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 BRARY (>F 
 
 DK. FRANCIS LIE HER, 
 
 ry n ml Law in Columbia College, Now York, 
 
 TH '.: <;IIT or 
 
 MICHAEL REESE, 
 
 1973. 
 
 Library. 
 

TREATISE 
 
 POLITICAL ECONOMY, 
 
 GEOEGE OPDYKE. 
 
 NEW YORK : 
 PUBLISHED FOR THE PROPRIETOR, 
 
 BY G. P. PUTNAM, BROADWAY. 
 
 1851. 
 
ENTERED 
 According to Act of Congress, in the year 1851, by 
 
 GEORGE OP DYKE, 
 
 In the Clerk's Office of the District Court of the United States 
 For the Southern District of New York. 
 
 WM C. BRYANT ti CO.. PRINTERS, 
 
 18 Nassau street, cor. Pine. 
 
PREFACE. 
 
 THE present brief Treatise originated in an effort to 
 ascertain the true commercial policy of our country. 
 That effort was commenced some years ago, and was first 
 directed to an examination of the arguments presented 
 in favor of the Protective system, and the Revenue Tariff 
 system, which, it is well known, are the only two lines 
 of commercial policy that have been adopted by our 
 government or advocated by any considerable number of 
 our people. Meeting with nothing in that quarter which 
 could be fairly regarded as a demonstration of the sound- 
 ness of either system, or as a satisfactory solution of the 
 main question, the author next resolved to investigate 
 the subject for himself not by consulting elaborate 
 works on Political Econony, (the source whence others 
 have imbibed such opposite views,) but by an original 
 inquiry. 
 
 In pursuance of that design, an investigation of the 
 problems of Commerce was entered upon. A mere glance 
 at the subject sufficed to show that the intimate connexion 
 between Commerce and Money must necessarily render 
 the inquiry a fruitless one, unless it were made to em- 
 brace a consideration of the latter Nor had much 
 progress been made in this direction before it also be- 
 came apparent that the principles involved in both com- 
 mercial and monetary problems were so dependent on 
 
IV 
 
 PREFACE, 
 
 other and more general principles of Political Economy, 
 that it would be quite impossible to frame satisfactory 
 theories with regard to them, without having first ex- 
 plored the whole of that vast field. The inquiry was 
 accordingly extended to these broader limits. 
 
 After a careful investigation of the whole subject, the 
 author succeeded in framing a general theory, which 
 appeared to his own mind to be not only consistent in 
 all its parts, but unexceptionable as a whole. A subse- 
 quent examination of some of the best economic treatises 
 extant, served to confirm this impression ; for while the 
 theory was found to differ in ma-ny important features 
 from that of any other writer, a careful examination of 
 tlu? points of difference convinced the present writer that 
 his own views were correct. This conviction naturally 
 suggested the idea of elaborating the inquiry into a brief 
 but sy.-ti'inatic Treatise, to be submitted to the judgment 
 of others.. 
 
 After some hesitation, growing out of the author's 
 distrust of his ability to perform such a task either with 
 credit to himself or with advantage to others, it was de- 
 cided to adopt that suggestion. The attempt was ac- 
 cordingly made, and, in the midst of more engrossing 
 occupations, persisted in, until the work had been moulded 
 into the form in which it is here presented, or very 
 nearly so.. The effort was then abandoned and the manu- 
 script thrown aside, under the conviction that neither 
 the logic nor the language was sufficiently accurate for a 
 work making pretensions to the character of a scientific 
 treatise. That conviction is still felt, and it is not un- 
 likely that it would have still deterred the writer from ven- 
 turing on the present step, had not his interest in the 
 subject been renewed and strengthened by meeting 
 with the elaborate work of John Stuart Mill, which 
 
PREFACE. 
 
 made its appearance in the year 1848, shortly after the 
 period just referred to. From the known ability of that 
 author, not less than from his prior efforts on kindred 
 topics, we had a right to expect from him a more perfect 
 exposition of the truths of Political Economy than had 
 before appeared in any quarter. Nor was that expecta- 
 tion greatly disappointed. All who are familiar with 
 the subject must admit that his treatise is more system- 
 atic and comprehensive, and, as a whole, more truthful 
 than that of any other laborer in the same field. Never- \f 
 theless, it is far from being perfect. A careful exam- 
 ination of it has convinced the present writer that it 
 contains numerous errors, some of which are so funda- 
 mental that their virus pervades the whole work, and 
 vitiates many of its conclusions. Besides, like most 
 other scientific works on this subject, it is the produc- 
 tion of one who has been reared and educated under 
 political institutions very different from ours ; and it is 
 chiefly designed to meet the wants of British readers. 
 For these reasons we must expect to find it imbued with 
 ideas and opinions in which we cannot concur, as well as 
 incumbered with discussions of no direct interest to us. 
 What we republicans need, is a system of Political 
 Economy in perfect harmony with the other portions of 
 our political edifice. In other words, we want an hon- 
 est, straight-forward system a system grounded on the 
 broad principles of Justice and Equality, and in all its 
 doctrines and legislative applications solely designed to 
 illustrate and enforce those principles. We have no 
 right to look for anything of this kind from quarters in 
 which the opposite principles of government are taught 
 and practised upon ; but we have a right to expect it 
 from Americans. Indeed we are clearly required to devise 
 such a system for our own guidance : our duty to ourselves 
 
VI PREFACE. 
 
 and to the form of government we Lave adopted, alike 
 demand it. Nor can we much longer neglect this duty 
 without forfeiting our claims to the title of consistent 
 Republicans. 
 
 Viewing the subject in this light, and believing that 
 the suggestions herein contained can scarcely fail to 
 contribute something to the advancement of this impor- 
 tant branch of political science, the author has finally 
 determined to place his effort before the public. He 
 submits it for the consideration of other inquirers, and 
 asks attention to it, not as a correct and finished treatise, 
 but as a rudely drafted model of what such a treatise 
 should be. If it shall be found to merit even this char- 
 acter, it must prove useful, since it will serve to furnish 
 hints to those who have the ability and leisure requisite 
 for the elaboration of a perfect system. 
 
 But while such is the general design of this volume, 
 it is proper to state that its composition and publication 
 have been specially prompted by the author's de- 
 sire to disseminate his peculiar views on the subject 
 of Money. These views constitute one of the sections 
 of a connected system, and therefore could not be pre- 
 sented separately without destroying a part of the evi- 
 dence on which they rest. They possess the equivocal 
 merit of originality, to say the least. It is hoped, 
 indeed, that they possess more substantial merits ; but of 
 this the reader must judge. They will be found, upon 
 examination, to embrace the outlines of a plan for fur- 
 nishing a paper currency, which, although irredeemable, 
 and therefore free from cost of production, will, it is be- 
 lieved, perform the offices of money much better than 
 either bank notes or coin. 
 
CONTENTS. 
 
 Page. 
 INTRODUCTION. Political Economy Defined. 1 
 
 PART L 
 OF THE SCIENCE OF WEALTH. 
 
 CHAPTER I. 
 Of the Origin and Design of "Wealth 15 
 
 CHAPTER II. 
 
 Of the Nature of "Wealth ; and of the expedients resorted to 
 by mankind for the purpose of facilitating its production 
 and preservation 31 
 
 CHAPTER III. 
 
 Of the Natural Laws of Trade. General remarks 59 
 
 Section L Of the Principles ichich control the Production 
 
 of Wealth 62 
 
 " II. Of the Principles which control its Distribution. 86 
 
 " TIT. Of the Principles which control its Consumption. 110 
 Of the rate of Profit and the degree of Wealth 
 
 which the Laws of Trade have established 117 
 
 PART II. 
 
 OF THE ECONOMIC FUNCTIONS OF GOVERNMENT. 
 CHAPTER L 
 
 Preliminary remarks. The General Purposes of Government 
 
 considered 141 
 
 CHAPTER IL 
 Of the Institution of Property 155 
 
Vlll 
 
 CHAPTER IIL 
 Of Property in Land 176 
 
 CHAPTER IV. 
 Of 'the Regulation of Commerce ; and of Taxation. 
 
 Section I. General remarks 199 
 
 " II. Of Tariff Laws, considered as a means of rais- 
 ing Revenue; and of Direct Taxation. The 
 
 merits of the two methods compared 207 
 
 " III. Of Tariff Laws, considered as a means of regu- 
 lating Commerce and Production with special 
 reference to their internal or domestic conse- 
 quences 223 
 
 " IV. The same subject continued with special refer- 
 ence to external or international consequences. . 239 
 V. Of Free Trade and Direct Taxation 258 
 
 CHAPTER V. 
 Of Money. 
 
 Section I Of Metallic Money ' m 265 
 
 II. Of Convertible Paper Money 284 
 
 " IIL Of Inconvertible Paper Money 296 
 
 CHAPTER VI. 
 
 Of Credit ; and of the Right of Property in Actions 311 
 
 CHAPTER VII. 
 Of Slavery 327 
 
A TREATISE ON POLITICAL ECONOMY. 
 
 INTRODUCTION. 
 
 POLITICAL ECONOMY, as usually defined, is the sci- 
 ence that treats of the general principles and laws which 
 affect the production, distribution and consumption of 
 things having an exchangeable value. This definition 
 appears to me unobjectionable for one so concise. It 
 is compact, yet sufficiently precise for ordinary purposes. 
 But when an individual inquirer attempts to shed ad- 
 ditional light on a scientific subject when he ventures 
 to submit his peculiar views to public inspection, in the 
 hope of impressing on the minds of others the convictions 
 which rest upon his own it is alike customary and use- 
 ful for him, at the outset, to mark with clearness and 
 precision the boundaries within which his speculations 
 will be found. 
 
 To the end that I may do this in a manner that will 
 be perfectly intelligible to the reader, I will first ask him 
 to join me in a bird's-eye view of the entire domain of 
 human knowledge. By this means we shall see not only 
 the position and limits of the small section of knowledge 
 that I am about to explore and hope to enlarge, but its 
 relations to neighboring sections with which its principles 
 are more or less interlinked. 
 1* 
 
INTRODUCTION. 
 
 Knowledge is, perceived and comprehended truth 
 truth revealed to the understanding ascertained truth. 
 But what is truth ? Those who are deeply versed in the 
 origin and meaning of words, and in the philosophy of 
 language, have answered, that, in the scientific sense, this 
 term merely denotes the distinguishing attribute of one 
 class of propositions or assertions, as falsehood does that 
 of another. In Mill's system of logic, for example, it 
 is maintained that all truth, and all error, lie in proposi- 
 tions ; that there is no such substantive thing as truth, 
 but merely such a quality as the true, and that this is 
 exclusively confined to one class of propositions, or asser- 
 tions and denials. Now, although this view of the sub- 
 ject is presented by one who ranks deservedly high in 
 letters and philosophy, yet, I cannot but regard it as 
 unsound and untenable. No such thing as Truth ! How 
 then, I would ask, can there be in propositions, such 
 qualities as the true and the false ? Why has the con- 
 crete name truth, been coined, as well as the abstract 
 name, trueness, unless the thing exists corresponding 
 with the former ? With what propriety could we speak 
 of warmness, or of a warm object, if no such thing as 
 caloric existed? These and similar questions which 
 might be put, cannot, I apprehend, receive satisfactory 
 answers without first admitting the substantive existence 
 of Truth. As a portion of the Universe, it is too im- 
 portant and all-pervading to be confined within the nar- 
 row limits of one class of propositions. It would be 
 much nearer its real character, as it seems to me, to call 
 it the essential portion of all things. The votaries of 
 philosophy and science have, in all ages, characterised 
 their own labors as efforts to ascertain truth ; and surely 
 they did not mean to admit, much less assert, that they 
 were pursuing a nonentity ; nor are they liable to the 
 
INTRODUCTION. 8 
 
 charge of having committed so great an absurdity. 
 Every particle of our knowledge concurs in giving un- 
 mistakable evidence that Truth is a real existence, 
 since these particles of knowledge are nothing less than 
 sections of truth impressed upon our minds, nothing 
 less, indeed, than witnesses testifying to the fact of their 
 own existence and presence. Universal Truth we may 
 regard as divided into two regions, one of which is termed 
 Knowledge, the other Ignorance, or the known and the 
 unknown. Now our existing stock of knowledge can be 
 nothing else than that portion of truth which has been 
 revealed to the human mind ; and it has ever been the 
 aim of scientific inquirers to enlarge its boundaries by 
 rolling back the dark mantle which separates the regions 
 of the known from the unknown. They trace up a given 
 line of truth to the point where earlier explorers had 
 left off, and then, summoning to their aid every instru- 
 mentality at their command, push back the curtain which 
 conceals its hidden links ; and the moment these are ex- 
 posed to the mental vision their image is impressed on 
 the mind, which, in its tarn, strikes off a duplicate in the 
 form of propositions, where the image may be seen, and 
 its counterpart impressed on an indefinite number of 
 other minds. The reason, therefore, why some proposi- 
 tions are called true, is, because they are counterparts 
 of truth ; i. e., they embody, and represent to the mind, 
 the image or likeness of . facts, or portions of truth. 
 Other propositions are called false because that image 
 is absent. 
 
 1 he latest philosophical classification of things is the 
 following : 1, Feelings ; 2, Minds ; 3, Bodies 5 4, At- 
 tributes. It is held that every namable thing may be 
 grouped under one or other of these heads indeed, some 
 metaphysicians, rejecting the fourth class as superfluous 
 
4 INTRODUCTION. 
 
 and improper, hold that the first three fairly include all 
 things. Now, it is apparent that Truth cannot be 
 classed under either the first or. the second head; nor 
 can it, with any degree of propriety, be called a Body, 
 since in the usual acceptation of the term, a body con- 
 sists of matter or rather, it is a thing so far material 
 as to come under the cognizance of one or more of the 
 external senses. Finding no place for Truth in either 
 of these general classes, logicians shove it aside, calling 
 it an attribute, and after appropriating it to one class of 
 propositions, deny that it exists anywhere else. They 
 seem to have forgotten that we have an internal sense, 
 competent to take cognizance of things of which the ex- 
 ternal senses are utterly incapable. The immateriality 
 of truth is too absolute to make any impression on 
 the latter, but this is the very quality which fits it for 
 assimilating with the mind, and thus impressing our con- 
 sciousness. For example, that immaterial force (termed 
 Gravity) which binds the universe together, still remains 
 occult to the outward senses, although the mind has been 
 familiar with the fact of its existence for centuries. In 
 making that discovery, the senses did nothing more than 
 to point out certain phenomena, which were the effects 
 of some hidden cause or agency ; but with this hint, or- 
 dinary minds were able to perceive the existence of the 
 agent itself, while the comprehensive mind of Newton 
 was able to trace it up to other worlds, and to demon- 
 strate its universality. Gravity, therefore, is an exist- 
 ence, but it is neither a Feeling, a Mind, nor a Body. 
 What then is it ? I answer that it is a Law of Nature, 
 and that it belongs to a class of namable things which 
 philosophers have altogether omitted in their categories : 
 namely, Facts or Principles, or in the concrete. Truth. 
 
INTRODUCTION. 5 
 
 It will be seen from what precedes, that I regard the 
 term Truth in its widest sense, as denoting that class of 
 things which consists of the Laws of Nature and their 
 derivatives, including all the principles and facts result- 
 ing from them. If this view of the matter be a correct 
 one, then that which the term denotes is neither more 
 nor less than the omnipresence of the Deity, or, in other 
 words, the external manifestations of the Author of na- 
 ture in His works, of which the everywhere present and 
 controlling power of the sun within our solar system is a 
 faint emblem. 
 
 Such is Truth, according to the conceptions I have 
 formed of it ; and in evidence of the correctness of this 
 view of the subject, it may be remarked, that if we knew 
 all the laws of nature and their derivatives, we should 
 be omniscient. It is well known, however, that it has 
 not pleased the Creative Power to endow humanity with 
 an unlimited capacity for the perception and comprehen- 
 sion of these laws. The powers of the human mind, al- 
 though exceedingly elastic, and gifted with a wide range 
 of action, are, nevertheless, finite. They can take cogni- 
 zance of only such laws of nature as happen to be within 
 their ordained sphere of action, and of these only such sec- 
 tions as are found to correspond with them in magnitude, 
 character, and attributes. It is well known, for instance, 
 that whenever we attempt to trace a line of truth or law 
 of nature, either up to its original source, or down to its 
 ultimate subdivisions, we are alike bewildered by the 
 vastness of the one, and by the minuteness of the others. 
 And it may well be that there are laws of nature or sec- 
 tions of truth which differ so completely in quality and 
 character from the human mind, that the latter is not 
 only incapable of perceiving and comprehending them, 
 but even of conceiving them to exist. 
 
6 INTRODUCTION. 
 
 After this preamble, in explanation of the nature of 
 truth, it will not be difficult to mark out the boundaries 
 of that division of it, which, by having its image impress- 
 ed on the understanding of mankind, has been converted 
 into knowledge. This division is capable of being made 
 co-extensive with the domain of thought, but at present 
 it is much smaller. 
 
 The aggregate of knowledge has been, with apparent 
 propriety, divided into the following classes : 1, A know- 
 ledge of the laws which link together causes and their con- 
 sequents, including all the principles and facts connected 
 with the succession of phenomena ; 2, of the facts, prin- 
 ciples and laws which relate to co-existences ; 3, of those 
 which relate to simple existences ; 4, of such as relate 
 to resemblances. To these is added a distinct but 
 subordinate class, consisting of a knowledge of such facts 
 as are involved in verbal propositions and relate to the 
 meaning of words. 
 
 Under one or other of the foregoing heads may be 
 grouped every matter-of-fact with which the human mind 
 is acquainted, or of which it is competent to take cogni- 
 zance. The class first named greatly exceeds, both in 
 extent and in importance, all the others combined ; and 
 since it is the division within which will be found the 
 small section of knowledge that we are about to explore, 
 it is not deemed necessary on the present occasion to 
 characterise the others more definitely. But this I will 
 proceed to define with more exactness, preparatory to 
 noting some of its subdivisions. 
 
 The soundest thinkers of the present day regard the 
 law of Causation as of universal prevalence. All their 
 scientific speculations are based on the assumption, that 
 every event which takes place in nature, whether connected 
 with matter or with mind, is the effect of some antece- 
 
INTRODUCTION. 7 
 
 dent cause or combination of causes ; as, for example, the 
 phenomenon, day, is the effect of sunbeams, the phenome- 
 non, motion, that of gravity or momentum, or of these two 
 causes acting jointly. Some have denied, and indeed 
 still deny, the universality of this law. They admit its 
 invariable prevalence in the material world, but deny its 
 agency in the production of mental phenomena. It will 
 be incumbent on me, in the ensuing chapters, to demon- 
 strate the unsoundness of this opinion, so far as it relates 
 to mental volitions connected with wealth ; and if I suc- 
 ceed in this, we may safely conclude that they are also 
 wrong as to all other phenomena of mind. Indeed, it 
 must be apparent to any one who has given the subject 
 much reflection, that no such thing as a well grounded 
 science of society can be constructed without assuming 
 as its basis, not only the existence of this law, but its 
 controlling influence over mind as well as over matter. 
 
 Assuming these views to be correct, it thence follows 
 that the department of knowledge under consideration, 
 occupies a wide space that it extends, in fact, over the 
 entire domain of ascertained truth, but is confined to one 
 class of laws exclusively. It takes cognizance of all 
 causes and all consequences which the human mind is ca- 
 pable of understanding, but it takes no note of the facts 
 involved in the simple existence, the co-existence, or the 
 resemblance of things, nor of the meaning of words, 
 except so far as may be necessary as a subsidiary 
 means of attaining the end in view. In truth, we 
 may regard each division of knowledge as present- 
 ing this widely extended surface, but while the others 
 only contain here and there an insulated fact or prin- 
 ciple of subordinate importance, this is literally filled 
 with interdependent lines of truth, to which time is 
 constantly adding new branches, and to each branch 
 
8 INTRODUCTION. 
 
 new links. When, from any chosen point of obser- 
 vation, these lines are traced upward, they are found 
 not only to converge, but at almost every link to con- 
 join, so that the nearer their source the fewer their num- 
 ber. As to what may be their character and tendencies, 
 in either their ascending or descending series, where 
 they pass beyond the present boundaries of human 
 knowledge, we can of course only conjecture ; but so far 
 as analagous reasoning warrants, we have a right to in- 
 fer that the same system prevails in the regions of the 
 unknown ; and hence, that, originating in the impulses 
 of the Great First Cause, the law of causation issues 
 thence in a single stream, which, at every remo.ve from 
 its source, diverges and divides like pencils of light until 
 the universe is filled with its innumerable branches. 
 
 This greatest of the four primary classes of knowledge 
 is subdivided into numerous sections or fields, called sci- 
 ences. It would be foreign to the aim of this prelimi- 
 nary chapter to detain the reader with an attempted de- 
 finition of the boundaries of each of these fields, or even 
 with a simple enumeration of the whole of them. It will 
 be sufficient for my purpose to characterise, briefly, a 
 few of the more important, together with those which 
 border on Political Economy. 
 
 I shall begin with the most elevated fields, or those 
 which lie nearest the superior boundary of knowledge, 
 where the lines of causation first enter in from the re- 
 gions of the unknown, and consequently, are fewest in 
 number, but greatest in magnitude containing, as it 
 were, the germs from which are developed the unnum- 
 bered derivative laws, which increase in geometrical pro- 
 gression as they pass through the domain of thought un- 
 til their ultimate subdivisions are hid behind the curtain 
 that forms its inferior boundary. The first is called As- 
 
INTRODUCTION. 9 
 
 tronomy. It is the province of the votaries of that sci- 
 ence to investigate and unfold the natural laws which 
 constitute the mechanism of the heavens and control the 
 motions of the bodies of space ; and we see them still 
 engaged in successful efforts to roll back the curtain so 
 as to penetrate still deeper into the mysteries of the uni- 
 verse. The second in position and magnitude, though 
 not in importance, is termed Geology, within which, lie 
 the laws concerned in the formation of the earth, espe- 
 cially its superior strata and surface. Next, Meteorology, 
 which takes cognizance of laws appertaining to the at- 
 mosphere. Next, Chemistry, which traces out the laws 
 concerned in the composition of all material substances. 
 Next, Physiology, which attempts to ascertain the laws 
 concerned in the phenomena of organic existence or life. 
 Next, Psychology, which investigates the laws of mind. 
 But- if, as is now most common, the two sciences last 
 named be so circumscribed in their definitions as to ex- 
 clude from their province all kinds of organic existence 
 except that of man, then they should be preceded by the 
 science of Human Nature, since this field includes both 
 of the others. 
 
 To come down, then, to the limited province wherein 
 man is the only subject or phenomenon presented for con- 
 templation, we begin with the science of Human Nature, 
 the votaries of which thread out the laws concerned in 
 his existence and constitution, whether connected with 
 his corporeal attributes or his mental. Next, Ethology, 
 which investigates the laws concerned in the formation of 
 character. Next, the Science of Society, which traces 
 out the laws concerned in the production of all social 
 phenomena of whatever kind or tendency. Next, Poli- 
 tics, or the Science and Art of Government. This is a 
 division of the field last named. As a science, politics 
 2 
 
10 INTRODUCTION. 
 
 merely takes note of the natural laws concerned in the 
 production of that class of social phenomena over which 
 the prerogative of government may be usefully extend- 
 ed : as an art, it frames and enforces the machinery of 
 government so executing its task as to conform to the 
 plan which science indicates as the one best calculated, 
 to suppress social evils and to produce social benefits. 
 
 Now, it is within a small section of the political de- 
 partment of social science that the very limited theatre 
 of our explorations will be found. While the general 
 science of society takes cognizance of all the causal laws 
 that affect the social interests of mankind, and while 
 the science of politics takes note of all those which in 
 any manner affect the interests of the state Political 
 Economy is concerned only with that portion of them 
 which give birth to and result from the desire of 
 Wealth. 
 
 Viewed in this aspect, and from a position which ena- 
 bles us to take a perspective survey of the entire domain 
 of knowledge, the science of wealth appears to be but a 
 mere point scarcely large enough to be perceived. Like 
 everything else, however, the nearer we approach it the 
 larger it will appear ; and when, upon entering the gate 
 that opens to its province, we attempt to trace out the 
 consequences of that law of human nature which begets 
 in all mankind the desire of wealth, we find so many de- 
 rivative laws branching off, and these branches subdivi- 
 ding in such rapid progression, that the powers of the in- 
 tellect are not equal to the effort of tracing out the whole 
 of their consequences. In fact, these principles are so 
 numerous and important, they occupy a field so vast, and 
 exercise such a potent influence on human happiness and 
 progress, that it has been deemed advisable to facilitate 
 their exposition by dividing this scientific field into nu- 
 
INTRODUCTION. 11 
 
 merous sections. Accordingly, Political Economy traces 
 this law of human nature and its derivatives no farther 
 than they affect the pecuniary interests of mankind in 
 their capacity of political communities or states. Here 
 it leaves them. They then pass through into numerous 
 other sections of the same field, some of which are term- 
 ed sciences, others arts such, for example, as Agricul- 
 ture, Manufactures, Navigation, and, in short, the whole 
 circle of useful arts and sciences. 
 
 Having thus, in general terms, pointed out the posi- 
 tion and character of our field of inquiry, as well as its 
 relations to other sciences, I will now proceed to give a 
 more exact definition of it. 
 
 Political Economy, then, I regard as the science whose 
 peculiar province it is : 1, To unfold the law or laws of 
 human nature from which the desire of wealth emanates : 
 2, To explain the nature and attributes of the resulting 
 phenomenon, Wealth or more properly, Value : 3, To 
 point out the prime agents of its production, together 
 with the manner in which their respective services con- 
 cur in the process : 4, To ascertain and describe the so- 
 cial machinery that political communities have de- 
 vised and adopted, as general auxiliary agents of pro- 
 duction : And 5 after ascertaining these fundamental 
 truths, which may be regarded as the groundwork of the 
 science to trace out the resulting principles or natural 
 laws which govern the production, distribution and con- 
 sumption of social wealth. Thus far the province of Po- 
 litical Economy is purely scientific it is confined to the 
 investigation of principles and the above definition of 
 it, indicates the limits within which the first division of 
 this inquiry will be confined. But after science has un- 
 folded the laws and principles from which wealth results, 
 and those to which it gives birth, it is also the province 
 
12 INTRODUCTION. 
 
 of Political Economy to point out their proper application, 
 by indicating the true economic polity of governments. 
 The second division of this inquiry will be an attempt to 
 execute a part of that task. 
 
 The foregoing definition needs some modification. It 
 will be seen that it seems to shut out of our field of in- 
 quiry, every law of human nature save that which 
 prompts us to prefer a greater to a less amount of wealth. 
 In strictness it should do so, because all other laws of 
 human nature properly belong to other departments of 
 scientific inquiry ; but since they are all linked together 
 by a chain of interdependence, we shall not be able to 
 ascertain the true origin of wealth without first deter- 
 mining their joint tendency, or rather, their joint influ- 
 ence on the desire of wealth. It will be found also, as 
 we proceed, that the interdependence referred to is so 
 complete, and so uniformly manifested in social phenom- 
 ena, that we shall have frequent occasion to step over 
 the lines which divide Political Economy from the collat- 
 eral departments of social science, for the purpose of ex- 
 aming other laws of human nature and their derivatives, 
 with the view of estimating their influence on kindred prin- 
 ciples with which we are directly concerned. We shall 
 find, for example, that the law of self-preservation (which 
 may be regarded as the fundamental principle of politi- 
 cal science, of which field this is but a small section,) not 
 only concurs with other causes in producing the desire of 
 wealth, but that it has given birth to that feature of the 
 Social Contract which forbids, and in a large degree pre- 
 vents, the commission of murder, as well as all other acts 
 of personal violence calculated to mar the productive ca- 
 pabilities of mankind ; and that it has thus contributed 
 essentially to the development of wealth. So, also, with 
 most of the other laws of human nature and their result- 
 
INTRODUCTION. 18 
 
 ing desires : they all concur, incidentally, either in pro- 
 moting the production and preservation of wealth, or in 
 hastening its consumption. It may, therefore, be found 
 useful, in the progress of this inquiry, to characterise 
 briefly the whole family of mental desires, for the pur- 
 pose of indicating the pecuniary consequences to which 
 they lead ; but whenever I find it necessary to trespass 
 on other fields of inquiry, I shall be careful to confine 
 my researches therein, to an examination of such facts 
 and principles as exert an influence on either the pro- 
 duction, the distribution, or the consumption of wealth. 
 
 Beside these links which connect Political Economy 
 with the superior and the collateral departments of so- 
 cial science, there are others which connect it with those 
 branches of science and art which lie below it and in 
 some measure result from it such as agriculture and 
 navigation, the manufacturing and mechanic arts, the art 
 of individual and household economy, &c. But as it re- 
 spects these, the line of demarcation is so distinct, and 
 the reciprocal influences so slight, that we shall rarely 
 find it necessary to extend our researches into their 
 rightful province. Their principles being derivatives of 
 those embraced in our science, the only way in which 
 they can modify the latter is by reacting on their source, 
 which, it is evident, must be to a much smaller extent 
 than where the influence is direct, as is the case in the 
 other instances to which I have referred. 
 
 To this delineation of what may be termed the exter- 
 nal relations of Political Economy, I might add a more 
 detailed enumeration than I have yet given of the truths 
 that lie within its own province. For the present, how- 
 ever, I shall refrain from doing so. In the definition al- 
 ready presented, I have named the cardinal principles 
 from which all the other truths of the science are derived ; 
 2* 
 
14 INTRODUCTION. 
 
 and since the ensuing inquiry is specially designed 
 to unfold them, by legitimate deductions from well es- 
 tablished principles and premises, it appears to me their 
 enunciation may be more properly left to the body of 
 the work. 
 
 These general remarks will, it is hoped, enable the 
 reader to understand my design, and with his consent we 
 will now enter upon the field of inquiry so imperfectly 
 marked out. 
 
PART I. 
 OF THE SCIENCE OF WEALTH. 
 
 CHAPTER 1 
 
 OP THE ORIGIN OF WEALTH. 
 
 IN considering the plan of this work, I have found it 
 somewhat difficult to determine whether to commence 
 with an analysis of the nature of wealth, or with an ex- 
 position of the natural laws concerned in its origin. Both 
 seem equally entitled to precedence, since we cannot 
 present either one without supposing in the mind of the 
 reader a pre-existing knowledge of the other. One or 
 the other, however, must have the first hearing ; and, 
 since a knowledge of the causes which brought wealth 
 into being will greatly facilitate our apprehension of its 
 nature, I have concluded to treat first of its origin. But 
 before doing so, it will be well to explain, briefly, the 
 sense in which the terms, wealth and value, are here 
 employed. 
 
 The term Wealth, or Social Wealth, I regard as the 
 general name of that class of things which possess the 
 attribute, value ; and Value I conveive to be that 
 property of things, which prevents their obtainment 
 unless other things possessing the same property be 
 given in exchange for them. This attribute is some- 
 
16 ORIGIN OF WEALTH. PART I. 
 
 times called exchangeable value, but I hold the adjective 
 to be unnecessary. Value, then, in the sense in which 
 the term is used in this treatise, may be regarded as the 
 vital principle or essential portion of social wealth, a 
 more expressive name for which would be, Artificial 
 Utility ; because (as I shall endeavor to prove in the 
 next chapter,) that property of things which we term 
 value, is, in fact, neither more nor less than the utility 
 wherewith they have been invested by artificial means. 
 
 Aided by this brief definition of the terms employed, 
 the reader will be prepared to follow me in the effort to 
 point out the origin of wealth, and the ends it was de- 
 signed to aid in attaining. To these his attention is now 
 invited. 
 
 In contemplating the nature of man and the circum- 
 stances which surround him, we discover the important 
 fact, that his wants and desires are ever in advance of 
 the means at his command for satisfying them ; his wants 
 and desires are infinite, the means at his command for 
 satisfying them, finite. This principle is so universal 
 and invariable, its manifestation in the life of every in- 
 dividual is so certain and constant, that we are warranted 
 in calling it an unavoidable condition of human life, 
 a fundamental law of human nature. 
 
 These wants and desires are not only infinite in num- 
 ber, but ever recurring ; to quiet their importunity re- 
 quires the constant presence of their objects. They are 
 of various degrees of intensity, being so arranged that 
 they may be said to environ each individual in a countless 
 number of receding circles, the intensity of which is in 
 proportion to their nearness to the centre, and their 
 volume in proportion to their distance from it ; that is 
 to say, the wants constituting the first or inner circle 
 are more urgent but less numerous than those of the 
 
CHAP. I. ORIGIN OF WEALTH. IT 
 
 second, the second than the third, and so on as they re- 
 cede ; from which it may be inferred that each circle 
 represents about the same aggregate of wants and desires. 
 Fortunately, we are not subject to the pressing importu- 
 nity of more than one of these circles at a time, because 
 the nearest forms a barrier which effectually prevents 
 the approach of all the others. But whenever that is 
 removed by the presence of its objects, the next outer 
 circle immediately concentrates and occupies its place. 
 The same may be said of the next, and the next ; and 
 so on to infinity, for no man has ever yet succeeded in 
 finding the outermost limits of his wants and desires. 
 
 Created subject to these boundless and ever recurring 
 wants and desires, man finds himself placed upon a 
 theatre of existence where but a very limited number of 
 their immediate objects are placed within his reach ; 
 not sufficient even to sustain his vitality. He finds 
 however, that nature presents to him a profusion of ele- 
 ments and proximate compounds, adapted to the forma- 
 tion of finished objects of desire ; and he finds moreover, 
 that his Creator has conferred on him suitable, though 
 limited, mental and muscular powers for making the 
 needful modifications. 
 
 Such are the means provided by nature for procuring 
 the objects of human desire, from which we may readily 
 perceive that the end cannot be accomplished unless man- 
 kind exercise the faculties wherewith they are endowed. 
 But if we contemplate for a moment the constitution of 
 the human mind, and the nature and arrangement of our 
 wants and desires, we shall find that the whole are ad- 
 mirably designed for securing this exercise. 
 
 Without entering the debatable portion of the .field of 
 mental science without adopting principles controverted 
 by any philosophical sect it may be assumed: 1, That 
 
18 ORIGIN OF WEALTH. PART I. 
 
 Intellect, or that faculty of the mind which performs the 
 office of reasoning and judging, is the highest endowment 
 of man, the governing principle of his nature ; and that 
 Happiness is the supreme desire of his heart all other 
 desires being merely its subordinate auxiliaries : 2, That 
 the intellect controls and directs the desire of happiness, 
 and through that, its subordinates ; from which rule, how- 
 ever, must be excepted, those instances wherein the pros- 
 pect of immediate pleasure renders desires so vehement 
 that they are led to commit acts of insubordination ; but 
 for these acts they are promptly punished by the intellect, 
 through its instrument, the conscience : 3, That the desire 
 of happiness, under the guidance of the intellect or judg- 
 ment, not only regulates the intensity of all other de- 
 sires, but prompts and directs every action of the life : 4, 
 That happiness is promoted (really , when the judgment 
 is true and its dictates obeyed seemingly, when it is 
 false or disobeyed,) by the satisfaction of wants and gra- 
 tification of desires. These propositions we may have 
 frequent occasion to refer to as premises ; but at present 
 we have only to notice a very obvious inference that may 
 be drawn from them, and the truth of which is fully con- 
 firmed by observation and experience ; namely, that 
 whether the intellect be enlightened or ignorant, the de- 
 sires obedient or disobedient, man is impelled, alike by 
 the dictates of his judgment and by the joint urgency of 
 his supreme desire and all its subordinates, to exercise 
 his faculties in procurement of objects adapted to his 
 wants and desires. 
 
 Such is a brief outline of the plan of human life as es- 
 tablished by its Author. It remained for man himself 
 to carry it out by performing Ins appointed part. Let 
 us now look at the nature and extent of the powers con- 
 ferred upon him for that purpose, and at the character 
 
CHAP I. ORIGIN OF WEALTH. 19 
 
 of some of the wants and desires which importune him 
 for their objects. 
 
 These powers may be divided into two classes, intel- 
 lectual and corporeal. The first plans and directs, the 
 second executes. I will endeavor to give an outline of 
 the process. To do this with precision and clearness 
 would require a more perfect knowledge of the men- 
 tal organism and functions than the science of mind has 
 yet unfolded, unless we adopt as the true theory, the hy- 
 pothesus of Gall and his followers. That would indeed 
 remove all difficulties, for this school of mental philoso- 
 phers profess not only to have ascertained the nature and 
 purpose of the different organs of the mind, but to be 
 able to measure the size and strength of each in any 
 given individual. But however much of truth there may 
 be in these pretensions, we know that Phrenology is re- 
 garded by many sound thinkers as too uncertain in its 
 premises, as well as in its conclusions, to establish its 
 claims to the title of a science ; and hence, its materials 
 are altogether unfit to be used in forming a basis on 
 which to build another science. It is not, however, ab- 
 solutely essential that, when investigating the origin of 
 wealth, we should be able to lift the curtain which hides 
 from us the secret machinery of mind, and thus learn the 
 precise source from which the intellectual portion of it 
 emanates. The ability to do so, and its resulting know- 
 ledge, would, doubtless, facilitate our labor and give in- 
 creased certainty to its results ; but in their absence, we 
 can substitute our knowledge of mental phenomena, and 
 thus seize hold of the rudimental principle of social 
 wealth, at the very point where it first enters the boun- 
 daries of our knowledge, which is but one remove from 
 its ultimate source. This, then, shall be our starting 
 point, whence we will reason only from such general 
 
20 ORIGIN OF WEALTH. PART 1. 
 
 principles of the human mind as are universally admitted 
 to be true. 
 
 As man has been constituted by nature, we find that 
 Mind is the controlling power in all his actions. The 
 Body serves as its tenement) and also, as an obedient 
 machine wherewith it may compass its volitions and aims. 
 The senses are placed upon this machine as sentinels, 
 which, by means of nerves leading from the brain to each 
 organ, and from each organ to the brain, serve to con- 
 nect the mind with the external world and impart to it 
 some knowledge of every thing of which they are capa- 
 ble of taking cognizance. Intuition, inference, memory, 
 voice, and motion, are also instrumentalities or media of 
 the mind, provided by nature, for imparting to it a 
 knowledge of her laws. The subordinate desires present 
 their petitions to the desire of happiness ; the desire of 
 happiness refers them to the understanding or judgment, 
 with instructions first to determine which it is possible to 
 gratify, next, to decide which of these are best calculated 
 to promote happiness, and finally to put in motion the ap- 
 propriate machinery for executing its decision. The mind 
 then plans and issues its volition, the machine moves in 
 obedience to the mandate, and the senses and other in- 
 strumentalities of the mind direct. Such is the modus 
 operandi in every human thought, emotion and volition, 
 when they result in action. It is to be noticed, however, 
 that the body cannot execute whatever the mind chooses 
 to will. The compass of the corporal powers is much 
 more circumscribed than that of the mental. They can- 
 not fly with the freedom and swiftness of thought, nor 
 can they accomplish a host of other tasks which the de- 
 sire of happiness would prompt the mind to impose upon 
 them, provided it perceived the ability to perform. 
 
CHAP. I. ORIGIN OF WEALTH. 21 
 
 Nature, in fashioning this machine, endowed it with 
 vitality and motion, which enable it, within the narrow 
 compass of its functions and powers, to obey the man- 
 dates of the mind ; but she at the same time kindled 
 within it a consuming fire, which, unless constantly fed 
 with fresh fuel, in the form of wholesome air, water, and 
 food, speedily consumes its vital organs. Now, inas- 
 much as it is a well-known law of human nature to love 
 life and dread death, it follows that the first and most 
 imperative mandate which the mind conveys to its obedi- 
 ent machine, is, that it procure the aliment required to 
 keep itself in motion, to the end that the vital functions 
 may be sustained, and the life thus prolonged. And lest 
 the love of life, and the mental desire for physical ali- 
 ment to which it gives birth, might not of themselves be 
 sufficiently strong to prompt the efforts requisite for se- 
 curing the end in view, nature has added the pleasurable 
 sensations which attend the gratification of these desires, 
 and the pains of hunger, thirst, and suffocation, as aux- 
 iliary aids to the mental desire. It may be affirmed, 
 therefore, that the most imperative of human wants, are 
 those having for their objects, air, water and food. They 
 may be regarded as constituting the first or inner circle 
 of those by which we are individually environed. Our 
 earthly existence is made to depend upon a uniform sup- 
 ply of their objects ; and we have seen that the love of 
 life, the dread of death, the enjoyments of appetite, and 
 the pains of denial, all concur in urging their procure- 
 ment. How, then, shall they be obtained ? This is an 
 important inquiry, and one which, if properly pursued, 
 cannot fail to exhibit the true origin of wealth. 
 
 In the first place, it may be set down as an axiom, 
 that man obtains all his aims and ends by the best 
 methods within his knowledge and reach. This is a 
 3 
 
22 ORIGIN OF WEALTH. PART I, 
 
 general principle of the human mind, of such universal 
 prevalence, that humanity scarcely presents an isolated 
 exception so uniform and ever active, that we see man- 
 kind, everywhere, and in all conditions of life, engaged 
 in untiring efforts to improve the methods in every 
 process required to supply their wants. Guided by this 
 unbending law of the mind, let us endeavor to trace out 
 the general features of the plan adopted by mankind for 
 the purpose of supplying the objects required by the 
 first or most urgent circle of human wants. 
 
 Atmospheric air, the object first named, is a free gift 
 of nature to her common children. All living creatures 
 that need it, may partake of it freely, without effort, and 
 without diminishing the supply. They are immersed in a 
 sea of it, and have but to permit the involuntary expan- 
 sion and contraction of the lungs, and that want is sup- 
 plied. Water is furnished by nature in almost equal 
 profusion ; no effort worthy of notice is required to pro- 
 cure it. Not so, howeyer, with the various kinds of food. 
 , These, although equally indispensable to life, have been 
 contributed by nature with a more sparing hand. To 
 obtain them, even of the simplest form, in quantities 
 sufficient to sustain the vital functions, requires some 
 exercise of the faculties wherewith man has been endow- 
 ed by his Creator. Nor can he go and gather them at 
 the promptings of his appetite and the volitions of his 
 mind, especially if the season be unpropitious or the 
 locality unfavourable. True, the immediate materials 
 of food are distributed over the world in considerable 
 (though inadequate) quantities, at least during a part of 
 the year, while their elements and proximate compounds 
 are supplied by nature in great abundance ; but then, 
 the direct powers conferred upon man for transforming 
 the elementary and proximate materials into finished 
 
CHAP. I. ORIGIN OF WEALTH. 23 
 
 articles of food, and for securing them and preserving a 
 portion for use in a season of scarcity, are found to be 
 defective. The mind has sufficient capacity to conceive 
 and direct, but the body has not the needful powers of 
 execution. It can only, as we have said, obey the 
 mental volitions when they direct it within the limits of 
 its ordained field of action, and this has been found so 
 narrow as to render it unequal to the task of pro- 
 curing the quantity of food required to support life. 
 Here, then, was a dilemma. The plan of human life 
 seemed to be imperfect, for its Author had not. apparent- 
 ly, furnished means sufficient to preserve it. The im- 
 perfection, however, was but apparent, not real ; for the 
 deficiency of direct, immediate means, was more than com- 
 pensated for by the rich endowments of the intellect. The 
 latter, we may suppose, had no sooner discovered the 
 defective capacity of the machine provided by nature for 
 executing the mental volitions, and the fatal consequen- 
 ces that must speedily ensue in the absence of a remedy, 
 than it commenced the task of contriving one. The 
 crisis was important, the necessity urgent, and the con- 
 sequences of success or failure of the most momentous 
 character, for the question of the perpetuation or extinc- 
 tion of the human race was involved in the effort and 
 must be decided by the issle. The intellectual faculties, 
 gifted, as they seem to be, with powers of expansion 
 proportionate to the duties required of them, proved 
 themselves equal, and more than equal, to the emer- 
 gency. They devised, and aided by the corporeal 
 powers, created Value, which they brought into their 
 service, and by aid of which they were enabled not only to 
 satisfy the desire of food, but to procure the objects of 
 many other desires. 
 
 The nature of this new agent, and the means employed 
 in its production and preservation, will be fully discuss- 
 
24 ORIGIN OF WEALTH. PART I. 
 
 ed in the next chapter, my object here being merely to 
 point out the motive, or rather the necessity, that prompt- 
 ed its creation. But lest my meaning prove obscure, it 
 may be well to say in this place, that value is the 
 essential principle of all artificial machines. When 
 mankind discovered that the direct ways and means 
 provided them by nature were inadequate to the preser- 
 vation of life, we may well suppose that they entered 
 into a most scrutinising examination of the nature of the 
 powers given them, for the purpose of discovering not 
 only the defect, but, if possible, the remedy. A mere 
 glance at the problem presented for their solution, must 
 have been sufficient to convince them that the defect 
 existed in the corporeal powers, and that it consisted of 
 their inability to execute, fully, the mandates of the 
 mind. But to find the remedy was a much more difficult 
 task ; and the fact that they hit upon one so appropriate 
 and so effectual as the creation of value, evinces a degree 
 of genius and judgment that would do honor to the best 
 intellects of the present day. They must have per- 
 ceived that their natural powers, both mental and physi- 
 cal, were so constituted, as to be capable of giving out 
 streams of service without sensibly diminishing the foun- 
 tains ; and from this fact they must have inferred that, 
 by a skilful blending of a pdHion of these services with 
 matter, they would be able to construct artificial machines, 
 which, when placed at the command of the natural 
 machine (the body), and serving in concert with it, 
 would greatly enlarge its powers. This inference 
 enabled them to conceive the proper remedy, and they 
 proceeded accordingly. Instead, therefore, of expending 
 the entire stream of mental and physical services in 
 direct efforts to modify and secure the immediate objects 
 of desire, they incorporated a portion of it with natural 
 
CHAP. I. ORIGIN OF WEALTH. 25 
 
 products in such a manner as to constitute secondary or ar- 
 tificial machines adapted to aid the primary or natural pow- 
 ers in securing the objects of desire. In other words, they 
 gave a separate and independent existence to a portion 
 of these services, and placed them as intermediate agents 
 between desires and their objects, there to labor, in 
 concert with the natural powers, in bringing the two 
 together. The manner in which these artificial machines 
 aid the natural one, is, by enlarging either the boundaries 
 of its power or its productiveness. Every machine is so 
 constructed as to secure one or other of these results 
 sometimes both. A ship, which enables us to cross 
 oceans, will serve as an illustration of the first, since we 
 could not compass that end unaided by other means than 
 those directly furnished by nature. A plough, or any 
 other labor-saving machine, will illustrate the second; 
 and a steam engine as well as many other machines, 
 possess both qualities. These machines constitute 
 value in its productive form. Their services, in con- 
 nection with those of the mental and muscular powers, 
 are transferred to matter, and so blended with it, as to 
 produce finished objects of desire. These constitute 
 value in its consumable form. Before the creation of 
 value, the streams of mental and muscular service went 
 out from their source directly to the objects of desire, 
 and after being incorporated with them, brought them 
 back to replenish the fountain ; but now they pass from 
 their source to these auxiliary machines, therree, greatly 
 enlarged, to the immediate objects of desire, and thence, 
 laden with these objects, return to their source. Value 
 has thus added a new and most efficacious link to the 
 chain which forms the circuit. But I am anticipating. 
 These are topics, the discussion of which belong pro- 
 perly to the next chapter. Let us return, therefore, 
 3* 
 
26 ORIGIN OF WEALTH. PA&T I. 
 
 from a digression which perspicuity seemed to demand. 
 Such is value in its primitive or most rudimental form. 
 I have shown that the unavoidable necessity of having 
 more food than nature provided direct means for securing, 
 must have been the primary cause of its origin. But 
 we must not forget that there are other wants, treading 
 close upon the heels of this, which are almost as urgent 
 in their promptings. Closely allied to those already 
 named, is the desire of clothing and tenements, as a 
 means of preserving life and health, by affording pro- 
 tection against changes of temperature, and other in- 
 clemencies of weather. So, also, the desire of nourish- 
 ment for offspring, until such times as their powers are 
 sufficiently matured to procure it for themselves, as a 
 means of perpetuating the species. The instinct which 
 gives birth to the desire last named, is common to every 
 variety of the animal kingdom ; and in all of every' 
 species, nature has been careful to plant it so deep, and 
 to aid its accomplishment by means of the vehemence of 
 another desire, and the unequalled force of parental affec- 
 tion, that nothing but sustenance is required to secure 
 the end in view. And whilst the offspring of the lower 
 orders of animals are capable, almost from their birth, 
 of procuring food for themselves, we find human offspring 
 utterly helpless for years, the preservation of their lives 
 depending entirely upon parental guardianship and 
 nourishment. The parents of the former have not, 
 like those of the latter, been endowed with powers capable 
 of creating auxiliary means to aid them in procuring the 
 objects of want. I notice this remarkable fact, not only 
 for the purpose of showing the imperative character of 
 the desire we are now considering, but also, for the 
 strong confirmatory evidence it affords that value origi- 
 nated in the causes here pointed out ; for in the laws of 
 
CHAP. I. ORIGIN OF WEALTH. 27 
 
 nature, as established by their Author, the adaptation of 
 means to ends are always perfect. 
 
 The desire of air, water and food, I have called the 
 first circle of wants ; the desire of clothing and tenements, 
 and of nourishment for offspring, may be termed the 
 second ; and the two together, or rather their objects, 
 may be regarded as essential to life. These, therefore, 
 we may term wants all the circles beyond them, desires. 
 I have said that the objects essential to life, could not 
 be procured without the aid of value ; and for evidence 
 of the truth of that assertion, I may confidently refer to 
 whatever is known of the condition of the rudest tribes 
 of savages in all ages of the world : the records of history 
 may be searched in vain for an instance in which a com- 
 munity or tribe of men have existed, entirely destitute 
 of artificial machines. It is to be observed, however, 
 that mankind need but little of value to enable them to 
 procure the objects indispensable to life. A few rude 
 and imperfect machines such, for example, as the most 
 uncivilized of men employ as instruments to aid them in 
 securing fish and game have been found adequate to 
 this primary end. These imperfect instruments, and 
 their products, represent wealth in its most elementary 
 form that form in which it is endowed with no other 
 attribute of productiveness than the- one conferred by the 
 single expedient which first brought value in existence. 
 In this initial form, wealth must be regarded as merely 
 an inactive germ, in which the principles of development 
 and preservation are either absent, or exist in such 
 feeble degrees that every effort at expansion is at once 
 suppressed by violence and rapine. 
 
 Wealth, in this its embriotic form, seems to have 
 been sufficient to satisfy that portion of the human family 
 who have not yet emerged from the savage state ; at 
 
28 ORIGIN OF WEALTH. PART I. 
 
 least, they have failed, either through ignorance or the 
 feebleness of their desires, to adopt the needful expedi- 
 ents for promoting its development and securing its pre- 
 servation. Not so, however, with the other portion of 
 mankind. They have not been satisfied with a single 
 intellectual achievement which enabled them to taste the 
 first fruits of wealth, and by that means to preserve 
 life and perpetuate the species ; but on the contrary, 
 prompted by a desire to enlarge the boundaries of their 
 happiness, by presenting for fruition the objects of their 
 less essential but equally importunate desires, and 
 guided by a more enlightened judgment, they have suc- 
 ceeded in imparting to this germ, principles of develop- 
 ment and preservation, so appropriate and effective, that 
 they have transformed it into the stupendous phenome- 
 non, Social Wealth. The intellectual expedients of a 
 general or social character, adopted and employed in 
 bringing about this transformation, we shall find to be 
 the four following namely : 1, The recognition and 
 enforcement of the Right of private Property, especially in 
 Land ; 2, Commerce ; 3, Money ; 4, Credit. To this 
 list might be added that fundamental principle of the 
 Social Contract, the recognition and social guaranty of 
 the Right of Life. But since that principle is broader 
 and deeper than the province of wealth constituting, 
 in fact, the foundation of the science of Politics, and 
 extending over its entire domain, and being withal, 
 mainly designated to protect the person rather than the 
 property I do not feel at liberty to include it ; and 
 yet we shall find, that the aid it affords in the produc- 
 tion and preservation of wealth, although incidental, is 
 not only effective but indispensable. 
 
 While bodily and mental services may be said to con-= 
 stitute the vital principle of value in its rudimental 
 
CHAP. I. ORIGIN OF WEALTH. 29 
 
 form, and while the intellectual expedient which first 
 diverted a portion of these services from direct to inter- 
 mediate objects of desire, may be regarded as the funda- 
 mental principle of wealth, since it gave a separate and 
 independent existence to value, in the form of a germ 
 capable of aiding in its own development the four expedi- 
 ents last named may be regarded as the corner-stones of 
 social wealth; for we shall find that they constitute the 
 social basis on which individuals have reared that 
 immense superstructure. Existing together and their 
 tendencies operating in harmony and concert, these 
 intellectual and social devices have given so much free- 
 dom of action to the productive faculties of mankind, 
 such variety and perfection to auxiliary machines, and 
 have so increased the security of both from trespass and 
 spoliation, that the rivulets of primitive value have been 
 expanded into full, broad rivers of social wealth. They 
 have thus enlarged, immeasurably, the circle of human 
 enjoyments, and thereby augmented the sum of human 
 happiness. And these, as I have endeavored to show, 
 are the ultimate ends which social wealth was intended 
 to secure, these the motives which prompted its origina- 
 tion, and still prompt its production. 
 
CHAPTER II. 
 
 OF THE NATURE OF WEALTH, 
 
 AND OF THE EXPEDIENTS AND MACHINERY OF A GENE- 
 RAL OR SOCIAL CHARACTER, INVENTED AND EMPLOYED 
 BY MANKIND, IN ITS PRODUCTION AND PRESERVATION. 
 
 In treating of the origin of wealth, I gave also, what 
 -perspicuity seemed to require, an inkling of its nature. 
 I now propose to enter into a more extended examina- 
 tion of this subject, believing that a thorough understan- 
 ding of the nature of wealth, and of the social instru- 
 mentalities which concur in its production and preserva- 
 tion, are indispensable to a correct apprehension of this 
 science. 
 
 We must commence with an analysis of value, since, 
 as already stated, value is the attribute which consti- 
 tutes the essential portion of wealth ; and it is, moreover, 
 the name I have applied to wealth itself, in its most 
 rudimental form. 
 
 First in order, then, will be a definition of the term, or 
 an explantion of the sense in which I intend to employ 
 it. Whatever may have been the primary sense attached 
 to the word value, it has, like almost all other words, 
 from a paucity of terms and other imperfections pecu- 
 liar to language, become ambiguous ; i.e. it has more than 
 one signification attached to it. It is generally used 
 to denote that property of things on which their market 
 worth or price is based; but it is often employed to 
 
32 NATURE OF WEALTH. PART I. 
 
 indicate those properties of things which render them 
 either useful or agreeable, in which sense it is synony- 
 mous with utility ; and it is sometimes used as synony- 
 mous with power, causation, signification, &c. Now, it is 
 in the sense first given that I intend to employ the term, 
 and shall confine its meaning strictly within those limits. 
 This was doubtless -the primary, as it is still the usual 
 signification attached to it, for I hold that the term is 
 not only peculiar to this science, but that it is indispen- 
 sable to a clear exposition of its first principles ; and 
 hence am unwilling that it should be spoiled by being 
 pressed into other service. Some writers on the subject 
 of wealth, having noticed that this term was rendered 
 ambiguous by the gradual enlargement of its meaning, 
 have abandoned its use, and substituted the term, Ex- 
 changeable Value. Regarding this term as less appro- 
 priate and less compact, and the adjective as uncalled 
 for, I shall not adopt it, but will continue to employ the 
 original term in accordance with this strict definition. 
 
 Thus defined, what is Value? It is believed that its 
 nature may be most clearly shown by a classification in 
 which all things may by grouped under one or other of 
 the following heads. 1, The useless, or those which pos- 
 sess neither value nor utility ; 2, the merely useful, or 
 such as posses utility without value ; 3, the valuable, or 
 those which, besides being useful, are also invested with 
 the attribute, value. 
 
 The first class will be made up of the things destitute 
 of properties, either direct or indirect, immediate or re- 
 mote, adapted to the satisfaction of human wants or de- 
 sires, if, indeed, there be any of that character, which 
 may be doubted. True, we have not discovered the 
 utility of poisonous reptiles, noxious plants and vapors, 
 nor of many other things in the mineral, vegetable, and 
 
CHAP. II. NATURE OF WEALTH. 33 
 
 animal kingdoms ; but it is not improbable that, with 
 more perfect knowledge, we shall be able to appropriate 
 them all to the advancement of human happiness. Or 
 it may well be, that in the economy of nature they al- 
 ready subserve this end without our being conscious 
 of it. 
 
 The second class will consist of such things as may be 
 obtained without effort, but which, nevertheless, pos- 
 sess properties adapted to the satisfaction of our wants 
 and desires, such, for example, as atmospheric air, 
 solar light and heat, water, &c. These things are 
 deemed of high utility, and justly so, since they are not 
 only essential to our happiness, but to our existence ; 
 and yet they have no value, they will command no price. 
 Why not ? Because they have been furnished by nature 
 in such profusion that all may partake of them at their 
 pleasure, without effort, and without diminishing the 
 supply. They are the free gifts of nature to her com- 
 mon children. 
 
 The third class, like the second, will be made up of 
 direct and intermediate objects of desire, of things 
 capable of ministering, either immediately or remotely, 
 to the advancement of human happiness ; but it will be 
 confined to such of these as cannot be obtained without 
 human effort, or price. In other words, the things 
 possessing useful properties imparted to them by artifi- 
 cial means, will constitute the third class. This -ac- 
 quired utility, or artificial utility, is termed value. To 
 obtain it, we must either create it, inherit it, or give 
 equivalent value in exchange for it. Hence, this class 
 of things will include every component part of the aggre- 
 gate of social wealth, and these only. 
 
 We find, then, that the utility conferred upon things 
 by nature, and that imparted to them by the direct and 
 4 
 
34 NATURE OF WEALTH. PART I. 
 
 indirect efforts of mankind, are altogether different 
 properties. The first constitutes no part of social 
 wealth ; the second is its vital principle or essential por- 
 tion ; and yet we witness the remarkable fact, that most 
 if not all who have hitherto written on this science, have 
 failed to distinguish the features in which they differ ; 
 or if they have succeeded in this, they have failed to 
 separate them by any thing like a well defined line. 
 They seem indeed to have regarded value and utility 
 not only as synonymous terms, but as identical things, 
 and they have thus led themselves and their readers into 
 a labyrinth of errors. The fact that value and utility 
 are two distinct properties of things, may be demonstrat- 
 ed by a mere reference to the two familiar articles, wine 
 and water. The first is the more valuable, it will com- 
 mand the higher price ; and yet all will admit that the 
 second is the more useful of the two. Utility may be 
 regarded as the essential principle of all objects of 
 desire, whether direct or intermediate, and hence, it in- 
 cludes value as well as natural utility. Value is that 
 portion of utility which has been created by artificial 
 means. Every thing to which this attribute has been 
 communicated, is admitted to membership in the family 
 of things called social wealth, while those to which it has 
 not been imparted is excluded from that family. Hence, 
 it is the distinctive attribute of wealth ; and being so, 
 it must be regarded as the phenomenon whereof it is the 
 peculiar province of this science to treat. 
 
 The necessity that prompted the origination of value, 
 and the means employed in creating it, in the imperfect 
 form in which it exists among savages, having been al- 
 ready pointed out, do not need repetition here, fur- 
 ther than to say, that value, in that form, is the con- 
 tinued existence of nervous and muscular powers after 
 
CHAP. II. NATURE OF WEALTH. 35 
 
 they have been transferred from their owner to the 
 matter upon which he exerted them. Or we may say, 
 that it consists of simple artificial machines, planned by 
 the intellect and fashioned by the hands, designed to aid 
 the natural powers in procuring objects indispensa- 
 ble to life, to the end that mankind, like other creatures 
 more directly provided for, might be able to obey the 
 first law of animated nature, self-preservation. Value, 
 in that imperfect form, was not, however, adequate even 
 to this primary end, since it must soon have fallen a 
 prey to the spoliation of the stronger, unless protected 
 by some social guaranty of individual rights. In illus- 
 tration of this truth, let us suppose that a tribe of men, 
 in a primitive condition, without other means of procur- 
 ing food than those afibrded by nature, are threatened 
 with famine ; that in this pressing emergency, one of 
 their number, after wearily tasking his intellect and 
 consuming his time by industrious effort, constructs a 
 machine by aid of which he can procure sufficient food 
 for himself and family, but not for the whole tribe ; and 
 that this machine, instead of being guarantied to him, in 
 virtue of the right acquired by the incorporation 
 of his skill and labor with it, be left to such owner- 
 ship as the law of strength awards. In that event, 
 unceasing and exterminating strife would give it, ulti- 
 mately, to the strongest, and the result could not fail to 
 be highly injurious, if not fatal, to a majority of the 
 tribe indeed, to all but one. It is this necessity that 
 has given birth to the recognition and social guaranty of 
 the right of private property, without which social 
 wealth could not exist, nor even its undeveloped germ, 
 for the necessity is of such an imperative character that 
 we find the rudest savages enforcing, to some extent, the 
 rule of right, as a means of preserving their imperfect 
 
86 NATURE OF WEALTH. PART I. 
 
 creations of value. Man's reasoning powers enable him 
 to recognise this right, and it may be that he has an in- 
 nate sense of justice, which, as well as necessity, points 
 to its social guaranty, since, as is well known, nature 
 often secures her aims by plural means. But in this 
 case there can be little doubt that necessity alone is a 
 sufficient cause to produce the effect. 
 
 Again. Nature, besides distributing food with a 
 sparing hand, has made even this scanty supply subject 
 to the varying influence of the seasons. Except in some 
 favored climates where vegetable life and development 
 are perennial, she furnishes her vegetable stores for but 
 a portion of the year ; and since the subordinate animals 
 are dependent on these for subsistence, it follows that 
 they must migrate in search of them. The vegetable 
 and animal kingdoms constituting the only materials on 
 which man can feed, it is apparent that he too must 
 either migrate or perish, unless his intellectual skill can 
 invent a better expedient. Behold the expedient of 
 hoarding ! This method, however, cannot be adopted 
 with any chance of success, unless aided by the social 
 guaranty of the right of property ; because, in the first 
 place, there would be no surplus food to hoard until the 
 security of property had stimulated the production of 
 auxiliary machines to aid in its procurement, and, in the 
 next place, because it would be quite useless to hoard 
 the surplus where the owners are subject to the torture, 
 and their property to the spoliation, of the stronger. It 
 may be inferred, therefore, that the unavoidable neces- 
 sity of preserving food for use, in seasons of scarcity, 
 when nature's storehouse is either exhausted or locked 
 up, also compels even the most uncivilized portion of 
 mankind, in some degree, to guaranty to those who pro- 
 duce value, its peaceable possession, as a means of pro- 
 
CHAP II, NATURE OF WEALTH. 37 
 
 mo ting both its development and preservation. Among 
 savage tribes this guaranty is, however, very imperfect 
 sufficient merely to perpetuate their existence. In 
 civilized communities it is more perfectly recognised, 
 and more rigorously enforced ; and we shall see presently, 
 that it is to these causes, combined with a skilful en- 
 largement of the right of property so as to include land 
 and some other natural products in the social guaranty, 
 that wealth is mainly indebted for its development, and 
 civilization for its origin as well as its superior advances. 
 
 Let us now take this undeveloped germ of wealth, as 
 we find it existing in the hands of uncivilized men, and 
 trace its progress "when under the control of those more 
 gifted. We* shall thus learn by what methods they 
 have succeeded in imparting to the dormant germ, the 
 active principle of development and the increased 
 security from violende, by which it has been expanded 
 into social wealth. If judged by their effects, these me- 
 thods must possess an extraordinary degree of efficacy, 
 for they have already transferred the wilderness into 
 cultivated fields, dotted the earth with cities, towns and 
 hamlets, covered the ocean with commerce, and elevated 
 man from a state of barbarism to civilization, besides 
 increasing immensely the population of the world. 
 
 The portion of services contributed by the mind in 
 the production of value, is called Skill, the portion con- 
 tributed by the body, Labor ; the joint service of the 
 two, I shall term Industry. The first value produced in 
 the world must have emanated exclusively from these 
 two sources, because skill and labor could have had no 
 artificial aids until such were fashioned by themselves. 
 But the moment a share of the services of skill and 
 labor was diverted from the immediate to the interme- 
 4* 
 
38 PLAN OF SOCIAL WEALTH. PART I. 
 
 diate objects of desire, that moment these objects were 
 made to assume the forms of auxiliary machines, (better 
 known perhaps by the name of productive capital) so as 
 to aid in the process. By this expedient, the projectors 
 of wealth made value to concur in the process of creat- 
 ing other value, thus pressing it into the service of 
 reproducing itself or rather, of aiding in that process, 
 for it is familiar knowledge that the most perfect ma- 
 chinery is unproductive without the superintendence of 
 skill and labor. For example, the method of breaking 
 up the soil by means of the horse and plough, or even 
 by the spade, is a great improvement on the natural plan 
 of using the fingers and toes ; but these means cannot be 
 employed without human aid and guidance. Therefore, 
 all three must concur in the process, whence, it is appar- 
 ent, that the value produced will be the common offspring 
 of this triple parentage. Nor are these all. Nature, 
 in various ways, aids in the process ; and it has been 
 found necessary to subject to individual appropriation 
 and ownership, some of the means she contributes. 
 Nature, for example, provides the soil whereon the art 
 of agriculture is prosecuted, together with the atmo- 
 sphere, light, heat and rain, required to develope the 
 plants and perfect the fruits ; and, although the soil, 
 like the other contributions of nature just named, is 
 the free gift of God to his creatures, and hence, would 
 seem to have been designed, either for the common use 
 of all or for equitable apportionment amongst all 
 the members of the human family as their birth- 
 right yet, it has been found that no cultivation 
 can take place unless the soil be made subject to indi- 
 vidual ownership : because, in the first place, it must be 
 fitted for culture by clearing, fencing, and other prepar- 
 atory outlays of industry and capital, which could 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 39 
 
 never occur unless private ownership were first recog- 
 nised, and secured by the social guaranty ; and, in the next 
 place, no one would be found willing to sow and cultivate 
 unless he first had assurance that he alone would be 
 permitted to reap. Here, then, was another dilemma. 
 The soil could not be made subject to individual appro- 
 priation, to purchase and sale, and to bequest or inherit- 
 ance at the death of the owner, without injustice to 
 those who should subsequently come into the world 
 destitute of such inheritance ; and, on the other hand, 
 wealth could not be produced, the soil could not be cul- 
 tivated, nor even buildings erected upon it, without first 
 guaranteeing the right of individual ownership. How 
 should justice obviate this difficulty, without disturbing 
 the equilibrium of her scales ! This has been, and 
 indeed still is, regarded by many as a problem for 
 solution ; for, although mankind, perceiving the immense 
 advantages which would be secured, and bowing to the 
 necessity of the case, have not hesitated to guarantee the 
 right of private property in land, yet it is not to be dis- 
 guised that many are dissatisfied with the arrangement. 
 Their objections are not, however, founded in reason. 
 The injustice is but apparent, not real, as I will 
 endeavor to demonstrate in another place. At present, 
 we will proceed with the immediate subject in hand. 
 
 We have now reached, in the progress of our enquiry, 
 an interesting period in the development of wealth. 
 Like the chrysalis, it is about to assume a new T form and 
 a more perfect existence. Aided by the Social Contract, 
 and especially by its economic provisions, rudimental 
 value is now to be transformed into social wealth. Let us 
 glance at the causes concerned in the production of that 
 phenomenon. 
 
 We left that division of mankind whose progress in 
 
40 PLAN OF SOCIAL WEALTH. PART I. 
 
 wealth we arc now tracing, in the possession of some 
 artificial machines designed to aid them in procuring 
 the immediate objects of desire, and of others capable of 
 aiding in the reproduction of themselves and of value 
 generally, whether in the form of immediate or interme- 
 diate objects of desire. Now, inasmuch as mankind, in 
 the absence of external restraint, are prone to trespass 
 on the rights of others, it is evident that even these two 
 classes of auxiliaries must have been comparatively use- 
 less for want of power in the individual to protect his pro- 
 perty from spoliation, and for want of undisturbed 
 possession of land to till ; and hence, that the develop- 
 ment of wealth must have rested at these limits, and the 
 satisfaction of wants have been confined to their two 
 narrowest circles, so long as these hindrances to pro- 
 gress remained. When these defects in the plan of 
 wealth, and the injurious consequences resulting from 
 them, were perceived, the intellectual faculties, doubt- 
 less at once assumed the task of providing a remedy. 
 As usual, they proved themselves equal to the effort. 
 They conceived and planned the Social Contract, or, as 
 I choose to term it here, the Government Machine, 
 which, as may be inferred from its effects wherever it 
 has been adopted by society, has proved to be a most 
 efficacious remedy. 
 
