vigorously set to work to amend 
 them. The endowment of all men as equally as is 
 practicable, with the advantages derivable from 
 human progress, should be the aim and endeavour 
 of every law-maker and of every book-writer. We 
 believe this to be in a great degree practicable, 
 chiefly by waging war against ignorance through 
 extended education, and against poverty through 
 extended wealth-creation.
 
 ABOLISH POVERTY, YOU ADMIT OF CULTURE, 223 
 
 It is true that the education supph'ed either 
 gratuitously or cheaply by the State can only be 
 elementary and introductory, and that without 
 the leisure and opportunity to use it afterwards for 
 continuous improvement, it loses its chief value, but 
 it is precisely in order universally to provide that 
 requisite leisure and opportunity that we so forcibly 
 urge the adoption of all possible aids and the 
 removal of all possible impediments to wealth- 
 creation. For we are in these pages endeavouring 
 to show that if all men were to contribute their fair 
 quota to the production of wealth, if all this work 
 were intelligently directed, through universal divi- 
 sion of labour, to the attainment of the vtaxivmrn 
 results, and if no part of these results were wasted 
 on useless or mischievous objects, then the burden 
 of producing wealth enough for all would fall very 
 lightly on each, and to each there would be afforded 
 sufficient leisure and opportunity for mental deve- 
 lopment and culture. If that end should be, in the 
 fulness of its extent, immediately unattainable, yet 
 every effort tending in its direction would bring us 
 nearer to it. " Chimerical ! " will you say } Not 
 at all ; it is far more chimerical to fancy that the 
 world will remain stagnant or move backwards — a 
 state of things that is quite inconceivable. No ! 
 It docs and must continue to move forward, and 
 therefore in the direction to which we point. 
 
 In all countries efforts have been made to some 
 extent to lessen ignorance by more or less of popu- 
 lar education, and to curb certain forms of immo- 
 rality by legal repression. But these efforts have 
 only been partially successful. The education
 
 224 WEALTH-CREATION. 
 
 afforded has been slight and superficial — by no 
 means generally diffused — and from want of after- 
 leisure it has remained unimproved and undeve- 
 loped. As to immorality, prevention is a far more 
 effectual corrective than repression. It must be 
 attacked at its source, and the causes of it and the 
 temptations to it must be removed by moral influ- 
 ences. Penal repression does not interfere with it 
 till its growth has reached a certain stage. Up to 
 that point, it leaves it unchecked and uncurbed, 
 and meanwhile it has become habitual and almost 
 ineradicable. 
 
 We have shown (see p. 63) that education and 
 morality promote, and are at the same time pro- 
 moted by, wealth-creation. The converse is equally 
 true. Ignorance and immorality both counteract, 
 and are counteracted by, the abundant production 
 and consequent abundant distribution of wealth. 
 This latter agency by dispelling abject poverty 
 dispels ignorance, and removes from immorality its 
 chief incentives and temptations. Thus does it 
 subdue its two opponents : ignorance, which, even 
 if industrious, does not direct its industry in the 
 best way to the best ends, and immorality, of which 
 the work is directed to evil. 
 
 These instances are exemplifications of the 
 mode in which moral progress comes to be the 
 result of material well-being. School learning is 
 not education ; it is only the ground-work and 
 preparation for it. Education, in its truest and 
 widest sense, is the formation of opinions and 
 beliefs from study and experience, both which 
 founts of instruction are inexhaustible, and hence
 
 POVERTY OBSTRUCTS ITS OWN CURE. 225 
 
 no man ever lived whose education was complete. 
 All men, some passively and slowly, others dili- 
 gently and fruitfully, continue, throughout their 
 lives, collecting data affecting their opinions and 
 beliefs. But the great bulk of the human race, 
 from absence of leisure, and the pressure of inces- 
 sant physical toil, have but few opportunities for 
 useful study and suggestive observation. For 
 want of books, and of time to read them, they are 
 debarred from a full and correct knowledge of 
 facts, and from the means of comparing the 
 thoughts of deep thinkers with their own. Nor 
 can they, from want of practice, acquire that habit 
 of thinking logically which so copiously fructifies 
 the teachings of personal experience. They are 
 compelled to reason, and draw their conclusions, 
 from incomplete and possibly erroneous data ; and 
 their convictions are moulded, not on the high 
 standard of the best thinkers, but on the low standard 
 of those minds with which they habitually come 
 into immediate contact. 
 
 As long, therefore, as there is an insufficiency 
 of the wealth requisite to meet the wants of all, 
 whether it proceeds from causes that impede 
 wealth-creation and distribution, or from the waste 
 of wealth on useless or pernicious objects, so long 
 must poverty continue to exist, and, as deplorable 
 but necessary consequences, ignorance and the 
 prevalence of those conditions which favour the 
 growth of immorality. But while ample wealth- 
 creation is the best cure for poverty, on the other 
 hand, poverty repels that cure and prolongs its 
 own existence by helping to impede the creation 
 P
 
 226 WEALTH-CREATION. 
 
 of wealth. It does so in a variety of ways, of 
 which we will only quote one as an example. The 
 ignorance which poverty fosters prevents the bulk 
 of the world's people (the labour-sellers) from 
 appreciating, requiring, and insisting on, as they 
 otherwise might and would, a system of free inter- 
 changes for the produce of their labour. This 
 submission to, and complicity with, a great 
 economic fallacy costs them dear. The hands, 
 brains, and capital of a state are compelled by the 
 Government to cease producing what they can 
 produce cheaply and abundantly, and to work 
 instead at what they can only produce expensively 
 and sparingly ; which destructive system is called 
 the protective system. What is the consequence .-• 
 Far less is produced than might be produced by 
 the same expenditure of capital and labour, and 
 there is less to distribute among the same number 
 of human beings. It is the poor who suffer from 
 this deficiency. It is they and not the wealthy 
 whose rations are curtailed, when the supplies run 
 short. Thus do poverty and ignorance, by their 
 .silence, support and virtually promote, the very 
 system by which their own existence is prolonged. 
 In a similar manner the poverty-begotten ig- 
 norance of the people allows the war system to 
 tear them from their families and occupations — 
 from the plough and the loom — in order to convert 
 them into unproductive and sometimes destructive 
 consumers. Were the people enlightened, the war 
 system, which not only wastes wealth but arrests its 
 creation, would soon come to be deemed, as the 
 cogrratc practice of duelling is in England, absurd
 
 man's influence over his destiny. 227 
 
 and illogical. Thus do poverty, ignorance, and 
 immorality act and re-act on each other. They 
 form an unholy alliance to which they staunchly 
 adhere, and one is rarely found isolated from the 
 others. Instances are no doubt to be met with of 
 wealthy ignorance, of learned poverty, and of 
 criminal wisdom and opulence, but they occur only 
 as exceptions, which tend to prove how general the 
 rule is. 
 
 CHAPTER XIX. 
 
 Utilisation of Female Labour.— Competition ; its Uses and Abuses. 
 — Communism. — Waste on Intoxicants and Narcotics. 
 
 We have now gone through the list which we 
 had sketched out at p. 14 of the chief aids and 
 impediments to wealth-creation, and have endea- 
 voured to trace their influence, favourable or ad- 
 verse, on the progress of human welfare. But that 
 list only professes to embrace the most prominent 
 of those influences, for, indeed, their number is 
 infinite. There hardly lives a civilised man whose 
 overt deeds and spoken thoughts have not some 
 bearing, infinitesimal though it may be, directly or 
 indirectly, by action, example, or precept, for good 
 or for evil, on the course of human events ; and it 
 is the sum total of these influences that finally 
 determines the destinies of mankind. In free and 
 comparatively enlightened communities, each in- 
 dividual exercises more — while under despotic 
 governments each individual exercises less — of this 
 P 2
 
 228 WEALTH-CREATION. 
 
 individual action on the common weal. No force, 
 whether physical or moral, is ever exercised totally 
 in vain. However minute and feeble it may be, it has 
 done its work such as it is. Whether it has helped, 
 or has impeded, it has contributed its mite to the 
 general aggregate of forces, just as each single, 
 separate drop has its place and plays its part in the 
 mighty rush of the Niagara waters. Who can 
 pretend to enumerate, or to gauge the relative 
 strength of, the multitudinous causes by which 
 human progress is accelerated or retarded .'' All 
 that can be done is to take in hand and examine 
 those of them which are most potent and universal 
 in their operation. But in making a selection it is 
 difficult to draw the line and to know where to stop. 
 Hardly yielding in importance to the topics with 
 which we have already dealt are a number of others, 
 to a few of which, by way of sample, we shall 
 briefly advert, leaving the rest as too secondary 
 and too numerous to receive separate treatment in 
 this work. 
 
 We shall therefore proceed to notice — 
 I. The iitilisatio7i of female labour. Every 
 advance in scientific discovery tends to substitute 
 the agency of nature's forces for human muscular 
 exertion. In the earliest stages of his progress, 
 man supplemented his own bodily strength by that 
 of animals — horses, oxen, camels, &c. Subse- 
 quently, he to some extent emancipated himself 
 from the necessity of using b"ute force by im- 
 proved tools and mechanical appliances. And 
 to-day, steam, electricity, and other natural forces 
 supply most of the motive power requisite for
 
 UTILISATION OF FEMALE LABOUR. 229 
 
 man's purposes. Hence human labour now in- 
 volves less and less of mere physical exertion, and 
 more and more of intellectual direction and 
 dexterity of manipulation. This happy change 
 opens a wide field for the utilisation of female 
 labour. Over and above the discharge of those 
 family and domestic duties which come within 
 the special province of woman, a vast surplus 
 remains to her of leisure, of capacity, and of desire 
 for useful and remunerative work. There is no 
 reason why that wasted leisure should not be 
 employed — that latent capacity should not be de- 
 veloped — and that laudable desire should not be 
 indulged, by the more general co-operation of our 
 sister-women with their brother-men in the noble 
 work of wealth-creation. There now exist fifty 
 channels to one of old in which that co-operation 
 is possible without the unseemly exercise of 
 muscular strain. Indeed, there are many tasks in 
 which woman's efficiency is equal, and some in 
 which it is superior, to that of man. 
 
 From some of the tasks for which they are 
 well fitted, women are at present debarred by 
 sentimental conventionality as being undignified or 
 unfeminine, or by the more real apprehension of 
 contact with coarseness and vulgarity. But both 
 these objections are gradually vanishing before the 
 diffusion of knowledge, and the widening spread 
 of education. Under the influence of general 
 enlightenment, the innate dignity of all honest 
 labour is being recognised, and workers are acquir- 
 ing more self-respect and softness of manner. 
 Year after year, we hope to welcome larger
 
 230 WEALTH-CREATION. 
 
 accessions of female labourers to the ranks of our 
 wealth-producers ; so that all human faculties shall 
 contribute according to their lights, to their oppor- 
 tunities, and to their powers, to that general stock 
 out of which human needs are supplied. In this 
 way, we shall not only secure to the world a more 
 ample store of " such objects of human desire as 
 are obtained or produced by human exertions," 
 but we shall also secure for women a fresh 
 career of usefulness and of independence. 
 
 Of course, some old-fashioned labour-seller of 
 the male sex will here start up and object to an 
 influx of female labour-sellers. " I want," he will 
 say, " no interlopers in my trade. Wages are 
 quite low enough, and if women are admitted to 
 compete, not only wages will be lower, but some of 
 us will be thrown out of work altogether." This 
 is the old anti-competitive and anti-improvement 
 cry. Every step in human progress has elicited it. 
 The use of horses and oxen in ploughing displaced 
 human labour, so did the use of tools and 
 machinery, so did the introduction of steam-ships 
 and railways, so does all division of labour, so do 
 all engineering achievemonts and changes in the 
 channels of trade, so would do the abolition of the 
 war-system, so has done, is doing, and ever will do 
 every scientific discovery, every improvement, and 
 every advance which civilisation is making towards 
 the greatest possible creation and dissemination of 
 wealth. All progress involves some temporary 
 displacement of labour and capital, but its per- 
 manent effect is increased production and con- 
 sequently a larger fund for the employment and
 
 COMPETITION; ITS USES. 23 1 
 
 payment of labour. In the present instance, the 
 increased capital created through the work of 
 women now unemployed, would enlarge the fund 
 out of which labour is paid and stimulate the 
 demand for that labour. That demand would not 
 only speedily re-absorb any labour that might for 
 a short time have been displaced by the innovation, 
 but occasion a call for more. As we have before 
 said and again repeat, the more of everything there 
 is produced, the more there is for distribution 
 among everybody. 
 
 2. Competition ; its uses and abuses. From the 
 nature and scope of the present work, our attention 
 must be confined to the question of competition for 
 wealth. It is only incidentally that some of our 
 remarks may apply to competition for power, for 
 rank, for fame, and generally for success in other 
 fields for rivalry. We are here specially consider- 
 ing the influence of competition on the production 
 of wealth. Let us briefly glance {a) at its uses, (b) 
 at its cause and origin, and {c) at its abuses. 
 
 [a) Its uses are obvious to all. Competition 
 stimulates human efforts, sharpens the human 
 intellect, and develops man's inventive powers 
 to their utmost. In those communities where it 
 is keenest, the most rapid advance is made in 
 material progress. It is a race in which the idle 
 and incompetent are left behind. The struggle for 
 success, which constitutes competition, is only an 
 intense form of emulation, one of the most deep- 
 seated feelings in man's nature. Under its influence, 
 he exercises his utmost powers of performance and 
 endurance, of skill and contrivance, of ingenuity
 
 232 WEALTH-CREATION. 
 
 and industry. Every latent faculty is brought into 
 play, and the effect is the maximum result which 
 hands and brains can achieve. It is in this way 
 that competition proves so powerful an agent of 
 production and distribution : of production through 
 agriculture and manufactures, of distribution through 
 commerce. 
 
 (d) The origin of the active competition for 
 wealth is readily traceable to the institution of 
 private proprietorship — to the system of indi- 
 vidualism in contradistinction to that of communism. 
 When whatever a man earns becomes absolutely 
 his own property, he has the strongest possible in- 
 centive to earn as much as he can. The very 
 different results of indolence or of activity — of 
 intelligence or of carelessness — come strongly home 
 to him, and, in the general scramble for wealth, he 
 will use all the arts which emulation and self- 
 interest can suggest to secure as large a share as, 
 by industry and inventiveness, he can for himself. 
 
 It is quite otherwise when, as under the com- 
 munistic theory, the aggregate earnings of all are 
 thrown into a common stock for common distribu- 
 tion, and when each man gets, whether he toil 
 much or little, intelligently or stolidly, successfully 
 or fruitlessly, the same quota out of that common 
 fund. In such a state of things, competition and 
 its stimulus to industry, inventiveness, and thrift, 
 altogether vanish. There is no special reward for 
 special exertions. Indeed, as the allotments are 
 equal while the contributions vary, the reward 
 proves to be in inverse ratio to the value of the con- 
 tributions. An equal share from the common stock
 
 COMMUNISM. 233 
 
 to him who brings much to it and to him who brings 
 little to it, is equivalent to a bonus to the latter, and 
 it would require stoic virtue and stern self-denial in 
 the former not to feel a sense of injustice. Indeed, 
 under the communistic system here discussed, unless 
 men repressed every selfish feeling and voluntarily 
 sacrificed themselves for the benefit of others, in 
 other words, unless men changed their nature, each 
 member of the community might, and probably 
 would imbibe, and act upon, the notion that by 
 throwing more work on others and less on himself, 
 he was individually a gainer. In that case, the 
 competition would be, not who should produce the 
 most, but who should work the least, and such 
 negative competition would act as a deterrent, 
 not a stimulus, to wealth-creation. 
 
 The communistic doctrine is thus summarised 
 by Johann Jacoby, one of its ablest exponents, 
 " Each for all — this is the duty of man. All for 
 each — this is the right of man." But there exists 
 this striking difference between the " duty " and 
 the " right." The right is definite and compulsory, 
 the duty is vague and voluntary. Each can exact 
 the full measure of his right from all, but all cannot 
 exact the full measure of his duty from each. The 
 right is a certain, the duty an uncertain, quantity. 
 That each man will take good care that he shares 
 equally with the rest, we may be pretty sure ; but that 
 all men will exert their powers of production to their 
 utmost when not each but all in common are to 
 reap the benefit of those exertions, we feel just as 
 sure will not be the case. Strong motives of 
 personal necessity and direct self-interest can alone
 
 234 WEALTH-CREATION. 
 
 overcome the natural love of ease and disinclination 
 to effort which is inherent to man. In the case now 
 before us, both would be absent. It is only under 
 the system of private proprietorship that those 
 motives can exist in their full vigour, and generate 
 that active competition which furnishes so powerful 
 a stimulus to the production of wealth. 
 
