LIBRARY 
 
 UNIVERSITY OF CALIFORNIA. 
 
 Deceived JAN 16 1893 .189, 
 Accessions No. 'Satr.5~J . Class No. 
 

PROBLEMS 
 
 IN 
 
 POLITICAL ECONOMY 
 
 BY 
 
 WILLIAM GRAHAM SUMNER 
 
 II 
 
 PROFESSOR OF POLITICAL AND SOCIAL SCIENCE IN YALE COLLBCZ 
 
 NEW YORK 
 
 HENRY HOLT AND COMPANY 
 
 1889 
 
TNOW8 
 
 AND BOOKBINDING COMPANY, 
 NEW YORK. 
 
CONTENTS. 
 
 PREFACE, - . - ~ . v 
 
 LIST OF BOOKS, - vii 
 
 1. GENERAL DEFINITIONS, ... i 
 
 2. ELEMENTARY PRINCIPLES, - 9 
 
 3. POPULATION, - 23 
 
 4. LAND AND RENT, * - - - - 26 
 
 5. WAGES, - - 31 
 
 6. CONSUMPTION, 50 
 
 7. MONEY, CURRENCY, AND BANKING, - - 58 
 
 8. INTERNATIONAL EXCHANGES, - 83 
 
 9. ECONOMIC POLICY: SOCIALISM, ADJUSTMENT OF RIGHTS, 
 
 ETC., 89 
 
 10. ECONOMIC POLICY: PUBLIC FINANCE, - - 105 
 
 11. ECONOMIC POLICY: TAXATION, - - 108 
 
 12. ECONOMIC POLICY: PROTECTIONISM, * 112 
 
PREFACE. 
 
 When I began to make this collection of problems I intended to 
 make only a small pamphlet for use in my own class-room. The 
 enterprise has grown, however, until it has seemed better to make 
 a book and publish it. Hence a few words of explanation are 
 here needed. 
 
 I have long used problems and fallacies as auxiliary to my 
 other class-room work. The object of such exercises is to break 
 up the routine of text-book recitations, to encourage wider study 
 of scientific treatises, and to develop some independent power of 
 thinking, and of applying the principles which have been learned. 
 In the present state of political economy it seems especially 
 desirable to study subjects, and not text-books. These problems 
 are intended to bring forward the subjects or topics which should 
 be studied, and to guide the student to an investigation of them 
 with the aid of the teacher, and by the use of the leading treatises 
 in the science. The problems are, in their form, almost all " lead- 
 ing," and effort has been made to put them in such a way that a 
 student who has already studied an elementary text-book can 
 dea! with them. When possible, they have been put in that form 
 in which they present themselves in practice. My aim has been 
 to limit the references as much as possible in number, and to con- 
 centrate them on the following books : Rogers's Adam Smith, 
 Mill's Principles, Jevons' Theory, Marshall's Economics of In- 
 dustry, Cairnes's Principles, Walker's Political Economy, and 
 Cossa's Guide. A " Loan Library of Political Economy" has 
 been formed as a part of the scheme, from which each student can 
 obtain a copy of each of the above books for use so long as he 
 desires. I have found, however, that, if the problems were to 
 
VI PREFACE. 
 
 have any range and variety, I must enlarge the range of the refer- 
 ences far beyond my original intention. I give below a list of all 
 the books to which reference is made under the problems. The 
 library will contain these in numbers proportioned to their use- 
 fulness. 
 
 While I was at work on these problems Milnes' collection of 
 2,000 questions and problems from English examination papers 
 was published. I have to acknowledge my obligations to that 
 collection. I have borrowed some problems from it; others I have 
 adapted. They are marked by an M. with the number in Milnes' 
 collection, thus : (M. 100). Many have been suggested to me by 
 reading that collection. I have given credit whenever the sug- 
 gestion was so close that I could specify the question in Milnes' 
 collection which suggested mine. This was not always possible, 
 and so the present general acknowledgment must cover the rest. 
 
 The problems here given are of very unequal difficulty and im- 
 portance. A primary classification is made by printing the num- 
 bers of those which I should reserve for examination at a later 
 stage of study with thin faced numerals. 
 
 I am indebted to Prof. H. W. Farnam and Mr. Arthur Hadley 
 for valuable aid and suggestions. 
 