 There were three principal aims (to say nothing of in- 
 cidental and less important objects,) which this machine 
 was designed to aid in securing namely : 1, The protec- 
 tion of life, liberty, and personal faculties. 2, The 
 protection of value. 3, The creation and protection of 
 what may be termed legal value in land and in some 
 other natural products. Of the first and highest aim, I 
 have but little to say in this place. Its consideration, 
 as already noticed, belongs to another and wider field of 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 41 
 
 social science. To that we leave it, with the single re- 
 mark, that the incidental aid thereby rendered to wealth, 
 is indispensable to its growth and its utility ; since, if 
 the lives and personal faculties of mankind, were not 
 protected by means of the social guaranty, it would be 
 neither possible for them to aid in the production of 
 wealth, nor useful to have its peaceable possession se- 
 cured to them. The second, I have already shown to 
 to be so requisite to life, that the least enlightened sec- 
 tion of the human family are compelled, in some degree, 
 to protect their meagre creations of value, the only 
 difference between them and the most enlightened sec- 
 tions, in this respect, being, that the protection afforded 
 by the latter is more perfect. But the third aim the 
 investiture of land and its natural products, with the at- 
 tribute of legal value, by ordaining that they should be 
 subject to individual ownership was a new feature in 
 the government machine. The first two features, more 
 or less perfectly developed, are common to all govern- 
 ments, whether of savage or of civilized communities, 
 but this is peculiar to the latter. In other words, the 
 right of private property in land is neither recognised 
 nor guaranteed in the political organizations of savage 
 tribes, while in those of all civilized communities it is. 
 This may be regarded as the chief, if not the only funda- 
 mental cause of the superior advances of the latter in 
 the development of wealth and its immediate offspring, 
 civilization. 
 
 The plan of this additional feature of the government 
 machine, may be thus briefly stated : The community, 
 in their collective or social capacity, as personified by 
 king or representatives, first assume the ownership of all 
 the land (including all its natural products,) within their 
 jurisdiction : they next invest it with legal value by es- 
 
42 PLAN OF SOCIAL WEALTH. PART I. 
 
 tablishing an arbitrary valuation or price for a given 
 quantity of it, upon the payment of which, by individuals, 
 they are recognised as its exclusive owners, and the 
 right to possess it guaranteed to them and their heirs 
 forever. Or, it may be stated thus : The society or 
 state, in exchange for proportionate quantities of artifi- 
 cial utility ) transfers to its individual members all the 
 natural utility under its control, of which that of land 
 and its natural products is the chief, and guarantees to 
 them its exclusive use, together with the right to dispose 
 of their respective portions, the same as though it were 
 value of their own creation. Or, in other language 
 still : By the voluntary act of at least a majority of the 
 members constituting a society or state, the individuals 
 first surrender to the mass the common right of each to 
 partake of the natural utility inherent in land and its 
 natural products ; and the mass then returns this right, 
 in definitive portions, accompanied with the social guar- 
 anty, to such of the members as are able and willing to 
 give in exchange fc/r it equivalent quantities of artificial 
 utility. 
 
 Such is the simple plan by which the right of private 
 property in land has been established and perpetuated. 
 Apparently, but little of genius was required in its con- 
 ception, but little of skill in its execution, or of judg- 
 ment in its adoption. The plan appears simple and 
 natural, its adoption obvious and just, and yet we wit- 
 ness the surprising fact that a large portion of the hu- 
 man family, from a deficiency either of genius or of 
 judgment, or of strength in their desire of happiness, 
 have failed to avail themselves of its momentous benefits. 
 
 Land and its natural products, mines, and some of 
 the smaller bodies of water, including mill seats and 
 fisheries, are the only kinds of natural utility that have 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 43 
 
 been made subject to individual ownership, and this for the 
 simple reason that no others are susceptible of being 
 made so. There are many other gifts of nature equally 
 useful, such, for example, as oceans, lakes and bays ; 
 light, heat, electricity, atmosphere and rain but their 
 characteristics are such as to render them mainly inde- 
 pendent of human control. For the sake of convenience 
 and brevity, I shall term the appropriated natural agents 
 simply, Land, that being the chief. 
 
 Before the right' of property in land was established, 
 there were, as we have seen, but three sources whence 
 value emanated ; but this ingenious device, by holding in 
 abeyance the aggressive propensities of mankind, per- 
 mitted the undisturbed assistance of land. The foun- 
 tain of natural wealth, which had been until then nearly 
 sealed up by unrestrained rapine, was thus opened and 
 converted into value, while the vigorous stream of ser- 
 vice that proceeded from it, was blended with those of the 
 other fountains. This, therefore, established another 
 source of value, making the whole number four ; name- 
 ly, Skill, Labor, Value (or productive capital,) and 
 Land. These are the prime agents of wealth ; they 
 constitute its great productive elements. All the value 
 that has ever been created, all the wealth that has ever 
 been produced, distributed, or consumed, has resulted 
 from these four classes of productive agents ; and nearly 
 all, from their united or concurrent services. Value 
 cannot, under any circumstances, be produced without 
 the concurrence of skill and labor ; rarely, if ever, 
 without the aid of capital in some form ; and only upon 
 unappropriated water, as in the whale fisheries and marine 
 commerce, without the concurrence of land. Aside 
 from these exceptions, value is the resulting product of 
 the blended services of these four concurrent agents ; 
 
44 PLAN OF SOCIAL WEALTH. PART 1 
 
 from them alone it proceeds, and hence, it must be to the 
 proprietors of these agents that the revenue or profits 
 accrue. These being the four elements consumed in the 
 great laboratory for forming the compound, value, and 
 the presence of each being necessary to the success of 
 every single process, it follows that the proprietors of 
 each will be, in every process, entitled to a share of the 
 resulting product or revenue. This is a partnership of 
 Nature's forming, and, as will be shown in the sequel, 
 she designed that the aggregate share of each should be 
 equal. 
 
 With intellectual skill to combine and direct, with 
 muscular powers, aided by artificial machines and land, 
 to execute ;and with the right of private ownership and 
 secure possession of each, recognised and enforced by the 
 government machine, we may readily perceive that man- 
 kind were able to compass the objects of numerous 
 desires which the direct means provided by nature had 
 not enabled them to reach. But the means were stHl 
 imperfect. For aught we have yet seen, each individual 
 or family found it necessary to produce for itself the 
 direct objects of desire, and also, the auxiliary machines 
 to aid in their procurement; i. e., the wealth consumed 
 and the capital employed by each individual or family, 
 must have been, in all cases, confined to the identical 
 value which each, respectively, had created. We may 
 safely assume, that this state of things could not have 
 existed long, before the intellectual faculties in view of 
 the manifest fact that nature had endowed different indi- 
 viduals with different degrees of mental and physical 
 powers, and had given to the earth great diversity of soil 
 and climate discovered that some men were, by nature 
 and circumstances, best adapted to the production of 
 value in one of its many necessary forms, some in ano- 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 45 
 
 ther, and so on ; that superior skill, and consequently, 
 enlarged value, resulted from the continuous exertion of 
 individual industry in a single pursuit ; and thence in- 
 ferred that the division of employments would facilitate 
 and perfect the processes by which value was produced, 
 and thus greatly augment its volume. But how should 
 they compass these advantages ? The cultivator of the 
 soil, by confining himself to that pursuit, would produce 
 a surplus of food, but then he would be destitute of 
 house and clothing, and of many other things essential 
 to his convenience and happiness. The mechanic, ma- 
 chinist and manufacturer would each have a superabund- 
 ance of the products of their respective arts, but inas- 
 much as none of these are suitable for food, the division 
 of employments would seem to sound their death knell, 
 apparently, under its adoption, they must soon die of 
 hunger. The difficulty was perceived, the mind grap- 
 pled with it, and again it came off victorious, as witness 
 the intellectual expedient, Commerce. 
 
 It is the province of commerce to execute the inter- 
 change of surplus commodities of value. It does this 
 by receiving them from their producers, carrying and 
 delivering them to consumers, and completing the trans- 
 fer in all cases, whether of receipt or delivery, by an 
 exchange of equivalents or equal quantities of value. 
 
 The plan and machinery of commerce, like all other 
 human contrivances, were doubtless at first deplorably 
 imperfect, consisting, we may suppose, of a few simple 
 instruments for measuring the bulk and weight of com- 
 modities, and of vehicles merely sufficient to transport 
 from one to another the surplus commodities of neigh- 
 boring producers. But the advancing knowledge of 
 mankind in the science and arts of production has ena- 
 bled them to render this expedient more and more perfect, 
 5 
 
46 PLAN OF SOCIAL WEALTH. PART I. 
 
 until, at present, we find the plan to be this : Through 
 its prime agents, called merchants, commerce presents 
 to every producer and every owner of value, all the 
 varied forms of artificial utility, and invites each to 
 give of such of his products as he needs least, in ex- 
 change for an equivalent of such as he needs most. By 
 means of this simple plan, most of the varied wants and 
 desires of mankind are in a measure amalgamated, or 
 changed from individual to social. It connects together 
 all the wants and desires of the commercial world by a chain 
 of interdependence similar to that by which the desires of 
 an individual are woven together. They are thus 
 thrown, as it were, into a community or oneness, so that 
 the possession of a commodity of value adapted to the 
 satisfaction of a single want or desire, is thereby ren- 
 dered equally available in the satisfaction of all others. 
 It is thus that commerce permits the division of employ- 
 ments, from which such immense benefits have resulted. 
 It was for the attainment of this single end that it was 
 devised and planned ; and, although it seems to fill a 
 more important post if not a wider space in the affairs 
 of life than all other processes of wealth combined, it 
 performs no other office. 
 
 The machinery of commerce consists of merchants and 
 their warehouses stocked with every form of artificial 
 utility ; of the means of transport such as roads and 
 canals, wagons, canal boats, steamboats and ships ; of 
 measures of bulk, length and weight, such as the bushel, 
 the yard-stick, and the pound weight ; of a slight en 
 largement of the government machine, so as to establish 
 rules in reference to the transfer of property, to bills of 
 lading, insurance, &c. This list is not yet complete, but 
 let us for the present consider it so, in order that we 
 may point out the serious nature of the defect which 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 47 
 
 called for the invention and adoption of the highly im- 
 portant instrument that remains to be named. 
 
 Let us see with what degree of facility commerce 
 will accomplish the exchange of values by means of the 
 machinery just named. We have the merchant with his 
 warehouse, commodities, means of transport, weights 
 and measures, and his legal rules of procedure. Thus 
 prepared, we will suppose that an agent of commerce 
 and a producer of surplus commodities, being mutually 
 attracted by the desire of gain, or by the desire of 
 obtaining that which they need more in exchange 
 for that which they need less, are brought together 
 for the purpose of effecting an exchange of values. 
 The producer presents (we shall say,) his bushel of 
 surplus wheat, for which he desires sugar, or coffee, 
 or cloth. The merchant stands ready and willing 
 to give either in exchange, but how shall he ascer- 
 tain, to the satisfaction of himself and the producer of 
 the wheat, the proper quantity ? He is provided with 
 instruments for ascertaining the length, bulk and weight 
 of commodities, but he has none for determining their 
 quantity of value ; and yet, this is, in all cases, the es- 
 sential portion of the objects to be exchanged. He may 
 know, perhaps, that the quantity of value in any given 
 commodity bears a fixed relation to the amount of the 
 joint service of industry, capital and land incor- 
 porated with it, in other words, that it is equal to the I/* 
 cost of production, plus average profits. He may know, 
 also, that supply and demand, acting in obedience to the 
 self-interest of men and to their desire of happiness, in- 
 dicate with a sort of vibrating truthfulness, the com- 
 parative cost of different commodities. But how shall he 
 contrive to measure their value 1 If he determines that a 
 yard of cloth is equal in value to a bushel of wheat, he will 
 
48 PLAN OF SOCIAL WEALTH. PART I. 
 
 soon discover that lie has committed an error ,because cloths 
 differ in their degree of value, and hence, the producer 
 of wheat would take only the best. So of sugar and 
 coffee ; they both vary in quality and cost, so that no 
 measurement of their magnitude or weight can indicate cor- 
 rectly the quantity of value they possess. Value is 
 imponderable, intangible, immaterial. Its quantity bears 
 no uniform relation to either the weight or the size of the 
 product with which it happens to be incorporated. There 
 is, for example, more value in an ounce of silver than in a 
 pound of iron, more in one bushel of wheat than in two 
 bushels of oats, and more in an inch of ribbon than in a 
 yard of tape. How then should the merchant determine 
 the quantity of this intangible, imponderable, yet essen- 
 tial portion of commodities 1 He had no means at his 
 command other than to observe first the indications of 
 supply and demand, and then to base upon these an es- 
 timate of the relative value that a given quantity of each 
 variety of each class of products bears to a given quan- 
 tity of any and every other variety and class of pro- 
 ducts. This estimate would be, at best, but a blind 
 effort to discover the true quantity of value. To per- 
 form the mental labor of making it, even imperfectly, 
 would be a task of immense magnitude and difficulty ; 
 to do it with any degree of certainty, would be utterly 
 impossible ; and yet, before the intervention of a mea- 
 sure of value in some form, commerce possessed no other 
 means of ascertaining its true quantity. In the case 
 we have supposed, the merchant was, therefore, com- 
 pelled to estimate, in the manner just pointed out, 
 not only the relative value of wheat, sugar, coffee 
 and cloth, but the proportion that the value of one 
 pound of each variety of his sugar and of his coffee, and 
 one yard of each quality of his cloth, respectively bore 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 49 
 
 to the value of one bushel of a particular quality of 
 wheat. When another customer presented a different 
 product for exchange, a similar estimate as to the rela- 
 tine value of that and the various commodities asked 
 for, would then be required, and so on through the 
 whole circle of valuable products. 
 
 Such must have been the first great obstacle encoun- 
 tered by the votaries of commerce, in their efforts to 
 prosecute it with the incomplete machinery at their com- 
 mand. They could only remove the difficulty by mea- 
 suring value, and how were they to provide means for 
 measuring a thing so intangible an immateriality ? 
 The effort would seem to be hopeless ; and it must be 
 admitted that the intellectual faculties were never more 
 nearly driven to the wall, for they have not, to the pres- 
 ent day, discovered a method whereby value may be 
 correctly measured ; but they have made a near approach 
 to it, as we shall see presently. 
 
 It was obvious that instruments purely material were 
 not competent to measure immateriality, and hence the 
 unavoidable conclusion, that the only way in which 
 the quantity of value could be determined, would 
 be to measure it by itself; i. e., to measure the 
 value of one product by comparing it with that of 
 one or more others. We have just seen that to make 
 this comparison of the value of each separate product 
 with that of all other products, would be so labori- 
 ous and so uncertain in its results, that, if adopted 
 as the method, it would neutralize in a great mea- 
 sure, the benefits of commerce. Hence the absolute 
 necessity of some more direct and certain rule by 
 which to determine the quantity of value. The re- 
 medy first devised we may .suppose to have been, the 
 selection and adoption of a single product of value (as 
 5* 
 
50 PLAN OF SOCIAL WEALTH. PART 1. 
 
 nearly as possible invariable in cost of production and 
 in quality,) as a standard by which the value of all other 
 products might be compared, and thus measured. We 
 will assume wheat to have been selected as the standard, 
 and a bushel of that product as the quantity of value to 
 stand as the unit of comparison. This contrivance en- 
 abled the parties, in every act of exchange, not only to 
 compare the estimated value of the products belonging 
 to each with the value of a bushel of wheat, but to 
 express the quantity of value in numerical language. 
 The merchant, for example, would express the value of 
 a pound of the various qualities of his tea, in centesimal 
 parts of the value of the standard unit, thus : .25, .50, 
 .75 ; or if of greater value than the unit, thus : 1.50, 2, 
 3, and so on ; and he would adopt the same definitive 
 language in naming the amount of value belonging to 
 a given quantity of any other product. 
 
 This method avoided the immense mental labor, and 
 the uncertain results, inseparably connected with the 
 plan of estimating the value of each separate product 
 by comparing it with the respective values of every 
 other kind of product. It established, in truth, a mea- 
 sure of value, albeit imperfect, but none better has been 
 discovered to the present day. 
 
 By this method, the estimated relative value of all 
 products mights be readily computed, and their exchange 
 consummated without the intervention of the wheat, 
 just as we now witness the direct exchange of one pro- 
 duct for one or more others, by merely computing the 
 value of each in dollars and cents. It must have been 
 soon perceived, however, that barter, or the direct ex- 
 change of one product for another, was a very expensive 
 and imperfect method of effecting exchanges. It not 
 only compelled products to taken a very circuitous 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 51 
 
 route in travelling from producers to consumers, but 
 it confined the division of employments mainly within 
 the narrow limits of producing finished objects of 
 desire, and thus prevented the development of manufac- 
 turing arts as a distinct division of production. The 
 method of barter required every merchant to keep a sort 
 of bazaar in which would be found a portion of each of 
 the varied commodities of the world, and to be willing 
 to give any one or more of them in exchange for an 
 equivalent of any other. This task must have been dif- 
 ficult if not impossible for individual merchants to ac- 
 complish, and if they succeeded, it must have been at a 
 prodigious expenditure of industry and capital, for 
 which they had to be reimbursed by the receipt of com- 
 missions correspondingly high. It was therefore but 
 imperfectly that even finished objects of desire were ex- 
 changed by this method ; while it must have been found, 
 very often, altogether inadequate as a means of exchang- 
 ing values which had not received their perfect forms. 
 For instance, it cannot be supposed that the merchant 
 was able to keep on hand the incomplete portions of 
 watches, clock, knives, wagons, ships, and of all other ma- 
 chines, as well as the finished machines themselves ; and 
 unless he did so, each producer of value must have 
 found it necessary to give his products their finished 
 forms, or else submit to a series of unprofitable ex- 
 changes, perhaps even more adverse to gain. Beside 
 these illustrations which apply to commerce in its nar- 
 rower sense, there are many other transactions of life 
 that properly belong to the commercial department 
 of production, which could scarcely be consummated 
 by the method of barter. The traveller, for instance, 
 would have to carry with him a great variety of 
 commodities to meet the diversified wants of his journey, 
 
52 PLAN OF SOCIAL WEALTH. PART I. 
 
 and even then, it is not improbable that he would be 
 on some occasions, compelled to forego his dinner. The 
 owner of real estate, wishing to dispose of his property 
 and to change his residence, would be likely to find it 
 about as practicable to take with him his houses and lands 
 as to transfer the bulky and ponderous articles offered him 
 in exchange. In short, much of skill, labor and capital 
 must have been consumed in making exchanges by the 
 awkward and imperfect method of giving one surplus 
 product for another, while the products themselves were 
 diminishing in value by the corrosions of time. There- 
 fore, to overcome the hindrances to a free and profitable 
 interchange of commodities, something more was requir- 
 ed than a mere standard of value by comparison with 
 with which the relative value of all other commodities 
 might be ascertained. In order to avoid the me- 
 thod of barter, it was found necessary to have an 
 intermediate agent of transfer. Accordingly, to sub- 
 serve this purpose, the machine called Money was in- 
 vented and constructed. 
 
 After the problem of measuring value had been solved 
 by the conception and adoption of the plan just describ- 
 ed, the invention of money did not require much genius, 
 nor its construction much skill, nor its adoption much 
 judgment, and yet it has proved to be one of the most 
 important and efficient of all the machines invented and 
 fashioned by mankind. 
 
 The invention consisted simply, in taking the standard 
 of value and using it in the two-fold capacity of a 
 measure and an instrument of transfer, that is to 
 say, the recognised standard of value, by comparison 
 with which all other values were measured, was taken 
 from its resting place and made to perform the office 
 not only of measuring values but of transferring them, 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 53 
 
 by being given in exchange for them. Instead, of re- 
 maining passive and measuring values by comparison, 
 the standard was thenceforward required to change 
 place with the values measured by it, In being made 
 to perform this twofold office, it was transformed into a 
 circulating medium, standing ready, everywhere, to mea- 
 sure and transfer all other values in search of a mar- 
 ket. 
 
 The construction of this machine, like that of most 
 other useful inventions, was at first rude and imperfect ; 
 for history informs us that wheat, iron, oxen, tobacco, 
 and many other things, have, in their turn, been used as 
 the materials of money. Wheat, in virtue of its great 
 uniformity in cost and in quality, answered very well 
 for a standard by which to compare values, but 
 from its great weight and bulk as compared with its 
 value, it has been found altogether unfit to be used as an 
 instrument of transfer. That office requires large value 
 in small compass and weight ; a material that is hard, 
 durable, easily measured and difficult to imitate. Gold 
 and silver have been found to possess all these qualities, 
 as well as those which constitute them good measures of 
 value, and hence we find, that the commercial world has, 
 with great unanimity, adopted them as the materials of 
 money, or more properly, as the material of the basis 
 which supports the superstructure of convertable paper 
 money. There can be little doubt that these are the best 
 materials which have yet been used in the fabrication of 
 money, in the present imperfect form of that instrument 
 a form in which its magnitude is made to depend on the 
 cost of producing it, or on the quantity of value inherent 
 in its material. It is believed, however, that this attribute 
 may be partially if not wholly dispensed with, by add- 
 ing another section to the plan of the machine. The 
 
54 PLAN OF SOCIAL WEALTH. PART I. 
 
 subject will be discussed in a subsequent chapter, to 
 which the reader's attention is specially invited. 
 
 Aided by this mighty auxiliary, commerce now finds 
 no difficulty in either measuring or transferring values. 
 Her votaries stand ready to carry the interchange of 
 commodities to the utmost limits of profitable circula- 
 tion, except where hindrances are interposed by unjust or 
 absurd legal restrictions. These, however, are fast 
 fading away before a more enlightened public judgment, 
 and it is hoped that a few years more will serve to 
 place them on the list of passed errors. 
 
 Thus aided by commerce, the division of employments 
 has been permitted to take an unlimited range, and to 
 adopt whatever subdivisions the sagacious promptings of 
 personal interest have deemed proper to dictate. By 
 this means, industry has been rendered more skilful, 
 machinery more various and perfect, land more fertile, 
 and, consequently, wealth more abundant. Commerce 
 has not only given potent aid to the development of 
 wealth by facilitating its processes and increasing their 
 number, but it has completed the metamorphosis which 
 the Social Contract projected and set in motion ; for, in 
 presenting the means of exchanging values, it has given 
 to the previously insulated parcels of wealth the attribute 
 of interdependence, whereby they are all linked together, 
 juul in a measure blended into a single mass. It has 
 thus changed the character of wealth from individual to 
 social, and thereby rendered the transformation com- 
 plete. 
 
 The increased development of wealth, resulting from 
 the social expedients named hitherto, betrayed the want 
 of another section to render the plan complete. As the 
 aggregate of capital augmented, it was found to be very 
 unequally distributed. In the hands of those who were 
 
CHAP II. PLAN OF SOCIAL WEALTH. 55 
 
 skilful, industrious and frugal, and who Lad withal some 
 capital and land to aid them at the commencement, it 
 accumulated in volumes so large as to become in a mea- 
 sure unproductive, while those destitute of these advan- 
 tages were without either capital or land to concur 
 with their industry. The wealthy had more capital and 
 land than they could profitably employ by moans of their 
 own industry, the poor had less than their industry re- 
 quired ; consequently, it must have been seen that much 
 of each must remain idle and unproductive, unless this 
 defect in the plan of social wealth could be remedied, 
 especially since, as before remarked, the four prime 
 agents of production must labor in concert if they labor 
 at all. How should this new difficulty be overcome ? 
 An obvious means presented itself namely, for the 
 wealthy to hire the industry of the poor, and thus set in 
 motion the surplus productive agency belonging to each. 
 This remedy was, doubtless, the one first adopted, but 
 it must have been found altogether inadequate, because 
 the successful prosecution of many of the arts of pro- 
 duction requires that the capital concurring should be, 
 during the process, in the possession and under the ex- 
 clusive control of the proprietor of the concurring indus- 
 try. For this reason, it is requisite to unrestrained 
 production, that the wealthy sometimes loan their capital 
 and land to the poor, as well as that the poor loan their 
 industry to the rich. In the one case, the poor retain 
 possession of the fountain of their industry, transferring 
 to the wealthy, for an equivalent, merely a stipulated 
 portion of its services ; while in the other case, the rich 
 transfer to the poor, for the time agreed upon, not only 
 the productive service of their capital but the capital 
 itself. This the latter might neglect or refuse to 
 return, and there were no existing means of com- 
 
56 PLAN OF SOCIAL WEALTH. PART I. 
 
 pulsion. For any tiling we have yet seen, the 
 right of property did not extend beyond its absolute 
 possession. The powers of government were competent 
 to prevent and punish acts of spoliation, but it had no 
 authority to aid men in recovering that which they had 
 voluntarily surrendered to others. The temporary 
 transfer of property, was, clearly, the only method 
 whereby surplus industry, capital and land could be 
 fully and effectively employed ; and in view of that fact, 
 it was resolved to devise a plan for securing its return to 
 its proprietors. In execution of this purpose, the gov- 
 ernment machine was so enlarged as to recognise and 
 enforce, and thereby establish, a new right, which, for 
 want of a better name, has been called the right of pro- 
 perty in actions. This right consists in the recognition 
 and enforcement of the obligation of contracts. In other 
 language, the government machine was so enlarged as to 
 recognise as property the bare promises of men to deliver 
 it at a stipulated period, and to enforce the fulfilment of 
 these promises, thus establishing the right of what may 
 be termed representative property. 
 
 This additional section of the government machine has 
 been appropriately named, the Credit System. Credits, 
 based upon capability and integrity of purpose, and 
 prompted by the desire of gain, nn^st have prevailed be- 
 fore the adoption of this system ; but in the earlier 
 ages, when the moral sentiments and intellectual facul- 
 ties of man were more subject to his animal propensi- 
 ties than they now are, credit, thus based, was doubtless 
 confined to limits of the narrowest kind. It was suffi- 
 cient, however, to give a foretaste of its advantages, 
 whence mankind were induced to adopt the social device 
 just named, with the view of enlarging its boundaries. 
 
 Credit is a most effective expedient in the production 
 
CHAP. II. PLAN OF SOCIAL WEALTH. 57 
 
 of wealth. It unites the surplus capital and land 
 of the wealthy with the surplus skill and labor 
 of the poor, thus enabling the four to serve in con- 
 cert in the production of value, while it secures to their 
 respective proprietors equitable portions of the revenue. 
 It thus not only removes an obstacle to production, but 
 supplies a motive which prompts to action the productive 
 powers of these otherwise idle agents. The social 
 machinery by which the right of property in actions 
 was established and the obligation of contracts enforced, 
 greatly enlarged the limits of credit, and, in perhaps an 
 equal degree, its productive capabilities ; but the injuries 
 inflicted by the legalization of credits are also great, 
 and it may well be doubted whether mankind are, after 
 all, really gainers by this extraordinary enlargement of 
 the province and machinery of government. The sub- 
 ject will be examined in a subsequent chapter, with the 
 view of resolving this problem. 
 
 Such is an imperfect outline of the nature of wealth, 
 of the prime sources whence it emanates, and of 
 the social plan which- the more enlightened divi- 
 sion of mankind have devised and established for 
 for the purpose of promoting its development and guard- 
 ing it from violence. All other means employed, or in- 
 struments used, in the diversified processes of production, 
 are either free, unappropriated agsnts, or else special in 
 their design and application, being intended to promote 
 some specific operation in a given art. These last may be 
 regarded as constituting the elementary principles of the 
 various arts of production, and hence, dissertations on 
 them do not come within the province of a work on 
 this science, but belong properly to treatises on the 
 arts of production to which they respectively relate. 
 The arts of production may be regarded as the instru- 
 6 
 
58 PLAN OF SOCIAL WEALTH. PART I. 
 
 mentalities with which individuals have wrought out the 
 superstructure of social wealth, in conformity with the 
 outlines and plan indicated by science and established 
 by society. Science indicated the outlines, society 
 adopted the plan, nature furnished the materials, indi- 
 viduals and the arts performed the work. Skill, labor, 
 land, and capital in the infinite variety of its ingeniously 
 devised forms, are the productive forces subject to the 
 control of individuals ; the right of property, especially 
 in land, commerce, money and credit, afford the means 
 of employing them advantageously, and of preserving 
 their fruits. 
 
Libra 
 
 CHAPTER III. 
 
 OF THE NATURAL LAWS 
 
 WHICH GOVERN THE PRODUCTION, DISTRIBUTION, AND 
 CONSUMPTION OF WEALTH. 
 
 General remarks. 
 
 Having shown the origin, design, and nature of wealth, 
 and having explained the nature and attributes of the 
 social plan established by a portion of mankind for the 
 purpose of facilitating its creation, we are now prepared 
 to trace out, understandingly, the principles which gov- 
 ern its production, distribution and consumption. This 
 is no holiday task. Commerce and money have so inter- 
 woven these principles with the fabric of social wealth, 
 that, to evolve them with clearness and method, it is re- 
 quisite the effort should be accompanied with a much high- 
 er order of analytical powers, a more practiced pen, and a 
 clearer knowledge of the subject, than I claim to pos- 
 sess ; but I hope, nevertheless, to furnish hints which 
 may serve to point out the way to those who are better 
 qualified for executing the task. 
 
 In order that the reader may be apprised of my ob- 
 ject, and thus the more readily apprehend the drift of 
 my arguments, it is deemed proper to state first, in the 
 form of general propositions, the truths which this chap- 
 ter is designed to unfold. It will be shown : 
 
 1, That self-interest governs the production and dis- 
 tribution of wealth, the desire of happiness its con- 
 sumption ; that, considered in the aggregate, the desire 
 of happiness, under the guidance of the intellect and the 
 
60 LAWS OF TRADE. PART I. 
 
 various degrees of restraint imposed by the limitation of 
 means, indicates the character and relative quantities of 
 the products desired, thus controlling the demand ; and 
 that the self-interest of mankind so directs the employ- 
 ment of the productive forces that each object of desire 
 is produced in quantities exactly corresponding with the 
 permitted demand for it, thus controlling the supply. 
 
 2, That the quantity of true value inherent in any 
 given product, is not only equal to, but identical with, 
 the quantity of productive service incorporated with it ; 
 that the market value is sometimes greater than the true 
 value and sometimes less, but if measured at their 
 mean the two are equal in quantity ; and that, although 
 the money value or market price rarely coincides with 
 either the true value or the market value, yet when re- 
 duced to its average and thus measured, the quantity 
 does not vary from that of either. Estimated in the 
 aggregate and regarded as units, the true value, the 
 market value and the money value of products, or of 
 any given product, are absolute equivalents. 
 
 3, That value is made up of two well defined but un- 
 equal parts namely, cost of production and profits. 
 
 4, That the proprietors of the aggregate of skill, of 
 labor, of capital, and of land, respectively receive one 
 quarter of the gross profits of production, the whole 
 being divided into four equal shares ; and hence, the 
 greater the aggregate quantity of either one of the pro- 
 ductive forces, as compared with the other three, the 
 lower will be the relative profits of its individual pro- 
 prietors, and vice versa. 
 
 5, That land, aside from its meliorations, does not 
 possess real value its market value and money value 
 being merely the legalized reflection of the capital placed - 
 upon it 5 and therefore, that the market value of the 
 
CHAP. III. LAWS OF TRADE. 61 
 
 aggregate of land (independent of meliorations) is pre- 
 cisely equal to that of the aggregate of productive ca- 
 pital. 
 
 6, That the profits of production vary, inversely with 
 the market value of land ; when the one is high, the 
 other will be correspondingly low. 
 
 7, That the profits of production, whether considered 
 in detail or unity, vibrate about a common standard ; 
 and that this standard itself oscillates about a fixed cen- 
 tre, which is believed to be about five per cent, per an- 
 num on the value of the productive forces employed. 
 
 8, That the portion of value constituting the cost of 
 production returns to the sources whence it emanates, 
 and is there consumed in the preservation and repro- 
 duction of skill, labor, capital, government and money ; 
 that the portion constituting the profits, is applied, in 
 part to the augmentation of skill, labor and capital, and 
 the balance to the gratification of the non-essential de- 
 sires of its owners, the productive forces now existing 
 being the accumulated profits of the present and all 
 preceding generations. 
 
 9, That the profits of production in the aggregate, 
 vibrate within the range of 2^ to T|- per cent, per an- 
 num, being not only restrained from transcending these 
 limits by starvation on the one side, and by a dense 
 crowd of liberated desires on the other, but also, driven 
 back towards the centre by the undue consumption of 
 capital at the one extreme, and of population at the 
 other. 
 
 These propositions present, in a condensed form, the 
 leading features of what have been appropriately named 
 the Natural Laws of Trade. The present chapter, as 
 already stated, is an attempt to unfold this portion of 
 nature's code ; and the discussions it will embrace are 
 6* 
 
62 LAWS OF TRADE, PART I. 
 
 designed to demonstrate the truths and fill up the out- 
 lines presented in the foregoing propositions. With the 
 view of simplifying the subject as far as possible, and in 
 deference to precedent, I shall prosecute the inquiry un- 
 der three separate heads, namely, Production, Distribu- 
 tion, and Consumption ; but I must in candor say, that 
 the three classes of laws are so woven together and in- 
 terlinked, that my powers of analysis are not equal to 
 the effort of separating them perfectly and clearly. 
 
 It may be well to premise that the reasoning of this 
 chapter is based on the assumption, that government in- 
 terposes no hindrances to obstruct the paths of produc- 
 tion, such, for example, as monopolies, duties, bounties 
 and usury laws but confines itself to the exercise of its 
 legitimate functions : namely, to the protection of life, 
 liberty and personal faculties ; to the protection of va- 
 lue ; to the creation and protection of legal value in 
 land ; to facilitating the operations of commerce by es- 
 tablishing uniform standards of weights, measures and 
 money, together with simple and concise rules for the 
 government of parties exchanging products at the 
 instant of transfer ; and to the protection of representa- 
 tive value, by enforcing the obligation of contracts. 
 With these explanations, I will now proceed to the inves- 
 tigation of the highly important and recondite principles 
 involved ip the subject presented. 
 
 SECTION I. 
 
 Of Production. 
 
 In treating of the nature and plan of social wealth, 
 I confined my inquiry into the laws of human nature, & 
 that portion of them with which we were then concerned, 
 
CHAP. III. AS INFLUENCING PRODUCTION. 63 
 
 and which were mainly social in their character and ten- 
 dencies. The general expedients and machinery which per- 
 mit and facilitate the creation of value, being adopted by 
 the social body for the purpose of benefiting its different 
 members, it was not necessary, nor even proper, that other 
 than social motives and actions should be brought in re- 
 view, while tracing out their origin, nature and design. 
 But now, when we are about to consider the phenomena 
 which have resulted from this social plan, and to trace 
 the natural laws which govern the production, distribu- 
 tion and consumption of wealth, it is necessary that we 
 look upon mankind as individuals, as well as members 
 of society, and that we scan closely their motives and ac- 
 tions as such. 
 
 Before the intervention of commerce and money, when 
 each proprietor consumed the identical value produced 
 by the service of his own agents, every one must have 
 been impelled, by his desire of happiness, to employ his 
 productive forces in the creation of such objects of his 
 own wants and desires as his judgment indicated as the 
 best adapted to promote that end. This sort of produc- 
 tion required, in the choice of pursuits, no other exer- 
 cise of judgment than that now required in making pur- 
 chases for direct consumption ; the two cases are 
 precisely analogous. The desire of happiness, guided 
 by the understanding, was then the governing principle 
 of production, as it still is of consumption. But when, 
 by means of commerce and money, individual wealth 
 was transformed into social wealth when the insulated 
 parcels of value, in all its varied forms, were so blended 
 as to constitute as it were a single mass, out of which 
 each contributor might select his portion in the form best 
 adapted to his individual wants the case was widely 
 different. It then became expedient for producers to 
 
{34 LAWS OF TRADE, PART I. 
 
 be guided, in the employment of their agents, by the 
 aggregate of human wants rather than by their own, 
 since, by exchanging equal values, they could thus more 
 successfully procure the ultimate objects of desire than 
 by the direct method of employing their own agents in 
 their production. This system required a very different 
 exercise of judgment from that which preceded it, and, 
 as we shall see presently, it necessarily called into being 
 a, new form of the selfish principle, to stand between the 
 desire of happiness and that portion of the objects of 
 desire which are rendered such by artificial means, for 
 the purpose of aiding the former in the procurement of 
 the latter. This principle is called Self Interest. 
 
 I have shown that when value became subject to ex- 
 change, it was essential that means should be devised for 
 determining its quantity, as without some knowledge of 
 that, commerce could not perform its office. I have also 
 shown that the skill and labor of mankind, the auxiliary 
 machines which they have fashioned, and the natural 
 utility that they have appropriated, are the sources 
 whence all value emanates ; that it is the joint service 
 of these sources, blended into compound streams and 
 incorporated with natural products in such ways as to 
 augment their utility, which imparts to those products 
 the attribute, value. From these premises results the 
 legitimate nay, unavoidable inference, that the quan- 
 tity of value in any given product is not only equal to, 
 but- identical with, the quantity of productive service in- 
 corporated with it. This may, indeed, be regarded as 
 an unerring rule for determining the quantity of true 
 value inhering in commodities, because self interest 
 never fails to direct producers to employ their produc- 
 tive forces in such methods as they believe will net 
 them, ultimately, the largest amount of utility. 
 
CHAP. III. AS INFLUENCING PRODUCTION. 65 
 
 Now let us for the present assume, that when the ex- 
 pedient, commerce, was first adopted, means were pro- 
 vided for measuring value correctly, and that the law 
 required every exchange to be made in absolute equiva- 
 lents, i. e., in equal quantities of true value. Under this 
 arrangement, every producer, as a matter of course, set 
 about the creation of value in the form deemed best 
 adapted to the nature and circumstances of his produc- 
 tive powers ; for he knew, in the first place, that he 
 could thus produce the largest quantity of value, and in 
 the next place, that he could contribute it to the mass 
 of social wealth and take thence a true equivalent in 
 whatever form his desire of happiness chanced to dictate. 
 With production governed by this rule, and consumption 
 governed as it now is and as it must have been then, by 
 the desire of happiness, subject however to such restraints 
 as were imposed by the intellect and by the limitation 
 of means to secure its objects, we may readily perceive 
 that the mass of social wealth could not long have main- 
 tained a form corresponding with the wants and desires 
 it was designed to satisfy. The production of some ob- 
 jects must have exceeded the liberated desires for them, 
 while that of others fell short for I hold it to be impos- 
 sible for the adaptation of the productive forces and the 
 relative urgency of liberated desires to so coincide in 
 strength as to produce an equilibrium in the supply of, 
 and demand for, even any one class of objects, much less 
 for all and yet, unless this actually occurred in all, 
 some products must have been placed in the lap of com- 
 merce in superabundance, with the surplus to be consumed 
 by time, while others were either entirely withheld or 
 furnished in quantities but partially sufficient to satisfy 
 the liberated desires for them ; for we may safely as- 
 sume, that no producer would contribute to commerce 
 
66 LAWS OF TRADE, PART I. 
 
 objects which he needed more, for the sake of taking 
 thence merely a true equivalent of those he needed less. 
 In illustration, we will suppose that an undue portion of 
 mankind, finding their powers better adapted to the pro- 
 duction of wheat than to that of any other object of 
 desire, and knowing the high degree of utility pertain- 
 ing to that product, directed their efforts to the creation 
 of value in that form. This caused an undue enlarge- 
 ment of the wheat portion of the mass of social wealth, 
 and, as an unavoidable consequence, as will be shown 
 presently, a corresponding diminution of some other 
 portion or portions, say sugar and cotton ; in other 
 words, the production of wheat exceeded the liberated 
 desire for it, the production of sugar and cotton fell 
 short of the liberated desires for them. Now, if a 
 bushel of wheat, ten pounds of sugar and ten pounds of 
 cotton, of given qualities, were known to embody, respect- 
 ively, equal quantities of productive service, and were 
 always exchanged in true equivalents, it is apparent 
 that the case we have supposed would soon divest the 
 floating mass of social wealth of its sugar and cotton 
 portions, while it would uselessly augment its wheat 
 portion. And, under the rule assumed, similar dispro- 
 portions between ail classes of liberated desires and their 
 respective objects must have been produced and perpe- 
 tuated, because the system presents no compensating 
 power capable of preserving or restoring the equilibrium. 
 In a word, that system would destroy either commerce 
 or its utility, for if prosecuted under it, the evils re- 
 sulting would greatly exceed the benefits. 
 
 In point of fact, no perfect measure of the true value 
 of products ever has been, or can be, provided ; but 
 some governments have, nevertheless, so far erred in 
 their policy as to require the exchange of certain pro- 
 
CHAP. III. AS INFLUENCING PRODUCTION. 67 
 
 ducts to be made in what they assumed to be true equi- 
 valents. The legislators of France, for instance, about 
 the beginning of the present century attempted to es- 
 tablish legal prices for bread and flour ; and they soon 
 realized the fruits of their folly in the aggravation of the 
 evil they were attempting to remedy. They fixed the 
 legal value too low and it banished the products. If 
 they had put it too high, and made it permanent, most 
 of the wealth of that nation would have been long since 
 converted into bread and flour. Provided with means to 
 determine the true value, their attempt would have been 
 worse than nugatory ; with no better measure than that 
 afforded by money, and especially such vile money as 
 France possessed at that time, the act savors of madness. 
 
 If, then, the true value of products cannot be ascer- 
 tained with precision, nor their exchanges made with ad- 
 vantage under the rule of invariable equivalents, even 
 with the aid of a perfect measure, how, and by what 
 rule, is commerce governed in the exchange of values ? 
 How is the equality of liberated desires and their res- 
 pective objects maintained 7 Where is the great balance 
 wheel which preserves, in relation to each product, as 
 well as to the whole mass of social wealth, the equation 
 of supply and demand? Let us remove the assumed 
 restriction and we shall soon see. 
 
 Instead of attempting to enforce the impracticable 
 rule we have been considering, the founders of com- 
 merce, after having provided the best measure of value 
 at their command, gave to the parties of every act of 
 exchange perfect freedom to determine for and between 
 themselves what quantity of their respective products 
 constituted equivalents, and in the event of mutual 
 agreement, to make exchanges accordingly. Men were 
 thus permitted to take greater value in exchange for 
 
68 LAWS OF TRADE, PART I. 
 
 less, provided they could find others willing to give it ; 
 or to give more for less if they so desired. 
 
 Such is the rule by which commerce determines equi- 
 valents. In its adoption originated the necessity of a 
 modified form of the selfish principle to preside over the 
 exchange of values and their production, so directing 
 both as to secure to each individual, in forms adapted to 
 his desires, the largest possible amount of utilit}^ that 
 his productive forces were capable of yielding. In 
 obedience to the necessity, Self-interest has been called 
 into being, and has taken her place as the presiding 
 genius not only of commerce, but of every other depart- 
 ment of production ; and we shall find that she so rules, 
 as to preserve, with admirable uniformity, the equal- 
 ness of liberated desires and their objects. The su- 
 premacy of this principle in all matters relating to the 
 production and distribution of wealth is so universal and 
 invariable, and the fact so notorious, that no argument 
 is needed to demonstrate either its existence or supre- 
 macy : if not self-evident truths, they are equally well 
 established by the universal experience of mankind. 
 But in view of the odium cast upon this principle of hu- 
 man nature by means of blind epithets emanating from 
 prejudice and error, it may be well to say that it is just 
 as necessary to man as gravity is to matter. If, in 
 matter, the force of attraction were not greater than 
 that of repulsion, we should find masses and particles 
 repelling each other until all things returned to their 
 original atoms or ether. So, if the selfish principle 
 were not stronger than the social, if men were not more 
 mindful of their own interest than of the interest of 
 others, we should see value repelled by every one, and 
 thus utterly destroyed, and with it the human race, for 
 I have shown that life cannot be preserved without it. 
 
CtiAP. III. AS INFLUENCING PRODUCTION. 69 
 
 It was for a wise purpose, therefore, that the productive 
 agents and the value created by their services were 
 placed under the control and direction of the personal 
 interest of their individual owners ; the welfare and 
 even the existence of the race required that it should 
 be so. Nor are there any evils resulting from the con- 
 trolling influence of self-interest, provided it be kept 
 within the confines of justice, and thus restrained from 
 the commission of trespasses on the rights of others. 
 Unfortunately, such trespasses often occur, notwith- 
 standing the threefold restraint existing in the Divine 
 law, the conscience, and the laws of society. They are, 
 however, but instances of the undue vibration of the 
 principle in one direction, as bankrupting munificence 
 and improvidence are in the other. 
 
 Let us now see what direction this ruling principle 
 gives to the productive forces, and by what means it 
 keeps the supply of each class of products on a level 
 with the demand for them. We will suppose that when 
 commerce first assumed her office the scientific plan of 
 wealth and the arts of production were both so imperfect, 
 and productive capital so scarce, that mankind were able 
 to provide for no more than the first three circles of their 
 wants namely, the want of ft^d, of clothing, and of |ene- 
 ments ; that in obedience to the invitations of commerce, 
 they divided themselves into four classes, one class to pro- 
 duce food, one clothing, one tenements, and one to perform 
 the offices of commerce each individual selecting the de- 
 partment for which he deemed his productive forces best 
 adapted; that it so happened that the requisite numbers en- 
 tered into commerce and into the production of tenements, 
 but too many into the production of clothing and too 
 few into that of food, so that there was more of the one 
 and less of the other produced than their respective 
 
 4 
 
70 LAWS OF TRADE, PART I, 
 
 liberated desires demanded. The commercial class, 
 acting as the carriers and intermediate agents of the 
 other three, had commenced, we will suppose ? the inter- 
 change of their respective products on the system of true 
 equivalents as nearly as these could be ascertained, 
 distributing the commissions charged for their services 
 equally on the products of each. But perceiving that 
 the supply of food diminished while that of clothing in- 
 creased, the merchants must have soon discovered that 
 they had committed an error, that they should have es- 
 timated equivalents by the relative intensity of the de- 
 sires for the respective products, as indicated by demand, 
 instead of being guided by the quantity of productive 
 service incorporated with them ; and they resolved thence- 
 forward to be governed by this rule. Accordingly, they 
 demanded of the producers of clothing, say two mea- 
 sures of true value in that form, in exchange for one 
 measure in the form of food; and the latter were com- 
 pelled to accept these conditions, since they could not 
 otherwise quiet the imperative urgency of appetite. But 
 it at once aroused their sleepless guardian, Self-interest. 
 She pointed out to them the undue profits of the pro- 
 ducers of food and the corresponding losses of their own 
 class, and directed a portion of them to transfer their 
 productive forces to the food department. The order 
 was as implicitly obeyed as it was promptly given for 
 all men yield a willing obedience to the dictates of self- 
 interest and the inevitable consequence was, a subse- 
 quent excess of food and scarcity of clothing ; perceiv- 
 ing which, self-interest called back a portion of her 
 votaries, which again produced clothing in excess ; and 
 so on, with lessening vibrations, until the equilibrium was 
 restored. And when, by reason of more perfect know- 
 ledge in the science and arts of production, or from other 
 
CHAP. III. AS INFLUENCING PRODUCTION. 71 
 
 favoring causes, there came to be a simultaneous excess 
 in the supply of food, clothing, tenements, and commer- 
 cial machinery when the liberated desire for each was 
 fully satisfied without consuming the whole of either 
 class of objects the first consequence must have been 
 the liberation of the next outer circle of desires ; the 
 next, a demand for their objects a demand more in- 
 tense than for either of the others, because of the rela- 
 tive scarcity of these ; and finally, a mandate from self- 
 interest, directing a portion of her votaries to produce 
 those objects, and thus equalize the intensity of supply 
 and demand. When, on the other hand, from the fee* 
 bleness of production or other adverse causes, the demand 
 for all classes of products exceeded their supply, the 
 outer circle of liberated desires was driven back and 
 again chained up. Self-interest then concentrated her 
 forces, and directed their employment in the production 
 of objects adapted to the satisfaction of the more im- 
 perative desires, which still remained free, thus again 
 equalizing the intensity of supply and demand. In other 
 words, when production augments, it enables the desire 
 of happiness to set free a previously enchained circle of 
 desires ; these, after long abstinence, vehemently de- 
 mand their objects, perceiving which, self-interest directs 
 the creation of a new class of products adapted to their 
 gratification. When production diminishes, the outer 
 circle of desires and its corresponding class of products, 
 are, in the same manner, suppressed. Thus self-inter- 
 est not only keeps the supply of each separate class of 
 products on a level with the demand for it, but main- 
 tains the equation, or equalizes the intensity, of supply 
 and demand as it relates to the aggregate of wealth. 
 
 We find, then, that the market value of products, or 
 commercial equivalents, are determined not by estima- 
 
72 LAWS OF TRADE, PART 1, 
 
 ting the quantity of productive service which they 
 respectively embody, but by the relative magnitude of 
 liberated desires and their existing objects, as indicated by 
 supply and demand at the time the exchange is made. 
 For example, when the existing quantity of food and the 
 aggregate liberated desire for it are coincident when 
 the supply of and demand for food are of equal intensity 
 we consider the desire and object as agreeing in mag- 
 nitude ; and so of the others. So long as this equili- 
 brium continues to exist, commercial equivalents are true 
 equivalents. But when, as in the case we have suppo- 
 sed, the supply of food fell short of the demand for it, 
 its market value expanded, which expansion lessened the 
 liberated desire by increasing the difficulty of procuring 
 its object, so that the equality of the two was preserved. 
 The market value of the- object was expanded by its 
 scarcity, the liberated desire was contracted by the ex- 
 pansion of the value, until they met, and again corres- 
 ponded in size, at a point somewhere above the then ex- 
 isting magnitude of the object, and below the natural 
 magnitude of the desire perhaps midway between the 
 two. In virtue of the same causes, the excess of cloth- 
 ing contracted its market value and enlarged the desire 
 for it, until the two met at a point as far above the na- 
 tural magnitude of the desire as they did in the other 
 case below it. The equation of supply and demand 
 which existed in reference to tenements, left the market 
 value of the latter coincident with their true value. 
 With the value of food thus expanded, that of clothing 
 thus contracted, and that of tenements in its natural 
 state, commerce took equal volumes of each and called 
 them equivalents. The producers of tenements were 
 therefore losers in their exchanges for food and gainers 
 in their exchanges for clothing ; what they lost by the? 
 
CHAP. III. AS INFLUENCING PRODUCTION. 73 
 
 expansion of value in the one, they gained by its con- 
 traction in the other. The producers of food, when they 
 exchanged with the producers of tenements, gave a mea- 
 sure of rarified value for one of medium density, and 
 when they exchanged with the producers of clothing 
 they gave a rarified value for an equal volume of a con- 
 densed one ; hence, they were gainers and the producers 
 of clothing losers. The expansion of the market value 
 of products augments the profits of their producers, the 
 contraction diminishes them ; but the self-interest of 
 mankind is ever on the alert, and constantly shifting the 
 distribution of the productive forces in such a way as to 
 transfer the pressure from compressed to expanded 
 values, so that the market value, in all classes of pro- 
 ducts, ultimately arrives at the point of natural density ; 
 or if the oscillations continue, in any given case the 
 sum of its expansions exactly equals that of its contrac- 
 tions. Observation seems to indicate that these oscilla- 
 tions are, in fact, continuous in all cases. They vary 
 in degree, being at one time greater, at another less, but 
 never cease entirely, so numerous are the disturbing causes, 
 both natural and artificial, by which they are perpe- 
 tuated. When, for example, the market value of a 
 given product has been expanded by an under supply, 
 we find that the diminished demand and the increased 
 supply thereby generated, rarely if ever fail to pro- 
 duce a corresponding compression, A change in tastes, 
 habits, circumstances, and many other causes, also tend to 
 perpetuate these oscillations by affecting the market value 
 of products. But amidst them all, self-interest never 
 fails to maintain her supremacy. Ever true to her of- 
 fice, she so governs the employment of the productive 
 forces that the supply of and demand for each and every 
 class of products regularly alternate in their preponder- 
 7* 
 
74 LAWS OF TRADE, PART I. 
 
 ating force ; so that their market value contracts and ex- 
 pands with almost as much uniformity as that with which 
 the pendulum vibrates when searching its gravitating 
 rest ; and like that, the sum of its variations will be pre- 
 cisely the same on either side of its gravitating centre. 
 From these premises we may safely infer, that although 
 commercial equivalents are rarely if ever true equiva- 
 lents, yet, if considered in the aggregate and measured 
 .-it its average density, the market value corresponds 
 with the true value ; and therefore, in the aggregate 
 commercial equivalents are true equivalents. True value 
 is of invarible density ; market value expands and con- 
 tracts, but every expansion begets a subsequent contrac- 
 tion, every contraction a subsequent expansion, so that 
 the aggregate of the one exactly equals that of the other. 
 The market value therefore, if taken at its mean, may 
 be regarded as identical with the true value, and the best 
 known indicator of the latter. 
 
 Having thus pointed out the basis of true value and 
 of market value, and marked the features in which they 
 differ ; having shown that the latter is subject to alter- 
 nate expansions and contractions, and that commerce 
 takes equal volumes of it and considers them commercial 
 equivalents, whatever may be the relative density of the 
 two portions exchanged ; and having shown that the de- 
 gree of expansion, or of contraction, is ascertained by 
 the relative intensity of supply and demand at the mo- 
 ment the exchange is made, it now remains to be shown 
 in what manner its volume is measured. Ability to 
 d t nn;ne the degree in which value is expanded or 
 coi i tract- d, were useless knowledge, unless its actual 
 vo unit 1 could be ascertained, or at least approximate- 
 ly determined by some sort of measurement. With- 
 out a knowledge of the actual volume, as well as of the 
 
CHAr. III. AS INFLUENCING PRODUCTION. 75 
 
 degrees of expansion and contraction, commerce would 
 be unable to determine what quantity of any two pro- 
 ducts constitute, at the moment of exchange, commercial 
 equivalents. 
 
 I have already shown that the method adopted is, the 
 selection of a product of value, to be used either as a 
 standard with which the volume of other values may be 
 ascertained by comparison, or as a machine by which 
 they may be actually measured, and also transferred, the 
 machine being one of the equivalents in each act of ex- 
 change. This instrument of commerce is called money. 
 These are familiar facts ; but in order to ascertain the 
 elements of money value or market price, it is requisite 
 that we also know with what degree of truthfulness this 
 instrument performs the office of measuring values. To 
 this investigation we will now proceed. 
 
 At the threshold, we are met by a prevalent error 
 which so obstructs our path that it must be refuted be- 
 fore me can hope to make much progress. The doc- 
 taine has been taught, ^and generally received as true, 
 that the adoption of gold and silver as the materials of 
 money greatly increased their value. This is an error. 
 It has widened the sphere of their utility, but in nowise 
 affected the amount of value belonging to specific quan- 
 tities of them ; unless, indeed, it has diminished the 
 amount, for according to the general maxim of pro- 
 ducers, the larger the quantity demanded the cheaper 
 the rate at which the article can be furnised. 
 Before their adoption as the materials of money, 
 they each possessed the two essential elements of value, 
 cost of production and utility. In the form of plate and 
 in other devices, they served to gratify a clamorous cir- 
 cle of human desires. They were called for to the ex- 
 tent that these desires possessed the means of securing 
 
76 LAWS OF TRADE, PART I. 
 
 their fruition, and, under the direction of self-interest, 
 they were produced to" an equal extent subject, how- 
 ever, like all other products of value, to the alternating 
 preponderance of supply and demand. In these forms, 
 gold and silver constitute finished objects of desire, and 
 they are consumed, albeit slowly, by the identical de- 
 sires which first prompted their production. But their 
 selection and adoption as the materials of money, gave 
 birth to a new desire for them in the form of coin. In 
 this case, the desire did not call for a direct object of 
 consumption,but merely for an intermediate agent capable 
 of aiding it in obtaining such objects in a word, for a 
 productive machine, to be placed as an additional link in 
 the circuit which connects the primitive desires with their 
 ultimate objects, and which aids so potently in bringing 
 the two together. This new desire generated an addi- 
 tional demand for gold and silver, which at first caused 
 their value to expand ; the expansion increased the sup- 
 ply, which, in its turn, contracted the value, so that 
 after a few enlarged expansions and contractions, the 
 market value of gold and silver returned to their ordi- 
 nary oscillations about the point of natural density, 
 the only ultimate consequences being a great enlarge- 
 ment of their sphere of usefulness, and a corresponding 
 augmentation in their production. 
 
 Either one of these metals would serve as the exclu- 
 sive material of money, nearly as well as both. The ob- 
 vious reason why both have been employed, is the well 
 known fact that gold, in virtue of its high cost as com- 
 pared with its bulk and weight, is more convenient as a 
 measure of large values, while silver, by reason of its 
 low cost, is better adapted to serve as the measure of 
 small values. I shall, therefore, for the sake of con- 
 
CHAP. III. AS INFLUENCING PRODUCTION. 7? 
 
 venience and perspicuity, consider the material of money 
 as consisting of a single product say, silver. 
 
 I have shown that silver in the form of bullion has 
 two desires to satisfy, the desire for plate and other ar- 
 ticles into which it is wrought for direct consumption, 
 and the desire for coin to serve as an auxiliary in the 
 production of wealth. Silver is thus made to assume 
 three distinct forms; bullion, plate and coin. The mar- 
 ket value of each of these will vibrate in accordance 
 with the relative intensity of supply and demand, as 
 they happen to exist in relation to either at any given 
 moment ; but since bullion, plate and coin are readily 
 transformed into each other without much expense, we 
 may safely assume that their respective market values 
 vibrate in unison ; that when an augmented demand or 
 diminished supply of coin expands the value thereof, the 
 value of silver* in every form is simultaneously expanded in 
 an equal degree, and vice versa. Let us then first ascer- 
 tain what constitutes the utility of silver in the form of 
 coin, see what place it occupies in the great laboratory 
 of production, and what service it is required to perform. 
 We shall thus learn not only the nature of the desire 
 for money, and the extent of the demand to which it 
 gives birth, but another highly important fact, the 
 existence of which seems to have been entirely over- 
 looked hitherto : namely, that the natural laws of trade 
 award to the money machine a standard magnitude from 
 which it cannot depart without setting in motion the re- 
 quisite influences to bring it back. 
 
 The purpose of money is to measure and transfer 
 surplus values ; i. e. , products intended for passing 
 through the channels of commerce before reaching the 
 hands of their consumers, together with the two trans- 
 ferable productive forces, capital and land. These con- 
 
78 LAWS OF TfcADE, PART I. 
 
 stitute much the larger portion of the gross creations of 
 Value including the value added by the manufacturing 
 arts and by commerce, probably not less than nine* 
 tenths of the whole. The subordinate machinery of 
 commerce transports these products from producers to 
 manufacturers, merchants, or consumers, and money is 
 the lever standing ready to measure and transfer them, 
 by presenting an equivalent in a portable and conven- 
 ient form. This is the only office of money, and in the 
 performance thereof consists its utility. It was for this 
 purpose alone that it was devised, and we may search 
 over the entire domain of production, examining as we 
 go, every process, without finding it employed in any 
 other service. Therefore, the true magnitude of the 
 aggregate desire of money is equal to the quantity re- 
 quired to perform that office. Without stopping to per- 
 form the difficult, and, at present, uncalled for task, of 
 estimating and expressing in numerical language, the 
 precise quantity of money required in order to render 
 the value of the object equal in magnitude to the desire, 
 it will be sufficient for our purpose to state the actual 
 result as evidenced by the statistics of money. These 
 show, that, at the present cost of producing gold and 
 silver, the standard magnitude of the money machine, if 
 expressed in dollars, is equal to about fifteen times the 
 number of inhabitants in the commercial world ; and that 
 this ratio varies but slightly when the estimate is con- 
 fined to any given nation, district, city, town, or village. 
 This appears to be the quantity of money required to 
 fill the channels of circulation to that natural degree of 
 fulness in which no portion of the machine is either idle 
 or overtasked. Now, it is apparent that whenever the 
 supply of money either exceeds or falls short of this 
 the true quantity demanded, the correctness of its mea- 
 
CHAP, lit* AS INFLUENCING PRODUCTION. 79 
 
 siirements is destroyed, because the aggregate of money 4 
 whether large or small, must perform the service of mea- 
 suring and transferring all other values in search of a 
 market,. If too small, i. e., if below its standard mag 
 nitude, its value must expand to render it equal to the 
 service required of it ; if too large, the value must con- 
 tract to prevent any portion of the machine from remain- 
 ing idle. In the first case, the profits on the production 
 of silver are enhanced, in the second they are dimin- 
 ished ; so that in either case, the natural laws which 
 preserve the standard magnitude of this machine are 
 speedily enforced. 
 
 From these positions it follows, that whenever the 
 quantity of money in circulation falls below the natural 
 standard, the money value or market price of all other 
 products is less than their market value, in other 
 words, a money equivalent is then less than a commercial 
 equivalent. When, on the contrary, the money machine 
 is too much enlarged, then the market price of all other 
 products is higher than their market value a money 
 equivalent is then greater than a commercial equivalent. 
 True, in these cases, as in all others, self-interest causes 
 supply and demand to so alternate in preponderance that 
 the market value of silver, if taken at its mean, is iden- 
 tical with its true value ; but the expansions and con- 
 tractions of its value render it defective as a measure of 
 other values. The value of silver is used to measure all 
 other transferable values, and to be given, as equiva- 
 lents, in exchange for most of those actually transferred ; 
 and inasmuch as the measure itself is subject to ex- 
 pansions and contractions, the market price of commodi- 
 ties must be at best but a variable and uncertain expo- 
 nent of even their market value, and a still more erring 
 one of their true value. 
 
80 LAWS OF TRADE, PART i. 
 
 To render silver a correct measure of the true value 
 of other products, it were requisite that the market 
 value of all products, including silver, should vibrate 
 in unison ; i. e., they should all simultaneously 
 expand, and that in the same degree, and contract with 
 like uniformity. This is known to be impossible ; in- 
 deed, so far is it from the possible, that no two classes 
 of value can be made to vibrate thus in unison. We 
 have seen, however, that values could not be exchanged 
 on the principle of true equivalents, or equal volumes of 
 value at its natural density, even with the aid of a per- 
 fect measure. Hence this sort of measure is not essen- 
 tial to the operations of commerce. 
 
 To render silver a perfect measure of the market value 
 of other products, it is indispensable that its own value 
 should be of uniform density, that its volume should 
 neither expand nor contract, but remain as steadfast as 
 that of the bushel. Then the dollar would invariably 
 stand as the measure of a definitive volume of market 
 value, as well as a definitive quantity of true value ; 
 and whenever another product should be brought forward 
 to be measured by it and exchanged for it, equal vol- 
 umes of each would be exact commercial equivalents, 
 whatever the degree of condensation or inflation of 
 the market value of the variable product ; in which 
 case, the marked price would be a true indicator of 
 the market value. But the market value of the dol- 
 lar being as variable as that of all other products, . 
 the actual results of its measurements must be equally 
 variable and uncertain. They may be compared to 
 measurements of wheat in a bushel, where both are sub- 
 ject to irregular expansions and contractions. Place 
 the wheat in the bushel when one is in its paroxysm of 
 expansion and the other of its contraction, the result 
 
CHAP. III. AS INFLUENCING PRODUCTION. 81 
 
 must differ widely from the true measure ; and it is pre- 
 cisely thus that money measures the value of commodi- 
 ties. For example, take an ounce of silver and a bushel 
 of wheat, and suppose them to embody equal quantities 
 of productive service ; they are, therefore, true equiva- 
 lents ; and, when supply and demand in relation to each 
 are evenly balanced, they are also commercial equi- 
 valents, and money equivalents. Now, suppose that 
 with the value of silver remaining undisturbed, the sup- 
 ply of wheat so far exceeds the demand that two bushels 
 of it will be given for one ounce of silver ; then, it is 
 apparent, the value of wheat is condensed to half its 
 natural volume, and hence, that two bushels of wheat 
 and one ounce of silver bear to each other the relation of 
 commercial equivalents, and also, of money equivalents, 
 but not of true equivalents. If we suppose a simulta- 
 neous and equal condensation of the value of silver, 
 then the money equivalent would again coincide with the 
 true equivalent as well as with the commercial equiva- 
 lent. But if a corresponding degree of expansion in 
 the value of silver should occur simultaneously with the 
 condensation of value in the wheat, then one ounce of sil- 
 ver and four bushels of wheat would be money equi- 
 lents, although the market value of wheat, as compared 
 with the value of products generally, would have dimin- 
 ished but one half : while one ounce of silver and one 
 bushel of wheat would still remain true equivalents. 
 Hence we find, that whenever a deficient supply of 
 money augments the market value thereof, the market 
 price of commodities is less than their market value ; 
 and when the market value of money is diminished by 
 an over supply or other cause, that the market price of 
 commodities is then greater than their market value. But 
 since the expansions of the market value of money exactly 
 8 
 
82 LAWS OF TRADE, PART I. 
 
 equal its contractions, it follows that if estimated at its 
 mean, the money value exactly equals the market value, 
 and therefore, the true value ; that notwithstanding the 
 fact that money equivalents, market equivalents and true 
 equivalents rarely if ever coincide in quantity, yet, if 
 measured in the aggregate, they are equals ; and that, 
 despite the elastic properties of money as a measure of 
 value, it serves, nevertheless, to measure with a sort of 
 vibrating truthfulness, not only the market value of pro- 
 ducts, but their true value also. The market value of 
 all products, including that of money by which the others 
 arc measured, may be regarded as so many pendulums 
 fastened to a common centre, the true value, each im- 
 pelled by supply and demand to vibrate on a line pecu- 
 liar to itself, and each expanding as it approaches one 
 end of its circuit and contracting as it nears the other, 
 with money measuring all it meets, regardless alike of 
 its own position and volume and those of the others, in 
 the general melee. Notwithstanding this seeming chaos, 
 the principles involved preserve order, and diffuse 
 throughout the whole a perfect harmony. Demand, 
 backed by the desire of happiness, stands at one end of 
 each line, attracting depressed value and repelling in- 
 flated value ; supply, backed by self-interest, stands at 
 the opposite extremes, repelling values when depressed, 
 and attracting them when inflated, thus causing the ag- 
 gregate of expansions and contractions in each and every 
 class of values to equal each other, at any given time, 
 and for all time ; and since money is subject to the same 
 Jaws, and at all times employed in the performance of 
 its .office, it follows, that however variable the results in 
 particular measurements, yet, when taken at its mean, 
 the measure js .a true one. 
 
CHAP. III. AS INFLUENCING PRODUCTION. 83 
 
 It is scarcely necessary to observe that the partial 
 substitution of convertible paper money for coin has in 
 nowise altered the principles involved. The paper is 
 based upon coin, and purports to represent it. The 
 parties accepting it as an equivalent, know, or at least 
 believe, that they can at any moment exchange it for the 
 quantity of coin it purports to represent ; whence we 
 may safely infer that the money value of products is not 
 otherwise affected by the substitution of paper for coin, 
 than by the expansions and contractions of the banking 
 system. That attribute of the banking system greatly 
 increases the extent and the frequency of the oscillations 
 of money value, but the mean remains the same. Irre- 
 deemable papeV money is, however, quite a different 
 thing. Its market value chiefly depends on the amount in 
 circulation, and that is governed by no principle, other 
 than the caprice of the parties issuing it, unless the 
 quantity be regulated by positive law. These posi- 
 tions will be illustrated and enforced in our chapter on 
 money. 
 
 Hitherto we have taken no notice of the variations to 
 which the quantity of true value belonging to a given 
 product is subject. I considered the expansions and 
 contractions of the value in the products measured, and 
 in that of the measure itself, sufficiently intricate, with- 
 out connecting with their solution another variable pro- 
 perty of value. But having, as I hope, shown the true 
 nature and relationship of money value, market value, and 
 true value, I will now endeavor to point out the variable- 
 ness of the latter when considered in connexion with 
 products. 
 