 All institutions and practices that tend to re- 
 move or avert competition tend in the same degree 
 to slacken the work of wealth-creation. Thus it is 
 notorious that monopolies conduct their operations 
 more wastefully, are less progressive and inventive, 
 and expend more labour and capital for the pro- 
 duction of the same results than those enterprises 
 which are exposed to the vivifying influence of 
 competition. In a similar way, those industries 
 which are sheltered by import duties from whole- 
 some contact with foreign competition, become care- 
 less and sluggish, are content to feed upon the country 
 which subsidises them, and are hopelessly under- 
 sold by their foreign unprotected rivals. An in- 
 dustry which, not being self-supporting, receives 
 national support, creates less than it consumes. 
 As we have before shown, it produces lOO coins 
 worth of commodities at the cost of 140 coins 
 worth of capital and labour, and the country pays 
 the difference. 
 
 Thus far the advantages of competition stand 
 out in strong relief Let us now consider the evils 
 to which it may lead, when carried to a vicious 
 excess. 
 
 [c) The abuses of the competition for wealth 
 consist in resorting to illegitimate or dishonest
 
 COMPETITION ; ITS ABUSES. 235 
 
 practices in order to undersell or supplant rivals. 
 These practices assume one of two forms, viz. — 
 I. Cheating. 2. Selling below cost. Let us briefly 
 analyse both. Cheating, in regard to the sale of 
 goods, includes the adulteration of commodities, 
 falsification of weights and measures, deceptive 
 statements, and other forms of dishonesty which 
 may be summed up as the fraudulent obtainment 
 of a customer's money under false pretences. 
 Now, beside the fact that many of these frauds 
 and impostures are punishable, and frequently 
 punished, by the law, it is equally a fact that, in 
 the long run, the unfair competition that assumes 
 this form is only successful for a short time. The 
 frauds are detected, the rogues are unmasked, and 
 the trade goes back to the honest trader. The 
 great bulk of the world's commercial dealings rests 
 on the basis of mutual confidence, and that confi- 
 dence, once forfeited, is rarely restored. 
 
 As to selling below cost for the purpose of 
 supplanting a competitor, it is a shifty, spiteful, 
 and short-sighted policy, entailing certain imme- 
 diate loss, and, if persevered in, cxentual ruin on 
 those who adopt it. If, after a time, and for a time, 
 a rival is ousted from the field, it is rare that the 
 loss incurred is recouped, and the triumph, like that 
 of Pyrrhus, has cost more than it is worth. Mean- 
 time the consumers have benefited by the folly,, 
 and have enjoyed the advantage of buying below 
 the cost of production. Let us not, however, be 
 surprised at the occasional adoption of this suicidal 
 policy by private persons ; since the wisdom of 
 nations has, through bounties on exports, &c.
 
 236 WEALTH-CREATION. 
 
 frequently committed the same error. National 
 bounties on a given article enable its producer, at 
 the expense of his country, to sell it to foreigners 
 below cost, and thus to undersell competitors. 
 These bounties, therefore, possess this peculiarity 
 — that the better they succeed in effecting their 
 object the greater is the national loss which they 
 entail, and, consequently, the better they work the 
 worse is the result to the community ! 
 
 We thus see that the abuses to which compe- 
 tition is liable are exceptional and transitory, and 
 that they only arise from its being carried to 
 excess. Even virtues become faults when strained 
 beyond a certain point. And, on the whole, we 
 may conclude that competition, by the impulse it 
 gives to cheap and rapid production, and to the 
 distributive operations of commerce, powerfully 
 promotes the creation of wealth. 
 
 3. Waste of labour and capital on the production 
 and consumption of intoxicants and narcotics. It 
 would be a most useful and suggestive, were it a 
 possible, task to assess the amount injuriously 
 wasted every year, throughout the world, in the 
 production and consumption of alcoholic drinks, 
 opium, bhang, and other intoxicating and narcotic 
 preparations. The inquirer would have to estimate 
 — I. The capital and labour diverted from other 
 objects, in order to be devoted to their production 
 and elaboration. 2. The extent of fertile land 
 occupied in raising the plants from which they are 
 extracted. 3. Their debihtating effects on the 
 health and vigour, and, 4. Their demoralising 
 effects on the minds, of those who consume them.
 
 INTOXICANTS AND NARCOTICS. 237 
 
 Real and great evils all, but difficult to assess. 
 Confining ourselves, as we must do here, to the 
 economic aspects of the subject, it would be very 
 interesting to ascertain approximatively how much 
 wealth is annually squandered that might be saved, 
 and how much wealth that might be created is 
 annually barred and prevented, by the causes 
 above enumerated. It is not in our power to 
 frame an estimate, nor dare we even propound a 
 guess. But, after making due allowance for the 
 moderate quantities of stimulants and narcotics of 
 which the use might be proper and justifiable, the 
 abstraction from the world's wealth by this diver- 
 sion of labour and capital from useful to noxious 
 productions, must be equivalent to the abstraction 
 of food, raiment, and shelter from hundreds of 
 thousands of families to whose wants that capital 
 and labour might otherwise have ministered. 
 
 How can it be possible for destitution not to 
 exist, when a vast amount of wealth is thus 
 uselessly and wickedly sacrificed .'' How can there 
 be enough of the comforts of life for all, while so 
 large a portion of what is produced is — whether 
 through the feverish delirium that gives a fatal charm 
 to alcohol and opium — or through the destructive- 
 ness of the war system — or through the interdiction 
 of free commercial intercourse and of the division 
 of labour — or through other pernicious practices — 
 wantonly destroyed, and the agents of production 
 themselves diverted to mischievous objects ? From 
 all these errors and wrongs, it is the lowly, the 
 weak, the ignorant, and the oppressed who chiefly 
 suffer ; and to redress the former would be to
 
 238 WEALTH-CREATION. 
 
 redeem the latter from their physical and moral 
 prostration. There would be plenty for all if 
 men so willed it, but, as it is, a large portion 
 of that plenty is intercepted from the stomachs and 
 backs of the many by intemperance as well as by 
 the still more potent adverse influences to which 
 we have, throughout this work, adverted. 
 
 All honour is due to those conscientious men 
 and women who are zealously, even if sometimes 
 intemperately, advocating the cause of temperance. 
 But we fear that neither moral suasion nor forcible 
 repression are competent to radically cure the evil 
 with which they try to cope. Moralists and legis- 
 lators have vainly undertaken its extirpation, but 
 its sources lie deeper than they can reach. It is 
 not innate viciousness that leads to the habit of 
 intemperance, or renders it inveterate. It is the 
 habit that leads to the vice, and our inquiry must 
 therefore be, what arc the causes which engender 
 the habit, and how are those causes to be elimi- 
 nated ? Of these causes, by far the most potent 
 and universal are poverty and ignorance. Some 
 generations ago, habits of intoxication, begotten of 
 barbarism, tradition, and routine, prevailed among 
 the wealthier classes of many European countries. 
 But with the spread of knowledge, art, and refine- 
 ment, a sweeping reform has taken place. If 
 instances among the wealthier classes of that 
 degrading vice do still recur, they are viewed with 
 disgust, and form dishonourable exceptions to the 
 general rule. 
 
 A similar improvement is perceptible among 
 the respectable artisans and labour-sellers, and the
 
 TEMPTATIONS TO INTEMPERANCE. 239 
 
 scandal of overt and habitual drunkenness is now 
 mainly confined to the poorest of the poor and the 
 lowest of the low. It is most prevalent among the 
 hopelessly poor, or among those of the easier 
 classes who had contracted the habit when they 
 were poor, or among the ignorant who are shut out 
 from purifying and elevating influences, or among 
 the destitute, the criminal, and the desperate. 
 These are unhappily the fated victims of a vicious 
 circle. Poverty and ignorance populate the gin- 
 shop, and the gin-shop perpetuates poverty and 
 ignorance. How is the charm to be broken ? 
 Strong are the temptations, seductive the pleas, and 
 specious the excuses by which abject poverty is 
 beguiled into intemperance. It offers a brief sub- 
 stitution of mental elevation for mental depression, 
 of lethargy for physical pain, of indifference for 
 hopelessness, of stupor for remorse, of oblivion for 
 despair ! Is it then every -man who, intensely 
 suffering, can stoically put away from his lips the 
 cup that offers relief, however transient.'' If we 
 sternly demand the exercise of such self-control 
 from our poor, weak, and afflicted brethren, what 
 then shall we say to those who, rich, strong, and 
 hearty, plunge into the vice out of sheer brute 
 sensuality .'' 
 
 Let us, then, apply ourselves vigorously to the 
 task of drying up the main source and fount of 
 intemperance, which is hopeless poverty. We must 
 work deep, not merely on the surface. A morass 
 must be tapped from the bottom, not from the top. 
 With the removal of hopeless poverty, the vice of 
 drunkenness will gradually disappear, except per-
 
 240 WEALTH-CREATION. 
 
 haps among a small minority that may prove irre- 
 claimable. And it is the object of this work to 
 show how, if man but wills it, poverty may be 
 removed by promoting all the aids, and sweeping 
 away all the impediments, to the creation and 
 distribution of wealth. 
 
 CHAPTER XX. 
 
 "Gluts" of Commodities and Labour. — National Antipathies. — 
 Tendencies towards Confederation. 
 
 4. Gluts, ivhether of commodities or of labour. 
 And first, with respect to commodities. A " glut 
 of commodities" is an over-supply of one or more 
 commodities, as compared with the demand for 
 them. It is corrected or remedied by a diminution 
 or temporary cessation of its (or their) production 
 until the superfluous quantity has found a vent, 
 and until the demand and supply have re-adjusted 
 themselves. As to a general glut of all commodities, 
 that, as we have shown elsewhere, is totally im- 
 possible. As long as industry is employed on the 
 production of every desirable object in the same 
 proportion as this desirability creates a demand for 
 it, there can be no " glut," and the more rapidly 
 universal production progresses in the proper 
 relative quantities, the greater will be, without 
 hitch or exception, the addition to the world's 
 wealth. Each article produced would find its
 
 CAUSES OF "GLUTS." 24 1 
 
 counter-value in some other, and all would be ab- 
 sorbed by mutual interchanges. 
 
 Many causes, however, tend to disturb the 
 natural equilibrium of supply and demand. Over- 
 supply does not so often arise from the too rapid 
 production of some articles, as it does from the 
 diminished production of others. Indeed, it is by 
 the short supply of some articles while the supply 
 of the rest remains unaltered, that the relative or 
 exchangeable values of various commodities are 
 most frequently and most violently disturbed. 
 Those industries in which capital and labour pro- 
 duce normal and steady results are affected by 
 the variable results of those which are fitful and 
 fluctuating. Over-supply is speedily ascertained 
 and soon checked ; but under-supply, while often 
 traceable to human agency, is not infrequently the 
 effect of influences beyond human control. Deficient 
 harvests, whether of cereals or of other products of 
 the soil, are powerful disturbing causes, and are 
 mainly due to climatic causes. Shortness of supply 
 in this large class of commodities is equivalent 
 to, and produces the same effect as, an overplus 
 or " glut " in other classes of commodities, of 
 which the production had not varied in quantity. 
 Five successive bad harvests in Western Europe 
 (from 1877 to 1 881) largely diminished the pur- 
 chasing power of the agricultural classes, so that 
 the commodities of which they were habitual con- 
 sumers were found to be in over-supply, although 
 there had been no over-production, and there ensued 
 a wide-spread depression in trade. 
 
 To the same category of more or less unpre- 
 Q
 
 242 WEALTH-CREATION. 
 
 ventible disturbing causes that includes bad harvests, 
 belong other natural visitations, such as cattle 
 plague, potato disease, phylloxera, silkworm dis- 
 temper, &c., as also earthquakes, volcanic eruptions, 
 typhoons, inundations, &c. All these affect the 
 quantitative relation of commodities to each other, 
 by making some deficient, and creating a relative 
 redundancy in others. Thus there exists a liability 
 to '* gluts " from causes which man can neither 
 foresee nor counteract, and all that we can attempt 
 is some mitigation of the evil when it does occur. 
 
 But " gluts " are also occasioned by human 
 agency — by scientific discoveries which turn the 
 stream of demand into fresh channels, leaving the 
 old ones dry ; by changes of fashion which take the 
 demand off from old articles to throw it on to 
 new ; by improved forms of machinery which com- 
 paratively lessen the producing power of the old pro- 
 cesses ; by speculative excitement which stimulates 
 the excessive production of some articles as compared 
 with the rest ; and, above all, by the artificial divi- 
 sion of the globe's surface into a number of areas 
 commercially isolated from each other, so that not 
 only " gluts " are rendered more frequent, but their 
 dispersion is rendered more tedious and expensive. 
 With perfect freedom of commerce, in case of an 
 over-supply of some commodities in some countries 
 and of other commodities in other countries, the 
 balance would soon and easily be redressed by the 
 interchange of the respective superfluous produc- 
 tions. The whole world would be open to facilitate 
 and equalise their distribution. Innumerable mar- 
 kets would present themselves to receive the com-
 
 OVER-SUPPLY OF LABOUR. 243 
 
 modities over-produced, or to fill up the vacuum of 
 under-supply. The inequalities between supply 
 and demand would be far less perceptible when 
 spread over so vast an area ; just as the under- 
 supply or over-supply of rain that make the 
 mountain stream either a dry ravine or a devasta- 
 ting torrent, produce but little effect on a broad 
 lake. 
 
 As regards the " glut " of labour, it is the in- 
 variable result of a "glut" of commodities, and is 
 therefore, to that extent, due to the same causes. 
 For an over-supply, whether it be positive or com- 
 parative, of some kinds of commodities necessitates 
 the temporary cessation or diminution of their 
 production, and in the same proportion is the 
 demand for labour lessened. 
 
 But the normal demand for labour in relation 
 to its supply depends upon more general and 
 permanent agencies. As we have before shown, 
 the three inseparable and indispensable factors in 
 the production of wealth are land, labour, and 
 capital. No one or two of these are of any avail 
 without the third. Of land there is for the present 
 no general dearth in one zone or another, but the 
 relative proportions of labour and capital differ 
 very much at different times and in different places. 
 It may be laid down as a general law that when 
 the reproductive capital of a country increases 
 faster than its population, the demand for labour 
 will be greater than its supply, and the rate of 
 wages will be high. Where the reverse conditions 
 exist, there will be a " glut " of labour, and wages 
 will be low. Capital is the labour-sellers' chief 
 < > 2
 
 244 WEALTH-CREATION, 
 
 customer, and the wealthier the customer the better 
 for the seller. Every obstacle which impedes the 
 progress of wealth-creation, depresses the value of 
 labour and is the labour-sellers' bitterest foe. Just 
 as capital is useless without labour, and is therefore 
 dependent on it, so is labour useless without capital, 
 and their interdependence is mutual. 
 
 Another important factor in the question of 
 redundancy or scarcity of labour is the power of 
 migration. The redundancy is relieved by emi- 
 gration, while immigration remedies the scarcity. 
 But both processes, fraught as they are with ad- 
 vantages, are attended with some evil and dangers. 
 Expatriation is a painful cure — a cruel wrench to 
 early associations and to the ties of kindred. Far 
 better, where possible, to bring capital up to the 
 level of the population than having to cut down 
 population to the level of capital. Nor does the 
 emigrant always better his condition. The task 
 before him is still a laborious one. To succeed in 
 his new career, he must possess all the qualities 
 that entitled him to success in his native land. 
 The chief advantage he has gained is the oppor- 
 tunity of exercising them. 
 
 On the other hand, immigration does not 
 always supply the right quantity, or the right kind, 
 of labour to the country into which it flows. There 
 may be, and sometimes is, a glut of immigrants. 
 Wherever there is a large or sudden influx of fresh 
 hands exceeding the labour-absorbing power of the 
 capital employed, the effect, for a time, is disas- 
 trous. The land is there and the labour is there, 
 but if the capital be deficient, the land must remain
 
 NATIONAL ANTIPATHIES. 245 
 
 untilled, and the labour must seek other fields for 
 employment. There arc num^erous instances of 
 new colonies or settlements which have failed, and 
 ended in disaster, through the lack of that "staying 
 power " which adequate capital can alone confer. 
 
 To sum up, those "gluts" or disturbances in 
 the relative supply and demand of commodities, 
 which arise from natural and unpreventible fluctua- 
 tions in the amount of produce raised from the 
 soil, or from changes in men's tastes or habits, or 
 from the invention of improved methods of pro- 
 duction, are unavoidable ; but their injurious 
 effects can be minimised by the adoption of a 
 world-wide system of free interchanges. 
 