 W. G. S. 
 
 YALE COLLEGE, December, 1883. 
 
FULL TITLES OF BOOKS CITED. 
 
 Accounts and Papers, Session [Parliament] 1868-9, v l- 35. (Pub- 
 lic Finances since 1688). 
 
 Baden-Powell, State Aid and State Interference. Chapman & 
 Hall, 1882. 
 
 Bagehot, Lombard Street. Scribner, Armstrong & Co., 1873. 
 
 Banker's Magazine. New York. 
 
 Brodrick, English Land and English Landlords. Cassel & Co., 
 1881. 
 
 Cairnes, Logical Method of Political Economy. Macmillan, 1875. 
 
 Cairnes, Some Principles of Political Economy. Harpers. 
 
 Cairnes, Essays in Political Economy, Theoretical and Applied. 
 Macmillan, 1873. 
 
 Chevalier, ticonomie Polilique. Paris, 1866. 
 
 Chevalier, On Gold (Translated). Appleton, 1859. 
 
 Cossa, Guide to the Study of Political Economy (Translated). 
 Macmillan, 1880. 
 
 Crump, English Manual of Banking. Longmans, 1877. 
 
 Cunningham, Growth of English Industry and Commerce. Cam- 
 bridge, University Press, 1882. 
 
 DeBroglie, Le Libre ^change et L Impot. Paris, 1879. 
 
 DeLavelaye, Primitive Property (Translated). Macmillan, 1878. 
 
 Dictionnaire de T Economic Polilique. Guillaumin, 1854. 
 
 Fawcett, Political Economy, 6th Ed. Macmillan, 1883. 
 
 Fawcett, Pauperism. Macmillan, 1871. 
 
 Fawcett, Free Trade and Protection. Macmillan, 1878. 
 
 Ford, American Citizen's Manual. Putnam, 1883. 
 
 Giffen, Essays in Finance. Geo. Bell & Sons, 1880. 
 
 Gilbart, The Principles and Practice of Banking. Bell & Daldy, 
 1871. 
 
Vlll REFERENCES. 
 
 Goschen, Theory of the Foreign Exchanges. E. Wilson, 1875. 
 
 Grant, Recess Studies. Edmonston & Douglas, Edinburgh, 1870. 
 
 Hankey, The Principles of Banking. Effingham Wilson, 1873. 
 
 Hertzka, Wahrung und Handel. Wien, 1876. 
 
 Holyoake, History of Cooperation in England. Lippincott, 1875. 
 
 Horton, Silver and Gold. R. Clarke & Co., 1876. 
 
 Humboldt, Sphere and Duties of Government. London, 1854. 
 
 Hamilton. National Debt of Great Britain. Carey, 1816. 
 
 Jevons, Theory of Political Economy. Macmillan, 1879. 
 
 Jevons, Money and the Mechanism of Exchange. Appleton, 1875. 
 
 Jevons, The Coal Question. Macmillan, 1866. 
 
 Jevons, Methods of Social Reform. Macmillan, 1883. 
 
 Lalor, Cyclopedia of Political Science, etc. Rand, McNally & Co., 
 1882. 
 
 Leroy-Beaulieu, Science des Finances. Guillaumin, 1877. 
 
 Letourneau, Sociology (Translated). Chapman & Hall, 1881. 
 
 Levi, History of British Commerce. Murray, 1880. 
 
 Macleod, Principles of Economical Philosophy. Longmans. 1872. 
 
 Macleod, Dictionary of Political Economy. Longmans, 1863. 
 
 Maine, Village Communities. Holt, 1871. 
 
 Mann, Paper Money. Appleton, 1872. 
 
 Marshall, Economics of Industry. Macmillan, 1879. 
 
 Martineau, History of England. Boston, 1865. 
 
 McCulloch's Adam Smith. Longmans, 1838. 
 
 Mill, Political Economy. Longmans, 1878. 
 
 Mill, Logic. Harpers, 1870. 
 
 Mill, Liberty. Longmans, 1865. 
 
 Milnes, Problems in Political Economy. Sonnenschein, 1882. 
 
 Molesworth, History of England. Chapman & Hall, 1874. 
 
 Mongredien, History of the Free Trade Movement in England. 
 Cassell & Co. 
 
 Mongredien, Wealth Creation. Cassell & Co., 1882. 
 