 These variations are sometimes temporary and some- 
 times permanent, as may be readily shown. We will 
 take for our first illustration the product, wheat. We 
 
84 LAWS OF TRADE, PART I* 
 
 will suppose that in a season of ordinary bounty, a 
 bushel of wheat embodies one day's service of an indi- 
 vidual and of proportionate quantities of capital and 
 land ; that in a season of extraordinary bounty, the same 
 quantity of service will produce two bushels of wheat, 
 and that in an unpropitious season it will produce but 
 half a bushel. When produced under these different cir- 
 cumstances,it is apparent that the half bushel, the bushel, 
 and the two bushels of wheat, will, respectively, embody 
 equal quantities of value. These are temporary variations 
 in the true value of a given quantity of wheat. But sup- 
 pose that agricultural chemistry, or other advancing 
 knowledge, should point out a more perfect method of 
 culture, whereby a given quantity of* the productive 
 forces, could, under like circumstances and time, produce 
 twice the quantity of wheat they now do. This would 
 permanently lessen by one half, or 50 per cent, the true 
 value of wheat. 
 
 Again : Suppose that one ounce of silver now represents 
 the quantity of productive service indicated above, and 
 that the discovery of richer mines, or advances in the arts 
 of mining and smelting, should hereafter enable like 
 forces to produce double the quantity ; this would per- 
 manently diminish, by one half, the true value of silver. 
 In point of fact, this consequence followed, and in even 
 a greater degree, the discovery and working of the rich 
 silver mines of Spanish America. Two and a half 
 ounces of silver now contain about the same quantity of 
 productive service that one ounce did before that event. 
 Hence, the true value of silver was thereby reduced 
 from 250 to 100, equal to 60 per cent. This, for a 
 time, must have caused the measure of value to depart 
 widely from the true standard, for it is to be noticed, 
 that the diminished value of that which was more 
 
CHAP. III. AS INFLUENCING PRODUCTION. 85 
 
 cheaply produced, lessened in an equal degree the value 
 of all the silver existing at the time. But after the 
 diminished value became adjusted to the enlarged pro- 
 duction, the measure returned to the true standard. 
 Two and a half ounces of silver now stand as an equi- 
 valent where one ounce did before the diminution of its 
 true value occurred. This is the only ultimate conse- 
 quence so far as money is concerned. 
 
 The true value of all products are thus subject to 
 variation of quantity. But amidst all their changes, 
 whether temporary or permanent, the market value and 
 the money value move with them, and vibrate about 
 them ; and there they must ever continue, for they are 
 bound by a chain that cannot be broken unless the gov- 
 erning principles of human nature are changed. When 
 the mainspring of production shall have had its power 
 so inverted that men will be impelled to labor for the 
 advancement of others interest rather than for their 
 own, then, but not sooner, we may expect to see these 
 fundamental laws of commerce and production annulled. 
 
 The preceding analysis of market value and price, is 
 so prolix, and has so much of apparent repetition, that it 
 will be likely to exhaust the patience of all who attempt to 
 wade through it ; but I have found it impossible to make 
 a fair presentation of my views on the subject in less 
 space. The problems it presents are confessedly the 
 most difficult, and their solution the most important in a 
 practicable point of view, of any that lie within the 
 boundaries of this science ; and since it appeared to me that 
 the efforts of other inquirers had not resulted in much 
 real progress, I felt constrained to push my explorations 
 to the bottom of the subject, and to trace out all its ra- 
 mifications, in the hope of discovering its truths, I think I 
 succeeded so far as to have their general ourUnes impressed 
 8* 
 
86 LAWS OF TRADE, PART I. 
 
 on my own mind ; but whether I have been equally suc- 
 cessful in transcribing them on to these pages, is quite a 
 different matter, and one in which my confidence is 
 weak. 
 
 I have now finished the discussion of the principles 
 which seem to me to constitute that section of the natural 
 laws of trade which preside over the production of 
 wealth, rather than over its distribution or its consump- 
 tion. We are thus prepared to pass to the distributing 
 section, and thence to the consuming; but, as before 
 observed, the three are so blended and interlinked, the 
 laws which govern either one of these processes have 
 such an important bearing on the other two, that the 
 division has more of form than of propriety about it. 
 
 SECTION II. 
 
 Of Distribution. 
 
 The money value of products, when measured at the 
 mean, being, as I have shown in the preceding section, 
 equal in quantity and volume with their true value, and 
 being moreover, the index which guides producers, as well 
 as the equivalent received by them in most of their ex- 
 changes, I shall henceforward employ the term market 
 price, as synonimous with true value, except when I have 
 occasion to note its vibrations. 
 
 When one individual loans money to another, it is 
 familiar knowledge that he receives a consideration, 
 called interest, for its service or use. This consideration 
 usually ranges somewhere between three and nine per 
 cent, per annum on the amount loaned, though extraor- 
 dinary circumstances sometimes cafry it for short 
 periods beyond those limits. The mean, therefore, is about 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 87 
 
 six per cent. ; but if we deduct one per cent, for taxa- 
 tion and the risk of loss, it leaves five per cent, per 
 annum as the average net revenue of capital in the form 
 of money. Now, inasmuch as money and every other 
 form of productive capital, can be, and are, at the plea- '* 
 sure of their owners, exchanged for each other in equi- 
 valent portions, it follows that five per cent, per annum 
 is the mean net revenue of every kind of productive ca- 
 pital ; and since productive capital and land are also 
 exchanged for each other in equivalent portions, it fol- 
 lows that the net. annual revenue of land is likewise 
 five per cent. These positions carry with them their 
 own demonstration ; they are almost self-evident truths, 
 for, with freedom of choice, it is manifest that self-inter- 
 est will prompt every proprietor of capital, or of land, 
 to select the form which gives promise of the highest net 
 revenue ; and with all thus choosing, it is equally clear 
 that the rate of net revenue, in every form of product- 
 ive capital and land, will be kept upon a level. When 
 the productive forces, called labor and skill, are subject 
 to alienation, as in the case of negro slavery, the net 
 revenue accruing to their proprietors must, in virtue of 
 the same principle, be kept upon the same level. And 
 even when skill and labor are inalienable, they are, like 
 money and all other kinds of productive capital and 
 land, subject to loan for a consideration. True, the 
 loan, in this case, is called hire, and the consideration 
 wages instead of interest or rent, but the difference in 
 names does not alter the principle. From these pre- 
 mises we derive the inference, that the net revenue of 
 each and all the productive forces conform to a common 
 standard, which, if estimated at its mean, is about five 
 per cent, per annum on the value of the forces employed. 
 In other language, the net annual profits accruing to the 
 
88 LAWS OF TRADE, PART I. 
 
 owners of the productive forces, whether considered in 
 detail or unity, are about five per cent., or one-twentieth 
 of the value of the forces employed. Whatever may be 
 the gross amount of value created, all save this is con- 
 sumed in the preservation and reproduction of the forces 
 themselves ; or I should say, rather, that after the 
 
 (share of the product which is indispensable to the exist- 
 ence of the agents producing it, has been absorbed by 
 them, there is found to remain an annual surplus of five 
 per cent., subject to the pleasure or caprice of its 
 owners. 
 
 But the question here arises : What constitutes the 
 value of the productive forces, and how may the quan- 
 tity of value belonging to each be ascertained ? At- 
 tending to the latter part of this inquiry first, I answer, 
 that statistics indicate, and observation confirms the 
 truth of the following position, namely : The aggregate 
 
 ^ net revenue of land is exactly equal to that of capital, 
 and the aggregate net revenue of industry is precisely 
 equal to that of capital and land combined. From 
 this position, taken in connexion with the fact just 
 noticed, that each class of the productive forces 
 yield to their owners an equal per centage of pro- 
 fits, it follows, that the market value of the aggre- 
 gate of capital and of land are equal, i. e., they 
 are commercial equivalents ; and that, if skill and 
 labor were transferable, the market value of the two 
 would be exactly equal to the united market value of 
 capital and land. The importance of these positions 
 will be readily conceded. They relate to the funda- 
 mental natural laws concerned in the distribution of 
 wealth, and if the matters-of-fact therein asserted can 
 be establised as ascertained truths, it will be at once 
 perceived that they afford the means of unravelling the 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 89 
 
 mysteries of this section of the laws of trade. Let us then, 
 first glance at the evidence presented in their support by 
 observation and experience, and afterwards try to ascer- 
 tain the lines of causation to which they belong, and to 
 unfold the links which connect them with their antece- 
 dents and consequents. 
 
 In the first place, it is to be observed that land, and 
 that portion of productive capital which constitutes its 
 ameliorations, are so blended that it is impossible to es- 
 timate with precision either their respective values or 
 the amount of productive service contributed by each. 
 Nevertheless, if we take a village or city on which to 
 base an estimate, where the meliorations of land mainly,, 
 consist in buildings erected upon it, we shall be able to 
 separate the value of the land from that of the capital /" 
 with sufficient correctness to show, that the aggregate of 
 the one about equals that of the other. The statistics 
 presented by assessments of property for the purpose of 
 taxation, invariably exhibit the estimated value of land 
 and its meliorations under the head of c real estate,' 
 and the estimated value of all other productive capital, 
 under the head of ' personal estate.' Assessments 
 made with the view of obtaining information for the 
 guidance of statesmen, or for historic data, usually ob- 
 serve the same rule of classification. Thus divided, we 
 may readily infer that the value of real estate greatly/ 
 exceeds that of personal estate, and so these statistics - 
 invariably indicate. But if we take the estimate for 
 any given village, town, or city, and from the gross 
 value of the real estate deduct the value of the build- 
 ings, and add it to the personal estate, we shall then 
 find them equal, provided the assessment had been cor- 
 rectly made, which, by the way, very rarely occurs. 
 
 Now as to observation. Those who are familiar with 
 
90 LAWS OF TRADE, PART I. 
 
 the value of property in the city of New York (any 
 other city would serve equally well as an illustration) 
 are aware, that the market value of the land on which it 
 is built is much greater than the value of the buildings ; 
 that if each lot and each building in the city should be 
 separately put up at public sale, and sold to the highest 
 bidders, the aggregate price of the lots would greatly 
 exceed that of the buildings. But if the productive 
 (capital contained in the buildings should be included 
 with them, then the gross price of the two would be 
 about equal. This is in accordance with our theory, 
 and we think that observation strongly supports the po- 
 sition, if it does not establish its soundness. A striking 
 evidence of its truth is afforded in the well known fact 
 that each lot will bring a price corresponding with the 
 amount of productive capital placed either upon it or in 
 its immediate vicinity. Take Wall street, for example, 
 where the buildings are most costly and contain most of 
 productive capital ; there the value of land is greatest. 
 Take a portion of the city where the buildings are poor, 
 and the locality remote from the productive capital 
 employed in commerce ; there the value of land is 
 least. Here it should be remarked, that buildings and 
 parts of buildings designed for ornament rather than for 
 use, do not come under the denomination of product- 
 ive capital. The true test of productive value belong- 
 ing to a house, store, or other building, is the 
 ^ent it will command, independent of the ground 
 rent. It is to be observed also, that productive capital 
 influences the market value of land beyond the imme- 
 diate spot on which it is placed. For this reason it 
 would be necessary, in order to render the two exactly 
 equal in New York or any other city, to include the 
 suburbs and adjoining lands in the estimate. 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 91 
 
 Again : Little more than half a century has elapsed 
 since the land on which the city of Cincinnati stands, 
 was purchased at one dollar per acre. There was then 
 no capital there. Now there are many millions of capi- 
 tal there ; and hence, we now find the market value of the 
 land, exclusive of the erections, as many millions. It 
 is thus of all other cities, towns, and villages through- 
 out the civilized world ; and it is thus in all agricultural 
 districts, but in these the land and its meliorations are 
 so much more intimately blended that we cannot per- 
 ceive the fact so readily. 
 
 The truth is, the market value of land is merely the 
 reflection of the value of the productive capital placed 
 upon it and in its immediate vicinity. It has no real 
 value of its own it cost nothing to produce ; but since 
 the laws have endowed it with the vital principle of 
 wealth by subjecting it to individual ownership, it can 
 no longer be obtained without giving in exchange for it 
 an equivalent portion of the capital present and designed 
 to concur with it in the production of wealth. 
 
 The truth of our position, that the market value of 
 the aggregate of land, and that of the aggregate of pro- 
 ductive capital, are equal, and this whether the estimate 
 be confined to a neighborhood, city, state, or includes 
 | the entire domain of civilization, seems, then, to be suffi- 
 ciently apparent ; and I cannot withhold the expression 
 of my surprise, that all writers upon the subject should 
 have overlooked a fact so obvious and so important. I 
 might content myself with having thus pointed out the 
 existence of this principle, and proceed to adopt it as 
 additional data on which to base my remaining investi- 
 gations ; but I prefer to push the inquiry deeper. Our 
 knowledge of this principle rests solely upon the evi- 
 dence of experience and observation. These show us. 
 
)2 LAWS OF TRADE, PART I. 
 
 that the fact exists as I have stated it, namely, that the 
 market value of land and of productive capital are uni- 
 formly equal to each other ; but they afford no explana- 
 tion of the causes from which the phenomenon results, 
 and hence, give no sufficient assurance of its continu- 
 ance. For aught we yet know, the observed uniformity 
 may result from chance. But if we can show by legiti- 
 mate deductions from other well established laws, that 
 this phenomenon must necessarilly result from them, 
 then we may safely pronounce it a truth, the existence 
 of which was first indicated by observation, and after- 
 wards verified by deduction. To do this I must pro- 
 ceed to answer the first clause of the question with 
 which we started namely : What constitutes the value 
 of the prime agents of production ? 
 
 In regard to the value of productive capital, it has 
 been shown already, that it consists of the services of 
 pre-existing productive forces, and that its quantity, in 
 any given machine, or in all machines, is truly indicated 
 by the average market price. As regards land, it has 
 been shown that, apart from its meliorations, it does not 
 possess true value ; that its market value had its origin 
 in the Social Contract, by virtue of that feature thereof 
 which established and enforced the right of property in 
 land ; and we know that its market price, like that of 
 every other transferable value, is governed by the se- 
 condary law of trade,called supply and demand. In tracing 
 to their origin the vibrations of price in other products, 
 we discovered that self-interest and the desire of happi- 
 ness so ruled supply and demand as to render the aver- 
 age market price an unerring exponent of the quantity 
 X of true value. It is requisite that we now determine 
 \\ what primary laws govern the supply of and demand for 
 land, wherein no true value exists. 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 93 
 
 Land is an indispensable co-laborer in almost every 
 process of production. It is not only one of the requisites 
 in agriculture, but also in commerce, manufactures and 
 the mechanic arts, because these must have land 
 whereon to erect warehouses, mills, shops and dwellings. 
 In fact, land participates in, and its proprietors receive 
 a share of, every new creation of value, except when the 
 process is executed upon unappropriated land or water. 
 For the present we will overlook the inconsiderable ex- 
 ception, and proceed to consider land as one of the con- 
 curring agents in every process of production, and its 
 co-operation as indispensable to success. The co-opera- 
 uop. of skill, labor and capital, being, as is well known, 
 also indispensable in every act of production, it follows 
 that value can only be created by blending the services 
 of the four productive forces. The desire of land 
 originates in this necessity. Present a sufficiency of 
 land to concur with all the skill, labor and capital placed 
 upon it, and the desire is satisfied ; present more than 
 this, and a portion of it must, for the time being, remain 
 unemployed; present less, and the desire will be but 
 partially satisfied. Wherefore, the magnitude of the 
 liberated desire for land is governed by, and is equal to, 
 the quantity of productive capital placed upon it. The 
 skill, labor and capital engender a desire for equivalent 
 portions of land to concur with them, and the desire 
 prompts a demand precisely equal to the existing supply 
 of productive capital. Let us next see what governs the 
 supply. 
 
 Land, unlike either of the other forces, is invariable V 
 in quantity and position. How strong soever the de- 
 mand, or superabundant the supply, the quantity of 
 land can neither be augmented nor diminished, nor its 
 locality shifted, but must remain forever subject to 
 9 
 
94 LAWS OF TRADE, PART I. 
 
 the boundaries and local distribution ordained by na- 
 ture. Therefore, the supply of land in any given 
 locality is invariable in quantity. It cannot, like all 
 classes of producible value, be augmented when the de- 
 mand strengthens and lessened when it weakens, so as 
 to maintain a uniform equality in the magnitudes of the 
 desire and the object ; but inasmuch as individuals are 
 its owners, self-interest will direct them to expand or 
 contract its market value in proportion to the increase 
 or diminution of the demand, so that the market value of 
 the object will at all times correspond in magnitude 
 with the desire. When the desire is in excess, the mar- 
 ket value of the land will expand and the desire con- 
 tract, until they meet at a point midway between the 
 natural market value of land and the natural magnitude 
 of the desire ; and vice versa. The natural market 
 value of land may be considered equal to the value of 
 the productive capital required to cultivate and other- 
 wise concur with it in the processes of production. 
 
 We find, then, that the desire of happiness governs 
 the demand for land, as it does the demand for every pro- 
 duct of value ; that productive capital and land are 
 equally necessary as auxiliary agents, in procuring the 
 ultimate objects of desire neither one being useful in 
 the absence of the other and hence, that the magnitude 
 or intensity of the demand for each must be equal : that 
 self-interest governs the supply of all classes of value, 
 save land, the supply of which is fixed by the unalter- 
 able fiat of nature : that, as regards productive capital, 
 these causes produce such an equation of supply and 
 demand that its average market value is coincident 
 with its true value ; while as regards land which has no 
 true value (its legal value being the result of individual 
 ownership and the social guaranty), nor capacity of en- 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 95 
 
 largement or diminution self-interest so governs the 
 expansions and contractions of its market value as to 
 keep the volume thereof coincident with the desire for it, 
 and hence, equal to the true value of productive capital, 
 because the two desires are equal. 
 
 We have thus verified the position which observation 
 and experience gave us warrant for assuming. We 
 have proved, it is hoped, by legitimate inferences from 
 well established premises, that the observed uniformity 
 of equality between the market value of land and that 
 of productive capital, is, really, one of the natural laws 
 of trade ; and that it results from the laws of human 
 nature and the social plan of wealth. But since a new 
 and important truth cannot be too clearly explained nor 
 too strongly impressed on the mind, I will try to pre- 
 sent it by another method, and in company with kin- 
 dred truths equally important. 
 
 It is known that capital and land are very unequally 
 distributed amongst mankind. The same remark will 
 apply to skill, and, in some degree, to labor. But by 
 means of commerce and credit, these prime agents of 
 production are so evenly distributed that every indi- 
 vidual who is possessed of industry, and willing to ex- 
 pend it productively, is provided with equivalent por- 
 tions of capital and land to concur with it. In other 
 words, productive capital and land, whatever may be 
 the number of their proprietors, are each divided into 
 as many sections as there are industrial machines to 
 concur with them. In this division of the productive 
 forces into concurrent groups, the distribution of pro- 
 ductive ^capital must be at all times complete ; since, 
 whenever any surplus remains, the proprietors thereof 
 press it into employment by offering it for sale at re- 
 duced prices, or the loan of it for a diminished consider- 
 
96 LAWS OF TRADE, PART I. 
 
 ation, either of which so condenses the market value of 
 all similar machinery, that room is thereby given for the 
 admission of the surplus ; and thus the whole of productive 
 capital (whether the aggregate be great or small as com- 
 pared with the other prime agents) is absorbed in consti- 
 tuting concurrent groups. With land the case is some- 
 times different. When population is sparce and capital 
 correspondingly meagre, it is impossible to employ, 
 productively, the whole quantity of land ; nor can 
 that, like capital and population, be diminished by 
 removal or the consumptions of time. In such cases, 
 each industrial agent is provided with an equivalent 
 portion of the existing capital, and with as much land 
 as the two can productively employ. Whatever portion 
 of the land is absorbed in this way, stands as the equi- 
 valent of capital ; the surplus meanwhile remaining un- 
 employed, and therefore unproductive, unless the aug- 
 mentation of its market value, caused by the increase of 
 population and capital, be improperly regarded as the 
 fruits of its own service. But when population and 
 capital are sufficiently abundant to concur productively 
 with the whole quantity of land, then land, like capital, 
 labor and skill, is all absorbed in constituting concurrent 
 groups; then, every owner of land, and every owner 
 of productive capital, place their respective portions 
 of these prime agents in the hands of such proprie- 
 tors of industry as will pay the highest consideration 
 for their use, retaining sufficient merely to concur with 
 their own industry, provided they wish to exert it pro- 
 ductively. Thus the entire quantity of skill, of labor, 
 of capital, and of land, respectively, are divided off into 
 as many concurrent groups as there are of individuals 
 alike able and willing to exert their industry product- 
 ively, each group consisting of equivalent portions of 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 97 
 
 the four productive forces. Whenever a surplus of 
 either remains unemployed, the proprietors thereof press 
 it into service by lowering the consideration demanded 
 for its use ; this lessens the market value of all similar 
 service, which at first produces a disturbance in the 
 distribution of the groups, a crowding in of the idle 
 and a pushing out of the employed,' but after a fewi/ 
 jostlings and oscillations of value the equilibrium is re- 
 stored, the only ultimate consequence being, that each 
 group has a somewhat larger quantity of the redundant 
 force than it had before the surplus was pressed in. 
 This, however, may be more properly called the penul- 
 timate consequence ; for we shall find, as we progress, 
 that the relative preponderancy of any one of the pro- * 
 ductive forces gives instant action to causes which tend 
 to restore the equilibrium, by lessening that and enlarg- 
 ing the others. 
 
 Each separate concurrent group here spoken of, is not, 
 indeed, made up of true equivalents of the respective 
 forces, the value and the net revenue of a given force 
 being in some instances greater, and in others less than 
 those of one or more of the others concurring with it ; 
 but if taken in the aggregate, they are absolute equiva. 
 lents.' Why is this 1 If the principle prevails in the 
 aggregate, why not in detail ? In answer, I remark in 
 the first place, that the portions of capital and land con- 
 curring in each separate group are usually absolute 
 equivalents, or very nearly so, because the market value 
 of land is merely the reflection or counterpart of the 
 value of the capital that is either actually concurring 
 with it or standing ready to do so. When, in any case, 
 the portion of capital is greater than the market value 
 of the concurring land, it is because the reflection of 
 the former extends to adjoining land, and there causes 
 9* 
 
98 LAWS OF TRADE, PART I. 
 
 the market value of land to exceed that of the concur- 
 ring capital ; whence it may be inferred, that in a col- 
 lection of neighboring groups, the value as well as the 
 net revenue of capital and land, respectively, must be 
 true equivalents. As regards skill and labor, the prin- 
 ciple is different. We frequently witness, especially in 
 the manufacturing art, where mills and expensive ma- 
 chinery are employed, production going on extensively 
 with but little aid from industry. Take, for example, 
 a steam cotton mill. The modification of the materials 
 which pass through it annually, enhances their value, say, 
 $50,000 ; while the wages paid for labor and for the 
 superintending skill do not exceed $10,000. Here the 
 portions of capital and land concurring are much greater 
 than those of labor and skill ; and the net revenue ac- 
 cruing to their proprietors is also much greater. But 
 this very preponderancy of machinery, or capital, begets 
 the necessity of a corresponding excess of labor and 
 skill in other processes namely, in the repair of the 
 mill and machinery, and in the construction of new ones 
 to take their place when worn out, for the fact is ob- 
 vious, that industry preponderates in these processes. 
 Indeed, observation fully warrants the assertion, that 
 industry preponderates in nearly every group em- 
 ployed in the fabrication of productive capital. Take 
 for illustrations, the wood-chopper, with no other capital 
 than his axe, the mason with his hammer and trowel, the 
 carpenter, wheel -wright and machinist with their few and 
 simple tools of trifling cost. And if we look at the means 
 employed in the construction of expensive ornaments, and 
 other articles of luxury, the demand for which is engen- 
 dered by the profits of capital, we find their value to 
 consist almost exclusively of the services of labor and 
 skill. I have seen a music-box, no larger than an ordi- 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 99 
 
 nary watch, so skilfully and laboriously wrought that it 
 required $500 to remunerate the fabricant, the material 
 of which did not cost twenty dollars, and even that was 
 chiefly produced by industrial service. 
 
 We find, then, that an excess of capital in one group 
 of the productive forces, begets the necessity of a cor- 
 responding excess of labor and skill in one or more other 
 groups ; and hence, when considered in the aggregate and 
 regarded'as units, the three must be absolute equivalents. 
 
 The reader will have noticed that I have uniformly 
 spoken of industry as consisting of two distinct elements, 
 and as constituting two distinct agents of production 
 namely, skill and labor. Before proceeding farther, it 
 well be well to state the grounds of this distinction, espe- 
 cially as all other inquirers have regarded industry as a 
 single force in the production of value. Nature has, 
 indeed, united skill and labor in the same being, and so 
 blended them that it is impossible to determine, in any 
 case, the precise amount of service contributed by each. 
 Yet we all know them to be distinct attributes ; we 
 know that the one emanates from the mind, the other 
 from the body : the productive service of the one is 
 mental or nervous, that of the other corporeal or muscu- 
 lar. Place capital and land in the hands of an idiot, 
 and how strong soever his muscular powers, he will be 
 unable to wield them productively, unless his efforts are 
 guided by the skill of another. Place them in the 
 hands of an intellectual giant whose physical powers are 
 paralized, and he will be equally unsuccessful. In the 
 first instance, skill would be absent, in the second, la- 
 bor ; but place capital and land in the hands of one en- 
 dowed with both elements of industry, and newly created 
 value will result from the union, because the four essen- 
 
100 LAWS OF TRADE, PART I. 
 
 tial parents are present to blend their services in a 
 single product. 
 
 We are familiar with the fact, that whether industry 
 is the employed, the employer, or the partner in pro- 
 duction, its proprietors are rewarded in proportion to 
 their degrees of strength and skill, respectively. When, 
 for example, the muscles are strong and the intellect 
 weak, the proprietor receives but the revenue of labor ; 
 when both are strong, he receives the revenue of both. 
 It is to be observed that mankind differ much more 
 widely in the degrees of skill wherewith they are en- 
 dowed, than they do in physical powers. Most men are so 
 v^ equally gifted with the latter that the wages paid for labor 
 are usually the same to the weak that they are to the 
 strong. Not so, however, as it relates to skill, for we 
 see the rewards of its service ranging from units to hun- 
 dreds, and even to thousands. The ordinary day la- 
 borer, for example, may be said to receive little if any 
 re ward for his modicum of skill. The mechanic receives a 
 reward for the service of his skill, equal perhaps to that 
 received for his labor. The artist, the merchant and 
 the professional man, receive still higher rewards for 
 their outlays of skill, reaching in some cases at least a 
 thousand fold that received by the day laborer for the 
 skill portion of his services. So, also, as regards those 
 engaged in the same profession or calling : the higher the 
 degree of skill, the greater the reward. It is no un- 
 common thing, for instance, to see two merchants com- 
 mence business under circumstances alike favorable, 
 prosecute it with an equal observance of application and 
 economy, and yet end at the opposite extremes of the 
 ladder of wealth, simply because they differed in degrees 
 of skill. Skill is of two sorts, intellectual and artistic. 
 The first is the gift of nature, the second is acquired by 
 

 CHAP. III. AS INFLUENCING DISTRIBUTION. 101 
 
 study or application to a given art ; the two constitute 
 the partner of that name in the productive firm. It should 
 be noticed that there is much of intellectual service con- 
 curring in the production of wealth, which is common, 
 unappropriated utility, like the natural agents, light, 
 heat, rain, &c. Of this character is scientific knowl- 
 edge, and useful inventions for which the patents have 
 expired. These are potent auxiliaries in the production 
 of wealth, but their services are free to all who 
 choose to employ them. Artistic and intellectual skill, 
 are however, like strength of muscle, appropriated pro- 
 perty ; and the proprietors thereof receive for every out- 
 lay of them, rewards corresponding with the magnitude 
 of the streams. 
 
 Here I might proceed to demonstrate the fact, that 
 skill and labor are equal partners in the great productive 
 firm ; that, in obedience to natural laws, they contribute 
 equal amounts of capital, render like quantities of service, 
 and receive equal shares of the revenue. To do this, it 
 would be only necessary to take for my premises the 
 laws of human nature and the general principles of 
 wealth already noticed, and connecting them with the 
 fact just pointed out, that wealth cannot be produced in 
 the absence of either skill or labor, deduce therefrom the 
 derivative laws which render them equal partners. I 
 might also verify the deduction by the observed fact, 
 that the preponderance (in service and profits,) of skill 
 in one process of production, begets the necessity of a 
 corresponding excess of labor in one or more others, and 
 vice versa; as well as by other evidences which observa- 
 tion and experience afford. But since the argument and 
 illustrations would be, in the main, a repetition of those 
 already presented in elucidation of a kindred principle, 
 I will withhold them, and thus spare the reader's patience. 
 
102 LAWS OF TRADE, PART I. 
 
 If those presented in relation to land, capital and indus- 
 try, have produced conviction, it will be readily perceived 
 that they could do no less in this case ; if, on the con- 
 trary, they have failed in the others, they would be 
 likely to fail in this also. I will only add, that my own 
 convictions of the truth of this position are as clear and 
 positive as they are in reference to any other principle 
 enunciated in this work. 
 
 We find then that skill, labor, capital and land, are 
 co-equal partners in the general firm of production their 
 respective proprietors receiving equal shares of the 
 gross revenue or profits ; and since commerce and credit 
 keep their respective per centages of profit at a common 
 standard, it follows that the aggregate value of each 
 must be equal. We shall also find in the sequel, that 
 the aggregate of skill, of labor, and of capital, respective- 
 ly, cost the same to produce; while land, as we have seen, 
 cost nothing. If I have failed, through unskilfulness in 
 the use of language and ignorance of the rules of logic, 
 to unfold the laws by which nature has established this 
 equitable partnership, yet, the fact of its existence I 
 hold to be so obvious and undeniable, that no one of 
 ordinary capacity can fail to perceive it, if he will take 
 the trouble of contemplating the subject for himself. 
 
 Assuming these premises to be sound, the inference is 
 unavoidable, that the greater the quantity of either one 
 of the prime agents of production, as compared with the 
 other three, the lower will be the relative profits of its 
 individual proprietors, and vice versa. Suppose, for 
 illustration, that 100 represents the mean, aggregate 
 productive power of each, and 400 that of the whole ; 
 then, if we assume the profits to be five per cent, per 
 annum, 20 represents the gross annual profits of pro- 
 duction, and 5 the share of each prime agent. Now 
 
CHAP. Ill, AS INFLUENCING DISTRIBUTION, 103 
 
 suppose that pestilence or other causes suddenly reduce 
 the quantity of labor and skill to 50 each ; capital and 
 land respectively remaining at 100. This would diminish 
 the aggregate productive power by one quarter, or from 
 400 to 300 ; and it would lessen the aggregate net 
 revenue in an equal degree, namely, from 20 to 15. 
 The last named quantity being divided, as our prenri- 
 ies divide it, into equal shares, would give to each class 
 of the productive forces 3f ; consequently, the rate 
 of profits on capital and land (each of which remains 
 at 100) would be 3 1 per cent, per annum, while the 
 rate awarded to skill and labor (which are reduced 
 to 50 each,) would be 7i per cent., or exactly double 
 that of capital and land. In other words, the interest 
 of money and the rent of land, houses, mills, machinery, 
 and of all other kinds of productive capital, would be 
 reduced twenty-five per cent, while the wages of labor 
 and the rewards of skill would be enhanced fifty per cent. 
 Such would be the first consequence of a sudden and violent 
 disturbance of the natural equilibrium of the productive 
 forces, of the character, we have supposed. Let us now 
 trace out and group the various causes concerned in the 
 production of this consequence, and see whither they 
 tend ultimately. 
 
 The diminution of population, by lessening the num- 
 ber of industrial machines, first throws out of employ- 
 ment a portion of the capital and land ; the surpluses of 
 these are next pressed into service by lowering the con- 
 sideration demanded for their alienation and for their use : 
 this lessens the market value and the profits of capital 
 and land, and enlarges the profits of industry ; the 
 diminished market value and profits of capital lessen the 
 demand for and the production of machinery, while the 
 augmented profits of industry, by setting free a large? 
 
104 LAWS OF TRADE, PART I. 
 
 number of desires, increase the demand for and the 
 production of value in its consumable forms. All the 
 causes thus set in motion, it will be perceived, tend to 
 produce a diminution of productive capitalj and with it, 
 of course, a corresponding contraction of the market 
 value of land. Simultaneously with these, other influ- 
 ences are put in motion which tend to increase the 
 quantity of labor and skill. For example : The dimi- 
 nution of population increases the rewards of industry, 
 and the increased rewards of industry attract population 
 from abroad. Besides, it is well known that extreme 
 wealth and extreme poverty are both unfavourable to 
 the production of population, as well as to the wealth pro- 
 ducing capacity of those who occupy these extremes ; 
 and since the diminished profits of capital reduce the 
 revenue of the rich, while the increased rewards of indus- 
 try enhance that of the poor, it is evident that the event 
 supposed would lessen these extremes, and thus tend to 
 increase both the number and the productive capabilities 
 of native population. We find, therefore, that a sudden 
 diminution of population first causes the profits of labor 
 and skill to increase, and those of capital and land to 
 diminish ; and that these, combined with other causes 
 simultaneously put in action by the disturbance, cause 
 productive capital and the market value of land to con- 
 tract in volume, and industry to expand until they 
 meet somewhere between the points from which they 
 respectively set out. But neither will stop there. The 
 impetus with which they started will carry each onward, 
 until they have changed places ; then a reaction takes 
 place, afterwards another, and so on, with lessening in- 
 tensity, until the natural equilibrium is restored. It is 
 thus in relation to every sudden or unnatural diminu- 
 tion of population. And whenever, from any cause, 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 105 
 
 the increase of population outstrips the growth of pro- 
 ductive capital, then the influences of these principles 
 are inverted, and the equilibrium thereby restored. 
 
 The same 'laws prevail in relation to capital also. 
 Suppose, for example, that a large portion of the product- 
 ive capital of the world should be suddenly destroyed by 
 the elements, or by any other cause. This, by first increas- 
 ing the profits on what remained, and the demand for and 
 the production of more while, by lessening the rewards 
 of industry, it retards the production of children for 
 want of means to rear them, and thins the existing po- 
 pulation by starvation would thus give action to the 
 laws which never fail to restore the equilibrium, ulti- 
 mately. If, on the contrary, a high degree of productive 
 skill, combined with habits of industry and economy, 
 should cause productive capital to augment more rapidly 
 than population, it would tend to lessen the profits, 
 weaken the demand, and diminish the production of cap- 
 ital ; while, by increasing the rewards of industry, it 
 would engender an augmented demand for wealth in the 
 forms best calculated to reproduce labor and skill, so 
 that in this instance too, the natural equilibrium would 
 be speedily restored. 
 
 In these illustrations, I have regarded the productive 
 forces as units. But it may not be amiss to remark, 
 that the principles are equally applicable to equivalent 
 sections of them, whether large or small. If we confine 
 our survey to a single nation, city, or village, we shall 
 find these laws presiding over the distribution of wealth, 
 and maintaining at a common standard the respectiv^/ 
 magnitudes of skill, labor, capital, and market value 
 of land. Indeed, uniformity of action may be said / 
 to be one of the distinguishing features of the laws ' 
 of trade. We may go into a workshop, where the 
 10 
 
106 LAWS OF TRADE, PART I. 
 
 different processes of wealth are carried on, and there 
 find exemplified and enforced the natural laws which 
 govern the production and distribution of wealth through- 
 out the commercial world. 
 
 Let us here pause for a moment to note a few facts of 
 practical importance which result as corollaries from the 
 argument just adduced. If the fundamental laws which 
 govern the distribution of wealth are of the character I 
 have endeavored to unfold, then it is obvious : 1, That, 
 as regards any given nation or community, the influx of 
 foreign population without capital, lessens the relative 
 profits of industry and enlarges those of capital and 
 land in other words, injures the poor and benefits the 
 rich. 2, That the efflux of population without capital, 
 benefits the remaining poor and injures the rich. 3, 
 That the influx of capital without population, enhances 
 the profits of industry and land, and lessens those of 
 capital. 4, That the acquisition and preservation of 
 capital by individuals, not only enriches themselves but 
 benefits the poor, while the consumption, by its owners, 
 of previously amassed wealth, lessens the revenue of all 
 except those who remain rich, in other words, that in- 
 dividual economy is a social benefit, and individual ex- 
 travagance a social injury. It is scarcely necessary to 
 observe, that these consequences are not permanent. 
 They may continue in some cases for a generation, or 
 even longer, but according to our theory, they must 
 sooner or later give place to those of a contrary kind. 
 
 But to return to the subject of profits, and the relative 
 magnitude of the productive forces. We have seen 
 that an excess of population curtails the rewards of in- 
 dustry, and enlarges those of capital ; that an excess of 
 capital produces results the reverse of these ; but that 
 natural law ultimately restores the equation both of 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 10T 
 
 magnitudes and profits. Let us now ascertain the prin- 
 ciples connected with the productive agent. Land, in 
 which there is no fluctuation of quantity. 
 
 Land, as I have said before, is the gift of nature : it 
 costs nothing to produce, it requires no renewal, it con- 
 sumes nothing. The last clause of this assertion will be 
 disputed by many, and I am willing to admit that land 
 may be impoverished by careless and unskilful culture, 
 as well as fertilized by manures ; but I maintain that, 
 with ordinary care and skill in the cultivator, its native iX 
 fertility may be kept up without the use of other fer- 
 tilizers than those afforded in its own refuse products. 
 This is all the assertion means ; and its truth is in some 
 measure confirmed by the fact that city lots consume no- 
 thing, although they concur in production, and in their 
 market value fully reflect the true value of the capital 
 placed upon them. 
 
 Land, in any given locality, is invariable in quantity. ^ 
 Its market value expands and contracts as the other 
 three productive forces augment and diminish, but its 
 productive powers remain stationary. Therefore, where 
 population is sparce, each concurrent group of the 
 productive forces embraces more of the productive 
 power of land, than where population is dense. The 
 greater the native fertility of land, and the larger the 
 quantity each individual may have of it to concur with 
 his industry and capital, the larger will be the product- 
 ion of value, and hence, the higher the rate of profits, 
 because there is not a corresponding increase of cost 
 or rather, the cost element of value remains stationary 
 while its gross quantity is enlarged. The market value of 
 land being, in all cases, exactly equal to that of the pro- 
 ductive capital placed upon it, it follows that where po- 
 pulation and capital are relatively scarce, its price 
 
108 LAWS OF TRADE, PART I. 
 
 must be proportionately low ; and the lower the 
 price of land the higher the rate of profits inuring 
 to its proprietors, as well as to the propertiors of 
 the concurring skill, labor, and capital, for they all 
 share alike. 
 
 These considerations warrant the conclusion, that the 
 market value of land and the profits of production move 
 inversely when the one ascends the other descends ; 
 that productive capital and population augment and 
 diminish in unison ; that the market value of land at all 
 times exactly equals the value of the productive capital 
 placed upon it ; and hence, that its market value will be 
 highest, and the profits of production lowest, where 
 population is most dense, and vice versa. This princi- 
 ple is of universal prevalence as regards different coun- 
 tries or political communities, but it is not applicable, of 
 course, as between city and country. In these cases, 
 the capital and industry in each, is employed in distinct 
 departments of production, the commercial and the 
 agricultural ; and it is well known that the latter re- 
 quires, in the production of a given quantity of value, 
 the concurrence of more land than the former. 
 
 The principle thus deduced is completely verified by 
 every man's experience and observation. Illustrations 
 present themselves on every side, but I will content my- 
 self by merely referring to one of a most convincing 
 character. In the valley of the Mississippi, where the 
 market value of unimproved lands of great natural fer- 
 tility, is but $l, T Yo- per acre, the interest of money, and 
 the profits of capital generally, range from ten to twelve 
 per cent, per annum; in the agricultural districts of 
 New York, where the market value of unimproved 
 lands, or of cultivated lands aside from the ameliora- 
 tions, is, on an average, about $30 per acre, the profits 
 
CHAP. III. AS INFLUENCING DISTRIBUTION. 109 
 
 on production, as indicated by the interest of money, 
 range from five to seven per cent. ; and in the densely 
 peopled sections of Europe, where the market value 
 of agricultural land, aside from its improvements, will 
 average more than $100 per acre, the annual profits on 
 production, as shown by the same indicator, range from 
 two to four per cent. In the first named locality, 
 population is sparce, in the second it is medium, in the 
 third it is dense, which not only accounts for the dispar- i/ 
 ity of profits but confirms the soundness of our theory. 
 The half fed populace of over-peopled Europe, without 
 any knowledge of the natural laws which preside over 
 the profits of production, have perceived the statistical 
 facts just named, and true to the promptings of self- 
 interest, we find them, with their faces turned hitherward, 
 leaving their homes as rapidly as they can find ships to 
 carry them ; and after landing on our shores, wending 
 their way to the cheap and fertile lands of the west. 
 The attraction of cheap and fertile land, everywhere, is 
 constantly drawing to it an increase of industry and 
 capital, and but for the strong ties which bind man to 
 the place and country of his nativity, together with the 
 diversity of language, government and climate, it would 
 equalize industry, capital and land throughout the world. 
 Even in the face of these hindrances, the tendency 
 towards that ultimate result is very rapid, and sooner or 
 later it will be accomplished. 
 
 Let us see how far we have progressed. It has been 
 shown that the oscillations of profits preserve the equation 
 of skill, labor, capital, and the market value of land 
 chaining each to a common standard of magnitude : that 
 the oscillations of profits also tend to condense the market 
 value of land when it is inflated, and to expand it when 
 compressed, so as to produce not only an ultimate uni- 
 10* 
 
HO LAWS OF TRADE, PART I. 
 
 formity everywhere, but also, a correspondence between 
 the market value and the productive capacity of land. It 
 now remains to show the ultimate law of profits that 
 law to which all the others are subordinate, and which 
 keeps the profits of production, with slight oscillations, 
 gravitating about the point of five per cent, per annum. 
 But since it will be necessary, in the exposition of this 
 law, to adopt as premises some of the principles which 
 preside over the consumption of wealth, it is deemed 
 best to pass those in review first. 
 
 SECTION III. 
 
 Of Consumption. 
 
 Having, in the two preceding sections, endeavored to 
 point out the general principles that govern the produc- 
 tion and distribution of wealth, it now remains to unfold 
 those which control its destiny. After having investi- 
 gated this section of the laws of trade, we shall be pre- 
 pared to contemplate them as a whole, and to determine 
 whether the separate parts of our theory in reference to 
 them, harmonize. I have no misgivings on this point ; 
 but on the contrary, am satisfied, that when we come 
 to contemplate the subject from that point of view, we 
 shall be able to see the truthfulness of the theory with 
 far more clearness than we have yet seen it ; for besides 
 the imperfect manner in which the subject is treated in 
 these sections, the different parts of the laws of trade 
 are so woven together by reciprocal influences, that it is 
 impossible to obtain a clear knowledge of either section, 
 until we have considered them, first by themselves, and 
 afterwards together as parts of a mutually dependent 
 system. 
 
CHAP. III. AS INFLUENCING CONSUMPTION. Ill 
 
 As relates to the section of these laws that we are now 
 to consider, it will be remembered that my thesis is : 
 
 1, That the portion of value constituting the cost of 
 production returns to the sources whence it emanates, 
 and is there consumed in the preservation and reproduc- 
 tion of skill, labor, capital, government and money ; 
 that the portion constituting the profits is applied in 
 part to the augmentation of skill, labor and capital, and 
 the balance to the gratification of the non-essential desires 
 of its owners, the productive forces now existing being 
 the accumulated profits of the present and all preceding 
 generations. 
 
 2, That the profits of production in the aggregate, 
 vibrate within limits bounded by 2| per cent, per an- 
 num and 7| per cent, per annum, being not only 
 restrained from transcending these limits by starvation 
 on the one side and by a dense crowd of liberated de- 
 sires on the other, but also, driven back towards the 
 centre by the undue consumption of capital at the one 
 extreme and of population at the other. 
 
 We will now proceed to consider the phenomena pre- 
 sented in the consumption of wealth, in doing which, it 
 will be my aim, among other things, to demonstrate the 
 truth of the foregoing propositions. It is familiar 
 knowledge that human offspring must be fed, clothed, 
 housed, lodged, and nursed in infancy and in sickness, 
 for a series of years, before their muscular powers are 
 sufficiently developed to yield the productive service, la- 
 bor ; that a still longer term of years is necessary to 
 educate them in the arts of production so as to yield the 
 service called skill ; and that the laws of society, as well 
 as parental affection, enjoin these duties upon their 
 parents. The value thus consumed must be regarded 
 as the cost of producing Skill and Labor, When the 
 
112 LAWS OF TRADE, PART I. 
 
 bodily and mental powers of children have been thus 
 matured at the expense of their parents, they take their 
 places in the laboratory of production as independent 
 proprietors of industry. Thenceforward they must be 
 fed, clothed, housed, lodged, and nursed in sickness as 
 before. These are the consumptions incident to the 
 repair and preservation of industrial agents. But not- 
 withstanding the outlay, they are preserved for a limited 
 period only : disease, accident and exhaustion, sooner or 
 later destroy their productive powers. Meanwhile, how- 
 ever, fresh agents are produced to occupy their place, 
 the renewal being effected in the manner just pointed out. 
 In the production, preservation and renewal of cap- 
 ital, a similar consumption of value takes place not 
 indeed of value in the form of food, clothing, and the 
 like, but of the direct service of industry, capital and 
 land. For instance, in the fabrication of the simplest 
 instrument of production, human agency must furnish 
 the skill and labor, capital the tools, and land the raw 
 material together with the use of the ground on which 
 the work is performed. The valuable service thus con- 
 sumed in the fabrication of productive machines and im- 
 plements, constitutes the cost of producing capital. 
 These machines deteriorate by use and exposure, so that 
 similar service is consumed in their maintainance and 
 repair : this constitutes the cost of preserving capital. 
 And finally, the productive power of machines, like that 
 of industrial agents, is ultimately destroyed by casualty 
 or exhaustion, so that capital also requires renewal. 
 And it is worthy of notice that the mean duration of 
 productive machines is about the same as that of human 
 life, as appears from the fact that experience has taught 
 underwriters to charge about equal rates of premium for 
 guaranteeing their preservation. 
 
CHAP. III. AS INFLUENCING CONSUMPTION. 113 
 
 The Government Machine is also a great consumer. It 
 is a powerful auxiliary in the production and preservation 
 of wealth, and its active co-operation is so beneficial that 
 producers can well afford to pay, in the form of taxes, 
 whatever share of the product is requisite to its efficien- 
 cy ; but, unfortunately, its voracious appetite is rarely 
 satisfied with so small a share. 
 
 Money costs no inconsiderable amount in its produc- 
 tion, but inasmuch as it costs but little for repairs, and 
 seldom needs renewal, its gross consumptions are trifling 
 compared to those of government. Some, no doubt, 
 will question the propriety of excluding money from 
 that class of productive agency, termed capital ; but it 
 appears to me there are good reasons for doing so. 
 Money, like government, is a social expedient or general 
 machine, designed to benefit society by giving incidental 
 aid to every producer. It therefore belongs to the 
 class of social auxiliaries, rather than to that of capital. 
 
 These are the only kinds of consumption that enter 
 into the cost of production. Taken together, they con- 
 stitute that class which has been well termed reproduct- 
 ive consumptions. Land, the other productive agent, 
 I beg to repeat, costs nothing. It has been furnished 
 gratis, it needs no repair, it is never destroyed, nor is 
 its productive power lessened by use, under a judicious 
 system of cultivation : it consumes no portion of the 
 value that it helps to create. As a source of production, 
 its services are gratuitous ; as a legal partner in the 
 producing firm, its owners are entitled to a share of the 
 revenue. The other prime agents and auxiliaries are, 
 however, as indicated above, great consumers. Their 
 repair, preservation, and renewal, swallow up the major 
 part of their joint progeny. The minor part, which 
 remains, is the net revenue or profits of production. 
 
114 LAWS OF TRADE, PART I. 
 
 This is consumed in various ways (according to the taste 
 or caprice of its different owners,) all of which, however, 
 may be conveniently arranged into three classes, and thus 
 designated ; 1, in the augmentation of the productive 
 forces ; 2, in the gratification of the senses ; 3, in the 
 satisfaction of mental desires. 
 
 As relates to the class of consumptions first named, it 
 is to be observed that nature has limited them to 3J per 
 cent per annum, under the most favoring circumstances 
 for an increase of population and capital in all other 
 cases, still lower. The statistics of population have 
 shown that under the most favorable conditions, as it 
 respects health and all the other requisites of increase, 
 the births do not exceed the deaths, annually, more than 
 3|- per cent, on the existing amount of population. 
 When we reflect that not more than one eighth of the 
 population are of the proper sex, age and condition for 
 bearing children, and that these cannot produce, on an 
 average, more than one each in two years, which gives 
 6 per cent, of births ; and that the deaths in a climate 
 of ordinary healthfulness average 2^ per cent we must 
 perceive at once that these limits cannot be transcended, 
 rarely indeed reached. Where the extremes of wealth 
 and poverty abound, or where the climate is unhealthy, 
 or population dense, the net annual increase cannot ex- 
 ceed 1 1 per cent. ; whence it is clear that the law of in- 
 crease to which population is subordinate, does not per- 
 mit the average rate to exceed 2 per cent, per annum. 
 Neither can capital augment more rapidly, since, as 
 already shown, its rate of increase is governed by and is 
 equal to that of population. Therefore, we may safely 
 conclude that 2 per cent, per annum, or one half the 
 net profits derived from industry and capital, is all the 
 value that can be absorbed by this class of consumers. 
 
CHAP. III. AS INFLUENCING CONSUMPTION. 115 
 
 The second and third class the senses, and the mental 
 desires each importune the intellect, through the desire 
 of happiness, for all the profits that remain namely, 
 the entire profits of land, and half those of industry and 
 capital, or five-eighths of the whole. The judgment usually 
 observes, however, a laudable degree of impartiality in 
 making the distribution; for it awards to each class 
 about an equal share of the remaining profits, to which 
 in truth they are both fairly entitled, by having been 
 equally instrumental in their production. 
 
 As regards the second class it may be said : The eye 
 is constantly appealing for something new and beautiful 
 to look upon ; the ear, for pleasing and harmonious sounds ; 
 the sense of smell, for fragrant and pungent odors ; the 
 palate, for savory delicacies in food and drink ; the sense 
 of feeling, for all kinds of bodily enjoyments or plea- 
 surable sensations, and for the removal of pain. Much 
 of value is consumed in quieting the urgency of these 
 appeals probably not less than the share of profits in- 
 dicated above. 
 
 The third class is made up of a more numerous host, 
 being no less than the whole family of mental desires 
 and sentiments. Of these it will be sufficient to name 
 a few of the most importunate, and point out the nature 
 of their wants : Veneration demands the trappings of 
 public worship ; benevolence, the means of practical 
 munificence ; fear, fitting guards for securing personal 
 safety ; pride, costly ornaments for ostentatious display ; 
 ambition, the means of securing its aims ; and so on, 
 until last of all, though not least, the Intellect the 
 progenitor and governor of this wonderful phenomenon 
 reserves to itself no inconsiderable share of the net re- 
 venue, as a means of aiding its advances on the path- 
 ways of truth. 
 
116 LAWS OF TRADE, PART I. 
 
 Such are the consumers of wealth. No member of 
 society is free from the importunity of any one of them, 
 for they are all either ingredients of human nature or 
 unavoidable accompaniments of the social condition. 
 They, however, differ in their degrees of strength in dif- 
 ferent individuals, their relative and absolute strength 
 in each case being governed by the peculiar mental 
 and physical organism that nature and circumstances 
 have awarded to the individual. After satisfying the 
 imperative wants of life and of capital (including their 
 permitted increase,) and the wants of government and 
 money, the remaining profits must necessarily be con- 
 sumed unproductively ; and it is sufficiently clear that 
 those to whom they belong will distribute their respect- 
 ive shares amongst their non-essential desires, in such 
 manner as the judgment of each shall indicate as the 
 best calculated to promote his own happiness. 
 
 We have now reached a favorable position for consider- 
 ing some of the higher laws to which profits are sub- 
 ject. We have seen by what agencies they are produced, 
 how they are distributed, and in what manner consumed ; 
 and we have seen that their present average rate in the 
 world-wide field of production, is about five per cent, per 
 annum. It is important that we know by what influ - 
 ences this rate is governed. Is it the offspring of chance, 
 and liable to change with every variation of circum- 
 stances in the field of production ? Or do the natural 
 laws of trade establish a standard rate, from which the 
 profits of production cannot depart without giving ac- 
 tion to causes which tend to bring them back ? I have 
 advanced the opinion that they do establish such a rate, 
 and will now proceed to demonstrate the correctness of 
 that opinion. 
 
CHAP. III.J LAWS OF TRADE. 117 
 
 In the first place, we will consider the commercial 
 world as a single field of production, and we will assume 
 that the standard rate of profit is 5 p. ct. per annum ; 
 that its establishment and maintenance requires the 
 existence of productive capital in the proportion of 
 $500 to an adult citizen or industrial agent the 
 market value of land being, of course, as much more ; 
 and that the mean cost of rearing and educating chil- 
 dren, (including the value consumed by those that 
 die before reaching their majority,) is equal to both- 
 namely $1,000 each. Assuming this to be the present 
 and the natural condition of things in the general field 
 of production, let us next suppose the rate of profit to 
 be suddenly lowered by some cause that will permantly 
 diminish the results of productive effort say by an 
 adverse change in the seasons. What would be the con- 
 sequences 1 Before attempting to trace them out, it 
 will be well to estimate the expenses or reproductive 
 consumptions incident to agriculture. 
 
 If we were to take 50 acres of land and incorporate 
 with it $1,000 of capital, in the form of improvements 
 and implements of husbandry, and employ two indivi- 
 duals in its cultivation, we would have (according to our 
 hypothesis,) a group of productive agents, equal in value 
 to $4,000 ; and which would produce $200 of net pro- 
 fits annually. Land of medium fertility will produce 
 about 20 bushels of wheat per acre, so that if the culti- 
 vation were confined to that plant, the gross value pro- 
 duced, (estimating wheat at one dollar per bushel,) would 
 be equalto $1,000 ; which gives $800, or four-fifths of 
 the gross product, as the cost portion, or the share re- 
 quired to sustain and preserve the agents employed. 
 This is probably about a fair estimate of the reproduc- 
 tive consumptions incident to agriculture. If so, a slight 
 11 
 
118 LAWS OF TRADE. [PART II. 
 
 withholding of nature's accustomed bounty, would seem 
 to be sufficient to prevent the realization of profits in 
 that department of production ; for whenever the yield 
 falls so much as one-fifth below the average, the pro- 
 ducts are all consumed in the mere maintenance of the 
 agents producing them, leaving nothing for the gratifi- 
 cation of non-essential desires, nor for the increase of 
 population and capital. It is to be noticed, however, 
 that the losses consequent on a diminution of products in 
 agriculture, do not fall exclusively on those engaged in 
 that pursuit, but are so distributed as to fall with equal 
 severity on all classes of producers. For instance, the 
 diminished yield enhances the value and price of the 
 products ; all men are consumers of agricultural pro- 
 ducts ; therefore, all must share in the loss. But inas- 
 much as the major part of the productive agency of the 
 world is employed in agriculture, it is evident that a 
 diminution of results in that department, equal to two- 
 fifths of the average yield, would, at first, prevent the rea- 
 lization of profits in all departments ; because, in that 
 event, the whole value produced would be re-absorbed 
 by the agents producing it, unless I have over estimated 
 the cost of agricultural products. But whether I have es- 
 timated the cost element of value, as compared with its 
 profit element, too high or too low ; and whether it re- 
 quires a diminution of results, in agricultural service, of 
 more or less than 40 per cent., to suppress the element 
 of profit in all products, are points not very material. It 
 suffices our present purpose to know the law and its ten- 
 dency in such cases to know, for instance, that the / 
 value of products is made up of cost and profit, and 
 that the profit element may be, for a time, entirely sup- 
 pressed by adverse causes : which general truths are 
 too manifest to require farther illustration. 
 
CHAP. III.] LAWS OF TRADE. 119 
 
 Let our supposition then be, that the change in sea- 
 sons is sufficiently adverse to suppress all profits. What 
 would be the consequences of such an event 1 Let us 
 trace them out, and ascertain their ultimate tendency. 
 
 In the first place, it is obvious that population would 
 go on increasing at the usual rate of 2J- per cent, per 
 annum* until checked by starvation, which last would be 
 an ulterior, not an immediate consequence. The rich, 
 meanwhile, would continue to gratify their non-essential 
 desires ; and since, in the aggregate, there are no profits 
 applicable to that or any other purpose, it is evident 
 that a part of the existing capital must be consumed ; 
 for it is to be noticed that wealth, in many of its forms, 
 may be either directly consumed or kept at service as a 
 productive agent. Therefore, the first consequences of 
 the event supposed, would be an increase of population 
 and a decrease of capital. These consequences would 
 necessarily cause the rewards of capital to be relatively 
 higher than those of industry, because the supply of the 
 latter would exceed the demand for it, while that of the 
 former would not equal the demand ; and since, according 
 to our supposition, there are no absolute profits pro- 
 duced, it follows that capital would continue to realize 
 a slight degree of profit, and industry an equal degree of 
 loss. And inasmuch as industry, when its accustomed 
 profits are withheld, has nothing to lose but itself, it is 
 manifest that less of value must be consumed in its pro- 
 duction and maintenance ; it must feed on less costly 
 products arid clothe in cheaper fabrics in other words, 
 the standard of the necessaries of life must be lowered. 
 This of itself lessens the cost of the productive agents 
 Industry, and thereby tends to bring its aggregate value 
 down to that of the diminished capital ; but there are 
 also oiher influences tending to the same end- Ii is 
 
120 LAWS OF TRADE. [CHAP. III. 
 
 known that in all communities, including the most pros- 
 perous, there is an unfortunate class who are compelled 
 to choose between starvation and public charity ; and 
 that, from this extreme depth of poverty, the pecuniary 
 condition of the different classes ascends by almost im - 
 perceptible gradations, up to the highest degree of wealth. 
 The losses on industral service force the next higher 
 classes down to a level with the lowest, whereupon famine 
 and its attendant pestilence quickly thin their crowde(J 
 ranks ; for the records of history compel us to own, that 
 the charities of society (under the restraints imposed by 
 necessity and by choice,) are too cold and sparing to 
 prevent that melancholy result. Simultaneous action is 
 also given to another cause of like tendency, namely : 
 The increased difficulty of providing for offspring deters 
 the more prudent and reflecting of the poor from mar- 
 riage ; which, by restraining procreation, tends to dimin- 
 ish population. 
 
 It will be readily perceived that the joint effect of 
 these three causes must be a rapid decrease in the value 
 of industry ; for, while famine and restrained procreation 
 diminish its quantity, the reduced amount of value con- 
 sumed by both adults and children, lessens the cost of 
 that which remains. We may safely conclude, there*- 
 fore, that the next important consequence of the event 
 supposed, would be, a decrease in the quantity and cost 
 of industry, equal to the antecedent decrease in the 
 quantity and cost of capital, and in the market value of 
 land. This would restore the equality of rewards, so 
 that neither profits nor losses would accrue to the owners 
 of either class of the productive agents the share of 
 each class being just sufficient to sustain the agents 
 themselves. Meanwhile, however, the more wealthy 
 would still permit the gratification of their non-essential 
 
CHAP. III.J LAWS OF TRADE. 121 
 
 desires ; and since the consequence last noticed would 
 again deprive them of revenue, it is evident that they 
 would make another inroad on their reserved profits, and 
 thus consume another portion of the productive agent-, 
 Capital. This gives renewed action to the causes noticed 
 above, and hence, must inevitably end in another thin- 
 ning out of population, by destroying the poorest class, 
 and by restraining the procreative propensities of the 
 class next above it. But while in every diminution of 
 capital and population, the market value of land contracts 
 so as to keep on a level with the value of skill, labor 
 and capital respectively, it must not be forgotten that 
 the actual quantity and productive capacity of land 
 remains the same as at first ; whence it is manifest that 
 the proportion of land, in every concurrent group of the 
 productive agents, will be relatively larger than it was 
 before the diminution of the other agents took place ; 
 and since Land-, unlike the other agents, is a producer/ 
 without being a consumer, it follows that every diminu- 
 tion of capital and population tends to enhance tjie 
 profits of production. So certain is this law, and so 
 uniform in its operation, that spares populations may 
 exist with scarcely the semblance of industry and capital ; 
 as witness the Aborigines of this continent, and the less 
 civilized division of the human family everywhere. 
 Therefore, the ultimate tendency of the event supposed, 
 is, to diminish population and capital, until the relative 
 preponderancy of land becomes sufficient to restore the 
 original standard of profits ; and, in case nature should 
 never return to her accustomed bounty, such would 
 certainly be the ultimate economic consequence. Any 
 other permanent cause of restraint in the production of 
 wealth, or of acceleration in its consumption, would of 
 course produce a similar result. So, on the other hand, 
 
 11* 
 
122 LAWS OF TRADE. [PART. II. 
 
 a permanently favorable change in the seasons, or in 
 economic legislation^ or in the science and arts of pro- 
 duction, would give inverted action to the same class of 
 laws, and therefore, would produce consequences directly 
 opposed to those I have pointed out. For instance, if 
 nature, after having produced the ultimate consequences 
 just noticed, should return to her former standard of 
 bounty, the abundance and cheapness of land, when 
 thus aided by favoring seasons, would enlarge profits ; 
 the enlarged profits would cause population and capital 
 to increase, and as the latter increased, the market 
 value of land would increase in an equal degree ; until, 
 finally, the plethora of population and capital, and the 
 consequent clearness of land, would again reduce profits 
 to the standard rate, These positions may be verified 
 by referring to the past history, the present condition, 
 and the probable future of our own country ; for it is to 
 be remarked that our original condition, in respect of 
 wealth, was analagous to that of a community revisited 
 by fruitful seasons after its ranks had been thinned, and 
 its capital diminished, by adverse ones. Our history 
 shows that the profits of production,. (as indicated by the 
 rate of interest,) have been hitherto much higher in this 
 country than their average for all countries ; they have 
 averaged here, not less than seven and a half per cent, 
 per annum, while their general average for all countries 
 does not exceed five per ct. I am aware that this differ- 
 \ ence is usually attributed to the favoring tendencies of 
 our political institutions, and the equally favoring charac- 
 teristics of our people. I am willing to admit that these 
 causes favor the result, but our superabundance of fertile 
 land is evidently the chief cause of that difference ; and 
 not only so, but the chief cause also of the superior 
 vigor, skill and enterprise of our people, as may be readily 
 shown. 
 
CHAP. III.J LAWS OF TRADE. 123 
 
 Our forefathers were the first occupants (save bar- 
 barians, who had never instituted the right of property 
 in land,) of an extensive and fertile domain. They con- 
 sequently possessed a relatively larger quantity of land 
 or natural utility, than they did of artificial utility, 
 muscles and nerves; therefore, in every concurrent 
 group of their productive agents, the service of nature 
 greatly exceeded that of either of the other three. This 
 necessarily gave them a high rate of profit, because the 
 gross value produced, was large in comparison with the 
 quantity of skill, labor, capital, and market value of 
 land employed. These large profits, being equally 
 divided between the proprietors of industry on one side, 
 and those of capital and land on the other, of course 
 enabled the former to partake more freely than they 
 could otherwise have done, of the comforts of life, arid 
 of the advantages of education ; and it was thus that th<3 
 condition of the masses in this country was fixed at an 
 elevated standard, and that our people were endowed 
 with a superior degree of vigor, skill arid enterprise. 
 
 Let us next glance at the present condition of our 
 country as it respects profits. If we look abroad over 
 the whole republic, we see different rates of profit accruing 
 in different sections and localities, ranging from 6 per 
 cent, per annum, up to 10 or 12 per cent. Why is this ? 
 What causes the diversity? Upon a closer examination^ 
 we find that the rate varies with the density of popu- 
 lation, and the fertility of land. Where population is^/ 
 most dense, as compared with the quantity and fertility 
 of land, profits are lowest ; where most sparse, they 
 are highest ; and so of the intermediate degrees. 
 
 Then, again, if we contemplate the probable future of 
 our country, we find that it is increasing in population 
 as rapidly as the laws of human nature, aided by an 
 
124 LAWS OF TRADE. [PART. II. 
 
 active immigration will permit ; that capital keeps pace 
 with population, and that every advancing step they 
 take, lowers the rate of profit by enhancing the price of 
 land ; that both are doubling in quantity every twenty- 
 three years, and quadrupling in forty-six years ; that' 
 they are thus progressing with a steadiness and certainty 
 which nothing short of unnatural causes can check, much 
 less stay, and therefore, must ultimately reach that 
 point of density in which the relative scarcity and dear- 
 uess of land will reduce profits, not merely to the stand- 
 ard rate, but to their lowest vibrating limits. When 
 we regard the slowness of their progress, and the 
 immense quantity of our unoccupied land, the period re- > 
 ferred to appears remote in the future ; but sooner or later 
 it must arrive, and it is in fact much nearer than w r e are 
 apt to consider. It arrived in China long since, and it 
 would have arrived in Western Europe before now, but 
 for the discovery of America. That important event, 
 while, on the one hand, it provided an outlet for the 
 surplus population of Europe, it gave her, on the other, 
 a new market in which to exchange the fabrications of 
 art for products of the soil : which causes have delayed 
 the time when her industry and capital will so far equal 
 her land as to bring the whole of the latter under culti- 
 vation. But in the face of those counteracting causes, 
 that period has approached sufficiently near in Europe, 
 to reduce the rate of profit there to about 3 per cent, per 
 annum ; and its fore-cast shadow has already crossed 
 our own borders, as may be seen in the fact, that profits 
 are reduced, in the older and more densely peopled 
 sections of our country, to about half the rate that attends 
 production in the west, where land is still plenty and 
 cheap. 
 
 The considerations now advanced, I deem sufficient to 
 
 
CHAP. III.] LAWS OF TRADE. 125 
 
 show : That, in the general field of production, profits 
 have a gravitating point, or general standard rate, above 
 and below which they oscillate : that an excess of land, 
 ill any given locality or nation, causes them to exceed 
 this rate, an excess of population and capital, to fall 
 short of it ; but that either of these conditions gives 
 action to laws which tend to bring them to that standard 
 ultimately : that the limitations to which the increase of 
 population is subject, render these laws so tardy in their 
 enforcement, that it often requires the elapse of centuries 
 to correct a single vibration in the rate of profit, in con- 
 sequence of which, the actual rate is different in the 
 different nations ; in some it coincides with the standard 
 rate, while in others it is either higher or lower ; but 
 wherever a difference exists, the actual rate is slowly 
 and surely tending towards the common average. 
 
 These, however, are not the only oscillatory move- 
 ments to which the rate of profit is subject. There are 
 others in which the movements are far more rapid, and 
 the reactions more prompt. Those we have noticed, 
 may be termed the vibrations incident to the different 
 national sections of the general standard of profit vibra- 
 tions which move so slowly, that, in any given nation, a 
 single passage from the highest to the lowest limits of 
 profit, usually occupies the whole period of that nation's 
 existence, and, in fact, governs its rise, progress and 
 decay. The oscillations in the rate of profit that we 
 have next to consider, are those to which these different 
 national standards are themselves subject, at every 
 stage of their more tardy vibrations about the general 
 standard ; for it is to be observed that the current rate 
 of profit, instead of conforming strictly to the temporary 
 standard which the causes just noticed award to a given 
 nation at a given time, merely oscillates about that 
 
126 LAWS OF TRADE. [PART. II. 
 
 Standard. In other words, the general standard of profit 
 consists of national sections, all of which vibrate about 
 a common centre of gravity, and each of which (at every 
 point in the primary circuit) performs secondary oscilla- 
 tions about its own centre of gravity. These compara- 
 tively frequent and temporary fluctuations in the rate of 
 profit, are well known to occur, but we have yet to ascer- 
 tain the causes which produce and correct them. To 
 that investigation we will now proceed. 
 