 5. National AiitipatJiies. The existence of such 
 feelings largely interferes with the progress of 
 wealth-creation by fostering that estrangement 
 between nation and nation from which mainly 
 spring the destructive system of war and the anti- 
 productive system of protection. Happily, these 
 antipathies, originating in ignorance and prejudice, 
 are gradually waning under the influence of wider 
 knowledge and closer inter-communication, and 
 their complete extinction will date from the advent 
 of permanent peace and universal Free Trade. 
 Primarily, groups of families clustered into tribes; 
 then groups of tribes clustered into larger com- 
 munities, as they were impelled by some approach 
 to identity of race, of interests, of language, and of 
 religion. This tendency of men to agglomerate 
 into larger social masses has still, with slight excep- 
 tions and retrogressions, been going on. With the 
 advance of wealth, knowledge, and civilisation, the
 
 246 WEALTH-CREATION. 
 
 tendenc}' (sometimes impeded, sometimes hastened, 
 by wars and conquests) has been towards the 
 consolidation of two or more smaller states into a 
 large one. A few centuries ago, England, France, 
 and Spain consisted of a variety of small, inde- 
 pendent states ; and the unification of Italy and 
 Germany has taken place within quite a recent 
 date. It is not yet a century since the United 
 States of America coalesced to form the grandest 
 confederation of states yet known, and only a 
 few }'ears have elapsed since the various provinces 
 of British North America were welded into a 
 confederacy under the title of Dominion of 
 Canada. 
 
 This tenidency to the fusion of smaller into larger 
 states, and to the incorporation of separate inde- 
 pendent states into vast commonwealths or con- 
 federations, is one of the most cheering results of 
 past, and most promising signs of future, civilisation 
 and progress. It is a recognition of the common 
 solidarity of mankind. It is smoothing the way to 
 universal peace and to freedom in all its shapes. 
 It is gradually inaugurating the reign of majorities 
 and abrogating that of brute force. This tendency 
 is still in full activity and potency, and is far from 
 having yet accomplished its mission. What is the 
 next work which it is destined to perform ? In 
 what shape will this centripetal force which has 
 clustered communities into states and states into 
 confederations, next exhibit its plastic power .^ It 
 is not easy to prefigure the new forms into which 
 the development of new tendencies may eventuate, 
 but among the possibilities which the not remote
 
 CONFEDERATION OF STATES. 247 
 
 future may have in store for us, we might instance 
 the following combinations as the practical and not 
 improbable results of the centralising tendency to 
 which we have adverted. 
 
 1. A confederation for certain defined objects, 
 none trenching on autonomy, of all the various 
 states of Europe under the title of "The United 
 States of Europe." We have already, at p. 150, 
 treated at some length of the possibilities and 
 benefits of this scheme, with a special view to the 
 prevention of war. 
 
 2. A confederation of the numerous English- 
 speaking peoples who have founded states in, and 
 are rapidly tenanting, various parts of the globe. 
 The junction of all these populations, unified as 
 they already are by race, language, and habits, 
 would form a vast Anglo-Saxon commonwealth, of 
 which the central representation might be invested 
 with certain imperial powers, without encroaching, 
 beyond those narrow limits, on the self-government 
 of the states of which it was composed. Even now, 
 it would comprise a population of nearly 100,000,000 
 of which the United States of America would alone 
 form about one-half But powerful as such an 
 Anglo-Saxon commonwealth might already be 
 from its numbers, its energy, and its wealth, the 
 unprecedented rapidity with which the English- 
 speaking races are working out their destinies and 
 multiplying their numbers, not only by their own 
 fecundity but by the absorption and assimilation of 
 immigrating races, would before long render such a 
 commonwealth a wonder, an example, and a guide 
 to the rest of the world. A child just born might
 
 248 WEALTH-CREATION. 
 
 live to see its population increased three-fold and 
 its area spread over most of the fairest portions of 
 the earth's surface. Ten years ago, a writer said 
 of England, " We are the seminal people from 
 which those nations will have sprung, which are 
 probably to be the future arbiters of the world's 
 destiny. Happy for us if we grow with them, 
 coalesce with them, identify ourselves with them, 
 and become part of the great cosmic system from 
 which we may hope for that progress towards 
 man's social well-being, which the old civilisation 
 of Europe has so wofully failed in securing." 
 
 3. Another possible confederation might be 
 that of the various states occupying the spacious 
 semi-continent of South America, But although 
 the great and improving empire of Brazil would 
 present an excellent nucleus round which the other 
 independent states of South America might rally 
 for the purpose, we fear that, in this instance, a 
 long period must elapse before the prevailing dense 
 mass of ignorance can be cloven and broken up by 
 impact with popular education, and before interna- 
 tional jealousies succumb to the voice of reason. 
 
 It is by means of such international combina- 
 tions that mankind will eventually form a real 
 brotherhood, and that unnatural and absurd national 
 antipathies will finally die out. We are far from 
 denying or under-rating the numerous obstacles and 
 difficulties which lie in the way of such vast schemes 
 of improvement. But obstacles and difficulties 
 always appear more formidable in a distant mass 
 than when they are closely examined and boldly 
 confronted. It is not so long since the general
 
 INCREASING TENDENCIES TO CONFEDERATION. 249 
 
 adoption of a postal convention between the various 
 nations of the world would have been treated as 
 an Utopian dream. It is now an established fact, 
 ^\ hich largely contributes to the comfort and benefit 
 of mankind. 
 
 Neither do we assert that such contemplated 
 confederations, which would knit together the 
 interests of the foremost nations of the world, and 
 give an immense stimulus to the production of 
 wealth, are at all likely to spring at once into 
 existence. But we do contend that, if the time for 
 them has not yet come, it is certainly coming — that 
 the continuous and increasing tendency to the 
 congregation of political bodies into large masses 
 must result in further practical development — and 
 that distances are now so neutralised by rapidity 
 of inter-communication, as to offer no impediment 
 to the working of large or complex combinations. 
 Nor would the diversity of languages prove any 
 serious difficulty. Already the diplomatic language 
 of the States of Europe is French ; the Anglo-Saxon 
 nations have in common the language of Shake- 
 speare ; and throughout the South American states 
 the prevailing tongues are Spanish and Portuguese. 
 
 We modestly offer these suggestions for what 
 they may be worth. It is possible that improve- 
 ments in our system of international polity may 
 take place in a different form, and we shall hail 
 them in any form. But meanwhile, we should 
 not shrink from ourselves propounding remedies to 
 evils merely because the adoption of those reme- 
 dies appears beset with difficulties. All difficulties 
 are surmountable. Even if our views should be
 
 250 WEALTH-CREATION. 
 
 branded as " impossibilities " we should not be much 
 moved. Our reply would simply be that "Im- 
 possible ! " is an objection which man, with his 
 finite intelligence and undefined perfectibility, 
 should be most chary of using. Dogmatically to 
 draw the precise line of demarcation between the 
 possible and the impossible, is an arrogant assump- 
 tion of infallibleness. That boundary line has often 
 been magisterially drawn ; and just as often, sub- 
 sequent experience has shown it to have been 
 drawn in the wrong place. The list of actually 
 accomplished " impossibilities " is an endless one. 
 That fact should prove a rebuke to dogmatic 
 sceptics, and an encouragement to the advocates 
 of progress. 
 
 It may perhaps be said that the absorption of 
 local and national interests into the wider and 
 more general range of universal human interests 
 will be destructive of patriotism. That depends on 
 the meaning assigned to the word " patriotism." 
 As long as it is, not the direct converse to, but a 
 concentrated form of philanthropy, as long as it 
 implies an intense desire for the special welfare of 
 a man's native country, not as opposed to, but as 
 connected with, the general welfare of mankind, 
 no sentiment can be more in accord with the 
 principles on which a friendly congress of nations 
 would be founded. 
 
 But if patriotism is meant to confine its sym- 
 pathies to the exclusive welfare of a man's native 
 country at the expense of, and in contradistinction 
 to, the general welfare of mankind, it subsides into 
 a narrow, provincial, and selfish prejudice, founded
 
 TRUE AND FA1.sk PATRIOTISM. 25 I 
 
 on the absurdly erroneous opinion that a country 
 best prospers if, and when, other countries are un- 
 prosperous. Patriotism so construed is the apo- 
 theosis of a blunder. It is a defect wrongfully 
 raised to the rank of a virtue. It is this fatuous 
 feeling that inspired those wretched feuds which 
 have marked the barbarism and hastened the 
 decadence of contentious savage tribes. The same 
 fatuous feeling gave rise to internecine and cruel 
 wars between the petty towns of ancient Greece, 
 and between the petty states of medicTeval Italy. 
 The ancient Lacedemonians specially called them- 
 selves patriots, because they hated and despised 
 everybody else ; but, in truth, they were (begging 
 Plutarch's pardon) nothing but a petty, savage, 
 egotistical, bigoted, and cruel race of slave- 
 holders. 
 
 CHAPTER XXI. 
 
 Land— Origin of Private Proprietorship— The World's Supply of 
 Land — Its Gradual Absorption and Consequent Increasing 
 Value. 
 
 We must forbear from prolonging the list of those 
 influences from which wealth-creation receives either 
 hindrance or encouragement. By the time that 
 public opinion throughout the civilised world has 
 received sufficient enlightenment to appreciate, and 
 gained sufficient strength to enforce, the reforms ad- 
 vocated in the preceding pages, the improvement in 
 the condition of mankind will have become so mani-
 
 252 WEALTH-CREATION. 
 
 {est that the remaining minor reforms will rapidly 
 follow, and prove but feeble obstructions. Before, 
 however, we proceed to summarise and comment 
 upon the general principles which constitute, and 
 the facts and reasonings which support, the argu- 
 ment propounded in this work, we must devote 
 some share of attention to a few collateral issues, 
 with which the main subject is more or less con- 
 nected. 
 
 Of these, one of the most important relates to 
 the peculiar conditions under which land is placed 
 as compared with the other two factors of all 
 wealth, viz., capital and labour. In the first place, 
 the supply of capital and labour is, originally, 
 scanty — it increases gradually — and to that 
 increase no limit is assignable. It is different with 
 land. Barring geological phenomena, the supply 
 of land is a fixed quantity. Hitherto, the aggre- 
 gate quantity of land which the world affords for 
 man's use has been far beyond man's requirements. 
 But it cannot always be so. As cultivable land 
 becomes worked up and utilised by the joint action 
 of capital and labour, its present excess of supply 
 will be gradually reduced, and must, at some 
 period more or less remote, become exhausted. 
 The more rapid the progress of mankind and the 
 increase of the world's population, the sooner the 
 time will arrive when we shall approach the limit 
 of the world's land-supply. 
 
 In densely populated countries the value of 
 land has been continually rising, but, so far, the 
 ri.se has been checked and rendered gradual and 
 bearable by the influx of agricultural produce from
 
 CONTINUOUS RISE IN THE VALUE OF LAND. 253 
 
 regions where land was cheap and abundant. How 
 will it be when those regions shall themselves 
 become more densely populated, and the supply of 
 surplus land shall further diminish.'' The result will 
 no doubt be a general and growing enhancement in 
 the value of land, eventually culminating, should 
 the present laws relating to landed property 
 remain in force, in conferring upon its possessors, 
 the unlimited, because undefined, privileges of a 
 monopoly. These are not merely vague and 
 distant speculations. It is a fact that there is a 
 limit to the supply of land — it is a fact that the 
 world's population is fast increasing and therefore 
 using up that supply — and it is a fact that, as the 
 demand becomes greater while the supply remains 
 the same, a proportionate rise in value must ensue. 
 Reason how we may, and infer what we may, those 
 facts have to be confronted. Is it wise to adjourn 
 the consideration of the pinch till the pinch itself 
 shall come .-' 
 
 In the second place, while capital and labour 
 are migratory and can, when required, remove from 
 one locality to another, land is fixed and irremov- 
 able. Its products, indeed, are transportable, and 
 may be conveyed to those places where labour is 
 most efficient and capital most abundant ; but in 
 order to create that agricultural produce, capital 
 and labour must go to the land. From the two 
 peculiarities which we have pointed out as distin- 
 guishing land from its co-factors, capital and 
 labour, various pregnant inferences are deduciblc, 
 to which we may make some brief reference. 
 
 It will be necessary to say a few words as to (d)
 
 254 WEALTH-CREATION. 
 
 the origin of proprietorship in land ; {b) the present 
 distribution of the world's supply of land ; {c) the 
 importance to mankind that land should be so 
 treated as to extract from it the greatest possible 
 amount of useful production ; and [d) the measures 
 requisite to promote and ensure the most productive 
 treatment of the land. 
 
 {a) Pi'oprietorship in land is a human histitn- 
 tion, not a natural ordinance. Whatever origin be 
 assigned to man, whether special creation or 
 gradual evolution, it is clear that at some period 
 more or less remote, and for a period of greater 
 or lesser duration, the land was as free to the 
 common use of mankind as the air we breathe. 
 Indeed, it is still so in several parts of the globe. 
 As long as hunting, fishing, and a few wild fruits 
 and berries supplied the wants of a sparse popula- 
 tion, necessity prompted no change. But some 
 primeval Triptolemus discovered that by cultiva- 
 tion, that is by clearing the ground of useless, and 
 substituting for them useful, plants, by loosening 
 and turning over the land and so converting it into 
 soil, by sowing it with cereals, &c., a very large 
 quantity of human food could be raised from a 
 given area which, in its state of nature, produced 
 next to nothing. Who, however, would undertake 
 the performance of work so arduous, in the expecta- 
 tion of advantages so tardy and uncertain, unless 
 assured that those advantages would undividedly 
 accrue to themselves .^ But in order that those 
 advantages should be exclusively assigned to them, 
 the rest of the tribe or community must be 
 debarred from the use of the area thus cultivated.
 
 PROPRIETORSHIP IN LAND. 255 
 
 Hence the specific appropriation to the cultivators, 
 of that area, which was before common to all. 
 Thus, practically and in a broad sense, has arisen 
 the substitution of private for public proprietorship 
 of land. 
 
 As a general proposition, viewed apart from the 
 question of social expediency, such an abstraction 
 of land from the common use of all, and its con- 
 version to the separate use of individuals, was 
 undoubtedly an injury to the commonalty from 
 whom that extent of land was sequestrated. Their 
 hunting or wild-fruit bearing grounds were by so 
 much diminished in extent, and, pro tanto, the 
 benefit to a iftw became a detriment to the many. 
 It is in this sense that Proudhon's exaggerated 
 dictum, La proprictc cest le vol (" property is 
 robbery "), has a certain degree of foundation in 
 truth. What was everybody's became somebody's, 
 and was everybody's no longer. It is in this sense 
 that injustice has undoubtedly been done to the 
 indigenous tribes of the American hemisphere who, 
 having for untold centuries freely and in common, 
 tenanted that vast continent, have been ousted, and 
 themselves nearly extirpated, by the encroach- 
 ments of civilised races. This process is still in 
 operation wherever the land is held in common, 
 and wherever communism in its completest form 
 is the prevailing practice among the indigenes. 
 The loose hold exercised over the land bv the 
 native tribes who use it in common, is everywhere 
 giving way before the energy and intensity of 
 individualism ; and in spite of the restraining 
 influence of benevolent philanthropy, the aboriginal
 
 256 WEALTII-CRiiATION. 
 
 races, which can neither resist, nor co-exist with, 
 civihsation, seem doomed to speedy extinction. 
 
 But these evils, deplorable as they are, sink into 
 insignificance when compared with the innumer- 
 able advantages attendant on land-appropriation. 
 Without separate and secure proprietorship (whe- 
 ther individual or corporate), there could be no 
 cultivation ; without cultivation there could be no 
 abundance; without abundance, no wealth; and 
 without more or less of wealth, there could be no 
 progressive civilisation. The same area of land 
 which under proprietorship and cultivation could 
 maintain in comfort several millions of human 
 beings, had, when unappropriated and uncultivated, 
 afforded a bare and precarious maintenance to a 
 few thousands. Reflection and experience led 
 to identical conclusions, so that, finally, by the 
 universal consensus of nations, the principle of 
 land -proprietorship has been adopted, legalised, 
 and enforced. 
 
 Land is therefore held, not by any abstract or 
 natural right, but by a conventional and legal right 
 conferred by the will, as defined and upheld by the 
 law, of the community. Might had, in many 
 instances, conferred the land on the original appro- 
 priator before society conferred on him the right to 
 hold it. That right was conferred, not from a 
 sense of fairness, since it involved unfairness to 
 the aboriginal common occupants ; but from a 
 sense of expediency, because the system presented 
 many material advantages. 
 
 In this brief review of the conversion and dis- 
 tribution of unappropriated land into private or
 
 APPROPRIATION OF LAND. 257 
 
 corporate properties, we have necessarily confined 
 ourselves to the broad and salient features of the 
 subject. We have made no reference to those 
 intermediate and transitional relations between 
 land and its possessors that have existed at certain 
 periods and in certain places, such as the various 
 and complicated forms of feudal tenures, the ryot 
 and zemindar system of India, the Russian mir, 
 the nearly extinct village communities, &c."^ 
 These form interesting and suggestive topics for 
 inquiry, but they have only an indirect bearing on 
 the subject before us, which is simply the " origin 
 of proprietorship in land."' Our task has been to 
 show that the division of the habitable surface of the 
 globe (that general inheritance of all mankind) into 
 private ownership is a social arrangement open to 
 modification ; not a law of nature from which there 
 is no appeal. 
 
