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(Printed for Private Distribution.) 
 
 AN EXAMINATION OF SOME OF THE BASES OF 
 CURRENT ECONOMIC THEORY. 
 
 VALEUR POUR VALEUR EOALE. 
 
 BY 
 
 SAMUEL B. CLARKE, 
 32 Nassau Street, New York City. 
 
 'Xo.]/}M..MKJMi^.:. 
 
 With the Writer's Compliments. 
 
 THE WBIBEZAHL PRINT 146 Broadway N, Y. Telephone 7320 Cort. 
 
AN EXAMINATION OF SOME OF THE BASES OF 
 CURRENT ECONOMIC THEORY. 
 
 Valeue Pour Valeue :6gale. 
 
 The bargain; is it an equation? To make the 
 question clear, it will be convenient, without at- 
 tempting to define a unit of property, to assume 
 that such a thing exists, and that, at any instant 
 of time, every separable item of property embodies 
 and is measured by a definite number of such 
 units. For example, a coin may be conceived of 
 as containing ten property units; suppose that 
 the owner exchanges it for another like coin of 
 ten units; evidently both parties to the bargain 
 stand, as property owners, just where they did 
 before; neither is made richer or poorer by the 
 bargain. Is this the type of the bargains which 
 are actually made in the usual course of industry 
 and commerce? Or do those bargains generally, 
 if not universally, resemble each other in this; — 
 that the property which each trader gets by the 
 bargain is not equal to the property which he 
 gives, but is either more or less, so that he is in 
 some degree either enriched or impoverished by 
 the bargain itself? 
 
 That the question is a fair one and of import- 
 ance from both the scientific and the practical 
 standpoints may be apparent if we reflect a little 
 on certain opinions which have considerable cur- 
 rency and credit. Mr. Cannan, in his history of 
 the theories of production and distribution (sec- 
 ond edition. Chap. 1, Sec. 7), quotes Quesnay for 
 the proposition: — ^^que le commerce n'est q'un 
 echange de valeur pour valeur egale et que rela- 
 tivement a ces valeurs il n^y a ni perte ni gain 
 
• • • 
 
 • •• • » , 
 
 « 1 
 
 enfre les contractants^^ ; and says himself; — ^'of 
 course exchange in itself is no creation of wealthy 
 and the things which are exchanged for each 
 other are for the moment of equal valueJ' Have 
 these opinions ever been challenged? The present 
 writer's impression is that they stand in the rela- 
 tion of axioms or necessary assumptions to the 
 prevalent theories of value and wealth distribu- 
 tion. Yet, on their face they commingle two 
 distinct ideas, the truth of one of which is, indeed, 
 evident, but of the other far from being so. It is 
 evident that bargains, being operative as transfers 
 of property at a single instant of time, do not and 
 cannot increase or diminish the quajLtity of prop- 
 erty existing at that instant ; but it is not evident 
 that a bargain does not increase the property of 
 one of the contracting parties and diminish that 
 of the other. A transfer without consideration 
 certainly does not increase or diminish the stock 
 of existing property, but as certainly it makes 
 the donor poorer and the donee richer. Why 
 may it not be that an exchange of properties 
 works similarly? Against what possibly may be 
 the unconsciously sophisticated opinions of Ques- 
 nay and Cannan we may set the practical wisdom 
 of two well known stories. Esau bartered his 
 birthright to Jacob for a mess of pottage; mani- 
 festly the trade was unequal, Esau losing thereb^y 
 and Jacob gaining in property. So, in Franklin^s 
 fable, the youth who traded his fortune of one 
 hundred pounds for a horse, and the horse for a 
 cow, and the cow for a sheep, and the sheep for 
 a goose, and the goose for a chicken, and the 
 chicken for a penny whistle, lost in property by 
 each trade and the counter-bargainor gained. 
 Are these cases peculiar and exceptional? They 
 may be so in respect of the degree of variation 
 from equality; but are they peculiar and excep- 
 
tioiial in respect of the fact of variation, much 
 or little? If bargains ordinarily were equal in 
 respect of the properties transferred, why should 
 not men who spend their lives in trading find 
 themselves, as property owners, at the end sub- 
 stantially where they were at the l)eginning, no 
 richer and no poorer? Because (as Cannan's 
 comment on Quesnay suggests) of changes in 
 the quantity of their property during the inter- 
 vals between bargains? That is a conceivable 
 answer; is it the true answer? Evidently some 
 traders grow richer and richer and others poorer 
 and poorer; is this due entirely to changes in the 
 quantity of their property in the intervals be- 
 tween bargains or partly at least to bargains being 
 themselves causes of gain to some and of loss to 
 others? It may be dif^cult, or impossible, to 
 separate bargain or instantaneous gains and 
 losses from time gains and losses, but this in 
 itself is not a sufficient reason for doubting the 
 existence of instantaneous gains and losses; we 
 believe that there are dark stars, although we are 
 unable to see them. 
 
 It is not the writer's purpose, on this occasion, 
 to attempt to deal judicially with the question 
 which has been stated, but rather, by advocacy 
 of inequality, to show that equality cannot prop- 
 erly be assumed, and that anybody who asserts 
 it or relies on it ought first to prove it. 
 
 I. Some typical bargains; bread for money; 
 flour for money; wheat for money. Let us begin 
 the consideration of the question with an exami- 
 nation of the following series of ordinary trans- 
 actions: the raising of wheat by a farmer, and 
 the sale for money of so much of it as he does 
 not want for food or seed by him to a miller; 
 the sale of some of the same wheat, in the form of 
 flour, for money by the miller to a baker; the sale 
 
4 
 
 of some of the same flour, in the form of a loaf 
 of bread, for a dime by the baker to a consumer; 
 and finally, the eating of the loaf by the consumer. 
 The result of all these transactions is a loss of 
 property; the loaf, once existing, has disappeared, 
 like evaporated water; it is gone, and no other 
 item of property has taken its place. The con- 
 sumer, indeed, has had a momentary pleasure 
 and has maintained for a few hours his life and 
 health; but pleasure, health and life are not 
 property. The consumer has lost the loaf; is his 
 loss of property limited to the loaf? This de- 
 pends upon whether the loaf, and the dime which 
 the consumer gave to the baker for it, were 
 equal as property. Immediately after the bar- 
 gain, and a« the result of it, was the consumer, 
 then owning the loaf, richer or poorer than he 
 was immediately before it, when he owned the 
 dime? Was the baker richer or poorer? Or was 
 there no change, as to either of them, in respect 
 of the amount of property owned? There are 
 at least two solid reasons for believing that the 
 dime and the loaf were not equal; and that the 
 baker gained in property by thQ sale at the ex- 
 pense of the consumer; — > 
 
 First: In buying the loaf, as in eating it, the 
 consumer's dominant motive was hunger, the satis- 
 faction or gratification of which has as its neces- 
 sary concomitant the loss of property. It was 
 a matter of indifference to him whether the neces- 
 sary and inevitable loss should begin and end 
 with the eating, or, ending with the eating, should 
 begin with the buying. On the other hand, the 
 baker's dominant motive was the desire of en- 
 richment; to increase his property (to make 
 money, as the saying is), is what he was in the 
 bakery business for. It is, therefore, obviously 
 highly improbable that the minds of the consumer 
 
and the baker should have met upon a price for 
 the bread which would not give the baker a 
 property gain at the expense of the consumer. 
 
 Second: It is a fact of observation that imme- 
 diately after the sale, or at any time after it, the 
 consumer could not ordinarily sell the loaf again 
 for a dime, while the baker could, if he wished it, 
 readily buy another loaf with the dime. Seldom, 
 if ever, can consumers sell again food, clothing, 
 furniture, jewels, &c., &c., for a price equal to, 
 or, indeed, much less than, the price they gave. 
 