 It was maintained by Malthus, in his celebrated Essay 
 on Population, that mankind tended to increase more 
 rapidly than the means of support ; in other w T ords, that 
 population is endowed with a greater capacity of increase 
 than capital. There may be special cases in respect ofj 
 which this proportion is true, but it appears to me clearly 
 untenable as a general proposition. We have seen 
 that if the fecundity of the human race were entirely 
 unrestrained, and the rate of mortality reduced to its 
 lowest known limits, the excess of births over deaths 
 would not even then exceed 83 per cent, per annum ; and 
 we know that the restraints imposed on procreation by 
 the unequal distribution of wealth, and by various other 
 Causes and motives, limit the actual excess, in the most 
 prosperous communities, to about 3 per cent, per annum. 
 This fact is clearly proved by our own statistics of popula- 
 tion ; for it is safe to say that the history of the world does 
 not present another instance in which the assemblage of 
 conditions were equally favorable for the increase of 
 population ; and yet our rate of increase, exclusive of 
 Immigration, has not exceeded those limits. These facts 
 prove that 3 per cent, per annum, or thereabout, is the 
 utmost capacity of increase inherent in population, how- 
 ever abundant the means of support. As relates to capital's 
 capacity of increase, it may be observed that the present 
 
CHAP. III.] LAWS OF TRADE. 127 
 
 general standard of profit affords the means of increasing . 
 the capital of the world, at the rate of 6^ per cent, per 
 annum, because it may reproductively consume the whole 
 of its own share of profit, together with one third of the 
 share awarded to land. For instance, a profit of 5 per 
 cent, to each of the four prime agents, gives an aggregate 
 profit of 20 per cent., one-third of which might be repro- 
 ductively consumed in the augmentation of skill, of labor,, 
 and of capital, respectively, but for the fact that other 
 causes than deficient means of support, limit the increase 
 of population to 3 per cent, per annum. And there can 
 be no doubt that capital would actually increase at some, 
 thing like that rate, were it not for the inability of labor 
 and skill to keep pace with it ; for it must be borne in 
 mind, that the laws of trade will not permit either one 
 of the prime agents to augment more rapidly than its 
 co-laborers in the field of production. These considera-1 
 tions show that, as it respects the entire domain of pro- 1 
 duction, the converse of the Malthusean doctrine is the I 
 true one. As before remarked, however, there may be 
 some few instances in which a redundancy of population 
 and limited external commerce, combined with other 
 adverse causes, have reduced the rate of profit below the 
 capacity of increase inherent in mankind China and 
 Japan are probably cases in point. But while unoccupied 
 land remains in any part of the world, and international 
 commerce continues, we may safely declare the general / 
 principle to be, tfcat capital tends to increase more 
 rapidly than population. And it is this very tendency 
 that produces the secondary oscillations in the rate of 
 profit, as I will proceed to show in connexion with the 
 causes by which that tendency is counteracted. 
 
 In tracing out the consequences of a disturbance of 
 the equation of skill, labor, capital and land, we dis- 
 
128 LAWS OF TRADE. [PART. II. 
 
 covered that an excess of the latter not only elevated the 
 rate of profit, and tended thereby to increase population 
 and capital, but that it also rendered industry more 
 vigorous and skilful, and machinery more abundant and 
 perfect ; -whence it might be inferred that, so long as the 
 excess remained, the rate of profit would continue to 
 ascend higher and still higher, without any assignable 
 limits. Such is undoubtedly the tendency, and such 
 would be the fact, were it not for the intervention of 
 other laws beside those hitherto noticed. We shall find 
 however, upon a closer examination, that whenever 
 capital gets a certain degree in advance of population, 
 and the rate of profit an equal degree above the tempo- 
 rary standard which the relative quantity and fertility of 
 land awards, they meet with counteracting tendencies 
 which not only arrest their farther progress, but force 
 them back to their natural positions. 
 
 The higher the rate of profit, the larger the portion 
 thereof unproductively consumed, because the rate of in- 
 crease in population vibrates within narrower limits than 
 does the rate of profit ; the former ranges, say from 2 to 
 3 per cent, per annum, the latter from 2|- to T|, the 
 mean of each being, respectively, 2| and 5. When 
 both are at their mean, the share of profit unproductively 
 consumed, is five- eighths of the whole, as I have shown 
 in another place ; when both are at their highest limits, 
 that share is more than two-thirds of the larger aggre- 
 gate ; and when both are at their lowest limits, it is but 
 two-fifths of the smaller aggregate. It is to be' noticed 
 also, that the cost or value of the productive agents them- 
 selves, is greater when the rate of profit is high, than 
 when it is low, because the agents of industry are better 
 provided for ; they consume more of value in their pro- 
 duction, preservation and repair ; and the cost of capital 
 
CHAP. III.] LAWS OP TRADE. 129 
 
 and market value of land, as already shown, are gov- 
 erned by and conform to the aggregate cost or value of 
 industry. In view of these facts, we may readily per- 
 ceive that, as the rate of profit ascends, the amount of 
 unproductive consumptions increase in a still greater 
 ratio. 
 
 To illustrate this point more clearly, let us revert for 
 a moment to our former hypothesis, namely : that, in 
 order to produce 5 per cent, per annum of profits, it is 
 requisite the average value of a concurrent group of the 
 productive forces should be equal to $2,000* This gives 
 an aggregate profit to each group of $100, five-eighths, 
 or $62 T Vo f which, must be unproductively consumed 
 in ministering to non-essential desires. Now, it is fair 
 to presume, that where the rate of profit is raised to 7 
 per cent., the cost of producing industry will be enhanced 
 in an equal degree, because the higher the rewards 
 of industry the more elevated the standard of what are 
 regarded as the necessaries of life, as may be seen by 
 reference to any two countries in which the existing 
 rates of profit differ. According to this estimate, with 
 the rate of profit at 7 1 per cent., and the rate of increase 
 of population and^capital at 3 per cent. as, for instance, 
 in the United States at the present ime the average 
 value of a concurrent group is equal to $3,000, the 
 gross profit $225, and the proportion thereof unproduc- 
 tively consumed, more than $150. A similar estimate 
 for the lowest rate of profit would give, as the value of the 
 group, $1,000, the gross profit, $25, and the share 
 unproductively consumed, $14. And a similar estimate 
 for a rate of profit at 10 per cent., would give more 
 than $300 as the average amount of unproductive con- 
 sumptions awarded to an adult citizen. 
 
 12 
 
130 LAWS OF TRADE. [PART II 
 
 These approximate estimates are presented for the 
 purpose of showing the rapidly accelerated force with 
 which non-essential desires are liberated as the rate of 
 profit ascends. It must be admitted that many of these 
 desires may be temperately indulged without impairing 
 the efficiency of industry ; but it is well known that 
 their too free indulgence enervates both body and mind. 
 This is true of the least hurtful kind of excesses, while 
 tliere are others, such as intemperance in drink, so per- 
 nicious, that they completely paralize, and sometimes 
 destroy the industrial powers. It is therefore evident, 
 that very high profits tend to diminish the productive- 
 ness of industry. Nor is this their only self-destroying 
 tendency. By liberating desires that are chained 
 under a lower rate of profit, they establish luxurious 
 habits, which not unfrequently become the masters of 
 those imbibing them. The desires are first set free with 
 the view of consuming the surplus profits for it must 
 be remembered that they cannot be reproductively con- 
 sumed ; they are next invited to the fruition of their 
 objects ; they accept the invitation with the avidity of 
 long restrained appetite ; the surplus profits speedily 
 disappear, and, during the process, the habit of gratify- 
 ing the desires obtains such a mastery over the man, 
 that whatever amount of capital he happens to possess, 
 usually disappears through the same channel. Thus, 
 undue profits lead not only to the consumption of sur- 
 plus products, but to the consumption of one of the 
 agencies by which they are produced. There is yet 
 another element of self-destruction inherent in exorbi- 
 tant profits. They increase the rewards of industry, 
 and thereby remove the poorer classes farther from the 
 borders of starvation. This, by quieting the fear of 
 want, permits idleness and luxury, those great antago- 
 
CHAP. III.] LAWS OF TRADE. 131 
 
 nists of wealth, to usurp the place of diligence and fru- 
 gality ; by which means, production is paralized, and 
 profits suppressed. 
 
 Such are the influences by which excessive profits and 
 redundant capital are made to sow the seeds of their 
 own destruction. But if additional evidence of this 
 fact be required, it may be found in the conduct of indi- 
 viduals. An individual reared in penury and in the fear 
 of want, usually concentrates his whole energies of body 
 and mind on the acquisition of wealth ; he neither stops 
 to enjoy his acquisitions, nor turns aside to aid in the 
 advancement of others, but pushes on through life under 
 the guidance of that paramount desire ; and, if he hap- 
 pens to be gifted with superior skill, he finishes hia 
 course at the opposite extreme, the pinnacle of wealth. 
 One that springs from the middle ranks of wealth, 
 being equally removed from the fear of want and from 
 luxury, is apt to remain there, unless driven to one or 
 other extreme by accident or peculiar endowments; 
 while on the other hand, one that is reared in the lap of 
 luxury, or in the expectancy of a large inheritance, gen- 
 erally proves to be such an idler and spendthrift, that 
 he ends his life in poverty. It is therefore evident, that 
 extreme individual poverty tends to engender habits of 
 diligence and frugality, which ultimately lead to wealth, 
 and that extreme individual affluence sows the seeds of 
 its own destruction ; and what is true of individuals as 
 a general rule, must be universally true in respect of 
 masses or communities, or of society at large. 
 
 After this full presentation of facts bearing on the 
 point, the true theory of secondary oscillations in the 
 rate of profit and in the degree of wealth, may be thus 
 briefly stated : 
 
132 LAWS OF TRADE. [PART II. 
 
 Capital has greater capacity of increase than 
 
 the larger the relative quantity of land ? as com- 
 pared with the other prime agents,. the wider the differ- 
 ence. When the prime agents equal each other in quan- 
 tity y the rate is about 5 per cent, per annum, the increase 
 of population about 2| per cent, j when land is in exeess,, 
 the rate of the one is about 7| per cent., the increase 
 of the other about 3 per cent. ; when industry is in 
 excess, the rate of profit is reduced to about 2| per 
 cent., and the increase of population to 2 per cent. ; and r 
 in eaclk case, the capacity of increase inherent in capital 
 is equal to the rate of profit plus one third of that rate* 
 Therefore, the economic progress of a community, in 
 which the density of population, and all the other more 
 permanent conditions that effect the profits of produc- 
 tion, are of the medium degree, must be marked by var- 
 iations something like these ; At first, capital increases- 
 at the rate of 6| per cent, per annum, population at the- 
 rate of 2| per cent. This excess of capital augments 
 the rewards of industry, and thereby adds to its effi- 
 ciency ; the increased efficiency of industry, and the 
 augmentation of capital, enhance the rate of profit, s&y 
 to 7 1 per cent., which, in its turi}, enables capital to in- 
 crease at the rate of 10 per cent, per ammm, and popu- 
 lation at the rate of 3 per cent., which is the highest ca- 
 pacity of the latter ; then the enlarged capital again en- 
 hances the rate of profit, the enhanced rate of profit 
 again accelerates the increase of capital, and so on. But r 
 while capital and profit thus mutually contribute to each 
 other's enlargement, it must be remembered that every 
 step they take in advance of population, weakens the 
 sources of production and increases the consumption of 
 wealth, by relaxing habits of diligence and frugality , and 
 by strengthening those of idleness and luxury. As soon as 
 
CHAP. III.] LAWS OF TRADE. 133 
 
 the last named habits obtain the supremacy, capital be- 
 gins to dimmish, and the rate of profit to descend, and 
 neither will stop until capital is thrown as far in arrear 
 of population, and the rate of profit as far below the stand- 
 ard, as were their prior advances beyond them. Then 
 principles of an opposite tendency are brought to bear, 
 and a reaction takes place,then another, and so on continu- 
 ously. Similar variations occur where land is in excess 
 and the temporary standard of profit at its highest lim- 
 its ; the only difference in the two cases being a differ- 
 ence in time. Capital gets in advance of population 
 most readily and promptly when profits are large ; in 
 other words, the higher the rate of profit, the shorter the 
 period required for capital to reach that degree of excess 
 which produces a reaction ; and since the rate of profit 
 is highest where land is most abundant and cheap, it is 
 evident that an excess of land tends to increase the fre- 
 quency of the oscillations referred to. An excess of 
 population, of course, produces effects the contrary of 
 these : it renders the movement more tardy, and the 
 reactions less frequent. 
 
 Such I conceive to be the correct interpretation of 
 this section of nature's code such the principles which 
 limit the degree of wealth, and which cause both that 
 and the current rate of profit to perform what I have 
 termed secondary oscillations about the temporary stand- 
 ards which the relative quantity of land happens to 
 establish for each at a given time and place. But do 
 these variations actually take place ? It occurs to me 
 that there may be those who doubt the existence of the 
 phenomena which I have taken so much paius to explain. 
 If so, I would refer them to their own experience, and 
 to the experience of all others, as evidenced in the uni- 
 versal phrases, " the times are good," " the times are 
 12* 
 
LAWS OF TRADE, [PART II. 
 
 bad ;" and especially to the fluctuations that take place 
 in the rate of interest. If these evidences should not 
 suffice to remove their doubts, they may find a still more 
 convincing proof of the fact asserted, in the periodical 
 occurrence of commercial revulsions. This phenomenon r 
 while it cannot be satisfactorily accounted for in any 
 other way, is an obvious and unavoidable consequence of 
 reactions in the degree of wealth and profit, that is to 
 say, the collapse of commerce and credit is a necessary 
 sequence of a diminution in the general wealth arid pros- 
 perity. I am aware that the general belief is, that the 
 collapse is the cause, not the consequence of the diminu- 
 tion ; but I am entirely satisfied that an attentive obser- 
 vation of the facts would prove that the latter invariably 
 takes precedence in the order of time. These oscillations 
 in wealth and profits are in a measure hid from our view 7 
 by constant fluctuations in the vafcie of money and in 
 the degree of credit, and their regularity is broken by 
 many accidental circumstances ; hence we cannot ascer- 
 tain their periods with precision. But from the indica- 
 tions afforded by commercial revulsions, we are authori- 
 zed to conclude that, in this country, where the rate of 
 profit is high, they touch their highest limits as often as 
 once in ten or twelve years. Where the national stand- 
 ard of profit is lower, the intervals are proportionally 
 longer. 
 
 Having pointed out the different kinds of fluctuations 
 which occur in the rate of profit, and in the degree of 
 wealth, and having ascertained the laws to which those 
 fluctuations are subordinate, it now remains to inquire : 
 What are the great overruling principles which so gov- 
 ern the production, distribution and consumption of 
 wealth, as to establish, for the world at large, a natural 
 standard of profit and a natural degree of wealth 1 In 
 
CHAP. III.J LAWS OF TRADE. 135 
 
 other and more familiar language, why are not the aver- 
 age profits of production, either higher or lower than 
 they are, and why is not the wealth of the civilized 
 world either greater or less than it is ? Why is the 
 mean rate of profit about 5 per cent, per annum, instead 
 of one per cent., or ten per cent. 7 And why is the 
 wealth of the civilized world, when expressed in dollars, 
 equal to about one thousand times the number of its 
 adult inhabitants, instead of one tenth or ten times that 
 amount? To these queries, we may return the general 
 answer, that the existing degrees of wealth and pros- 
 perty necessarily result from the joint action of the 
 laws of human nature, the plan of social wealth, and 
 the natural laws of trade hitherto unfolded : they are 
 the ultimate economic effects of that assemblage of 
 causes. 
 
 Profit is closely related to natural wealth. In fact, it 
 may be said to originate thence, since, as already shown, 
 the productive service of land, and other contributions 
 of nature, are the principal elements in its composition. 
 Where these free contributions are relatively greatest, 
 where the quantity and fertility of land, and the natural 
 facilities of intercourse and transport, preponderate most 
 over population and capital, the rate of profit is high- 
 est ; and where these conditions are least favorable, the 
 rate is lowest. From these premises, considered in con- 
 nection with the fact, that the earth is not yet fully 
 peopled, it may be inferred that the existing general 
 standard of profit (5 per cent.) results from a sufficiency 
 of land, of medium fertility, to give full and unrestrain- 
 ed employment to the industry and capital placed upon 
 it. These we may regard as the average conditions of 
 production the mean, in point of favorableness, of the 
 general field. To that mean, the laws of trade are 
 
136 LAWS OF TRADE. [PART II. 
 
 slowly but surely bringing the conditions everywhere, 
 by transferring surplus population to surplus lands, 
 as well as by various other means of relief where the 
 conditions arc adverse, and of depression where they 
 are unusually favorable. Consequently, 5 per cent, per 
 annum is the central point or natural standard towards 
 which the different temporary standards of profit are 
 tending. Other considerations, already adduced, point 
 to the same conclusion. We have seen, for instance, 
 that the rate of profit cannot be permanently lower 
 than 2 per cent, per annum, where the conditions are 
 most adverse, nor higher than Tj per cent, where they 
 are most favorable ; for the reason that a greater de- 
 pression superinduces famine and frugality, or a larger ^ 
 consumption of industry than of capital, and a greater 
 elevation, idleness and luxury, or a disproportionate 
 consumption of capital; either of which consequences 
 produces a reaction in the rate of profit. Therefore, 
 2 per cent., and 7^ per cent., indicate the boundaries 
 beyond which the more permanent rates of profit cannot 
 pass within these limits, the primary vibrations of profit 
 are necessarily confined ; and if these are the vibrating 
 limits, it is evident that 5 per cent, must be the gravi- 
 tating centre, since it is the mean of the two extremes. 
 This general standard cannot be sensibly elevated while 
 human nature remains what it is, nor permanently de- 
 pressed so long as unoccupied lands remain in any part 
 of the world. As respects the first named condition, we 
 have no reason for anticipating a change ; but it is pro- 
 bable that the period will arrive, sooner or later, in 
 which the industry and capital of the world will more 
 than suffice to cultivate its entire surface ; and if so, it 
 is manifest that the present standard of profit must then 
 b lowered. 
 
CHAP. III.] LAWS OF TRADE. 137 
 
 But what are the principles which have established 
 arid now maintain the average degree of wealth at about 
 $1 ,000 per adult inhabitant. Evidently thej are similar 
 in kind to those which preside over the general standard of 
 profit, since, as already shown, the degree of wealth and 
 rate of profit always vibrate in unison. This fact proves 
 that the former, like the latter, has a gravitating centre or 
 najtural standard, about which the current degree oscillates; 
 and the statistics of wealth, although too meagre and faulty 
 to admit of any thing like an accurate estimate, never- 
 theless prove, that something like the degree of wealth 
 just named constitutes that standard. These, however, 
 are merely the preliminary points : they authorize the 
 main question, but do not answer it. That question is, 
 why have the laws of trade established the general stand- 
 ard of wealth at the degree named, rather than at any 
 other degree ? It will perhaps be a sufficient answer to 
 sa} T , that some specific degree of wealth is requisite to 
 the equal development of those two antagonist forces, 
 production and consumption ; and that the existing 
 amount of wealth coincides with that degree ; which 
 positions are proved by the facts already noticed, that a 
 larger degree tends to its own diminution by superindu- 
 cing idleness and luxury, and a smaller degree to its 
 own enlargement, by necessitating diligence and frugal- 
 ity. It is to be noticed, however, that the degree of 
 wealth requisite to the equalization of production and 
 consumption, varies with the conditions under which it is 
 produced, distributed and consumed ; being greatest 
 where land is most abundant and fertile and wealth most 
 equally distributed, and least where the conditions are 
 the opposite of these ; from which it is evident that the 
 standard degree of wealth, like the standard rate of 
 profit, is primarily dependent on the degree of nature's 
 
138 LAWS OF TRADE, [PART II. 
 
 bounty. We have seen that an average degree of 
 natural wealth awards to production a profit of 5 per cent, 
 per annum. This rate of profit, while it requires, as 
 one of the conditions of its production, the concurrence 
 of capital in the ratio of $500 to one industrial agent, 
 at the same time, awards to industry the proper degree 
 of revenue for securing that ratio ; because it enables 
 the industrial classes to place the standard of the neces- 
 saries of life at that degree of elevation which renders 
 the mean cost of producing industrial agents equal to 
 $,1000 each ; and we have seen that the cost of produ- 
 cing industry governs the amount of capital, and that 
 it awards to the latter an aggregate value equal to half 
 that of its own, or, if we include the market value of 
 land, exactly equal to its own value. From these and 
 other considerations heretofore advanced, I derive the 
 following general conclusions : 
 
 The relative quantity of natural wealth, as compared 
 with population and artificial wealth, governs the stand- 
 ard rate of profit ; this standard governs the cost of 
 producing and maintaining industry ; the cost of pro- 
 ducing industry, governs the quantity of capital estab- 
 lishing its aggregate cost or value at a point equal to one 
 half of that of the existing industry ; the quantity of 
 capital governs the market value of land, keeping the 
 magnitude thereof on an exact level with its own. These 
 principles, operating in conjunction with the laws of 
 human nature, and in conformity to the plan of social 
 wealth, have established as general standards, 5 per 
 cent, per annum, as the mean rate of profit on produc- 
 tion, and about $500 per adult head, as the mean quan- 
 tity of productive capital, and, including the market 
 . value of land, a mean of $1,000 per adult head, as the 
 natural degree of wealth. Where land is either scarce 
 
CHAP. III.] LAWS OF TRADE. 139 
 
 or possessed of a low degree of fertility, or govern- 
 ment interposes unnecessary hindrances, both these 
 standards are lower than the degrees named ; where land 
 is abundant and fertile, and the economic polity enlight- 
 ened, both are higher ; but since the desire of gain is 
 constantly drawing population from localities and coun- 
 tries where profits are lowest and wealth least, to those 
 where both are greatest, (the more rapid increase of 
 native population, in the latter, also tending to the 
 same result,) the general equation will be sooner or 
 later brought about. Since, moreover, there now is, 
 and must be for centuries to come, a surplusage of land, 
 beyond the requirements of industry and capital, we 
 may regard the rate of profit and the degree of wealth 
 just named, as the permanent general standards about 
 which each must continue to vibrate. 
 
 These are conclusions in which there are probably 
 very few prepared to concur, similar views not having 
 been heretofore advanced, so far as I know, in any quarter. 
 My own views were somewhat different, it must be con- 
 fessed, when I commenced the investigation of this 
 subject ; but a faithful adherence to the principles 
 evolved, and a firm determination to follow them out to 
 their legitimate results, having brought me to these con- 
 clusions, and impressed on my mind a conviction of their 
 truth, 1 unhesitatingly adopt them ; for I have no desire 
 to shun the presence of truth, however unexpected or 
 unwelcome may be the aspect in which it presents itself. 
 I had hoped that a thorough knowledge of the origin, 
 nature and attributes of wealth, and of the principles 
 which control its production, distribution and consump- 
 tion, would enable us to devise a plan by which poverty 
 and its attendant miseries might be either wholly ban- 
 ished from the world, or at the least, g.eatly lessened. 
 
140 LAWS OF TRADE, [PART II. 
 
 The conclusions at which I have arrived would seem, at 
 the first blush, to destroy that hope, seeing that the 
 natural laws of trade, and especially the laws of human 
 nature, stand as immovable obstacles to its accomplish- 
 ment. I trust, however, that we shall find, when we 
 come to consider the economic polity of government, 
 that much may be done by proper legislation in mitiga- 
 tion of these evils. It is much to know the true char- 
 acter of the difficulties with which we have to contend ; 
 without this knowledge, success can result from our best 
 efforts only by accident. But when we know the causes 
 or principles concerned in the production of phenomena, 
 we can, as an eminent philosopher has suggested, go to 
 work understandingly with the view of mitigating that 
 which is evil in their tendencies, and of promoting that 
 which is good, refraining altogether where science 
 tells us that our best efforts would be either futile or 
 injurious. 
 
 I have now completed the imperfect survey which I 
 proposed to take of the scientific aspect of Political 
 Economy. I have traced out the origin, nature and 
 attributes of wealth, and have endeavored, though I fear 
 unsuccessful, to unfold the exceedingly intricate code of 
 natural laws involved in its production, distribution and 
 consumption. If the principles deduced shall be found 
 worthy the name of scientific truths, they will establish 
 a fact which very few are prepared to admit at present ; 
 namely, that all the phenomena connected with wealth, 
 are produced by, and subject to, uniform natural laws 
 laws which are links or sections of that vast and intricate 
 labyrinth known as the Law of Causation. The practi- 
 cal considerations suggested, by contemplating the sub- 
 ject in this somewhat novel aspect, will occupy our 
 attention in the ensuing chapters. 
 
CHAP. I.j 
 
 PART 2. 
 
 OF THE ECONOMIC FUNCTIONS or GOVERNMENT, 
 CHAPTER L 
 
 Preliminary remarks. The general purposes of 
 government considered. 
 
 Assuming the principles evolved in the preceding 
 chapters to be the essential truths of the science of 
 wealth, I will now proceed to bring in review the 
 economic sections of the framework and legislation of 
 governments especially those of our OMn and, by com- 
 paring them with these principles, test their fitness or 
 adaptation to the ends designed pointing out as I go along 
 such defects, and suggesting such amendments, as seem 
 to be required in order to make these features of the 
 government machine conform to the purpose of their 
 invention and adoption. In other words, I shall attempt 
 first, to present a plan of social wealth more perfect 
 than any now in use, and afterwards, to indicate the 
 rules or maxims by which economic legislation should be 
 guided. But in this, as in the first division of the work, 
 I shall aim at nothing more than the presentation of 
 general outlines, or roughly drafted models, refraining, 
 as before remarked, from any attempt to elaborate them 
 13 
 
142 PROVINCE OF GOVERNMENT. [PART. II. 
 
 into finished disquisitions, under the conviction that I 
 have neither the capacity nor leisure requisite to suc- 
 cess. 
 
 It has heen already noticed that the means by which 
 government may best protect the life, liberty and per- 
 sonal faculties of the citizen, are not proper subjects of 
 consideration in a work on this science. These lie 
 within the province of Politics ; they are principles 
 which the votaries of that science should explain, and 
 which statesmen should so apply in practice as to 
 promote the best interests of society. But, although 
 these features of government were not devised and 
 adopted with the view of influencing the production, dis- 
 tribution, or consumption of wealth, yet their incidental 
 aid in the development and preservation of that phenom- 
 enon, has proved to be so potent that a treatise on political 
 economy would be manifestly incomplete without some 
 notice of them ; and especially, of their points of contact 
 with this department of political science. For these 
 reasons, it is deemed necessary to preface this division 
 of our inquiry with a brief explanation of the origin, 
 nature and general purposes of government. 
 
 It is generally, if not universally held, that the 
 Author of life has endowed the human mind with an 
 innate or intuitive knowledge of right and wrong, and 
 with a sentiment of justice which never fails to condemn 
 the wrong and approve the right ; but that there are 
 other sentiments or endowments of the mind running 
 counter to these, and which, if not restrained by exter- 
 nal means, rarely fail to obtain the supremacy. With- 
 holding, for the present, our assent to the assertion con- 
 tain in the first clause of this proposition, it is believed 
 there can be no doubts regarding the soundness of the 
 other. Mankind are ever prone to trespass on the rights 
 
CHAP. I.J PROVINCE OF GOVERNMENT. 143 
 
 of one another ; and so strong is this propensity, that 
 we find, where each individual is left to the guidance of 
 his own nature, that the rule of right is entirely disre- 
 garded, the law of might usurping its place, even to the 
 first and highest natural right of all mankind, the right 
 of existence. We see this unpleasant truth exempli- 
 fied, not only in the past history of the race, but in some 
 of the existing practices of all nations, including the most 
 civilized. We see, for example, savage tribes striving, 
 and sometimes successfully, to exterminate each other ; 
 and still worse, we see communities the most civilized, 
 in defiance of the restraints imposed by the law of 
 nations, constantly referring international differences 
 to the arbitrament of the sword, or the law of strength ; 
 and we should see individuals invariably obeying the 
 same law, but for the hindrances interposed by society. 
 To this principle of human nature may be safely 
 assigned the origin of government. Mankind doubtless 
 perceived, not only its existence, but the fatal conse- 
 quences resulting from it, and thereupon devised and 
 adopted the Social Contract as the appropriate remedy. 
 By means of this device, they aimed, so far as social 
 relations are concerned, to shift the supremacy from the 
 natural law of strength to the artificial rule of right. 
 This rule is by no means uniform ; indeed, so diverse is it, 
 that we find each political community or nation observing a 
 standard peculiar to itself. Amongst savages, the con- 
 tract referred to is extremely imperfect, consisting of a 
 simple league in which it is understood, that the strongest 
 shall be the chief to whom all others of the tribe must 
 yield obedience ; that the individual members shall re- 
 spect the imperfectly understood rights of each other, and 
 protect them from foreign aggression ; and that the law 
 of strength, in its most unmitigated form, shall rule their 
 
144 PROVINCE OF GOVERNMENT. [PART. II. 
 
 intercourse with other tribes. Civilized communities, 
 and especially those of them that are also christianized, 
 have advanced much farther. Guided by that perfect 
 rule of social conduct, conveyed in the Christian precept, 
 " do unto others as ye would that others should do unto 
 you," and following the promptings of a more enlight- 
 ened public judgment, they have devised, adopted and 
 enforced social contracts and codes of laws, in which 
 they have aimed to embody justice, so far at least as 
 that principle is involved in social relations and duties as 
 between members of the same political community. 
 And, by means of the international code, they have 
 aimed, though not with equal success, to extend the 
 principle to external relations and duties. Some nations 
 have gone even farther, and established laws for the 
 government of man as relates to his duties to his Maker 
 and to himself. Generally, however, laws of that char- 
 acter are regarded as uncalled for and unjust, because 
 they unnecessarily abridge the freedom of the citizen, 
 and rarely prove beneficial to the individual or the 
 community. 
 
 In contemplating this subject with the view of find- 
 ing out what that is which mankind regard as justice, 
 in the abstract, our attention is arrested at the thres- 
 hold by the remarkable diversity of opinions. No 
 two governments, nor even any two individuals of the 
 same government, agree, in all respects, as to what 
 should constitute the rule of right in social inter- 
 course. All agree that the rule should be in strict 
 accordance with justice, but, unfortunately, this funda- 
 mental principle of government, if it exists at all, is so 
 imperfectly understood that it is itself without a gener- 
 ally received definition ; in other words, it conforms tc 
 no established standard. For example, some of the 
 
CHAP. I.] PROVINCE OF GOVERNMENT. 145 
 
 ruder tribes consider it right not only to take the lives 
 of those who bear to them the relation of foreigners, 
 whenever they have the power to do so, but to eat them 
 afterwards. Others, one step higher, approve of the 
 killing, but not of the eating. Others again, neither 
 kill nor eat, but subject to slavery, foreigners and their 
 progeny, whenever the latter fall into their power. The 
 history of our own nation affords a notable illustration 
 of this class. We practised upon that principle until 
 it was believed the stock and its natural increase ren- 
 dered the supply sufficient, the only qualification in 
 our case being, that, by reason of an odd fancy, the 
 application of the principle was confined to a particular 
 color. Others again, merely withhold from foreigners 
 the priviledge of citizenship, and some not even that. 
 All nations, though not all their individual members, agree 
 in referring international disputes, which cannot be other- 
 wise adjusted, to the mutual satisfaction of the parties, 
 to the law of strength for decision ; and, in such cases, take 
 life and destroy property with as much alacrity and self- 
 complacency as marks the performance of the most benefi- 
 cent acts. The principle of justice, as exemplified in the 
 internal policy of nations, we find to be equally various. 
 Some place supreme and absolute power in the possession 
 of one individual, all others having no rights, being sub- 
 ject to the caprice or tyranny of the sovereign. In these 
 cases, the sparing and uncertain privileges enjoyed by 
 the subjects are not regarded as natural rights, but as 
 immunities emanating from the generosity of the despot. 
 Others award different degrees of rights to different 
 classes as, for example, under political organizations of 
 the aristocratic type. Others maintain the doctrine of 
 equal rights, and aim to embody and enfore that stand- 
 ard of justice, in social contracts of the republican form ; 
 13* 
 
140 PROVINCE OF GOVERNMENT. fPART tt. 
 
 but these same, when they come to establish the details 
 of their plan, and to practice upon their theory, rarely 
 fail to mete out to the rich and powerful on one side, 
 and the poor and friendless on the other, very different 
 principles of justice. 
 
 Again : men differ in opinion as to the justice or injus- 
 tice of almost every human action. There are those 
 who conscienciously believe in the justice of murder 
 wilful, premeditated murder provided the provocation be 
 strong. Fraud is accounted a virtue by many : locali- 
 ties might be named where this opinion is entertained by 
 a majority of the inhabitants. The legal remedy for 
 enforcing the obligation of contracts was recently sus- 
 pended by our national legislature, with the express 
 design of permitting debtors to escape their obligations : 
 the right of property in actions, to the amount of 
 untold millions, was thus expunged. To carry the 
 inquiry and illustrations still farther, look at the admin- 
 istration of justice. Where the bench consists of a 
 plurality of members, how rarely is it that we find the 
 award unanimous 1 The diversity may occasionally arise 
 from different interpretations of written law, but more 
 frequently, from a difference of opinion among the judges 
 as to what constitutes justice. 
 
 Now, disclaiming any intention to start a doubt in 
 reference to the truth and divine origin of the principles 
 which should govern social intercourse, as expressed and 
 enjoined upon man in the sacred volume I must, never- 
 theless, in view of the diversified opinions and ever varying 
 practices of men, be permitted to say, that I place little 
 reliance on the innate sense of justice which the human 
 mind is supposed to possess. I believe, on the contrary, 
 that, aside from revelation, our notions of justice are the 
 offspring of our desire of happiness, and that what we call 
 
CHAP. I.J PROVINCE OF GOVERNMENT. 147 
 
 the rule of right is adopted because it is an efficient means 
 of promoting happiness ; and therefore, that the stand- 
 ard of justice will be high, or low, according to the 
 degree of true knowledge possessed by the community 
 or the individual whose rule of action it is. If it were 
 otherwise, why, I would ask., do we find every individual 
 possessing a standard of justice peculiar to himself, and 
 diifering from that of every other person. Those edu- 
 cated in the light of the gospel, and subscribing to its 
 doctrines, profess to make that the guide of their social 
 actions ; but it is very often merely profession, while 
 their practice conforms to the lower standard which 
 results from their imperfect knowledge of their true 
 interests. And if we contemplate the condition of the 
 heathen, and the savage, we find as we descend the scale 
 of knowledge, a lower or more imperfect standard of 
 justice as their guide. These considerations seem to 
 warrant the inference that a knowledge of the truth, and 
 virtuous actions, bear to each other the relation of cause 
 and effect, or parent and offspring ; and that ignorance 
 and vice stand in the same relationship. In other words, 
 we may conclude, that the more perfectly mankind 
 understand their real interests, the more elevated will 
 be their standard of justice, and, consequently, the more 
 perfect and efficient the social machinery for restraining 
 vice and advancing virtue. 
 
 We find, then, that the only legitimate end or aim of 
 goverment is, the augmentation of human happiness ; 
 that the only means by which it can accomplish that end 
 is, either by lessening the action of causes which tend 
 to produce misery, or by stimulating those which pro- 
 duce happiness ; and that the only machinery which it 
 is competent for society to employ in the matter, is the 
 adoption, and (by means of penalties and other devices,) 
 
148 PROVINCE OF GOVERNMENT. [PART. II. 
 
 the enforcement of such rules in relation to social inter- 
 course as are best calculated to produce these effects. 
 We find also, that the greater the knowledge the more 
 appropriate the rules, and the more efficient the machinery 
 for enforcing them ; and that the Golden Rule is by far 
 the most perfect and appropriate that has ever been 
 devised. If mankind were sufficiently enlightened, 
 society would adopt that rule, and so construct the 
 machinery of government as to enforce upon individuals 
 the injunctions it contains. If A is not made to do 
 unto B, C & Co., as he would that they should do unto 
 him, then B, C & Co. will not be made to do unto A 
 as they would that he should do unto them, and the con- 
 quence is that all are less happy. But if the rule is 
 made obligatory on all sides, its tendencies are all in 
 favor of happiness, and its restraints only upon actions 
 which produce misery : it gives an impulse to virtue and 
 a paralysis to vice. The more perfect the knowledge, 
 the more rigorously is this rule enforced ; and not only 
 so, but the more virtuous the desires which constitute the 
 rule. 
 
 Now, of the three classes of governments (the mo- 
 narchic, the aristocratic, and the republican,) under one 
 or other of which, all political^ institutions may be 
 grouped, it is obvious that the first two are not based 
 on the principle of justice embodied in the golden rule, 
 but upon its antagonist. The first makes the will of 
 one supreme, the second, that of a class. In either case, 
 the rulers cannot do unto the subjects as they would 
 that the subjects should do unto them without abolishing 
 the distinction and yielding their exclusive power, which 
 would at once transform their government into a republic. 
 The sovereign or the aristocratic class, for example, 
 desire all other classes to obey their laws, and in order 
 
CHAP. I.J PROVINCE OF GOVERNMENT. 149 
 
 to conform to the golden rule, it would be necessary 
 for them to desire also, that all other classes should rule 
 over them, which presupposes an absurdity. The two 
 desires are antagonistic, and cannot exist together. 
 
 But political organizations of the third class that 
 class which is based on the principle of equality and 
 abides by the will of the majority approach much nearer 
 to that elevated standard of justice to which I have 
 referred. Indeed, the fundamental principles of repub- 
 lican government may be said to be in strict accordance 
 with that standard, but, in consequence of deficient know- 
 ledge in the architects, the superstructure is not equally 
 perfect. In constructing the framework of government, 
 and in filling up the details of the plan by means of 
 statutory laws, with the view of molding those princi- 
 ples into rules for practical guidance, both the scientific 
 knowledge and the artistic skill of the operations have 
 generally proved to be lamentably deficient. The people 
 of the United States, however, have made a very success- 
 ful effort in this line. They have not attained perfec- 
 tion in their social machinery, it is true ; but their poli- 
 tical institutions, save one dark spot, reflect more truly 
 the spirit of the golden rule, than those of any other 
 people of the present or of former times. This fact is 
 conceded even by the enemies of republican go vermnent, 
 but they at the same time maintain that these institu- 
 tions are so deficient in powers of self-preservation, to 
 say nothing of improvement, that they must soon end in 
 anarchy. This opinion, I apprehend, is not only erro- 
 neous, but directly opposed to the truth ; for, unless I 
 am greatly mistaken, there is in republicanism an innate 
 self-improving property which no other form of govern- 
 ment possesses. Let me explain : 
 
 Government is the instrument employed by society for 
 
150 PROVINCE OF GOVERNMENT. [PART. II. 
 
 compelling its members to observe the principles of 
 justice, or the rule of right in their social actions. In 
 doing this, what is evil in the human heart is restrained 
 and its outbreaks punished, while the good therein is 
 developed. Now, it is the peculiar excellence of repub- 
 lican government that its framework is in strict accord- 
 ance with that design, and its practical results tend to 
 the complete accomplishment of these important ends ; 
 for, whilst all are prone to trespass on the rights of 
 others, and each desires for himself the exclusive privi- 
 ledge of doing so, they are each and all unwilling that 
 others should trespass upon theirs ; and, since it is a 
 fixed consequence of republicanism that every privilege 
 granted, or restraint imposed, must be embodied in laws 
 made by the majority for the benefit of the whole, and 
 to which all are alike subject, it follows that the pro- 
 pensity to evil will be effectually restrained, or, at 
 least, that it cannot find countenance in the law, as it 
 does where government is based on the principle of poli- 
 tical inequality. The statute-books of the United States, 
 both state and national, have, it is true, been deformed 
 by numerous acts of special legislation ; but they were 
 the offspring of ignorance and*fraud, and are rapidly 
 disappearing before a more enlightened public opinion ; 
 and when a majority of the community come to under- 
 stand their true interests, the last vestage of them will be 
 expunged. The truth is, that government, in a republic 
 like ours, where all participate in making the laws, and 
 all are alike required to obey them, is nothing more than 
 the legalized expression of the public judgment as to 
 the best social means of promoting the happiness of each 
 individually, and of all collectively ; while, under gov- 
 ernments based upon the principle of inequality in civil 
 and political rights, where the few rule and the many 
 
CHAP. I.j PROVINCE OF GOVERNMENT. 151 
 
 obey, the governing class has the power to choose between 
 the adoption of a false system, (so contrived as to 
 promote their own interests at the expense of those they 
 govern,) on one side, and that of a true and just one on 
 the other. Our knowledge of human nature, as well as 
 the records of history, indicate with sufficient clearness, 
 their invariable choice. Thus, while governments based 
 upon the principle of equality, permit no social wrongs, 
 except through ignorance, those founded in inequality often 
 not only permit, but legalize them as a matter of choice. 
 While the former secure their own stability, and tend to 
 perpetuate themselves by means of the superior benefits 
 they confer, the latter are now tottering under the dis- 
 pleasure of those upon whom their wrongs are inflicted ; 
 while the former, by an equal distribution of benefits, 
 elevate the masses, and, by increasing the aggregate 
 of benefits, augment knowledge, and thereby tend to 
 elevate the standard of justice higher, and still higher 
 each step in advance paving the way for the next, the 
 latter tend to degrade the masses, lessen the benefits of 
 government and lower the standard of justice : the only 
 counteracting tendency calculated to prevent the adop- 
 tion, by the ruling class, of an undisguised and unmiti- 
 gated system . of plunder towards their subjects, being 
 the fear of retribution. 
 
 In view of what has now been said, I may venture 
 to assert, that the republican is the best known form of 
 government ; that political institutions based on the 
 principle of equality, and constructed in conformity to 
 it, are the best known social means of augmenting indi- 
 vidual happiness ; and hence, that the chief duties of 
 government are : 
 
 1. The protection of life, this being the basis on 
 which all other rights depend. 
 
152 PROVINCE OF GOVERNMENT. [PART. II. 
 
 2. The protection of personal faculties, physical and 
 mental. 
 
 3. The protection of personal freedom, and the recog- 
 nition and enforcement of the principle of equality, so 
 far as it relates to civil and political rights. 
 
 4. The establishment and enforcement of such rules 
 in reference to the family relations as will most effectually 
 promote the happiness thereof. 
 
 5. The recognition and enforcement of the right of 
 property in value produced. 
 
 6. The institution and enforcement of the right of 
 property in Land. 
 
 7. The regulation of commerce. 
 
 8. The production of money and the regulation of its 
 value. 
 
 9. The institution and enforcement of the right of 
 property in actions. 
 
 10. The assessment and collection of taxes sufficient 
 to defray the expenses of government, and to provide for 
 the education and support of the infirm and friendless 
 poor. 
 
 To these might he added some duties of minor im- 
 portance, but as I am not writing a treatise on politics, 
 we will not stop to emunerate them. Nor have we 
 strictly speaking, any thing to do with the four classes o 
 governmental duties first named, for they too belong to 
 the science just referred to; but it is manifest that there 
 can be no advancement in wealth where these duties are 
 not well performed. If, for example, there be no secu- 
 rity of life and of personal faculties, there can be no 
 security of property, nor indeed, any property to secure. 
 If government unjustly interferes with individual rights 
 and needlessly restrains personal freedom, the example 
 will be followed by individuals, and thus the cords which 
 
CHAP. I.] PROVINCE OF GOVERNMENT. 153 
 
 bind society together, will be loosened, the community 
 demoralized, and the superstructures wealth and civili- 
 zation razed to the ground. If there be an infringe- 
 ment of the rule of political equality, the aggrieved 
 will never rest satisfied until the inequality is removed ; 
 and if the marriage contract be not enforced, and the 
 parents compelled to provide for and educate their 
 offspring, knowledge cannot advance, nor industry 
 possess the requisite vigor and skill to so direct and 
 aid the processes of production, as to preserve, much 
 less augment, the existing volume of wealth. There- 
 fore, it is manifest, that the development and pre- 
 servation of wealth cannot fail to be greatly in- 
 fluenced by the manner in which these various du- 
 ties are performed. But since it is not our province 
 to inquire as to the best methods of performing them, 
 we must dismiss these topics with this brief refer- 
 ence to their politico-economic bearing, and, with the 
 assumption that the duties referred to are well perform- 
 ed, proceed to point out the true policy of government, 
 in regard to the six classes of duties connected with 
 social wealth. It is proposed to devote a chapter to the 
 consideration of each. 
 
 14 
 
CHAP. II. j 155 
 
 CHAPTER 2. 
 
 OF THE RECOGNITION AND ENFORCEMENT OF THE RIGHT 
 OF PROPERTY IN THE PRODUCTS OF INDUSTRY, CA- 
 PITAL AND LAND. 
 
 The origin and nature of this right, as well as the 
 motives which prompt its social recognition and guaranty, 
 have been sufficiently explained in the first division of 
 our treatise ; hut we have yet to define its just limits, 
 and to indicate the best social means of securing to indi- 
 viduals its undisturbed enjoyment. 
 
 First, as to its proper limits. The right of property, 
 so far as the value thereof consists of one's own indus- 
 trial service, follows necessarily from the right to live 
 in the possession and use of our faculties, because, as 
 we have seen, this element of property originates 
 in the exercise of mental and physical powers, the 
 value resulting from their exercise, being neither 
 more nor less than the continued existence of in- 
 dustrial service, after it has passed from the indivi- 
 dual to the matter upon which his powers have been 
 exerted ; and if the individual is entitled to life 
 and to the possession of his faculties, it is clear 
 that he has an equal right to exert them in advancement 
 of his happiness, provided it be not done in a way to 
 mar the happiness of others. So far as the value con- 
 sists of the productive service of capital, the right of 
 property results from the right just named, since, if the 
 individual has the exclusive right to the value created by 
 bis industrial service, it is manifest that his right to the 
 
156 RIGHT OF PROPERTY. [PART II. 
 
 products of that value, is equally exclusive and valid. 
 To the extent that the value of property is made up of 
 the appropriated natural agents and their productive ser- 
 vice, the right has its origin in the Social Contract ; but 
 it is also involved in, and, in practice, necessarily results 
 from, the right to the other two elements of property, since 
 all who possess land, have either given an equivalent of 
 industry or capital in exchange for it, or they have 
 inherited it from those who had acquired their title or 
 exclusive right in that way. The right to the sort of 
 property last named, although widely different in origin 
 and nature from the right to the other elements of 
 property, is founded on a principle equally just, and 
 should be held no less sacred, as I shall aim to demon- 
 strate in the next chapter. 
 
 The right of property, therefore, as recognized and 
 enforced by society, extends to and includes skill, labor, 
 capital and land, and the value created by the produc 
 tive service of these prime agents of wealth : it includes 
 the sources of property and their productive employ- 
 ment, as well as property itself. These seem to be its 
 proper boundaries. It does not, or rather it should not, 
 go beyond them ; nor is it expedient that it should 
 be regarded as absolute within them. When the right 
 is so exercised as to avoid the production of consequences 
 injurious to society, it should be secured to individuals 
 without qualification or reservation; thus far the develop- 
 ment and preservation of wealth, and, consequently, 
 the general welfare, imperatively demand its social gua- 
 ranty. But when the productive agents are so employed 
 by individuals as to produce consequences adverse to the 
 general happiness, or when like results follow from the 
 simple possession of property, it is the duty of society 
 to limit the right, either by withholding the needful pro. 
 
CHAP II.] RIGHT OF PROPERTY. 157 
 
 tection, or by interposing the necessary restraints. For 
 instance, an individual should not be permitted to enjoy 
 the right of property when its nature is such as to des- 
 troy the relative rights of others, as in the case of sla- 
 very ; nor should he be permitted even to hold legitimate 
 property, when its nature and the attending circumstances 
 are such as to put in jeopardy the lives or the property 
 of others, as, for example, in the storing of powder in a 
 city or populous neighborhood. As relates to the em- 
 ployment of the productive forces, an individual should 
 not be allowed to prosecute, in a densely peopled dis- 
 trict, any business calculated to engender pestilence or 
 to destroy the property of others. He should not be 
 permitted to engage in such occupations as tend to im- 
 poverish or demoralize the community, as, for example, 
 in the production and sale of intoxicating drinks nor 
 in those which are unproductive of value, such as the 
 selling of lottery tickets, and other kinds of gambling. 
 In short, whatever process of production is found to yield 
 more of evil than of good, to be more productive of mi- 
 sery than of happiness, in its general consequences, should 
 be not only excluded from the social guaranty, but its 
 exercise strictly prohibited by the laws of society : it 
 should be regarded as a wrong requiring suppression, 
 rather than as a right entitled to protection. The public 
 good clearly requires this limitation, which fact, when it 
 comes to be generally perceived, will impel the social voice 
 to demand it ; and thus, in republics at least, where the 
 laws are but legalized expressions of the public will, 
 the limitation will be established. 
 
 It will be seen that the right of property, as here 
 
 defined, differs somewhat from the standard recognized 
 
 and established by our constitutions and laws. The 
 
 external boundaries of the two differ in this, that our 
 
 14* 
 
158 RIGHT OF PROPERTY. [PART II. 
 
 legalized standard includes the right of property in human 
 beings, and the right of property in actions, both of which 
 our definition excludes : and the reasons therefor, will be 
 given in subsequent chapters on slavery and credit, as it 
 is believed the importance and intricacy of the questions 
 involved, clearly entitle each of these subjects to a dis- 
 tinct consideration. The internal limitations of the two 
 also differ essentially in degree, if not in kind. I would 
 not only withhold protection, but interdict the enjoyment 
 of the right of legitimate property, in certain cases where 
 our social machinery protects it, protects it subject to li- 
 mitations, it is true, but these are at best feeble, and 
 withal, rarely enforced. Take, for example, the produc- 
 tion, importation and sale of ardent spirits. Our 
 government recognizes these as rights, and it protects 
 individuals in their enjoyment, subject to no other res- 
 traints than such as are afforded by the imposition of 
 taxes somewhat higher than those assessed on other kinds 
 of property ,and on other pursuits. This, however, 
 imposes no practical restraints, because the augmented 
 taxes are paid by the consumers in the increased price 
 of the product. The enhanced price does indeed slightly 
 diminish the consumption, and thus indirectly restrains 
 the production and distribution ; but, in this case, the de- 
 gree is too inconsiderable to produce practical benefits. 
 
 Aside from its medicinal and chemical properties if 
 indeed these constitute exceptions alcohol is wholly 
 destitute of real utility. It is not only destitute of use- 
 ful properties, but fraught with those of a contrary na- 
 ture. In view of the frightful amount of human misery 
 it has produced, we are, perhaps, warranted in regard- 
 ing it as the most potent instrument of evil the world 
 has ever known. Be this, however, as it may, I can- 
 not be mistaken in saying since every one's observa- 
 
CHAP. II.] RIGHT OF PROPERTY. 159 
 
 tion and experience will confirm its truth that the ge- 
 neral wellfare is lessened by its presence ; that it re- 
 tards the development of wealth, and hastens its con- 
 sumption ; that it augments misery and diminishes hap- 
 piness ; and hence, that its suppression, or the interdic- 
 tion of its production and distribution, would be beneficial 
 to society. If the evils resulting from alcohol were 
 confined to those who consume it, society might not feel 
 justified in interposing restraints. It would then be a 
 matter in which it had no interest, the individuals and 
 their own consciences being the only parties concerned. 
 It is well known, however, that such is not the case. 
 Nearly all the trespasses on the rights of life, personal 
 faculties, and property, as well as most of the demands 
 for public charity, result either directly or indirectly 
 from this fruitful source, to say nothing of the misery 
 inflicted on women and children by the intemperance of 
 husbands and fathers. It is, therefore, competent for 
 society to exercise its prerogative in suppressing the evil, 
 as clearly so, it appears to me, as to suppress any other 
 social evil ; and, in view of the good which might be thus 
 attained, I hold it to be the duty of government to pro- 
 nounce the production, importation, and sale of alcohol, 
 severally, misdemeanors, and to suppress them by means 
 of the needful penalties and punishments. This sug- 
 gestion may appear illiberal, doubtless it will be so re- 
 garded by many, but when we reflect on the lamenta- 
 ble social evils produced by alcohol, and remember that 
 we may search in vain for its compensating benefits, we 
 should rather be astonished that society has so long ne- 
 glected the performance of such a manifest duty to 
 itself. 
 
 If it be objected that the assumption of this preroga- 
 tive, on the part of society, would be an unauthorized in- 
 
160 RIGHT OF PROPERTY. [PART II. 
 
 terference with individual rights, it may be answered 
 that the propensity to drink to excess, like the pro- 
 pensity to steal, cheat, or gamble, is one of those hurt- 
 ful and unruly desires, which the conscience, aided by 
 divine law, is unable to keep at all times in subjection 
 to the judgment ; and since every act of insubordination 
 produces consequences injurious to society, it follows 
 that society is warranted in interposing the restraints 
 necessary to protect its own rights. The exercise of 
 this social prerogative would be in strict accordance with 
 the general maxim of republicanism, which enjoins that 
 line of policy which will secure the greatest good of the 
 greatest number. Indeed, we may go further, and af- 
 firm, that the suppression of the product and traffic under 
 consideration, would be productive of good unmixed with 
 evil ; the happiness not only of the majority, but of 
 the whole, would be promoted by it. It is well known 
 that a large portion of the crimes committed are either 
 superinduced or directly prompted by the consumption 
 of this product. It is deemed proper that society should 
 exercise the prerogative of punishing those who commit 
 these trespasses, the plea of intoxication not being re- 
 garded by the law as even a mitigating circumstance. 
 How manifestly proper, therefore, that society should 
 exercise the milder but far more efficacious prerogative, 
 of suppressing the cause which prompts their commis- 
 sion. It would thus uproot the evil, and thereby avoid 
 the injurious consequences of the offence, as well as of 
 the punishment. Crimes which result from the innate 
 depravity of the perpetrator, cannot be prevented by 
 suppressing their cause. Society has not the power to 
 exterminate the vicious propensities of its individual 
 members. It cannot dry up human passions and evil 
 desires, as it can the fountains of rum. It is compelled. 
 
flHAP. II.] RIGHT OF PROPERTY. 161 
 
 therefore, in reference to this class of crimes, to adopt 
 the expedient of penalties and punishments : it has no 
 other direct remedy. But in regard to the crimes and 
 other social evils which result from alcohol, there is no 
 such compulsion. There, the root of the evil is detached 
 from humanity detached even from animal and vege- 
 table life. It stands entirely alone, an inanimate com- 
 pound of evil, extracted by man from the products of na- 
 ture, as if to show the extent to which his genius and 
 industry can be perverted. Thus isolated, without the 
 semblance or order of utility about it, society, by in- 
 terdicting its future production and distribution, may 
 completely exterminate this fruitful source of crime and 
 misery, without injury or injustice to a single individual. 
 When this question shall have passed through the puri- 
 fying process of scientific investigation and discussion ; 
 when philosophic statesmen shall have divested it of its 
 prejudices and errors, so that its true merits may be un- 
 derstood, I have not the slightest doubt that all re- 
 publican societies will adopt and enforce the limitation 
 of the right of property herein suggested. If it should 
 be considered necessary to continue the use of alcohol in 
 the practice of medicine, and in the arts, government 
 might authorize the production and distribution of a 
 specific quantity for those purposes ; or it might assume 
 the task of producing and distributing it by means of 
 its own agents. 
 
 If there are any other rights of property now recog- 
 nized and protected by government, which, in a social 
 point of view, are more productive of poverty than of 
 wealth, or of misery than happiness, they may be class- 
 ed with the above ; and, for the reasons already given, 
 society should convert its protection into prohibition. 
 The same might be said of all civil and political rights ; 
 
162 RIGHT OF PROPERTY. [PART II. 
 
 but as these lie without the boundaries of our subject, 
 they are referred to merely for the purpose of excluding 
 them ; though it will have been seen that, in 
 discussing the questions connected with the just 
 limitations of the right of property, I have been 
 compelled to push my inquiries into the very cen- 
 tre of the field of political science, in order to ascer- 
 tain the effects of certain divisions of this right on the 
 general welfare and happiness ; for in the absence 
 of this knowledge, we could not decide intelli- 
 gently as to the validity of the right. Without occa- 
 sional departures of this kind from our appropriate pro- 
 vince, for the purpose of tracing out the ultimate conse- 
 quences of specific causes, our inquiry would be mani- 
 festly incomplete, if not altogether worthless. 
 
 Another right recognized and enforced by some go- 
 vernments, though not by all, is the right of gambling. 
 This may be regarded as a right of property, because 
 those who exercise it do so with the view of procuring 
 property. It should be not only excluded from the so- 
 cial guaranty, but its exercise forbidden, for the reason 
 that its social consequences, like those emanating from 
 the production and distribution of rum, are evil unmixed 
 with good ; and for the additional reason that it is un- 
 productive of value in any form. It is the distinguish- 
 ing attribute of gambling an attribute by which it may 
 be recognized under whatever disguise it chooses to as- 
 sume that it yields no product. In its processes, skill, 
 and labor, and capital, and land, are always employed, 
 but no value of any kind ever results from their services. 
 At the end of each and every process, the quantity of 
 value is the same as at the commencement, at least, 
 there is no increase. The value merely changes hands ; 
 what one gains another loses ; while the productive 
 
CHAP. II. J RIGHT OF PROPERTY. 163 
 
 agents thus employed must be maintained, or kept in 
 repair, by consuming wealth produced by others. 
 Gambling, so far as it affects society, may be classed 
 with counterfeiting, cheating, stealing and robbing. 
 They all require an outlay of productive service, but 
 neither produces value ; they each aim, by different 
 methods, to procure the property of others without giv- 
 ing an equivalent ; and they all rely on the same quali- 
 ties of human nature to furnish them victims, namely, 
 ignorance and credulity. If either vocation is less tole- 
 rable than the others, I hold it to be gambling. Its 
 votaries seem to be more completely divested of con- 
 scienciousness ; for while they will strip a victim of the 
 last vestige of his property, without any apparent com- 
 punctions, those who follow the other vocations are 
 usually satisfied with a small share. Besides, the first 
 not only strips its victims of their property, but of 
 their virtue as well, while the latter leave the 
 character of the victim unimpaired. For these reasons, 
 gambling should be regarded as a crime rather than as 
 an individual right. The prevailing error of society on 
 this subject, as evidenced by its laws, is, that it regards it 
 as neither : gambling is excluded from the list of indi- 
 vidual rights, but it is not included in the list of social 
 prohibitions. 
 
 The term, gambling, is here employed in its widest 
 signification, in which it denotes not only the act of 
 gaming for money, and the traffic in lottery tickets, but 
 every other occupation or calling which is unproductive of 
 value, such as purely speculative operations in stocks and 
 merchandize, and in all other kinds of property. He who 
 sells 1000 bbls. of flour at a given price, to be delivered 
 on a future day, not having the flour either in possession 
 or expectation, in effect merely wagers that the article 
 
164 RIGHT OF PROPERTY. [PART II. 
 
 will decline in price, while the purchaser wagers that 
 the price will rise. And if the flour be actually deliver- 
 ed, and the purchaser has no other motive than specula- 
 tion if he buys with the sole view of holding for a rise, 
 without any purpose of distribution then the transaction 
 on his part should also be denominated gambling, be- 
 cause it is unproductive of value. These remarks will 
 apply to all purchases and sales purely speculative ; 
 but, since transactions of this character closely resemble 
 the legitimate operations of commerce, and rarely take 
 place without some admixture of the latter, it would be 
 exceedingly difficult for society to suppress them, and at 
 the same time avoid an improper interference with the 
 exercise of legitimate rights. It is believed, however, 
 that gambling operations in stocks, and some other 
 transactions of like character, might be included in the 
 social prohibition, with advantage to the community, and 
 without doing violence to the legitimate rights of indi- 
 viduals. 
 
 Here it may be well to say a few words in explana- 
 nation of the legitimate boundaries of commerce, lest it 
 be supposed that I have fallen into the popular error of 
 believing that merchants, and especially jobbers of mer- 
 chandize, are non-producers. This fallacy, if not gene- 
 ral, is at least widely entertained. It has its origin in 
 the fact that merchants sell the identical commodoties 
 they p buy, without either producing them or changing 
 their qualities or their forms. It is perceived that agricul- 
 turists produce wealth by increasing the products of 
 the soil, and that manufacturers and artizans produce it by 
 altering the forms of these products, so as to fit them 
 for use and consumption ; but the equally indis- 
 pensable, and therefore productive service, which the 
 merchant performs in shifting their locality, and in making 
 the distribution, seems to have escaped the observation 
 
CHAP. II.] RIGHT OF PROPERTY. 165 
 
 of those who thus err. Commerce performs the office of 
 distributing wealth. Merchants are the prime agents of 
 commerce ; they direct, superintend, and accomplish its 
 processes. Every merchant through whose hands commo- 
 dities pass, during their journey from producers to manu- 
 facturers or consumers, increases their value, either by 
 placing them nearer the point of ultimate destination, or 
 by actually accomplishing their distribution. Take, 
 for an illustration, the commodity tea. This product 
 is more valuable in the warehouse of the merchant 
 of Canton, than it is in the hands of its producer, be- 
 cause it is then nearer, or more accessible to, its con- 
 sumers. It is still more valuable in the hands of the 
 New York importer, and for the same reason. When 
 it passes to the hands of the New York jobber, its 
 value is again enhanced, not in virtue of its shifted loca- 
 lity, (for in this case no material change of place oc- 
 curs), but for the reason that it is then accessible to the 
 retailer, in quantity and quality adapted to his wants. 
 And so the latter, by placing it within the reach of consu- 
 mers, gives another and final addition to its value. It 
 is thus in relation to all other commodities which pass 
 through the channels of commerce : each intermediate 
 agent is necessary to their cheap, expeditious and perfect 
 distribution. Were it not so, the laws of trade would 
 promptly expel the unproductive agents, by rendering 
 their vocations unprofitable. In fact, they do thus expel 
 not only the supernumerary votaries of commerce, but 
 its unnecessary agencies and machinery as well ; by which 
 means, that department of production is kept within its 
 legitimate or useful limits. 
 
 Thus far in our examination of the right of property, 
 we have searched only for errors of enlargement, that 
 is, for features of the right, as now established by law, 
 15 
 
166 RIGHT OF PROPERTY. [PART II 
 
 which the public good requires should be either curtailed 
 or abolished. We have next to inquire in what res- 
 pects, if any, the right has been improperly abridged. 
 So far as our government is concerned, its errors of this 
 character consist mainly of laws conferring exclusive 
 privileges, and of those relating to the interest of money. 
 It must not be forgotten that the right of property 
 includes the right of using it, or employing it produc- 
 tively, (provided it be exercised without detriment to 
 others) as well as the right of holding it ; for without this, 
 its recognition and enforcement, would confer no benefits. 
 Now, in granting to an individual or class the exclusive 
 privilege of prosecuting a given process of production, the 
 relative rights of those excluded are necessarily abridged. 
 In fact, every grant of this kind should be entitled u an 
 act to restraint all men except A, B & Co. from employ- 
 ing their industry, capital or land in the production of, 
 &c." If the business or vocation yields good fruits, 
 if it tends in the main to augment wealth and promote 
 the general welfare, the right to prosecute it should be 
 enjoyed by all ; if injurious, it should be withheld from 
 all. Class legislation is a strange anomaly in a repub- 
 lic, for it is opposed to every principle on which that 
 form of government is based. It can only result from 
 fraud or ignorance on the part of the representatives, 
 and can only be endured by a constituency profoundly 
 ignorant of its real interests. Usury laws are free from 
 the odium of benefiting one class at the expense of 
 another, for they injure the borrowing interest quite as 
 much as they do the lending ; but they are obnoxious to 
 the charge of imposing a general restraint on the exer- 
 cise of a legitimate right, and of thus retarding the 
 production of wealth. Money, like industry, land, or 
 capital in any other form, is a productive agent. Any mo- 
 
CHAP. II. J RIGHT OF PROPERTY. 167 
 
 tives of policy, which may seem to authorize a legal limi- 
 tation of its revenue, will furnish reasons equally valid 
 for limiting the revenue of all other productive agents ; 
 but, until it is demonstrated that the world is getting rich 
 too fast, no sufficient warrant can be found for either. 
 Whenever money becomes scarce, the inevitable tendency 
 of usury laws is, to divert it from channels of greater pro- 
 ductiveness to those of less, by which means- the develop- 
 ment of wealth is restrained. It is well known that those 
 laws also tend to demoralize. Their injustice andabsur- 
 dity challenge the contempt rather than the respect of the 
 community, and give birth to all sorts of ingenious devi- 
 ces to evade them, and even to frequent acts of open 
 violation ; all of which tends to impair the force of just 
 and necessary laws. The mischievous consequences of 
 those laws are, therefore, obvious and certain ; and yet 
 we may search in vain for a single benefit derived from 
 them. They are productive of evil unmixed with good, 
 and hence, should be abolished. There is no sufficient 
 reason why the right of property in money should be 
 denied, in its exercise and productive employment, the 
 same degree of freedom that the right of property in 
 industry, land, houses, and machinery is permitted to 
 enjoy. 
 
 Having thus imperfectly defined the right of property, 
 and pointed out what I conceive to be the chief errors 
 of our policy in regard to its institution, it now remains 
 to consider the best social means of securing to individuals 
 its undisturbed enjoyment, in other words, the best 
 means of protecting property from stealth, violence and 
 fraud. It will be perceived that this inquiry leads di- 
 rectly to the province of criminal jurisprudence; but it 
 needs scarcely be said, that I am not about to enter a field 
 so vast, and with the principles of which I am so imper- 
 
168 RIGHT OF PROPERTY. ]PART. II. 
 
 fectly acquainted. I merely propose to give a passing 
 glance at the subject with the view of ascertaining the 
 philosophy on which criminal laws are based. 
 
 Penalties and punishments are the means usually 
 relied on by society for the protection of property from 
 stealth, violence, and fraud, as well as for the protection 
 of all other rights. This seems to be the only practica- 
 ble remedy in all cases wherein the social prerogative is 
 not competent to reach and suppress the causes of 
 trespasses. But wherever government has the power 
 to control the cause of crime, and, by suppressing that, 
 to prevent its commission, this expedient should be em- 
 ployed in preference to penalties and punishments, be- 
 cause it screens society from the mischievous consequences 
 of the offence as well as of the punishment, all of which it 
 must endure under the expedient last named. We have 
 seen how the preventive remedy might be successfully 
 applied to crimes superinduced by alcohol ; namely, by 
 interdicting the production and sale of that fruitful 
 instrument of mischief. And the same effective method 
 may be adopted in all cases in which the remote cause 
 of trespasses is known to reside in property, or indeed 
 any where else, provided its nature and circumstances 
 are such that the laws of society can be made to reach 
 and control it. But where crimes have their origin in 
 the constitution of human nature, where they are 
 directly prompted by ignorance, or passion, or by 
 innate depravity, the preventive remedy cannot be ap- 
 plied with equal directness and certainty. Much, how- 
 ever, may be accomplished even in those cases, by pro- 
 moting intellectual and moral culture, which maybe term- 
 ed the indirect method of prevention. Ignorance must 
 be regarded as the principal cause of all vicious ac- 
 tions except those which result from the outbreaks of 
 
GHAP. II.] RIGHT OF PROPERTY. 169 
 
 passion and the insubordination of desires ; because, 
 minds enlightened by a knowledge of the truth, read- 
 ily perceive that vicious actions produce misery, that 
 the practice of virtue is the best means of securing hap- 
 piness ; and I hold it to be self-evident that the judgment 
 invariably dictates in obedience to the promptings of 
 that supreme desire. Ignorance, therefore, is a fruitful 
 source of crime, and being so, it is incumbent on society 
 to diminish it by all the instrumentalities at its command. 
 The subject is universally regarded in this light, as 
 may be inferred from the fact that all governments foster 
 and encourage education, by appropriating less or more 
 of revenue to its support, to say nothing of other expe- 
 dients designed to promote the acquisition of knowledge. 
 Some governments go much farther than others in the 
 performance of this duty ; but it appears to me that the 
 boldest and the best, among which may be reckoned 
 some of our state governments, have stopped far short of 
 the true policy. The State of New York, which, it is 
 believed, may justly claim pre-eminence in this regard, 
 has placed within the reach of every child within her 
 limits, the means of obtaining what is called a common 
 school education. At this point she stops ; her efforts 
 do not go beyond it. Now, if, in addition to this, she 
 should place within the reach of her children, the means 
 of obtaining a general outline of the scientific know- 
 ledge of our times ; and, after having thus enlarged the 
 proffered mental aliment, she should then (by penal 
 laws aimed at neglectful parents and guardians) com- 
 pel them to partake of it, or of other aliment of 
 like character, I am persuaded the utility of her system 
 would be vastly increased. As a general rule, study 
 and mental discipline are not agreeable employments in 
 the estimation of children. They are incapable of ap* 
 15* 
 
170 RIGHT OF PROPERTY. [PART. II. 
 
 predating the advantages of knowledge, and parents are 
 often neglectful. For these reasons, a large share of 
 the advantages which might be derived from systems of 
 public education are lost for want of a compulsary clause. 
 With that additional feature, much of ignorance and 
 its mischievous consequences might be banished from 
 society. 
 