 {b) The present distributioji of the world's supply 
 of land. In newly-settled countries, and especially 
 in those which have been colonised by the Anglo- 
 Saxon racesj the modes in which the present owners 
 of land have become possessed of it are simple 
 enough. In a few instances, the land has been 
 bought for a nominal value from certain indigenes, 
 whose power to sell and to give a title was exceed- 
 ingly doubtful. In the majority of cases, however, 
 the land has been, under various pretexts, taken 
 from the natives by main force and appropriated by 
 
 * Those who wish for information on these subjects should con- 
 sult Mr. J. W. Probyn's excellent collection of the best treatises on 
 the various systems of land tenure, published by Cassell & Co. 
 
 K
 
 258 WEALTH- CREATION. 
 
 the government of the new state. Thereupon 
 naturally followed the gradual distribution of the 
 land, by allotment or cheap sale, among immi- 
 grating settlers. Much of it still remains undis- 
 tributed in the hands of the various states, and its 
 sale constitutes a large source of revenue. In most 
 new countries land-ownership has thus arisen. 
 
 In old countries, the existing distribution of 
 land has been arrived at through many circuitous 
 processes. Besides the original act (justifiable or 
 not) of diverting land from the common use of all 
 to the special use of a few, the transmission of the 
 land from generation to generation has, many times 
 and at many periods, been deflected from its legal 
 course by conquest, confiscation, rapine, fraud, and 
 violence of all kinds. The title to many a fair 
 domain now peacefully enjoyed, may be traced 
 back to the might to seize and the power to hold 
 exercised in troublous times. But all land-owner- 
 ship, whatever its origin, once defined and sanctioned 
 by law, becomes sacred in the eye of the law, and 
 is under its guardianship as long as that law remains 
 in force. The firm maintenance of legal rights is es- 
 sential to the very existence of social organisation. 
 
 On the other hand, society has not abdicated 
 its prerogative of modifying the law itself The 
 superior controlling power of the state is constantly 
 being exemplified. In all cases of public improve- 
 ments, such as roads, canals, railways, street 
 alterations, harbours, &c., the legislature overrules 
 proprietary objections, and decrees compulsory 
 transfer of the necessary land on terms to be 
 privately or juridically arranged. Even in the
 
 STATE INTERFERENCE WITH LAND. 259 
 
 disposal of personal property the state has some- 
 times specially interposed. Thellusson, in 1797, 
 left by his will ^600,000 to trustees to be invested 
 for accumulation (before distribution to the heirs) 
 for a period of about a century, by which time it 
 was calculated that the amount would have ex- 
 panded to iJ" 1 40,000,000. This singular devise 
 induced Parliament, in 1799, to pass an Act to 
 prevent testators from exercising any power over 
 their personal property beyond twenty years after 
 their decease. As it happened, Parliament under- 
 went needless alarm, for litigation brought about a 
 premature distribution of the Thellusson property 
 in 1859, and meanwhile the law expenses had 
 devoured the accumulations, so that the amount 
 distributed hardly exceeded the amount originally 
 bequeathed. Still, the legislature herein exercised 
 its privilege, and evinced its determination to inter- 
 fere with proprietary rights when they were deemed 
 incompatible with the public weal. 
 
 The Irish Land Act of 1881 is the most striking 
 as well as the most recent instance of legislative 
 control over land-ownership. By fixing rents 
 (though under exceptional circumstances), it inter- 
 feres, to however limited an extent, with the free- 
 dom of contract and with the natural relations of 
 supply and demand. Rut the evil was a special one 
 and required a special remedy. The evil was that 
 in Ireland the article legislated upon, land, was in 
 limited supply and in excessive demand. Hence 
 exorbitant and impossible rents (at least in many 
 cases) which legislative interference alone could 
 reduce. The case is, no doubt, a special one, but it 
 K 2
 
 260 WEALTH-CREATION. 
 
 may not long remain a solitary or even an ex- 
 ceptional one. As the population of the world 
 continues to increase while the supply of land 
 throughout the world continues limited, the pro- 
 blem which the Land Act was framed to solve in 
 Ireland will, sooner or later, obtrude itself in other 
 places, or in other forms. Land everywhere tends 
 to increase in value, and that tendency is most 
 rapid and pressing when and where the density of 
 the population is greatest. 
 
 Moreover, there are certain tacitly understood 
 limitations to the rights conferred by society on 
 land-proprietorship, and certain implied conditions 
 to their exercise. It has become a common saying 
 that "property has its duties as well as its rights." 
 This doctrine, if it really means what it really says, 
 is a very sweeping one, and raises questions which 
 its author probably never intended. For, as the 
 performance of the duties and the exercise of the 
 rights are made correlative, it implies that where 
 the duties are unperformed, the rights lapse. With- 
 out going so far as that, it is undeniable that there 
 are certain limits and conditions to the leeal ricrhts 
 of land-owners which, without being specifically 
 expressed, are practically annexed to them. These 
 limits and conditions are intimately connected with 
 the primary origin of the private ownership in land, 
 which was, its necessity in order to extract from 
 the land a larger yield of useful productions. That 
 was the plea for, and the justification of, such 
 ownership. Otherwise, what was the object of 
 rescuing the land from the wild state in which 
 it was common to all ?
 
 RAISING GAME INSTEAD OF WHEAT. 261 
 
 There are cases, however, in which the proposed 
 result does not ensue. For instance, such an exer- 
 cise of proprietary rights as should, on a large 
 scale, leave the land as waste as it was before it 
 was appropriated, would be an infringement of the 
 very purpose which society had in view, in con- 
 ferring those rights. Let us suppose that two or 
 three millionaires clubbed together to purchase 
 100,000 acres of the fine wheat lands of Lincolnshire, 
 in order to oust the farmers who now cultivate them, 
 and to convert the whole into a game preserve ; 
 what then .'' There is nothing in the laws affecting 
 land to prevent such a purchase, or to prohibit the 
 conversion of the land to such uses. The effect 
 would be that the production of wheat in this 
 country would be diminished by 300,000 to 400,000 
 quarters annually, that food for nearly half a 
 million of human beings would have to be im- 
 ported instead of being grown, that the farmers 
 and labourers who before raised the wheat on the 
 land would have to find other employment or 
 emigrate, that the increased competition for land 
 in other parts of England would cause a general 
 rise in rents, and that the area of England, as a 
 food-producing country, would be smaller than 
 before by 100,000 acres of her finest land. A 
 scheme so rife with evils, so cynically selfish and 
 devoid of all consideration for others, might indeed 
 rouse the indignation and provoke the interference 
 of the community, but in the present state of the 
 law it would be quite feasible and strictly legal. 
 
 Here, then, is an act which transgresses no law, 
 and only violates the tacit limitations and condi-
 
 262 WEALTH-CREATION. 
 
 tions which attach to the law ; nevertheless, such 
 an act would not be tolerated. Its very enor- 
 mity would furnish its own corrective, and the 
 legislature would amend the law to meet the case. 
 It is true that such an act, on such a scale, and in 
 its naked features, is not likely to be attempted. 
 It must, however, be remembered that similar 
 violations of the unwritten spirit of the law, on a 
 reduced scale and in a less obtrusive fashion, are by 
 no means uncommon in countries where the land is 
 owned in large masses. The love of sport which 
 impelled William the Conqueror to convert Hamp- 
 shire into a deer forest still survives, and prompts 
 miniature imitations (under cover of the law) of 
 a deed that overrode all law. There are, in- 
 deed, many practices with regard to land which 
 are strictly within the letter of the law, but which 
 thwart and frustrate its spirit. The existing 
 relations between the land and its owners cannot, 
 therefore, be regarded as final, and circumstances 
 may arise which will subject them, in some places 
 sooner, in others later, to revision and modification. 
 (c) TJie primary importance of such a mode of 
 treating land as shall secure from it the largest 
 amouftt of useful production is too obvious to need 
 much comment. If, as we have endeavoured 
 throughout to show, it be a sin against wealth- 
 creation to waste capital and labour because such 
 waste lessens the common stock of useful things 
 for distribution to the world, it must be a still 
 greater sin to waste the productive powers of land, 
 since its supply is a fixed quantity, whereas capital 
 and labour are reproducible to an indefinite extent
 
 LAND SHOULD YIELD ITS UTMOST. 263 
 
 The utmost amount of production is obtainable 
 when all the three factors of wealth — land, labour, 
 and capital — are combined in their requisite pro- 
 portions. Land, when its co-factors are absent, is 
 simply barren ; and when they are present, but ' 
 in relatively insufficient supply, it produces less 
 than it might and ought. Even when all three 
 factors co-operate in due proportions, the result 
 may be abundant production, but not necessarily 
 useful production. For instance, the cultivation of 
 poppies for the manufacture of opium ministers to 
 a far lower class of human wants than the cultiva- 
 tion of cereals for the purposes of food, or of cotton 
 for the purposes of clothing. 
 
 As long as extensive tracts of land exist in 
 various parts of the globe fitted for, and waiting for, 
 man's cultivation, the importance of making culti- 
 vated land yield its utmost does not so impressively 
 come home to us. But when it is borne in mind 
 that man's reserve of cultivable land, though large, 
 is yet of limited extent, and that each year we are 
 encroaching on that reserve, it surely behoves us to 
 take into consideration, boldly face, and gradually 
 prepare for, a contingency which may be more or 
 less remote, but to which the progress of civilisa- 
 tion is irresistibly leading us. 
 
 (d) As to the measures best adapted to secure 
 such a treatment of the lajid as shall be the most 
 productive, that is far too vast and complex a 
 question to be discussed within the limits of the 
 present work. Indeed it hardly comes within its 
 scope, and lies mostly in the domain of politics and 
 agriculture. It is sufficient here to point it out as
 
 264 WEALTH-CREATION. 
 
 a subject of pressing and growing importance that 
 has attracted, and will yet more attract, the atten- 
 tion of able thinkers. The land question in its full 
 range involves many more problems than have as 
 yet been broached. In densely populated countries 
 the struggle for land is becoming intense, its value is 
 rising, and it must continue to rise until it may reach 
 such a height as shall prove intolerable, unnatural, 
 and injurious to the common weal. The period 
 must come when some corrective will have to be 
 found to counteract that tendency to monopoly 
 which is more or less inherent in land, from its 
 limited supply, as compared with the unlimited 
 growth of population and capital. 
 
 We must here close these perfunctory remarks 
 on a subject so vast and so important. It will 
 before long occupy the minds and test the powers 
 of the greatest statesmen and thinkers. The 
 necessity for decisive action may not arise soon, 
 nor everywhere at the same time. It may be 
 postponed by palliative remedies. Indeed, in 
 abstract theory, it might never arise at all, if 
 science could devise means to raise food and raw 
 materials in ever-increasing quantities out of the 
 same area of land, so as to meet the ever-growing 
 requirements of an ever-growing population. But 
 in our present state of knowledge, and with our pre- 
 sent command over the forces of nature, we have, or 
 shall some day have, to confront the uncomfortable 
 possibilities arising out of the contrast between limit- 
 less requirements for cultivable land and its limited 
 supply. Meanwhile, we have no faith in the devices 
 hitherto proposed to meet this eventual emergency.
 
 265 
 
 CHAPTER XXII. 
 
 Contempt for Wealth-Producers— The Poor would be Largely 
 Benefited by Increased Wealth-Creation. 
 
 While we have a firm trust in the future of civilised 
 man, we fear that there are some races of men 
 of whom, from their inaptitude for progress, we 
 must despair. It is in the highest stages of civi- 
 hsation that the art and practice of wealth-creation 
 will attain the fullest recognition and the most 
 ample development. The initial start must depend 
 on the power to rise from a state of nature to a 
 state of progress. True that the desire of possession 
 being innate in man, it is as strong in the lowest 
 savage as in the most cultured Caucasian ; but the 
 former neither knows the true use and value of 
 wealth, nor the most effectual modes of acquiring 
 it. He snatches at the objects of his desire as the 
 means of gratifying his immediate appetites, and 
 has but elementary notions as to the multiplica- 
 tion of those objects with a view to future fruition. 
 Can he be taught to adopt the habits, join in the 
 labours, and submit to the restraints of civilised 
 life .? Some races have done so, although in 
 only a limited degree, but, in their case, a certain 
 advance having been made, a farther advance may 
 be hoped for. 
 
 But, on the other hand, there are other races, on 
 whom the experiment has been tried in vain. The 
 indigenous possessors of the soil in America and 
 Australia on whom civilisation has encroached,
 
 266 WEALTH-CREATION. 
 
 have deteriorated, and almost perished, by contact 
 with it. Every effort to induce them to join us in 
 our social arrangements has been fruitless. All 
 amalgamation has been found impossible, and we 
 have either to retire from the work of turning 
 barren wastes into cornfields and gardens, or to 
 resign ourselves to view with pitying eyes and 
 regretful hearts the gradual decay and final extinc- 
 tion of those indigenous races. 
 
 It may be asked how it is that the aptitude for 
 civilisation is absent in some native races and exists 
 in others ; and where the line between them is to 
 be drawn. Our theory as to this is but a rough and 
 ready one, and we give it for what it may be worth. 
 We believe that it will be found that those paces 
 or tribes among whom the land remains unappro- 
 priated, and exists in its primitive condition of 
 being common to all, are the most untamable to 
 the yoke of civilisation and will never live within 
 its pale. Whether this preference for savage inde- 
 pendence and dislike to settled habitations be the 
 result of some peculiar physical conformation, or 
 that habits indulged in, generation after generation, 
 may have ripened into hereditary proclivities, certain 
 it is that those indigenous tribes, among whom the 
 land has remained unapportioned and uncultivated, 
 are precisely those that have evinced the greatest 
 incompatibility with, and aversion to, the arts of 
 civilisation. 
 
 On the other hand, those nations among which 
 the institution of land-ownership exists, seem to 
 have passed the line which separates the improvable 
 from the non-improvable races, and to have taken
 
 ~ HINDRANCES TO KNOWLEDGE AND CULTURE. 267 
 
 that first step which renders the rest possible. It is 
 to these that progress, more or less rapid, becomes a 
 destiny ; and it is of these that, after all, the great 
 bulk of mankind is composed. 
 
 We have now, to the best of our ability, urged 
 the claims of wealth-creation to rank as the most 
 efficient agent in promoting the physical, and, 
 through the physical, the moral well-being of the 
 totality of mankind. Without the physical, the 
 mental and moral well-being is unattainable. It is 
 illusory and deceptive to open the temple of know- 
 ledge, culture, and refinement to the bulk of the 
 population, to invite them to enter, and to blame 
 them for not entering — and at the same time to leave 
 them oppressed by poverty, their leisure absorbed 
 in toil, and their minds burdened with troubles and 
 anxieties. It is the feast of the Barmecides. 
 Practically, our cruel wars, our mistaken legislation, 
 our wanton waste of wealth, close the entrance to 
 the temple of knowledge to the many, be its 
 portals ostensibly opened ever so wide. 
 
 What is primarily wanted is a sufficient supply 
 of material comforts and sufficient leisure for 
 mental improvement, not for a small minority, but 
 for the general body of mankind. At present, 
 these requirements are amply furnished to the few 
 rich, but fall far short of adequate supply to the 
 many poor. This deficiency, however, does not, we 
 contend, arise from the nature of things, but from 
 defects in our institutions. The wealth necessary 
 to provide for all the requirements of all human 
 beings would be easily obtainable, if the creation of 
 wealth had fair play, and its unnecessary waste
 
 268 WEALTH-CREATION. 
 
 were properly repressed. We have shown that 
 whatever is produced is distributed, that the more 
 there is produced, the more there must be for dis- 
 tribution, that the articles composing this increased 
 production would chiefly be articles of necessity, 
 such as food, clothing, &c., and that of these, were 
 industry and capital intelligently directed to the 
 right objects, there would be a superabundance for 
 all. And we have further shown that the causes 
 which either prevent production or beget waste, 
 are removable by the exercise of human volition, 
 for they owe their existence to the imperfection 
 of human institutions. The evil influences which 
 man has created, man can annul. 
 
 That multifarious objections will be started to 
 our views we are quite aware. We anticipate that, 
 among other things, it will be said: — i. That we are 
 appealing to the lowest springs of human action, 
 viz., a selfish greed for wealth. 2. That the in- 
 creased production of wealth which we hold out as 
 an universal panacea will do no good to the poor 
 man, but merely go to swell the stores of the rich. 
 
 3. That the poor and illiterate who form the bulk 
 o{ the population throughout the world are mostly 
 sunk too low in ignorance, coarseness, and bar- 
 barism, ever to be raised to culture and refinement. 
 