 Like the baker, the miller was in business for 
 the purpose of enrichment. In the sale of the 
 flour the motive of both parties was, in a general 
 sense, the same, namely; — enrichment. But there 
 was an important difference between them. The 
 miller must accomplish his purpose of enrichment 
 by the sale of the flour, that being his final 
 product; it was now or never with him. On the 
 other hand, the proximate, efficient motive of the 
 baker was to obtain material for bread; foresee- 
 ing his profitable sale of bread to the consumer, 
 he could afford some loss of property in buying 
 the flour to be used as material for bread. Prob- 
 ably, therefore, the sale of the flour resulted in an 
 immediate property gain to the miller and an 
 immediate property loss to the baker. The same 
 difference existed in the case of the sale of wheat. 
 The farmer must gain in property, if at all, by 
 that very sale, or another like it, while the miller, 
 foreseeing his profitable contract with the baker, 
 could afford a loss in that bargain. Probably, 
 therefore, the farmer gained and the miller lost. 
 
 How much was the gain and loss of property 
 by these bargains? Without a standard of com- 
 parison and a unit of property and measurements 
 of the specific quantities of the material things 
 exchanged, we cannot answer this question with 
 
6 
 
 precision. But we can see some things. The 
 consumer's loss in property in buying the loaf 
 must have been large enough to giye the baker 
 a net gain on his two bargains, and the baker's 
 loss must have been large enough to give the 
 miller a net gain on his two bargains, and the 
 miller's loss must have been large enough to give 
 the farmer his gain; that is to say, the consumer's 
 loss equalled the gains of the baker, the miller 
 and the farmer; that is to say again, the con- 
 sumer's loss must have been relatively quite large, 
 and he may, indeed, have lost more property in 
 buying the loaf than in eating it. On the other 
 hand, in the €ase of each of the three bargains 
 there were forces at work which tended to limit 
 the gain and loss, although their operation 
 stopped short of reducing the gain and loss to 
 zero at the point of equality. The consumer who 
 bought and ate the loaf contemplated, and was 
 reconciled to, some loss of property, and was 
 wholly indifferent whether the loss should come 
 to him wholly in eating or partly in eating and 
 partly in buying; but he was not indifferent to 
 the total of his loss of property, and had this 
 total appeared to him of more importance than 
 complete satisfaction of his hunger, he could and 
 would have put himself on short rations. This 
 power of his tended to keep down the price which 
 he would pay for the loaf, but it ceased wholly 
 to operate at the point where, in his mind, full 
 satisfaction of his hunger over-balanced the loss 
 of property involved in paying the price. Again, 
 bread is a perishable thing, and in order to ac- 
 complish the purpose of enrichment the baker 
 must sell it within a rather short time after it 
 is made or it will spoil on his hands. This tended 
 to prevent him from setting the price too high, 
 but it ceased to operate as a force on his mind 
 
before reducing the price to a point where he 
 would make no gain in property, for otherwise 
 he would not have continued in business. So also 
 the competition of other bakers tended to prevent 
 him from setting the price too high; but this 
 force also ceased to operate before reducing the 
 price to a point where there was no property gain 
 to the baker in the sale of the loaf, for bakers 
 generally are in business for the same thing, 
 namely; — self -enrichment, and their competition 
 must cease * at a point which will enable this 
 motive to be accomplished or else they, or some 
 of them, must go out of business; and the fact 
 that the baker in the supposed case was in busi- 
 ness indicates that the competition had ceased to 
 reduce the price before it reached a point where 
 there was no property gain. 
 
 The three bargains which we have examined 
 are widely typical. The industry of the civilized 
 world which supplies us with the necessaries, com- 
 forts, conveniences and luxuries of life is organ- 
 ized in groups of men, and the organization is 
 such that the finished product of one group be- 
 comes the material for the next group, and the 
 finished product of that group the material for 
 the following group, and so on, till material 
 things are at last completely adapted, in form, 
 composition and location, to human use, where- 
 upon they become the property of consumers and 
 are used. From the existence of this organiza- 
 tion, and its continuance throughout a consider- 
 able period of time, we may infer that the motives 
 and purposes of the men in each group, who are 
 able to continue there, are in fact accomplished; 
 for otherwise it would seem that the groups, and 
 the whole organization, must necessarily break 
 up. It seems, therefore, legitimate to infer, fur- 
 ther, that what is true of these three bargains 
 
8 
 
 is true generally and to say that, as a rule, 
 exchanges of property in the regular course of 
 industry and commerce are not equal, but result 
 in a loss of property (probably a great loss) to 
 consumers, and a gain of property (probably a 
 great gain) to producers. 
 
 What becomes of the gains of producers? By 
 the word producers^ as here used, must be under- 
 stood only the comparatively few men who are 
 the owners of intermediate and final products, 
 and whose judgment and will, therefore, are effi- 
 cient in determining the contracts governing the 
 disposition of intermediate and final products. 
 These men are themselves consumers, and, to the 
 extent that they make bargains for consumption, 
 they will, for the reasons stated, be losers. In this 
 way they lose a part (probably a small part) of 
 their gains. What 'becomes of the residue? In 
 the processes of production it is necessary for 
 producers to make a great variety of contracts; 
 they must hire laborers, they must borrow money, 
 they must buy tools and implements, they must 
 rent land and buildings, &c. Unless these con- 
 tracts were also ordinarily unequal, the riches 
 of producers would doubtless increase with amaz- 
 ing rapidity. Just as the producer of the final 
 product, looking forward to his profitable con- 
 tract with the consumer, loses in the purchase of 
 the material for the final product, so, doubtless, 
 all his other contracts, and the like contracts of 
 intermediate producers, with laborers, landlords 
 and lenders, &c., are unequal, and most of pro- 
 ducers^ gains go to the reimbursement of losses 
 incurred in this way. The laborers, the lenders 
 and the landlords are consumers, and, so far as 
 they make consumption bargains, they lose the 
 gains which come to them from their contracts 
 with producers. It is not, however, necessarily 
 
9 
 
 true or even probable that in this way the totality 
 of producers' gains is offset by consumption losses. 
 Between a gaining contract and a losing contract 
 there is usually an opportunity for saving. The 
 consumption desires of men are elastic, and, by 
 limiting the gratification of them, it is possible 
 to become permanently enriched through bargain 
 gains, and many men doubtless avail themselves 
 of this power of limitation. We may say, then, 
 that producers' gains are largely offset by con- 
 sumption losses, but that a considerable part of 
 them is saved, and thereby some men are more 
 or less permanently enriched. 
 
 II. Elements of property; its utilities for 
 the owner; standards of measurement; property 
 power. We may continue the consideration of 
 the question by attempting somewhat greater 
 definiteness of thought and words. By analyzing 
 the complex idea of property so as to identify the 
 entities or realities which are represented by 
 its component ideas, we may be able to discern 
 clearly what its utilities are, and then, by analyz- 
 ing and classifying the desires to which those 
 utilities minister, we may be able to find out 
 whether traders use a single standard or diverse 
 standards in trading, and what effect upon the 
 measurements of bargains diversity may have. 
 
 Property, as the word is ordinarily used, usual- 
 ly, though not always, implies the existence of 
 a specific material thing, which is adapted or 
 adaptable to some human use, such as a horse, 
 a hen, a parcel of land, a building, a coat, a 
 bracelet, an axe, a billet of steel, a basket of 
 wheat, a bale of cotton, &c., &c. From this point 
 of view, property appears to ^be a material entity, 
 and such is the common understanding of it. We 
 impute to property a situs in space. We classify 
 it as movable and immovable. We talk of the pro- 
 
10 
 
 duction, transportation and destruction of prop- 
 erty. We say that we buy and sell lands, cattle, 
 coal, &c. The price of a loaf of bread, the value 
 of a ship, are common expressions. But all these 
 are mere fashions of speaking, convenient, and, 
 for many purposes, harmless ellipses, rather than 
 accurate statements of fact. Professor Wash- 
 burne, in his familiar idiom, used to say to his 
 law students; — ^^"You may think somebody owns 
 land. No he don't, nuther. Nobody owns land. 
 All that he owns, or can own, is an estate in 
 land." 
 