 Price, Practical Political Economy. Kegan Paul & Co., 1878. 
 
 Princeton Review, November, 1879, Bimetalism. 
 
 Princeton Review, March, 1881, The Argument Against Protec- 
 tive Taxes. 
 
 Princeton Review, November, 1881, Sociology. 
 
REFERENCES. ix 
 
 Princeton Review, November, 1882, Wages. 
 
 Probyn, Systems of Land Tenure in Various Countries. Cassell 
 ,V: Co. 
 
 Ricardo, Works, Edited by McCulloch. Murray, 1881. 
 
 Richardson, H. A., National Banks. Harpers. 
 
 Richardson, W. A., Public Debt and National Banking Laws of 
 the United States. Washington, 1873. 
 
 Rogers, History of Agriculture and Prices in England. Claren- 
 don Press, 1866. 
 
 Roscher, Political Economy (translated). Holt, 1878. 
 
 Say, Rapport stir le Payement de I" Indemnite de Guerre, in his 
 Translation of Goschen, Theorie des Changes. Guillaumin, 
 
 1875- 
 
 Seebohm, The English Village Community. Longmans, 1883. 
 Seybert, Statistical Annals. Philadelphia, 1818. 
 Seyd on Bullion and Foreign Exchanges. Effingham Wilson, 
 
 1868. 
 
 Sidgwick, Principles of Political Economy. Macmillan, 1883. 
 Smith, Adam, Wealth of Nations, edited by Rogers. Clarendon 
 
 Press, 1880. 
 
 Smith, Adam, edited by McCulloch, see McCulloch. 
 Soetbeer, PetermamJs Mittheilungen, Erganzungshefl, Nr. 57, 
 
 Edelmeiall-produktion. Gotha, 1879. 
 Spencer, Study of Sociology. Appleton, 1874. 
 Spencer, Principles of Sociology. Appleton, 1883. 
 Spencer, Biology. Appleton. 1874. 
 Spencer, Social Statics. Appleton, 1863. 
 
 Spencer, Essays, Moral, Political and Esthetic. Appleton, 1872. 
 Sumner, Life of Jackson. Houghton, Mifflin & Co., 1882. 
 Sumner, Argument before the Tariff Commission, 1882. 
 Sumner, History of Protection in the United States. Putnam. 
 Sumner, What Social Classes Owe to Each Other. Harpers, 1883. 
 Sumner, see " Princeton Review." 
 Thornton, On Labor. Macmillan, 1870. 
 Walker, Political Economy. Holt, 1883. 
 Walker, Money. Holt, 1878. 
 Walker, Money, Trade and Industry. Holt, 1879. 
 
X REFERENCES. 
 
 Walker, Land and its Rent. Little & Brown, 1883. 
 Wallace, Russia. Holt, 1877. 
 
 Walras, Elements <? ficonomie Politique Pure. Lausanne, 1874. 
 Ward, Dynamic Sociology. Appleton, 1883. 
 Wilson, The National Budget. Macmillan, 1882. 
 Woolsey, Political Science ; or, The State. Scribner, Armstrong 
 & Co., 1878. 
 
 ADDED 1885. 
 
 Connell. The Economic Revolution of India. Kegan Paul, 1883. 
 Frohme, Die Entwickelung der EigenthumsverhcUtnisse. Bocken- 
 
 heim, 1883. 
 
 Le Touze, Traitd du Change. Guillaumin, 1883. 
 Le Play, La Reforme Sociale en France. Dentu, 1878. 
 Pollock, The Land Laws. Macmillan, 1883. 
 Rae, Contemporary Socialism. Scribners, 1884. 
 Rogers, Work and Wages. Putnams, 1884. 
 Taylor, Profit-sharing. Kegan Paul, 1884. 
 
TJHI7BRSIT7 
 
 ECONOMIC PROBLEMS. 
 
 1. 
 
 GENERAL DEFINITIONS. 
 
 1. Discuss the following definitions of political 
 economy : It is the science of value. 
 
 It is the science of exchanges. 
 
 It is the science which treats of the production, 
 exchange and distribution of wealth. 
 
 Political economy, or economics, is the name 
 of that body of knowledge which relates to 
 wealth. 
 
 Political economy is the science which investi- 
 gates the laws of the material welfare of human 
 societies. 
 