 4. That in our enumeration of the means by which 
 we propose to elevate the masses in the scale of 
 being, we have omitted the powerful leverage of 
 religious influences ; and, 5. That our scheme is 
 Utopian, and that the results we look for are 
 unattainable. Let us briefly pass under review 
 these several allegations.
 
 GREED FOR WEALTH. 269 
 
 I. Greed for wealth is only a contumeHr)Us 
 mode of defining the virtues of industry and 
 frugality, which definition is readily adopted by 
 those who are devoid of both. The assumption 
 that the creation of wealth is an ignoble task, and 
 that the creators of wealth are an inferior class, 
 is tantamount to asserting that the mere posses- 
 sion of wealth confers dignity, while its creation 
 implies degradation ; and that those who use 
 unearned wealth are, from that very fact, a supe- 
 rior class to those who earn it. Is there, then, so 
 much more merit in those who have inherited 
 wealth than in those who have collected and 
 bequeathed it .'* A lucky accident, the chance of 
 birth, transfers to the former the wealth which 
 the latter may have acquired by labour or by 
 talent. Is his luck to dignify the one who receives 
 the wealth, and his labour and talent to disgrace 
 the other who bestows it .-' True, that the wealthy 
 enjoy leisure and opportunities for mental culti- 
 vation, of which many (by no means all) avail 
 themselves, but that is a gratuitous privilege which 
 fortune has conferred, not a merit ascribablc to 
 personal superiority. 
 
 The foundation of the payments made to re- 
 munerate the governing and professional classes 
 is the very wealth so affectedly disparaged, which 
 is created by the very producers who are so 
 unaffectedly despised. Kings, statesmen, generals, 
 judges, bishops, &c., down to policemen and 
 beadles, are the paid servants of the " inferior 
 class " by whom wealth is created. The difference 
 between the many-palaccd Emperor of Germany
 
 2/0 WEALTH-CREATION. 
 
 and the shirtless King of the Ashantees arises 
 mainly from the difference in the wealth-creating 
 powers of their respective subjects. To condense 
 it briefly, which class best deserves our admiration 
 and sympathy — those who enjoy wealth without 
 creating it, or those who create wealtli without 
 enjoying it ? Is it for the former to tax the latter 
 with being actuated by " greed for wealth " .'' 
 
 It is in another form, however, that the con- 
 tention displays most plausibility. Wealth, once 
 acquired, is allowed to be highly respectable. It 
 is the act of earning it which, according to some, 
 degrades the mind, lowers the dignity, and vitiates 
 the taste of the wealth-getter. " How," say they, 
 " can that man who devotes his energies to buying 
 cheap and selling dear, to saving some trifle in 
 the production of a commodity, to haggling with 
 a workman about wages, and other trumpery 
 matters, be considered the equal of another whose 
 mind is occupied with lofty political or philoso- 
 phical speculations, or with the aesthetic contem- 
 plation of works of art, or with the inspirations of 
 divine poetry, &c. .'" We humbly reply that, 
 {a) These highly-cultured persons would never 
 have been in a position to indulge their lofty flights 
 if somebody had not endowed them with wealth 
 ready-made to save them from the necessity of 
 earning their dally bread, {d) The very object of 
 the present work is to show how it may be rendered 
 practicable for the same man for some hours of the 
 day to take his fair share in the work of wealth- 
 creation, and for some hours of the same day 
 apply himself to that mental culture which we
 
 WHOM ABUNDANCE WOULD BENEFIT. 2/1 
 
 deem quite compatible with the performance of a 
 man's duty as a bread-winner. There are innu- 
 merable instances of the co-existence in the same 
 man of useful hand-labour and valuable brain- 
 labour. Indeed, the one forms a salutary balance 
 to the other. It is certainly unwholesome, and 
 we believe it to be quite unnatural, that man's 
 efforts should be undeviatingly directed into one 
 groove. {c) All honest and useful labour is of 
 equal dignity. Indeed, the more useful it is the 
 more estimable. Sowing an acre of ground with 
 wheat is a more substantial contribution to human 
 happiness than writing a mediocre poem, and it 
 assuredly evinces more strength, both of mind and 
 of body, to toil for hours, day after day, at some 
 useful but laborious task than to recline on a soft 
 couch or a sunny bank to dream of Arcadia and 
 its theatrical shepherdesses. We cannot admit 
 that the latter is the more dignified performance 
 of the two. 
 
 2. That even if wealth were abundantly pro- 
 duced and not uselessly wasted, its increased 
 volume would, on distribution, do little or no good 
 to the poor man, is a paradox of easy refutation. 
 The increase of production and the cessation of 
 waste must result in the supply of more food, more 
 raiment, and more articles of necessity for the use 
 of every class of the community, even to the very 
 lowest. It is not articles of luxury for the rich 
 that would be multiplied by the cessation of all 
 impediments, and the adoption of all aids, to the 
 creation of wealth. If you run your eye down the 
 list of the chief articles that arc either imported or
 
 272 WEALTH-CREATION. 
 
 exported, you will find nearly all of them to be 
 such as minister to the wants of the millions, and of 
 which the consumption is universal. These would 
 be the commodities which would be so largely 
 multiplied by promoting wealth-creation. For 
 instance, it would be almost exclusively on such 
 articles that the millions of able-bodied men, whose 
 labour would be liberated and rendered available 
 by the cessation of the European war-system, 
 would employ their productive powers. The more 
 abundant creation of wealth necessarily means the 
 more abundant production of all such articles of 
 universal consumption. 
 
 Now let us see what would become of this large 
 increase in the supply of the necessities and com- 
 forts of life. Once brought into existence, they 
 must, as we have shown at p. 3, be distributed. 
 And among whom ? It is clear that it must be 
 among the population at large; that is, among the 
 labour-selling and poorer classes. It cannot be 
 among the opulent alone. The increased stock 
 that has to be distributed consists chiefly of food, 
 raiment, and other necessaries. How can the 
 distribution possibly be confined to the wealthy.? 
 They cannot eat all the extra food raised, or wea*' 
 all the extra clothing produced. In fact, of neither 
 class of commodities can they consume more 
 than they formerly did, for they had an ample 
 sufficiency before. What, then, becomes of the 
 surplus stock ? If this extra food, raiment, and 
 necessaries be distributed at all (and how they can 
 fail being distributed we do not see), they must go 
 to satisfy hunger that before went unsatisfied, to
 
 PLENTY BENEFITS THE POOR. 2/3 
 
 substitute good clothing for scanty rags, to provide 
 the labour-seller with the necessaries of life without 
 the same strain on him as before, and, generally, to 
 eliminate poverty with all its attendant evils. 
 
 This view of the subject seems to have escaped 
 the attention which it deserves. It has been / 
 assumed far too lightly that it is the rich who \ 
 chiefly benefit by the increase of the world's wealth. ' 
 The contrary is nearer the truth. Abundance ' 
 blesses both rich and poor, but the blessing to the 
 rich forms a slight percentage over their previous 
 resources, while the blessing to the poor forms an 
 enormous percentage over their former small dole, 
 and perhaps doubles or trebles their previous 
 enjoyments. It is in times of dearness and 
 scarcity that the position of the rich man becomes 
 peculiarly invidious, and stands out in irritating 
 contrast to that of the ill-paid toiler. In such 
 times there is barely enough for all, and of course 
 the pinch falls on the poor. To the rich such 
 insufficiency means the curtailment of a few 
 luxuries, to the poor it means the curtailment of 
 the necessaries of life. 
 
 In times of abundance and cheapness it is quite 
 different. The increased supply of the necessaries 
 of life scarcely touches the rich, who already had 
 as much of them as they could consume, and 
 therefore it is on the poor that the blessings of 
 comparative plenty fall. How could the rich man 
 prevent the distribution among the rest of mankind 
 of the extra supply of good things which perfected 
 wealth-creation without waste would provide for 
 the purposes of consumption ^ Let us consider. 
 S
 
 274 WEALTH-CREATION. 
 
 To a large extent, that wrong is done, now, by 
 means of the protective system, which interdicts 
 the free interchange of the commodities produced 
 in one country with those produced in another ; 
 but we are at present supposing " perfected wealth- 
 creation," which implies the abolition of the 
 protective system. How, then, under " perfected 
 wealth-creation " could the rich man keep back the 
 articles of necessity, which he cannot himself con- 
 sume, from being consumed by the poor ? What 
 he might do if he were obstinately determined to 
 deprive the poor of that benefit, would be to buy some 
 cargoes of erain or a few thousand bales of cotton 
 and woollen fabrics, and burn them. Or he might 
 use every effort to get the protective system re- 
 enacted. We see no other way in which he could 
 effect his purpose. 
 
 It may be said, " No ! the rich man will not 
 adopt those courses. He will spend his share of 
 the increased wealth in keeping more servants and 
 maintaining a more expensive establishment, in 
 building palatial mansions, and acquiring more 
 artistic furniture and works of art." Readily 
 granted ; but all this, far from interfering with 
 the distribution among the labour-sellers of the 
 increased wealth in question, merely explains the 
 very processes through which that distribution would 
 be effected. This increased expenditure of the rich 
 goes to the increased employment of labour and 
 to the payment of wages ; and the greater the 
 demand for labour the higher will be its remune- 
 ration. It is through this increased expenditure 
 that the sellers of labour, whether it be labour of
 
 WEALTH IS USED TO BUY LABOUR. 2/ = 
 
 the brain or of the hand, get their share of the 
 additional wealth that has been created. In short, 
 the whole of that increment in the world's wealth 
 which will result from " perfected wealth-creation 
 without waste," will be distributed, and that dis- 
 tribution will be effected by its exchange with the 
 labour of those who have labour to sell. The 
 more of it there will be to distribute in proportion 
 to the quantity of labour in the market, the better 
 for the labour-sellers, for the higher will be the 
 rate of their remuneration. 
 
 If, however, the rich, instead of expending 
 their increased wealth on fresh luxuries, should 
 prefer investing it in reproductive enterprises, 
 so much the better for the labour-sellers. Not 
 only he gets, as in the other case, an increased 
 demand, and therefore an increased price, for his 
 labour, but the wealth which his labour has helped 
 to produce is not consumed once for all, as in the 
 former instance, but becomes reproductive and is 
 renewed again and again. Thus fresh additions 
 are made to that capital out of which the wages 
 of labour are paid. Clearly then, labour-sellers 
 have a special interest in the amount of production 
 being as large as possible, since that production 
 must be distributed, and in that distribution they 
 largely share. 
 
 S 2
 
 2/6 
 
 CHAPTER XXIII. 
 
 Raising the Poor to a Condition of Ease and Culture — Are the 
 Results we Aim at Chimerical ? 
 
 3. That the task of raising the poorer classes 
 throughout the world to a condition of ease and 
 culture is a hopeless one, we strenuously deny. 
 That it may be a difficult one — a tedious one — that 
 it can only be achieved slowly, gradually, partially, 
 and with more or less of completeness — yes. But 
 that it is hopeless none will believe who will 
 take the trouble to trace the course of the future 
 by the bearings of the past, and who have faith 
 that progress will lead us somewhere, instead of 
 nowhere. To state it broadly, the dead wall that 
 stands between the rude peasant and the finished 
 gentleman is poverty with its disabilities. Remove 
 but that, and there will potentially reside in the 
 one all the elements and capabilities of culture 
 possessed by the other. Nature distributes her 
 favours of congenital strength, symmetry and 
 beauty, both of body and mind, on quite different 
 lines from those on which society is distributed into 
 classes, and the average infant of the poor is not 
 inferior to the average infant of the rich of the 
 same race. 
 
 What the respective destinies of these infants 
 may be in regard to future happiness, education and 
 sufficiency of m.eans will doubtless decide. Not that 
 the education need be more than sound for the poor 
 child, while it may be brilliant for the rich ; or that 
 the sufficiency of means need be more than a nega-
 
 DIFFUSION OF EASE AND CULTURE. l^J 
 
 tion of poverty for the former, while it is affluence 
 for the latter. The man who has enough is, in 
 essentials, as well off as the man who has more 
 than enough. Shakespeare is still Shakespeare 
 whether he be read from a cheap copy or from a 
 gorgeously bound edition. Life is rendered only a 
 little more enjoyable by great wealth, while it is 
 made barely endurable by excessive poverty. Of 
 the two extremes of superfluity and destitution, the 
 latter far more depresses man than the former 
 raises him. To eliminate the latter is therefore a 
 far more important object than to promote the 
 former. A household, earning a sufficiency for 
 physical comfort and for mental improvement, is 
 placed under conditions highly favourable to the 
 attainment of the utmost amount of human 
 felicity. 
 
 It has been alleged that a rise in the rate of 
 wages generally leads the recipients either to 
 increased intemperance or to increased idleness. 
 This is only true in exceptional cases ; for instance, 
 when the rise has been great and sudden, not 
 gradual and enduring, or when it has occurred 
 among the poorest and most ignorant of the labour- 
 sellers ; and even then only for a time, until the 
 excitement and novelty had worn off. The general 
 and permanent effect of steadily high wages has 
 been in every way most salutaiy. Emancipation 
 from the miserable shifts and temptations of hope- 
 less and abject poverty generates in the man a 
 feeling of self-respect, whence there spring in due 
 time, the habit of self-command, the wish to 
 advance in the social scale, and, as a consequence,
 
 278 WEALTH-CREATION. 
 
 the desire for mental improvement. As a rule, it is 
 the higher-paid artisans who swell the amount 
 annually invested in savings-banks and thus 
 become capitalists ; they are the men who frequent 
 reading-rooms and lectures, and whom books and 
 newspapers are educating to the proper exercise of 
 the voting power. Compare the badly-paid English 
 working man of two generations ago with the 
 better-paid working man of the present day, and 
 we shall find that in education, manners, temper- 
 ance, and thrift, the latter is immeasurably superior. 
 
 Why should not the same process be continued 
 with the same effect .' The vast and compact mass 
 of poverty and ignorance existing throughout the 
 world may, at first sight, seem too huge and dense 
 to be broken up by the advance of civilisation and 
 progress, but it must be remembered that every 
 individual who may be rescued and detached from 
 it forms a step towards its disintegration. There 
 is so much less left to be done, and as our attacks 
 make larger breaches, so will the resistance to 
 them become feebler. 
 
 One of the mainsprings to human effort is emu- 
 lation — the desire to excel. Wherever it is not 
 either latent or obliterated, it exerts a mighty in- 
 fluence over the intensity of man's efforts, whether 
 directed to the highest or the lowest objects. It is 
 a force which exists for good or for evil, according 
 to the purpose for which it is used. So powerful a 
 lever should carefully be pressed into the service of 
 the right and the true. "Onwards and upwards" 
 is the motto of the poet who spiritualises life ; of 
 the painter who idealises nature; of the musician
 
 POTENCY OF EMULATION. 279 
 
 who fashions sounds into lovely shapes and mean- 
 ings ; and of the orator who brands his words into 
 the minds of his hearers. Each strives to do his 
 best and his uttermost. And it is a similar craving 
 for success which gives life and animation to the 
 very lowest forms of competition. It inspires the 
 jockeys, the pugilists, the athletes, down to the 
 drunken miner who trains his bull-pup " to fight and 
 to conquer" other dogs. All these, equally with 
 the poet and orator, strain every nerve to triumph 
 in their respective ways. 
 
 " How different the aims ! " will you say ? Very 
 true, but you must nevertheless recognise the force 
 and energ}^ with which, in each case, the main- 
 spring, emulation, manifests its influence. As it 
 exists in all human hearts, so our business should 
 be to turn it to the best account and give it the 
 right tendencies. The diversity of aims is the out- 
 come of the diversity of education and surround- 
 ings. These man's action can shape and modify, 
 and therefore it is in his power to give a proper 
 direction to those energies which, in some direction 
 or the other, will ever result from the impetus of 
 emulation. 
 