 The word further imports the existence at the 
 same time of two or more human beings standing 
 in certain jural relations to each other in respect 
 of some one or more of the material things which 
 are adapted or adaptable to their use. If there 
 were no human beings, or only one, there would 
 be no property. Crusoe, alone on his island, 
 finding a nest of hen's eggs, takes and eats them, 
 without subjective hesitation or external hin- 
 drance or penalty. But a man among men, find- 
 ing eggs, does not eat or take or disturb them. 
 He knows that some other man owns the eggs 
 and has the right to do with them as he pleases, 
 and that his duty to that other man is not-to- 
 interfere with this right. His sense of duty, and 
 his fear of what the owner and other men may 
 do to him, overpower his hunger and hold him 
 in check. The thing that stops him is property, 
 which, though invisible, intangible, non-existent 
 in space, is ordinarily as effectual for the purpose 
 as if it were a wall of granite. From this point 
 of view property appears to be not a material 
 but a psychic entity, consisting of the rights 
 against other men which an individual man has 
 in respect of a specific material thing, and of the 
 correlative duties or debts which those other men 
 
11 
 
 owe him in respect of the same material thing. 
 The right of the owner is to use the material 
 thing more or less freely for a longer or shorter 
 period of time, in accordance with his own desires, 
 judgment and will, and to employ physical force 
 to prevent interference by other men with such 
 nse by him of the thing, and the correlative duties 
 or debts of other men to the owner are to ab- 
 stain, severally and collectively, from any inter- 
 ference, and to help him with the force of their 
 bodies, or otherwise, to prevent any one or more 
 of them from interfering in such use of the thing. 
 
 Again, property, usually, though not always, 
 also imports the idea that the owner is free, at 
 his own will and pleasure, to substitute another 
 man as owner in his place. This is the owner's 
 right of alienation. He is at liberty to transfer 
 to another man the ijiaterial thing (or, speaking 
 accurately, Ms rights in respect of the material 
 thing,) without conditions, in the form of a 
 gift, or upon any condition he chooses to impose, 
 such as the transfer to himself of some other 
 thing. He may also divide his rights in certain 
 ways, and, keeping some of them himself, transfer 
 the others; so that the full ownership of a mate- 
 rial thing is often distributed among two or 
 more men. The entity represented by this idea 
 is a psychic entity, and the processes of transfer, 
 though they may be facilitated and evidenced by 
 material things and processes, are essentially 
 psychic processes. Gifts and exchanges of prop- 
 erty are events which do not occur in the world 
 of space and matter, but in the world of mind. 
 
 Again, property also imports the idea of the 
 existence, deep down in the feelings and opinions 
 of men, of a certain concord and consent, giving 
 rise to what are variously known as the jural or 
 the inherent or the natural rights of men and also 
 
12 
 
 giving rise to powerful psychic forces, which 
 control and guide economic actiyity in all its 
 forms, at 'all times, from the beginning of produc- 
 tion to the end of consumption. These forces 
 cause men to respect the boundary lines between 
 things appropriable and things unappropriable, 
 and also the boundary lines between the fields of 
 action within which each man is at liberty to 
 follow his own feelings, judgment and will, and 
 the fields within which he has no such liberty. 
 They do this, partly and mainly by their direct 
 influence on individual men, and partly through 
 the instrumentality of civil government, one of 
 whose functions is to ascertain exactly the true 
 location of the boundary lines and to erect legal 
 boundary walls thereon, and another of whose 
 functions is to provide an overwhelming physical 
 force operating at all tim^s, by menace at least, 
 both as a shield for the protection of the liberty 
 of each man within his own fields, and as a sword 
 for keeping him out of the fields of freedom of 
 other men. Thus we arrive at another psychic 
 element of property, the element of security. 
 
 Finally, the property concept usually, though 
 not always, also involves the idea of a psychic 
 force inherent in the owner and controllable by 
 him, enabling him, or tending to enable him, to 
 influence the desires, judgment and will of the 
 owners of other property in the direction of 
 transferring to him what they own, or a part of 
 it, in consideration of his transferring to them, 
 or one of them, what he owns, or a part of it. 
 This force is an entity as real as those other 
 psychic forces in a man which enable him to excite 
 pity or love in other men, as real as the physical 
 forces of gravity and electricity. The owner, by 
 virtue of his ownership of a specific material 
 thing, and of his right to transfer the ownership. 
 
IB 
 
 lias a power over other men which he would not 
 otherwise have. For convenience we may name 
 this force propcf^ty power. 
 
 If this analysis does not appear to be correct 
 on the mere statement of it, we may, perhaps, 
 make it appear so by being more concrete in cer- 
 tain respects. The material things of the world 
 which are adapted or adaptable to human use 
 are divided into two great classes, namely; — those 
 which are and those which are not legally appro- 
 priable by individual men. . Human beings, the 
 sun's light and heat, the air, the high seas, some 
 X)ortions of the land of the world, are examples 
 of unappropriable things. Other portions of the 
 land of the world, animals inferior to man, 
 and the severable fruits and products of 
 animals, land, sea and air, are examples 
 of appropriable things. The reasons for this 
 classification need not now be touched, but the 
 fact that the classification exists is manifest. 
 Let us compare one of the appropriable things 
 with one of the unappropriabh* things. The strip 
 of land along the sea between low and high water 
 marks, sometimes known as the foreshore, is not 
 legally appropriable, and is not property, but 
 the like strip running inland from high water 
 mark is legally appropriable, and is property. Re- 
 garded merely as material things, these two strips 
 of land do not differ in any substantial way; they 
 are both useful to man, they are of the same 
 size, and one is no more scarce (or abundant) 
 than the other. That which makes one of them 
 property is the fact that some men have exclusive 
 rights against other men in respect of it, and 
 that which prevents the other from being property 
 is the fact that no man has, or (without a change 
 of law) can have, any exclusive rights against 
 other men in respect of it. This contrast seems 
 
14 
 
 to show clearly that the essence of property is the 
 psychic entity, exclusive right, — an idea which 
 becomes still clearer when we think of those kinds 
 of property which do not have relation to any 
 specific material thing; e. g., money debts, public 
 offices, some franchises, copyrights, patents for 
 invention. Again, compare a parcel of the in- 
 land strip, which is owned in fee by somebody, 
 with a like parcel of the foreshore, which is 
 owned by nobody. In the one case the existence 
 of the force which we have called property power 
 is manifested, and in the other it is not mani- 
 fested. The owner of the inland parcel, by offer- 
 ing to transfer his exclusive rights, can persuade 
 some other man to transfer to himself some other 
 thing which he may desire more than the land, 
 but no man can obtain what another owns by 
 offering to do, or doing, anything whatever in 
 respect to the foreshore parcel. This comparison 
 seems clearly to make it evident that property 
 power does not, like gravity, electricity, chemical 
 affinity, and other physical forces, inhere in, or 
 emanate from, material things, but is a psychic 
 / "^ ' force inherent in the personality of the owner, 
 just as his power to excite pity or love in other 
 men inheres in him. Again, compare the owner 
 of the fee in a parcel of the inland strip with the 
 lessee for a year, under an ordinary lease, of an- 
 other like parcel of the inland strip. In the case 
 of the fee owner the existence of property power 
 is manifested; by sale or exchange he can obtaiu 
 other property which he may desire more than 
 the land. But the existence of property power 
 is not manifested in the case of the lease owner; 
 he cannot, by sale or exchange, obtain anything 
 else which he may desire more than the leased 
 land. The two cases do not differ at all, so far 
 as the two parcels of land are concerned. They 
 