 Cairnes, Logical Method, 57. 
 
 2. Is political economy not a science (i) be- 
 cause, as is alleged, it cannot predict economic 
 phenomena ; (2) because, as is alleged, it has not 
 won a body of positive and ascertained results ? 
 What is a science? or what is the essential con- 
 dition that any discipline may become a science? 
 
 Marshall, 2. 
 
2 ECONOMIC PROBLEMS. 
 
 3. Sociology is the science of life in society. 
 Political economy is that branch of sociology 
 which treats of the industrial organization of 
 society. Expand the notion and definition of 
 sociology and explain what that conception of 
 political economy is which is here presented. 
 
 4. Price says that it is silly to call political 
 economy a science ; that supply and demand, the 
 law of population, etc., are only familiar facts of 
 intelligent observation. Per contra, he affirms 
 that political economy is " the application of 
 common sense to familiar processes. It explains 
 their nature and manner of working. It analyzes 
 and thinks out practices which are universal ex- 
 cept when thwarted by artificial theory." Criti- 
 cise this view of political economy as antithetical 
 to the notion of a science. What is it to think out 
 a practice? What is a practice which would be 
 universal, if not thwarted? What is an artificial 
 theory ? How can a theory thwart a practice ? 
 
 Price, 10-15. 
 
 5. Wealth is any material good which satisfies 
 a desire of man, and which is not gratuitous. It 
 is used as a collective term, for the general con- 
 ception of such goods, and, when it describes the 
 subject or aim of political economy, it carries 
 with it the notion of abundance. Criticise and 
 
GENERAL DEFINITIONS. 3 
 
 correct this definition. Do you include in your 
 definition the following? Honesty, health, skill, 
 " the moral, intellectual, and physical natures" of 
 the people, a patent right, a copy-right, a bill of 
 exchange, the voice of a singer, a good harbor, 
 climate, and sunlight. Do you infer, for instance 
 from Price's discussion, that economists need not 
 continue the effort to formulate a satisfactory 
 definition of wealth ? 
 
 Price, 23-30. Marshall, 6. Sidgwick, Chap. III. 
 
 Adam Smith, I., i, Rogers's note. 
 
 6. If a census were taken of the wealth of the 
 country ought the owners of land to return it at 
 its market value? Is the land a part of the 
 national wealth ? Ought the owners of govern- 
 ment bonds to include them in the return? If 
 they did so, and if the returns were added up, the 
 national debt would be counted into the sum of 
 the national wealth. Would that be right? If 
 A sells to B a bale of cotton for $500 and B gives 
 a promissory note for it, ought B to return the 
 cotton and A the note ? If A has a certificate of 
 stock in a railroad, ought the railroad officers to 
 return the railroad and ought A to return the 
 stock? 
 
 Adam Smith, I., 254, Rogers's note. 
 
 7. " Because political economy confines itself 
 to discovering the laws of wealth, it has, by some, 
 
4 ECONOMIC PROBLEMS. 
 
 been called derisively, the gospel of mammon. 
 In reply to this sneer it would be enough to say 
 that, while wealth is not the sole interest of man- 
 kind, perhaps not the highest interest, it is yet of 
 vast concern, of vital concern to individuals and 
 to communities. As such it deserves to be 
 studied. Now, if it is to be studied at all, it will 
 best be studied by itself." Vindicate in detail 
 this view of political economy and show the rela- 
 tion of political economy to other interests. 
 
 Walker, Pol. EC., I, 2. 
 
 8. If there should be a scarcity of houses in the 
 city of Washington this winter, would that fact 
 constitute a problem requiring the attention of 
 the economists of the country? How does your 
 answer bear on the sphere of political economy 
 and the opinions of the professorial socialists ? 
 
 9. It has been said that the free play of eco- 
 nomic forces would produce, not the best con- 
 ceivable, but the worst conceivable, state of 
 society. Show the absurdity of this statement. 
 
 10. What are economic forces? What are 
 economic laws? Are economic laws subject to 
 exceptions like laws of grammar? Are eco- 
 nomic laws like the ten commandments ? Are 
 they like Acts of Congress? Are they like laws 
 
GENERAL DEFINITIONS. 5 
 
 of physics? Can we "violate" them? What is 
 the limit of what we can do with economic forces ? 
 If economic laws are described as expressing- a 
 "tendency," what is meant? What objection is 
 there to that description of them ? 
 