 4. That in our enumeration of the means by 
 which the masses may be raised in the scale of 
 being we have omitted the powerful leverage of 
 religious influence we admit, and we justify the 
 omission. In a mere economic work like this, such 
 a consideration would be out of place. It is v/ith 
 man as a human being, and not with man as a 
 spiritual being, that we have here to do. Our task 
 is to work out man's material — and throuszh it his
 
 280 WEALTH-CREATION. 
 
 mental and moral — well-being, by means of the 
 natural and mundane elements at our disposal. 
 Moreover, our subject is cosmopolitan ; we are 
 addressing men, not of one, but of all religions. 
 On which form of belief could our appeal to the 
 religious element in man be grounded, without its 
 being distasteful or, at least, unacceptable to the 
 j rest ? It is on the undisputable data which human 
 experience furnishes, and not on the disputed data 
 which theology puts forward, that economic science 
 must rely for its progress. The modes of action 
 which have been urged, have no special connection 
 with, nor do they offer the smallest opposition to, 
 any of the four or five great divisions into which 
 the religious belief of the world has grouped itself 
 
 5. That our scheme is Utopian, and that the 
 results at which we aim are chimerical, are objec- 
 tions to which we have already incidentally adverted. 
 But we must be allowed a few more words on 
 the subject, since we anticipate that this form of 
 argument will again and again be addressed to us. 
 " Utopian and chimerical ! " say you .'' Well ! we 
 accept the omen. Those are the very words which 
 have invariably been applied to large schemes on 
 the eve of their practical accomplishment. Those 
 were the very words used by the learned Dr. 
 Lardner when he pooh-poohed the idea of a steam- 
 vessel ever crossing the Atlantic ; the very words 
 used by consummate European politicians when 
 apprised of the intention of General Washington, 
 Mr. B. Franklin, and a few other private individuals, 
 to organise the British colonists of North America 
 into an independent federal republic ; the very words
 
 TRUTH AND ERROR. 28 1 
 
 used by the experienced Post Office functionaries 
 when consulted on Rowland Hill's scheme of 
 penny postage ; the very words used by eminent 
 English engineers and statesmen in reference to 
 the Suez Canal, projected by that energetic per- 
 former of impossibilities, Ferdinand de Lesseps ; in 
 short, the very words which always foreshadow the 
 advent of some important practical improvement, 
 which they are intended to denounce and deride, 
 but which they rarely succeed even in delaying. 
 They really convey no argument, but are the mere 
 ejaculations of startled routine-lovers, and have 
 been so often misapplied, that they have lost all 
 force and significance. 
 
 Those who use the cry of which we have just 
 disposed, are actuated by a variety of divergent and 
 even conflicting fallacies. These we may briefly 
 summarise as follows : — Ignorance of the truth, 
 whence belief in the error ; indifference to the truth, 
 whence tolerance of the error ; selfish interest in 
 the error, whence aversion to the truth ; disbelief 
 as to any remedy, whence meek acceptance of the 
 evil ; fear of future disturbance, whence submission 
 to present wrong ; unreasoning dread of all change, 
 whence unreasonable antagonism to all improve- 
 ment. 
 
 On the whole, all these obstructions to the right 
 current of thought resolve themselves into a de- 
 sponding view of the future of the human race. 
 They amount to this, that whatever has hitherto 
 been the rule must ever continue to be the rule. 
 History, so runs their argument, tells us that men 
 have always been at overt, or co\ert, war with each
 
 282 WEALTH-CREATION. 
 
 other, therefore war is natural to man ; that every 
 country has always been adverse to buying from 
 other countries (though willing enough to sell to 
 them, as if one were possible without the other), 
 therefore commercial isolation is natural to man ; 
 that among all nations the great bulk of the popu- 
 lation has always been steeped in poverty and 
 ignorance, therefore poverty and ignorance are 
 natural to the bulk of mankind, and so on. They 
 then proceed to argue that as the evils referred to are 
 within the very conditions of man's nature, and as 
 it is impossible to change man's nature, it is impos- 
 sible for men to exist without wars, without hostile 
 tariffs, without poverty, and without ignorance. 
 
 All this would be very discouraging, were it 
 not, fortunately, quite illogical. It does not at all 
 follow because no remedy has hitherto been found 
 for certain evils, that those evils are irremediable. 
 Scientific discoveries, each of which supplied some 
 deficiency, or remedied some evil, till then deemed 
 inseparable from human weakness, have been, since 
 the thirteenth century, strewed along the path of 
 Time as thickly as stars to our vision along the milky 
 way. Let us take one of the earliest, and one of the 
 latest instances. In the olden time, it was very 
 inconvenient to steer vessels at night by the stars, 
 often obscured by cloud or fog ; but it was deemed 
 irremediable, since it was the result of nature's 
 laws. Nevertheless, the remedy came in the shape 
 of the mariner's compass. Till quite recently, a 
 man could not converse with a friend a few miles 
 off without personal access to him — an incon- 
 venience which was deemed irremediable, since it
 
 WHITHER IS CIVILISATION LEADING US? 283 
 
 was the result of nature's laws. Nevertheless, a 
 remedy came in the shape of the telephone. Of 
 intermediate instances, the list is innumerable. 
 Who then dare come forward and assert that all 
 those evils are irremediable which have not yet 
 been remedied .'* Or, worse still, to pronounce it 
 chimerical even to seek to remedy those evils, 
 because they are, from their very nature, irreme- 
 diable. It is moral cowardice, as well as bad logic, 
 to believe so readily in the invincibility of evil. 
 
 If the evils which at present attend our social 
 condition be so inherent to it as to be inseparable 
 from it, whither are our boasted civilisation and our 
 restless advance in physical science bearing us ? 
 Is their result to be merely to deepen the grooves 
 in which society at present runs without altering 
 their direction ? Will their effect be only to make 
 wars more destructive, to render national jealousies 
 more bitter, and to heighten the painful contrasts 
 which already exist between the splendour of 
 wealth and the squalor of poverty .'' If that be all 
 that civilisation and science are competent to effect 
 for us, then well may we despair of the future of 
 humanity. If the evils of which we complain are so 
 ingrained in man's nature, and so beyond all cure, 
 that even to seek for a cure is Utopian, then why 
 strive further .'' Why worry ourselves with useless 
 efforts ? Let us sit down, fold our hands, and 
 meekly moralise over the evils which, as we are 
 told, we cannot prevent. 
 
 As for ourselves, we earnestly repudiate this 
 doctrine of despondency. We firmly believe that 
 civilisation and science have a far higher mission
 
 284 WEALTH-CREATION. 
 
 than is assigned to them by that doctrine. We 
 beUeve that their agency will largely promote the 
 creation of wealth, will equalise its distribution, and 
 will thus conduce to the physical and moral well- 
 being of a larger and larger circle of human beings, 
 ever increasing, till the great majority, if not the 
 totality, of mankind shall be embraced within it. 
 As the causes which retard this consummation are 
 gradually removed, there is no reason why it should 
 not finally become of universal application. A noble 
 task ! to which we believe civilisation and the 
 progress of science to be fully competent, and we 
 look to them trustfully for its completion. 
 
 It may be said that, granting the possibility of 
 accomplishing the ends which we have in view, the 
 means which we have suggested are not those best 
 adapted for the purpose. It may be so. We have 
 recommended those measures which, according to 
 our lights, have appeared to us the fittest. But if 
 other means, more conducive to the desired end, 
 be proposed, we shall hail them with delight and 
 eagerly adopt them in lieu of our own. All that 
 we contend for, and strenuously insist on, is that 
 the baneful causes to which we have referred, as 
 obstructing man's advance in material and moral 
 well-being, have not, as despondent sceptics main- 
 tain, their source in man's very nature, are not 
 inextricably interwoven into his destiny, but are 
 remediable and removable at man's will. 
 
 Let us, however, suppose that the full and corn- 
 plete attainment of all the objects which we have 
 in view be morally impossible, that is no argument 
 against using our best endeavours to move steadily
 
 ONE STEP FORWAkl) LEADS TO ANOTHER. 285 
 
 forward in the right direction, so as to attain as 
 many of those objects as possible, as soon as 
 possible, and as completely as possible. This is 
 not a case of all or nothing. Every single step we 
 take in the way of reform is accompanied by some 
 corresponding improvement in the condition of 
 humanity. We have never expected, or held out 
 the expectation, that the reforms which we have 
 advocated would or could be adopted all at once, 
 or everywhere at once. But we are quite sure that 
 as these reforms, or some of them, or instalments 
 of some of them, shall be in process of adoption, 
 the effect of such partial progress will be to facilitate 
 and hasten the adoption of the rest. Every single 
 impulse given to, every single obstacle removed 
 from, the creation of wealth ; every item of waste 
 that is avoided (\\'hether of the power to produce, 
 or of the wealth produced) ; every single human 
 being redeemed from ignorance and poverty ; each 
 of these is a step in advance, not only beneficial in 
 itself, but preparing the way for a further advance. 
 It is not a fair representation of our argument 
 to exclaim, " Here is a visionary who thinks that ir 
 we abolish war, establish free trade, educate the 
 common people, and adopt a few other similar 
 measures, we shall forthwith create an Elysium on 
 earth." Our pretensions are far more modest. We 
 simply look for a large alleviation of the present 
 amount of human suffering through processes which 
 will only be adopted slowly and after many strug- 
 gles. We may not be able to make earth an 
 Elysium, but we may prevent its being made a 
 hell. It is true that the wealth necessary to man's
 
 286 WEALTH-CREATION. 
 
 well-being will not grow spontaneously, and must 
 ever necessitate man's labour both of body and 
 mind. But for that very reason, it is deplorable 
 that war, which creates a large number of un- 
 productive consumers, Protection which creates a 
 far larger number of only half-productive producers, 
 and ignorance which keeps the bulk of mankind 
 toiling in a faint-hearted manner on unremunerative 
 work with semi-starvation as the result, should 
 enormously curtail and stunt the production, and 
 consequently the distribution of wealth. 
 j- As things now are, to take the world at large, 
 the human race do not produce probably one 
 hundredth part of what they might produce if 
 their labour were properly and intelligently applied. 
 Do away with the agencies that interfere with 
 abundant production, and a largely multiplied 
 amount of wealth will of necessity be created. 
 What will be done with this surplus production\'* 
 It must either be destroyed or consumed. If to be 
 consumed, it must be distributed, as the lesser 
 amount now created is distributed ; but with this 
 essential difference, that in the latter case many 
 people run short, whereas in the former case there 
 would, from the abundance of production, be 
 plenty for all. This result may not be Elysium, 
 but none will deny that it would be a vast 
 improvement on the prevailing extremes of 
 plethoric opulence and grim want.
 
 28; 
 
 CHAPTER XXIV. 
 
 Expansibility of Man's Productive Power — Tlie Interests Advocated 
 are not National, but Universal — Conclusion. 
 
 In presenting wealth-creation as the great material 
 desideratum necessary to produce a great moral 
 improvement, we have only followed the natural 
 order in which the moral is developed in man out 
 of the physical. The corpus satuini is, as a rule, 
 the best guarantee for the mens sana. An ill- 
 balanced or unhealthy brain can hardly secrete a 
 high order of thought. Even the soundest and 
 most capacious brain becomes useless for good, 
 and is often deflected to evil, under the influence, 
 ere it is fully matured, of abject poverty or evil 
 surroundings. There can be no mental develop- 
 ment without a certain amount of ease, education, 
 and leisure, which abundant wealth-creation alone 
 can confer on the many. Of those men who can 
 boast of a classical education, of cultured minds, of 
 social, literary, or political success, how very few 
 there are who do not owe their advantages to 
 inherited competence .-' Surely it is not for these 
 to disparage the laborious pursuit and hard-earned 
 acquisition of that wealth which has bestowed on 
 them such privileges. 
 
 But even among professed political economists 
 we occasionally find men to whom " material 
 interests" are objects of scorn — with whom gold is 
 dross, and money-making contamination. For 
 instance, Louis Rcybaud, in his " Economistes 
 Modernes," talking of the advocates for peace,
 
 288 WEALTH-CREATION. 
 
 says, " lis fouillent dans les coeurs pour y r^veiller 
 ce qu'ils renferment d'instincts et de sentimens 
 inferieurs. II y a un oubli du sens moral, contre 
 lequel on ne saurait protester par des paroles trop 
 severes. Ces appels constants a I'interet, a I'interet 
 seul, a un interet etroit, egoiste, exclusif, sont du 
 plus detestable exemple, et s'ils etaient ecoutes, 
 ils aboutiraient infalliblement a I'abaissement des 
 caracteres, et a la decadence des institutions." 
 Frothy declamation, it is true ! But it represents 
 the notions of a certain super-seraphic school 
 which proclaims that every-day attention to 
 material interests is utterly incompatible with the 
 development of what they rather vaguely term 
 " the highest instincts of man's nature." Are 
 these, then, to be the exclusive apanage of the 
 rich .-• 
 
 The expansion of man's mental faculties is 
 
 intimately connected with the expansion and right 
 
 direction of man's productive powers. The rapid 
 
 and abundant creation of wealth would effect two 
 
 I objects. I. Its abundance would provide for the 
 
 } material wants of all ; 2. Its rapidity would leave 
 
 '' leisure to all for mental cultivation. For, even 
 
 j under the present imperfect system which produces 
 
 1 so very much less than might be produced, and 
 
 wastes so very much more than need be wasted, 
 
 enough wealth is produced to afford to the masses 
 
 a scanty living in return for incessant toil. But 
 
 under an improved system, which would promote 
 
 the creation of wealth to its uttermost extent, by 
 
 abolishing both the checks to it and the waste of 
 
 it, not only would the wealth thus supplied for dis-
 
 PROBABLE INCREASE OF PRODUCTION. 289 
 
 tribution be almost indefinitely increased, but an 
 ample sufficiency of it might be produced with the 
 expenditure of one-half the human labour by which 
 nearly the entire waking life of the workers is now 
 absorbed. Men's ultimate productive capabilities, 
 when developed to their utmost in all people in 
 all countries, would, irrespectively of the impulse 
 which they might receive from fresh scientific dis- 
 coveries and inventions, result in an amount of 
 wealth (that is, "of such objects of human desire 
 as are obtained or produced by human exertions ") 
 exceeding, to an incalculable degree, perhaps, in 
 many instances, a hundred-fold or more, the 
 amount now produced. Indeed, the only limits 
 to its expansion would be the area of available land 
 throughout the globe, and those unknown latent 
 capabilities of the land which science might yet 
 discover and develop. A large margin before pro- 
 gress received a check ! 
 
 But without discussing ultimate results, let us 
 take some intermediate and comparatively not 
 distant stage of improvement, when the present 
 yield of man's exertions should be multiplied only 
 fourfold. If, in such a state of things, the number 
 of hours spent each day in the work of production 
 were reduced by one-half, it is clear that even with 
 this deduction of the labour applied, twice the 
 quantity of wealth now produced would be left for 
 distribution among the same number of people. 
 Thus, by means of active wealth-creation, lei- 
 sure for mental cultivation might be easily ob- 
 tained for the many, precisely as, at present, 
 by means of wealth, whether of direct creation 
 
 r
 
 290 WEALTH-CREATION. 
 
 or acquired by inheritance, leisure for mental culti- 
 vation is the privilege of a few. 
 
 No doubt such a desirable state of things offers 
 so vast a contrast to the prevailing condition of 
 mankind, that it may at first sight appear to some 
 too good to be within man's power of attainment. 
 This view, however, chiefly arises when the two 
 extremes of present misery and possible happiness 
 are both at once present to the mind, without re- 
 ference to the many slow and gradual steps which 
 form the connecting links between the two. The 
 reforms requisite to lead mankind from the one 
 stage to the other are, though not innumerable, 
 very numerous, and of difficult, though by no 
 means of impossible, accomplishment. When the 
 effects of these contributary steps are severally 
 as well as collectively considered, the wonder will 
 cease. So, to a person who might be unacquainted 
 with the means resorted to, it would appear 
 incredible that the ideas of a man in London 
 should be almost instantaneously conveyed to 
 another man in New York, whereas the wonder 
 would cease were he made to understand the 
 intricate appliayces, and the great amount of 
 science and skill, of capital and labour, ex- 
 pended on the construction of submarine tele- 
 graphic cables. The supposed miracle would then 
 shrink into a commonplace fact. 
 
 We have all along granted that the complete 
 realisation of the contemplated results may be 
 distant, but that is only an additional reason why 
 we should endeavour, by mooting the question, by 
 dragging it into sight, by subjecting it to discus-
 
 NO OROANIC CHANGES INVOLVED. 29 1 
 
 sion, and by urging its consideration, to abridge 
 the interval that separates us from those results. 
 And, after all, that same space of time which "cuts 
 a monstrous cantle out " of the life of a human 
 being, is but a moment in the history of the world. 
 The succession of events, as well as the events 
 themselves, bear quite a different relation to living 
 men than they do to the race of man. In the 
 mighty current and rush of human progress each 
 of us individually is a mere effaceable and replace- 
 able unit, and whoever may live or whoever may 
 die, the aggregate stream of life will pursue its 
 course and achieve its destiny with no very sensible 
 change of direction or diminution of impetus. 
 
 We may venture further to remark that the 
 reforms which we have submitted for consideration 
 do not involve any organic changes in the frame- 
 work of our social system, and that they are 
 susceptible of partial and gradual adoption. They 
 require no abrupt transition from one form of 
 government to another. They are such as might 
 be inaugurated by enlightened and beneficent rulers, 
 under whatever denominations they may be known. 
 It is by their works that political institutions must 
 finally be judged, and not by their names. Some 
 of the most arbitrary governments in the world 
 have called themselves republics. It is, however, 
 undeniable that the larger the infusion of the 
 democratic element in the world's political institu- 
 tions, the more rapid will be the advance and the 
 more thorough the reforms. The welfare of the 
 masses is the great business of the masses, and 
 they must take their business in hand themselves 
 T 2
 
 292 WEALTH-CREATION. 
 
 if they want it done quickly and effectually. If 
 they will not bestir themselves in their own cause, 
 they are accomplices in their own abasement. For 
 instance, it is on the masses that the evil effects of 
 protection chiefly fall, while the masses mostly re- 
 main inert, so that free trade for the present remains 
 practically a middle-class contention, whereas it is 
 essentially and vitally a poor man's question. 
 