15 
 
 do not differ substantially so far as the exist- 
 ence of property in respect to each parcel of land 
 is concerned; the lease owner has exclusive rights 
 shorter in duration and narrower in »cope than 
 those of the fee owner, but quite as real; he is 
 also subject to certain burdens which the fee 
 owner is free from, such as the payment of rent; 
 but such differences as there are do not account 
 for the fact that the lease owner has no property 
 power while the fee owner does have it, though 
 they would be quite sufficient to account for the 
 power of the fee owner being greater than the 
 power of the lease owner, if, in the case of the 
 latter, the power existed at all. What, then, is 
 the difference between the two cases which may 
 account for the fact that in one property power 
 exists and in the other it does not exist? The 
 only difference is that the fee owner's exclusive 
 rights are alienable, while under an ordinary lease 
 the lessee's exclusive rights are inalienable. An- 
 other example of the effect of alienability may be 
 found in the fact that property in an army com- 
 mission does not now give an army officer any 
 property power, the commission now being in- 
 alienable, but that formerly it did give him 
 property power, the commission then being alien- 
 able. Another good example is presented by the 
 contrast between a life annuity granted by an 
 insurance company and a life pension granted 
 by the government; both are property, but the 
 former is alienable and its owner has property 
 power, while the latter is inalienable and the 
 owner does not have property power. Again, by 
 the law of New York, lands held in trust are in- 
 alienable; pending the trust, such lands give 
 their owners no property power. Property power, 
 like electricity, is a force which manifests its exist- 
 ence only under certain conditions and arrange- 
 
16 
 
 meiits. It does not exist in the case of legally 
 unappropriable material things, no matter how 
 useful to man or how scarce or abundant the;y 
 may be. It does not exist in respect of legallj' 
 appropriable and appropriated material things 
 unless the exclusive rights of the owner are alien- 
 able. We may believe, therefore, that alienable 
 exclusive rights are some of the efficient and in- 
 dispensable causes of its existence. 
 
 This analysis is far from being exhaustive, but, 
 if it correctly classifies the elements of property, 
 omitting none that is essential, it will serve the 
 present purpose. Is any essential element omit- 
 ted? Value? In the whole world of All-Being 
 does there exist any entity or reality, other than 
 property power, which can be denoted by this 
 word, when used, as, for example, Quesnay uses 
 it, in the sentence quoted at the beginning of 
 this paper? Value in exchange? Does that 
 phrase denote anything else than a measure, by 
 some standard, of property power? Value in use? 
 That is merely a measure, by some standard, of 
 the ultility of a material thing for any purpose to 
 which the material thing, as such, is adapted, — 
 is it not?i 
 
 iThat economists are in error in regarding scarcity as one 
 of the efficient causes of the existence of property power or 
 value, may further be made to appear as follows: — Among 
 the most scarce of useful things are the masterpieces of Italian 
 art. Suippose that the Italian Government were to extend the 
 poliicy wihich now prohibits the exportation of such master- 
 piieces to the point of forbidding the owners to sell or trans- 
 fer ithem to any one; evidently the owners would no longer 
 have any property power by virtue of their oiwnership of the 
 masterpieces or, what is the same thing in meaning, the 
 masterpieces would no longer have value. On the other hand, 
 one of the most abundant of useful things is the air. It 
 would be a simple matter to draft a statute which, if enacted 
 and ertforced, would result in the alienable appropriation of the 
 air. Were this done, the owners of air would certainly have 
 property power or, what is the same thing in meaning, the air 
 
17 
 
 With this analysis in mind, we may see that, 
 for the owner,^ property has two utilities which 
 are as wide apart as the color and the weight 
 of a material thing, and which may, for conven- 
 ience, he distinguished as consumption utility 
 
 would have value. Relative abundance and scarcity are causes 
 of the variability of 'property power or value, but not of the 
 existence of property power or value. 
 
 IFor all-of-us, for 'mankind, property has other utilities which 
 w^ould have to be emphasized if the question were on the 
 economic and ethical justification of property. The supposed 
 principle of property — to the producer the product of right 
 belongs — which is implicitly assumed by the socialist, Karl Marx, 
 and by many individualist econom/ists, and which is expressly 
 affirmed by J. S. Miill, in the second book of his Principles of 
 Political Economy, and by Henry George in Progress and 
 Poverty, and by Professor J. B. Clark, in the 'lay-out chapter of 
 his Distribution of Wealth, appears to the writer to be the 
 antipodes of the truth. Speaking practically; this pretended 
 principle is not a workable determinant of the kind of disputes 
 and quarrels which actually arise among men. Speaking ethic- 
 ally; it cannot be co-ordinated with several of the recognized 
 principles of justice, and, in particular, it flatly denies the prin- 
 ciple oif liberty and the sub-principle of freedom of contract. 
 Speaking economically; if there is to be economic thrift property 
 must precede, not follow, production; witness what happens (i) 
 at the gold diggings till the place where each man is to work is 
 first marked out and made secure to him; (2) at the oyster beds 
 till the stakes are set; (3) in the matter of squatter settlements 
 on the public lands; and (4), above all, witness the blotter lifelong 
 quarrels which often arise between the sons and daughters of 
 the same father and mother who have been left tenants-in- 
 common of land and have triied too long to get on without a 
 partition. Tihe mentally conceivable, but practically impossible, 
 alternative to private property is a militao-y socialistic organiza- 
 tion which, by physical force, compels the individual man to 
 work undeir the orders of an officer and to abide the decision 
 of an officer as to what his fair share of produce is. This wouM 
 deprive everybody of that measure of liberty to w^hioh all of us, 
 old and young, rich and poor, high and low, have been so accus- 
 tomed from earliest infancy that it is now a part of our sub- 
 conscious and (instinctive nature, and all or most of us stand 
 ready to fight to the death for it as our natural right and as our 
 moral right. But the conception of private property as the 
 means of rescuing mankind from a private warfare with which 
 no government otherwise could cope, and as the means of giving 
 
18 
 
 and transfer utility. Consumption utility puts 
 the owner^ so to speak, into the position of 
 Crusoe; it opens for him a psychic wall and en- 
 franchises him with respect to the utilities of 
 the material thing which is the subject of his 
 property; it enables him to gratify such desires 
 as the material thing is adapted to gratify and 
 at the same time to gratify the very different 
 desire of being free from pain of conscience and 
 from suffering and fear of suffering at the hands 
 of other men; it is complex, all items of property 
 having in common the utility of enfranchisement 
 to a greater or less degree, and each having dis- 
 tinctive and peculiar material utilities; it can be 
 taken advantage of at any time, and from time to 
 time so long as the owner's title and the material 
 thing continue to co-exist. On the other hand, 
 transfer utility enables the owner in the alterna- 
 tive either, by gift, to gratify his altruistic desires 
 for the welfare of family, friends, fellow-country- 
 men, mankind, or, by exchange, to gratify his 
 desire for some other item of property which he 
 wants either for its consumption utility or for its 
 transfer utility; it can be taken advantage of only 
 in one way and at a single instant of time, 
 namely, by an act, and at the time, of transfer. In 
 short, the two utilities minister to radically 
 different human desires and they are inconsistent, 
 in the sense that it is impossible for the owner 
 to take advantage of both at the same time. 
 
 It thus appears that there are two entirely dis- 
 tinct standards for measuring a bargain, and that 
 one or the other is likely to be used by a trader 
 
 to all men a reasonable measure of liberty, a reasonable measure 
 of contract bondage, a reasonable measure of equality, and a 
 reasonable measure of economac efficiency, and as the means of 
 preserving for mankind many useful natural resources, such, for 
 example, as the fur seal, is not germane to the question now 
 under consideration. 
 