 Marshall, 3. Cairnes, Logical Method, 18. 
 
 Cairnes, Principles, 184. Mill's Logic, Book III., Chap. 10, 5. 
 
 Cossa, 7. Sidgwick, 24. Spencer, Study of Sociology, 22. 
 
 11. A writer who ridicules the notion of 
 natural or scientific laws in political economy 
 cites " property" as a proof that no such laws 
 exist. Show the fallacy. 
 
 12. Distinguish between the science and art 
 of political economy ; between political economy 
 and politics. 
 
 Walker, Pol. Econ., 20-22. Cossa, 6, 11-13. 
 
 13. Is it a valid distinction to say that the 
 science of political economy investigates what is ; 
 the art, what ought to be ? 
 
 Sidgwick, 23-26, also 402. 
 
 14. Does the art of political economy mean, 
 or include, the art of getting rich, or the art of 
 conducting business, or the art of speculation, or 
 the art of investing capital in stocks, bonds, lands, 
 etc., or the art of conducting the finances of a 
 nation, or the art of legislating on trade, in- 
 
6 ECONOMIC PROBLEMS. 
 
 dustry, and finance ? Give reasons for including 
 or excluding each of these things. 
 
 15. Is political economy a "moral" science? 
 If so, according to what classification of the 
 sciences is it so classed? and what is meant by so 
 denominating it ? 
 
 Cairnes, Logical Method, 31, 37. 
 
 16. Is political economy a deductive or an in- 
 ductive science? What difference does it make 
 which it is 
 
 Cairnes, Logical Method, 60 fg. Sidgwick, Chap. III. 
 
 17. Is imagination a force in political econ- 
 omy? If so, give all the illustrations you can. 
 Discuss delusion, fraud, falsehood, prejudice, 
 habit, tradition, patriotism and affection, so far 
 as you think that an economist ought to take 
 account of them. 
 
 Ought there to be any difference in a text- 
 book of political economy for an English college 
 and for a college in India? 
 
 Walker, Polit. Econ., 23. 
 Connell, 11-22; 50; 148-9. 
 
 18. If it is said: "Some people struggle to 
 keep up false appearances of wealth and so ruin 
 themselves," do you think that that is such an 
 observation as an economist should take account 
 of? If it is said: " Many people waste their capi- 
 
GENERAL DEFINITIONS. 7 
 
 tal by extravagant expenditure," do you think 
 that that is an observation of which an economist 
 should take account? 
 
 19. Do you think, as a matter of fact, that 
 most people actually distribute their incomes in 
 their expenditure so as to get the maximum of 
 utility for themselves, judging by such standards 
 of utility as they would admit to be sound when 
 discussing the question of what things are useful 
 abstractly ? If there are many who do not do so, 
 does that present a fact which the economist 
 ought to take note of in his discussions? 
 
 Jevons, Theory, 77-80; 149-153. 
 
 20. Do you believe that there are crafty and 
 able men who can " rig the market" and bull and 
 bear prices more or less at their pleasure? Men- 
 tion commodities with which this might be more 
 possible than with others. Is it possible with 
 stocks? If so, why? What should you say of 
 such interferences on the whole and over a con- 
 siderable period of time ? Is the popular opinion 
 correct about the extent to which manipulation 
 of the market is possible? 
 
 Banker's Magazine, XXXVI., 308. 
 
 21. Was it the fundamental doctrine of the 
 mercantile system that the precious metals are 
 
8 ECONOMIC PROBLEMS. 
 
 wealth exclusively or preeminently? If not, 
 what was the fundamental doctrine of that sys- 
 tem, and how was the doctrine just mentioned 
 derived from it? Describe the development of 
 the system. 
 
 Adam Smith, I., 15, Rogers's note ; II., 63, Rogers's note. 
 Cossa, 119, fg. 
 
 22. How was the colonial system a deduction 
 from the mercantile system ? 
 
 Adam Smith, II., 190-210. 
 
 23. Who were the Physiocrats and what did 
 they teach ? 
 
 Cossa, 142. Art. Physiocrates in the Dictionnaire de FEc. Pol. 
 