 But after all that can be properly done by society, in 
 the prevention of trespasses, by the direct and indirect 
 methods of removing or lessening their causes, many 
 will still occur, to which the only remedy applica- 
 ble is the direct one of penalties or punishments. It 
 becomes of interest, therefore, to understand the nature 
 of this remedy, and to inquire as to its proper extent 
 and character. Its only legitimate aims appear 
 to be, to compel restitution or remuneration, and 
 to prevent .future offences, either by restraining the 
 perpetrator or by deterring others from the commission 
 of like offences. In regard to the degree of pun- 
 ishment necessary to secure these ends, it is to be 
 remarked that experience and observation are the only 
 safe guides. There is one rule, however, that may be 
 safely adopted, namely, to shut out of the penal code 
 every feature and sentiment of revenge. When we con- 
 sider that man is the involuntary being which nature, edu- 
 cation and association have made him, that his character 
 is, mainly at least, formed for him and not by him that he 
 is in a great measure incapable of controlling his own ac- 
 tions, we must perceive the impropriety and injustice of 
 permitting punishments to be tainted with the spirit of re- 
 venge. On the contrary, the nature of the punishment 
 should partake as largely of mercy as the safety of society 
 will warrant, and its character should be such as tends to 
 the reformation of the criminal. The present tendency 
 
CHAP. II. J RIGHT OF PROPERTY. 171 
 
 of public sentiment on this subject,throughout the civilized 
 world, is in the direction of mitigation. It has already in- 
 fused more of mercy in the penal code than the world has 
 hitherto witnessed, and we shall soon be able, by observ- 
 ing the effects, to form a well grounded opinion as to the 
 propriety of the change. Thus far the effects seem to 
 have been salutary. It is to be hoped that we may safe- 
 ly advance much farther in the same direction ; but I 
 have my fears. It seems to me there are unmis- 
 takable indications that a much greater mitigation of 
 the criminal code would embolden the ignorant, the idle, 
 the vicious, and the depraved, to disregard all rights, 
 and especially the right of property, to the extent per- 
 haps of demanding an equal distribution of the existing 
 wealth. I regard the present tendency as one of those 
 vibratory movements to which all things in nature ap- 
 pear to be subject. The penal codes were, for a long 
 period, unnecessarily severe ; that undue severity caus- 
 ed the reaction now witnessed, and, whenever the rigors of 
 criminal law shall become so far relaxed as to give society 
 a foretaste of anarchy, we may expect another reaction 
 in public sentiment, followed by increased severity of 
 punishments. Be this, however, as it may, there is one 
 feature of deformity in criminal jurisprudence which calls 
 for special notice and condemnation. I refer to the pro- 
 digious difference between the law as it is written, and 
 the law as it is administered. Penal laws are not en- 
 forced with sufficient fidelity. Either the legal penal- 
 ties are too severe, or public sentiment is too lenient, for 
 their disparity is immense in all countries, and especial- 
 ly in the United States. Our jurors and judges, in obe 
 dience to their own notions of duty, and in conformity 
 with public sentiment, usually fritter away the rigors of 
 the law and the force of testimony to such a degree 
 
172 RIGHT OF PROPERTY. [PART. II. 
 
 that, while convictions are rare, the penalties awarded 
 are of the mildest grade that the law permits ; and even 
 these are generally remitted by those entrusted with the 
 pardoning power. It were far better that the law 
 should be abolished, or its letter and spirit made to con- 
 form to public sentiment, than to thus trifle with its 
 provisions. The evil, however, if it be one, will be 
 likely to work out its own cure. Experience will de- 
 monstrate as to which is in error the law or its ad- 
 ministrators and then the public sentiment will make 
 the needful correction. 
 
 In what has been said in relation to the enforcement 
 of rights, it will be seen that I have included all other 
 rights as well as that of property. All legalized rights, 
 and all penal enactments for enforcing their observance, 
 being designed to secure a common end the promotion 
 of the general welfare ; and the different divisions being 
 linked together by reciprocal influences, it was believed 
 that a passing glance at the whole field of criminal ju- 
 risprudence would be the surest means of arriving at cor- 
 rect conclusions in reference to laws specially designed to 
 enforce the right of property. As the result of the general 
 but imperfect survey, I have to remark that, so far as the 
 enforcement of the specific right under consideration is 
 concerned, I have no explicit emendation to suggest, in 
 the existing penal laws of the United States. Their ef- 
 fects prove them to be well adapted to their true ends, 
 since they not only render the property over which they 
 stand guard, at least as secure as it is in any other 
 country, but accomplish that end by milder punish- 
 ments than can be found in the practices of any 
 other nation of the present or of the past. For these 
 happy results we are, doubtless, more indebted to the 
 favoring tendencies of a cheap and fertile soil, and to a 
 
CHAP. II. J RIGHT OF PROPERTY. 173 
 
 republican form of government, than to the peculiar 
 mildness, or other excellencies, of our penal codes ; but, 
 since the general result is favorable, it is perhaps the 
 safest course to follow the trite adage, and leave well 
 enough alone. It is certain, however, that, as a commu- 
 nity, we suffer more from the direct injuries produced by 
 offences against the right of property, than by those which 
 result from the punishment of offenders, in other words, 
 that we are nearer anarchy than despotism ; from which 
 it may be inferred that the change demanded by the 
 public good, if any, is an augmentation of penalties and 
 punishments. 
 
175 
 
 CHAPTER 3. 
 OF THE INSTITUTION AND ENFORCEMENT OF THE RIGHT 
 
 OF PROPERTY IN LAND. 
 
 In a former chapter it has been shown that land does 
 not possess real value, except in its meliorations, that 
 the utility inherent in it is the gift of nature, and not 
 the production of man or his instrumentalities ; that the 
 imperative necessity of incorporating value with the 
 soil, in order to increase its fruitfulness, induced the 
 more enlightened sections of the human family to 
 establish and enforce the right of private ownership ; 
 that this has been accomplished by means of first 
 transforming a natural right, common to each individual, 
 into a social right, and afterwards transferring the latter 
 back to individuals, in definitive portions accompanied 
 with the social guaranty, upon the payment of an equi- 
 valent. It has been shown also, that this expedient con- 
 stitutes the chief corner stone of social wealth, and that 
 it is fraught with extraordinary powers of productive- 
 ness, that it is, in fact, that master stroke of social poli- 
 cy, by means of which, more than by all other instru- 
 mentalities combined, man has been elevated from bar- 
 barism to civilization. 
 
 But notwithstanding the momentous benefits derived 
 from this expedient, there are many who regard its 
 
176 RIGHT OF PROPERTY IN LAND. [PART. II. 
 
 adoption as an improper assumption of social power, and 
 the right which it confers, as illegitimate. They 
 maintain that the appropriation of the soil is unjust 
 to those who do not possess any portion of it, and espe- 
 cially so to those who, upon entering the arena of pro- 
 duction, destitute of such inheritance, find the land 
 already monopolized by earlier comers. This monopoly, 
 it is averred, violates the natural rights of the landless, 
 because it excludes them from a participation in benefits 
 which nature designed as a free gift to all. A few words 
 will suffice to show the unsoundness of these opinions, 
 and to vindicate the policy under consideration. 
 
 According to the fundamental rule of social policy 
 adopted by our government a rule which I have endea- 
 vored, in the two preceding chapters, to inculcate as the 
 true one, and which is briefly expressed in the republican 
 maxim, " the greatest good of the greatest number" 
 the right of property in land is clearly legitimate, be- 
 cause it is universally conceded that its recognition and 
 enforcement has produced more of benefits than of 
 injuries: the relative superiority of man's condition 
 wherever it exists, as compared with his condition in its 
 absence, aifords indisputable evidence of this fact. But 
 we may safely go farther, and affirm, that it is beneficial to 
 every member of the society adapting it or rather, that 
 it operates equally , and places within the reach of ally 
 benefits which they could not otherwise compass. If 
 there are those who fail to partake of the proffered ad- 
 vantages, the fault must be their own, since the policy 
 presents no features of exclusiveness or inequality. Its 
 conditions are the same to all. 
 
 It will not be denied that the members of a community 
 have a right to enter into whatever contract they may 
 choose, with the view of bettering their social condition, 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 177 
 
 provided its enforcement inflicts no wrong on any por- 
 tion of themselves, nor on the members of other commu- 
 nities. Now let us examine the agreement under con- 
 sideration, and see whether its stipulations do not con- 
 form to even this illiberal rule. The contracting parties 
 are possessed of a right, common to each, to partake of 
 the utility derivable from the soil. They mutually agree 
 to surrender to the mass that common right, and to 
 accept in its stead, the exclusive right to definitive por- 
 tions, subject, however, to this condition : that the ex- 
 clusive right shall not be conferred in any case without 
 the payment of an equivalent, or other uniform consider- 
 ation stipulated in the contract. Taking the procedure 
 of the United States in reference to this subject, as the 
 type of the agreement by which the right of property in 
 land has been established, this is the length and breadth 
 of its provisions. Examine the subject in whatever 
 aspect we may, these are the only essential features it 
 presents. There is surely no injustice perpetrated here. 
 Every member of the community is placed upon an 
 equal footing. All the provisions of the contract come 
 within the limits of that absurdly stringent rule of social 
 policy, which requires the body politic to refrain from the 
 assumption of prerogatives, in the exercise of which, 
 wrong or injury is inflicted on any portion of its mem- 
 bers. An equal per capita division of the soil (if such 
 a plan were practicable, which it is not) could not be 
 more equitable, indeed it would be less so, as may be 
 readily shown. 
 
 It is well known that some occupations require the 
 concurrent service ot more land than others do. The 
 processes of agriculture, for example, require more 
 than those of mining, commerce, or the manufacturing 
 arts ; and yet, the productive service of the smaller quan- 
 16 
 
178 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 tity is worth as much to those who prosecute the latter 
 as the larger quantity is to cultivators of the soil. Wher- 
 ever commerce or the manufacturing arts, in obedience to 
 the invitations of favoring locality and other natural advan- 
 tages, select their theatres of action, there the market 
 value of a building lot, and the net revenue derived from 
 it, are equal to the market value and the net revenue of 
 many acres of land appropriated to agriculture. These 
 indeterminate but uniform principles are known to every 
 one from observation ; and in my attempt to unfold the 
 natural laws of trade, I have proved, it is hoped, that the 
 following definite principles obtain : namely, that capital is 
 everywhere proportionate to population, and that the mar- 
 ket value of land is the counterpart of the capital placed 
 upon it and concurring with it in production ; from which 
 it follows, that, when estimated in the mean, the market 
 value of single building lots of ground appropriated to 
 commerce, or to the arts, and thus employed productively 
 by individuals, is precisely equal to the market value 
 (of the land independent of meliorations) of single farms 
 appropriated to agriculture ; and if their respective mar- 
 ket values are equal, it follows that the net revenue, or the 
 value of the productive service derived from each, must 
 be equal also. 
 
 We find, then, that nature has variously endowed the 
 soil, having conferred on some localities productive pro- 
 perties which invite the co-operation of the miner, on 
 others, those which attract the merchant or the manu- 
 facturer, and on others, qualities esteemed by the hus- 
 bandman to say nothing of the relative difference in 
 productive powers, between different localities of the 
 same class. We find, also, that the miner, the mer- 
 chant, the manufacturer and the artizan, respectively 
 require, for the profitable employment of their industry 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 179 
 
 and capital, the concurrence of a much smaller quantity 
 of land than is needed by the agriculturist probably 
 not more than the one thousandth part ; and the service 
 of the larger quantity is worth no more to the last named 
 than that of the smaller quantity is to either of the 
 others. In view of these facts, how manifest the injus- 
 tice and unfairness of an equal division of the soil. If 
 that system should be adopted by a state in which the 
 industry and capital were sufficient to employ produc- 
 tively the whole of the land, it is obvious that cultiva- 
 tors of the soil would receive much less than their occu- 
 pation required, whilst all others would receive a super- 
 abundance, for the use of which they would compel the 
 former to pay them tribute. And in case population were 
 sparse and lands redundant, as, for instance, in the United 
 States, the injustice towards the agricultural interest 
 would be the same, because the adoption of this system 
 would either force a portion of the cultivators into the 
 wilderness, remote from a market, and thus deprive them 
 of the benefits derivable from commerce and the arts, or 
 else compel them to forego their portions, and to pay 
 tribute to the other interests. 
 
 The objections just urged against an equal division of 
 the soil, on grounds of equity, will not apply to the 
 existing system. They are completely obviated by that 
 provision in the land agreement, which requires the pay- 
 ment of an equivalent for the exclusive right, whenever 
 it is conferred. All individuals, and all interests, are 
 thus placed on an equal footing. If the locality be 
 adapted to commerce or the arts, the equivalent will be 
 relatively high the better the adaptation, the higher ; 
 if to agriculture only, it will be relatively low the 
 less fertile the soil, the lower ; and, in every case, the 
 equivalent paid, goes to the common fund. The simplest 
 
180 RTGHT OF PROPERTY IN LAND. [PART II. 
 
 and most certain rule for determining the true money 
 equivalent of any given section or parcel of the national 
 domain is, to sell it at public sale to the highest bidder. 
 The system of equivalents, and this rule for determining 
 them, have been adopted by the government of the 
 United States, with which, however, it has skilfully 
 combined the feature of a stipulated consideration, by 
 establishing a minimum price, below which, no portion of 
 the public lands can be sold, either by auction or at 
 private sale. For example : when surveyed and brought 
 into market, the lands are first offered at public sale, 
 subject to that limitation ; the more valuable sections 
 find purchasers, some above, and others at, the minimum 
 price ; the less valuable remain subject to entry at that 
 rate ; and whenever the swelling tide of industry and 
 capital has approached sufficiently near to render this 
 price the true money equivalent of such sections as 
 remain, then these find purchasers also. Thus, by 
 means of this admirably devised plan, the right of pro- 
 perty in land is conferred on individuals at relative 
 prices exactly corresponding with the relative value of 
 the respective parcels or sections at the time of convey- 
 ance. But we have yet to enquire whether the absolute 
 price agrees with the absolute value. In the purchase 
 of public lands, all individuals are placed upon an equal 
 footing, each pays, according to a given ratio, in pro- 
 portion to the value received ; but it may be that all pay 
 either too much or too little. This question we will 
 briefly examine. 
 
 We have seen that land does not possess real value, 
 and that its market value in the reflection or counterpart 
 of the capital either placed upon it, or standing ready 
 to concur with it in production. From these facts it 
 might be inferred that the true equivalent of the value 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 181 
 
 of unappropriated lands, is, just nothing at all, in 
 other words, that the exclusive right should be conferred 
 on individuals without consideration or price ; and the 
 inference would be legitimate, were it not for the fact 
 that government is compelled to expend on the land, less 
 or more of capital, in order to render itself competent 
 to furnish to individuals perfect titles. This fact destroys 
 the validity of the inference. Government, for example, 
 must extinguish all pre-existing titles ; it must have the 
 lands surveyed, and carefully marked off into sections 
 and lots ; it must execute the title deeds, and preserve a 
 record of them ; it must perform all these acts, and 
 incur the expenses incident thereto, before it can be in 
 a position to furnish perfect titles. For these outlays it 
 is clearly entitled to remuneration, but to nothing more. 
 Government may be regarded as the trustee in this mat- 
 ter ; it holds the public lands in trust for the benefit of 
 the citizens, and, in making the distribution, it should 
 receive a consideration sufficient to defray the expenses 
 of the trust. The expenses referred to, are incident to 
 the establishment of the right of property in land. 
 There are others growing out of its enforcement, but it 
 is alike customary and proper to defray these by means 
 of taxation. 
 
 We find, therefore, that the absolute value of .the 
 national domain is, the cost incident to the social trus- 
 teeship ; that the prices of the different sections should 
 correspond with the relative value of each j and that the 
 aggregate price should be equal to the aggregate expen- 
 diture. Now, upon examining the results of the pub- 
 lic land policy of the United States, we find that it 
 conforms to these just principles. Whether this con- 
 formity should be regarded as a fortunate accident, or as 
 the result of enlightened economic views on the part of 
 16* 
 
182 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 those who framed the policy, I are not prepared to say, 
 nor is it material. It is sufficient to know that the 
 existing land policy of our government is just and wise. 
 But if, as we are bound to suppose, the authors of this poli- 
 cy adopted it with the design of causing the aggregate re- 
 ceipts to equal the aggregate expenditure, because they 
 knew that the latter constitutes the true and only value of 
 the public lands, then we cannot but admire the extraor- 
 dinary skill displayed by them, in so framing it as to pro- 
 duce this result, without departing from the principle of 
 selling the different sections and lots at prices correspond- 
 ing with their respective values. The extreme difficulty 
 of devising a system capable of combining and carrying 
 out these two principles, will appear from what follows. 
 The absolute price of the public lands might be made 
 to coincide with their absolute value in the aggregate, by 
 establishing a uniform price per acre. But that system 
 would not combine the principle of selling each section 
 at its relative value, because it puts all classes of land 
 the mineral, the commercial, the manufacturing and 
 the agricultural, between each of which, there is a wider 
 difference in value and all qualities of each, at the 
 same price. The relative price would be made to agree 
 with the relative value, by the simple expedient of selling 
 all the public lands by auction, to the highest bidder, 
 without limitation or reservation. But this system would 
 fail to produce a correspondence between the aggregate 
 expenditure and the aggregate receipts, because, in this 
 case, the absolute price of each section would depend on 
 the quantity thrown upon the market. The market 
 price of land, like every other commodity, IB governed 
 by supply and demand ; and, while supply and demand, 
 in relation to all other commodities, are so ruled by self- 
 interest and the desire of happiness, as to cause the 
 

 CHAP. III.] RIGHT OF PROPERTY IN LAND. 183 
 
 average market price to coincide with the true value, the 
 supply of unappropriated land is dependent upon the 
 will or caprice of the government, it being the sole pro- 
 prietor. Being possessed of this monopoly, it has the 
 power of elevating the price by withholding the supply, 
 or of depressing it by crowding its lands upon the mar- 
 ket. Therefore, neither system will combine and carry 
 out both principles. But, by a skilful combination of 
 the two methods, and by establishing the appropriate 
 minimum price, this end has been attained by our govern- 
 ment, and it has thus succeeded in devising and adopting 
 the true policy. This policy cannot be departed from, 
 nor could any other have been established in the first 
 instance, without doing violence to the principle of 
 justice. We have already seen that it cannot, inequity, 
 depart from the principle of relative value ; and we will 
 now proceed to show that its conformity with the princi- 
 ple of absolute value is equally essential. 
 
 In the first place, it is to be observed, that the injus- 
 tice consequent upon commencing wrong, is not so direct 
 and apparent, nor is it equal in degree, to that perpetra- 
 ted by changing from the true policy to a false one. In 
 illustration of the mischievous consequences of a wrong 
 beginning, let us suppose an infant State to adopt the 
 policy of charging its individual members 100 per cent, 
 profit on land, instead of selling at cost and charges. 
 What would be the consequences of this policy ? How 
 would it affect the rights and interests of the individual 
 members, or of the different industrial classes? The 
 only legitimate disposition that could be made of the 
 profits, would be, either to apply them in payment of 
 expenses incident to the performance of other govern- 
 mental duties, or to distribute them amongst the mem- 
 bers of the community. In either case, this policy 
 
184 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 would seem to extort tribute from the purchasers of land 
 for the benefit of the whole community to tax a part 
 for the benefit of the whole. Such is not the conse- 
 quence however ; the injustice is only apparent. We have 
 seen that the natural laws of trade produce an ultimate 
 uniformity in the rate of profit in all departments of pro- 
 duction, however numerous or violent the disturbing influ- 
 ences may be ; and that the same laws award to the proprie- 
 tors of land, one quarter of the aggregate profit, regard- 
 less of the relative quantity of land employed. Now, it 
 is obvious, that the higher the price demanded for unap- 
 propriated land, the smaller will be the quantity pur- 
 chased, and made to concur in the processes of produc- 
 tion ; because, in the first place, the higher the price, 
 the smaller the number possessing the means of pur- 
 chase, and in the next place, the higher the price, 
 the smaller must be the quantity employed, in order 
 to maintain the equilibrium of profits. Therefore, 
 in the case supposed, the profits charged by govern- 
 ment, in the sale of unappropriated land, would first 
 diminish the quantity which would otherwise be produc- 
 tively employed; this diminution would enhance the 
 market value of the services of the land brought into 
 employment, by which means, the purchasers thereof 
 would be remunerated for the tribute paid to govern- 
 ment, and the equilibrium of profits maintained. The 
 erroneous policy under consideration, does not, therefore, 
 violate the right of individuals, nor of classes : it oper- 
 ates on all alike, and leaves their relative condition the 
 same. But, by placing an unnecessary, and therefore 
 an unjust barrier, between industry and capital on the 
 one side, and unappropriated land on the other, it 
 mars the prosperity of the whole. It lessens, as we 
 have just seen, the quantity of land productively em- 
 
CHAP. m.J KIGHT oi^ rnorEiiTY m LAND. 185 
 
 ployed ; it withholds from industry and capital a portion 
 of the land with which their productive powers are capable 
 of concurring ; it thus partially seals up, for a time, the 
 fountain of natural wealth, causing its stream of produc- 
 tive service to flow with less fullness and vigor than nature 
 designed, and thereby diminishes the aggregate produc- 
 tion of wealth, and lowers the standard of profits. This 
 is the only mischievous consequence, provided the profits 
 received by government are applied in liquidation of 
 other necessary expenditures of the state ; but if the 
 profits are distributed, then we should add to the evil 
 just pointed out, the pecuniary loss incident to, and the 
 corruption engendered by their collection and re-distri- 
 bution. 
 
 Should an infant State commit the opposite error of 
 establishing the .prices of unappropriated lands below the 
 natural or true value, these consequences would not, of 
 course, ensue ; but it would thereby expose itself to 
 others, perhaps equally injurious. The prices, or the 
 mean price, could not be established much below the 
 cost of producing perfect titles without abandoning the 
 principle of relative value, which, as we have seen, can- 
 not be done without disregarding the plainest dictates of 
 justice. The establishment of a low minimum would, 
 however, produce a mean price below the mean cost, 
 without departing from the rule of selling the different 
 parcels at prices proportionate to the value of each. 
 Assuming the erroneous policy not to transcend these 
 limits, what would be its consequences 1 It could not be 
 productive of benefits, since what individuals gained by 
 the low price, the state would loose. That loss the 
 state would be compelled to make good by taxation ; 
 and since the natural laws of trade make an equal 
 distribution of the benefits, and of the burdens, award- 
 
186 RlttHT OTT PROPF.RTY TN T.AND. [PART II. 
 
 ing to every individual equal portions of each, it follows 
 that no one would gain, but, on the contrary, there would 
 be an aggregate loss equal to the expenses incurred 
 in the collection of the taxes necessary to make good the 
 loss on laud. To the extent of that loss, the policy 
 under consideration would prove injurious to the politi- 
 cal society adopting it. It would also be productive of 
 another mischievous consequence far more detrimental to 
 the general welfare. By establishing the prices of public 
 lands below their true value, it would cause an unnatural 
 dispersion of population, and thus diminish the benefits 
 derivable from commerce and the arts, and from associa- 
 ted efforts. 
 
 Such are the evils consequent upon the policy of sel- 
 ling the public lands, either above or below their true 
 value, when adopted and persisted in from the beginning. 
 The act of changing from the true policy to a false one, 
 is not only productive of similar consequences, but liable 
 to another objection of a more direct and serious kind ; 
 namely, it benefits one class at the expense of another. 
 Let our government, for example, change the minimum 
 price from l T Yo to 2 T W per acre, thereby enhancing the 
 price of all public lands one hundred per cent. What 
 would be the effects of the change on existing interests 1 It 
 could not fail to enhance, and that promptly, the market 
 value of all lands owned by individuals, to the same 
 extent namely, $1 T \\ per acre, for the poorest quality, 
 and in that proportion for the better qualities. As, for 
 example, when the law gives to an individual or corpor- 
 ate body, the exclusive privilege of producing any given 
 article of wealth, the market value of the existing supply 
 of that article at once conforms to the arbitrary price 
 established by the monopolist, and for the obvious rea- 
 son, that purchasers will take the one and leave the other. 
 
CHAP III.] RIGHT OF PROPERTY IN LAND. 187 
 
 so long as there is a perceptible difference in favor of 
 either. And it is precisely thus in relation to the market 
 price of lands. Government possesses the monopoly, 
 it is invested with the exclusive privilege of furnishing 
 new lands to meet the augmentation of demand ; conse- 
 quently, when government raises the price of fresh sup- 
 plies, the demand is thereby concentrated on the existing 
 supply, and thus the market value of private lands is 
 forthwith expanded, and made to conform to the arbitrary 
 standard established by the government valuation. It is 
 clear, therefore, that the change referred to, must inevita- 
 bly produce the effect stated, namely, a corresponding 
 enhancement in the price of all private lands. We 
 might now advance a step, and proceed to deduce the 
 first consequences of this effect, then move onward to 
 the next link in the series, and so on, until all the impor- 
 tant consequences of the measure were traced out ; but 
 since the argument would be similar to others already 
 advanced, it is not deemed necessary to present it. I 
 shall therefore merely state the ulterior consequences, 
 and refer to the chapter on the Natural Laws of Trade 
 for evidence of their soundness. 
 
 The first effect of the enhancement of the market 
 value of private lands (by the means referred to) would 
 be to enrich the proprietors of land, to the extent of the 
 enhancement, and, in the same degree, to impoverish the 
 proprietors of industry and of productive capital. The 
 next consequences would be to diminish the relative quan- 
 tity of land productively employed, and to augment the 
 revenue of a given quantity of it ; to lessen the rewards 
 of industry and the profits of capital, and, at the same 
 time, to retard the increase of both. And the ultimate 
 economic consequence would be, to lower the national 
 standard of profits. Therefore, our government could 
 
188 RIGHT OF PROPERTY IN LAND. [PART. II. 
 
 not enhance the present price of public lands without 
 rendering itself liable to the double charge of injustice 
 and folly. The injustice of the measure would consist 
 in an arbitrary transfer of a portion of the wealth of the 
 landless to land-owners, its folly, in lowering the 
 standard of profits, diminishing the aggregate of wealth, 
 and thereby impairing the general prosperity. 
 
 Should a change take place in the opposite direction, 
 (which, it may be remarked, there is far more reason to ap- 
 prehend,) the consequences would be no less in conflict with 
 the principles of justice. To reduce the price of 
 government lands, would lessen in an equal degree, the 
 market value of all other lands, and thereby impoverish 
 the proprietors of land and enrich the proprietors of 
 industry and capital. This measure is also liable to the 
 objections, that its adoption would render necessary 
 increased taxation with its attendant evils, and that it 
 would still farther disperse our already scattered popula- 
 tion. 
 
 From the foregoing considerations, we derive the follow- 
 ing general conclusions, namely : That society has not 
 trespassed on the rights of any one of its members, in 
 establishing the right of property in land ; that the con- 
 tract by which it has been accomplished, (taking the 
 existing land system of the United States as the model or 
 standard) conforms to the principles of justice, and to 
 the maxim of political equality ; and that the policy is 
 dictated by true wisdom, since it is fraught with momen- 
 tous benefits to all who choose to partake of them, and 
 is unproductive of injury to any. 
 
 Therefore, if the policy is liable to well founded objec- 
 tions, they must be urged, not against the right to ac- 
 quire and to hold landed property, but against that other 
 feature of the agreement, which establishes the right of 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 189 
 
 bequest and inheritance. This feature is quite distinct 
 from the former, and if it should be found obnoxious to 
 the charge of injustice, or of folly, it might be abrogated 
 without disturbing the other provisions of the contract. 
 But I apprehend that the right to convey, bequeath and 
 inherit, will be found as free from valid objections, and 
 as conducive to the well-being of society, as the right to 
 acquire and hold. 
 
 We have seen that the right of property in land is no 
 less legitimate, while it is more productive of benefits, than 
 the right of property in capital, or in the products of 
 industry and capital ; and it is known that capital and 
 land are in many cases so intimately blended as to be 
 inseparable. Therefore, if the right of bequest and 
 inheritance be abolished in the one case, it must neces- 
 sarily be abolished in the others also. In that event, all 
 private property, upon the death of its respective owners, 
 would become public property, subject to the guardian- 
 ship of the State, where it would be either consumed by 
 the hungry cormorants in office or distributed amongst 
 the members of the community. At]least this'would be the 
 best policy that could be adopted under the circumstances, 
 since the only alternative presented would be the aban- 
 donment of property left without a legal owner, to indis- 
 criminate and unrestrained plunder. But whatever 
 might be the policy adopted, in substitution of the right 
 to bequeath and inherit, it needs no argument to prove 
 that property would vanish like dew before the sun. 
 The social recognition and guaranty of that right is one 
 of the indispensable supports of social wealth. Remove it, 
 and the immense fabric will fall to the ground. Abolish 
 the right to bequeath, and you take away the strongest 
 incentive to the acquisition and preservation of wealth : 
 you relax the springs of Industry by destroying its strong- 
 
 17 
 
190 RIGHT OF PROPERTY IN LAND. [PART II, 
 
 est motive of action, and by awakening the expectation 
 of social contributions ; and you sharpen the teeth of 
 com sumption, and unchain its appetite, by completely 
 unnerving its antagonist, economy. In a word, you first 
 seal up the fountains of wealth, and then invite the speedy 
 consumption of their existing products. 
 
 It is deemed unnecessary to say more in vindication of 
 this section of the right of property in land. Its wisdom 
 or utility, as evinced by its fruits, is second only to that of 
 the other section of the same right ; and its freedom from 
 mischievous properties, as well as its conformity with the 
 principle of political equality, may be inferred from the 
 considerations advanced in reference to the right to acquire 
 and hold landed property. It is believed to be entirely 
 free from valid objections of any character whatever. 
 But if the fact be otherwise, if the right to bequeath and 
 inherit land is productive of injuries of any kind, they 
 are too trifling to be perceived in presence of its rich and 
 abounding advantages. Nevertheless, it has been found 
 necessary in this instance, as it has in the establishment 
 of most other legal rights, to confine its exercise within 
 prescribed limits. Different states, in founding the 
 right of bequest, have given to it different boundaries ; 
 but it is believed that all have either qualified or excluded 
 primogeniture and entailment. In view of the proneness 
 of richly endowed heirs to sacrifice their patrimonies at 
 the shrine of luxury or of vice, wealthy testators have 
 ever been desirous of adopting that expedient, as a means 
 of securing to their posterity the full benefits of their 
 bequests. This desire is natural, and even laudable ; but 
 society has deemed its unrestrained gratification incom- 
 patible with the public good. Governments have accord- 
 ingly interposed restraints, and we are now to inquire 
 whether they have been moved thereto by good and suffi- 
 cient reasons. 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 191 
 
 By the terms primogeniture and entailment, I mean 
 the bequest of landed estates to the eldest son and his 
 heirs forever, which of course confers on each recipient 
 nothing more than the right of use, or what is usually 
 termed a life-estate. Bequests of this character, there- 
 fore, virtually destroy the right of property in land. 
 The testator loans his estate, first to A during his life- 
 time, then to B for the same term, then to C, and so on 
 in perpetuity ; but the absolute right of property therein, 
 dies when he dies, and is buried with him. Thus the 
 dead are the owners, the living mere tenants. When 
 viewed in this light, the act of simple entailment chal- 
 lenges the condemnation rather than the favor of society ; 
 and when we reflect that the impossibility of dividing 
 and sub-dividing estates amongst all the descendants, 
 compels this class of testators to combine the odious 
 prerogative of primogeniture, which is a direct violation 
 of the principle of equality, we cannot fail to perceive 
 that the system is grossly iniquitous. How- mani- 
 festly unjust, for example, for the land owners of 
 one generation to ordain, and for the state to confirm 
 the decree, that all landed property shall descend the 
 tide of time in a few streams of a given volume, never 
 to be divided, nor turned aside to irrigate and fertilize 
 the toil of the coming millions ; that however indus- 
 trious, skilful and frugal the offshoots of those lines 
 may be, they can never hope to participate in the revenue 
 flowing from that which nature intended for the benefit 
 of all. And how pernicious the social consequences of 
 this policy, since its inevitable tendencies are, to foist 
 on society a permanent landed aristocracy, to classify 
 the community, to render the few permantly rich and 
 powerful and the many hopeless poor and ignorant, and 
 thus to augment the sum of human misery. For these 
 
192 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 reasons, the laws of society should not only exclude 
 primogeniture and entailment from the right of bequest, 
 but they should prohibit their exercise. The true policy 
 is, to maintain the right of property absolute in the 
 living, by discountenancing every attempt on the part of 
 individuals to impair it by the exercise of posthumous 
 control over their estates. Most nations have establish- 
 ed the right of bequest with larger boundaries than here 
 indicated^ They have included, with less or more of 
 limitations, the privileges of primogeniture and entail- 
 ment ; and the consequences, as exemplified in the exist- 
 ing condition of Great Britain, where the limitations are 
 less stringent than in most other nations, are sueh 
 as to stamp the policy as directly opposed to the 
 dictates of justice, equality, and the public good. The 
 United States, however, under the guidance of those 
 singularly gifted and pure-minded men who laid the 
 foundations of our government, have adopted the true 
 policy, -by so curtailing these privileges as to virtually 
 exclude them from the right of bequest. 
 
 In eon/elusion, it may be remarked that if the views> 
 advanced in this chapter are sound, then our government 
 machine, in its section devoted to the establishment and 
 maintenance of the right of property in land, is all that 
 can be desired. It needs no emendation ; any attempt 
 to render it more perfect would be very likely to in- 
 crease its defects. Under that system, proprietors of the 
 soil acquire their rights therein, either by purchase in an 
 open market, or by inheritance ; and if by the latter, we 
 find, by tracing backwards the lines of descent, that 
 these lands were originally obtained by purchase also. 
 Therefore, it may be said that no one can become the owner 
 of land without giving an equivalent in exchange for it ; 
 and since the value given must have resulted either from 
 the industry of the purchaser, or from the productive 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. . 193 
 
 employment of his pre-acquired capital or land, or partly 
 from each of these sources, it follows that the land pur- 
 chased is as rightfully his as the value produced by his 
 own hands. The right therefore is legitimate ; and we 
 have seen that the method adopted by our government 
 for conferring it on individuals, accords so perfectly with 
 the principles of justice and political equality that no 
 portion of the present or of future generations can with 
 reason complain of it. The prices charged for our 
 public lands are barely sufficient to cover the expenses 
 incurred in furnishing perfect titles. Virtually, there- 
 fore, the government holds them in trust as the birth- 
 right, not only of such of our own citizens as may desire 
 to occupy them, but of those who choose to come here 
 from other countries as well ; and, unless the existing 
 policy be changed, they will remain a birthright to mil- 
 lions yet unborn. And when the period shall have arrived 
 in which all the lands are appropriated and occupied, 
 our exclusion of primogeniture and entailment from the 
 right of bequest, will, by maintaining the alienability 
 of the right of property in land, cause this right to 
 still rest on the broad basis of equality, and thus effec- 
 tually protect the landless from the injustice and the 
 hopeless poverty entailed upon them wherever the oppo- 
 site policy prevails. 
 
 Before closing this chapter, it may be well to notice a 
 doctrine recently started, and now advocated with much 
 zeal in certain quarters namely : That the public 
 lands should be sold to actual settlers only. The argu- 
 ments advanced in favor of this limitation, appear to be 
 based on the asssumption that the right of exclusive 
 property in land is less valid, and its unconditional 
 enforcement less just, than where the right appertains 
 to artificial products. Land being a free gift of na- 
 17* 
 
194 RIGHT OF PROPERTY IN LAND. [PART IT. 
 
 ture, and evidently designed for the benefit of all, it is 
 maintained that it is a violation of natural right to confer 
 exclusive titles thereto, (even upon the payment of a 
 fair consideration) on those who purchase with the design? 
 of withholding it for a season from productive employ- 
 ment, because society is thereby deprived of the benefits 
 derivable from its service. This reasoning is plausible 
 but fallacious. The premises are true, but it is hoped 
 that arguments already adduced have sufficiently shown 
 that they do not warrant the conclusion. Indeed, the 
 present chapter, as well as the two which precede it, have 
 been written to little purpose if they have failed to demon- 
 strate the utter falsity of that conclusion. There is, 
 however, a more valid objection to the sale of public 
 lands to others than actual settlers, which might be 
 urged in favor of the proposed limitation. It is this : 
 That most of that traffic is unproductive of value in 
 other words, pure gambling. When, for example, an 
 individual buys government land ? not with the intention 
 of distribution, nor of immediate or prospective occu- 
 pancy, but with the single purpose of holding it for a 
 rise, it is clear that the transaction does not come within 
 the legitimate limits of commerce or any other depart- 
 ment of production, because no augmentation of real 
 value ensues : what the individual gains, the government 
 loses, or vice versa. In fact, it is a virtual wager be- 
 tween the two : the individual bets that the market value 
 of the land will increase more rapidly than interest will 
 accumulate on the purchase money, and the government 
 bets that it will not. It is probable that much the larger 
 portion of the sales which the proposed limitation is 
 designed to suppress, are of this character. Another 
 well founded objection to the existing system is, its ten- 
 dencies to dispersion. Non-residents purchase lands, and 
 
CHAP. III.] RIGHT OP PROPERTY IN LAND. 195 
 
 either -withhold them from market or demand prices 
 above the current rate, which often compels the actual 
 settler to leave broad tracts of uncultivated lands in his 
 rear, and, hermit-like, to choose his residence in the 
 wilds of nature, remote from his fellow men. These are 
 legitimate arguments in favor of the policy under con- 
 sideration, and, although entitled to less weight than 
 might be inferred from their simple statement, they 
 would warrant the change proposed, but for the fact that 
 other considerations of far weightier import forbid it. 
 
 That the evijs just referred to are not of a serious kind, 
 may be readily shown. Observation teaches that purely 
 speculative purchases of the national domain, are mostly 
 confined to periods in which the gambling propensity of 
 man is, by expansions of the currency and other incen- 
 tives, so strongly stimulated as to pervade every ram- 
 ification of commerce; and that even those who enter 
 into such speculations, in these seasons of general delusion, 
 are very willing to abandon them without profit, the 
 moment the intoxication passes off. The fact could not 
 well be otherwise, for speculations of this character must, 
 as a general rule, result unprofitably. We have seen that 
 the market value of land can increase no faster than cap- 
 ital or population ; we know that money, at the usual 
 rate of interest, will double itself in ten years, and 
 we know that it requires twenty-three years to double 
 our prolific population, even with the aid of immi- 
 gration. Hence, money at interest will more than 
 quadruple in the time required for unemployed land to 
 double its market value. It is to be noticed, however, 
 that the population on our western borders, where the 
 public lands speculated in are to be found, increases more 
 rapidly than that of the Union at large. In some of 
 the territories and newly admitted states, it has doubled 
 
196 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 in even a shorter period than ten years. But it must be 
 remembered that the value of capital is mainly reflected 
 on the identical land with which it concurs productively 
 the weaker or less valuable rays only, reaching the 
 uncultivated lands in its vicinity ; and therefore, that 
 lands held by forestallers, or non-residents, cannot in- 
 crease in market value in a ratio equal to that with which 
 the surrounding population and capital augments. It would 
 probably be a liberal estimate to regard the mean expan- 
 sion of the market value of such lands, as equal to the 
 mean rate of increase of the population of the Union 
 say, three per. cent, per annum. Thus it appears that 
 observation, experience and theory, concur in proving the 
 traffic unprofitable, and only entered into by a few mis- 
 taken votaries, except in seasons of commercial mad- 
 ness. Occasionally, it is true, some fortunate hit in the 
 purchase of public lands, like that of the lucky num- 
 bers in a lottery, rewards the adventurer with a rich 
 harvest of profits, but in both cases the odds are greatly 
 against him. It may be said, therefore, that the social 
 evils which the proposed limitation is calculated to sup- 
 press, are neither abounding nor aggravated. 
 
 Let us now glance at the considerations which forbid 
 the change. In the first place, it may not be amiss to 
 remark, that inasmuch as land is legitimate property 
 there being, as we have seen, no well grounded econ- 
 omic distinction between it and any other form of 
 social wealth it is evident that the reasons urged in 
 favor of limiting its commercial freedom, may be applied 
 with equal propriety and force to all other kinds of pro- 
 perty. When a warehouse or dwelling changes owners, 
 the purchaser is at liberty to choose what disposition he 
 will make of it ; he may either occupy it himself or let 
 it to others, or he may appropriate it to idleness. A 
 
CHAP. III.] RIGHT OF PROPERTY IN LAND. 197 
 
 proposition to deprive him of that freedom of choice, by 
 restricting him to occupancy, would be justly regarded 
 as an absurd and unwarrantable attempt to abridge 
 individual rights ; and yet this proposition is almost 
 identical with the one we are considering, and which is 
 now pressed upon our National Legislature with some 
 prospects of its adoption. Again : The restriction asked 
 for, would be a direct violation of the principles of jus- 
 tice and equality. The national domain belongs to the 
 people at large ; it is a vast undivided property in which 
 each citizen has an equal interest, and to which no indi- 
 vidual or class can rightfully present superior claims or 
 preferences. Now, by attaching to sales, the condi- 
 tion of immediate occupancy, a large portion of the com- 
 munity would be virtually excluded both from the traffic 
 inj>ublic lands, and from all direct benefits derivable from 
 them, because many who possess the ability to purchase, 
 and desire to do so, either as an investment or with the 
 view of future occupancy, may be altogether unable to 
 comply with this condition. They would thus be deprived 
 of their relative rights, and excluded from a legitimate 
 traffic, while both would be monopolized by those who 
 happened to possess the ability to comply with the unjust 
 condition, a large proportion of whom are foreigners. 
 If the restriction could be made to exclude none others 
 than speculators and forestallers, it would be well enough ; 
 but this is impracticable. Purchases for investment, or 
 for future occupancy, are as proper as those made by 
 actual settlers ; and how is it possible to distinguish 
 between these and purchases made in the spirit of gamb- 
 ling 1 In order to do so, it would be necessary for 
 government to resort to the expedient of demanding from 
 each purchaser a declaration of motives. This demand, 
 at best offensive and unwarrantable, would be rendered 
 
198 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 odious by the accustomed insolence of the subordinate 
 agents of government. Freemen would not tolerate its 
 enforcement, nor would the expedient be competent to 
 attain the end in view, if submitted to. Motives are not 
 easily ascertained ; besides, they are often indefinite. An 
 individual, for instance, may purchase government land 
 without having determined whether he will re-sell it, or 
 hold it as an investment or for future occupancy : his 
 choice will be determined by future circumstances. And 
 if he has formed a distinct purpose, and buys with a 
 definite intention as to appropriation, he will not be over 
 scrupulous in the means employed to conceal that inten- 
 tion from the government official. These considerations 
 clearly warrant the assertion, that gambling in the 
 national domain cannot be suppressed without excluding 
 from the right of purchase those who desire to make 
 legitimate investments therein ; which exclusion, as we 
 have just seen, would be violative of the rule of right, 
 as well as of the principle of equality ; and hence, would 
 produce mischiefs of far greater magnitude than those 
 which it would be competent to suppress. The proposed 
 restriction should not therefore be adopted. 
 
199 
 
 CHAPTER iv. 
 
 OF THE REGULATION OF COMMERCE ; AND OF TAXATION. 
 
 SECTION 1. 
 General Remarks. 
 
 In blending the consideration of two governmental 
 duties so distinct as those which form the title to this 
 chapter, I may perhaps be charged with confusing my 
 subject by an unnatural union of its separate parts. A 
 moment's reflection, however, will convince the reader 
 that the course I have chosen is rendered necessary by 
 the prevailing policy of legislators in reference to com- 
 merce and taxation. That policy unites these two func- 
 tions of government, and aims to compass the ends of 
 both by means of a single law, or a single class of laws. 
 That the regulation of commerce and taxation are, 
 naturally, as distinct and dissimilar as any other two of 
 the prerogatives of government, and that the practice of 
 blending them in legislation is attended with mischievous 
 consequences, I readily admit ; but since almost every ex- 
 isting revenue law designedly conflicts with the natural laws 
 of trade, and thus interferes with the operations of com- 
 merce, it becomes our duty to consider the two subjects 
 together, in order to determine the qualities and test the 
 wisdom of these double edged laws. 
 
200 REGULATION OF COMMERCE. [PART 11. 
 
 Commerce, as I have in a former chapter, is an 
 expedient of extraordinary productiveness ; it has greatly 
 enlarged the volume of wealth and widened the circle 
 of human enjoyments. But for the expedient of ex- 
 change, each individual or family would be com- 
 pelled to labor with tools of its own construction, 
 and confine its consumptions to the identical articles 
 produced by the service of its own industry, capital and 
 land. Consequently, in the absence of all forms and 
 degrees of commerce, no one, however wealthy, could 
 obtain, of consumable products, a variety equal to that 
 now enjoyed by the day laborer, unless he understood 
 and practiced almost every vocation in the whole cata- 
 logue of productive processes, from the simplest branch 
 of agriculture, up to the highest department of art ; 
 and even then, he would be compelled to forego the use 
 of agricultural products not adapted to his soil and cli- 
 mate. Commerce, by executing the interchange of 
 commodities, has so completely removed these hindrances 
 to production, that every variety of soil and climate, 
 every degree of muscular strength and artistic skill, and 
 every form of productive capital, may now be exclusively 
 employed in whatever division or subdivision of produc- 
 tion their respective qualifications best fit them for. 
 
 It may be well to remark that the term Commerce is 
 here used in its widest signification, in which it includes 
 all exchanges of property, of whatever kind or quantity. 
 In proceeding to a closer examination of its properties, it 
 will be well to divide it into two parts, namely, domestic 
 and foreign, or internal and external. Convenience and 
 custom both point to this division, and we shall find that 
 it is demanded by a substantial difference in the attri- 
 butes of the two sections. 
 
 Commerce, in the aggregate, performs two important 
 
CHAP. IV.] REGULATION OF COMMERCE. 201 
 
 offices of utility : it increases and diversifies the pro- 
 ducts of industry and capital, in permitting the division 
 of employments ; and it augments the products of land, 
 by allowing each division of the earth's surface to be 
 exclusively appropriated to the growth of such useful 
 plants as are best adapted to its soil and climate. The 
 first of these offices is mainly performed by domestic or 
 internal commerce. It enables the community to divide 
 the field of production into seven grand departments 
 namely, agriculture, manufactures, commerce, the me- 
 chanic arts, navigation, the learned professions, and 
 unskilled manual labor. These departments it also ena- 
 bles them to sub-divide to whatever extent convenience 
 or profit dictate. That this extent is well nigh unlimi- 
 ted, is evidenced by the fact that it has been found expe- 
 dient and profitable to divide the process of making a 
 single pin, into not less than ten distinct mechanical 
 arts. By means of these divisions, every individual is 
 enabled to devote himself exclusively to whatever occu- 
 pation his natural endowments, his education, or his 
 tastes, may indicate as most appropriate. 
 
 The other useful attribute of commerce is chiefly con- 
 fined to its foreign or external section. It may be illus- 
 trated thus : In temperate latitudes, with appropriate 
 soil, wheat, rye, oats, barley and potatoes, are produced 
 with facility ; within the tropics, sugar, coffee, cotton, 
 rice and spices are produced with equal ease ; but, with 
 the aid of the utmost skill and labor, neither zone can 
 be made to produce, in perfection and abundance, the 
 spontaneous products of the other. For instance, in 
 climates congenial to the growth of wheat, coffee must be 
 grown in a conservatory, if at all, while in latitudes 
 where coffee and spices are indeginous, wheat can only be 
 grown in a refrigerator. The votaries of international 
 18 
 
202 REGULATION OF COMMERCE. [PART II. 
 
 commerce, however, with suitable appliances and ma- 
 chinery such, for example, as ships, steamboats, ware- 
 houses and money stand ready to carry the surplus pro- 
 ducts of the temperate zones to the tropics, and, after 
 effecting the exchange, to bring thence the surplus products 
 of the latter. Now, it is manifest that after paying the 
 merchant his fitting reward for this service, the produ- 
 cers of both latitudes are still gainers by the exchange, 
 that, with the same expenditure of productive service, 
 they will more abundantly supply their wants by this 
 method, than by attempting to produce for themselves 
 things which nature and circumstances prohibit ; for, if 
 the fact were otherwise, self-interest would promptly 
 interdict the traffic. Wants and desires are thus supplied, 
 through the agency of foreign commerce, not only in 
 greater abundance,, but in largely increased variety. If 
 any individual, either rich or poor, will take a survey of 
 the articles he is in the habit of using or consuming daily, 
 he will find that a large proportion of them would be 
 altogether beyond his reach but for this arm of com- 
 merce. And if we include the advantages received from 
 the other arm of commerce, in permitting the division 
 of employments at home, we may safely say that the 
 adoption of this expedient has so elevated the condition 
 of mankind, that the enjoyments of the least favored 
 portion of those who partake of its advantages, greatly 
 surpass all that it would be possible for the most fortu- 
 nate and gifted to procure without it. 
 
 Such being the noble benefits conferred by Commerce, 
 it is eminently proper that government should aid its 
 development, and facilitate its operations, so far as it 
 can do so without injustice to other interests. It may 
 rightfully do this, by establishing uniform standards of 
 weights, measures, and money ; by prescribing simple 
 
CHAP. IV.] REGULATION OF COMMERCE. 203 
 
 and concise rules by which the parties exchanging pro- 
 ducts shall be governed ; by establishing rules in relation 
 to the receipt, transportation and delivery of goods ; by 
 enacting penal laws for the suppression of commercial 
 frauds, and for the punishment of those who commit 
 them ; by establishing light-houses and preparing cor- 
 rect charts of the ocean ; and by protecting external 
 commerce from spoliation. These simple acts, as it 
 appears to me, constitute about the whole duty of govern- 
 ment touching this department of production. Within 
 these limits, I regard the regulation of commerce us a 
 legitimate prerogative of government, because, to this 
 extent it is salutary, and may be exercised without injury 
 to other interests. But legislators, like other men, 
 delight in the exercise of authority ; and unless restrain- 
 ed by public opinion or fundamental laws, they are 
 prone to go beyond their appropriate sphere. This they 
 have done in reference to commerce especially its 
 external section, to a most pernicious extent in all 
 ages and in all countries. Finding no constitutional 
 restriction, or other limitation of their right to reg- 
 ulate commerce, their authority has run riot, and led 
 to the adoption of commercial codes as absurd and mis- 
 chievous as the most capricious tyranny could suggest. 
 In apparent ignorance of the fact that the undisturbed 
 action of the natural laws of trade never fails to direct 
 commerce into the most productive channels, and to 
 arrest it at the exact limits of profitable exchange, they 
 have beset it with bounties, duties, restrictions, prohibi- 
 tions and international treaties, to such a degree, that a 
 large per-centage of its benefits are lost to mankind ; for 
 it is manifest, that every interference of this character 
 tends, either to lessen the extent of commerce or to divert 
 it from channels of greater productiveness to those of less. 
 
204 REGULATION OF COMMERCE. [PART II. 
 
 Why is it that all governments persist in a policy so 
 mistaken and absurd as that which wantonly trifles with 
 commerce, and mars its utility by keeping manacles upon 
 it ? Is it feared that its freedom would produce a sur- 
 feit, by the abundance of its benefits" ? The apprehen- 
 sion is neither felt nor expressed. Is it supposed that 
 commerce diminishes profits 1 There are none so 
 ignorant as to entertain this belief. Then why, I ask 
 again, mar its blessings by legal restrictions and prohibi- 
 tions ? The answer usually given by those who advo- 
 cate this policy is, that governments are better qualified 
 than individuals for judging correctly as to the direction 
 and extent to which commerce may be carried with 
 advantage to the community ; and that restrictions on 
 international commerce are called for by the necessity of 
 countervailing the policy of other governments, as well 
 as by the necessity of protecting home products and pro- 
 ductive agents, from foreign competition. These appear 
 to be the chief grounds on which the restrictive policy 
 is based ; for, upon examining the arguments advanced 
 in its favor, it will be found that they generally resolve 
 themselves into efforts to establish the truth of the fore- 
 going propositions. The propositions are, nevertheless, 
 unsound. They are based in error, not in truth, nor can 
 all the arguments w r hich it is possible to frame, invest 
 them with that attribute. The restrictive policy is hurtful, 
 not beneficial ; it is productive of injuries, but not of 
 blessings of any kind. It is the offspring of ignorance 
 and fraud. Some of its advocates are prompted by 
 erroneous views of the subject, others by the fraudulent 
 design of using it as a means of promoting their own 
 interest, or that of a class, at the expense of the whole. 
 The truth of these assertions, it will be my effort to 
 demonstrate in the progress of this chapter, and to show 
 
CHAP. IV.] TAXATION. 205 
 
 also, that it is the true policy of each nation, regard- 
 less of the course pursued by all others, to leave its 
 foreign, as well as its domestic commerce^ entirely free 
 from restraint or interferences of any kind, except those 
 simple and salutary regulations already named. 
 
 Next as to taxation. No one will deny to government 
 the right to assess and collect taxes sufficient to keep 
 itself in motion. So long as human nature remains what 
 it now is, so long civil governments will be useful in 
 suppressing that which is evil in its social manifes- 
 tations, and of developing that which is good ; and 
 so long as civil governments continue necessary or 
 useful, so long it will be proper to invest them with this 
 attribute of self-preservation ; for, without the power of 
 raising revenue, they could not exist for a single day. 
 To this extent, then, taxation is clearly a legitimate pre- 
 rogative of government. It is generally conceded also, 
 that government should support the infirm, unfriended 
 poor, and place within the reach of all classes a given 
 amount of education ; which offices, it could not perform 
 in the absence of a corresponding power of taxation. 
 These offices of government have not been well defined, 
 nor do their practical illustrations conform to any uni- 
 form rules, or established maxims ; but to whatever 
 extent a nation may deem it wise to exercise them, they 
 clearly carry with them their correlative, taxation. In 
 fact, every authorized function or prescribed duty of 
 government, carries with it the right of taxation, so far 
 as revenue may be necessary to its efficient performance. 
 Within these limits, the right is useful and its exercise 
 necessary ; but beyond them, taxation becomes an usur- 
 pation instead of a right. 
 
 In exercising this prerogative, legislators have diver- 
 ged at least as widely from the true policy, as they have 
 18* 
 
206 TAXATION. [PART n. 
 
 in the regulation of commerce. Instead of confining 
 themselves to the simple duty of first determining the 
 actual amount of revenue required for the legitimate 
 purposes of government, next assessing the taxes on pro- 
 perty in the ratio of its market value, and then collect- 
 ing them by the most direct, safe and economical method 
 they have commonly aimed to reach the pockets of 
 the people by indirection, and to abstract a portion of 
 their contents by stealth, regardless of the inequality 
 and the wasteful extravagance perpetrated by that sys- 
 tem. This is usually done by taxing, in various ways, 
 consumable commodities. The most notable method of 
 applying this species of taxation, and indeed about 
 the only one adopted by the United States government, 
 is by what are termed tariff laws, that is, by levying 
 duties on imports. This is the revenue edge of the 
 laws by which commerce is "regulated," or rather, 
 crippled ; for it is thereby driven from its paths of greatest 
 productiveness, and compelled to work out its ends limp- 
 ingly in those of less. I shall aim, in the ensuing sections, 
 to demonstrate the impolicy of this class of laws, whether 
 regarded as a system of raising revenue, or as a means of 
 so regulating international commerce as to countervail 
 the policy of other nations and, at the same time, to 
 protect home interests from foreign competition. I shall 
 aim to show also, that the true and only just system of 
 taxation is, to assess a uniform per-centage on the mar- 
 ket value of all property, wherever found, and to enforce 
 payment from its possessors, without stopping to inquire 
 whether they are owners or merely temporary holders. 
 Beside the error of legislators as to the method of 
 taxation, they not unfrequently raise revenue for impro- 
 per purposes, as, for example, when it is raised for the 
 payment of bounties on particular products, or on ex- 
 
CHAP. IV.] TAXATION. 207 
 
 ports ; for the payment of undeserved pensions ; for the 
 propagation and support of specific religious doctrines 
 and forms of worship ; for re-distribution, &c. Taxes 
 for all such purposes are illegitimate : their enforcement 
 violates the principle of justice by compelling one class 
 to pay tribute to another, to say nothing of the loss 
 incurred in the collection and disbursement. 
 
 These general remarks will prepare us for a more 
 detailed consideration of the prevailing policy of govern- 
 ments especially that of our own as connected with 
 taxation and commerce ; a consideration demanded by 
 the practical importance of the subject, as well as 
 by the existence of conflicting theories in regard to it. 
 
 SECTION II. 
 
 Of tariff laws, considered as a means of raising re- 
 venue ; and of direct taxation. The merits of the 
 two methods compared. 
 
 In a former chapter, I have endeavored to point out 
 the proper purposes, ends and aims of civil government. 
 Whatever may be thought of the theory there advanced, 
 all will admit that to establish justice between man and 
 man, by protecting each and all in their rights of person 
 and property, is not only a rightful prerogative of govern- 
 ment, but one of the most important of the ends which 
 it was instituted to secure. We may say, therefore, 
 that the government which neglects this duty, or fails in 
 its performance, is too weak or insufficient for the attain- 
 ment of its most beneficit end. If it goes beyond 
 this, and needlessly restrains the freedom of the citizen or 
 subject, it is too despotic. But what shall we say of the 
 
208 TAXATION. [PART. n. 
 
 government which not only fails to establish justice, but 
 designedly establishes injustice, by laws of its own enact- 
 ment? What opprobious epithet will sufficiently express 
 the infamous character of such laws ? To say that such 
 a government is a curse instead of a blessing, and that 
 such laws are flagrant manifestations of usurped power, 
 is but a mild expression of their true character. And 
 yet it will appear, when we come to examine the protec- 
 tive feature of tariff laws, that they not only do legalize 
 injustice, by compelling one classnbf citizens to pay 
 tribute to another class, but that they are purposely 
 intended to produce that effect. Nor is their revenue 
 feature entirely free from the same weighty objection. 
 
 Government being instituted for the purpose of secur- 
 ing the right of property, as well as for the protection* of 
 the person, it is but just that property should bear a 
 portion of its . Burthens. It should, as it seems to me, 
 contribute the whole amount of taxes, because the person 
 must bear the hazards of war, and is required to render, 
 gratuitously, numerous services in support of government , 
 such, for instance, as military trainings, jury duty, 
 and the various duties incident to the elective franchise ; 
 which last, if performed with intelligence and fidelity, 
 consume much time and. mental service. The person, in 
 fact, gives all that it has to give, the requisite amount of 
 physical and mental service ; so capital should contribute 
 that which it is alone capable of contributing, the necessary 
 amount of pecuniary means. The tariff method of rais- 
 ing revenue, rudely violates this just basis of taxation, 
 by predicating its assessments upon consumptions instead 
 of capital. 
 
 That tariff laws and other indirect methods of taxation 
 have been resorted to by most of the nations of Europe, 
 is not surprising. Their governments are of the aristo- 
 
 v 'tlt^ >ec*vri 
 Q+CftuM'- 
 
CHAP. IV. J TAXATION. 209 
 
 cratic type that is, the few rule and the many obey; 
 and whenever this is the case, we must expect to see the 
 selfish principle of human nature manifest itself in acts 
 of injustice and tyranny. Accordingly, we find the 
 governing class exacting from the governed, not only 
 the chief portion of the taxes, but onerous contribu- 
 tions for their own peculiar benefit. They do this, not 
 boldly and openly for they fear the physical power of 
 those whom they thus wrong but by the stealthy methods 
 referred to, in order to hide from their subjects the 
 extent to which they are fleeced. And we republicans, 
 who claim to be equals, all sovereigns as well as citizens, 
 have followed their pernicious example ; in doing which, 
 we have been guilty of the folly of resorting to deception - 
 to wrong ourselves ! We tamely submit to unnecessary 
 and unequal taxes by indirection, which we would indig- 
 nantly refuse to contribute if openly demanded of us. 
 It would be an amusing scene, I fancy, to witness the tax 
 gatherer, on his tour of collection, under such a change in 
 our system as would require the payment of all our taxes, 
 direct and indirect, open and covert, to be made in direct '- 
 annual instalments, the assessments meanwhile retain- 
 ing their present unjust and unequal distribution. The 
 amount we now pay, when brought in its annual aggregate 
 thus distinctly to our senses, would be startling. To 
 those of small incomes with large families, it would be 
 absolutely astounding. They would be likely at first to 
 consider the officer insincere in his demands, but finding 
 him to persist, they would probably regard him as either 
 a madman or robber, and treat him as such. And yet it 
 would be quite as easy for them to pay their taxes in 
 that shape as in the present. 
 
 I have made a rough estimate of the gross amount of 
 taxes paid by the people of the United States including 
 
 * - ' 
 
210 TAXATION. [PART. n. 
 
 therein, the taxes paid to manufacturers in the shape of 
 increased prices received for their goods in conse- 
 quence of the protection afforded them by the duties 
 charged upon imports, and those paid in the shape of 
 losses on the bills of broken and discredited banks for 
 the privilege of using paper money, as well as the legi- 
 timate taxes for town, county, state and national pur- 
 poses and I find that the annual aggregate will, by an 
 estimate more likely to fall below than to exceed the 
 actual amount paid, reach the prodigous sum of $310,- 
 000,000, or about $1,000,000 per day. Counting the 
 number of taxable citizens at three millions, the average 
 for each is $103 per annum, or 33 cents per day ; so 
 that if the taxes fell on industry alone, they would absorb 
 at least one-third of its gross products. This statement 
 is astounding, but nevertheless true. The subject de- 
 mands investigation ; our present methods of raising 
 revenue urgently require the pruning-knife of reform, to 
 lop off the execresencies which have swollen the mass of 
 our takes to this frightful amount. As before remarked,the 
 great error, if not the only one committed by our govern- 
 ment in this respect is, in raising revenue from imports. 
 Let us then proceed to point out the mischievous con- 
 sequences of that policy. 
 
 In order to do this and at the same time demonstrate 
 the superiority of direct taxation, we will examine the 
 practical operation of each of these methods of raising 
 revenue, and compare their merits when tested by the 
 principles of equality and economy. Fortunately, we 
 have good data to guide us in this investigation, since, 
 while the general government practices the one method, 
 some of the states practice the other. In the first place, 
 let us see how they compare in point of economy. 
 
 We pay in custom dues an annual average 
 of, say ' $25,000,000 
 
CHAP. IV.j TAXATION. 211 
 
 We pay to the importer, say 15 per cent, 
 profit on this sum, for it is well known that 
 the merchant predicates his profits upon the 
 whole cost of his goods upon the duties 
 and charges, as well as upon the prime 
 cost ; 3,750,000 
 
 We pay to the jobbing merchant, say 
 10 per cent, profit on these two sums 2,875,000 
 
 We pay to the retailer, say 25 per cent, 
 profit on these three sums. . 7,906,250 
 
 $39,531,250 
 
 We have here an aggregate of $39,531,250 of taxes, 
 paid by the consumers of foreign goods, of which the 
 government receives but $25,000,000 ; and from this 
 sum must be deducted all the expenses incurred in its 
 collection. These include, all the rent paid for the use 
 of custom houses and government warehouses, together 
 with interest on the cost of those owned by the govern- 
 ment ; the salaries of the collectors of customs, and of the 
 army of subordinate officers ; and the expenses incident 
 to the marine revenue service. These, taken together, 
 cannot be short of $2,500,000 per annum. This leaves 
 the net receipts of government $22,500,000, which is but 
 little more than half of the gross amount contributed ; 
 or, to state the matter more definitely, revenue is collect- 
 ed from the people, by the tariff method, at an expense 
 of 77 per cent, on the net amount received by govern- 
 ment. I have purposely excluded from this estimate, 
 the immense tribute which these laws compel the con- 
 sumers of protected domestic products to pay to their 
 producers, because the contrast will be found striking 
 enough without it; and for the additional reason, that this 
 tribute will be the prominent subject of our next sec- 
 
212 TAXATION. [PART IT. 
 
 tion. But it may be well to state in this place, that the 
 late Secretary of the Treasury, after an elaborate 
 examination of the question, has estimated the amount 
 of tribute thus paid, under the tariff of 1842, at not 
 less than $100,000,000 annually. 
 
 We find, then, that the tariff system of taxation has 
 not the merit of economy to recommend it. Now let us 
 look at this aspect of its proposed substitute, direct tax- 
 ation. A few years since, the State of New York, find- 
 ing that she needed additional revenue, levied what was 
 called " the Mill Tax ;" that is, her citizens were re- 
 quired to contribute one mill of taxes for every dollar of 
 capital or property that they possessed. This tax pro- 
 duced an aggregate of $600,000. The assessment and 
 collection of this amount of revenue, cost the state a 
 sum not exceeding $12,000, or two per cent on the 
 amount collected, which is 75 per cent, cheaper than the 
 tariff method. And there is no obstacle which need 
 prevent the general government from adopting the same 
 plan. It is perfectly feasible, and the transition 
 easy. For example, the same officers who now assess 
 and collect the township, county, and state taxes, in the 
 several states, could assess and collect this also. It 
 could be accomplished without the employment of a 
 single additional officer, and at an expense not exceeding 
 two per cent. In order to secure safety and economy, 
 as well as an equitable distribution, the general govern- 
 ment should apportion the tax among the several states, 
 in the ratio of property, or what amounts to about the 
 same thing, in the ratio of population, and require each 
 state to furnish its quota. The states would, as they 
 now do in the management of their own taxes, apportion 
 it among their respective counties, requiring each to 
 furnish its share ; and the counties would apportion it 
 
CHAP. IV.] TAXATION. 213 
 
 among the townships. Thus the federal government 
 would look to the states, the states to the counties, the 
 counties to the towns, and the towns to the people, which 
 would give to the latter the right of choosing, through 
 their respective township organizations, their own rules of 
 assessment and their own collecting officers. When we 
 consider how directly their personal interests would be 
 involved in the matter, we cannot doubt that they 
 would exercise this right with a single eye to economy 
 and fairness. Nor would they fail, when thus dir- 
 ectly called upon to furnish their quota of taxes, to 
 scrutinize the purposes for which the taxes were asked, 
 with the determination of putting their veto on such as 
 they found to be unnecessary. In this way many of the 
 existing abuses of the taxing power would be suppressed. 
 This system of applying the direct method of taxa- 
 tion, has been adopted by most of the states, coun- 
 ties and towns of the United States, and with the hap- 
 piest results. It has proved to be not only just and 
 economical, but eminently secure, for we rarely hear 
 of a defaulting officer except in large cities. Within 
 these, occasional defalcations on the part of tax collec- 
 tors take place, but they are clearly attributable to the 
 unwise policy, which usually prevails in cities, of con- 
 ferring these offices, as well as most others, on political 
 partizans. In the appointment of custom house officers, 
 applicants of the character just named seem to receive an 
 invariable preference over all others. From the collec- 
 tors down to the tide-waiters inclusive, we find them to 
 be, with rare exceptions, political partizans of the least 
 scrupulous kind. When weconsider further that the peo- 
 ple have no voice in their appointment, that the collec- 
 tors of customs and their principal subordinates are all 
 selected bythe President of the United States, who can- 
 19 
 
214 TAXATION. [PART. n. 
 
 not be expected to have any personal knowledge of their 
 charactersor their qualifications, we cannot be surprised 
 at the number and magnitude of the defalcations which 
 hare occurred among them ; since, from such materials 
 thus chosen, we could expect no other result. 
 
 We find, then, that the direct method of taxation is 
 vastly superior to the tariff form of the indirect method, 
 not only in point of economy, but equally so as regards 
 security in the processes of collection and transmission 
 to the disbursing officers* According to the estimate 
 just presented, the gross cost of collecting our national 
 revenue by the existing method, exceeds $17,000,000 
 per annum, while that which would attend its collection 
 by the method proposed, would fall short of $500,000, 
 showing a difference in favor of the latter of $16,500,- 
 000 per annum. To this sum we may safely add $500,000 
 for the excess of losses by the former, making the whole 
 difference in favor of the latter, in an economical point 
 of view, not less than seventeen millions of dollars annu- 
 ally. This immense sum the people of the United 
 States would save yearly, in diminished taxation, by the 
 abandonment of tariff laws and the substitution of a 
 judicious system of direct taxation. 
 