19 
 
 according to the desire, or set of desires, which 
 predominates in determining his volition to trade. 
 If he uses the standard of consumption utility, 
 he must gain, or think that he will gain, in the 
 matter of consumption utility; he will not trade 
 if he thinks that, in that respect, he will be either 
 worse off or merely equally well off. So, if he 
 uses the standard of transfer utility, he must 
 gain, or think that he will gain, in that respect; 
 he will not trade if he thinks that, in the matter 
 of transfer utility, he will be worse off, or merely 
 equally well off. If one of the parties to a bar- 
 gain uses the consumption standard, and the other 
 party uses the transfer standard, each gains, or 
 thinks he gains, by his own standard; this is the 
 case of the bargains made between intermediate 
 producers in the regular course of industry, and 
 particularly is it the case of the bargains made 
 between final producers and consumers. If both 
 parties to a bargain use the standard of transfer 
 utility, each thinks he gains in that respect, and 
 in all probability the judgment of one is right 
 and of the other wrong; this is the usual case in 
 speculative bargains on the market and a frequent 
 case in investment bargains, each party thinking 
 that he is getting the better of the bargain, one 
 actually doing so, and the other in fact getting 
 the worse of it. If both parties to a bargain use 
 the consumption standard, each thinks he gains 
 in respect of the kind of material utility which 
 he wants, and it is a matter of mere chance how 
 the bargain results in respect of transfer utility; 
 for example, in a barter of food for clothes, one 
 trader gives up food which he does not want to eat 
 for clothes which he does want to wear, and the 
 other trader gives up clothes which he does not 
 want to w^ear for food which he does want to eat, 
 and both gain in consumption utility; that is to 
 
20 
 
 saj, by this standard each is better off as the 
 result of the bargain, not worse off, or merely 
 equally well off, and by the transfer standard one 
 is probably better off and the other worse off. 
 
 Utilities are merely convenient abstractions of 
 the qualities or attributes of entities or things. 
 What are the elements of property, or combina- 
 tions of elements, of which consumption utility 
 and transfer utility are the attributes? It is 
 evident that the alienability of the exclusive 
 rights of the owner of property adds nothing to 
 the consumption utility of the property. We 
 may, therefore, when thinking of consumption 
 utility, exclude the idea of alienability. Such 
 exclusion necessarily carries with it the idea of 
 property power. The useful material thing, the 
 free and exclusive right, and the security of the 
 right, are plainly essential to consumption utility. 
 We may say, therefore, that consumption utility 
 is the attribute of property conceived of as the 
 free and secure exclusive right to the use of a 
 material thing for all purposes to which the 
 material thing, as such, is adapted. All items of 
 property may be deemed equal in respect of free- 
 dom and security, and therefore (for the purpose 
 of getting a measure) we may eliminate those 
 ideas and say that a measure by a proper stand- 
 ard of the availability of the material thing for 
 any one use to which the material thing, as such, 
 is adapted, is a proper measure (or the value) of 
 the property for that one purpose. Property thus, 
 in respect of its consumption utility, has as many 
 values as the material thing which is the subject 
 of the property has uses. Transfer utility plainly 
 requires alienability to be added to the elements 
 which go to make up consumption utility. The 
 conception includes all the material uses and 
 values of property and also the security and 
 
21 
 
 enfmnchisement elements of consumption utility, 
 but deals with the whole in its relation to pur- 
 poses which cannot be served by the material 
 thing alone, namely ; — the availability of the whole 
 for the purpose of gratifying the desires which 
 can be gratified by a gift of the property or by 
 an exchange of it for other property. Now, 
 property power being the result or effect (analo- 
 gous to an induced current of electricity) of all 
 the other elements of property, it may be taken as 
 the representative of those other elements, and, 
 therefore, we may conceive of transfer utility as 
 the attribute of property power ; hence, a measure- 
 ment of property power by a proper standard is 
 the value of the property for the purpose of gift 
 or exchange. 
 
 The main question under consideration may 
 now be restated thus; — Is the result of a bargain 
 an increase or diminution of each trader's prop- 
 erty power, or is his property power after the 
 bargain just equal in quantity to wliat it was 
 before the bargain? From the foregoing analyses 
 we may infer that the true answer to the question 
 is as follows; — 
 
 First: Whenever both parties to a bargain 
 use the standard of consumption utility it will be 
 a mere matter of chance whether the bargain, 
 when remeasured by the standard of transfer 
 utility, is seen to have resulted in equality or 
 inequality. The chances are infinitely great that 
 the bargain will have been struck at one of the in- 
 numerable points of inequality, so that one party 
 will have gained and the other will have lost in 
 property power, rather than at the single point 
 of equality. 
 
 SecMnd: When both parties use the transfer 
 standard, one will err in judgment and lose in 
 property power and the other will be right in 
 
22 
 
 judgment and gain in property power, except in 
 the highly improbable contingency of a joint 
 error, in which case there would be neither gain 
 nor loss in property power by either party, i.e., 
 there would be equality. 
 
 Thir-d: If one party uses the consumption 
 standard and the other the transfer standard, the 
 latter will gain in property power unless he makes 
 a mistake of judgment, in which case the result 
 as to him will be what it plainly will be with res- 
 pect to the other party, a mere matter of chance, 
 with the chances in favor of inequality. 
 
 III. The Margin of Chmice. It is evident that 
 unless traders measure their bargains accurately, 
 it is a matter of chance whether the bargains are 
 equal or unequal, with the chances in favor of in- 
 equality, and that the more inaccurate the mea- 
 surements are, the greater the chance that the 
 departure from equality will be substantial. From 
 this basis we may argue as follows; — 
 
 First: The measurement of a bargain is a 
 reasoning process. The human reasoning faculty 
 cannot work unless, at some point or other, it is 
 footed and fulcrumed on a creed which the rea- 
 son is incompetent to prove but must take for 
 granted. One article of the creed is that the 
 material universe is governed by natural laws, 
 so that, if we can but discover any such law, 
 we shall be able to gain thereby a clear, exact 
 and definite knowledge of so much of the material 
 universe as the law applies to. Hence, if we 
 look at property power in the wuj that, under 
 the name of value, many economists do look at it, 
 namely; — as a quality or attribute of material 
 things, or as a force inherent in material things, 
 we do not despair of being able, by search, to find 
 out the natural law that governs it, and by help 
 
23 
 
 of the law, to measure it with great precisioD, ju&t 
 as we measure the weight of material things with 
 great precision. But if, by analysis and study, 
 we have become satisfied, as is now assumed, that 
 property power or value is a psychic force inher- 
 ent in the personality of the owner of property, 
 we find ourselves face to face with (another arti- 
 cle of the creed. Whatever philosophic or contem- 
 plative doubts, of minds adrift and compassless, 
 there may be, we nevertheless believe, and, by 
 our conduct, universally show that we believe, in 
 freedom of the will. The volitions which result 
 in bargains, or in any form of economic or other 
 activity, are, to an undefined extent, outside the 
 realm of natural law. We may take it, therefore, 
 that no measure of property power or value which 
 is made, or can be made, by the judgment of a 
 trader, or of an economist, or of anybody else, 
 is accurate in the sense in which our measure- 
 ments of the volume and density of material things, 
 or of the intensity of physical forces, is accurate. 
 Those who assert that all business is gambling 
 merely misconceive the essence of gambling; they 
 are right in supposing that all business involves 
 the taking of risks. Some margin for the play 
 of chance there is in all trading.^ 
 
 iThe first sentence of Professor J. B. Clark's Essentials of 
 Economic Theory is; — "The creation and the use of wealth are 
 everywhere governed by natural laws, and these, as discovered 
 and stated, constitute the science of economics." This sentence 
 is a perfect illustration of the extreme difficulty, and practical 
 dmpossiibiility, of so using words as to express but one definite 
 meaning. The sentence may mean that the economic activity 
 of men is limited by natural laws, as the activity of a horse out 
 at grass is limited by the fence of his pasture; in this sense the 
 sentence is, of course, true. But it may mean that economic 
 activity has no free play at all; in this sense does anybody 
 believe it to be true? Professor Clark makes a valid and 
 beautiful discritmination between Capital goods, material things 
 the function of which is not to minister directly to consumers' 
 
24 
 
 Second: Traders, in closing bargains, are 
 nearly always under the influence of some strong 
 feeling, need or desire. Such influences inevitably 
 bias the judgment and tend to make it inaccurate 
 to a substantial degree. 
 