 24. Mention the leading English economists 
 from Smith to J. S. Mill, giving dates and the 
 chief contributions of each. 
 
 Cossa, 161-182. Life of Smith prefaced to Rogers's Smith. 
 
II. 
 
 ELEMENTARY PRINCIPLES. 
 
 25. What is meant by a period of production? 
 Show the great importance of observing the 
 element of time in economic phenomena aud 
 correctly defining it in economic generalizations. 
 
 Jevons, Theory, 249-258. 
 
 26. What could supply and demand mean to 
 Robinson Crusoe? When, in history, did supply 
 and demand begin to act ? 
 
 Supply and demand, at their lowest terms, are 
 not a ratio, but a case of two simultaneous equa- 
 tions between two variables, or, they are repre- 
 sented by two curves which intersect. There 
 are two .persons and two commodities. Prove 
 this and show what errors must follow from treat- 
 ing supply and demand as a simple ratio. 
 
 How far can we analyze supply and demand ? 
 
 Is the equilibrium of supply and demand acci- 
 dental, imperfect, arbitrary, contingent, moral, or 
 mathematical? 
 
 Jevons, Theory, Chap. IV. 
 
 Jenkin in Grant's Recess Studies, 151-171. 
 
 Princeton Review, November, 1882, p. 249-50 
 
10 ECONOMIC PROBLEMS. 
 
 27. Effort and satisfaction are the pulsations 
 by which the isolated man maintains existence. 
 So soon as society exists division of labor begins 
 and exchange follows. The systole and diastole 
 of supply and demand are the form which the 
 pulsations of effort and satisfaction take for a man 
 who lives in society. Hence supply and demand 
 are constant and all-pervading relations in society, 
 and demand the first and most careful study of 
 the economist. 
 
 Rights and obligations are the jurisprudential 
 aspect of the relations of supply and demand. 
 Expand and criticise. 
 
 28. The law of supply and demand, in a free 
 market without reserve, is that they come to an 
 equilibrium at the ratio of value which will clear 
 the market. Compare Mill's law of the equation 
 of international value and criticise the law here 
 stated. 
 
 Mill, III., 18, 4. 
 
 29. What is the difference between supply 
 and demand and reciprocal demand ? 
 
 Mill, III., 18, 4. Cairnes, Principles, 89. 
 
 30. Value is a fact, not an opinion. It there- 
 fore has conditions of time and place, and may 
 vary from moment to moment or place to place 
 
ELEMENTARY PRINCIPLES. II 
 
 if successive sales take place. Expand, illustrate, 
 and establish, or refute, this statement. 
 
 31. "Value, economists are pretty much 
 agreed, is a relation ; and, for the purposes of the 
 present discussion, we may so take it." A few 
 pages further on: " Value is purchasing power ; 
 power in exchange." What further analysis is nec- 
 essary to make these two definitions consistent? 
 
 Walker, Money and Trade, 30, 36. 
 
 32. " Wheat is worth 24 francs the hectolitre. 
 This fact has the character of a natural fact. 
 This value of wheat, reckoned in silver, does not 
 result either from the will of the seller, or the 
 will of the buyer, or from an agreement between 
 them." " Wheat is worth 24 francs the hectolitre. 
 This is a mathematical fact. The value of wheat 
 in silver yesterday was 22 or 23 francs. A little 
 while ago it was 23^ or 23^. It will shortly be 
 24^ or 24^. But to-day, at this instant, it is 
 24 francs, neither more nor less. This is a math- 
 ematical fact and admits of mathematical expres- 
 sion." Explain and prove. 
 
 Walras, 29, 30. 
 
 33. If the supply of all commodities were 
 doubled or halved suddenly, would any changes 
 in their relative value ensue or not? (M. 774.) 
 
 Jevons, Theory, 160-174. Mill, IV., 3, 4. 
 
12 ECONOMIC PROBLEMS. 
 
 34. On the Black Friday of 1869 gold was 
 sold on one side of the gold room for 160 when it 
 was being sold on the other side for 135. Those 
 on one side of the room knew a minute sooner 
 than those on the other side that the Secretary 
 of the Treasury had ordered five million dollars 
 gold to be sold, .adding so much to the supply. 
 How does this illustrate the doctrine of value? 
 Cf. question 30. 
 