 But that the masses should " take their own 
 business in hand " is very far from implying re- 
 course to physical force. The sword is but a 
 clumsy and cruel mode of solving social problems. 
 It may cut, but it does not untie, the knot. By far 
 the more effectual weapon is moral force. Let the 
 units of which the masses are composed but think, 
 speak, write, and vote according to their lights, 
 and the result (for truth is the certain outcome 
 of free discussion) will be such a power of public 
 opinion as would soon become irresistible. The 
 changes which it would enforce might not be sudden 
 or sweeping, but even if only effected gradually 
 and by instalments, they would be all the more 
 secure, since, being founded on reflection and 
 conviction, they would prove the more substan- 
 tial and enduring. A bit-by-bit reform may seem 
 a tedious process, but it is not of necessity so slow 
 as, at first sight, it may appear. For, i. There is 
 less resistance to its inception, and it therefore 
 commences its work at an earlier date than would 
 a complete measure of reform which provoked 
 violent opposition. 2, One step in reform leads to 
 another, slowly perhaps at first, but afterwards 
 with accelerated speed, till, at the later stages. 
 
 \
 
 NO CLASHING OF CLASS INTERESTS. 293 
 
 the progress towards completeness is rapid and irre- 
 sistible. 3. The improvements thus gradually 
 effected are more durable and less reversible than 
 those resulting from sudden or violent effort, which 
 are generally followed by powerful and dangerous 
 reaction. 
 
 It will be observed that in these pages we have 
 set the interests of no one class in opposition to 
 the interests of any other. On the contrary, it has 
 been shown how those interests are all interwoven 
 and dovetailed into each other. We have endea- 
 voured to point out how the poor could be made 
 less poor without making the rich less rich. By 
 promoting wealth-creation to its utmost extent, 
 largely increased wealth is produced for distribu- 
 tion among all, rich and poor. It is by directing 
 labour and capital to their maximum productive 
 results, and by reducing to a minimum the waste 
 of those results, that we may look for ministering 
 copiously to the wants of the poorer while in- 
 creasing the enjoyments of the wealthier. Thus 
 it is not by taking from one person to give to 
 another that the removal of poverty is to be 
 effected, but by expanding the general stock of 
 wealth to that amplitude as shall fully suffice for 
 the requirements of all. 
 
 We beg to add that this book is not intended 
 merely as an English work, addressed to the 
 English people, and treating of English interests. 
 It is written in the English language, because it is 
 the language in which we can most clearly and 
 most correctly express our ideas, but the topics of 
 which it treats, the evils and abuses which it ex-
 
 294 WEALTH-CREATION. 
 
 poses, and the reforms which it recommends, are 
 matters of universal and cosmopolitan interest. It 
 is the entire brotherhood of man, not merely our 
 English fellow-countrymen, that we have had in 
 view when writing these pages. Whatever truths 
 they may contain are founded on general principles, 
 and are of universal application. To say that this 
 work is addressed to all men in all countries, is 
 tantamount to saying that it is specially addressed 
 to the labour-sellers of the world, since they form 
 the great bulk of " all men in all countries." In 
 the question of which we treat is involved the 
 welfare, not of the people of any particular country, 
 but of the great bulk of the human race every- 
 where, without distinction of nationality, language, 
 or religion. To them it is a question of happiness 
 or misery — almost of life and death. For if the 
 prevailing extremes of poverty and wealth be the 
 result of an inexorable law — if they form a con- 
 dition sine qua non of social organisation — then 
 countless millions must yield to despair ; they must 
 continue, by incessant toil, to eke out a precarious 
 and scanty subsistence ; their higher instincts must 
 be repressed ; and that civilisation of which the only 
 possible outcome is to deal out enjoyments to a 
 small minority, and privations to a large majority, 
 must be pronounced a failure. 
 
 It may be said that there is nothing new in our 
 teachings, for everybody was aware that war was 
 an evil, and that abundance of wealth was a good. 
 Be it so ; the point is not worth discussing. If the 
 same argument in the same shape has been pre- 
 viously set forth by others, by all means let them
 
 OUR AIMS ENTITLED TO SYMPATHY. 295 
 
 have the merit. We do not care the flap of a fly's 
 wing for the personal question. It is the cause 
 itself, and that only, which we have at heart. It is 
 important that it should make progress — through 
 whose efforts, it matters little. If, in its advocacy, 
 we have been wanting in eloquence, we may at 
 least lay claim to the fervour of earnestness ; and 
 the words of an earnest man often have the power 
 of awakening an echo in the breasts of other men. 
 
 To the charge of occasional repetition and reite- 
 ration, we plead guilty. When we have deemed 
 it necessary in order to enforce a truth or to 
 combat an error, we have not scrupled again to 
 use a weapon which had done service before. The 
 same truth may suffice to rebut several forms of 
 error, and it has therefore to be reproduced when- 
 ever those various forms of error present them- 
 selves. 
 
 Even from those who may differ from us as to 
 the means which we have herein suggested, we 
 claim sympathy with the objects which we have 
 had in view. The feebleness of our performance 
 may perhaps be pardoned in consideration of the 
 noble ends at which we have aimed. A man can 
 only put into his work as much as there is in him. 
 If what we have put into this work be pronounced 
 incomplete, inadequate, or unworthy of the great 
 task undertaken, we are content to retire with the 
 poor merit of good intentions, and to leave to abler 
 men and more vigorous pens the substantial merit 
 of effectively promoting the cause. 
 
 Our task is finished. We now, humbly but 
 hopefully, submit to the world our views on one of
 
 296 WEALTH-CREATION. 
 
 the most important themes that can engage men's 
 attention. Humbly, because we are diffident of 
 our own powers of analysis and exposition — and 
 hopefully, because time and its developments are 
 in our favour. We have faith in the perfectibility 
 of the human race — not in the sense that it can 
 ever attain actual perfection, but in the sense of its 
 ever tending towards it ; just as the asymptotes of 
 the hyberbole are ever approaching to, without 
 ever actually reaching, absolute convergence. We 
 have faith in the thought-stirring effects of dis- 
 cussion and reflection, in the diffusion of know- 
 ledge, and in the active co-operation of those, few 
 or many, who may concur in our views. 
 
 Nor shall we be at all dismayed or disheartened 
 by opposition or criticism. On the contrary, not 
 only we fully expect, but we cheerfully look 
 forward to, them. For it is out of the conflicts of 
 discussion that truth finally emerges triumphant. 
 What we should chiefly regret and deprecate is 
 neglect and indifference on the part of the great 
 body of labour-sellers everywhere, in whose interest 
 these pages were specially written. It is their 
 battle that is being fought, and they ought not to 
 stand aloof. 
 
 Every argument which bears upon the subject, 
 whether it be favourable or adverse, deserves the 
 fullest consideration, for it is a more or less im- 
 portant factor in the elucidation of truth. But 
 there is one kind of influence that may be used, 
 against which wc must enter a decided protest. 
 We mean the unsupported authority of great 
 names. We may probably be told that such and
 
 CONCLUSION. 29; 
 
 such profound thinkers who are dead, or that other 
 profound thinkers who are aHve, have pronounced 
 our views to be untenable, our hopes to be 
 chimerical, and our efforts to be futile — and that 
 we are bound implicitly to bow to such authorities. 
 To this arbitrary verdict we utterly refuse to 
 submit. If the reasons by which those profound 
 thinkers were themselves swayed should be laid 
 before us, we will examine them, and they may, or 
 may not, sway us also. But a mere ipse dixit, 
 unsupported by corroborative arguments, has no 
 force whatever over reasoning minds. We wil- 
 lingly yield to the weight of evidence, but refuse to 
 be overborne by the weight of authority. We 
 must be convinced, not silenced. We claim to 
 retain our independence of thought, and cannot 
 submit passively to the influence of great names. 
 These have often and often led men astray. 
 Indeed, experience teaches us that great names 
 are frequently but splendid instances of human 
 fallibility ! 
 
 \^Fo7- Appendix, sec pa^e 299.
 
 299 
 
 APPENDIX. 
 
 THE COUNCIL OF THE UNITED STATES 
 OF EUROPE. 
 
 The subjoined sketch of the main provisions which might 
 form the constitution and define the powers of the Council 
 of the United States of Europe, is of necessity imperfect, 
 tentative, and open to numberless alterations and additions. 
 It is submitted only as a rough probationary plan, indicating 
 the chief lines on which such a scheme might be built. 
 Before being moulded into its final shape it would have 
 to be impressed and modified by many minds and many 
 interests, so as, in the end. to represent the average conclu- 
 sions of European statesmen. 
 
 CONSTITUTION AND POWERS OF THE COUNCIL OF 
 THE UNITED STATES OF EUROPE. 
 
 1. The Council of the United States of Europe is instituted in 
 accordance with the provisions and stipulations of a treaty entered 
 
 into on between the following Sovereign States 
 
 of Europe, viz., 
 
 2. The said Council shall be composed of the representatives 
 appointed by each of those European States which are, or which 
 may become, parties to the aforesaid treaty, on the basis of one 
 representative for every ten luillions of ihcir European population.
 
 300 WEALTH-CREATION. 
 
 Thus the numl^er of representatives in the Council which each 
 
 State has the right to appoint is : — 
 
 One for States having a population of more than i million up to 
 
 lo millions, 
 Two for States having a population of more than lo millions up to 
 
 20 millions, 
 Three for States having a population of more than 20 millions up to 
 
 30 millions, 
 and so on in the same proportion. Only the population that is 
 resident within the boundaries of Europe is to betaken into account. 
 (It is calculated that, as Europe is now constituted, the total number 
 of representatives forming the Council would be forty.) 
 
 3. No person under the age of 45 is admissible as a representa- 
 tive in the Council. 
 
 4. The chairmanship at each sitting of the Council devolves on 
 each member successively, according to the alphabetical rotation of 
 the members' names. 
 
 5. The Council has full power to examine into, collect evidence 
 upon, and finally to decide, all disputes and differences which may 
 exist, or arise, between two or more of the States that have become 
 parties to the treaty under which the Council is formed. But their 
 power does not extend to the settlement of disputes and differences 
 between any of the said States parties to the treaty, and other States 
 not parties thereunto. 
 
 6. Every decision of the Council, if carried by a majority of two 
 or more, is final; but a decision carried by a majority of only one 
 requires to be confirmed at another sitting of the Council to be held 
 within one week ; when, if again carried by a majority of either one 
 or more, it becomes final. 
 
 7. The Council has the power to determine and assign the inter- 
 pretation and true meaning and intent of the treaties subsisting 
 between the various States that have become parties to the treaty 
 under which the Council is formed ; which States shall be, through- 
 out these articles, designated as the " Combined States." 
 
 8. The Council has the power to appoint secretaries and sub- 
 committees, frame bye-laws, institute commissions of incjuiry, and 
 generally to adopt such measures as they may deem most conducive 
 to the performance of the duties and the exercise of the powers 
 entrusted to them. 
 
 9. The autonomy and self-government of each of the Com- 
 bined States remains inviolate, and the Council has no power to 
 mtcrfere in their internal arrangements or policy. It is their
 
 APPENDIX. 301 
 
 international relations alone that come within the cognisance of 
 the Council. 
 
 10. The members of the Council bind themselves implicitly to 
 submit to, and loyally to abide by, the decision of the majority of 
 votes. And the States represented by the minority pledge them- 
 selves to co-operate in carrying out such decision as thoroughly and 
 efficiently as though they formed part of the majority. 
 
 11. No decision of the Council shall have any force or validity 
 unless at least one-fourth of its members shall have been present at 
 the sitting wherein such decision was arrived at. 
 
 12. In the case of any decision of the Council being disobeyed 
 or disregarded, the Combined States agree and bind themselves to 
 unite in enforcing it by such means and in such manner as the 
 Council shall determine. 
 
 13. In case of there being an equality of votes on any question 
 submitted for the decision of the Council, the Chairman at that 
 sitting is to have the casting vote. 
 
 14. The representative, or representatives, appointed to the 
 Council by each State shall retain his, or their, functions and powers 
 for at least twelve months, unless in case of death. But at the ex- 
 piration of twelve months (or sooner in case of death), each State 
 may either appoint new, or re-appoint the old, member or members 
 to represent it at the Council. 
 
 15. The Council shall be deemed constituted, and its operations 
 shall commence, as soon as, and not before, the assent to the treaty 
 authorising its formation shall have been given by such a number of 
 European States as that their aggregate population shall amount to 
 at least four-sevenths of the total population of Europe. 
 
 16. No .State that has once become a party to the treaty under 
 which the Council is formed shall be entitled t)r allowed to withdraw- 
 therefrom without the consent of the majority of the Council. 
 
 17. Any European State, with tlie reipiisite population, that may 
 not have become a party to the treaty constituting the Council at 
 the time of its constitution, may, at any subsequent period, become 
 a party to it, and be represented in the Council, provided it gives 
 its assent and sanction to the decisions at which the Council may 
 meanwhile have arrived, or provided the majority of the Council 
 may agree to waive that condition. 
 
 18. If any European State that has become a party to the treaty 
 aforesaid should neglect or refuse to send representatives to the 
 Council, the decisions of the Council shall be as binding on that 
 State as though its representatives were, or had been, present.
 
 302 WEALTH-CREATION, 
 
 19. The Council shall meet not less than twice a year, and for 
 not less than ten days each term. The first meeting shall be held at 
 
 , and, after that, at such place as the Council may 
 
 appoint. But if the pressure of business or other circumstances 
 render it necessary, the meetings shall be as frequent and prolonged 
 as the Council shall deem fit. Special meetings may be convened 
 
 by members, and of such meetings fourteen days' notice must 
 
 be sent to every member of Council. 
 
 20. The expenses incidental to the meetings of the Council will 
 be defrayed by pro rata subventions from each of the combined 
 States, in proportion to the number of representatives which they 
 are entitled to send to the Council.
 
 INDEX 
 
 Abundance benefits the Poor, 271 
 
 Aggrandisement, the Chief Ob- 
 ject of War, 137. 
 
 Aids to Wealth-Creation, easy 
 of Adoption, 64. 
 
 Appropriation of Land, 257. 
 
 Arbitration as a Substitute for 
 War, 147. 
 
 , its Weak Point, 149. 
 
 Armies, Composition of Modern, 
 
 97- 
 continue Large m Tune of 
 
 Peace, 96. 
 
 of Former Times com- 
 paratively Small, 95. 
 
 Austria, Loss of Italy a Gain to, 
 140. 
 
 Balances due by a Nation not 
 paid in Specie, 170. 
 
 Barter, All Commerce is, 172. 
 
 , Direct or Indirect, 74. 
 
 Boundaries should be finally 
 fixed, 155. 
 
 Bounties, National Subventions 
 to Losing Trades, 236. 
 
 British Government, Expenses 
 of, in 1880, 79. 
 
 , Classification of its Ex- 
 penses, 80. 
 
 Buying is equivalent to selling, 
 177. 
 
 Capital an Efficient Aid to 
 Wealth-Creation, 36. 
 
 as a Factor of Wealth- 
 Creation, 12, 71. 
 
 , Definition of, 27. 
 
 diverted by War from 
 
 Productive Purposes, 105. 
 
 goes to Payment of La- 
 bour, 32. 
 
 is Unconsumed Produc- 
 tion, 63. 
 
 Capital lured into Dangerous En 
 
 terprises, 66. 
 only utilisable through 
 
 Labour, 31. 
 Cheapness of Production and of 
 
 Living the Result of Free 
 
 Trade, 211. 
 and Plenty benefit the 
 
 Poor, 273. 
 Civilisation Inaccessible to some 
 
 Races, 265. 
 , its Ends and Aims, 163, 
 
 222. 
 , Whitlier it is leading us, 
 
 283. 
 
 Civilised Societies divided into 
 Four Sections, 70. 
 
 Class Interests not opposed to 
 each other, 293. 
 
 Coal, its Use supposed super- 
 seded, 50. 
 
 Communication, Necessity for 
 Easy Means of, 45. 
 
 Communism would paralyse 
 production, 232. 
 
 Competition weakened by Mo- 
 nopolies and Protection, 
 
 234- 
 
 , its Abuses, 234. 
 
 , its Uses, 231. 
 
 Confederation of English-speak- 
 ing Peoples, 247. 
 
 of European States, 299. 
 
 of South American States, 
 
 248. 
 
 of States, Tendency to, 
 
 246. 
 