 Third: The standard commonly used in bar- 
 gains for measuring value or property power is 
 gold coin. This standard is not an accurate 
 standard, like the yard stick or the pound weight 
 of iron. It is a variable standard, like the com- 
 pass, but, unlike the compass, it does not vary 
 according to law. The property power incident 
 to the ownership of coin varies according to the 
 
 wants, but to 'help in making things which do this, and Capital 
 itself, which is a permanent fund, or continuous stream or 
 procession, of such material things. He likens Capital to a 
 waterfall, and Capital goods to the ever changing drops of water 
 in the waterfall. This discrimination easily leads to another. 
 From the economic point of view the abiding thing in the 
 iwaterfall is the power, the water power; so, in Capital, the 
 abiding thing is the power, the property power. Here we must 
 become cautious. The water power is entirely, and always, 
 subject to natural laws; but is the property power always, and 
 entirely, subject to natural laws? Or is there not, within the 
 limits of natural laws, a considerable freedom of play? Should 
 men, working and trading, be thought of as ruled by instinct, 
 like bees and ants? Or should they be thought of as conscious, 
 free and enring workers and traders? 
 
 Professor Qark, at page i8 of the Essentials, gives a question- 
 able imaginary example from supposed primitive life of how it is 
 that men in modern industry, who spend their time in making 
 and repairing tools and other Capital goods, get their food 
 without waiting for it ; and, at the same time, he gives, uncon- 
 sciously, an excellent illustration of the domination over his 
 mind of the bee-and-ant idea. He says; — "Five men may 
 do nothing but fish, while a sixth keeps their stock of canoes 
 intact, by repairing old ones left on the shore and making new 
 ones to replace such as are beyond repairing. Fishing and 
 boat building may go on simultaneously, and all the men may 
 go share and share in each day's catch. This is a type of what 
 goes on in modern industry, where a complex stock of Capital 
 goods always exists and is kept intact by the action of a class 
 of persons who share the returns that come from using the stock. 
 None of these persons has to wait for food, although some of 
 them devote themselves exclusively to the production of tools.*' 
 
25 
 
 mere moods of people to an astonishing degree. 
 During periods of expanding credit, when every- 
 body is hopeful, optimistic, buoyant and trustful, 
 substitutes for gold coin, such as checks and bills 
 of exchange, and credit entries in bankers' books 
 of account, are readily accepted and used in 
 place of coin, land the result is similar to what 
 it would be if the stock of gold were rapidly and 
 very largely increased, that is to say; — the prop- 
 erty power of the owners of coin becomes largely 
 less, and, at the same time, the property power 
 of the owners of other kinds of property, relative- 
 ly to property in gold, becomes markedly in- 
 creased in amount. On the other hand, when the 
 feelings of people change, and they become timid, 
 depressed, pessimistic, suspicious, the substitutes 
 for coin are refused, with the result that the prop- 
 erty power incident to the ownership of coin in- 
 creases with great rapidity, and the property 
 power incident to the ownership of other kinds 
 of property, relatively to gold, decreases, just as 
 would be the case if the currency in circulation 
 were abruptly reduced by la large fraction. The 
 true reason for considering gold the best standard 
 of value is not because it is a good standard, but 
 
 What makes those fishers and that boat tinker act in that way? 
 Is it instinct? Is it not rather a conscious prearrangement and 
 agreement upon which each of them relies and which, therefore, 
 becomes the principle of their organization and the cause why 
 the boat tinker and each fisher gets a share of each day's catch 
 of fish? If the answer be yes, then is it true that the example 
 -is a type of what goes on in modern industry? Is the cause why 
 the modern tool maker gets food without waiting a sharing in 
 the returns that come from using the tools? Is there ordinarily, 
 in modern industry, any conscious prearrangement or agreement 
 for shares of the produce? Xs there not an entirely diflferent 
 prearrangement which is the real cause why tool makers get 
 their daily iood? Shares of produce! That is the conception 
 of which is writer is suspicious, and against which he is tempted 
 to prefer a charge of high treason to the cause of truth. 
 
26: 
 
 because it is less bad than any other. Any claim 
 of substantial accuracy of measurement, when 
 such a standard is used, seems plainly untenable. 
 
 Fourth: One way in which the gold standard 
 of measurement is commonly used is the treatment 
 of the quotations of actual sales of different par- 
 cels of homogeneous properties (such as cotton, 
 wheat, shares of corporate stock, &c., &c.) as an 
 index or gauge of the amount of property power 
 or value w^hich the ownership of a unit of any 
 suck homogeneous properties gives its owner at any 
 instant of time. This subject has received great 
 attention from economists, from the point of 
 view of property power or value being an attribute 
 of material things, or a force inherent in material 
 things, and they believe that they have discovered 
 a series of natunal laws governing tlie matter, and 
 these laws they lay down with almost mathemati- 
 cal precision and with a hypnotizing confidence 
 of expression. Let us examine one of these sup- 
 posed natural laws — the so-oalled first law of the 
 market. This law is thus stated (except as to the 
 italics) by Professor Carver (Distribution of 
 Wealthy page 5) ; — 
 
 "To be sure, if the units are all alike, or 
 so nearly alike as to serve the buyer's purpose 
 equally well, they will all have the same price 
 at the same time and place. Obviously, no 
 buyer would pay more for one unit than he 
 would have to pay for another if he knew 
 that the cheaper unit would serve his pur- 
 pose just as well. This is what Marshall has 
 called the first law of the market. Since all 
 units of such a commodity have the same price, 
 and since the price of any is a gauge of the 
 price of every other^ it is customary to speak 
 of the price of the commodity without naming 
 its units." 
 
 There is an implication here that a trader's 
 
27 
 
 conduct in closing a bargain is guided by knowl- 
 edge which it is impossible for him to have. Bar- 
 gains take effect at an instant of time (literally 
 a miathematical point of time), but it takes a 
 period of time of appreciable duration to nego- 
 tiate and close them. If the traders are brokers 
 with full discretionary authority, and the trading 
 is done on the floor of the most perfectly organized 
 exchiange, two or three seconds, at least, are re- 
 quired for the negotiation; and if the agents, 
 not having full authority, mu^t communicate with 
 their principals and get fresh instructions, by 
 leaving the floor of the exchange and going out- 
 side to talk with the principals, or by telephon- 
 ing, or telegnaphing, or writing to them, or if the 
 transaction is closed betw^een the principals them- 
 selves off the floor of the exchange, a considerably 
 longer time is required. During the period of 
 negotiation, some time before its close, the in- 
 fluence of competition comes to an abrupt end ; the 
 attention of the two traders, parties to a bar- 
 gain, is intensely concentrated on what they are 
 doing; for that moment they are blind and deaf 
 to everything else that is then going on in the 
 W'Orld. When buyer and seller in group number 
 one are closing a bargain, the buyer cannot know 
 what the seller in group number two, or the seller 
 in group number three, or the seller in any other 
 group, is at that moment willing to do. Each 
 dealer must decide and act on his knowledge of 
 the past, not on any knowledge which it is possible 
 for him to have of the present, and there is no 
 ground for believing that the most complete knowl- 
 edge of the past will bring the minds of different 
 traders to the same point. In any market whose or- 
 ganization permits more than one sale lat a time 
 there are as many possible prices at the same 
 time for different units of homogeneous properties 
 
28 
 
 as there are possible groups of dealers, each 
 group containing one buyer and one seller. What 
 took place in the New York Stock Exchange at 
 the moment of opening business on Tuesday, Janu- 
 ary 5, 1909, tais narrated in the following report 
 of it in the New York Sun of January 6, 1909, is 
 only what, antecedently, might have been ex- 
 pected ; — 
 
 ^^It wa« a foregone conclusion after the 
 break in Consolidated Gas on Monday that the 
 stock should be the centre of interest at the 
 opening of yesterday's market, but it is doubt- 
 ful if miany persons were prepared for what 
 actually happened. For several minutes be- 
 fore business opened the Gas post was sur- 
 rounded by a large crowd of brokers, nearly 
 all of whom held selling orders, each anxious 
 to execute his commission as soon as possible 
 in the fear that the price would not long re- 
 main lat one figure and that even a second or 
 two of hesitation might mean considerable 
 loss. This eager desire to be first resulted in 
 the making of a number of sales simultaneous- 
 ly at prices running from 140 to 1381/2, a 
 decline over night of from a point to 2% 
 points, the amount of stock represented in 
 these simultaneous transactions reaching the 
 aggregate of 3,500 shares. The highest figure 
 at the opening was not paid again all day 
 and even after further heavy declines the 
 stock showed little or no rallying power." 
 