 35. Is either one of the following things com- 
 mensurable ; if so, which? Cost, desire, utility, 
 satisfaction. What is "cost" according to 
 Cairnes ? 
 
 Cairnes, Principles, 73-87. 
 
 36. Why does not skill enter into cost? Is 
 the fact here analogous to the fact that the rent 
 of land does not enter into the price of agricul- 
 tural produce ? 
 
 Cairnes, Principles, 76-80. 
 
 37. Translate into English, prix de revient. 
 
 38. It is commonly said that value, in the long 
 run, conforms to "cost of production." Jevons 
 says: "I hold labor to be essentially variable, so 
 that its value must be determined by the value 
 
KLKM i:\T.\RY PRINCIPLKS. 13 
 
 of the produce, not the value of the produce by 
 that of labor." " Labor once spent has no influ- 
 ence on the future value of any article." He 
 defines labor " all exertion of body or mind" by 
 which we get products, and he says that it is in- 
 commensurable. Cairnes defines " cost " as all 
 onerous exertion and sacrifice necessary to get 
 goods. Macleod denies that labor produces 
 value. He says that value produces or calls out 
 labor. Sidgwick objects to Cairnes's use of 
 "cost" that Cairnes spoke of the proportion of 
 cost of production, but that we cannot think of 
 " anything being in proportion to an aggregate 
 of incommensurables." Marshall recognizes two 
 uses of cost of production, adopts Cairnes's 
 notion, and proposes the term " expenses of pro- 
 duction" for the outlay, to which, as he and 
 others say, normal value must conform. Is 
 Sidgwick's objection valid ? Compare the above 
 views and say whether the two senses of cost of 
 production should be recognized, or, if only one, 
 which ? 
 
 Mill, III., ch. 3. Jevons, Theory, 174-189. 
 
 Sidgwick, 201. Macleod, Econ. Philos., I., 331. 
 
 39. Jevons says that " Labor once spent has 
 no influence on the future value of any article." 
 On the wages system, if the labor spent last 
 week was paid for by capital then consumed by 
 
14 ECONOMIC PROBLEMS. 
 
 the laborer, can value to be received ever have 
 any effect back upon labor expended ? or value 
 be made to conform to capital formerly laid out? 
 If we say that we shall make a hew adjustment, 
 in the next period of production, if we fail to re- 
 place our capital, will not the next period of 
 production have all its own facts, circumstances 
 and relations, and be, in fact, a new and inde- 
 pendent problem ? 
 
 40. Cost of production is a comparison of 
 ratios. Cost is incommensurable, but the subject 
 of it compares the cost with the satisfaction 
 obtained. This ratio he cannot measure. It 
 could not be measured and compared for two 
 men, but the first man can compare the cost to 
 him and the satisfaction to him in one line with 
 the cost to him and the satisfaction to him in 
 another, and this is what is really essential and is 
 really done so long as two or more lines are 
 open. Hence cost of production redistributes 
 labor and capital and acts on supply ; so ulti- 
 mately on value. In no other way does it act on 
 value, which is controlled by supply and demand 
 only. Criticise this doctrine. Suppose that no 
 second line is open, and that the ratio of satisfac- 
 tion to effort falls, as when a laborer advanced in 
 life has to compete with a machine which lowers 
 the price of his product, what happens then? and 
 
ELEMENTARY PRINCIPLES. 15 
 
 what becomes of the notion of cost of production 
 as an ultimate regulator of value? What light 
 does this last supposition throw on the last two 
 questions ? 
 
 41. "All other organs, therefore, jointly and 
 individually, compete for blood with each organ, 
 so that, though the welfare of each is indirectly 
 bound up with that of the rest, yet, directly, 
 each is antagonistic to the rest." " Evidently 
 this process [of enlargement of an industry or 
 development of a district whose products are in 
 unusual demand] in each social organ, as in each 
 individual organ, results from the tendency of 
 the units to absorb all they can from the common 
 stock of materials for sustentation ; and evidently 
 the resulting competition, not between units 
 simply, but between organs, causes in a society, 
 as in a living body, high nutrition and growth of 
 parts called into greatest activity by the require- 
 ments of the rest." 
 
 Explain the doctrine of the first sentence and 
 show how it applies to society. What light is 
 here thrown on competition as a mode of growth, 
 and on the general laws of life of which competi- 
 tion is one phase ? 
 