 Let us now examine the two methods in another of 
 their aspects, and determine their relative merits when 
 tested by another principle the principle of justice. 
 Which is the most equitable as a rule of assessment ? 
 In other other words, which causes the distribution of 
 the burdens of government to correspond most nearly 
 with the distribution of its benefits 1 
 
 I am entirely satisfied, for my own part, that the rule 
 of assessment already indicated is the true and only 
 just one ; namely, that taxes should be assessed exclu- 
 sively on property, and not at all on persons, except a* 
 
CHAP. IV.J TAXATION. 215 
 
 the representatives of the property which they respec- 
 tively hold. But lest others should douht the equity of 
 this rule, I will take another position, the justice of 
 which no one will dispute. It is this : that taxes should, 
 at the least, so far correspond with the degree of wealth 
 as to compel the rich to pay more than the poor. 
 When we reflect that the protection of property is 
 one of the most useful functions of government, and 
 that the peformance of this function constitutes its 
 most onerous duty, we cannot but admit the justice 
 of requiring property to bear at least a portion of 
 itsburdens. The only way in which it can be made 
 to do so is by taxing it, through its different holders, at a 
 rate which shall be uniform when compared with the 
 amount or value of the property held by each respec- 
 tively. According to our first rule of assessment, the 
 distribution of taxes should be in the exact ratio of the 
 distribution of property. But if it be considered right, 
 in view of the fact that government protects persons 
 as well as property, to compel persons to bear not only 
 the whole of its physical and mental burdens, but a 
 share of its pecuniary burdens also, then this portion 
 should be assessed on persons, in the form of a per capita 
 or poll tax, and the balance distributed in the ratio 
 of the distribution of property. Under this rule, 
 therefore, taxation would bear, not an exact but an 
 approximate proportion to the amount of property held ; 
 which, it will be perceived, is in accordance with our 
 second position, or formula of assessment, namely : the 
 greater the wealth of the individual, the higher should 
 be his taxes. 
 
 It will not be denied, I think, that one or the other of 
 these rules is the correct one ; nor will it be denied that 
 direct taxation is the only practicable method of enforcing 
 
216 TAXATION. [PART u. 
 
 either. By this method we may readily enforce which- 
 ever rule is deemed most politic and just, as is proved by 
 the experience of our several states, some of which have 
 adopted the first, others the second, and in no case has it 
 been found difficult to enforce either. It must be acknowl- 
 edged, however, that our state governments, in framing 
 their rules of assessment, have generally committed one 
 important error. Mistaking mortgages, notes of hand, 
 and other representations of property for property itself, 
 they have classed them as such, and required that they, as 
 well asthe property they represent, should be taxed ; con- 
 sequently, all property that is either incumbered, loaned, 
 or in any manner held by others than its actual owners, is 
 taxed double. This error is probably the joint effect of 
 two causes. It must be attributed in part to a miscon- 
 ception of the nature of property, but mainly, I appre- 
 hend, to the desire of taxing the owners of property 
 rather than its indebted possessors. The desire is laud- 
 able, but the expedient resorted to for securing its 
 object' is about as ineffectual as I have shown it to be 
 unjust. Wealth which consists in the ownership of pro- 
 perty held by others, or in claims of any kind against 
 others, is easily hidden, and the knowledge of its posses- 
 sion in a great measure withheld from the agents of 
 taxation, in consequence of which it has been found 
 utterly impossible in practice, to tax it with any degree 
 of uniformity. The more conscientious of its holders 
 are compelled to pay on the full amount held, while the 
 less scrupulous escape either a part or the whole. The 
 true policy is to tax, in the ration of its market value, 
 real property only (not its shadows or representations) 
 and to enforce payment from its holders. By this simple 
 rule, not only all property would be taxed, and taxed 
 equally, but the taxes would be paid either directly or indir- 
 
CHAP, IV.] TAXATION. 117 
 
 ectly by the actual owners. Where the owner held his 
 property in possession he would of course pay the taxes 
 directly ; where he had let or loaned it to others, the 
 lessees or borrowers would pay less for its use, by an 
 amount equal to the taxes demanded of them, than they 
 would do if the proprietor himself were required to pay 
 the taxes ; from which it will be seen that the latter would 
 be compelled to pay them indirectly. Thus the owners of 
 leased property, mortgages, notes of hand, book accounts, 
 joint stock shares, and, in fact, every form of representa- 
 tive property (except public securities these being ghosts 
 of departed property rather than representations of that 
 which really exists,) would be reached by the taxing [power, 
 through the indebted holders of property itself ; so that 
 the ultimate distribution of taxes, by the rule given, 
 would correspond with the actual, not the apparent dis- 
 tribution of wealth. 
 
 This then is the perfect rule of assessment, and direct 
 taxation the true method of enforcing it. Their joint 
 results are precisely those which every honest legislator 
 should aim at, because, in addition to their superior 
 economy and safety, they distribute the burdens of 
 government in exact proportion to the benefits conferred 
 by it. This principle commends itself not less by its 
 expediency than by its perfect equity ; since it is at least 
 as easy for the wealthy to contribute a given per- 
 centage of their capital as it is for the poor to con- 
 tribute a like per-centage of theirs. The rich may be 
 less willing to part with it, and, as a general rule, are 
 80, I believe ; but it does not in truth inconvenience them 
 BO much. 
 
 Our tariff method of taxation entirely disregards this 
 manifestly just principle, substituting for it. as a rule 
 of assessment, the amount of consumptions, which 
 19* 
 
218 TAXATION. [PART ir. 
 
 compels us to pay, not in proportion to the benefits 
 received, nor in the ratio of our means of payment, but 
 according to the number of mouths we have to feed and 
 bodies to clothe. The practical operation of this often 
 is, to tax the poor higher than the rich ; for it were easy 
 to demonstrate, if the notoriety of the fact did not pre- 
 clude the necessity, that there are large numbers of our 
 population, whose only wealth consists of a numerous 
 progeny entirely dependent upon their daily earnings for 
 support, who contribute more to the revenue of the 
 federal government than do an equal number which 
 might be selected from the wealthiest class of our citi- 
 zens. How manifestly unjust! He who has millions in 
 property for the protection of which he looks to govern- 
 ment, pays less towards the support of that government 
 than does the pennyless day-laborer ! He who is better 
 able to contribute his thousands of dollars than the poor 
 man is to contribute one, in reality pays less ! Surely, 
 a method of taxation which operates thus inequitably, 
 which thus favors the rich and oppresses the poor, must 
 be alike impolitic and unjust. I am aware that the 
 attempt has often been made to obviate these objections 
 by placing the highest duties upon luxuries, with the use 
 of which the poor may dispense ; but it has invariably 
 failed in practice, because, while it placed them beyond 
 the reach of the poor, it also deterred the rich from their 
 use, and thus failed to produce the needful revenue. Be- 
 sides, it is not republican thus to classify society, to de- 
 grade the poor by artificially raising the price of certain 
 articles above their means of purchase : their unfortunate 
 condition sufficiently circumscribes the circle of their en- 
 joyments, without the aid of any such surreptitious de- 
 privations on the part of their government. Our present 
 tariff has not the poor merit of attempting this means of 
 
CHAP. IV. J TAXATION. 219 
 
 compelling the rich to pay higher taxes than the poor, for 
 its variations from a horizontal line of duties are gradu- 
 ated with an eye to revenue, and to enlarged protection to a 
 few pet interests, rather than with the design of favoring 
 the poor. And as relates to the tariff of 1842, it would 
 seem to have been framed with the express design of 
 oppressing the poor, since, by the contrivance called 
 minimums, it taxed the coarser and cheaper fabrics, 
 which the poor are constrained to use, much higher in 
 proportion to their value than it did the more costly 
 fabrics consumed by the rich. 
 
 The wasteful extravagance of this method of raising 
 revenue, combined with the glaring injustice of its rule 
 of assessment, would seem to be enough to insure its 
 general condemnation and instant abandonment. If 
 judged solely by its revenue merits, such would certainly 
 be its fate ; but it happens to be endowed with another 
 attribute which, although equally mischievous, finds 
 many interested friends. I of course refer to Protection. 
 This excites the cupidity of the favored classes, and 
 leads them to ply with unwearied assiduity, every art and 
 argument at their command calculated to mislead public 
 opinion. Thus far they have partially succeeded. They 
 have enveloped the subject in a cloud of sophistry so thick 
 that the minds of a majority of the community have .not 
 yet been able to recognize the true character of protec- 
 tion. Many, however, have succeeded in looking di- 
 rectly through the deceptive mantle wherewith this policy 
 has been clothed by its interested friends, and they 
 have discovered that it has not the semblance of justice 
 or wisdom about it ; that while it utterly fails to pro- 
 duce benefits it is fruitful of injuries ; that, instead of 
 counterbalancing the evils incident to the revenue feature 
 of tariff laws, it aggravates them by the infliction of 
 
 " V^Vv^ 
 
 I 
 
 
220 RIGHT OF PROPERTY IN LAND. [PART II. 
 
 others of a still more hurtful kind, as will be shown in the 
 ensuing section. 
 
 Another objection to the tariff method of raising 
 revenue, is the uncertainty of its amount. It is ever 
 fluctuating with the ebb and flow of commerce, giving in 
 prosperous seasons much more of revenue than the govern- 
 ment requires, which necessarily leads to extravagance 
 and corruption ; while in seasons of commercial depression 
 the revenue yielded is unequal to the wants of govern- 
 ment, which sends the latter into the market, a needy 
 borrower, at a time when it is most difficult to effect loans. 
 Direct taxation is free from these objections, since it 
 would enable the government at all times to collect the 
 precise amount of revenue required. Should objections 
 be urged against this method on the ground that it would 
 give the revenue, not in a continuous stream, as it should 
 do to meet the ever recurring wants of government, but 
 in annual instalments, it may be replied that this is not 
 an unavoidable consequence. It may be obviated in 
 various ways, one of which would be to have different 
 periods of payment for the different states. 
 
 There is yet another objection of great weight to our 
 tariff method of taxation. It is demoralizing. Expe- 
 rience has proved that executive patronage is a fruit- 
 ful source of corruption. This method of taxation 
 greatly enlarges that patronage, because it invests the 
 President with authority to appoint all the revenue offi- 
 cers, a power which the people would be careful to re- 
 serve to themselves under the direct method. It also 
 leads to the commission of frauds on the revenue by 
 means of smuggling, perjury, and other flagrant viola- 
 tions of law, all of which tend to lower our national 
 standard of morality, and in an equal degree to dimin- 
 ish our capacity for self-government. The direct method, 
 
 X \ -V*- 
 
 .^*l 
 
CHAP. IV.] TAXATION. 221 
 
 if carried out in accordance with the plan and rules 
 which I have indicated, would be altogether free from these 
 vicious consequences. *$w* v 
 
 We find then, #8-the general result of our examina- 
 tion and contrast, that direct taxation is, in every essen- 
 tial feature, vastly superior to our present method ; that 
 the former accords with justice, economy, and all the 
 other requirements of a sound policy, while the latter 
 violates every principle on which legislation should be 
 based. It must be owned, however, that notwithstanding 
 the weighty objections to the one, and the economy and 
 perfect fairness of the other, there are but few of 
 our citizens who are desirous of making the proposed 
 change. "Direct Taxation" is a phrase that grates 
 harshly on the nerves of all. Men start at its sound 
 as though it was potent in evil, something which had 
 once impressed them with deadly fear. They seem to 
 regard it as deeply imbued with the spirit of tyranny, to 
 say the least, if not as the most forbidding impersona- 
 tion of that monster. So unpopular is this method of 
 taxation, that an aspirant of public station or honors 
 would as soon think of committing high treason as to 
 propose or. advocate it ; and if his ambition were bound- 
 ed by the present he would be right, for that could not 
 more effectually destroy his present popularity. How 
 this extreme hatred of a policy so clearlv^right, has '/// 
 succeeded in taking such deep root in the public mind, it 
 is difficult to conceive ; for our people are proverbial for 
 their quickness to perceive and readiness to em-^ 
 brace whatever tends to promote their pecuniary inter-\ ' - 
 ests. Perhaps the phenomenon may be accounted for in' 
 part by the fact that the unjust manner in which we 
 were taxed by Great Britain, while yet her colonists, en- 
 gendered in the public mind a deep seated hatred of 
 
222 TAXATION. [PART n. 
 
 every form of taxation ; and the direct being its most 
 visible or sensible form, it has been mistaken for the 
 worL This impression was strengthened when the most 
 unpopular of our Presidents (the elder Adams) recom- 
 mended this policy, and when the opposing political party, 
 seizing the occasion to profit by public prejudice, repre- 
 sented it as the worst form of tyranny. But a more pro- 
 lific source of error on this subject, and one to which we 
 may safely attribute the continuance of the prejudice 
 against direct taxation, is to be found in the systematic 
 efforts of those profitin^fey the tribute incident to tariff 
 laws, to blind the public mind in reference to the true 
 merits of the two opposing methods of taxation. 
 
 Happily, for the cause justice and sound policy, a 
 purer light has at length dawned on this subject, a 
 light which is now reflected and shed abroad by numerous 
 advocates of commercial freedom. I have no fears but 
 the chemical ray, the ray of truth, will soon take root in 
 the public mind, and engender a fermentation which will 
 entirely divest it of protectionism and its kindred errors. 
 
 There are many other false methods of taxation 
 such as taxes on income, on production, on con- 
 tracts, and on communication. These and others of 
 like character, have long prevailed in Great Britain, and 
 many of them in most of the other nations of Europe ; 
 but since no one of them has been adopted to any con- 
 siderable extent in the United States, and since also, 
 there can be but one true method, which I have already 
 endeavored to point out, it appears to me quite useless to 
 detain the reader with an attempted exposition of the 
 objections to which those named above are respectively 
 liable. 
 
 
CHAP iv.] 223 
 
 SECTION 2. 
 
 Of tariff laws, considered as a means of regulating 
 commerce and production with special reference to 
 their internal consequences. 
 
 Having shown the impolicy of tariff laws, considered 
 simply as expedients of taxation, it now remains to 
 inquire whether their commercial attributes afford any 
 compensating benefits. 
 
 In entering upon this investigation, it is necessary that 
 we consider the commercial world as divided into national 
 sections, and the commodities consumed by each nation 
 as divided into two classes namely : the one consisting 
 of the commodities produced at home, the other of those 
 imported from abroad. Tariff laws subject the latter to 
 a tax from which the former are exempt. In doing this 
 they confer on the home producer an advantage over his 
 foreign competitor, which necessarily restrains external 
 commerce, and developes the home production of com- 
 modities similar to those which, but for these laws, would 
 be brought from abroad. It is conceded on all hands, 
 that these are the natural and unavoidable consequences 
 of the laws we are considering. In fact, the tariff or 
 restrictive policy has been established with the avowed 
 design of securing these ends. In the estimation of the 
 advocates of that policy in the United States, the 
 suppression of foreign commerce, and the stimulation 
 of feebler interests at home, are among the most useful 
 offices if not the most imperatice duties of government. 
 With the view of making converts to their theory, or 
 
224 PROTECTIVE TARIFFS. [PART II. 
 
 perhaps with the design of impressing on the minds of 
 others a conviction of their own sincerity, they have 
 christened the policy " Protection to home Industry and 
 home Products." The name is captivating, certainly, 
 but we shall find it to be altogether deceptive. 
 
 Such being the nature of the commercial attribute of 
 tariff laws, we will now proceed to consider it under the 
 name conferred upon it by its friends, though when 
 we come to understand its true character, we shall pro- 
 bably be inclined to give it a very different one. 
 
 There have been so many changes rung in favor 
 of protection, so much of art and sophistry employed 
 to hide its vicious consequences, and to magnify its 
 pretended advantages, that many have been brought to 
 regard it as the great panacea which is to cure all the 
 evils of the body politic. There is so little of truth in 
 these representations, and, in many cases, it is to be 
 feared, so little of honest conviction in the minds of 
 those who make them, that I feel eager to make an onset 
 at their idol, and to contribute my mite towards stripping 
 it of its disguises. 
 
 I will now proceed to analyze this boasted attribute of 
 tariff laws ; a task which is by no means difficult, because 
 we shall find that in its most complex form, it consists 
 of only two elemental parts namely, Injustice and 
 Folly ; while, in many cases, one or the other of these 
 is its only element. 
 
 Protection is simple, unmitigated injustice, when 
 it is conferred on an interest which does not need 
 its aid, on one that would exist and return remuner- 
 ating profits by virtue of its own unaided merits. Pro- 
 tection to such an interest is downright wrong. It robs 
 Peter, not to pay Paul, but to give to Jonathan. To 
 establish justice is one of the declared objects of our 
 
CHAP. IV.] PROTECTIVE TARIFFS. 225 
 
 government it is so written in the first line of the pre- 
 amble to our organic law ; and the sentiment is worthy 
 of standing as the fundamental maxim of all govern- 
 ments. This sort of protection shamelessly disregards 
 that maxim : for, in granting it, the government in effect 
 says to the consumers of the goods thus protected, c my 
 mandate is that you either forego the use of those com- 
 modities, or pay tribute to their producers, who, it is 
 true, are already realizing profits equal to yours, but my 
 will is that theirs be augmented and yours diminished.' 
 If we ask for an explanation of the motives which prompt 
 such wanton injustice, no better answer can be given 
 than that revenue is the object, injustice the incident. 
 This is the pretext, not the real motive, but if it were 
 the latter it would afford no justification, because the 
 objectionable incident may be readily avoided by chan- 
 ging the method of taxation. 
 
 I might here proceed to demonstrate that a large 
 share of the protection afforded by all tariff laws, 
 including our present revenue tariff as it is called, is of 
 the character just pointed out that is, sheer injustice ; 
 but it is unecessary, because it will be seen presently 
 that the other element of protection -is quite as bad nay 
 worse, for it is more enduring. The protection which 
 gives to those who do not need its aid, although it has 
 neither justice or wisdom about it, has one mitigatnig at- 
 tribute : it is short' lived. Home competition is its mor- 
 tal enemy ; it never fails to attack it, and sooner or later, 
 perhaps after its recipients have fattened upon the tribute 
 of a generation of consumers, is certain to kill it off. In 
 fact, it not unfrequently happens that the two combat- 
 ants are overtaken by the calamity which befel the Kill- 
 kenny cats they eat each other up ; or what amounts to 
 the same thing, the protection is annihilated by the 
 20 
 
226 PROTECTIVE TARIFFS. [PART II. 
 
 eagerness of those who compete for its bounties, while the 
 over production consequent thereon compels the latter to 
 disgorge the tribute which they had received, and with it 
 their legitimate wealth. The natural laws of trade are 
 paramount to human enactments ; and according to the 
 theory advanced in the first division of this treatise, the 
 oscillations of market prices, above and below the true 
 value, must, in all cases, ultimately bring about this 
 retributive justice and they do ; but their movements 
 are sometimes so tardy as to permit the well laden reci- 
 pients of tribute to retire with their plunder before resti- 
 tution is demanded, so that the avenging blow, instead of 
 falling upon them, strikes down the younger and less 
 favored portion of their elass. And this is the great 
 evil of the species of protection under consideration, as 
 I will now proceed to explain more fully. 
 
 We will suppose that the protection afforded to 
 the cotton manufacturing interest of the United States, 
 is of this character, or in other words, that its profits 
 would be remunerating without any protection. I 
 do not mean to say that such is the fact, though I 
 believe the assertion would be true ; I believe that a 
 full and fair estimate of the relative advantages posses- 
 sed by the American fabricant and his European 
 competitor, would show that the former are at least 
 equal to the latter, especially with respect to to the 
 American markets. The point, however, is immaterial, 
 since if the fact be otherwise, the protection afforded 
 that interest is of a still more objectionable character. 
 But it is necessary that we make the supposition in order 
 to illustrate this principle of protection. 
 
 Our present tariff levies a duty of 25 per cent on all 
 imported fabrics of cotton. This affords protection to 
 the home producer from foreign competition to that 
 
CHAP. IV.] PROTECTIVE TARIFFS. 227 
 
 extent; and since there is not produced a sufficiency of 
 American cotton goods to satisfy the demand of the home 
 market, their prices must necessarily be enhanced to the 
 full extent of the duties, because the foreign fabrics must 
 still be imported to make good the deficiency, and after 
 having paid the duty they must still be sold in competi- 
 tion with the domestic article. Where an actual compe- 
 tition exists in the sale of two commodities of like char- 
 acter, it is scarcely necessary to say that, in proportion 
 to their respective qualities or values, their prices must 
 be equivalent ; otherwise, the one would sell, the other 
 remain on hand. According to our supposition, this 
 degree of protection gives undue profits to that in- 
 terest ; these undue profits attract fresh votaries and 
 additional capital, until the production exceeds the 
 demand; then the price sinks below the remunera- 
 ting point, which consequence, in its turn, drives a portion 
 of the industry and capital from this into other pursuits, 
 and so on. But the vibrations of value in a depart- 
 ment of production like this, are very slow in their move- 
 ments. The interest is large and unwieldy ; its suc- 
 cessful prosecution requires large combinations of cap- 
 ital with but few proprietors ; it takes a long time 
 to prepare the mills and machinery; the prevailing 
 opinion that it would be unprofitable without pro- 
 tection from foreign competition, and the chance like 
 uncertainty of the future policy of our government in 
 this respect, render most capitalists exceedingly cautious 
 in making investments in it; the long time required, 
 even by those engaged in it, to ascertain whether its. 
 results are profitable or otherwise,. and the still greater 
 ignorance of others as to its true results : These 
 considerations, combined with the certainty of its disas- 
 trous isssie in periods of excessive competition, have 
 
228 PROTECTIVE TARIFES. [PART II. 
 
 retarded the naturally slow alternations of profits and 
 losses in this ponderous interest; but they will ulti- 
 mately occur in defiance of all obstacles. When need- 
 less protection is granted to a slow moving, unwieldy 
 interest like this, its tardy vibrations ripen the injustice 
 engendered by the grant, because it enables one genera- 
 tion of manufacturers to fatten upon the tribute of their 
 cotemporary consumers, while the next generation of con- 
 sumers grow rich upon the ruin of their cotemporary 
 manufacturers. Thus the wrong is accomplished before 
 the right interferes, the poison proves fatal before the 
 antidote is applied. 
 
 This species of protection, therefore, notwithstanding its 
 temporary character, metes out in practice about the 
 same amount of injustice that would flow from perman- 
 ent protection. They differ only in character, not in 
 degree ; the injustice of the former applying alternately 
 to two classes, that of the latter always to one. 
 
 Let us next examine the other aspect of protec- 
 tion. When laws are made to foster an interest upon 
 the development of which nature or circumstances have 
 staniptcd a prohibition, the tribute required and thus 
 given to support it, is, simply and wholly, an offering 
 at the shrine of folly. While it impoverishes the con- 
 tributor it does not enrich the receiver, but merely remun- 
 erates him for the productive service which he wastes by 
 misdirection. It is lost literally thrown away. It is 
 an unjust and foolish tax, extorted from every consumer 
 of the commodities thus produced ; and each contributor 
 might say of the recipient and say it with no less truth 
 than force he 
 
 " Robs me of that which not enriches him 
 And makes me poor indeed." 
 
 We have but few protected interests wholly of this 
 
CHAP. IV.J PROTECTIVE TARIFFS. 229 
 
 stamp possibly not one ; for the authors of the protec- 
 tive policy have been careful to administer it in doses so 
 large that it rarely fails to betray the features of its 
 other parent injustice. The sugar growing interest, 
 however, approaches it very nearly, and I am inclined 
 to believe that under the diminished protection of our 
 present tariff, it will be found altogether of this charac- 
 ter. Up to the year 1846, the cultivation of the sugar 
 cane in the United States was protected by a duty of 2| 
 cents per Ib. charged on all imported sugars. The tariff 
 of that year reduced the duty to 30 per cent, ad val. In 
 the West Indies we can buv sugars, equal in quality to 
 those produced in Louisiana, at 2 cents the Ib., and this 
 price is there remunerating, because the soil, the climate, 
 and the skill of the cultivators, all harmonize in their adap- 
 tation to its production, Not so, however, in Louisiana. 
 Adaptation of climate is there wanting, the plant being 
 a tender exotic, the life and value of which are both des- 
 troyed by the first frosts of autumn, provided they occur 
 before the plant matures, which often happens. In con- 
 sequence of this it requires 4 or 5 cents per Ib. to re- 
 munerate its producers. In other words, a given amount 
 of land, capital and industry, in the West Indies, will 
 produce 2 Ibs. of sugar, while a like amount in Louis- 
 iana will produce little more than one Ib. Therefore, 
 nearly one half of the services of all the land, capital 
 and industry, employed in that forced, hot-bed cultivation 
 in the United States a cultivation which flourishes, not 
 by the genial warmth of the sun of Heaven, but by the 
 artificial smiles and favors of a partial government, is un- 
 productive, absolutely thrown away and lost, unless that 
 interest is realizing undue profits. This, I think, is not 
 the case to any considerable extent, if at all ; for if we 
 take a number of years together on which to base an 
 20* 
 
230 PROTECTIVE TARIFFS. [PART IT. 
 
 estimate, we will find that the sugar growers as a class 
 have not been, even under a protection of 2| cents per 
 lb., much if any more prosperous than the cotton grow- 
 ers, nor has the market value of their lands, which are 
 admirably adapted to the growth of cotton, ranged much 
 higher than those employed in the cultivation of that 
 plant. Consequently, the diminished protection afforded 
 by the present tariff to the sugar interest, must leave the 
 business barely remunerative. 
 
 If these are the true results of experience and it is 
 within my personal knowledge that they are nearly so ; 
 if these are the only fruits that the Louisiania sugar 
 planters have gathered from their soil, when fertilized by 
 a stream of tribute so enriching that it nearly doubles 
 the market value of their crops, then they stamp protec- 
 tion to that interest with the character I have given it 
 an oblation to folly. For, in virtue of this protection, a 
 large amount of land, capital and industry, have been 
 directed into an employment so unnatural and so unpro- 
 ductive that their aggregate results are little more than 
 half sufficient to support those engaged in it, the other 
 portion being supplied from the surplus profits of other 
 branches of production, in the shape of tribute from 
 every consumer of sugar in the United States. The 
 protection to this interest is not of the alternating kind, 
 but permanent, that is, it will last as long as the law 
 which grants it, unless the production of sugar in the 
 United States should exceed the consumption, which is 
 not likely to occur ; for we have scarcely enough of soil 
 and climate adapted to the production of sugar (at best, 
 imperfectly adapted) to yield the quantity required for 
 home consumption, even if every acre of that soil should 
 be simultaneously cultivated. This, it is believed, is 
 the only productive interest of the United States, worthy 
 
CHAP. IT.] PROTECTIVE TARIFFS. 231 
 
 of notice, which is susceptible of permanent protection 
 by taxing imports, because, as it respects all others, 
 undue profits would altimately stimulate a production 
 beyond our own wants, and thereby neutralize the pro- 
 tection. If, however, we have other existing interests, 
 the development of which nature or circumstances had 
 interdicted, but which by the aid of protection have 
 been hatched out and sustained merely, without being 
 made to grow fat, they belong to this class. 
 
 But where the degree of protection is greater than 
 this ; where we find these offspring of folly not only fed 
 but clothed in golden garments, by means of the tri- 
 bute they receive from other interests, it is proof that 
 they belong to a third class, for they betray the features 
 of injustice as well as of folly : they are compounds of 
 the two elements of protection. The tribute received 
 by this class is divided between the interests and 
 the owners. The foolish portion being indispensable 
 to the continued existence of the former, is swallowed 
 up by it; the unjust portion passes into the hands of 
 the latter. In illustration of this truth, let us assume 
 that the sugar growing interest, under the tariff of 1842, 
 belonged to this class. It then received a protection 
 equal to 100 per cent. We will suppose that 50 
 per cent, would have sustained it, rendering its pro- 
 secution as profitable as the growing of cotton or any 
 other agricultural pursuit. If this supposition be true, 
 it follows that the tribute then received by that interest 
 in virtue of the tariff, was equally divided between the 
 recipients named above. Here then was a waste of one 
 fourth of the productive means expended in the cultivation 
 of su^ar in the United States, which was paid for, or 
 replaced, by one half of the tribute received from its 
 consumers, leaving the other half of the tribute to be 
 
232 PROTECTIVE TARIFFS. [PART II. 
 
 added to the already remunerating profits of its pro- 
 ducers. The one half was sacrificed at the shrine of 
 folly, and passed into a nonenity, while the other half 
 was transferred from its legitimate owners to legalized 
 robhers. 
 
 The friends of this policy maintain that our protected 
 interests are mainly of the second class, that the 
 tribute exacted from consumers is nearly all thrown 
 away. I think they are mistaken. A full knowledge 
 of the condition of the different interests would pro- 
 bably show that nearly all of them belong either to' the 
 first class or to the third, and that those which belong to 
 the latter partake much more of the nature of the first 
 class than of the second, in a word, that there is more 
 of knavery than of folly in the system. It matters but 
 little, however, to which class they belong, for they are 
 all bad, though I consider the first less objectionable 
 than either the second or the third. The first robs for 
 the sake of the plunder; the second destroys from sheer 
 wantonness or folly ; the third destroys for the sake of 
 picking up the fragments. I can see nothing to admire 
 in either. They are all detestable ; and when we reflect 
 that the revenue attributes of tariff laws are of a similar 
 character, we cannot doubt that every right minded 
 citizen, when he comes to understand the subject fully, 
 will raise his voice in favor of an entire abandonment of 
 the restrictive policy. 
 
 The foregoing analysis of protection is no fancy sketch. 
 Its repulsive features are neither magnified nor too 
 highly colored, nor does it possess any redeeming quali- 
 ties which have been overlooked or suppressed. Injus- 
 tice and folly are the only fruits which it is capable of 
 yielding. It is a hateful exotic, of transatlantic origin, 
 which should never have been engrafted on our laws. It . 
 
CHAP. IV.] PROTECTIVE TARIFFS. 233 
 
 is fertilized by the toil and tribute of every citizen, while 
 folly and the favored few who are able to take shelter 
 under its branches, are the only partakers of its fruit. 
 How strange that such a principle should have taken root 
 in a republic like this, where all laws are but the legalized 
 expression of the public will. That it should find favor 
 in Europe, where the few rule and the many obey, is not 
 surprising, because in the hands of the governing class 
 it is a potent engine to aid them in oppressing and rob- 
 bing the governed. But that we should have blindly 
 adopted it without discovering its antagonism to the 
 spirit of our political institutions ; that we should have 
 voluntarily fashioned w T ith our own hands a legal wrong 
 to rob ourselves, implies a delusion or, to speak more 
 plainly manifests a degree of ignorance on this sub- 
 ject which it is really mortifying to contemplate. The 
 masses of Europe are not chargeable with like folly. 
 Their masters perpetrate the wrong, and their submission 
 to it is a matter of necessity, from which there is no 
 escape except by revolution. In illustration of this fact, 
 let us briefly examine the practical operation of protec- 
 tion in Great Britain, and thus learn also, the motives 
 which have prompted that government to pursue this 
 policy. 
 
 .Those who have the right of voting for or otherwise 
 choosing their rulers, constitute the governing class in 
 all nations. In the United States this right is enjoyed 
 by nearly every adult male citizen. In Great Britain it 
 is in a great measure confined to the proprietors of the 
 soil, with many inequalities in the representation de- 
 signed to strengthen the influence of this favored class. 
 The result is, that, with the exception of a few represen- 
 tatives of cities and towns in the house of Commons, the 
 government is made up of the representatives of the 
 
234 PROTECTIVE TARIFFS. [PART II. 
 
 landed interest. Consequently, the landed proprietors 
 of Great Britain constitute the governing class, to which 
 all other classes and interests of that nation are subser- 
 vient. The men composing this class are not exempt 
 from the frailties and vices of human nature. They 
 love idleness and luxury, and they hate labor. They 
 are no further mindful of justice than to wear its man- 
 tle ; and finding that they have the power in their own 
 hands, they so shape their policy that others are com- 
 pelled to sow and reap while they enjoy the fruits. To 
 do this openly might stagger the fealty of their semi- 
 vassals ; hence the adoption of the ingenious device of 
 Protection. They first established laws of primogeni- 
 ture and entailment, by which the landed estates and 
 titles were handed down to the eldest sons of succeeding 
 generations. This rendered the aristocratic class per- 
 manent, and protected it from accidental interlopers. 
 They next gave a large bounty on the exportation of 
 agricultural products ; for at that period of the nation's 
 growth, protection to the landed interest by duties upon 
 imports would have been inoperative, because the pro- 
 ductions of their soil exceeded the home consumptions. 
 They were then exporters of agricultural products, not 
 importers. Consequently, the bounty on exports an- 
 swered the aim of the law-givers, for it enhanced the 
 price of agricultural products consumed at home, to the 
 full extent of the bounty paid on the few that were 
 exported. They continued this system for a long time, 
 probably until the tributary class saw through the dis- 
 guise, and, perceiving its unjustice, became restive under 
 it ; or perhaps until the increased density of population 
 compelled them to change the system. The govern- 
 ment then, in casting about for some other method 
 whereby it might better deceive the governed without 
 
CHAP. IV.] PROTECTIVE TARIFFS. 235 
 
 diminishing the amount of tribute extorted from them, 
 discovered that the growth of the nation had reached a 
 point where protection to the landed interest would be 
 secured by taxing imports, the population having become 
 so dense, and the manufacturing arts so far developed, 
 that the productions of their own soil were no longer 
 sufficient to supply the home demand. They then hit 
 upon a plan which answered their purpose much better, 
 and the injustice of which was so effectually disguised 
 that other interests did not for a long time perceive it, 
 but meekly c kissed the rod that scourged them ;' for, 
 by the plan adopted, all interests were ostensibly put 
 upon an equal footing, high duties being charged on all 
 imports on manufactured goods as well as on produc- 
 tions of the soil. But this sort of protection to British 
 manufacturers, like the protection of our tariffs to 
 American farmers, is a perfect mockery, because in both 
 cases they are exporting interests, and consequently 
 the home prices of their products are governed by the 
 prices current in foreign markets. The fact was not, 
 however, at first perceived by the tributary classes. 
 
 At the suggestion of Burke, to whom the British 
 aristocracy were greatly indebted for the happy thought, 
 they established the admirable " Sliding Scale" of du- 
 ties on imported bread stuffs. By that incompara- 
 ble contrivance, the landed interest government of 
 Great Britain was enabled to secure to itself and to 
 its constituents, tribute from the governed classes to 
 the precise extent of their ability to pay. For exam- 
 ple : If the prices of bread stuffs were low, the duty ran 
 up to prohibition; and, since they did not produce 
 enough for their own wants, the prices of the domes- 
 tic article must have promptly ascended the same scale. 
 When the latter got so high that starvation began to 
 
236 PROTECTIVE TARIFFS. [PART II. 
 
 pick off here and there a victim, the duty jumped sud- 
 denly down to the very bottom of the scale. Then 
 foreign corn rushed in, which, caused the price to descend 
 also, and thereby stopped the inroads of starvation. 
 Then the duty began to re-ascend the scale, with the price 
 cautiously following after it, until again frightened down 
 by starvation, and so on. The governing class thus 
 gathered in from the governed all the tribute they could 
 spare and yet survive : it robbed them of everything but 
 their life-blood. 
 
 Such has been, until very recently, the protective 
 policy of Great Britain. It was neither more nor less 
 than a skilful expedient of the governing class, or the 
 aristocracy, or the proprietors of the soil the terms are 
 synonymous for exacting tribute clandestinely from the 
 governed. The plan succeeded admirably. Unlike 
 most of the similar attempts that have been made by the 
 United States government, the protection to British 
 land-owners proved equal to the rate of duties charged 
 on imported agricultural products, and as permanent as 
 the law which granted it. These results were inevitable, 
 because the agricultural interest there was an importing, 
 not an exporting, interest. The products of the British 
 soil, stimulated and forced as they had been for a long 
 period by this partial monopoly of the home market, 
 were, nevertheless, unequal to the wants of their own 
 population ; and inasmuch as the quantity of land could 
 not, like the quantity of capital or of industry, be en- 
 larged by strengthening the demand, it follows that the 
 deficiency had to be supplied by importations from abroad. 
 These, after having paid the duty, had to be sold in com- 
 petition with the products of the British soil ; conse- 
 quently, the market value of the latter, as well as that 
 of the former, was enhanced to the full extent of the duty. 
 
CHAP. IV.] PROTECTIVE TARIFFS. 237 
 
 The protection thus afforded to the British land- 
 owners, together with the density of population in that 
 kingdom, carried up the annual rent of lands, in Eng- 
 land, to an average rate of not less than $20 per acre. 
 The tenantry have been enabled to pay this prodigious 
 rent, only by aid of the artificial price received for their 
 crops, and by confining their own consumptions within 
 the narrowest limits of absolute necessity. They have 
 had no participation in the benefits conferred on the 
 landed interest, but, on the contrary, have constituted 
 one section of the tributary class. Their industry and 
 capital, instead of being protected, have been exposed to 
 the full force of a home competition rendered doubly 
 intense by the tribute exacted from all capital and all 
 industrial interests, to pamper these lords of the soil. 
 
 The restrictive policy of Great Britain, then, whether, 
 we look at the motives or the results, presents features alto- 
 gether different from those of its namesake in the United 
 States. There, the policy was established with the two- 
 fold object of deception and plunder ; and such have 
 been its results, because the political institutions of that 
 nation, combined with a dense population, have favored the 
 unrighteous design. Here, it has been conceived in ignor- 
 ance prompted by injustice, and brought forth in folly. 
 
 The effects of this policy in Great Britain were so 
 injurious to the masses that they could not be expected 
 to remain passive under it any longer than they continued 
 ignorant of its real consequences ; and its disguises, 
 although wrought with exceeding skill, and supported by 
 specious arguments, were at length unraveled by scien- 
 tific inquirers. Practical men of business and politi- 
 tians next took up the subject, and arrayed themselves 
 in opposition to the policy. They formed themselves 
 into what they termed "the anti-corn-law league,' 'with 
 21 
 
238 PROTECTIVE TARIFFS. [PART II. 
 
 the avowed determination of persisting in agitation and 
 discussion until the last vestige of the policy should be 
 expunged. They soon made proselytes enough to awaken 
 the anxiety of government. The latter, ever watchful 
 of the interests and safety of its class, early discerned 
 the speck of danger ; and knowing full well that the 
 spirit and tendency of the protective policy could not 
 bear the light of reason and free discussion, nor stand 
 before the frowns of offended justice, it came forward 
 promptly, and met the movement with concessions. It 
 did this, if not before it was asked, at least much sooner 
 than was expected ; thus giving to a measure extorted 
 from the fears of the aristocracy, the appearance of a 
 cheerful and voluntary concession. By that slight mod- 
 ification of the corn-laws, the government hoped to break 
 the strength of the league, and to arrest the agitation oi 
 the subject. Its expectations were not realized, how- 
 ever. The concession checked the movement, but did 
 not stop it. After a slight pause it again broke out witl 
 an energy so intense that the government, deeming it im- 
 prudent to persist longer in a policy the injustice oi 
 which had become apparent to the meanest understand- 
 ing, gave an unwilling assent to the entire repeal of it:; 
 corn-laws. And the British aristocracy may considei 
 themselves fortunate in getting rid of the matter sc 
 easily, for it generally happens that the ultimate fruits 
 of an unjust policy are presented in bitterness to th< 
 lips of those who, for a time, enforced it to their owi 
 profit. 
 
 The British government still adheres to the tarii 
 policy, as a means of raising a portion of its revenue 
 and perhaps, also, in the vain hope of countervailing 
 the commercial policy of other nations ; but proteetioi 
 to pet interests at home no longer constitutes one of it 
 features. 
 
CHAP. IV.] 
 
 SECTION 3, 
 
 The same subject continued with special reference to 
 external or international consequences. 
 
 Thus far in my examination of the tariff policy of the 
 United States, and of Great Britain, I have confined my 
 attention to the direct consequences which each produces 
 at home. I have shown that duties on imports affect 
 injuriously the productiveness of the capital, industry 
 and land of the community wherein they are exacted, 
 besides wronging the many for the benefit of the few. 
 It now remains to trace out their external or interna- 
 tional consequences. If there are any useful properties 
 about them, they must be found here. 
 
 As before remarked, the advocates of the restrictive 
 policy maintain the necessity of commercial retaliation. 
 In other words, they maintain that when one nation 
 adopts the restrictive policy, it becomes necessary that 
 all others should .do the same thing, in order to coun- 
 tervail its effects on their commerce and industry. Why 
 so? In what manner do the duties on imports, or the 
 prohibitions established by one nation, affect the inter- 
 ests of others 1 The restrictionist replies and it is the 
 only plausible grounds of injury he can suggest c that 
 they either diminish or entirely cut off the market for 
 the exports of other nations ; that the market prices of 
 these exports are thereby depressed, both at home and 
 abroad ; and hence, that their producers are, in effect, com- 
 pelled to pay either a part or the whole of the duties.' 
 If this be so, if any portion of the duties charged by one 
 
240 RESTRAINTS ON [PART II. 
 
 nation on its imports from others, is in truth paid, either 
 directly or indirectly, by the foreign producers or owners, 
 it establishes the necessity of countervailing laws ; be- 
 cause it proves that the restrictive policy is an expedient 
 by which one nation may unlock the coffers of all others, 
 and rob them. Hence, all must turn robbers in self- 
 defence, or prohibit international commerce altogether. 
 
 This opinion I will examine somewhat closely. It is 
 widely entertained, and, if founded in truth, it de- 
 monstrates the necessity of tariff laws, notwithstanding 
 the serious objections to which they are liable in other 
 respects. If, on the contrary, the opinion is erroneous ; 
 if, as I will endeavor to show, it has not a particle of 
 reason or truth to support it, then we must conclude that 
 the whole restrictive policy is a compound of evils, and 
 that nothing but good could result from its abandonment. 
 We must conclude also, that isolated, single-handed 
 Free Trade is practicable, that our government, or 
 any other government, might safely abolish its tariff 
 laws without regard to the course pursued by all other 
 nations. 
 
 In order that my examination of the external effects 
 of tariff laws may partake more of the practical than 
 of the speculative, I will base my remarks on the 
 operations of our existing tariff. The first inquiry is, 
 do we, in virtue of our tariff, purchase from their foreign 
 producers or owners, the commodities constituting our " 
 imports, at cheaper rates than we could purchase them, 
 without it 7 In answering this question, I readily admit 
 that the charging of duties lessens the amount of impor- 
 tations. This may not be an invariable consequence,, 
 but it is a legitimate one ; because, in virtue of the 
 protection afforded by these duties to such of our home- 
 interests as come into competition with imports, their 
 
CHAP IV.] INTERNATIONAL COMMERCE. 241 
 
 productiveness is stimulated and increased, while the 
 gross amount of consumptions is diminished by the 
 enhancement of prices. The principle therefore is sound, 
 and I adopt it as such. This, then, is the general exter- 
 nal attribute of our tariff, and it is the only one belong- 
 ing to it that can have the remotest effect on prices in , 
 the foreign market. Will this disturb them ? Will it 
 depress them ? To determine these questions it will be 
 necessary to come down to particulars. We must take . 
 a single class of foreign commodities, or a single foreign 
 interest, examine the bearing of our tariff upon it, , 
 then apply the natural laws of trade, and from these , 
 premises deduce the ulterior consequences. 
 
 First, then, let us examine the effect of our tariff on 
 the price of sugars in the foreign market. It meets < 
 their importation into the United States with a high duty,* 
 say 30 per cent. It is not contended that we, in virtue of . 
 this duty, can go to the West Indies and buy sugars cheaper 
 than those who purchase for free markets. Therefore, 
 if our tariff depresses the price of sugar in any one 
 market, it does so in all, and equally in all. If the doc-, 
 trine of the restrictionists were true, it would prove that, 
 our tariff benefits all foreign consumers of sugar as much "7S" 
 as it does our own, and that the consumers of sugar every- . 
 where, owe lasting gratitude to Great Britain for having 
 taxed its importation so enormously. But let us return 
 to the main question : Does our tariff depress the price 
 of sugars in the foreign market ? When first established, 
 it must, by increasing the price in our markets, have 
 diminished the consumption in the United States, and 
 consequently the demand in the exporting markets. The 
 diminished demand must, at first, have caused an over 
 supply, and therefore a lower price in those markets. 
 The reduction of price renders the business unprofita- 
 
 ctftL 
 
242 RESTRAINTS ON [PART II. 
 
 ble, which drives a portion of the capital and industry 
 from the production of sugar into other parsuits. This, 
 in its turn, lessens the supply, and thereby enhances 
 the price, until it reaches a point nearly as far above the 
 natural standard as the tariff had at first driven it be- 
 low ; then fresh capital and industry return to its pro- 
 duction, and so on. Thus, every legal disturbance of 
 prices, which does not partake of the nature of mono- 
 poly, may be likened to a blow which knocks the pendu- 
 lum from its gravitating rest : both will vibrate, equally 
 on either side of the centre, until they again find their 
 natural position. We have only to admit that self- 
 interest presides over and directs the employment of the 
 productive forces, and there is no escape from this con- 
 clusion. 
 
 Again : We tax the woollen and cotton fabrics, impor- 
 ted from Great Britain, with a duty of 20 to 30 per cent. 
 Other nations may admit them free, or upon the pay- 
 ment of a much lighter duty than we charge. We can 
 buy them from the British manufacturers no cheaper 
 than they. But, by reason of our tariff, we buy from 
 them less of these articles, which diminishes the aggre- 
 gate demand for them, and hence, it is contended, 
 lowers their price. We will assume, for the purpose 
 of illustration, that our tariff lessens by 25 per cent., 
 our importations of these fabrics of Britain, and we 
 will suppose that we still take the 25th part of the 
 productions of her looms, which, by the way, is a 
 large estimate. Our tariff then cuts off or destroys, 
 one per cent, of the demand for cotton and woollen fa- 
 brics in the British market. If there should be no 
 other disturbing cause operating on that market at the 
 same time, it would be at first sensibly depressed even 
 by this pebble ; but it would be only for the moment. 
 
CHAP. IV. J INTERNATIONAL COMMERCE. 243 
 
 The manufacturers would at once shorten the per diem 
 time of running their machinery, this being their uni- 
 form method of meeting and counteracting every depres- 
 sion of the market ; for they dare not, it would seem, 
 lower the wages of the operatives for fear of producing 
 riots and the destruction of their mills. The supply is 
 thus diminished, the price enhanced, and the equilibrium 
 ultimately restored. Therefore, what we gain by the first 
 dip of prices below their natural level, we lose by their 
 ensuing elevation above it. It is thus with every other 
 class of imported commodities : we buy them no cheaper, 
 on the average, in consequence of our tariff. This fact 
 will be readily perceived, without farther illustration, by 
 all who coincide with the views which I have advanced 
 touching the laws of trade. There is then no virtue here. 
 But this does not entirely dispose of the question. 
 We must go one step farther in the investigation, before 
 we can determine the amount of foreign influence belong- 
 ing to our tariff. We have seen that the profits of pro- 
 duction bear an inverse ratio to the amount of capital 
 and industry, as compared with the quantity of land or 
 natural wealth, in other words, that profits are in 
 the inverse ratio of the density of population. Con- 
 sequently, every community or nation has a natural 
 standard of profits peculiar to itself. These standards 
 are established by the natural laws of trade, and grad- 
 uated to a scale which indicates the density of popula- 
 tion when estimated, not by the quantity of land, but by 
 its productive capacity, as compounded of its extent, fer- 
 tility, and other natural advantages. Where population 
 is dense in comparison with the amount of natural wealth 
 as in Great Britain and most other European states the 
 standard of profits is low ; where population is sparce 
 and natural wealth abundant, as in the United States, 
 
244 RESTRAINTS ON [PART II, 
 
 the standard of profits is high. The migration of cap- 
 ital and industry, from places where natural wealth is 
 relatively scarce to others where it is more abundant, 
 together with other natural causes, are slowly but surely 
 approximating, to a common standard, the profits of pro- 
 duction throughout the civilized world. At present 
 however, they are known to be very diverse, ranging in 
 the different nations from 2^ per cent, per annum to 6 
 per cent. Now it is obvious that there are only two 
 ways in which the various national standards of profit 
 can have any influence on each other namely : either 
 by the migration of industry and capital from one nation 
 to another, or by international commerce. That the 
 first has such an influence, that it tends to equalize pro- 
 fits in the different nations, is sufficiently clear ; but the 
 question we have now to determine is, whether interna- 
 tional commerce affects them, and if so, whether the 
 effects of tariff laws, on international commerce, tends to 
 increase or in any wise alter that influence 7 Or the 
 question may be stated more distinctly, thus : does inter- 
 national commerce affect the profits of production and if 
 so, what is the bearing of tariff laws on profits abroad ? 
 The first clause of the inquiry must be answered in the affir - 
 mative, for the general reasons already adduced in evi- 
 dence of the utility of this arm of commerce. Besides, 
 it is known that there are some nations of Europe which 
 could not support their present amount of population, 
 without exchanging with other nations the products of 
 art for those of the soil. Their profits are increased by 
 exchanging things which they can produce cheaper than 
 others for such things as others can produce cheaper than 
 they. The desire of enlarging profits is in fact the 
 mainspring of commerce, but for which desire it would 
 not exist. The extent to which exchanges can be made 
 
CHAP. IV.J INTERNATIONAL COMMERCE. 245 
 
 with profit, is the legitimate boundry of commerce : thus 
 far and no farther it would be carried, but for the foolish 
 restrictions that have been placed upon it. 
 
 In reference to the second division of the inquiry, it 
 is to be remarked that tariff laws (or to return to the 
 specific law under consideration,) our tariff in some 
 degree diminishes international commerce. It prevents 
 other nations from selling us as many of the things 
 which they can produce cheaper than we, and from 
 buying of us many of the things which we can produce 
 cheaper than they, as they would do but for the hin- 
 drances which it interposes. It therefore slightly "dimin- 
 ishes their profits. It does this by forcing from the 
 beating track to wealth, a small portion of their produc- 
 tive forces, diverting them into new channels less adapted 
 by nature and circumstances to their profitable employ- 
 ment ; from which it will be perceived that their profits 
 are diminished, not by lowering the market price of 
 their product s, but by enhancing the cost. Therefore, 
 while they are injured we are not benefited, for we can 
 buy their commodities no cheaper. The diversion of 
 the productive forces, and consequent diminution of pro- 
 fits, resulting to other nations from the effects of our 
 tariff, are so slight that they are neither seen nor felt 
 after the oscillations produced by the first shock have 
 subsided ; and when compared with the diversion and 
 consequent injury inflicted on our own productive interests, 
 they shrink into nothingness almost. The law under 
 consideration throws much of our industry and capital 
 off the track, and thereby lessens in a large degree 
 their productiveness, the loss of which is all our own, 
 because we are not only owners but underwriters, in- 
 asmuch as we comsume the commodities produced thus 
 in violation of the natural laws of trade. There is then 
 
240 RESTRAINTS ON [PART II. 
 
 no virtue here, unless the wasting much of our own pro- 
 tive energies for the sake of causing other nations to 
 waste a little of theirs may be regarded as such, and I 
 am unwilling to believe that the most ultra advocate of 
 retaliatory tariffs would so consider it. 
 
 But there is yet another important question connected 
 with this branch of our subject, and it is one the con- 
 sideration of which I approach with diffidence, not that 
 I entertain any doubts as to what should be the char- 
 acter and import of a legitimate answer to it, but be- 
 cause its truth lies buried so deep that it is to be feared 
 1 do not possess the requisite skill to bring it to the light. 
 Its nature and importance are shadowed forth in the 
 questions so frequently asked : What should we do with 
 all our agricultural products if we were to abandon the 
 policy of protecting our manufactures ? Where would 
 we find markets sufficient to absorb the whole of them ? 
 How should we obtain the means of paying for our im- 
 portations, which, under the Free Trade policy, would be 
 so greatly augmented 1 These are important questions 
 I admit, and such as require satisfactory answers. 
 They are based on the assumption that our tariff en- 
 j / \ hances the prices of our agricultural products both at home 
 and abroad ; or, what amounts to the same thing, that 
 its repeal would lessen those prices. They have nothing 
 else to support them. If, therefore, the assumption be 
 unsound, if it can be demonstrated that it has neither 
 reason nor truth to rest upon, and that, in point of fact, 
 while the tariff fails to enhance the prices of our agri- 
 cultural products, either at home or abroad, it actually 
 increases their cost then the questions will have recei- 
 ved satisfactory answers, and the last and deepest foun- 
 dation stone on which the whole restrictive policy has 
 been made to rest, will have been removed. 
 
CHAP. IV.] INTERNATIONAL COMMERCE. 147 
 
 Does our tariff enhance the prices, either at home or 
 abroad, of that portion of our agricultural products des- 
 tined or fitted for exportation 1 Let us examine this 
 question carefully, and with all fairness. The duty 
 charged on similar articles imported from abroad, is 
 inoperative of course, since there is no importation of 
 them except under an unnatural state of the market ; 
 nor would there be without the duty, because the agri- 
 cultural is our paramount or exporting interest. This 
 portion of our tariff is therefore a dead letter, a use- 
 less incumbrance on the statute-book, and was put therev^L 
 doubtless, for the sole purpose of blinding our agricul- 
 turists to the rank injustice done them by other por- 
 tions of the same law. I have already stated that the 
 foreign demand governs the home market price of expor- 
 table commodities, and the remark applies not only to 
 the portion actually exported, but to those consumed at 
 home, as well. This, as a general principle of trade, is 
 sufficiently familiar. Any one at all acquainted with the 
 practical operations of commerce, knows that, as relates 
 to this class of commodities, the foreign demand is the 
 controlling one, and that the home market prices of the 
 products of our soil (all, save sugar and wool of which 
 we consume more than we produce) usually conform to 
 their respective values in the foreign market. But we 
 must remember that the power of demand (whether 
 foreign or domestic) over prices, is not omnipotent. Un- 
 der the existing circumstances of a market its control 
 of prices will be absolute at any given moment ; over 
 those circumstances it has no control, for they are the 
 offspring of that primary law of prices which is the 
 joint efiect of the desire of happiness and the desire 
 of gain, and of which supply and demand are but 
 secondary agencies. For example : whenever the de- 
 
 A^ 
 
 <U J ^ 
 
248 RESTRAINTS ON [PART II. 
 
 mand, operating on the existing circumstances of a 
 market, brings the current price of a given commodity 
 either above or below its true value, self-interest, whose 
 slightest promptings are always obeyed, at once issues 
 her mandate that the circumstances be so changed as to 
 send back the price to its point of equilibrium, the true 
 value. In this process the desire of happiness, acting 
 on the supply, also concurs ; all of which has been suffi- 
 ciently illustrated in a former chapter. 
 
 We find then that the only permanent influence which 
 our tariff can possibly have on the prices of products 
 of our soil, must be in affecting either their foreign 
 market value or the cost of their production, or rather, 
 their remunerating price at home. Let us first trace 
 out its influence on their value in the foreign market. 
 
 It is alletlged that, but for the protection to our manu- 
 factures, the productions of our soil would be much 
 greater than at present, and their home consumption 
 much less ; and hence, that the repeal of the tariff would 
 throw them on the foreign markets in quantities so largely 
 increased that their price in those markets must neces- 
 sarily be much depressed. It is believed that the sinis- 
 ter motives of some, and the excited imaginations of 
 others, have greatly magnified this apprehended effect ; 
 but I admit the soundness of the priciple, and will there- 
 fore suppose that in case our tariff should be suddenly 
 and totally abolished, which, by the way, no prudent 
 statesman would ever propose, the first effect on the prices 
 of our agricultural products abroad, would be a depres- 
 sion. It would not disable foreign consumers from pay- 
 ing the same price for them that they had paid previ- 
 ously on the contrary, their ability to purchase them 
 would be slightly increased in consequence of our en- 
 larged purchases from them, but it would cause the 
 
CHAP. IV.] INTERNATIONAL COMMERCE. 249 
 
 supply to exceed the demand, and thus throw a surplus 
 on the market. The immediate consequence would be, 
 a settling of the price of agricultural products below 
 their true value ; then a reaction, brought about in the 
 manner and by the influences so frequently pointed out, 
 would ensue ; and finally, after a series of oscillations, 
 the price would return to the point from which it was 
 first driven ; for proof of which, the reader is referred 
 to the chapter on the laws of trade. It appears, 
 therefore, that tariff laws do not permanently affect the 
 price of exports in the foreign market. Consequently, 
 the only way in which the tariff under consideration can 
 possibly benefit our agriculturists, is in its effects on 
 the remunerating price of their products at home in 
 other words, by diminishing the cost of those products. 
 This last hidden refuge of the pretented benefits of the 
 tariff policy, we will now explore. 
 
 Let me first repeat that every nation has a standard 
 of profits peculiar to itself. The remunerating price of 
 every class and variety of valuable products, is made up 
 of the cost of production added to the standard rate of 
 profit in that community in which they are produ- 
 ced. Thus, for instance, the net profits of produc- 
 tion in the United States, as indicated by the interest 
 of money, (less the risk of loss, and taxes) is about 6 
 per cent, per annum. Around this national standard 
 the profits of all interests, and of all departments of pro- 
 duction, centre ; and in order that they may do so, it is 
 manifestly necessary that the remunerating price of all 
 classes of commodities must conform to a corresponding 
 standard. In Great Britain the national standard of pro- 
 fits is about 2-j- per cent, per annum ; around which stand- 
 ard, all the productive interests of that nation centre. 
 And it is thus with all other nations. Now, if any given na- 
 22 
 
 uU 
 
250 RESTRAINTS ON [PART II. 
 
 tion pass a law which exacts tribute from one interest for 
 the benefit of another, it will at first depress the profits of 
 the one and elevate those of the other, equally, below and 
 above this common standard, without disturbing the stand- 
 ard itself; and the laws of trade, provided no natural ob- 
 stacles intervene, will, through the agency of home com- 
 petition, ultimately bring the profits of both interests back 
 to it. But a law which exacts tribute from one or more 
 interests, merely to bring another into existance, will de- 
 press the profits of the former below the standard without 
 elevating those of the latter above it ; and inasmuch as 
 the laws of trade will bring about an ultimate reunion of 
 the depressed interests with the standard of profits, and 
 there being in this case no elevated interest to aid in its 
 accomplishment, it follows that the depressed interests will 
 have to be raised by lowering the national standard of 
 profits. Such, in the opinion of its friends, is the char- 
 acter of our tariff; for they maintain that it confers 
 on the manufacturer no more than remunerating pro- 
 fits, notwithstanding the oppressive tribute it extorts, 
 for his benefit, from the agricultural and other interests, 
 indeed, they affirm that his profits are below the average, 
 or national standard. The tribute, then, goes to pay 
 for productive services wasted by misdirection. The 
 tariff must therefore lessen, to the extent of the tribute, 
 ($100,000,000 annually) the aggregate profits of pro- 
 duction in the United States ; which, if we estimate 
 that aggregate at $2,000,000,000 anrually, shows aeon- 
 sequent depression of the national standard of profits, 
 equal to 5 per cent., or j\ of the whole. And since 
 the laws of trade ultimately bring all interests of a 
 given nation to share alike in their degree of profit, it 
 follows that the profits of our agriculture are diminished 
 by the tariff; and that this is effected, not by lowering 
 
CHAP. IV.] INTERNATIONAL COMMERCE. 251 
 
 the price of its products, but by increasing their cost. 
 The standard price is neither elevated nor depressed ; 
 there is more of cost and less of profit in its elementary 
 parts, but the sum of the two remains the same. There 
 is then no virtue here, but on the contrary much mis- 
 chief; for while the tariff utterly fails to elevate the 
 price of exportable commodities, it greatly increases 
 their cost, and in an equal degree diminishes the profits 
 of their producers. 
 
 If, however, the friends of this policy are mistaken as 
 to its effects on the protected interests ; if the tribute 
 which it awards to the latter, instead of merely elevating 
 their profits to a level with those of other interests, does 
 in truth carry them much higher, then the ultimate con- 
 sequences will be somewhat different from those just 
 pointed out. In that case, the foolish portion of the 
 tribute the portion which goes to pay for productive 
 services wasted by misdirection will, to that extent, 
 lower the national standard of profits, by transforming 
 profits into cost ; but the unjust portion that which 
 goes to fill the pockets of the protected class with undue 
 profits while it at first elevates the profits of the pro- 
 tected class above the national standard, and in the same 
 degree depresses those of the exporting or tributary 
 class below it, will be ultimately neutralized and ren- 
 dered of no effect by the force of home competition. 
 
 I might here dismiss the topics embraced in the sub- 
 ject of this section, and pass to the consideration of 
 others ; for I trust enough has been said to demonstrate 
 the impolicy of tariff laws, whether regarded as a method 
 of raising revenue, a means of fostering illegitimate 
 home interests, or as an expedient of protection from the 
 aggressive policy of foreign nations. The practical 
 importance of the subject, however, induces me to ask 
 
252 RESTRAINTS ON [PART II. 
 
 the reader's attention "while I attempt to illustrate 
 one point, more fully than has yet heen done. 
 
 We found that the only external influence of tariff 
 laws is, to injure other nations : and I remarked at the 
 time that even this is scarcely appreciable. I will now 
 endeavor to prove the correctness of that remark. 
 
 I will take a strong case, the strongest which the 
 whole tariff policy has presented the late corn laws of 
 Great Britain and inquire how, and in what degree, 
 they injured our growers of wheat. These laws sensihly 
 diminished the consumption of flour in that nation. 
 They did this by a twofold influence : they enhanced its 
 price, and at the same time took from the masses a por- 
 tion of their means of purchase ; thus giving them, as it 
 were, a sort of locked-jaw, which prevented the admission 
 of wheaten bread except in homeopathic doses. They 
 were therefore compelled to substitute some cheaper 
 materials, say oatmeal and potatoes. 
 
 As before remarked, these laws enhanced the prices 
 in the British market, of both domestic and foreign 
 flour ; of the domestic, because they produce less than 
 they consume; of the foreign, because they could not 
 purchase it without paying, over and above the duty 
 charged, as much as it would command in any free 
 market. 
 
 But the existence of these laws lessened the aggregate 
 consumption of wheat in the commercial world, say one 
 per cent., or ten per cent., for it does not matter which. 
 This lessened the aggregate demand for that product, 
 and consequently, at first depressed its market price, 
 which drove a portion of the industry, capital and land 
 into other employments say into the culture of potatoes 
 and oats, for which there was an improved demand. 
 This, in its turn, diminished the supply of wheat, and 
 
 
CHAP. IV.] INTERNATIONAL COMMERCE. 253 
 
 enhanced its market price ; but after a few lessening 
 vibrations, of equal extent on either side, the market 
 price must have returned to the standard of true value. 
 Did these laws lower that standard ? I have shown in 
 another place, that such cannot be the effect of tariff 
 laws. But they slightly changed the proportion of its 
 elements ; they enlarged the cost portion of the value of 
 wheat and lessened its profit element, by which means 
 they injured our growers of that product. And how 
 did the British corn-laws produce this effect ? I answer, 
 by slightly diminishing our vent for wheat. I say slight- 
 ly, because it must be remembered that the gross dimin- 
 ution of demand, caused by these laws, was diffused 
 throughout the wheat markets of the world ; whence it is 
 evident that our share must have been almost inappre- 
 ciable. By this contraction of the wheat market, a 
 fraction of the industry, capital and land of the United 
 States, was driven from the culture of that plant into 
 employments for which they were not quite so well adap - 
 ted. Our remaining wheat growers were thereby com- 
 pelled to pay a trifle more for their necessary supplies, 
 which, to that extent, increased the cost and diminished 
 the profits of their vocation. The degree of injury 
 was inconceivably small. Its gross annual amount was 
 probably less than the one hundredth part of that which 
 our own tariff inflicts on them in the same length of 
 time ; for the only way in which these corn laws did, or 
 possibly could, affect injuriously the interests of other 
 nations, was by misdirecting their productive energies ; 
 and that could only be to the extent to which they dimin- 
 ished their commerce with Great Britain. Besides, the 
 misdirection which they caused was so slight in degree 
 that it failed to produce serious mischiefs. They forced 
 a part of our commerce with Great Britain, and a part 
 22* 
 
254 RESTRAINTS ON [PART II. 
 
 of our wheat growing interest, off the natural and most 
 direct paths to wealth, but they left them perfectly free 
 to choose the next best roads ; and in a country like this, 
 where the elements of wealth in an undeveloped form so 
 greatly abound, there are so many good ones that it is 
 difficult to determine which is really the best. With 
 regard to our own tariif laws the case is widely different. 
 They entice a part of our productive agencies into paths of 
 natural unproductiveness, by scattering on their way-sides 
 golden tribute from other interests. 
 
 The internal fruits of the British corn laws, were, 
 likewise, infinitely worse than their external conse- 
 quences. It has been shown that they enriched the 
 landed interest by stealthily abstracting the profits of all 
 other producers of that nation, and that in doing so they 
 but accomplished their iniquitous design ; in addition to 
 which, they wasted much of the fruits of British industry 
 and capital, by strewing artificial profits around the culti- 
 vation of the barren heath and the naked rock, while the 
 productions of the fertile soils of the earth stood knocking 
 at her doors, in vain demanding entrance. The conse- 
 quent loss of productive service was all borne by her own 
 people, because they consumed the things thus expensively 
 produced. 
 
 These laws also greatly diminished the foreign com- 
 merce of Great Britain. They lessened her's as much 
 as they did that of all other nations combined. They 
 compelled each of all other nations to trade a little less 
 with her ; but while the diminution to each was trifling 
 in amount, by reason of its distribution, the gross sum, 
 which had to be borne by Great Britain alone, on one 
 side, was necessarily large ; and while they only drove 
 that of other nations into the next best channels, they 
 absolutely destroyed her own share of the diminution. 
 
CHAP. IV.] INTERNATIONAL COMMERCE. 255 
 
 And, finally, while the injurious effects of the British 
 corn-laws fell with such withering force on her own 
 interests, and so lightly as to be scarcely preceptible on 
 ours, on her's they were permanently confined to one por- 
 tion of her people, while on ours, they were equally dis- 
 tributed through all classes and all productive interests. 
 
 What I have said in illustration of the very slight 
 degree of injury inflicted by the corn-laws of Great 
 Britain on the prosperity of foreign states, will apply 
 with equal and even greater force to the international 
 consequences of all other tariffs ; for this is the strongest 
 case on record. The truth is, the injury is so small that 
 it is of no practical importance ; and but for the desire 
 of demonstrating that fact, as well as for the sake of 
 scientific exactness, I should not have deemed it worthy 
 of a moment's notice. 
 
 In view of all the considerations now advanced, we 
 cannot, as it appears to me, avoid the general inference 
 that all tariff laws are unmitigated evils : the premises 
 admit of no other conclusion. Their tendencies are all 
 bad, and may be recapitulated thus : 
 
 As a method of raising revenue they are : First, 
 oppressively expensive ; costing in the collection, as 
 evidenced by our own tariff, 75 per cent, more than 
 the direct method of taxation : Secondly, they are ine- 
 quitable as a rule of assessment, since they distribute 
 the burdens of taxation, not in proportion to the benefits 
 conferred by government, nor the ability to pay, but 
 according to the amount of consumptions. These neces- 
 sarily correspond in some degree with the relative num- 
 bers of which the families of the tax payers respectively 
 consist ; consequently, by this rule the poor are often 
 compelled to pay higher taxes than the rich. 
 
 As a means of fostering pet interests at home, they 
 
256 RESTRAINTS ON [PART II. 
 
 are unjust, and for other reasons unwise. Their injus- 
 tice consists in extorting tribute from one class of the 
 community, for the benefit of another class which does 
 riot need their aid ; their folly, in placing hindrances on 
 the most direct roads to wealth, and in strewing artificial 
 profits on paths which naturally lead to poverty, thereby 
 enticing a part of the productive energies of the nation 
 from channels of greater productiveness to those of less. 
 
 As a means of countervailing the restrictive policy of 
 foreign states, they are worse than ineffectual ; for while 
 they utterly fail to ward off the slight external injuries 
 incident to that policy, they inflict on the nation adopt- 
 ing them other injuries of a far more serious kind 
 injuries, in comparison with which, the former are as 
 nothing. 
 