 It is true that market quotations furnish a basis, 
 for some conduct in dealing which can properly 
 be regarded as the taking of a reasonable risk, 
 rather than a gambling risk; but, what conduct? 
 If you mean ,to buy or sell only a few units, 
 say one or two hundred shares of stock, you will 
 incur some risk, but doubtless not an unreasonable 
 risk, if, on the basis of the latest quotations, you 
 give an order to your broker to buy or sell ^'at the 
 market." But it would be wild folly for you to give 
 
29 
 
 an order for a huDdred thousand shiares upon the 
 assumption that the statement of the first law of 
 the market that the price of any unit is a gauge 
 of the price of every other, is true. It is evident 
 that the weight of a unit of a homogeneous 
 mass is equal to the weight of each and every 
 other unit, and that a summation of the weights 
 of all the units is the weight of the mass; but it is 
 necessary to hesitate in assuming that the prop- 
 erty power incident to the ownership of any one 
 unit of a homogeneous commodity is, at any 
 instant, equal to the property power which the 
 ownership of each and every other unit gives to 
 its owner, and that a summation of the several 
 property powers is the property power of the en- 
 tire homogeneous commodity. It is certain that 
 a unit of the homogeneous commodity will bring 
 a different price, if it is the only unit offered, 
 from what it will bring if many units, or all the 
 units, are offered at the siame time, and it seems 
 quite clear that the price for which one dealer, 
 or a few dealers, sell their units at any instant 
 cannot be an accurate measure of the property 
 power at that instant either of the units then 
 sold, or of any of the units not then sold, for the 
 judgment of the owners of other units, who do 
 not then sell because they think the price too low, 
 and of other buyers, who do not then buy because 
 they think the price too high, seems to be quite 
 as important as the judgment of those who then 
 actually sell their units. Furthermore, the judg- 
 ment of all owners willing to sell at what they 
 think the right price, and of all buyers willing to 
 buy at what they think the right price, may be 
 at fault on account of the existence of facts 
 which none of them, except a few gamblers in am- 
 bush, know. 
 
 You can know the total amount of your commo- 
 
30 
 
 dity in existence, say the authorized and issued 
 stock of a corporation, and this knowledge is of 
 some help in forming la judgment, but it is by 
 no means certain to lead to a true and accurate 
 judgment. Unless you yourself are the mana- 
 ger of a pool which has secretly locked up twenty, 
 forty, ninety per cent, of the amount of your 
 commodity actually existing, you are not likely 
 to know what quantity of the existing commodity 
 is free in the market at any time; and if you 
 could know that, you would still be far from 
 having a certain basis for judgment. There is 
 always a possible psychic excess of supply, of 
 indefinite and unknowable amount, over the known 
 amount of what actually exists. This excess is 
 a closely guarded secret in the back of the heads 
 of manipulators and gamblers, who may, at any 
 time, bring it out and sprinkle or flood the mar- 
 ket wdth it by making short sales. Again, you 
 are little likely to know, or to be able to gauge, 
 the manipulative processes of matched and care- 
 fully adjusted purchases and sales by which it is 
 easy for great manipulators and gamblers to give 
 an entirely false appearance to market quotations. 
 The trial of Morse, for breach of the federal 
 banking law, incidentally showed that, by these 
 processes, the price of ice stock was, within a few 
 months, jacked up from about twenty-seven dollars 
 a share to about ninety dollars a share. As mat- 
 ters stand, nobody has any assurance that there 
 are so many as one commodiy in any market the 
 quotations of which are free from the taint of 
 these processes; just as it would be easy for a 
 few counterfeiters, if not interfered with, to cor- 
 rupt the currency, so, under existing conditions, it 
 is easy for a few gamblers to corrupt the market 
 standard of value. 
 
 The most important thing to be known and 
 
31 
 
 emphasized labout markets is that there is a good 
 deal which cannot be known. The next most 
 important thing is that there is a good deal, not 
 now known, which could, by legislation, if not 
 otherwise, become known, and which, if known, 
 would help to save investors from cruelly biting 
 losses. 
 
 Suppose that honest men, awaking from their 
 sleep, w^ere to cause their influence to prevail 
 with legislators over the influence of gamblers; 
 suppose that a bill for the protection of the mar- 
 ket standard of value by the severe penalization 
 of fraudulent practices without doing damage to 
 legitimate trade, were to be drawn, as easily 
 it could be drawn ;^ suppose such a bill to be en- 
 acted, and then enforced by prosecuting officers 
 who know their business, as the prosecutor of 
 Morse knew his business; suppose all the reeking 
 fraud with which many people believe a few 
 gamblers have saturated the markets of the day 
 were thus to be purged away; suppose that mar- 
 ket quotations were to become in fact what the 
 theories of economists assume them to be, namely ; — 
 a record of the bona fide judgments as to the 
 value of commodities of men honestly competing 
 for their several interests; suppose all these 
 things to be done, what then? We should have 
 a much better standard for measuring property 
 
 i If the intent which a jury must find were defined as intent 
 to corrupt and debase the market standard of value, a dealer who 
 should make an occasional short sale, or should make an occa- 
 sionail purchase and follo(w it by a prompt resale, would be in 
 no more danger than everybody now is in passing an occasional 
 counterfeit coin. Before a jury would convict it would have to 
 be satisfied, by miany facts and circimistances, as the jury an the 
 Morse case was satisfied, that the purpose was to cause the 
 published quotations of prices to become a trap for investors. 
 On the other hand, a statute defining the intent in this way 
 would be a whip of scorpions with which prosecutors, like Mr. 
 Stamson, could drive gambling money changers out of the 
 
32 
 
 power or value than we have now; but, at its 
 best, the market standiard would still be, and for- 
 ever must be, very far indeed from having the 
 accuracy of our measures of weight and spacial 
 dimensions; there will always be a wide margin 
 for the play of chance, and within that margin 
 the trader of brains, of knowledge, of experience, 
 and of expertness will have a marked advantage 
 over the stupid, ignorant, inexperienced and in- 
 expert trader. 
 
 Fifth: With the first law of the market econ- 
 omists use other bases for their theories of prices 
 and their determination of values which, like 
 the first law, are at least so far unsound as to 
 make the theories useless for the solution of the 
 question now under consideration. One such is 
 the idea that, besides being the measure of value, 
 money is only, and merely, a medium of exchange, 
 so that a series of money transactions can, with- 
 out error, be treated as indirect barters of mater- 
 ial things. From this footing a step is made 
 to the idea that laws of value and price can be 
 arrived at by confining attention to the instinctive 
 needs and demands for pleasure of the human 
 body, and by studying the relation thereto of ma- 
 terial things. It is observed that the bodily needs 
 and desires, though recurrent, are quickly satia- 
 ble. From this narrow induction springs a law 
 of the diminishing utility of material things, and 
 a curious and wonderful superstructure of un- 
 convincing a priori reasoning as to their exchange 
 values. But the utility of property, as dis- 
 
 markets, and keep them out. The market standard is now a 
 reoogmized measure of damages in the courts, and it is also 
 frequently referred to in statutes for various purposes. For 
 example, in Section 547 of the New York Penal Code, market 
 value is made the test for discriminating between the various 
 degrees of larceny. 
 
33 
 
 tinguished from tlie utility of material things, 
 is ignored, and the insatiability of the desires 
 which property, as such, ministers to, is ignored. 
 The desire of property or of enrichment is con- 
 ceived of by economists as a desire for things-in- 
 general, that is, for material things-in-general, 
 that is, for material things, and therefore, (they 
 seem to think) only material things, and their 
 utilities in ministering to bodily needs and desires, 
 call for special consideration and study. 
 