 Contrast between Present Misery 
 and Possible Happiness, 
 290. 
 
 Cosmopolitan, This Work not 
 English, but, 293. 
 
 Cost of European Armies tabu- 
 lated, 98.
 
 304 
 
 INDEX. 
 
 Cost of European General War, 
 III. 
 
 Council of the U.S. of Europe, 
 Form and Constitution Pro- 
 posed for, 299. 
 
 Culture diffused by abolishing 
 Poverty, 223. 
 
 unattainable without Com- 
 petent Means and Leisure, 
 270, 276, 287. 
 
 Defensive Wars are Sacred, 137. 
 
 Democracies, their Tendency to 
 Peace, 146, 151. 
 
 Democracy, Prevailing Ten- 
 dency to, 144. 
 
 Dependence on Foreigners is 
 Mutual Inter-dependence, 
 207. 
 
 Dignity of Honest Labour, 57. 
 
 Displacement of Labour, whence 
 arising, 39. 
 
 from Supposed Disuse of 
 
 Coal, 51. 
 
 Disputes between Capital and 
 Labour, 87. 
 
 , International, Resolvable 
 
 by the U.S. of Europe, 156, 
 299. _ 
 
 Distribution obstructed by Pro- 
 tection, 75. 
 
 of Necessaries not very un- 
 equal, 5, 271. 
 
 of Increased Production, 131 
 
 of Land-Supply, 257. 
 
 promoted by Cheap Con- 
 veyance, 43. 
 
 Distributors of Wealth, 73. 
 
 Diversification of Industries ad- 
 verse to Division of Labour, 
 201. 
 
 — — Greatest in Backward Coun- 
 tries, 203. 
 
 — — no Benefit, 199. 
 
 Division of Labour ignored and 
 scouted, 19. 
 
 — - — , its Benefits, 15. 
 
 promoted by Cheap and 
 
 Easy Inter-communication, 
 44. 
 
 Duties and Freight paid by Im- 
 porters, 191. 
 
 Education gives Dignity to 
 Labour, 57. 
 
 , its Connection with Wealth- 
 Creation, 56. 
 
 requires Leisure and Op- 
 portunities, 223. 
 
 Small part of, gained at 
 
 School, 5, 225. 
 
 uproots Ignorance and 
 
 Immorality, 223. 
 
 Emigration relieves Redundancy 
 of Labour, 244. 
 
 Emulation, its Stimulus to En- 
 ergy, 278. 
 
 England is accumulating Wealth 
 rapidly, 216. 
 
 , Prosperity of, a Grievance 
 
 to Protectionists, 214. 
 
 , the World's Indebtedness 
 
 to, 215. 
 
 , this Work addressed to 
 
 the World, not to England 
 only, 293. 
 
 Errors for the avoidance of 
 Mankind, 217. 
 
 Europe, a Final Map of, desira- 
 ble, 155. 
 
 Chief Seat of the War- 
 system, 161. 
 
 in a Perennial State of 
 
 War-organisation, 96. 
 
 European Armies, Table of their 
 Cost, 98. 
 
 Evil, Belief in its Invincibility,283 
 
 Evils unremedied, not irreme- 
 diable, 282. 
 
 Exports and Imports are cor- 
 relative, 23. 
 
 , Permanent Excess of, a 
 
 Sign of Indebtedness, 178. 
 
 Facilities of Inter-communica- 
 tion, 42. 
 
 Factors of Wealth, Land, Labour, 
 and Capital, 12, 71. 
 
 Families in Europe, all mulcted 
 by War, 130.
 
 INDEX. 
 
 301 
 
 Federation of European States, 
 
 150. 
 female Labour, Objections to, 
 
 removed, 230. 
 
 Utilisation of, 228. 
 
 Feuds suppressed by merging 
 
 Small into Large States, 154. 
 
 Foreign Possessions, their Cost 
 and Value, 10 1, 139. 
 
 Foreigners considered Inborn 
 Enemies, 165. 
 
 Free Commercial Intercourse, 
 21. 
 
 Free Imports cheapen Produc- 
 tion, 196. 
 
 Free Trade, Partial, a Special 
 ]:oon, 211. 
 
 .Universal, a General Boon, 
 
 210. 
 
 , why not universally 
 
 adopted, 212, 2i8. 
 
 Free - Traders in Protective 
 Countries, 213. 
 
 Frugality under-rated as a Vir- 
 tue, 61. 
 
 Fund-holders affected by Rise 
 or Fall in Prices, 126. 
 
 are Annuitants, 122. 
 
 Gluts of Commodities, 240. 
 
 of Labour, 243. 
 
 , none irom Soldiers be- 
 coming Labourers, 1 17. 
 
 , their Causes, 7, 241. 
 
 Gold Production, Effects of, on 
 National Debts, 124. 
 
 Government Expenditure Classi- 
 fied, 78. 
 
 P'unctionaries, 77. 
 
 Governments, How they assist 
 
 Wealth-Creation, 67. 
 
 How, impede it, 68. 
 
 Great Names, Protest against, 
 
 297. 
 Greed for Wealth, 269. 
 
 Hampshire made a Deer Forest, 
 
 262. 
 Hereditary Thraldom to Na- 1 
 
 tional Creditors, 123. | 
 
 U 
 
 Hero-worship deifies Success, 
 
 157- 
 Horrors of War, 1 14. 
 Horses used in War earn 
 
 Nothing, 106. 
 Hours of Labour, Reduction in, 
 
 69. 
 
 Ignorance and Immorality, 221. 
 
 Immorality better prevented 
 than repressed, 224. 
 
 Import Duties fall on Im- 
 porters, 185. 
 
 — , no Part paid by Foreign- 
 ers, 195. 
 
 Percentage of, to exclude 
 
 Foreign Goods, 24. 
 
 Three Kinds of, 192. 
 
 Importers pay both Small and 
 
 Large Duties, 193. 
 
 Importing more means export- 
 ing more, 183. 
 
 Imports and Exports correla- 
 tive, 23. 
 
 Permanent Excess of, a 
 
 Sign of Wealth, 177. 
 
 Impossibility a Vague Term, S3, 
 
 250. 
 Improvement assumed to be 
 
 impossible, 281. 
 Independence of Foreigners is 
 
 Isolation, 206. 
 Indigenes, Inaptitude of some, 
 
 for Civilisation, 266. 
 Indigenous Tribes, Injustice to, 
 
 255- 
 Industrial Establishments reared 
 
 on Subventions, 169. 
 
 Industry under-rated as a Virtue, 
 60. 
 
 Inequality of Wealth and of 
 Education, 222. 
 
 Insecurity of Person and Pro- 
 perty, 65. 
 
 Insolvency of Nations, 121. 
 
 Intemperance from Poverty and 
 Ignorance, 23S. 
 
 'I'emptations to, 239. 
 
 Interchanges without Specie- 
 displacement, 175.
 
 3o6 
 
 INDEX. 
 
 Intoxicants and Narcotics, Effects 
 of, 236. 
 
 Invention applies and utilises 
 Discoveries, 48. 
 
 Irish Land Act of 1881, 259. 
 
 Isolation, Complete, not At- 
 tained, 166. 
 
 Evils of Commercial, 160, 
 
 164, 217. 
 
 Jacoby, hisCommunistic Theory, 
 233- 
 
 Labour as a Factor of Wealth- 
 Creation, 12, 71. 
 
 Displacement of, by 
 
 Changes, 40. 
 
 soon re-absorbed, 53. 
 
 , its Dependence on Capital, 
 
 29. 
 
 Increased Wealth causes 
 
 Increased Demand for, 274. 
 
 not swamped by disband- 
 ing Soldiers, 1 16. 
 
 Saved by Easy Inter-com- 
 munication, 47. 
 
 Utilisation of Female, 228. 
 
 When Demand for, lan- 
 guishes, 54, 243. 
 
 Labour-saving Processes soon 
 increase the Demand for 
 Labour, 40, 54. 
 
 Lacedemonians, their Egotism, 
 
 251- 
 
 Land, Advantages of Proprietor- 
 ship in, 256. 
 
 as a Factor of Wealth- 
 Creation, 12, 71. 
 
 , its Continuous Rise in 
 
 Value, 253. 
 
 , its Peculiar Conditions, 252 
 
 , Limited Supply of, 252, 
 
 263. 
 
 not held by any Natural 
 
 Right, 256. 
 
 , Origin of Proprietorship 
 
 in, 254. 
 -State Interference with, 258 
 , Tendency to become a 
 
 Monopoly, 264. 
 
 Land, Utmost Amount of Pro- 
 duction from, 262. 
 
 Land-owners, Limits to their 
 Rights, 260. 
 
 contribute to Creation of 
 
 Wealth, 75. 
 
 Language, Diversity of, no Bar 
 to Federation, 249. 
 
 Leisure for Culture obtainable 
 for all, 289. 
 
 Lesseps, Ferdinand de, 281. 
 
 Little Wars, their frequency, loi 
 
 Macaulay on Food Supplies in 
 
 War-time, 208. 
 Machinery at first supplants 
 
 Labour, 37. 
 soon increases Demand for 
 
 it, 38. 
 , Suppose, carried to an 
 
 Extreme, 41. 
 , Wealth-Creation largely 
 
 promoted by, 42. 
 Man, his Influence over his own 
 
 Destiny, 227. 
 , not doomed by Fate to 
 
 Social Misery, 58. 
 Measures, the fittest to accelerate 
 
 Progress, 284. 
 Mental Sciences comparatively 
 
 Stagnant, 49. 
 Military Establishments, Table 
 
 of, 98. 
 Preparations not conducive 
 
 to Peace, 108. 
 Virtues, Recognition of, 
 
 132. 
 Minnesota, Productions of, widely 
 
 distributed, 45. 
 Miser, of more Utility than the 
 
 Spendthrift, 62. 
 Money is not Wealth, 8. 
 , its intrinsic Metallic Value, 
 
 II. 
 Moral Force more Effectual than 
 
 the Sword, 292. 
 Well-being, its Connection 
 
 with Physical, 267. 
 Morality promoted by Wealth- 
 Creation, 57.
 
 INDEX. 
 
 307 
 
 National Antipathies, Evils of, I 
 
 245- 
 
 National Debts, Causes of, 119. 
 
 , Contracted on Usurious 
 
 Terms, 128. 
 
 , Financial Strain of, 121. 
 
 , their Dividends create 
 
 Non-Producers, 127. 
 
 , their Tendency to increase, 
 
 120. 
 
 Navies and Armies, their Ex- 
 penses Tabulated, 98. 
 
 Patriotism, True and False, 157, 
 
 250. 
 Paupers, unable or unwilling 
 
 to Work, 89. 
 Peace, Cost of War in Time of, 
 
 107. 
 or War, decided by the 
 
 Few, 145. 
 Peoples do not war against 
 
 Peoples, 135. 
 Well-being versus Nation's 
 
 Greatness, 140. 
 Perfectibility of the Human Race, 
 
 296. 
 Poor are benefited by Increased 
 
 Production, 131, 271. 
 , Brunt of War falls on the, 
 
 , Just Claims of the Infirm, 
 
 90. 
 
 Population, Capital should grow 
 faster than, 35. 
 
 Sparse, adverse to Divi- 
 sion of Labour, 44. 
 
 Possessions, Cost and Value of 
 Foreign, loi, 139. 
 
 Poverty, connection of, with 
 Ignorance, 224. 
 
 , Necessary Result of Waste, 
 
 237- 
 
 obstructs its own Cure, 225. 
 
 removable through 
 
 Wealth-Creation, 5. 
 
 , the Obstacle to Culture, 276. 
 
 Prices, their Rise or Fall as 
 
 affecting National Debts, 
 
 125. 
 
 Producers of Wealth, Who are 
 the, 71. 
 
 have to maintain Non- 
 Producers, 118. 
 
 Production, Loss of, by Soldier- 
 ing, 104. 
 
 susceptible of Vast In- 
 crease, 286, 289. 
 
 Professions, Learned and other, 
 
 83- 
 
 preferred to Industries, 85. 
 
 Profit, Goods not sent Abroad 
 
 without, 189. 
 Promulgation of Truth, 213, 
 
 220. 
 Proprietorship in Land, a Human 
 
 Institution, 254. 
 Prosperity in spite of Protection, 
 
 204. 
 of a Country hateful to 
 
 Rivals, 159. 
 of one Country is that of 
 
 all, 158. 
 Protectionism discourages Native 
 
 Industry, 181. 
 Aggregate Loss it inflicts, 
 
 167. 
 
 Reduction achievable in Stand- 
 ing Armies, I02. 
 
 Religious Influences not ad- 
 verted to, 279. 
 
 Reyliaud decries the Pursuit of 
 Peace, 288. 
 
 Right of Might, what is its 
 Limit ? 143. 
 
 Saving by abolition of War- 
 system, 103. 
 
 of Time, &c., by Electric 
 
 Telegraph, 47. 
 
 Savings, Capital formed of, 62. 
 
 Scientific Discoveries, probable 
 Progress in, 48. 
 
 , P^ffects of, 47. 
 
 S-illing below Cost for Competi- 
 tion's Sake, 234. 
 
 is equivalent to buying, 177. 
 
 Social System, no Organic. 
 Changes proposed in our, 291
 
 3o8 
 
 INDEX. 
 
 Soldiers, Recognition of their 
 Merits, 132. 
 
 turned into Producers, 1 16. 
 
 Standing Armies, Cost of, during 
 Peace, 106. 
 
 State Glory versus People's Pros- 
 perity, 153. 
 
 States, Small merged into Large, 
 153. 246. 
 
 Steps leading in the Right Direc- 
 tion, 285. 
 
 Strikes and Lock-outs, Remarks 
 on, 86. 
 
 Sufficiency obtainable for all, 
 267, 284. 
 
 Superfluity of Public Function- 
 aries, 81. 
 
 Sympathy, Our Aims entitled to, 
 295. 
 
 Table of European Armies and 
 Navies, 98. 
 
 Tamboft", Products of, find no 
 Market, 46. 
 
 Taxing Foreign Industry im- 
 possible, 187. 
 
 Many for the Benefit of 
 
 Few, 214, 219. 
 
 Territorial Extension, Value of, 
 
 139- 
 Thellusson's Will, 259. 
 Thrift builds up National Wealth, 
 
 63. 
 Trades-Unions, their Uses, 87. 
 Truth and Error, 281. 
 
 Unemployed, Classification of 
 the, 85. 
 
 United States of America, Cost 
 of its Army, 100. 
 
 ■ of Europe, Proposed, 150, 
 
 299. 
 
 UnproductiveConsumers, Super- 
 lluity of, 69. 
 
 Created by the War-sys- 
 tem, 94. 
 
 Possible Diminution of, 82. 
 
 Utopian, Proj^oscd Schemes not, 
 59. 280. 
 
 Victoria Cross, Merits of its 
 Deservers, 133. 
 
 Wage-rate fixed by Supply and 
 Demand, 34. 
 
 Wages Highest where Capital 
 most rapidly created, 199,243 
 
 paid out of Capital, 32. 
 
 War, a Question of Financial 
 Power, 120. 
 
 , Case of only Partial Euro- 
 pean, 113. 
 
 , Defensive, is Sacred, 137. 
 
 Expenditure in Time ol 
 
 Peace, 99. 
 
 in Time of War, 1 10. 
 
 , its Evils classified, 92. 
 
 , its Necessity discussed, 134. 
 
 its Principle carried out, 
 
 141. 
 
 , Various Causes of, 135. 
 
 War-system, Progress retarded 
 
 by it, 129. 
 
 , Savingbyits Abolition, 103. 
 
 , Supposed Indispensability 
 
 of, 152. 
 Wealth, Definition of, i. 
 
 isalldistributedandused,3. 
 
 , the more created, the 
 
 more for Distribution, 4, 1 31. 
 
 , Undistributed, 3, 46. 
 
 Wealth-Creation, Effects of, on 
 
 Progress, 2S8. 
 
 , Non-contributors to, 91. 
 
 , Obstacles and Aids to, 14. 
 
 wars with Poverty and 
 
 Ignorance, 224. 
 
 Wheat-land turned into Game- 
 preserves, 261. 
 
 Work, Culture compatible with, 
 2 o. 
 
 Working-men displaced by 
 Changes, 39. 
 
 , Effects of High Wages on, 
 
 277. 
 
 not the Sole Producers of 
 
 Wealth, 33. 
 
 , their Objections to Ma- 
 chinery, 37.
 
 This book is DUE on the last date stamped below 
 
 Form L-9-15m-7,'32
 
 HB 
 171.7 Mongredien 
 
 ~ M'74W " 
 
 We a 1th- 
 
 UC SOUTHERN REGIONAL LIBRARY FACILITY 
 
 AA 000 557 590 7 
 
 creation. 
 
 
 UNIVERSITY of CALIFORNIA 
 
 L.US ANGELES 
 LIBRARY