 Such I believe to be a fair presentation of the charac- 
 ter and consequences of the tariff policy. If it pos- 
 sesses a single beneficient attribute, or yields a single 
 benefit, in mitigation of its manifold evils, they have 
 escaped my search. It is maintained by some, that this 
 policy is essential to national independence ; that it 
 secures the home production of the munitions of war and 
 other materials of defence, without which a nation would 
 be liable to foreign subjugation. The only answer which 
 this position requires is, that where the natural laws of 
 trade fail to develope the means of national defence, to 
 the extent which safety may require, it is the duty of 
 government to do it itself. For instance, if the defi- 
 cient material be amunition, the government should man- 
 ufacture it ; if ships of war, it should build them, and 
 so on. It is apart of the duty of government to pro vide 
 for the national defence, but it may do so in a direct and 
 sensible way, without resorting to an expedient so unjust 
 and impolitic as tariff laws. 
 
CHAP. IV. J INTERNATIONAL COMMERCE. 257 
 
 The objections urged against the class of laws we have 
 been considering, will, with one exception, apply with 
 equal force to every legislative restraint upon commerce, 
 and to every governmental interference with the natural 
 laws of trade and production ; for the class we have 
 been considering is a correct type of the whole restric- 
 tive policy. 
 
 The exception referred to is the class of laws which 
 relate to the navigating interest. These are sometimes 
 confounded with tariff laws, from which, however, they 
 are entirelv distinct. Navigation is a productive interest, 
 and a very important one, since, in addition to its utility as 
 one of the processes of commerce, it fashions materials 
 for the most efficient arm of national defence. When 
 employed in foreign commerce it has one peculiarity 
 which distinguishes it from every other interest name- 
 ly : the voyage cannot be accomplished, the productive 
 process cannot be completed, nor made to yield fruits, 
 without entering the territory or going within the juris- 
 diction of foreign states. To do this it is of course 
 necessary that nations should have each others assent, 
 and also, that the conditions and terms of the assent 
 should, in all cases, conform to the rule of reciprocity ; 
 since the navigation of a state which failed to insist on 
 its rights under that rule, would, by discriminations 
 against it, be soon driven within the narrow limits of 
 its internal or domestic commerce. This is the only 
 case in which it is necessary that one state should 
 require of others that the terms of intercourse be reci- 
 procal ; and it will be perceived that the reciprocity does 
 not relate to commerce or any other branch of production 
 as such, but merely to the privilege of entering each 
 others ports for the purpose of consummating a peculiar 
 operation of production. Every other productive pro- 
 
258 FREE TRADE. [PART II. 
 
 cess can be finished at home, or on waters common to all 
 nations, and hence do not need the assent of other 
 nations. 
 
 SECTION 4. 
 Of free trade and direct taxation. 
 
 In prefacing this chapter with some general observa- 
 tions indicative of its scope and purpose, I remarked, in 
 substance, that it was chiefly depigned to demonstrate 
 the truth of the following proposition, namely: That 
 Free Trade absolute, unconditional Free Trade, and 
 Direct Taxation, is the true policy of all nations, and 
 of each nation regardless of the course pursued by all 
 others. 
 
 It is hoped that the end proposed is already attained ; 
 for, although we have been thus far exclusively engaged 
 in considering the effects produced by commercial res- 
 trictions and indirect taxation, yet, if I have succeeded 
 in demonstrating their injustice and folly, I have also 
 shown the wisdom of free trade and direct taxa- 
 tion, since, as the terms import, the one policy is the 
 opposite of the other : every objection which has been 
 urged against the former will apply with equal force in 
 favor of the latter. I shall* not, therefore, tax the 
 patience of the reader, by turning over the arguments 
 contained in the preceding sections, so as to present their 
 positive face instead of their negative : the reader will 
 find no difficulty in shifting their application himself. 
 But since it is the object of this treatise to indicate the 
 true policy of government in reference to the produc- 
 
CHAP. IV. J FREE TRADE. 259 
 
 tion, distribution and consumption of wealth, as well as 
 to point out the errors of existing economic legislation, 
 systematic completeness seems to require that I should 
 present in this place, at least a synopsis of the principal 
 arguments which may be fairly advanced in favor of 
 commercial freedom. Arguments illustrative of the 
 wisdom of direct taxation, have already been presented 
 with sufficient directness, and, perhaps, with unnecessary 
 fullness. 
 
 If all men were left free to apply their productive 
 agents to such processes as they are respectively best 
 fitted for by nature, circumstances, habit and inclination 
 subject to no other modifications or restraints than those 
 imposed by the desire of gain the aggregate results 
 would be greater than when a portion of them are forced 
 into channels for which they are unsuitable. This is 
 self-evident. All commercial restrictions, whether de- 
 signed for revenue or protection, thus divert the natural 
 currents of industry, capital, and the productive service 
 of land. For an illustration of this truth, witness the cul- 
 tivation of the beet-root in France, and the sugar-cane in 
 Louisiana. The universal adoption of the free trade 
 policy would of course prevent the whole of this loss ; 
 and the isolated, single-handed adoption of that policy 
 by any one nation, would, as we have seen, screen the 
 citizens thereof from at least ninety-nine hundredths of 
 their share of the loss. Therefore, under the benign 
 influence of this policy, mankind would be able to supply 
 their physical wants in less time, or by the expenditure 
 of a smaller quantity of productive service, than is now 
 required ; which would leave a larger share of life to be 
 devoted to mental wants, to intellectual culture, to the 
 improvement of the spiritual man. When it is remem- 
 bered that these are the only attributes which distinguish 
 
260 FREE TRADE. [PART II. 
 
 us from the brutes that perish, how obvious is the wis- 
 dom of that policy which promotes so beneficent an end. 
 True, another tendency of high profits, or enlarged pro- 
 duction, is, to increase the amount of population ; but, 
 that this is not the only one, that they also tend to promote 
 the mental or spiritual elevation just noticed, is abund- 
 antly proved by history as well as by the present condi- 
 tion of the different nations, and especially by the rela- 
 tive superiority, in intellectual developement, of the 
 civilized section of the human family when compared with 
 the savage. By some, this comparison may not be 
 regarded as a fair one ; but if, as I endeavored to show 
 in a former chapter, social wealth was the primary 
 cause of civilization, the comparison is perfectly legi- 
 timate. 
 
 It seems to me that the foregoing considerations should 
 be sufficient, of themselves, to bring every right thinking 
 man to support the free trade policy. But there is 
 another consideration, which, to my mind, is still more 
 conclusive in its favor namely : it is the only just 
 policy. While the restrictive policy constantly violates 
 the relative rights of the citizens or subjects, by 
 robbing some and enriching others, and, by repeated 
 modifications, perpetuates the injustice, free trade leaves 
 all to place reliance on their own merits alone, and 
 secures to every individual the just rewards of his pro- 
 ductive efforts and enterprises. 
 
 In a word, free trade permits the all-wise, benevolent 
 and just laws, which the Creator has established to 
 govern the production and distribution of wealth, to 
 move on in uninterrupted harmony to the accomplish- 
 ment of their appropriate ends. Therefore, this policy 
 is as strongly marked by wisdom and justice as its oppo- 
 site is by folly and wrong. 
 
CHAP. IV.] FREE TRADE. 261 
 
 If practical illustrations of the benefits conferred by 
 this policy be asked for, I might point to the evidences 
 afforded by the highly profitable and extensive commerce 
 carried on between the different states of this Union. 
 Or, if it be denied that this commerce, from which for- 
 eigners are in a measure excluded, can fairly illustrate 
 the practical effects of free trade, I might refer to 
 Switzerland. That nation long since adopted this policy 
 in its fullest and broadest extent, and she adopted it 
 alone. Situate in the centre of Europe, surrounded by 
 powerful nations which refused to reciprocate, she had 
 the boldness and the wisdom to throw her gates open to the 
 free ingress of the commodities of the world. The prac- 
 tical results of her experiment have been, so far as I am 
 informed, altogether favorable to the theory of commer- 
 cial freedom. From personal observation, I can bear 
 testimony to the appearance of general prosperity and 
 comfort witnessed every where within her borders, sur- 
 passing in these respects the adjoining provinces of other 
 nations. Nor are the mass of the Swiss people insensible 
 of the benefits which they derive from this policy, as was 
 proved by an occurrence which took place there a few- 
 years since. Some manufacturers in one of the eastern 
 cantons, feeling the weight of competition from similar 
 fabrics produced in Alsace, a neighboring province of 
 France, petitioned the General Diet to grant them pro- 
 tection. The petition was respectfully received and 
 considered, but the boon it asked for was denied, promptly 
 and almost unanimously ; and the action of the repre- 
 sentatives of the cantons met the approbation of the 
 people. 
 
 Unfortunately, the practices of nations afford no 
 further direct evidences on this subject, as Switzerland 
 is, I believe, the only political community of any note 
 23 
 
262 FREE TRADE. [PART II. 
 
 whose practice conforms to our theory. At all events, 
 she is the only free trade nation with whose condition and 
 laws I am sufficiently familiar to speak with confidence. 
 The experimental light -which her example affords is in 
 perfect harmony with our theoretic conclusions. It 
 therefore verifies the proposition which stands at the 
 head of this section. 
 
 It now only remains to point out the proper method of 
 applying this theory. It is maintained by some, that 
 however injurious the existing policy, and however bene- 
 ficial the one proposed, the evils incident to the transi- 
 tion would outweigh the benefits to be secured, and hence, 
 that the change should not be made. This is a very 
 great error. True, the change would depress such 
 interests as had grown up under the hot-bed influence of 
 protection ; it would at first diminish their profits and 
 ultimately banish them to more congenial localities, just 
 as the invention of the power-loom first injured hand- 
 loom weavers and ultimately drove most of them into 
 other employments. And so of all other improvements 
 in the science and arts of production : while they are the 
 stepping stones which Providence designed to aid us in 
 the attainment of a higher civilization, by increasing the 
 aggregate means of enjoyment and comfort, the human 
 family never, in its progress, took a step in advance 
 which did not injure some of its members. But this is 
 no sufficient objection to the adoption of free trade, or 
 any other improvement. The greatest good of the 
 greatest number, is the true doctrine. Besides, the 
 interests which would be prejudiced by the change pro- 
 posed, are but the offspring of injustice and folly ; they 
 were born of that double parentage, and have been reared 
 at the expense of other interests, so that it is but fair 
 that they should be made to disgorge. I would not, 
 
CHAP IV.] FREE TRADE. 263 
 
 however, recommend the sudden, as well as the total 
 abandonment of the restrictive policy. I hold it to be 
 unjust, and for other reasons unwise, to make sudden 
 and great changes in laws which affect the pecuniary 
 interests of the citizen. When public good demands the 
 change, it should be the work of time, and brought about 
 by gentle gradations like those of the Compromise Act, 
 or tariff of 1833. \Z_ 
 
 If our government should make the transition by 
 means of a law which removed one tenth of the present 
 duties annually, for ten consecutive years, the evils 
 incident thereto would be in a great measure avoided. 
 All protected interests that should prove to be congenial 
 to the soil and climate of our country, and adapted to 
 the genius of our people, would glide imperceptibly into 
 the new order of things, and flourish under profits less 
 exorbitant perhaps, but more just, as well as more 
 uniform and secure. Those not possessing these re- 
 quisites would be abandoned for more profitable employ- 
 ments. In fact, illegitimate interests those interests 
 which thrive only in virtue of the tribute they receive 
 would be rooted out by free trade with that discrimina- 
 ting judgment and completeness with which a skilful 
 gardener removes the weeds from his beds. 
 
 ^AM 
 
205 
 
 CHAPTER V. 
 
 OF MONEY. 
 
 SECTION 1. 
 
 Of Coin. 
 
 In the first section of the chapter on the natural laws 
 of trade, I have pointed out the nature and uses of 
 money, and have said perhaps all that is necessary in 
 relation to money in the peculiar form of coin. But since 
 the problems connected -with the subject are alike intri- 
 cate and important, I prefer passing hastily over that 
 ground again, in order to preserve the unity of the sub- 
 ject, as well as the requisite connection in the chain of 
 reasoning by which I hope to unfold its truths. 
 
 Money is an instrument of commerce, designed to 
 facilitate the exchange of all other commodities by pre- 
 senting-- an equivalent in a portable and convenient 
 shape. A ship carries values from one market to 
 another ; money measures and transfers them from one 
 owner to another : this is its only office. It is one of 
 those machines which the ingenuity of man has contrived 
 for facilitating the production of wealth. But for its 
 invention, commerce would have to accomplish its ex- 
 changes by the awkward and expensive process of barter. 
 It is, therefore, strictly speaking, a labor-saving ma- 
 chine, and I may add that it is also a power-increasing 
 23* 
 
266 MONET, [fcART II. 
 
 machine, since it would be impossible, .by any other known 
 method, to carry the interchange of commodities to the 
 extent and perfection now witnessed. All kinds of pro- 
 ductive machinery, from a needle up to a steam ship, 
 possess one or other, or both of these attributes- 
 they either lessen labor or they aid in producing things 
 which human effort alone is incapable of producing. 
 Money does both, and it is thus that its services con- 
 tribute to the increase of wealth. True, the materials" 
 of which real money is made (gold and silver) are valua- 
 ble for the purposes of art, but that application of their 
 value has nothing whatever to do with their functions as 
 money 5 nor would their adaptation to this purpose be 
 lessened if their usefulness in every other respect should/ 
 destroyed. This is sufficiently proved by the fact that 
 bank notes, the material of which is without correspond- 
 ing value for other purposes, are, in virtue of their repre- 
 sentative or convertible attribute, capable of performing 
 the office of money. 
 
 I have said that the only purpose to which money can 
 be usefully applied is, to be given in exchange for other 
 values, and at the same time to measure them. In 
 strictness it should be observed, that it is also the instru- 
 ment usually chosen for completing contracts which 
 have been entered into on credit. In such cases it 
 performs the same office without being present, but it is in 
 virtue of a promise that it shall appear at a stipulated 
 time. This is, therefore, a service identical in character 
 with the one first named, but rendered in a modified 
 form. 
 
 If the oldest coin extant were capable of impart- 
 ing its history, we should find that its only acts of utility 
 had been in performing the services already named. 
 Place money in a till or safe, and it will not increase, 
 
CHAP. r.J MONEY. 267 
 
 though it be left, there forever. If we loan it to 
 another, and he returns us ? at a subsequent period, the 
 amount with interest, he is enabled to do so, not because 
 it increases in his hands, but because he gives it proper 
 employment the transferring of ^ues. We transfer 
 it to him in exchange for his obligation to return us tha 
 amount together with a commission for its use, because 
 we do not care to have the trouble of superintending its 
 service ourselves. He sets it at work by exchanging it for 
 other values, whence it proceeds on its appropriate mis- 
 sion, while he labors to modify, and thus increase,, the 
 values he has received in exchange for it. These he 
 again exchanges for other money, out of which he returns 
 the amount borrowed together with interest, retaining 
 the balance, if any, as his reward for. superintendence.. 
 It is to be noticed that the identical money loaned is not 
 returned to us, that having been taken by the borrower 
 only as a-- means of obtaining other values, in the super- 
 intendence or modification of which he could profitably 
 employ his labor and skill ; the money meanwhile per- 
 forming its office by passing from hand to hand, and 
 thus yielding a like service to hundreds of others. T 
 vagrant, non-returning habit,. is peculiar to money, since r 
 if we loan or let any other kind of property, whether it 
 be in the form of machinery, houses or land, it will be 
 returned to us at the expiration of the contract, not in 
 kind, but in identity. Money is returned in kind only ; 
 which fact, while it distinguishes this productive agent 
 from all others, and indicates the nature of its service, 
 clearly proves the singleness of its- office. 
 
 Money, to be useful, must be kept in motion ; for, 
 like all other machinery, it is unproductive when at rest. 
 To this activity it is impelled, alike by the prodigality 
 of the spendthrift and the prudence of the frugal. The 
 
268 MONEY. [PART n. 
 
 latter set it in motion for the sake of its revenue ; the 
 former, for the sake of consuming the commodities that 
 may be obtained in exchange for it. The only excep- 
 tions to this rule are those misers who, through the 
 joint effect of ignorance, fear and avarice, doom their 
 money to idleness by hoarding it. 
 
 Having explained the object of the inventor, by point- 
 ing out the office which the resulting machine was de- 
 signed to fill, and having shown that it is incapable of 
 yielding other useful service, be it our next task to ex- 
 amine the machine itself. It is important that we know 
 its merits as an invention, its form, its size, and of what 
 materials it is made ; as without such knowledge we can- 
 not judge of its adaptation to the end designed. 
 
 Before entering upon this examination, however, it is 
 proper to state that there are three kinds of money in 
 use namely, coin, convertible paper, and inconvertible 
 paper ; and that they constitute three distinct inventions 
 or machines, each of which will claim a section by 
 itself. For the present, we are to consider the first 
 named only ; and in or.der that we may divest the subject of 
 unnecessary intricacies, it will be well to assume that no 
 other kind of money exists. It is well known that money, 
 in its simplest form, passes at its real value ; in other 
 words,, that the market value of coin corresponds with 
 the true value (cost of production plus average profits,) 
 of the materials whereof it is composed. As relates to 
 convertible and inconvertible paper money, the case is 
 different, as we shall find when we come to consider 
 them. 
 
 First, then, as to the merits of the invention. The 
 desideratum was, as we have seen, the invention of an 
 instrument or machine, capable of measuring the value 
 of commodities, and of shifting their ownership without 
 
CHAP. V.] MONEY. 269 
 
 resorting to the inconvenient and expensive process of 
 barter. The plan devised was simply this : For govern- 
 ment to select from the whole class of valuable commo- 
 dities, one or more kinds; reduce each to a uniform 
 quality ; divide them into pieces of different sizes, con- 
 taining known qualities ; stamp them with distinctive 
 names, arbitrarily chosen, and with the name of the 
 government issuing them ; and then to send them forth, 
 not only as the established measure of value and instru- 
 ment of transfer, but also as a legal tender in payment* 
 of debts. In whatever aspect the subject may be view- 
 ed, it will be found that this is all there is of genius in 
 the invention of money in the form of coin. It cannot 
 be denied that the conception or plan, simple as it is, \ 
 and imperfect as we shall find it to be, is yet entitled to ! 
 great merits as an invention, since the resulting machine 
 has answered the aim of its projectors by superseding 
 the system of barter. The plan has also been execu- 
 ted with becoming skill and judgment. The only 
 serious error in this respect is in the naming of coins. 
 Instead of stamping them with arbitrary names, the 
 name should express the kind, quality and weight of the 
 material. If this rule of naming had been adopted, 
 much of the confusion and intricacy of international 
 commerce and exchanges would have been avoided. 
 
 Gold and silver have been selected as the materials ; 
 and if we glance at the service to which the machine ia 
 applied, and thus learn the requisite properties of its 
 material, we shall find that they have been wisely chosen., 
 We are familiar with the fact that every purchase or 
 sale is, by the parties thereto, deemed to be an exchange 
 of equivalents ; and since the plan of this sort of money 
 requires that it pass from hand to hand at its true value, 
 it follows that the material must possess the attribute 
 
270 MONEY. [PART n. 
 
 value : to be convenient for carriage or transportation, it 
 should embody much of that attribute in small compass 
 and weight : to prevent abrasion, to which it is peculiarly 
 exposed by constant use, it should possess the qualities, 
 hardness and adhesiveness : to qualify the machine for 
 measuring all degrees of value, the material should be 
 susceptible of exact divisions, and minute subdivisions : 
 to prevent fluctuations in the quantity and value of 
 raoney, the material should be one whereof the cost of 
 production is uniform : to- prevent frauds by counterfeit- 
 ing, it should be difficult to imitate. These are the 
 essential properties required in the material of money ; 
 and it is well known that they are more fully combined 
 in the metals gold and silver, than in any other commo - 
 dities. Either one of these metals would have answered 
 the purpose, without the other ; but it was found that 
 gold, by reason of its high cost, was not well adapted to 
 the measurement of small values, and that silver, in 
 consequence of its low cost, was inconvenient as an instru- 
 ment to measure and transfer large values ; hence the 
 adoption of both. 
 
 Now, although the materials have been well chosen- 
 under the plan devised, none better could have been 
 selected yet, it will be noticed that they are liable to 
 three serious objections : namely, their production costs 
 too much, they are too heavy for convenience, and their 
 value fluctuates. The plan, therefore, is defective. It 
 would be an achievement of some moment to so modify 
 the plan as to permit the use of materials free from these 
 objections, without impairing the efficiency of the machine. 
 This, it is believed, may be accomplished by a method to 
 be pointed out in the third section. 
 
 Next, let us glance at the form or shape of this ma- 
 chine. If we contemplate the aggregate of money in 
 
CAAP 
 
 . V] MONEY* 271 
 
 the world as a unit, we find it to be of the exact pro- 
 portions of commerce, whose handmaid it is. Wherever 
 commerce exists, there money is to be found aiding its 
 operations, by facilitating the exchange and distribution 
 of commodities. Where the commerce is heavy, there 
 the section of the machine, or the quantity of money, is 
 large ; where the commerce is light, there the section is 
 small. So uniform is this correspondence, that the 
 amount of money employed in any given market, is an 
 unerring indicator of the extent of its commerce. 
 
 We are now prepared to consider the size of this ma- 
 chine, which, it is to be observed, is the most important 
 aspect in which the subject can be viewed. In contem- 
 plating the plan of the inventor, we discovered no device 
 or function for limiting, or in any manner controlling, 
 the amount of money in circulation ; and a moment's 
 reflection will convince us that no such function exists in 
 the machine, or was intended to exist, the inventor hav- 
 ing left its aggregate size and shape to such development 
 as the natural laws of trade might happen to give. 
 What, then, is the size which they have established ? If 
 these laws be such as they have been defined in a former 
 chapter, and if the foreging exposition of the nature of 
 money and its uses be true, it then follows that there 
 will exist at all times, and at all places, an amount of 
 value in the form of money precisely equal to the per- 
 formance of the service required of that instrument ; 
 which is, to measure and transfer all other values in 
 search of a market, without failing to measure them 
 correctly ', and that, whether we consider the commercial 
 world as divided into individual markets, or into nations, 
 or as one grand mart, it will be found true in relation to 
 each individually, and to all collectively. There will, it 
 is true, be temporary departures from this standard, 
 
272 MONEY. [PART n. 
 
 caused by the alternating preponderance of supply and 
 demand, but, like all other commodities, the sum of the 
 variations above it will exactly equal the aggregate of 
 those below. 
 
 In illustration of the soundness of these positions, we 
 will first consider the aggregate of money in the world as 
 a single instrument of commerce. We will suppose the 
 amount now in circulation to be $4,000 millions-, con- 
 sisting of one half gold and silver coin, the other half 
 convertible paper ; and we will further suppose, that the 
 amount named fills the channels of circulation to that 
 natural degree of fulness which enables this instrument 
 of commerce not only to transfer all other commodities 
 in search of a market, but, at the same time, to measure 
 their value correctly. In other words, that the relative 
 quantities of money and other commodities are so well 
 balanced, the supply and demand for each are so 
 even, that the industry and capital employed in pro. 
 ducing the one are neither more nor less profitable 
 than those engaged in the production of the other. As 
 long as the equilibrium continues, production in each 
 department will go on temperately and evenly, the vo- 
 taries of each receiving their appropriate rewards. But 
 suppose convertible paper money sKould be suddenly 
 and universally suppressed, and the use of every other 
 substitute for coin strictly prohibited. According to our 
 supposition, this would lessen the amount of money, or 
 contract the dimensions of the machine, one half. What 
 would be the consequences? The first consequence 
 would be, that the remaining half would have to perform 
 the same amount of service that the whole had done 
 before ; and since we have seen that it was then, as in 
 fact it always is, whatever be the quantity in circulation, 
 under the lash and spur of the self-interest and the im- 
 
CHAP. V.J MONEY. 273 
 
 providence of mankind, we cannot expect it to go faster 
 now. Therefore, every dollar must now measure at each 
 transfer double the quantity of value it did before ; con- 
 sequently, instead of being a true measure it is now a 
 false one; but we shall find that the change is only 
 temporary. For example : Before the diminution took 
 place, one bushel of wheat and one dollar (we shall 
 say,) were equivalent values ; that is, they would not 
 only purchase each other in the market, but reward 
 their respective producers with the same degree of pro- 
 fit, say five cent, per annum. After the diminution, 
 one dollar would buy two bushels of wheat, or twice 
 the usual quantity of any other product ; so that the 
 production of gold and silver, instead of yielding to the 
 industry and capital employed therein, five per cent. 
 per annum, (the average rate of profit in all depart- 
 ments of production,) would now yield at least fifty 
 per cent. How promptly and how strongly would these 
 unwonted profits excite the desire of gain, and thus 
 impell fresh votaries to join in the production of gold 
 and silver. Plate and bullion would be transformed into 
 coin ; existing mining operations would be prosecuted 
 with increased vigor ; mines long since abandoned would 
 be re-opened, and the earth would be ransacked and its 
 bowels torn open in search of fresh ones. This state of 
 things would soon produce an over supply of coin, which, 
 in its turn, would cause a reaction ; and so on, with les- 
 sening oscillation, until the equilibrium of profits as well 
 as the natural relations of money and other commodities 
 were permanently restored. 
 
 It thus appears that the existing aggregate of money 
 
 cannot be permanently diminished, since, if any portion 
 
 of it be destroyed by accident or legislation, the natural 
 
 laws of trade, which govern the production of all sorts of 
 
 24 
 
274 MONEY. [PART n. 
 
 wealth, will speedily restore to this machine its original 
 or natural dimensions. Nor can it be perm antently en- 
 larged, except by the augmentation of commerce. In 
 illustration of this truth, let us assume, as before, that 
 the existing quantity of money in the world is $4,000- 
 000,000 half coin and half convertible paper. Now, 
 suppose the aggregate should be increased to $5,000- 
 000,000, by the issue of $1,000,000,000 more of convert- 
 ible paper, what would be the ultimate consequence 1 
 At first the relative value of money would be lessened ; 
 in other words, the market price of all other things 
 would advance twenty-five per cent. This would cause 
 the production of gold and silver to be unprofitable, and 
 it would also increase the profits on other products ; 
 whence it is apparent that the production of gold and 
 silver would be suspended, that their consumption in the 
 arts would be increased, that the production of other 
 commodities would also be increased, and that, by these 
 influences the natural relation of money to other commo- 
 dities would be restored, the only ultimate consequence 
 being that one quarter more of the material of money 
 would be converted into coin. Instead of consisting of 
 equal proportions as before, it would then stand three 
 parts paper and one part coin, leaving the aggregate the 
 same as before the disturbance took place. This is an 
 important fact in the consideration of our subject, for it 
 has been and still is very generally believed, that the 
 partial substitution of convertible paper for coin has 
 greatly increased the aggregate of money in circulation. 
 I venture, however, to pronounce the opinion unsound, 
 and to lay it down as a general principle that every 
 dollar of convertible paper money issued drives one of 
 coin from the channels of circulation. 
 
 Hitherto we have considered money as a unit, or as a 
 
CHAP. V.] MONEY. 275 
 
 single instrument of the commerce of the world. Next, 
 let us consider it as divided into national sections. A 
 little reflection will convince us that no one of these can 
 be either enlarged or diminished, permanently, except in 
 obedience to the enlargement or diminution of the na- 
 tional commerce whose instrument it is. If, for example, 
 the balance of trade, or an over production of coin or of 
 bank notes, gives one nation more money than its com- 
 merce calls for, or more than its relative proportion as 
 compared with other nations, there will at once ensue a 
 general rise in the prices of all commodities consumed 
 at home, leaving undisturbed the market prices of ex- 
 portable commodities, because these are governed by, the 
 prices current in foreign markets. Hence, importations 
 are profitable, exportations unprofitable. Therefore the 
 one will diminish, the other increase, until the surplus 
 money is taken abroad to liquidate the adverse balance 
 of trade ; and thus, after a few vibrations, the equili- 
 brium will be restored. If adverse trade, or the sup- 
 pression of paper money, or the consumption of coin, 
 gives one nation less than its due proportion, these in- 
 fluences are inverted and money flows in from abroad. 
 
 The considerations now advanced clearly prove, as it 
 seems to me, that the machine called Money is of very 
 determinate size and shape. So obstinate is it, that 
 whenever we attempt to enlarge one of its sections, the 
 addition at once diffuses itself through the whole instru- 
 ment, driving out as much both of volume and value, 
 as we may choose to pour in. If we attempt to enlarge 
 the whole machine by a general issue of convertible 
 paper, the supply of coin is at once cut off, and a por- 
 tion of the existing coin equal to the amount of paper 
 issued, is speedily transferred from the channels of cir- 
 culation to bank vaults and to the arts; and if we 
 
276 MONEY. [PART n. 
 
 attempt to curtail its proportions by suppressing paper 
 money, strong currents of gold and silyer at once flow in 
 from their mineral fountains, and the vacuum is filled 
 with coin. The only way, therefore, in which the exist- 
 ing aggregate of money in the world, or the quantity in 
 any given market, can be either lessened or enlarged 
 permanently, is by an increase or diminution of com- 
 merce. It may be well, however, to observe, that the 
 nominal quantity of money would be affected by any 
 variation in the cost of producing gold and silver ; but 
 the value or purchasing power of the aggregate, which is 
 the only material point to be considered, would remain 
 the same. 
 
 What, then, it may be asked, is the exact ratio oi 
 money and commerce ? Or to state the question more 
 distinctly : At the present cost of producing coin, what 
 quantity of money does a given annual amount of com- 
 merce require 7 It will be quite impossible to answer 
 this question with precision, because the statistics oi 
 commerce are too imperfect to show its full extent in an;y 
 nation, or even in any single market ; for it must be 
 noticed that the term commerce is here used in its widesi 
 acceptation, in which sense it includes every purchase oi 
 sale of all sorts of property. If, however, besides know- 
 ing the quantity of money employed in a given market, 
 we also knew how often it changed hands annually, we 
 might then readily ascertain the extent of commerce IE 
 that market, and thus learn the exact proportion thai 
 the quantity of money bears to the extent of commerce. 
 But here we are likewise at fault for want of sufficienl 
 data. We should not, perhaps, be very wide of the 
 truth in estimating that money, on an average, performs 
 its office of measuring and transferring values about one 
 hundred times in a year, by passing through the hands 
 
CHAP. V.] MONF.V. 277 
 
 of that number of owners ; and hence that the propor- 
 tion of money to annual commerce is as 1 to 100. Be 
 that however as it may, it will be sufficient for our pur- 
 pose to know the actual quantity of money which com- 
 merce requires, and upon this point the statistics of 
 money furnish the needful data. 
 
 Commerce being an expedient for permitting the divi- 
 sion of employments, and money a contrivance for aiding 
 the operations of commerce, it may be inferred that the 
 quantity of money required in any given community 
 will be, not strictly in proportion to its numbers, but 
 slightly modified by the extent to which they have carried 
 the division of employments. In confirmation of this, 
 we find, by the statistics of money, that the people of 
 Great Britain and Ireland possess about $500,000,000, 
 which, reduced to a mean, is about $19 per head, whilst 
 the people of the United States possess about $300,- 
 000,000 (say $220 m. of bank currency and $80m. of cir- 
 culating coin,) which is but $15 per head ; and it is well 
 known that there is greater division of labor, and hence 
 more commerce, in Britain than in the United States. 
 The quantity of money in fcrreat Britain and Ireland, 
 as here stated, is taken from an estimate made by that 
 government and submitted to Parliament, a few years 
 since, except that I have added thereto the deposites in 
 banks payable on demand, which were most strangely 
 omitted in the estimate. The quantity of bank currency 
 in the United States, as here stated, is taken from 
 a document published in the year 1846 by the Trea- 
 sury Department at Washington. The quantity of 
 circulating coin in the United States at that period, ex- 
 clusive of the amount held by banks, which we must not 
 include because it does not circulate, is an estimate of 
 my owji. It is probably higher than most men would 
 24* 
 
278 MONEY. [PART n. 
 
 estimate it, but I consider it more likely to be tmder than 
 over the true quantity. In the document jilst referred 
 to, is given a statement of the amount of currency fur- 
 nished by the banks of the United States for each year 
 from 1834 to 1845 inclusive ; from which it appears, that 
 notwithstanding the mischievous expansions and contrac- 
 tions which that method of furnishing money has pro- 
 duced in our section of the machine forcing our aggre- 
 gate of money sometimes forty per cent, above its natural 
 quantity, and at others as much below yet the average 
 for the twelve years was about the same, in proportion to 
 population, that it was in 1846 ; from which we may 
 conclude that our section of the machine was then at its 
 natural size, or gravitating point. In other words, that, 
 at the present cost of producing gold and silver, a mean 
 of fifteen dollars per head is the quantity of money that 
 our commerce requires, and which the natural laws of 
 trade will give, whether the money consists of coin ex- 
 clusively, or of coin and its paper representative. To 
 Britain they will give more because her people are more 
 commercial than ours ; to other nations they will give 
 less because their's are less commercial, so that the United 
 States may be considered about a fair standard by which 
 to estimate the quantity of money required by commerce 
 in the aggregate. Therefore, the natural ratio of money 
 (when expressed in dollars) and population, is as 15 to 1. 
 But, as already intimated, this ratio would be disturbed 
 by any variation in the cost of producing gold and silver, 
 or either of them ; and in view of the extraordinary 
 deposits of gold which are said to have been discovered 
 recently in California, it may be useful to illustrate the 
 point briefly. 
 
 The precious metals, like every other valuable pro- 
 duct, are obtained by the joint service of skill, labor, 
 
CHAP. V.] MONEY. 
 
 capital and land ; and their true value, which is but 
 another name for that service, is equal to the cost of pro- 
 duction plus average profits. The four prime agents con- 
 tribute equally in their production, and the proprietors 
 of each receive an equal share of the gross profits.. 
 True, where the mines are rich their proprietors receive 
 more than one fourth of the profits, and where the mines 
 are poor they receive less than that proportion ; but 
 taken collectively, their revenue is subject to the same 
 law- of distribution which we found to preside over pro- 
 duction in general. When new and richer mines 
 are discovered they are at once invested with a high 
 market value, but the market value of other mines 
 is depressed in the aggregate to nearly the same ex- 
 tent; the poorest are even, abandoned. Consequently, 
 sueh discoveries increase the quantity of these metals pro- 
 duced by a given amount of industry, capital and land ; : 
 in other words, they lessen the cost of gold, or of silver, 
 as the case may be. With cost of production dimin- 
 ished, and the market value of the product remain- 
 ing undistured, the profits are of course enhanced. The 
 enhanced profits not only stimulate the productive forces 
 already engaged in the pursuit, but attract others, by 
 which means the production is enlarged. The enlarged 
 production depresses the market value until it settles 
 below the true value ; but, as in the case of all other 
 products, it will ultimately conform to that standard. 
 Therefore the quantity of money will increase in exact 
 proportion to the diminished cost of producing coin. 
 For example : if, by the discovery of richer mines, or by 
 improvements in the arts of mining and metallurgy, gold 
 and silver should hereafter be produced 25 per cent. 
 cheaper than at present, it would ultimately increase the 
 quantity of money in circulation 33 per cent., or from 
 
280 MONEY. [PART n. 
 
 $15 to $20 per head, and vice versa. While, however, 
 it would thus increase the quantity, the aggregate value 
 would remain as at present ; for it must be remembered 
 that whenever, from permanent causes, any class of com- 
 modoties are produced at cheaper rates, the value of those 
 previously produced at higher rates is brought down to the 
 same level. True value is to be estimated in all cases, 
 not by what the product actually cost, but by the cost at 
 which one equally useful could be produced at the time 
 the estimate is made. 
 
 But we have not yet solved the problem presented by 
 the recent discoveries in California. That case has had 
 no exact parallel ; and if the accounts received from 
 there be not gross exaggerations, the history of wealth 
 affords nothing approaching a parallel. It is represent- 
 ed, for instance, that over large districts of that terri- 
 tory, gold is scattered in such profusion that an unskilled 
 laborer, with the rudest of implements, may gather on 
 an average more than an ounce of the pure metal per day, 
 and that the supply is inexhaustible. These are the 
 most sober of the accounts received, while others repre- 
 sent that large masses, and even large mines of pure 
 gold have been discovered. But discarding these as 
 fabulous, let ns assume that the more sober accounts arc 
 true, and, after clothing the facts with the extraordinary 
 circumstances by which they are surrounded, attempt to 
 trace out their consequences. 
 
 The gold is discovered in California simultaneously 
 with the transfer of the ownership of that province from 
 Mexico to the United States, and before the latter has 
 extended her laws over it. The laws of Mexico are 
 annulled, those of the United States are not yet estab- 
 lished, nor arc they -likely to be soon : conflicting opin- 
 ions in reference to slavery bid fair to prevent it for a 
 
CHAP. V.] MONEY. 281 
 
 year or two at least. Meantime, adventurers from all 
 quarters of the globe are flocking thither in numbers so 
 yast that a few years bids fair to give the province a 
 population of millions. They gather the gold without 
 paying ground rent, and almost without the aid of skill 
 or capital. There is but one partner in the productive 
 firm, namely, Labor; and each proprietor of labor, 
 instead of receiving the ordinary reward of one dollar per 
 day, receives $20. When the United States gets ready 
 to establish a government there, and to take possession 
 of her lands, preparatory to their survey and sale, it is 
 not likely that such men, thus employed, will be in the 
 proper temper to submit. We may rather suppose that 
 they will feel inclined to keep the mineral lands common 
 property, in order that they may continue to engross the 
 whole proceeds of their labor. If thai should prove to 
 be the event, and if the gold is really as abundant and 
 inexhaustible as represented, then the ultimate con- 
 sequence would be an enlargement of the money ma- 
 chine to twenty times its present volume, or to $300 per 
 head, leaving the aggregate value thereof the same as 
 now. But if, on the other hand, the government should 
 succeed in getting possession of the mineral lands, and 
 should divide them into lots and sell them to the highest 
 bidders, then the production of gold there, as elsewhere, 
 would soon range itself under the natural laws of trade, 
 which, as we have seen, award one half the revenue to 
 industry and the other half to the proprietors of the 
 concurring capital and land. In that event, therefore, 
 the ultimate consequence of the facts assumed would be 
 a tenfold increase of the quantity of money, say from 
 $15 per head to $130. This enlargement would of 
 course consist of gold coin alone. In fact silver would 
 be entirely expelled from the money machine, and the 
 
252 MONEY. [PART n. 
 
 place it now occupies therein, as well as the enlargement, 
 would be filled by gold, unless the relative value of the 
 two metals, as now established by law, should be modi- 
 fied in conformity with the change in their relative cost 
 of production. The relative value of gold and silver, as 
 now established by law> is as 15 T 2 j to 1, which ratio- 
 probably coincides very nearly with their relative cost* 
 But if ten ounces of gold shall hereafter be produced by 
 the same amount of productive service now expended in 
 the production of one ounce, it follows that the relative 
 value of gold an.d silver will stand as 15 T 2 i to 10. The 
 true value of silver will not be disturbed, but gold will 
 possess no more than one-tenth the quantity of that 
 attribute which it does at the present time. 
 
 Now it is interesting to inquire, whether, upon the 
 happening of such a contingency, governments would 
 permit silver to be expelled from its office as money ; or 
 whether they would attempt to approximate the legal 
 value of the two metals in conformity with the approxi- 
 mation of their cost, so as to retain both in circula- 
 tion; and if the latter, by what me&ns they would 
 accomplish it. They could not with propriety or jus- 
 tice change either the weight, quality, or name of the 
 silver dollar, since no change occurs in the cost of pro- 
 ducing it. Therefore they would have to change either 
 the weight, quality, or denomination, of gold coins. 
 The eagle, for instance, if left at its present weight and 
 fineness, would have to be called a dollar ; or if its name 
 and its present legal value were retained, its weight or 
 the quantity of pure metal which it now contains, would 
 have to be increased tenfold . An ordinance of that 
 kind would inflict heavy losses on banks and all other 
 large holders of gold coin, but it would be the legitimate 
 consequence of holding a commodity that had been depre- 
 
CHAP. V.J MONEY. 283 
 
 ciated in value by a reduction in the cost of producing 
 other commodities like it ; whereas, if the legal value of 
 the coin should be retained, in the face of a diminu- 
 tion of ninety per cent, in its true value, it is obvious 
 that the holders of annuities and mortgages, and in fact 
 all creditors of every class, would be robbed of nine- 
 tenths of their rightful dues, and that the debtor class 
 would be benefited to the same extent. Therefore, it 
 would be most politic and just to continue the use of 
 silver as money ; and to do it either by increasing the 
 weight and fineness or by lowering the denomination 
 of gold coins, in proportion to their diminished cost ; 
 leaving the weight, quality, name, and legal value of the 
 silver dollar, as well as all other coins of that metal, the 
 same as they are at present. 
 
 It is scarcely necessary to remark that the assumption 
 on which the preceding speculations are based is not 
 believed to be literally true. The statements received 
 from California are assumed to be true in their whole 
 length and breadth, merely for the purpose of deducing 
 the monetary consequences of the facts asserted, in case 
 they prove to be facts. So far as relates to the abun- 
 dance of gold in certain localities, and to the facility 
 with which it may be obtained at present, the accounts 
 may doubtless be relied on as correct. But with re- 
 gard to the extent of the placers, and especially to their 
 inexhaustibleness, the statements are at best mere con- 
 jectures, which, it is riot at all likely, will be fully verified 
 by a more exact knowledge of the facts ; and if they are 
 not, the consequences I have deduced will not, of course, 
 ensue. There can be little doubt, however, that there 
 will be found enough of truth in these representations to 
 dimmish in some degree the average cost of producing 
 gold ; and hence that the money machine will be some- 
 
284 CONVERTIBLE PAPER MONEY. fl'ART II. 
 
 what enlarged, and that the market price of other com- 
 modities will be in an equal degree enhanced, unless 
 governments alter either the denomination, the weight, or 
 the fineness of gold coins. Temporarily, indeed, these 
 effects are certain to ensue, because the amount of coin 
 will be for a time somewhat enlarged, and for the addi- 
 tional reason, that convertible paper money is certain 
 to increase in the same ratio ; but both will return to 
 their present quantity whenever the California deposits 
 shall have been so far exhausted that the cost of produ- 
 cing gold there will be equal to the present average cost 
 of producing it elsewhere.* 
 
 SECTION 2. 
 Of Convertible Paper Money. 
 
 The invention of convertible paper money may be 
 regarded as an ingenious but most unfortunate attempt 
 to avoid two of the objections which I have shown may be 
 fairly urged against money in the form of coin ; namely, 
 the expensiveness and the weight of its material. The 
 attempt must be called ingenious since it has succeeded 
 to some extent in dispensing with the use of coin, by 
 filling its place with paper promises ; it is unfortunate 
 because it has produced evils which far surpass its bene- 
 fits, as will be shown in the progress of this section. 
 
 * It is proper to remark that the views here presented in reference to the discovery of 
 gold in California, and its probable effects on the currency, were penned in January, 
 1849, at w-hich time our information on that subject was less definite and less authentic 
 than at present. The facts do not, however, differ materially from those which I then 
 assumed to be true, nor do their monetary effects, so far as they are yet developed, differ 
 from those which I then ventured to predict. Therefore, I have not thought it worlli 
 while either to recast or modify what I had written on this subject, so as to adapt it to 
 our present enlarged knowledge of the facts in the case. 
 
CHAP. V.] CONVERTIBLE PAPER MONEY. 285 
 
 Let us first look at the conception and plan, and then 
 at the processes by which this sort of money is pro- 
 duced. 
 
 The idea of its projectors appears to have been 
 simply this : to add another section to the money ma- 
 chine, as they found it existing in the form of coin, by 
 engrafting it with paper promises. And the plan was, to 
 take from the channels of circulation a given quantity 
 of coin, to hold it in possession, and to send to those 
 channels, two, three, or four times the quantity of paper, 
 bearing on its face a promise of redemption in coin when- 
 ever demanded. This is all there is of genius in the 
 invention. The plan has been carried out, or practically 
 applied, by what are termed banks of discount, deposite 
 and circulation. It will be useful to present an illustra- 
 tion of their processes. 
 
 We will suppose one of these paper money mills, or 
 monied institutions, as they are ambitiously termed, to 
 commence business with a cash capital of $100,000, in 
 coin. It commences discounting mercantile paper that 
 is, it gives its own bills, payable on demand, in exchange 
 for notes payable at a future day, less the discount. It 
 at the same time begins to receive deposites of money in 
 the shape of its own bills and the bills of other banks. 
 These it in turn gives out in exchange for more mercantile 
 paper, less the discount. We will suppose this process to 
 go on until the bank holds discounted paper to the amount 
 of $300,000, exclusive of the discount charged on it ; and 
 that it still retains the $100,000 of coin. It will be 
 perceived that it must then owe to its depositors and to 
 the community for circulating bills $300,000 say $100,- 
 000 to the former, and $200,000 to the latter. In this 
 supposition, therefore, the bank first takes from the 
 channels of circulation $100,000 of money, in coin, 
 25 
 
286 CONVERTIBLE PAPER MONEY. [PART II. 
 
 which, after having gone through the multiplying process 
 of bank representation, returns to those channels in 
 the form of $300,000 convertible paper, or bank cur- 
 rency namely, $200,000 of bank note circulation, and 
 $100,000 due depositors on demand. The item last 
 named, although it be no where in existence, (for neither 
 the bank nor the depositors really possess it,) is as truly 
 money, and performs its office as well, as the notes in 
 actual circulation; because, whenever depositors find 
 use for their money, the bank is compelled either to pay 
 them in coin or to increase to that extent its issue of bills. 
 And if they should all simultaneously demand their 
 deposites, and the bank should pay them in bills, its cir- 
 culation would of course be increased to the full extent 
 of the deposites. The truth is, the money of the mer- 
 chant, or capitalist, deposited in bank for safety or 
 convenience, is as truly in circulation as that which he or 
 others carry in their pockets. It seems strange that a 
 fact so obvious and so important as this, should have 
 been overlooked by most writers on the subject of paper 
 money. 
 
 This bank, then, having taken $100,000 of coin and 
 transformed it into $300,000 of convertible paper, has 
 increased the quantity of circulating money $200,000. 
 The increase, however, is only temporary, since, as I 
 have already shown, it results ultimately in a mere sub- 
 stitution of convertible paper for coin, by driving from 
 the channels of circulation an equal amount of the lat- 
 ter. A very simple, yet certain rule for ascertaining 
 the extent to which banks first increase the quantity, but 
 finally merely change the quality of money, is, to sub- 
 tract the amount of capital paid in from the gross amount 
 of loans and all other investments : the difference will 
 be the true answer. 
 
CHAP. V.] CONVERTIBLE PAPER MONEY. 287 
 
 Such is a brief outline of the process by which con- 
 vertible paper is engrafted on money, and made to per- 
 form a share of its services. In the case just assumed 
 and presented as an illustration, we found that the locking 
 up of one dollar of money, in the form of coin, set free 
 three dollars in the form of convertible paper ; and this 
 is probably about the ratio of transformation which ac- 
 tually takes place under the banking system as it now 
 exists. Therefore, while the paper dollar purports to 
 represent a dollar of coin, it in fact represents but the 
 third part of a dollar. But since all who desire to 
 do so, may exchange it for a whole dollar of coin, it of 
 course performs the office of a whole dollar. Seeing, 
 however, that its representative character is in part 
 fictitious, and knowing that it often proves altogether 
 fallacious, we may naturally ask, why will people receive 
 it as money ? Why will they accept the shadow in place 
 of the substance ? The answer is to be found, first, in its 
 superior convenience ; secondly, in the belief that it can be 
 converted at pleasure into coin ; and thirdly, in that in- 
 tense and universal desire for money which springs from 
 its recognition as the standard of value, and from its being 
 the chosen instrument for satisfying contracts. la 
 virtue of these attributes, money has the power of com- 
 manding the presence of any desired commodity of value. 
 It is the immediate agent for supplying the objects of 
 all wants and desires which wealth is capable of minis- 
 tering to. Not so with other commodities. Generally, 
 they can only be exchanged for money, and not for tho.t 
 until the proper market and purchaser have been found, 
 which is always difficult and sometimes impracticable. 
 In short, with money in possession, we have but one ex- 
 change to make in order to secure the object of desire, 
 while with other surplus products we have two, the first 
 
288 CONVERTIBLE PAPER MONEY. [PART II. 
 
 of which (securing the money) is infinitely more difficult 
 than the second. 
 
 It is to these considerations that we must attribute the t 
 willingness of men accept the shadow of money in lieu 
 of its substance. All men of ordinary sagacity know 
 that the representative character of convertible paper 
 money is, in part at least, an ingenious fiction ; and 
 hence, that if any considerable portion of the bill holders 
 and depositors of the best managed bank should simul- 
 taneously demand payment, they must be refused. They 
 know, too, that when adverse trade or other cause creates 
 a panic, the whole fraternity of banks shut themselves 
 up in their shells like so many tortoises. It is known 
 also, from bitter experience, that the want of security 
 which attaches to this sort of money is not imaginary, 
 since the holders of it in the United States have lost 
 within the brief period of its existence here, more than 
 $100,000,000 by broken banks and depreciated bills, to 
 say nothing of the still heavier losses incurred by share- 
 holders. And yet we find that the desire of money, 
 combined with the superior convenience of the paper 
 material, leads men possessing a full knowledge of the 
 hazards, not only to accept the substitute but to receive 
 it with alacrity. 
 
 But how, it may be asked, does it supplant the coin 1 
 I answer, simply by filling the measure of money too 
 full, or rather, by attempting to heap it up, for it is 
 always as full as the fluid nature of its functions will 
 bear. It has been shown, for instance, that whenever 
 the enlargement of a particular locality or section is 
 attempted, the increase first diffuses itself throughout 
 the whole machine, and afterwards disappears ; and 
 inasmuch as paper money, like every other commodity, 
 gravitates towards its market of greatest value ; which, 
 
CHAP. T.] CONVERTIBLE PAPER MONEY. 289 
 
 with this, is its place of redemption, it follows necessar- 
 ily that the surplus taken away and diffused, must be in 
 coin, which is of uniform value everywhere. 
 
 It now remains to inquire whether convertible paper 
 has any other recommendation than that of superior 
 convenience. This is clearly the only benefit that the 
 community at large derive from its use ; for although 
 its material is much less expensive than that of coin, yet 
 no one ever received from the banks a single dollar of it 
 without giving in exchange, or promising to give, an 
 amount of value equal to that which it purports to repre- 
 sent, and which really belongs to the material of coin. 
 I am aware that the popular opinion is, that banks / 
 increase the quantity of money, and that this is benefi- 
 cial to the community. The premiss I have already 
 shown to be false, and with that the inference must fall. 
 Besides, the inference is not legitimate. So far from it, 
 indeed, that, if it were true that banks increase the 
 quantity of money in circulation, they would be vastly 
 more mischievous than they really are. 
 
 If, then, there are other benefits inherent in this sys- 
 tem, they must inure to the banks themselves. The 
 invention has obviated the necessity of value in the 
 materials of money, to an extent precisely equal to the 
 excess of bank discounts and other investments over 
 bank capital. That excess is known to be large, and 
 the profits thence resulting, necessarily accrue to the banks 
 themselves, since they receive interest on the amount 
 without possessing the capital. They also gain the 
 principal, as well as the interest, on that portion of their 
 circulating bills which are never returned for redemp- 
 tion. When, in addition to these advantages, which are 
 legitimate fruits of the invention, it is considered that 
 banks are usually invested with the attribute monopoly, 
 25* 
 
290 CONVERTIBLE PAPER MONEY. [PART II. 
 
 which screens their profits from the equalizing tendencies 
 of the natural laws of trade, we might readily conclude 
 that the production of convertible paper money is highly 
 profitable to those engaged in it : under that impression 
 men become shareholders in banks. It is familiar knowl- 
 edge, however, that, in this country at least, no other 
 business has been equally disastrious. How shall we ac- 
 count for a result, apparently so unnatural 1 In the first 
 place I think we may safely attribute many bank disasters 
 to the want of knowledge and skill on the part of those 
 engaged in the business ; and in the second place, 
 to the demoralizing tendencies of the business itself, 
 which has been found to stimulate the dishonest propen- 
 sities of so many of the managers and clerks. 
 
 In evidence of the prevailing ignorance on the subject, 
 it may be observed that there is scarcely a state in the 
 Union but that has permitted, by special grants, a greater 
 extent of banking than would have been established by 
 the natural laws of trade if left to themselves. They 
 have thus, without perceiving the fact, virtually des- 
 troyed the very monopolies they designed to grant. 
 Now York and some other states have wisely abandoned 
 the old system of special grants, and have thrown open 
 the business to all who will conform to prescribed condi- 
 tions. This is an advance in the right direction, since 
 the new system is more equitable and more secure than 
 those which it supersedes ; but it has not reached the root 
 of the evil. The radical defect in our banking system I 
 conceive to be the absence of individual liability on 
 the part of shareholders. The origin of most of those 
 disasters, and consequent losses to proprietors and 
 creditors, which we find recorded in every page of its 
 history, may be clearly traced to that fatal omission ; 
 and yet, strange as it may appear, a large majority of 
 
CHAP V.] CONVERTIBLE PAPER MONEY. 291 
 
 both classes of sufferers have pertinaciously resisted 
 every attempt to engraft on the system that just and 
 effectual expedient for increasing their security. With 
 that simple clause inserted in bank charters, .we should 
 not find their affairs placed under the management of those 
 who were either needy, incompetent, or unworthy of confi- 
 dence. Nor should we then find, as we now do in some 
 instances, a board of directors owning less than the twen- 
 tieth part of the capital over which they preside. To loan 
 money securely and well, requires the keen sagacity of 
 personal interest. 
 
 But even if the science of banking were thoroughly 
 understood, the art perfect, and its processes guided by 
 enlightened and skilful owners, the business would not 
 then be so profitable as we are apt to imagine. If 
 thrown open to the whole community, competition would 
 of course bring its profits, ultimately, to correspond 
 with those of all other departments of production. But 
 I mean to say, that if confined to the favored few, by 
 special laws, the profits would not be much if any higher 
 than the average. A few words, in explanation of the 
 manner in which banks create value v will demonstrate 
 the correctness of this assertion. 
 
 Banking, like mining, metallurgy and coining, pro- 
 duces money, but it is of a kind which loses its value 
 when returned and redeemed ; and as this occurs sooner 
 or later with nearly all that it issued, it follows that the 
 only value created by the production of convertible paper 
 money, is the amount of interest, while in circulation, 
 of the gross quantity produced, together with the princi- 
 pal of that portion which is lost or destroyed. The 
 only other source of revenue in legitimate banking is, 
 interest on the actual capital, which, it is well known, 
 may be obtained as readily and more securely without 
 
292 CONVERTIBLE PAPER MONEY. [PART II. 
 
 resorting to that expedient. Now, before we can de- 
 termine the net profits of any pursuit, we must ascertain 
 the cost, and deduct it from the gross value produced. 
 The cost of producing convertible paper money consists, 
 1, of the paper, plates, and printing of the bills ; 2, of 
 the rent or use of banking houses ; 3, of furniture, 
 books, stationary, &c. ; 4, of the salaries paid to officers 
 and clerks ; 5, of losses by frauds, forgeries, over-drafts 
 and insolvencies. If these expenses, and these unavoid- 
 ble losses, which to some extent must occur in the bu- 
 siness of a skilfully managed and fortunate bank, be 
 added together, it may be inferred that they about equal 
 the value produced that is, they absorb the interest 
 received on the excess of loans over capital, together 
 with the principal of circulating notes lost and destroyed 
 leaving to the stockholders nothing more than interest 
 on their capital, which it would have earned with far 
 greater certainty if directly loaned by themselves. If 
 we make a similar estimate where either skill or integ- 
 rity, or both, have been wanting in the officers and man- 
 agers, we may expect to find that the expenses and losses 
 absorb not only the entire value created, but in addi- 
 tion, some portion of the capital and its revenue ; and 
 in extreme cases, the whole of these together with the 
 value of the circulating notes and deposites. These 
 inferences, fairly deducible from the nature of the bu- 
 siness, are completely verified by experience and obser- 
 vation ; and they warrant the general conclusion, that, 
 when viewed as a department of business, the production 
 of convertible paper money has not been, nor is it likely 
 to be, profitable to those engaged in it. 
 
 The worst feature of this invention remains to be 
 noticed. Its tendencies are eminently demoralizing. 
 By its alternate and ever recurring expansions and con- 
 
CHAP. V.J CONVERTIBLE PAPER MONEY. 293 
 
 tractions of the money machine, it keeps the standard 
 of value constantly vibrating. This unsettles business 
 as -well as prices ; it makes fortunes and mars them ; it 
 excites men's gambling propensities, which are sufficiently 
 strong by nature ; it leads to recklessness, extravagance, 
 and immoral practices. These influences are felt, less or 
 more, by the whole community, while to those employed 
 in the paper money laboratories, the temptations to fraud 
 and peculation are so strong, and the opportunities so 
 inviting, that many men of ordinary honesty are thereby 
 turned into rogues. 
 
 Another evil consequence of this method of producing 
 money deserves a passing notice namely, its tendency, 
 when aided by restrictions on external commerce, to 
 keep the measure of money too full. From what has 
 been shown of the nature and uses of money, we may 
 safely conclude that the desire for that article can never 
 be fully satisfied ; and hence, that the supply can never 
 equal the demand. But since we know that the market 
 value sinks as the supply increases, we may readily infer 
 that, when money passes at the market value of the 
 material whereof it is made, as is the case with coin, the 
 supply will be kept within the limits of profitable pro- 
 duction. This natural veto on the excessive production 
 of coin, is inoperative when applied to an excessive issue 
 of convertible paper, because the market value of the 
 latter is not dependent on the cost of production. But 
 for restraining that evil, nature has provided another 
 law equally effective namely, the adverse balance there- 
 by produced in external commerce, and the consequent 
 abstraction of the specie basis of the paper issues, which 
 compels the banks to curtail their circulation or fail, 
 either of which alternatives will divest money of its sur- 
 plus quantity. Where international commerce is pro- 
 
294 CONVERTIBLE PAPER MONEY. [PART II. 
 
 hibited, this natural restraining law is of course annulled, 
 and as a consequence, a mixed currency, consisting of 
 coin and convertible paper, is no longer a true measure 
 of value, but, on the contrary, altogether arbitrary and 
 uncertain. Where external commerce is trammeled by 
 the imposition of duties on imports, the consequences 
 are somewhat analagous. These duties, for example, 
 first diminish imports by protecting, and thus increasing 
 the production of, their domestic rivals. This brings in 
 coin to restore the balance of trade ; the coin increases 
 the basis of convertible paper, whereupon the banks 
 increase their issues, which enhances prices and checks 
 exports. The inflation of money and consequent en- 
 hancement of prices go on increasing until an excess of 
 imports is called in, by the high prices, sufficient to 
 carry away a part of the coin, which, in its turn, forces 
 in the excessive issue of paper, and generally with so 
 much suddenness that the result is an explosion or 
 more properly, a collapse of the banking system. These 
 consequences are not only legitimate but inevitable, be- 
 cause, as we have just seen, the only restraint upon bank 
 expensions is the fear of losing coin. The different 
 banks of the same country would, however, be a check 
 upon each other, were it not for the well known fact that 
 their managers all become excited at the same time ; 
 and worse still, they inoculate the whole community with 
 their madness. It may be said, therefore, that conver- 
 tible paper money, when co-existent with tariff laws, 
 tends to keep the measure of money too full, besides 
 causing the standard of value to vibrate more suddenly, 
 and to far more ruinous extremes. 
 
 I have now finished my survey of the uses and pro- 
 perties of money in its two most customary forms ; and 
 if the views that have been advanced are sound, they 
 
CHAP. V.] CONVERTIBLE PAPER MONEY. 295 
 
 establish the truth of the conclusions which follow 
 viz : 
 
 First, That money in the form of gold and silver 
 coins, although an invention ef unrivaled utility, is, 
 nevertheless, liable to three serious objections, namely : 
 it costs too much to produce, it is too heavy for conveni- 
 ance, and it lacks the requisite uniformity of value. 
 
 Secondly, That the invention of convertible paper 
 money was designed to mitigate two of these defects by a 
 partial substitution of representative value (mainly ficti- 
 tious) for real value, and a material of paper for one of 
 metal. 
 
 Thirdly, That while the invention last named has 
 secured the aims of its projectors, by partially avoiding 
 the objections referred to, it has produced other mis- 
 chiefs of a far more serious kind, which may be recapi. 
 tula ted thus : 1, It has turned out that the fictitious 
 value of the convertible paper costs its producers as 
 much or more than it costs to produce the coin which it 
 purports to represent : this, of itself, neutralizes one of 
 the two advantages anticipated from the invention. 2, 
 The money thus produced has proved to be insecure ;' 
 for although it costs as much to produce as coin, it has 
 no value when its producers become insolvent, which 
 happens so often that its holders are subjected to im- 
 mense losses. 3, It is clemoralizing and otherwise inju- 
 rious to the general welfare, since, by its ceaseless 
 expansions and contractions of the measure of value, it 
 has thrown around commerce, and in fact every other 
 branch of production, the chance-like uncertainties of 
 the gambling table. 4, It tends, when aided by tariff 
 laws, to keep the measure of money too full, which, 
 besides giving undue advantages to foreign nations, by 
 enhancing the price of imports while it does not affect 
 
296 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 the price of exports, is certain to be followed by ruinous 
 contractions or a general suspension of specie payments. 
 To counterbalance these great evils, convertible paper 
 money has but one compensating attribute, which in 
 comparison with them is but as a feather in the opposite 
 scale namely, it possesses greater convenience than 
 coin. 
 
 SECTION 3. 
 Of Inconvertible Paper Money. 
 
 Inconvertible paper has often filled the office of money? 
 but never, that I am aware of, in conformity with a pre- 
 viously devised and digested plan. Its producers have 
 been governed by no fixed rules ; they have adopted it as 
 an expedient either of necessity or of fraud : and the 
 extent of issues, in each case, has been governed by 
 the joint operation of the motive and the means. 
 
 It is not my purpose to investigate the properties of 
 money issued thus at random. But I desire to present 
 the outlines of a plan of inconvertible paper money, by 
 means of which, it is believed, all that is useful in coin 
 and convertible paper may be secured, and all that is objec- 
 tionable in each avoided, except so far as coin may be 
 required in our external commerce and in the circulation 
 of fractional parts of a dollar. The plan I would sug- 
 gest may be thus set forth : 
 
 Let the Constitution of the United States be amended, 
 by the insertion of provisions something like the fol- 
 lowing : 
 
 First, That the production and emission of conver- 
 
CHAP. V.] INCONVERTIBLE PAPER MONEY. 297 
 
 tiblc paper money in the United States be henceforth 
 interdicted, and that the amount thereof already emitted 
 and now in use, be withdrawn from the channels of cir- 
 culation and suppressed, in the manner following, to 
 wit : by an annual diminution of the loans and discounts 
 of each and every bank in the Union now exercising the 
 functions of discount, deposite, and circulation ; which 
 annual diminution shall be at least equal to one-tenth of 
 the amount by which their loans and discounts at present 
 exceeds the amount of their capital actually paid in and 
 not otherwise employed. [This would leave them at the 
 end of ten years without any bills in circulation, without 
 any capital loaned out except their own, and with their 
 deposites, if any, remaining in the vaults unemployed. 
 It would therefore not only deprive them of the power 
 of producing money, but so effectually dry up their 
 sources of profit that they would be likely to disband and 
 let each proprietor loan his own capital.] 
 
 Second, That the existing clause in the Constitution, 
 which establishes gold and silver coins as the standard 
 of value and as the legal tender in payment of debts, be 
 so modified and enlarged as to include the money issued 
 under and by authority of the ensuing clause namely : 
 
 Third, That the government of the United States, in 
 payment of its current expenses, issue annually, for ten 
 consecutive years, $25,000,000 of paper money, to be 
 of the similitude of bank notes, and of various denom- 
 inations, ranging from $1 to $1,000 ; and to be worded 
 thus : 
 
 " Dollars,, legal Money of the United States, 
 
 issued by authority of the people thereof. Dated 
 Washington city, January 1, 18 . 
 
 26 
 
298 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 (Signed) A. B., President of tlie United States. 
 
 " C. D., Treasurer. 
 (Countersigned) E. F., Commissioner. 
 " G. H. Register." 
 
 [Here should follow detailed constitutional provisions, 
 prescribing the method of production and emission, 
 and establishing the most rigorous of penalties for every 
 act of unfaithfulness committed by those entrusted with 
 these operations especially /or the act of transcending 
 the prescribed limits of emission.] 
 
 That, at the expiration of the ten years, the popula- 
 tion of the United States be ascertained, and such addi- 
 tional issue of this money then made as will render 
 the aggregate emission, when expressed in dollars, equal 
 to ten times the whole number of inhabitants ; and that 
 every year thereafter the emission be equal to ten times 
 the annual increase of population, so that the number of 
 dollars in paper money and the number of inhabitants 
 will uniformly stand as 10 to 1. 
 
 Fourth, That the production and emission of every 
 other substitute for coin be strictly prohibited. 
 
 Such is an outline of the monetary policy which I ven- 
 ture to recommend. It will be perceived that it embraces 
 the method of transition from convertible paper money 
 to inconvertible, as well as the plan of producing and 
 emitting the latter. I will now proceed to explain what 
 I conceive to be its advantages. 
 
 Paper money, thus issued, would cost no thing, or next 
 to nothing, to produce, nor would it be inconvenient 
 from weight. Therefore, it would clearly obviate two 
 of the three serious objections to which coin is liable. 
 And since its quantity, as compared with population or 
 commerce, would be invariable, it follows that its value 
 
CHAP. V.] INCONVERTIBLE PAPER MONEY. 299 
 
 or purchasing power would be uniform : therefore, it 
 would be free from the other objection which I have 
 urged against coin, and which applies with still greater 
 force to convertible paper. It would possess another 
 advantage over coin which deserves notice. When coin 
 is lost or destroyed, there is an absolute loss of value 
 the owner loses, no one gains ; but whenever this should ; 
 meet the same fate, the loss of the owner would be bal- 
 enced by the gain of the community. If, in these essen- 
 tial attributes, it is thus superior to coin, it is scarcely 
 necessary to compare it with convertible paper, or with a 
 circulating medium made up of coin and bank notes. It 
 may not however be amiss to say, that, in virtue of its 
 irredeemable character, it would be free from the wide- 
 spread mischiefs produced by bank panics, suspensions^ 
 and failures, which periodically occur under that systems 
 It would thus greatly mitigate the severity of commer- 
 cial crises, and perhaps render them altogether harmless. 
 In a word, it would remedy all the defects inherent in 
 coin and in convertible paper. The important inquiry 
 then is, would paper issued in conformity with this plan 
 perform the office of money 1 in other words, would it 
 be recognized as money, and received as money ? And 
 if so, would it be free from new defects peculiar to itself? 
 I answer in the affirmative for the reasons which follow. 
 In contemplating money as an instrument invented to 
 fill a specific office in the laboratory of production, we 
 discovered that the inventor had made no effort to control 
 its size, but left it to such development as the natural 
 laws of trade might happen to award. And pursuing 
 our inquiries, we found that these laws have awarded to 
 that instrument a very determinate size ; one which not 
 only qualifies it for measuring and transferring all other 
 values in search of a market, but for measuring them 
 
300 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 correctly : for whenever, from any cause, it is either 
 diminished or enlarged, so as to destroy the correctness of 
 its measuring power, these laws speedily bring it back to 
 the standard size which they have established. There- 
 fore the quantity of money in circulation, w T hen the 
 instrument is fashioned after the model represented by 
 coin, is altogether dependent on the cost of its produc- 
 tion, value of material is the only essential element. 
 Convertible paper money is constructed on. nearly the 
 same principle. In fact, it is a part of the same instru- 
 ment, since the paper emissions are based upon coin and 
 purport to represent it , the only difference being that a 
 representative value, partly fictitious, is there substitu- 
 ted for a real one. Consequently, this modification of 
 the original invention has not interfered with the princi- 
 ple just pointed out.. The size or quantity of a circula- 
 ting medium compounded of coin and its professed repre- 
 sentative, is entirely dependent on the cost of producing 
 coin, and the aggregate is precisely the same as though 
 it consisted of coin alone. In other words, the quantity 
 of money, as that instrument is at present constructed, 
 is governed by the natural laws of trade. 
 
 Now the instrument which I propose, would be con- 
 structed upon a principle differing radically from this. 
 Its magnitude or quantity , instead of being governed 
 by natural law, would be governed by positive law. It 
 will be readily perceived that the positive limitation of 
 quantity in this instrument would accomplish the only 
 useful purpose that cost of production does in the other ; 
 and that it would do it not only as well but much bet- 
 ter, provided human enactments could be enforced with 
 as much certainty as the laws of nature are, because the 
 cost of producing coin is constantly fluctuating, and as 
 a matter of course its value is equally unsteady. 
 