 What are the ignored desires which property, 
 as such, ministers to? Among them tare liberty 
 of many kinds, present assurance against the 
 tyranny of future bodily needs, influence good or 
 bad over other men, the permanent welfare of 
 wife and child, the great happiness of making 
 others happy. Are these desires satiable, las hun- 
 ger is satiable? Do they have no influence on 
 values and prices? Is there any law for exactly 
 measuring their influence? Is it, indeed, the same 
 thing for the baker to sell bread for money, part 
 of which he is at liberty, if he pleases, to save 
 for the gratification of these desires and part use 
 for the purchase of butcher's meat, as it would be 
 for him to barter the bread directly for meat, 
 which he could do nothing with except presently 
 eat it? Surely money is not a mere medium of 
 exchange. It is property, and, as such, it is 
 specially adapted to the gratification of a most 
 important set of human desires which cannot 
 be gratified by other forms of property, except to 
 the extent that they can first be converted into 
 money. 
 
 Such is the case for the inequality of bargains, 
 as the writer sees that case. There are now 
 known various species of time gains in property 
 power or value; such as those that result from 
 the application of one's own native and purchased 
 
34 
 
 labor and capital to tlie adaptation of material 
 things for use; such as those that come to a land- 
 owner as the result of the expenditure of his 
 neighbors' labor and capital; and such as those 
 that come to the owner of gold as the result of 
 the fluctuating moods of men. Will not somebody 
 who knows come forward and tell us what reasons 
 there are for believing that there is no genus of 
 instantaneous gains and correlative losses for the 
 eye of economic science to study? 
 
 In conclusion, the writer may be pardoned for 
 adding a short explanation of what appears to 
 him to be the vital theoretic importance of a cor- 
 rect solution of the question which has here, one- 
 sidedly, been discussed. A fundamental concep- 
 tion of economics, so far as that science attempts 
 to understand and explain the activity of men 
 in getting their living under the existing regime 
 of civil government, private property and ordered 
 liberty, may be indicated by the phrases, first, pro- 
 duction — then, distribution of produce among 
 the huynan agents in production — then, consump- 
 tion. So, loving boys, with fallow passions and 
 souls unplowed, sometimes go out in a boat on 
 the water to catch flounders; they fill the boat, 
 row to shore, and divide the fish into shares which 
 may be equal or unequal as their heavenly har- 
 mony of heart moves them; then eacli carries 
 his share home and eats it, or deals otherwise with 
 it as he pleases; for lovers like these no govern- 
 ment, no law, no property, and no need of any; — 
 an idyllic dream of anarchy!^ From this root 
 
 1 It is interesting to think that all the mighty influence of this 
 'false sequence of ideas, dtiring the last sixty years, may have 
 had i'ts origin in the dream of a generous and brilliant, but in- 
 experienced boy, J. S. 'Mill appears to have laid his economic 
 foundations, under the guidance of his unwise, Benthamite 
 father, when between thirteen and sixteen years of age; see 
 Cannan, History of the Theories of Production and Distribu- 
 
35 
 
 sprouts the notion that the requisites of produc- 
 tion are, as some say, land and labor, or, as others 
 say, land, labor and capital, or as others say, 
 capital, labor and enterprizing. Another offshoot 
 from the same root is the idea that there is a pri- 
 mary distribution of produce by natural law into 
 such categories as, — Rent, the share of land- 
 owners; Wages, the share of laborers; Interest, 
 the share of capitalists; and Profits, the share 
 of entrepreneurs; and that such primary distri- 
 bution is followed by a further distribution 
 of rent among individual land-owners, of wages 
 among individual laborers, of interest among in- 
 dividual capitalists, and of profits among indivi- 
 dual entrepreneurs. A very large part indeed of 
 theoretic economics is devoted to these and simi- 
 lar categories and to the elaboration and formu- 
 lation of the supposed natural laws which apply 
 to them. Now, to anybody who will open his eyes 
 and see for himself, the fact is manifest that land, 
 labor, capital and enterprizing are requisites of 
 production only in the material or physical sense, 
 that is to say, in the same sense in which many 
 unappropriable things (such as the air, the sun's 
 light and heat, the forces of gravity, chemical af- 
 finity and vitality,) are requisites of production. 
 In quite a different sense there is, in the existing 
 regime, another requisite of production, which in 
 this relation is seldom emphasized by economic 
 theorists. That requisite is property; you must 
 own before you can produce, just as you must own 
 before you can eat. So, also, it is manifest that 
 the title to produce vests in the owners of the land, 
 the buildings, the tools, the materials and the labor 
 
 Hon, Second Edition, pages 388-390. It does not seem ever 
 to have occurred to Mill to consider whether the relations of men 
 to the material world can efficiently be organized unless their 
 relations inter sese are first in some way adjusted and estab- 
 lished with a considerable degree of firmness. 
 
36 
 
 which are used in producing it, and that those 
 owners are, not the laborer, but the employer-pro- 
 ducer who has bought the labor, not the landlord, 
 but the tenant-producer who has bought the use 
 of the land, not the capitalist who lends capital, 
 but the borrower-producer who has bought the 
 use of it; and that whatever distribution there is 
 among producers (using that word in the limited 
 sense that has been explained,) is determined 
 by their contracts, and not at all by what they 
 have done as producing agents; in short, there 
 is ordinarily, in the existing regime, no distri- 
 bution of produce qua produce among the human 
 agents in production. Produce, as it comes into 
 being, is merged into the general mass of property, 
 and, as a part of the general mass, is distributed, 
 without any intermediate classification, directly 
 among individual men, including those who are 
 and those who are not agents in production, by 
 gift, by exchange, and by direct operation of 
 governmental law. Outside of accounting rooms 
 and the closets of scholars there is (with some 
 minor and insignificant exceptions) no other dis- 
 tribution than this. Hence, it is not possible that 
 those parts of economic theory which have been 
 referred to can be a true explanation of the 
 existing regime, unless what the theory supposes 
 to be done is equivalent to what actually is done, 
 and, inasmuch as the only instrumentality in 
 sight for working out equivalency is the bargain, 
 there can be no equivalency unless bargains are 
 equal. It seems, therefore, that if bargains are 
 unequal, the bird's-eye view or root idea or fun- 
 damental conception of the branch of economic 
 theory which is concerned with the true under- 
 standing and explanation of the existing regime 
 is wrong and must be changed to something else, 
 say, something like this, namely; — 
 
37 
 
 Preconception, 
 
 A state of general economic unthrift; first, anarchy; then, 
 clashing interests and opinions, bitterness of heart, quarrels, 
 homicides, disorder, war. 
 
 Conception of Existing Regime. 
 
 A state of mingled economic extreme thrift, moderate thrift, 
 and extreme unthrift; first, civil government, private property, 
 ordered liberty ; then, peace ; then, simultaneously, on the one 
 hand distribution of property, and, on the other hand, production 
 and consumption of material things. 
 
 Postconception. 
 
 A state of general economic thrift; problems for men of 
 science who shall have first truly explained the existing regime ; — 
 What are the causes of the extreme thrift and the extreme 
 unthrift of the existing regime? Is a false location of the legal 
 boundary walls of property and liberty one of the causes? Is 
 fraudulent manipulation of markets one of the causes? By 
 what modification or new combination and adjustment of the 
 primal forces of the existing regime can general thrift be 
 promoted? Firsit, what? Then, what? 
 
 In this view property stands at the front of the 
 existing regime, a first cause, a principal force, 
 in the organization and direction of the economic 
 activity of men ; in the view now prevelant among 
 economic theorists it stands inconspicuously in the 
 hackground, an effect or result of economic activi- 
 ty. The error in the prevalent view, if error there 
 be, is of the mind-fettering kind such as fre- 
 quently has blocked for a long time the advance 
 of science. It resembles the error which once as- 
 tronomers made in assuming that the earth is sta- 
 tionary and that the sun moves over it. 
 
 Samuel B. Clarke. 
 New York City, June 1, 1909. 
 
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