CHAP. V.J INCONVERTIBLE PAPER MONEY. 301 
 
 If, then, as I have endeavored to show, and as a mo- 
 ment's reflection will convince any one, the presence of 
 value in the materal of money be only required for the 
 purpose of limiting its quantity, how much better and 
 cheaper would it be to establish the limitation by an 
 unbending organic law of the state, and to select a ma- 
 terial free from cost and inconvenience. No one can 
 fail to perceive the immense advantages that would 
 ensue. But it may be asked, how would you secure for 
 this improved instrument its general recognition and 
 acceptance as money, when it neither consists of nor 
 represents a material of value? It is believed that the 
 plan proposed would secure that end. Let us see. 
 
 The substance of the proposition is this : That the 
 people of the United States grant to their government an 
 exclusive patent for the production and emission of paper 
 money, accompanied by positive and unbending restric- 
 tions as to the quantity it may emit, and as to the legal 
 value at which it shall be emitted by the government and 
 received by the people, not only in exchange for commo- 
 dities but in payment of debts. And in order to prevent 
 any sudden or even ultimate variation of the quantity of 
 money now in circulation, I have proposed that the 
 emission correspond in time and quantity with the retiring 
 of convertible paper money ; for it is to be remarked 
 that our banks now furnish, in the form of circulating 
 notes and deposites, about $250,000,000 of convertible 
 paper money, which amount agrees with that of the 
 inconvertible paper it is proposed to issue within the 
 time named for winding up their affairs ; but since the 
 $50,000,000 of coin now held by them would be simul- 
 taneously set free, it follows that our circulating medium 
 would be increased to that extent by the transition ; which 
 increase, however, would scarcely equal the relative 
 26* 
 
302 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 growth of our commerce during the same period. As an 
 additional, but perhaps unnecessary safeguard, I have 
 also proposed that the production and emission of every 
 other sort of money, save gold and silver, of which there 
 need be no fears of a redundancy, be stricly prohibited. 
 
 The name (Money) and the legal character that would 
 be thus stamped upon this paper by the supreme law, 
 combined with the promised recognition implied in grant- 
 ing authority to issue it, could not fail to secure its gen- 
 eral recognition and acceptance as money everywhere 
 within our borders, especially as the want of some other 
 medium, to take the place of bank notes withdrawn from 
 circulation, would be intense, while this would be the 
 only legal substitute attainable. Under circumstances 
 like these, the result could not be doubtful : the paper 
 would be not only recognized as money, but cordially 
 received in that capacity. And it would be equally cer- 
 tain to do its work well. The impossibility of obtaining 
 it without giving in exchange an amount of real value 
 equal to the unchanging legal value wherewith it is 
 stamped, combined with the invariableness of its quan- 
 tity, would render its measurements of value both true 
 and uniform. Its lightness and adaptation to rapid 
 counting would render it convenient as an instrument of 
 transfer, which fact is fully established by experience 
 derived from the use of its prototype, bank notes. 
 
 Now if this kind of money is producible without cost ; 
 if it will be recognized and received as money ; if it will 
 measure values with uniform correctness, and transfer 
 them without inconvenience why is it not perfect? It 
 would seem to combine all the good qualities we could 
 desire, and to be free from bad ones, unless they have 
 been overlooked. Perhaps it may be urged in objection 
 to the plan, that its adoption would invest government 
 
CHAP. V.] INCONVERTIBLE PAPER MQNEY. 303 
 
 with a monopoly. If so, it may be answered that the 
 right to produce and establish the standard of value is a 
 legitimate and useful prerogative of government, a 
 prerogative conferred on ours at its birth, and which 
 it has uniformly exercised,, albeit imperfectly, by coin- 
 ing gold and silver money and regulating the value 
 thereof. In truth, the functions of money are so inter- 
 woven with the affairs of men that its stability and uni- 
 formity of value are almost as essential to their pros- 
 perity as is the establishment and maintenance of the 
 right of property itself. And since we have seen that 
 the production of convertible paper money is demoralizing 
 and unprofitable to those engaged in that pursuit, it follows 
 that the unqualified government monopoly herein propo- 
 sed, and whieh it is believed the framers of our consti- 
 tution intended to confer, would, like the maintenance of 
 the right of property, deprive the citizen of no privilege 
 but that of plundering his fellow men without advantage 
 to himself. It is proper to remark, also, that where the 
 form of government is republican, the profits and other 
 advantages resulting from the monopolies wherewith it 
 is invested, inure to the people themselves, and are 
 shared by all. 
 
 But a more plausible objection to my plan may be 
 grounded on the conceded fact that the paper issued in 
 conformity with it would not be recognized as money in 
 foreign countries ; and hence, that it would be defective 
 as an instrument of external commerce. However valid 
 this objection may be, when urged against the adoption 
 of a circulating medium of inconvertible paper alone, it 
 is altogether inapplicable to my scheme, as will be shown 
 presently. It is believed, however, that it would not be 
 entitled to much if any weight when applied to the 
 stronger case just referred to. In the ordinary transac- 
 
304 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 tions of international commerce, bills of exchange are 
 employed instead of money, the latter being only re- 
 quired for preserving the equilibrium, which it does by 
 passing from the debtor to the creditor community when- 
 ever an adverse balance occurs. Now it is obvious that 
 bullion would perform this service quite as well as money, 
 for, like that, it is of uniform value everywhere. True, 
 the exportation of bullion would not check importations 
 so promptly as does the exportation of coin, because the 
 latter acts directly on their market price, while the for- 
 mer could only affect the market price of bullion ; but 
 since by elevating that, the cost of imports and the mar- 
 ket value of exports would be increased, it is clear that 
 the ultimate consequence would be the same in both 
 cases, namely, a check to imports and an impetus to 
 exports. For these reasons, it is believed that money 
 in the form of coin is not essential even in foreign com- 
 merce ; and hence that coin and all other money based 
 on the value of its material, might be, with safety and 
 profit, entirely displaced by inconvertible paper, with the 
 exception, perhaps, of fractional parts of a dollar. The 
 soundness of this conclusion is in some measure confirmed 
 by the experience of Buenos Ayres. The commerce of 
 that state has been carried on for many years with no 
 other money than inconvertible paper. They have not 
 issued it in conformity with any established plan ; they 
 have issued twelve times the quantity called for by their 
 commerce ; they increase the emission whenever the 
 wants of government are pressing ; the government itself 
 is so weak as to be liable to foreign subjugation, in which 
 case the purchasing power of its money would be des- 
 troyed. Yet, in the face of these serious defects, their 
 paper money performs its office not only to their own 
 satisfaction, but to the satisfaction of those of other 
 
CHAP. V.] INCONVERTIBLE PAPER MONEY. 305 
 
 countries who are connected with their external com- 
 merce. 
 
 There are, however, some objections to the entire 
 disuse of the precious metals as money ; but it is unnes- 
 sary to name them, since they, taken in connexion with 
 the possible validity of the objection just disposed of, 
 have deterred me from proposing that policy. My pro- 
 position is merely designed to transform that portion of 
 our circulating medium which consists of convertible pa- 
 per, into inconvertible or rather, to expel the one and 
 fill its place with the other leaving the coin portion un- 
 disturbed. We should thus blend the service of the two 
 portions, and secure the utility of both inventions. The 
 paper would circulate at home, coin partly at home and 
 partly in the channels of foreign commerce. It may be 
 useful to illustrate this point briefly. 
 
 It has been shown from well authenticated statistics 
 that, at the present cost of producing coin, our aggregate 
 of money, when expressed in dollars, is equal to 15 times 
 the number of our inhabitants. But this sum is known 
 to be subject to variations connected with foreign com- 
 merce. For example, when the exports exceed the im- 
 ports money flows in ; when the imports are in excess it 
 flows out. And as it respects the United States, it must 
 be remarked that when the balance of trade is favora- 
 ble and coin flowing in, our banks increase their issues, 
 when the balance is adverse and the coin leaving us, 
 they contract them ; which influences necessarily increase 
 the extent of these variations. The data furnished by 
 the records of our foreign commerce show that the excess 
 of exports of coin over its imports, or of imports over 
 exports, in any single vibration of the balance of trade, 
 never exceeds $25,000,000 rarely half that sum. . 
 The statistics of banking show that their expansions and 
 
306 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 contractions occupy much wider limits. In the memor- 
 able inflasion of 1836, which stimulated to madness the 
 gambling propensities of our people, and in the subse- 
 quent contraction, ending in 1841, which bankrupted not 
 only individuals but states, and engendered immoral 
 practices so gross that they have cast a shade over that 
 chapter of our 'history the two extremes were $155,- 
 000,000 apart. With the exception of this instance, it 
 is believed that the oscillations of our convertible paper 
 money have not transcended the limits of $75,000,000; 
 which, added to the variations in coin, gives as the aggre- 
 gate variation in our 4 quantity of money $100,000,000, 
 or $5 per head. In other words, our circulating medium, 
 as at present compounded of coin and its professed repre- 
 sentative, ranges from $12^ to 1 of population, up 
 to 17^ to 1. Convertible paper money is peculiarly 
 liable to variations in quantity, because it purports 
 to represent more coin than it really does, in * conse- 
 quence of which it is compelled to contract its vol- 
 ume whenever a panic or a foreign demand for coin 
 sends it in for redemption. It is apparent, therefore, 
 that with a circulating medium exclusively metalic, or 
 mixed in the manner I have proposed, these vibrations in 
 our quantity of money would be confined within much 
 narrower limits limits which we may safely say could 
 never exceed $60,000,000. This would give as our 
 minimum 13| to 1. $30,000,000, or $1| to 1 of popu- 
 lation, would be abundant to fill the channels of circula- 
 tion with fractional parts of a dollar. Taking the last 
 named sum from the minimum, it leaves $12 to 1 of 
 population, as the largest extent to which irredeemable 
 paper could be issued without resorting to bullion to aid 
 in liquidating the adverse balances of foreign commerce. 
 My proposition is but 10 to 1 ; consequently it would 
 not render that expedient necessary. 
 
CHAP. V.] INCONVERTIBLE PAPER MONEY. 307 
 
 If our money were constructed according to the plan 
 suggested, it would consist of two-thirds paper and one- 
 third coin. At home they would work in harmony and 
 concert in measuring and transferring values, and in satis- 
 fying contracts, with this difference only : the paper being 
 the lighter and more convenient of the two it being capa- 
 ble of travelling faster and at less expense than coin it 
 would necessarily receive a preference over it, ranging 
 from one-quarter of one per cent, to two per cent., accord- 
 ing to circumstances and locality. But when an adverse 
 balance of trade opened the door to a foreign demand for 
 money, coin alone could satisfy that demand, which 
 would give it, momentarily, a higher market value than 
 its paper colleague. That the difference, however, would 
 be both slight and temporary, is made manifest by the 
 teachings of 1837. Our currency had then been inflated 
 beyond all precedent ; the inflation had engendered spec- 
 ulations, foreign loans and importations to an untold 
 amount ; and when the re-action came, the banks suspen- 
 ded cash payments at almost the first call for coin, leaving 
 the country flooded with an inconvertible paper currency, 
 and with a large balance of foreign indebtedness. Under 
 this accumulation of adverse circumstances, the paper 
 of the suspended banks in New York the point at which 
 the foreign demand for coin was strongest did not sink 
 more than 12 per cent, below coin, and it recovered at 
 least the half of this depression as soon as the panic 
 caused by the explosion had subsided. The twenty-six 
 years suspension of cash payments by the Bank of Eng- 
 land, furnishes another notable illustration in point. 
 During the greater part of the period of suspension, the 
 bills of that bank were almost upon a par with coin ; 
 and their value was never seriously depressed, except in 
 the more trying crises of the wars against Napoleon. It 
 
308 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 must be borne in mind that the depressions here referred 
 to were mainly produced by causes from which the money 
 I have proposed would be entirely exempt. It is well 
 known, for instance, that the bills of suspended banks 
 are depressed in value by the non-fulfilment of the prom- 
 ise stamped upon them, by their excessive emission, by 
 a knowledge of their utter worthlessness in case the sus- 
 pension proves to be*a failure, as it often dees, and in 
 most cases by their want of legality, as well as by the 
 absence of their foreign recognition as money ; which 
 last is the only cause of depression that would apply to 
 inconvertible paper money issued in accordance with the 
 plan suggested. It is believed, therefore, that the 
 strongest foreign demand for coin could not enhance its 
 market value, even temporarily, more than two or three 
 per cent., or at the utmost four per cent., above that of 
 its paper colleague. Arid we must not overlook the im- 
 portant fact that this temporary superiority of coin would 
 be caused by the expansion of its own market value, not 
 by a contraction of that of the paper money : the mar- 
 ket value of the coin would change, that of the paper 
 would remain as before, or rather, its purchasing power 
 would also increase, but in a less degree than that of the 
 coin. 
 
 Upon the whole, I think we may safely conclude that 
 the average market value of the paper dollar would be 
 higher than that of its metallic compeer. The sound- 
 ness of this conclusion can be tested only by experi- 
 ment ; but I have such entire confidence in the truth of 
 the theory whence it is derived, that I have no more 
 doubt that a fairly made experiment would verify it than 
 I have that the sun will rise to-morrow. 
 
 It remains to notice one other objection that may be 
 urged against this plan of money, and it is the only one 
 
CHAP V.J INCONVERTIBLE PAPER MONEY. 309 
 
 of any validity to which it is fairly liable. I refer to 
 the difficulty of confining the total emission within the 
 limits prescribed, and of guarding against other acts of 
 unfaithfulness on the part of those entrusted with its 
 production and emission, a difficulty which has its origin 
 in the frailty of humun nature. There can be little 
 doubt, however, of the feasibility of securing these ends. 
 Mature reflection would suggest a plan of guards, and 
 checks, and punishments, abundantly competent not only 
 to secure the faithful execution of the trust, but to guard 
 this money, more effectually than any hitherto produced, 
 from successful attempts to counterfeit it. The simple 
 expedient of connecting the President of the United 
 States with the trust and making him responsible for its 
 faithful performance, would probably be sufficient of 
 itself to prevent unfaithfulness ; for we have never yet 
 had, and it is hoped we never may have, an incumbent of 
 that office whose desire of fame, sense of duty, and love 
 of virtue, combined with the fear of punishment, have 
 not been sufficient to restrain him from the perpetration 
 of fraud and perjury for the sake of pecuniary gain, 
 however great. But it would not be right, nor prudent, to 
 put the fidelity of the President to so severe a test as the 
 sole trusteeship would involve. The trust should be 
 placed in the hands of the President, the Vice President, 
 and the Treasurer of the United States, together with a 
 Commissioner and a Register to be elected by the people. 
 Each of these trustees should not only sign and preserve 
 a record of every bill issued, but they should be enjoined 
 to fidelity by an oath, and deterred from infidelity by the 
 most severe and ignominious penalties known to our laws. 
 And if it should be deemed necessary to guard against 
 collusion on the part of the trustees, it might be required 
 that every bill issued should be registered and counter- 
 27 
 
310 INCONVERTIBLE PAPER MONEY. [PART II. 
 
 signed by one or more of the governors of states. These 
 suggestions are thrown out as an indication of the means 
 at our command for preventing excessive issues and other 
 frauds, not as the proper method of attaining that end. 
 Doubtless those who are skilled in such matters could 
 frame provisions far more appropriate and effectual . 
 
 In conclusion it may be observed that, by the adoption 
 of this plan of producing money and regulating the value 
 thereof, the people of the United States would save, in 
 diminished taxes, within the first ten years, $250,000,000, 
 and some $7,000,000 (or tenfold the increase of popula- 
 tion) annually thereafter, together with the interest of 
 the whole and the principal of whatever portion of the 
 emission should happen to be lost or destroyed. They 
 would, moreover, enjoy the convenience of paper money 
 without subjecting themselves to the manifold evils of 
 bank notes ; and they would possess a better, a more uni- 
 formly truthful measure of value, than coin, without its 
 accompaniments of cost and weight. It will be readily 
 admitted that these are advantages worth possessing ; 
 and, after mature reflection, I am free to declare my 
 conviction that they may be secured by the plan of 
 which I have given the outlines, and without the hazard 
 of a single returning evil. 
 
311 
 
 CHAPTER vi. 
 
 OF CREDIT ; AND OF THE RIGHT OF 
 PROPERTY IN ACTIONS. 
 
 It is known that great inequality exists in the pecu- 
 niary condition of mankind, and that the fact is chiefly 
 attributable to the various degrees of skill, diligence and 
 frugality wherewith nature has endowed different indi- 
 viduals, though it must be owned that unjust laws often 
 produce no small share of the inequality. In a former 
 chapter it has been shown that this inequality in the 
 ownership of wealth, by placing a superabundance of 
 capital and land in the hands of some proprietors of 
 industry, and a deficiency in the hands of others, led to 
 the expedient of Credit, which, for purposes of produc- 
 tion, equalized their distribution, and thus avoided the 
 necessity of any portion of the productive forces remain- 
 ing idle. It was there shown, also, that the right of 
 property in actions was instituted by governments for 
 the purpose of compelling the return of capital and land 
 thus loaned. I then expressed some doubts as to the 
 wisdom of that policy, and will now present the reasons 
 on which those doubts are grounded premising, how- 
 ever, that further reflection on the subject has resolved 
 them into convictions. 
 
 The establishment of this right is the most complex 
 feature of government, and its enforcement by far the 
 
312 CREDIT. [PART n. 
 
 most difficult duty that the state has undertaken to per- 
 form. Take it all in all, it has caused a prodigious 
 enlargement of the government machine. A vast ma- 
 jority of the laws of every civilized nation are designed 
 either to define, establish, enforce, or perfect this right ; 
 and the chief duty of the judiciary is to adjudicate, and 
 of the bar to prosecute, the claims and legal controver- 
 sies to which it gives rise. Yet how very imperfectly is 
 it enforced ! We frequently see debtors revelling in 
 wealth, which belongs to their creditors creditors who 
 have tried the remedies provided by government for se- 
 curing their rights, and found them utterly unavailing. 
 In truth, it is very rare so rare that it may be called 
 an exception to the general rule that any one who is 
 indisposed to pay his debts is compelled to do so by 
 virtue of legal remedies, however able he may be. 
 Therefore the right of property in actions, or to use a 
 more familiar phrase the enforcement of the obligation 
 of contracts, is not, practically, a reality. It is an illu- 
 sion, or rather, a rotten beam in the political edifice, 
 tempting the dependence of the unwary, but failing to 
 give them the needful support at the critical moment. 
 
 Now it is manifest that there must be some fundamen- 
 tal error in this policy. A right whereof the establish- 
 ment, definition and maintenance, consumes more than 
 one half the mental service devoted to legislation ; a 
 right which forms the staple of law-books, and the 
 attempted enforcement of which constitutes the chief 
 duty of judges, lawyers, jurors, witnesses, and a host of 
 government officials, should be something more than a 
 mere nullity. One of two things, therefore, is clearly 
 necessary : the right should be either strengthened and 
 made real by more perfect guaranties, or it should be 
 annulled. Which is the proper remedy ? Experience 
 
CHAP. VI.] CREDIT. 313 
 
 has demonstrated the impossibility of perfecting the 
 right, especially its enforcement ; but assuming it fea- 
 sible to increase in an essential degree its security, 
 which may well be doubted, it is believed that it would 
 be better policy, nevertheless, to abrogate it altogether 
 as relates to capital, but not as relates to land. 
 
 It has been shown that wealth is produced by the 
 joint effort of skill, labor, capital and land, and that in 
 every concurrent group the different agents correspond 
 in magnitude ; that is, there is sufficient of each to con 
 cur with the productive powers of the others. When 
 the proprietor of industry owns less of capital and land 
 than he is capable of laboring in concert with, he either 
 borrows more of these or he loans his industry to others ; 
 when his capital and land are in excess, he either loans 
 the excess or he borrows more industry. By these means 
 the productive forces are so distributed that the whole of 
 each is fully employed. These are the simplest forms of 
 credit. In these forms, and to the extent indicated, it is 
 highly advantageous to borrowers and to lenders, and for 
 that reason would exist in the absence of the pretended 
 guaranty. But there are other and more complicated 
 forms of credit, which doubtless originated in govern- 
 mental interference. I refer particularly to the existing 
 system of mercantile credits, especially in the United 
 States, where it is carried to a more pernicious extent 
 than it is in any other country. Under this system B 
 borrows capital in the form of merchandize of A, not 
 for the purpose of employing the capital himself, but for 
 the purpose of loaning it to C, who in his turn loans it 
 to D, and so on to the end of the alphabet each charging 
 a profit (beyond a fair commission for* the sale of goods,) 
 sufficient to cover interest and risk of loss on the amount 
 loaned. A large share of the internal commerce* of our 
 
 27* 
 
314 CREDIT. [PART n. 
 
 country is carried on under this system ; and instead of 
 being beneficial, it appears to me to be seriously detri- 
 mental to both prosperity and virtue. 
 
 It is known that 2 per cent, commission is charged 
 for guaranteeing sales on credit in those departments of 
 commerce where the hazards on such sales are least. It 
 is also known that in some branches of business, and in 
 the retail trade generally, the per centage of loss on 
 credit sales ranges from 10 per cent, upwards. We 
 may therefore safely assume that the mean loss on credit 
 sales is not less than 4 per cent. In passing from pro- 
 ducers to consumers, commodities are usually subject to 
 numerous sales or transfers of ownership. Take, for an 
 illustration, the article cotton. It first passes from its- 
 producer to the commission merchant, thence tathe manu- 
 facturer, thence again to the commission merchant, 
 thence to the jobber, thence to the retailer, and thence, 
 finally, to the consumer. This is its most direct route. 
 It sometimes has to pass through the hands of several 
 other intermediate agents. The same remarks will 
 apply to most other agricultural products, and, indeed, 
 with slight modifications, to every article that passes 
 through the channels of commerce. 
 
 We shall be safe then in assuming that the average 
 number of sales to which the articles of commerce are 
 subjected, before reaching consumers, is not less than 
 five. And we have just seen that the average profit 
 charged on each credit sale, to cover risk of loss, is four 
 per cent, or upwards ; so that consumers have to pay, in 
 addition to interest for the credit extended to them- 
 selves, not less than 20 per cent, more for goods which 
 have been transferred through the different agencies of 
 commerce by means of credit, than they do for those that 
 are transferred by means of cash payments. This is one 
 
CHAP. VI. J CREDIT. 315 
 
 of the legitimate fruits of the existing system of com- 
 mercial credits. It will be admitted that it is bitter ; 
 but I will proceed to show that the system bears another 
 class of fruits which are still more pernicious. 
 
 Is it asked what becomes of the 20 per cent, addi- 
 tional profits paid by consumers ? It is obvious that it 
 does not go into the pockets of merchants, as extra pro- 
 fits, for we have seen that it merely remunerates them 
 for losses on credit sales. It goes then to those mer- 
 chants who do not pay for the goods they buy on credit, 
 and to those consumers who do not pay for the articles 
 which they consume. Does it benefit either of these 
 classes ? Clearly not in a pecuniary point of view, for it 
 leaves them poor ; their only plea for not paying is inabil- 
 ity, and incase the plea is not well founded the law profes- 
 ses to enforce payment. Does it tend to elevate them in a 
 social or moral point of view, or to increase their happi- 
 ness in any respect ? Directly the contrary. It enables 
 them to sow the seeds of idleness, dissipation, improvi- 
 dence and other vicious habits, and to reap the harvest 
 of misery, which, in some form or other, invariably en- 
 sues. In short, this form of the credit system compels 
 the honest, industrious and frugal to pay one-fifth higher 
 for the goods they consume, in order that spendthrifts and 
 rogues may live in idleness and luxury. 
 
 It is generally supposed, however, that credit multi- 
 plies capital, and hence that without this extended sys- 
 tem of credits there would not be sufficient means to 
 prosecute commerce advantageously, if at all. This is 
 an error. The premises are altogether false. Credits of 
 the simplest kind merely shift, for a stipulated period, 
 the possession of capital, without either increasing or 
 diminishing its amount. But the complicated system of 
 mercantile credits which now prevails, scarcely does so 
 
316 CREDIT. [PART II. 
 
 much as that at least, while, like the simpler forms of 
 credit, it utterly fails to increase capital, it does not even 
 shift its possession to anything like the extent of the 
 credits granted : for in many instances, a line of indebt- 
 edness, running the whole length of the alphabet, might 
 be liquidated by a single transfer of property from Z to 
 A. Indeed, it often happens that Z and A are also con- 
 nected by a similar credit, so that the line of indebted- 
 ness forms a complete circle, in which case there is no 
 transfer of capital, provided the debits and credits in each 
 link of the series are equal and uniform ; since, in that 
 event, the whole indebtedness may be liquidated by off- 
 sets, without a single payment in cash, or other transfer 
 of property. The more general case, however, is the 
 one first named. The operation is something like this : 
 merchants of the first class, such as importing and com- 
 mission houses, usually advance either cash or accep- 
 tances at short date for their wares ; they sell them to 
 the jobbing merchant on a credit of six or eight 
 months ; the jobber sells them to the retailer, and the 
 retailer distributes them to consumers, on similar terms. 
 As a means of payment, the consumers rely either on the 
 debts due them for their own products which they had 
 previously sold on credit, or on their future earnings 
 generally the latter. 
 
 Now it is evident that, where consumers rely on the 
 debts due them for liquidating their own indebtedness, 
 this system of credits does not alter the distribution 
 of capital, nor the pecuniary condition of any one of 
 those who participate in it, otherwise than by compel- 
 ling them all to pay 20 per cent, higher for the 
 products which they consume. But where consumers 
 rely on their future earnings to pay for goods which 
 they have bought on credit and consumed, the effects 
 
CHAP. VI.] CREDIT. 317 
 
 of the system are different. It does not then augment 
 capital, nor in any wise increase the facilities of produc- 
 tion or the interchange of commodities ; but it is vir- 
 tually a loan, at an enormous profit, from the mercan- 
 tile to the agricultural, manufacturing, and mechanic 
 classes, of an amount of capital which, but for the sys- 
 tem, the latter would save out of their own earnings 
 save, too, without stinting their consumptions, for we have 
 seen that they would then obtain their supplies 20 per 
 cent, cheaper than they do at present. It therefore 
 tends to impoverish all classes but the mercantile, and 
 to demoralize that without enriching it, since, as already 
 shown, the extra profits charged by merchants merely 
 compensate them for their losses by bad debts. 
 
 For these and other reasons which might be advanced, 
 I regard our present extended credits as going far be- 
 yond the boundaries of utility ; nor can it be doubted, 
 I fancy, that they owe their extraordinary development 
 to the interference of government. The abrogation of all 
 laws for the collection of debts would speedily lop off 
 the excresencies of the system, and bring credit back 
 to the performance of that office which it was originally 
 designed to fill namely, to equalizing, for the pur- 
 poses of production, the distribution of the productive 
 forces. 
 
 It may be supposed by some, that without the stimulus 
 of law, credits could not, or would not, be kept up to the 
 extreme limits of utility. I am entirely satisfied that 
 there need be no fears on this point. The interests of 
 the rich and the poor, of borrowers and lenders, are reci- 
 procal as respects credits. The former are as unwilling 
 to lose the revenue of their surplus capital and land, by 
 reason of their idleness, as the poor are unable to forego 
 the revenue of their industry ; so that the inducements 
 
318 CREDIT. [PART n. 
 
 offered on either side could not fail to be such as to bring 
 the two together, to at least the degree requisite to pre- 
 vent the idleness of either. The chances are, on the 
 contrary, that the adventurous spirit of the mercantile 
 class, aided bj the force of habit, would perpetuate an 
 excessive development of credit, at least for a long time 
 after the legal stimulus had been removed. 
 
 Under the existing system, lenders look chiefly to the 
 responsibility of the borrower, i. e. to his pecuniary 
 means of paying. Abolish the right of property in 
 actions, and they will look exclusively to character to 
 honesty, capability, and other kindred attributes. These 
 are the legitimate foundations of credit, for it is mainly 
 the poor they who have no other security to offer that 
 wish to avail themselves of the benefits to be derived 
 from borrowing. It is a well known law of commerce 
 and the principle will hold good in every other class of 
 transactions that, whenever you increase the demand for 
 an article, the supply directly increases in the same 
 ratio. Increase the demand for integrity of character, 
 frugality and diligence, by basing credits exclusively 
 upon them, and you will soon stimulate and de- 
 velope these desirable qualities of character to such a 
 degree that any one wfao should prove so far deficient 
 therein as to refuse the payment of a debt, when he either 
 possessed or by proper efforts might have possessed the 
 means of payment, would be utterly discountenanced in 
 all respectable society. Increase the demand for virtue 
 and you will increase the supply ; enlarge its rewards, 
 and you will not fail to improve its quality, and thereby 
 elevate the national standard of morality. 
 
 As the matter now stands there are districts in our 
 country in which it is accounted meritorious to evade the 
 payment of an honest debt ; while in no part of our 
 
CHAP. VI.] CREDIT. 319 
 
 country is that species of villiany so emphatically con- 
 demned as to be made a ground of exclusion from any 
 social circle, however select or exacting it may be in other 
 respects. This vicious public sentiment is a natural 
 consequence of the existing policy. Creditors look more 
 to the law than to the honesty or honor of their debtors 
 for the enforcement of payments ; and while such is 
 the case we must expect that evasions of payment will 
 be regarded as skilful achievements over the law and 
 the sagacity of creditors, rather than as acts of dishonor. 
 Or, if these offences against morality are not looked upon 
 with entire complacency, the existing policy at least se- 
 cures them from a large share of that obloquy which would 
 justly attach to them if the debtor's seriSe of justice 
 were the only means relied on for enforcing payments.* 
 Another consideration deserves notice. The compul- 
 sory enforcement of the payment of debts gives a facti- 
 tious advantage to capital, by securing to its owners a 
 larger degree of credit than they could otherwise obtain, 
 which is a clear infringement of the rule of equality. Cred- 
 it, if there be such things as natural rights, is one of them ; 
 consequently, any policy which modifies or alters the distri- 
 bution of its benefits is unjust to those who are thereby 
 deprived of their rightful share. 
 
 * In support of these positions I may here present some historical facts which have 
 come to my knowledge since this work was written. When the State of Mississippi 
 was set off from the Territory of Alabama, a misunderstandihg occurred between those 
 two governments in relation to the boundary line. Both claimed a strip of land suffi- 
 ciently large to form several counties ; neither one would permit the other to exercise 
 jurisdiction over it; and the consequence was that the inhabitants were left to shift for 
 themselves, without laws or legal tribunals of any kind : there was not a judge nor a 
 lawyer within the limits of the disputed territory. This state of things continued for 
 for some years, during which time the population increased, the inhabitants were pros- 
 perous, their commerce flournished ; and although sales were made on credit to the 
 amount of millions, without other guaranty than that which the honor of the pur- 
 chasers afforded, not a single delinquency occurred not the first bad debt was made. 
 These facts are related on the authority of the Hon. R. J. Walker, who, I believe, was 
 personally cognizant of them, 
 
320 CREDIT. [PART n. 
 
 I can conceive of no important benefits to be derived 
 from the policy under consideration, even if it were pos- 
 sible to make its guaranties perfect ; and as it is now 
 modeled and enforced in the United States, it must be 
 regarded as the most stupendous failure of the age. 
 For one, and in the capacity of one who has had no small 
 share of experience under it, I can truly say that I have 
 found it safest to place no reliance whatever on its prof- 
 fered aid. These remarks, as well as all those which 
 precede, do not, of course, apply to the loan of houses 
 and lands. For reasons too obvious to notice, the law 
 should guaranty the return of those, whenever they 
 have been let or loaned for a stipulated period. 
 
 I am well aware that there are but few who will sub- 
 scribe to the doctrines herein advanced. The public 
 mind in this country is certainly not yet prepared to abolish 
 all laws for the collection of debts. Perhaps it never 
 will be, though I am free to confess that I confidently 
 expect that event to take place at no distant period. As 
 a most significant indication of its approach, 1 would 
 point to a kindred but mistaken theory, which, although 
 but recently started, has been received with so much 
 favor that it has already assumed, in many of the states, 
 the form and force of law. I refer to the policy of 
 " homestead exemption," as it is called. In some of the 
 western states this policy has been adopted to the extent 
 of securing to individual debtors, when they chance to 
 possess so much, an ordinary sized farm and its appur- 
 tenances, together with the needful implements of cul- 
 ture ; that is, those states have abolished to this extent 
 the legal remedy of creditors. 
 
 Any valid reason that can be urged in favor of this 
 modification of the right of property in actions, will, as 
 it appears to me, apply with equal force in favor of its 
 
CHAP. VI. 
 
 CREDIT. 321 
 
 entire abrogation ; while, on the other hand, good reasons 
 may be offered in favor of the latter which are not appli- 
 cable to the former. So far as principle is involved, it 
 makes no difference whether a debtor, -who is able to pay, 
 withholds from his creditors $100 or $10,000. In either 
 case the act is dishonest ; the difference is in degree, not 
 in character, nor is the difference in degree any greater 
 than the difference in temptation. In many cases, also, the 
 inconveniences produced by small delinquences equal those 
 produced by large ones. For example, where an individual 
 whose creditors are poor tradesmen, mechanics, or labor- 
 ing men, avails himself of the homestead-exemption-law for 
 the purpose of defrauding them, they will be likely to 
 feel more serious embarrassment from their trifling losses 
 than would large capitalists from the loss of thou- 
 sands. 
 
 The truth is, these homestead-exemption-laws are 
 based on a false principle. Their adoption is urged and 
 justified on the ground that society owes to its members 
 the means of support, and that a given quantity of land 
 is an indispensable part of that means. These grounds 
 are altogether untenable. In a former chapter it has 
 been shown that they would not even justify the state in 
 donating land to individuals ; and if they will not war- 
 rant that, with what show of justice or propriety can 
 they be urged in favor of permitting one individual to 
 withhold from other individuals their rightful property ? 
 The answer is clear : none whatever. It might almost 
 as well be urged that the robber and thief are entitled to 
 their plunder, the only difference being, that, in these 
 cases, the owners part with their property involuntarily, 
 while in the case of creditors the act is a voluntary one. 
 This distinction does not afford the slightest justification 
 to those debtors who keep, for their own use and benefit, 
 28 
 
322 CREDIT. [PART u. 
 
 property which rightfully belongs to their creditors ; but 
 it would justify the state in abstaining from all interfer- 
 ence between debtors and creditors. 
 
 The policy of exempting homesteads will probabty be, 
 like most other measures founded in error, very short- 
 lived. Its consequences are not likely to be such as its 
 advocates expected it to produce. It ^as supposed that 
 it would enable the idle, the improvident, and the unfor- 
 tunate, to live on the earnings of the industrious and 
 frugal ; for it was believed that the former would still 
 succeed in obtaining the property of the latter on credit, 
 although the legal obligation to return it, or pay for it, 
 was annulled. This expectation is not likely to be real- 
 ized. Already the credit of merchants and others, in 
 those states where these laws have been adopted, is con- 
 siderably impaired ; and when their credit shall be called 
 upon to pass through one of those commercial revulsions 
 which periodically occur, we may expect to see it redu- 
 ced to limits of the narrowest kind. Therefore, these 
 laws, instead of benefiting the class for whose especial 
 advantage they were made, will prove injurious by de- 
 priving them of their accustomed credits. This may, 
 however, prove beneficial to them in the end, inasmuch 
 as it will drive them into the ranks of the diligent and 
 frugal. At all events, the contraction of credits cannot 
 fail to prove advantageous to the community at large ; 
 and when the benefits which properly belong to the 
 change of policy herein proposed, shall have been thus 
 accidentally tasted, we may expect to see homestead 
 exeption laws give place to the abrogation of all laws for 
 the collection of debts. 
 
 Before dismissing the subject of credit, it may be well 
 to notice the generally entertained opinion that all kinds 
 of credit transactions tend to diminish the aggregate 
 
CFIAP, VI.] CREDIT. 323 
 
 demand for money in other words, that credit is an abscr 
 lute substitute for money. This doctrine has been 
 taught by almost every eminent writer on political econ- 
 omy ; but as the matter appears to me, it is very wide 
 of the truth nevertheless. 
 
 There is one kind of credit which certainly does 
 diminish the demand for metallic money : but, to the pre- 
 cise extent of the diminution, it furnishes a substitute 
 therefor in the form of convertible paper money. I refer 
 of course to the kind of credit involved in the banking 
 system, and the nature of which has been sufficiently 
 explained in a former chapter. There is, however, 
 another kind of credit, the employment of which lessens 
 the aggregate demand for botli paper money and coin, 
 and that is, the credit involved in bills of exchange. 
 The expedient of liquidating debts due in distant mar- 
 kets by means of bills of exchange, could not be resorted 
 to without tlic aid of credit ; and but for that expedient, 
 there would have to be constant streams of money pas- 
 sing to and from all the different markets of the world. 
 The average amount of money that would be thus em- 
 ployed, beyond the amount now employed in liquidating 
 balances of distant indebtedness, is dispensed with by 
 means of this branch of the credit system. There is 
 also another form of credit somewhat analogous to this, 
 which is, where A and B sell to each other on credit, and 
 settle at stated periods by a mere payment of the 
 balance, if any. This, however, may be more properly 
 called an indirect method of barter, than a specific form 
 of credit. All other forms of credit are destitute of 
 influence on the currency or rather, they neither enlarge 
 nor diminish the aggregate amount of money demanded 
 for measuring and transferring the circulating wealth of 
 the commercial world. They merely change the office 
 
324 CREDIT. [PART 11. 
 
 of money from that of transferring the ownership of the 
 property or commodities sold, to that of liquidating the 
 obligations which represent them. Suppose, for example, 
 that the commercial transactions in a given market are 
 $1,000,000 per day, and that they are all entered into 
 on a credit of 6 moths. It is plain enough that the 
 amount of daily payments, in cash, will be $1,000,000, 
 just the same as if no credit was given the only differ- 
 ence being that the money is- em-ployed in the payment 
 of notes instead of the purchase of goods. Among the 
 multitude of expedients to which interest and conven- 
 ience give rise in commercial transactions, there are some 
 which may be called exceptions to this rule such as 
 where a party liquidates the claim of his creditors with 
 the note of his debtor, or where he employs it in the pur- 
 chase of goods. In these and similar expedients, credit 
 is a substitute for money in the particular transactions to 
 which they relate ; but the resort to them is so rare r and 
 their influence so slight, that they cause no appreciable 
 diminution in the aggregate of momey employed in com- 
 merce. 
 
 The opinion that credit is an absolute substitute for 
 money, is based, it would seem, on the well known fact 
 that the former, like the latter, possesses the power of 
 purchase. If it also possessed the power of satisfying 
 contracts, the opinion would be sound. It is familiar 
 knowledge, however, that credit does not possess this 
 power, except in the peculiar form of it already referred 
 to. In all others, money is ultimately called in to per- 
 form its rightful office. 
 
 It is highly probable, however, that credits in their 
 ordinary form, often aggravate the severity of what is 
 termed a commercial crisis ; and that they do so from 
 the very fact that they only perform one half the office 
 
.VI.] CREDIT. 325 
 
 CHAP 
 
 of money. If they were competent to execute their own 
 engagements, they could have no effect, either in the pre- 
 sent or the future, on the demand for money ; nor could 
 they have if the extent to which they are substituted for 
 money, in the act of purchase, were invariable. But 
 neither of these attributes appertain to credit. While 
 its purchasing power is nearly unlimited, the only means 
 that it affords of cancelling its own engagements, is the 
 expedient of a legal discharge under bankrupt laws ; 
 and while the extent to which it is employed as a means 
 of purchase is governed by no fixed rules or uniform 
 laws, that extent is found to be subject to great varia- 
 tions variations which correspond, very nearly, in time, 
 place, and degree, with the oscillations in the amount 
 of money in circulation. We might reasonably expect 
 that the larger the amount of money in circulation, the 
 less use would be made of its substitute as a means of 
 purchase ; but the reverse appears to be the fact, and a 
 closer examination will show us that it could not well be 
 otherwise. When the volume of money is enlarged, 
 prices rise ; the rise of prices, by producing an apparent 
 general prosperity, engenders a spirit of speculation ; 
 speculation produces an augmentation of credits, and 
 since an increase of purchases on credit do not require, 
 until a future period, a corresponding increase of money 
 to pay for them, it follows that the inflation of prices is, 
 by the mischievous influences of credit, often carried far 
 beyond the point at which they would be arrested under 
 a system of cash payments. So, on the other hand, 
 when the crisis arrives when the enlarged contracts 
 entered into on credit are to be met, and when the pay- . 
 ment of foreign indebtedness, the contraction of the 
 banking system, and the hoarding consequent on the 
 previous inflation of prices, have diminished the amount 
 
326 CREDIT. [PART u. 
 
 of money in circulation then credits, instead of being 
 extended to fill the vacuum in the purchasing power, 
 caused by the diminished circulation of money, are also 
 greatly diminished ; by which means they increase the 
 intensity of the reaction, and thereby aggravate the dis- 
 aster of the crisis. 
 
 The present system of mercantile credits is not, I 
 fancy, obnoxious to the charge of originating those infla- 
 tions of prices which first intoxicate and afterward pros- 
 trate the commercial community. It merely enters in, 
 after the movement has been started, as an adjunct to 
 the prime cause. That cause is to be found in the var- 
 iations of the aggregate amount of money in circulation, 
 and in the constant ebbing and flowing of portions of it 
 between the different markets of the world. If no other 
 money existed than that which is made of the precious 
 metals, these causes would be sufficiently active to pro- 
 duce serious commercial revulsions ; but stimulated as 
 they are by the partial substitution of convertible paper 
 money for coin, the volume of the substitute being sub- 
 ject to the ever recurring expansions and contractions of 
 the banking system, they must be still more potent in the 
 production of these evils. As before remarked, however, 
 it is to the concurrent expansion and contraction of cred- 
 its, to which these causes give rise, that we must mainly 
 attribute the intensity of commercial revulsions, as well 
 as the general bankruptcy which they often produce. 
 
 If credits were found to contract as the volume of 
 money increased, and to expand as it diminished, they 
 would be highly useful as a means of counteracting the vi- 
 bration of prices : but since experience has abundantly pro- 
 ved that the oscillations of credit, under the present system, 
 always correspond with those of money, we must note the 
 fact as another evidence of the impolicy of that system. 
 
327 
 
 CHAPTER vu. 
 OF SLAVERY. 
 
 Considered as a political institution, Slavery consists 
 in the recognition and social guaranty of the right of 
 property in human beings. This right is clearly incon- 
 sistent with the principles of justice and political equal- 
 ity. Its exercise necessarily deprives the enslaved of 
 their relative rights ; it in fact despoils them of every- 
 thing worth possessing, except life, and it often renders 
 that burdensome. For these reasons, slavery, instead 
 of being legalized and established as one of the institu- 
 tions of society, should be strictly interdicted by all 
 governments, and especially by those of the republican 
 type. No considerations of any kind can possibly jus- 
 tify a state in the adoption of a system so repugnant to 
 every dictate of justice so directly in conflict with the 
 first and highest principles for the maintenance of which 
 governments themselves were instituted. 
 
 Having thus summarily disposed of the political ques- 
 tion involved in slavery, having shown that, as an insti- 
 tution of the state, it is founded on principles so funda- 
 mentally wrong, that no possible combination of circum- 
 stances can justify its establishment we might dismiss 
 the topic as one meriting no further consideration. Un- 
 fortunately, however, the question of estalishing slavery 
 is not presented to us as an original proposition, but as 
 one which some states have already decided in the affirm 
 ative, and reduced to practice. We must therefore 
 
328 SLAVERY. [PART u. 
 
 consider the right of property in human beings as an 
 existing legality, and as one which is constantly produ- 
 cing fruit of some kind or other. By ascertaining the 
 character of that fruit, we shall be able t$> determine, 
 not whether it is such as to justify the policy by which 
 it is produced for that we have seen to be impossible 
 but whether it tends to aggravate or mitigate the iniquity 
 of that policy. It is believed by many that the evils of 
 slavery are reciprocal, or in other words, that the sys- 
 tem is injurious to the master as well as to the slave. If 
 this belief is well founded, a clear demonstration of the 
 fact could scarcely fail to give a death-blow to the sys- 
 tem, for it needs but that conviction among slaveholders 
 to render its voluntary abandonment both certain and 
 speedy. 
 
 There are various aspects in which slavery may be 
 viewed, in reference to its effects on human happiness. 
 It unquestionably exercises a strong influence on the 
 moral and social condition of society, as well as on its 
 political and economic condition ; and it is not unlikely, 
 if we were to take a general survey of the subject, we 
 should find that the influences first named are more im- 
 portant and of a more pernicious character than the 
 second. This, however, is not the proper place to inves- 
 tigate them, except so far as may be necessary to ascer- 
 tain their indirect effects on the production, distribution 
 and consumption of wealth. These last being the only 
 consequences with which political economy is concerned, 
 I shall of course refrain from noticing any others. It 
 may be well to premise, also, since there are various 
 kinds and degrees of involuntary servitude, that the 
 considerations I am about to offer will be confined to that 
 specific form of slavery which prevails in tae southern 
 states of this republic. 
 
CHAP. VII. J SLAVERY. 329 
 
 The first inquiry then is, does slavery tend to enrich 
 the communities in which it exists, or does it tend to im- 
 poverish them 1 As respects its influence on the enslaved, 
 the question is easily answered, since it not only divests 
 them of all property, but of all the means of future acqui- 
 sitions. But as relates to its effects on the interests of 
 slave-owners and other freemen, the correct answer is not 
 so obvious. Statistics and observation have indeed proved, 
 most conclusively, that the non-slaveholding states of 
 our Union are more prosperous than the slaveholding 
 the fact is no longer disputed by slaveholders themselves ; 
 but since many of the latter deny that the less prosper- 
 ous condition of the south is justly attributable to sla- 
 very, it will be necessary to apply the natural laws of 
 trade to that system of production and distribution, in 
 order to ascertain what kind of economic fruits it is 
 really calculated to produce. 
 
 It has been found that negro slavery, by degrading all 
 those employments to which the slave is put, com- 
 pletely excludes freemen from similar occupations, where - 
 ever that system prevails. In consequence of this, the 
 industry employed in agriculture and the mechanic arts, 
 as well as in all kinds of menial occupations, at the 
 south, consists almost wholly of the service of slaves. 
 The non-intellectual quality of that service excludes it 
 from the learned professions, and from the higher pro- 
 cesses of commerce ; insomuch that these vocations 
 are prosecuted entirely by freemen. It will be perceived, 
 therefore, that the two classes, the enslaved and the 
 free, have each an exclusive field in which to exercise 
 their industrial powers. That in which slaves are em- 
 ployed requires an outlay of little else than muscular 
 strength, while the field appropriated to freemen calls 
 chiefly for intellectual effort. In other words, this sys- 
 
330 SLAVERY. [PART u. 
 
 tern completely separates Labor from Skill, and converts 
 the former into Capital. Under it, laborers do not, as 
 they do in a free state, constitute a distinct and inde- 
 pendent partner in the productive firm, entitled to one 
 quarter of the gross profits ; but, like the plough and 
 the ox, they are merely productive machines belonging 
 to owners and subject to their will. 
 
 This conversion of Labor into Capital cannot fail to 
 diminish the productiveness of that agent. The slave 
 has no personal interest in the results of his own labor. 
 He knows that however much of revenue he may pro- 
 duce, his own share will be strictly limited to the neces- 
 saries of life ; he knows that diligence will not better 
 his pecuniary condition, nor idleness render it worse. 
 In a word, the hope of gain and the fear of want are 
 both extinguished by the deprivation of freedom. The 
 absence of these two most powerful incentives to dili- 
 gence and carefulness, must necessarily render slave 
 labor extremely inefficient. About the only motive that 
 prompts the slave to exertion, is a dread of the lash. 
 This motive is probably strong enough in most cases to 
 overcome the natural aversion to labor, but all expe^i- 
 ence testifies that it is an extremely feeble incentive 
 compared to the desire of gain and other motives which 
 prompt the industrial efforts of freemen. Under its 
 influence the slave aims to do as little as circumstances 
 will permit, while the freeman strives to do as much as 
 he possibly can ; whence it is evident that the labor of 
 the former must be less productive than that of the lat- 
 ter. But the diminution of quantity is not the only 
 influence, nor even the worst, which slavery exerts on the 
 productiveness of labor : a still more pernicious conse- 
 quence is to be found in its deterioration of the quality 
 of that labor. The slave has no motive to strive for 
 
CHAP. VII. J SLAVERY. 831 
 
 excellence or increased proficiency in the arts of produc- 
 tion, nor is it the habit of his owner to expend much of 
 either effort or money in attempting to educate him 
 therein. Indeed the latter, under the joint influence of 
 fear and avarice, carefully withholds from the former all 
 the means usually employed in promoting mental devel- 
 opment. Reared thus in ignorance, slaves are necessarily 
 put to such employments as require but little of intel- 
 lectual effort ; and, since they have no hope of reward 
 or other adequate inducement to exercise that little to 
 the best of their ability, we cannot but expect their skill 
 to become less and less, until their service is scarcely 
 distinguishable from that of the ox or the mule, except 
 by its inferiority of muscular power. 
 
 These views are in perfect harmony with the results 
 of experience. All who "are familiar with the subject 
 know that in those simple occupations which require the 
 outlay of muscular strength only, slave- labor is not 
 more than half as efficient as the labor of freemen ; and 
 they also know that in the more recondite arts of pro- 
 duction, where much of intellectual and artistic skill is 
 required, the difference in favor of the latter is more 
 than a hundred-fold. 
 
 Nor are these the only paralizing effects on the pro- 
 duction of wealth, with which slavery is chargeable. 
 It tends to prevent the accumulation of legitimate capi- 
 tal, by occupying its place with human chattels. So 
 strong and certain is this tendency, that we generally 
 find the joint value of the two no greater than that of 
 capital alone under the free system. In fact the con- 
 version of Labor into Capital appears to dry up one of 
 the four prime sources of production altogether with- 
 out, however, as will be shown presently, suppressing 
 with equal completeness one of the agencies of con- 
 usmption. 
 
332 SLAVERY. [PART u. 
 
 This system of production also tends to exclude Skill, 
 and to vitiate the quality of that which it admits ; for 
 while it completely suppresses the skill of the enslaved 
 class, it rarely fails to render their proprietors either 
 too proud, too indolent, or too ignorant of the science 
 and arts of production, to superintend and direct the 
 labor of slaves. Their usual alternative is to employ 
 overseers. These are necessarily men of slender quali- 
 fications, because no one of much capacity or self res- 
 pect will accept of a situation which is so universally 
 regarded as despicable and degrading. It appears, 
 therefore, that the skill which co-operates with slave- 
 labor must be about as inefficient as I have shown that 
 kind of labor to be. Land, the other co-operating force, 
 is a passive agent. Its productiveness is chiefly depen- 
 dent on the degree of energy and skill with which it is 
 cultivated. Consequently, to whatever extent slavery 
 weakens the efficiency of Skill, Labor, and Capital, to 
 precisely the same extent it diminishes the productive- 
 ness of Land. 
 
 We find, then, that slavery suppresses one of the 
 prime agents of production, and seriously weakens tl]e 
 efficiency of the remaining three ; insomuch that I think 
 we may safely conclude that the aggregate production of 
 wealth, under it, is less than half the amount that an 
 equal number of freemen will produce. 
 
 While slavery thus lessens, by more than 50 per 
 cent., the gross production of wealth, it does not, because 
 itcannot without detriment to the owner's interest, reduce 
 the share consumed by slaves below the point essential 
 to the development and maintenance of their physical 
 powers. To this point the consumptions of a large por- 
 tion of the laboring class of freemen are also reduced, 
 in some cases by necessity, in others by choice ; but, 
 
 
CHAP. VII. J SLAVERY. 333 
 
 whether their abstinence is voluntary or involuntary, 
 their productive powers are free from that paralizing in- 
 fluence which the act of enslavement exerts. Conse- 
 quently, the larger average consumptions of freemen 
 cannot be regarded as one of the causes of their superi- 
 ority as productive agents, except so far as wealth is 
 consumed in their industrial education. It is evident, 
 however, that where the aggregate production is less, the 
 aggregate consumption must also be less ; because a 
 community cannot, in the long run, consume more than 
 it produces, nor indeed quite so much without arresting 
 its own growth. Under slavery the consumptions of 
 Labor are strictly limited to the necessaries of life, while 
 under freedom a large share of that class cf producers 
 partake of the luxuries of life. This compulsory absti- 
 nence of the enslaved will compensate in some measure 
 for the inefficiency of their productive powers ; but 
 whether it will fully compensate for that inefficiency, 
 remains to be seen. It must indeed do much more than 
 this before the system can be justified, even on economic 
 grounds ; for unless it compensates for all the detriments 
 to production, with which slavery is chargeable, it is 
 evident that the system must be injurious to the master 
 as well as to the slave. 
 
 The important inquiry then is, does the saving accom- 
 plished through the forced frugality of slaves equal the 
 losses occasioned by the paralizing effects of slavery on 
 the sources of production ? A complete determination 
 of this question, on purely theoritic grounds, would re- 
 quire a more extended consideration of the subject than 
 it is deemed necessary to enter upon. The question can 
 be determined with sufficient accuracy by a much shorter 
 method. Indeed, if I have not over-estimated the losses 
 incident to the slave system of production, the question 
 24 
 
334 SLAVERY. [PART n. 
 
 is already answered ; for, according to that estimate, 
 if slaves should consume nothing at all, their abstinence 
 would not compensate for those losses, as may be 
 demonstrated in a single sentence. For example : 
 A community in which slavery exists will produce 
 no more than half the quantity of wealth that an 
 equally numerous community of freemen will produce ; 
 freemen constitute more than one naif of the gross pop- 
 ulation in most if not all of our slaveholding states ; 
 therefore, if the freemen of that section should engross 
 the entire wealth produced there, they would even then 
 be poorer, as a body, than the freemen of the non- 
 slaveholding states, or rather, they would have less rev- 
 enue at their command, less wealth to consume. But 
 they are not the sole recipients of the wealth produced 
 there. Instead of engrossing the whole, they merely 
 monopolize the profits. Their slaves are neither ob- 
 tained nor supported without cost. They are not even 
 furnished, as they formerly were by African traders, at 
 the cheap rates of stolen goods, the article being now 
 contraband with us ; nor can they subsist on the wind. 
 On the contrary, they are reared, lodged, clothed, fed, 
 and reproduced, out of the products of their own labor. 
 With this unavoidable abatement, therefore, the mean 
 revenue of the freemen of that section must be vastly 
 less than ours. 
 
 This reasoning would be perfectly sound, and the 
 demonstration complete, provided mankind were the only 
 consumers of wealth. Such is not the case, however. 
 Productive capital in all its forms, as well as in the anom- 
 alous form of slaves, is a great consumer. Under the 
 free system of production, where there are four prime 
 agents, its creation, repair and renewal, absorb, as I have 
 shown in a former chapter, just one- third of the cost ele- 
 
CHAP. VII.] SLAVERY. 335 
 
 ment of value, which is nearly equal to one-third of all 
 the wealth produced, because the profit element of value 
 is a mere trifle compared with the cost element. Under 
 the slave system of production, where there are but 
 three prime agents where productive capital includes 
 labor its maintenance of course absorbs a much larger 
 share of the gross products, certainly not less than 
 half of the cost element of the whole, and probably not 
 less than two-thirds of that element. Therefore, with 
 this correction of the foregoing deduction, we still find 
 that the ecomonic condition of a slaveholding community 
 must be vastly inferior to that of a community of free- 
 men. Neither the restraints which that system imposes 
 on the consumptions of its victims, nor any other advan- 
 tages inherent in it, can compensate the proprietary class 
 for a moiety of the injuries which it inflicts on them 
 through its paralization of the sources whence all wealth 
 is derived. Lest, however, I may have over-estimated 
 the extent of these injuries, it may be well to verify the 
 theoretic conclusions arrived at, by a contrast of the 
 respective conditions and natural advantages of the 
 slaveholding and non-slaveholding sections of our coun- 
 try. 
 
 Let us then endeavor to ascertain which section en- 
 joys the higher rate of profit and the larger degree of 
 wealth. Judging from such statistical evidences as we 
 possess, it would seem that the average rate of interest, 
 and consequently the rate of profit in general, is about 
 the same in the slaveholding as in the non-slaveholding 
 states ; and that the mean degree of wealth belonging to 
 the freemen of the two sections is also about equal, pro- 
 vidcfl we include with the wealth of the southern section 
 the market value of its slaves. But in estimating the 
 relative wealth of a slaveholding and a non-slaveholding 
 
SLAVERY. [PART n. 
 
 community, it is manifest that we should either exclude 
 from the wealth of the former the market value of human 
 chattels, or include with that of the latter the vastly 
 higher value of its free laborers; for as an element of 
 national wealth, or strength, or prosperity of any kind, 
 the latter are infinitely superior to slaves. Indeed, to 
 render the comparison a perfectly fair one, we should 
 not only exclude slaves from our estimate of wealth, but 
 include them in our estimate of population, because 
 they, like their masters, are human beings, and consti- 
 tute a part of the population of the states in which 
 they are held. If we were to make an estimate of the 
 relative wealth of the two sections of our country on 
 this basis, (and it is certainly the correct one if we wish 
 to consider the subject in the pure light of republican- 
 ism,) we should probably find that the average degree of 
 wealth at the north is not less then five-fold what it is 
 at the south. But since our present object is to ascer- 
 tain the effects of slavery on the economic interests of 
 the proprietary class, it is incumbent on us, for the pur- 
 poses of this inquiry, to exclude slaves from our estimate 
 of population, and to class them as property. 
 
 According to this basis of computation, how stands 
 the relative wealth of the north and the south ? I have 
 said that such evidences as our meagre statistics of 
 wealth afford, seem to indicate something like an equal- 
 ity between the two sections ; but I think a closer in- 
 spection of the subject will satisfy us that these evi- 
 dences are deceptive. I believe we shall find the fact to 
 be, that the average wealth of the freemen of the north, 
 although they include the " hewers of wood and drawers 
 of water," (a class which we count as property in the 
 other section,) is much greater than that of the freemen 
 of the south. When we come to scrutinize the matter 
 
CHAP. VII. J SLAVERY. 337 
 
 closely, we cannot fail to perceive that, with the excep- 
 tion of property in slaves, the south is possessed of but a 
 thin drapery of productive capital, so thin that with 
 the aid of an abundant and fertile soil, and the cheap 
 labor of slaves, the net profits are so meagre that the 
 proprietary class, although it shares the whole of those 
 profits, is compelled to forego many of the comforts of 
 life, and most of its luxuries. In evidence of this, it 
 may be remarked that the people of that section have 
 but few railroads and canals, nor scarcely a turnpike- 
 road or other highway that can be called passable. The 
 steamboats which navigate their noble rivers, and the 
 ships that visit their sea-ports, are mostly owned either 
 in the free states or abroad. A majority of their mer- 
 chants are enterprising adventurers from other regions, 
 who have gone there, not with the intention of making it 
 their permanent home, but for the purpose of acquiring 
 a fortune to be enjoyed elsewhere. They have but few 
 mills, and but little machinary of any kind, even the 
 mechanic arts are scarcely known among them. Most 
 of their dwellings are of the rudest and cheapest kind, 
 with but few barns or other out-buildings, except negro 
 huts. Their lands are but imperfectly prepared for till- 
 age, badly fenced, and wretchedly cultivated ; in proof 
 of which, it may be remarked that cotton plantations 
 are often worn out and abandoned before the original 
 forest has been entirely removed from any part of them : 
 the larger trees are not felled, but merely girdled and 
 left standing in their desolation, fit monuments of the 
 blighting effects of the system by which they were des- 
 poiled of their native vigor and beauty. They have no 
 accumulation of the products of former years. They 
 have no capital invested in the free states or loaned on 
 foreign securities. They have (comparatively) but few 
 
SLAVERY. [PART n. 
 
 churches, colleges, or charitable institutions, nor are 
 they well provided with common schools. In a word, 
 they have but little real wealth in their possession ; nor 
 is that little their own. 
 
 ft is well known that the rule by which the south 
 governs her commercial transactions with other sections 
 is, to sell for cash and buy on credit. The merchants of 
 that section make their purchases from northern mer- 
 chants on a credit of six, eight, or twelve months, and 
 they re-sell to the planters on a similar credit, while the 
 latter invariably sell their products for cash. They sell 
 most of their own products, and they get nearly all their 
 supplies from. us. Consequently, the south is at all 
 times indebted to the north for nearly one year's pur- 
 chases, which, of course, is nearly equal to the value of 
 their annual products, and probably fully equal to all 
 the productive capital in their possession, exclusive of 
 slaves. According to this, the people of that section 
 have no real wealth ; their only property, exclusive of 
 the property of others held by them, consists of land 
 and slaves. But as we are considering these as genuine 
 wealth, we must place their market value in the bal- 
 ance against the wealth of an equal number of north- 
 ern freemen. The paucity of their productive capital 
 renders the market value of their land so very low, that 
 it is as nothing compared with the market value of land 
 at the north. I have very little doubt that the land 
 alone, of the north, would command a sum as far ex- 
 ceeding the entire wealth of the south, including slaves, 
 as the population of the north exceeds the free popula- 
 tion of the south; besides which, we have productive 
 capital at least equal in value to all our land. Accord- 
 ing to this estimate, which I feel confident is not 
 more favorable to the north than the facts will justify, 
 
CHAP. VII. J SLAVERY. 339 
 
 our average degree of wealth is at least double that of 
 southern freemen, including the market value of their 
 slaves. 
 
 That this great difference in our favor is solely attribu- 
 table to the existence of slavery at the south, is evident 
 from the fact that nature has been more bountiful to that 
 section than to this. She has given it a richer soil and 
 a more genial climate, nobler rivers and more luxuriant 
 forests. She has also given it an almost perfect monop- 
 oly of the growth of cotton, a product which no part 
 of the civilized world can now dispense with, and which 
 bids fair, at no distant day, to rival all others in import- 
 ance. In addition to these rich gifts of nature, our gov- 
 ernment has conferred on the agriculturists of that sec- 
 tion, the benefits of a thirty per cent, duty on imported 
 sugars ; which, in practice, amounts to something like 
 an artificial monopoly of the home market for that arti- 
 cle. But with all these accumulated advantages, the 
 freemen of that section have less wealth, toss security of 
 person and property, and less of every other element of 
 prosperity and progress, than those of the north. Nor 
 does the system afford any compensation for these evils ; 
 at least there are none to be found within the province of 
 political economy, and I believe its warmest friends have 
 never maintained that its moral and social tendencies 
 are of a salutary kind. We must therefore conclude 
 that it robs its victims of their dearest rights, and sinks 
 them almost to a level with the brute creation, for no 
 worthier or more beneficent end than that of narrowing 
 the circle of their owner's enjoyments. 
 
ERRATA. 
 
 Page 28, line 28, for " designated ' read " designed." 
 " 37, " 20, for " transferred" read " transformed." 
 " 85, " ^8, for " practicable" read "practical." 
 " 126, " 15, for "proportion" read "proposition." 
 " 132, " 5, after the word "rate," insert "of profit" 
 
 " 140, " 23, for " unsuccessful" read " unsuccessfully." 
 
 " 161, " 11, for "order" read "odor" 
 
 " 191, " 33, for " hopeless" read " hopelessly." 
 
 " 200, " 1, after the word " have" insert " shown" 
 
 " 210, " 29, for " equality" read " equity" 
 
 " 216, " 30, for " ration" read "ratio." 
 
 " 245, " 14, for " beating" read " beaten." 
 
 " 269, " 6, for " qualities" read " quantities" 
 
 " 281, " 32, for "$130" read "$150." 
 
 Besides which, there are errors in orthography and punctuation, 
 
 which it is not deemed necessary to notice. 
 
Mr. Opclykc ou the Currency. 
 
 To Hon. S. P. Cfiase, Secretary of the Treasury : 
 
 DEAR SIR : In compliance with my promise, I 
 embrace the first leisure hour sine* meeting you in 
 Washington, to submit the reasons which induce me 
 to favor the emission of one hundred and fifty mil- 
 lions in iundable Treasury notes, without interest 
 and to be made a legal tender In payment of debts. 
 
 In the first place, I believe this measure to be indis- 
 pensable to the maintenance of the credit and honor 
 of the Government. Unless its heavy floating debt 
 sh;ll be paid with reasonable promptitude, and its 
 rapidly-accruing liabilities provided for, it will soon 
 find difficulty in obtaining supplies for the army at any 
 price. The delay of payment that has already occur- 
 red has depressed its certificates of indebtedness eight 
 or ten per cent. 
 
 How els* shall these immediate liabilities be met ? 
 Three other modes have been suggested : First, by 
 taxation ; second, by the sale of Government stocks to 
 the highest bidders ; third, by paying tne public cred- 
 itors in Treasury notes bearing interest, or in stocks. 
 These are the only alternatives that have been pro- 
 posed, and I know of no other resource, since the 
 Banks have no longer the disposition or the means 
 to take further loans. Let us examine each of these 
 methods. 
 
 The.first is legitimate, but unavailable. Taxation 
 must be resorted to, and that liberally and promptly ; 
 but the proceeds cannot be realized in time or in 
 amount sufficient to meet the present emergency. 
 The second alternative would subject the Govern- 
 ment to a heavy loss, and eadly impair its credit. I 
 assume that nothing short of one hundred millions 
 will suffice to meet the wants of Government for the 
 present and immediate future. The floating debt is 
 supposed to be upward of fifty millions already, and 
 it will.,, doubtless, reach one hundred millions before 
 means of payment can be provided by any of the 
 methods proposed. The public creditors are clam- 
 orous for their pay, and are suffering serious incon- 
 venience and loss for want of it. If it is in the 
 power of Government to pay them, good faith and 
 sound policy alike demand that it should do so with 
 all possible promptitude. To throw upon the market 
 one hundred millions ot Government securities, to be 
 solt tg the highest bidders, iu the present condition 
 of /7^7~' 1 * i Uh the credit of Government weakened 
 by / ***dGH Jf'jv*fi() l r iuils ' *h? market already, 
 
 ot 'OK 'Jtm^B WA9 '*["<* ;r ff a !g 
 
, jfelmmrjr 2 > 1862L 
 
 gold and silver ootn, its average In nil commercial 
 co untiles is, as the statistics of money prove, about 
 twenty dollars per. capita, this being the quantity re- 
 quired, at the present cost of producing the precious 
 metals, to make the exchange of money for other 
 commodities an exchange of equivalent or equal val- 
 ues. If the quantity were greater or less, it would 
 not be a true measure of values* If the money con- 
 sist of coin and eonvert.bie paper, the aggregate 
 quantity will still be twenty dollars per cap- 
 ita, because the paper will drive out of circu- 
 lation an amount of coin equal to itself. So, 
 if it consist of coin, convertible paper and legalized 
 irredeemable paper, its aggregate will- still remain 
 the same, since the latter will expel of the other two 
 an amount equal to its own issue. Hence, Govern- 
 ment paper money, made a legal tender, might be 
 issued to the extent of $20 per capita, without danger 
 of ultimate debasement of the currency ; and if the 
 amount could be kept within that limit, it would 
 be the best and most uniform currency evr known. 
 The danger and the mischief are in transcending the 
 limit of $20 to one of population, which is the pro- 
 portion that the laws of trade award when the cur- 
 rency consists of coin, or of coin and convertible 
 piaper. 
 
 Estimating the population of the loyal States at 20,- 
 600,000, we need a currency of $400,000,000, PMor to 
 the late bank suspension we had of coin, bank depos- 
 its and bank circulation, about that amount. It is 
 now much less, because the suspension at once ban- 
 ished most of the coin from circulation, and also di- 
 minished the circulation of ^ank notes. This leave* 
 a fitting opening for Government paper money. It- is 
 needed to fill the existing vacuom. I think nearly 
 $100,009/00 would be thus absorbed without produc- 
 ing any sensible effect on nrices or o the circulation 
 of bank notes. Theissuef $150,00fr,000, as proposed, 
 would, however, at first slightly enlarge thecurrency,, 
 and thus enhance prices ; but it would be merely suf- 
 ficient to give a healthy stimulus tobusiaees, and 
 thus enable the community with facility and prompti- 
 tude to pay their debts and the heavy taxes which 
 await them. And even this stimulus woeld not be of 
 long continuance, for the Government money would 
 ultimately displace an equal amount of coin and bank 
 
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 To Hon. S. P. C"> 
 
 
UNIVERSITY OF CALIFORNIA LIBRARY 
 
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