 Spencer's Principles of Sociology, I., 535-6, 
 
l6 ECONOMIC PROBLEMS. 
 
 42. Criticise the expression "division of la- 
 bor." Explain social organization. Show that 
 division of labor is only a case of it. Show the 
 power and utility of organization. What is 
 proved in regard to the social and industrial 
 utility of concord and peace? What is the law 
 of the " Increasing Return?" 
 
 Marshall, Chap. VII., p. 57. 
 
 43. "Are the following to be included in capi- 
 tal? (i) the original powers of the laborer; (2) 
 his acquired powers ; (3) the original properties 
 of the soil; (4) improvements on land; (5) credit; 
 (6) unsold stock in the hands of a merchant ; (7) 
 articles purchased but still in the consumer's 
 hands." (M. 1 66.) 
 
 Jevons, Theory, 280-8. Sidgwick, 120-141. 
 
 44. The savings of the United States have 
 been estimated at 850 millions of dollars a year. 
 What sort of things are these savings and where 
 are they? (M. 177.) 
 
 Price, 113-14. Marshall, 15. 
 
 45. Capital is transmuted in every period of 
 production. Prove this. Show its relation to 
 " risk," and to any sound doctrine of wages. 
 
 Show that industry is limited by capital. 
 
 Mill, I., 5, i, 3, 5- 
 
II KMKNTAKY PRINCIPLES. I/ 
 
 46. The socialists declare that capital is pro- 
 duced (i) by accumulating the differences be- 
 tween buying price and selling price, i. e. the 
 profits of merchants, and (2) by accumulating the 
 differences between product and capital dis- 
 tributed to laborers. They regard the product 
 as due entirely to labor, and therefore denounce 
 the latter difference as an abstraction from the 
 laborer of what belongs to him. They therefore 
 construe the history of the last five hundred 
 years as a period in which the middle class has 
 developed itself by the accumulation of capital, 
 (i. e. the plunder of the proletariat) and the crea- 
 tion of a capitalist system of industry. They 
 construe civil liberty as the license given by the 
 state to the robbery mentioned, and denounce 
 competition as the mode in which the robbery is 
 accomplished. 
 
 State what facts in the industrial history of the 
 last five hundred years are here misconstrued, 
 show the misconstruction, and put the facts in 
 their true light. 
 
 Give an outline of the history of capital. 
 When did it begin to be? 
 
 Describe the modern industrial system as com- 
 pared with the system in England in the thir- 
 teenth century. 
 
 Cunningham, especially 139, 249. Seebohm. 
 
 Adam Smith, I., 273, Rogers's note. Walker, Land, 188. 
 
 Rogers, Work and Wages. Frohme. Rae, ch. III. 
 
18 ECONOMIC PROBLEMS. 
 
 47. Mention as many natural monopolies as 
 you can. State when and why space, light, air, 
 and water have value. Do honesty and truth 
 have value? If so, why? Are natural monopo- 
 lies beneficent or maleficent to man? Illustrate. 
 
 48. If fresh meat has hitherto been wasted in 
 Australia and Buenos Ayres, and if refrigerator 
 ships can be constructed which can carry that 
 meat to Europe, what effects can you trace on 
 the prices of certain commodities, on the distri- 
 bution and increase of population, and on interna- 
 tional competition in industry as likely to be 
 produced? 
 
 Adam Smith, I., 245. 
 
 4:9. What is a speculator? Is he a parasite on 
 the commercial system? If he performs a ser- 
 vice, what is it? Is it a correct definition to say 
 that he is one who bets on variations in prices ? 
 
 Cairnes, Principles, 109. Adam Smith, II., 89 note ; 99. 
 
 Nation, VII., 85. 
 
 50. Can we ever become too rich? Has the 
 work to be done any limits? Is the work to be 
 done a positive quantity? Does it remain con- 
 stant ? 
 
 Cairnes, Principles, 249-262. 
 
KLKMKXTARY PRINCIPLKS. 19 
 
 51. "As the washing of clothes is not a pro- 
 ductive industry, and its cost is one of the 
 charges of living, it is an object that it should 
 occasion as little drain upon the pecuniary re- 
 sources of the community as possible." 
 
 Criticise the distinction between productive 
 and unproductive labor. 
 
 52. Would it be a good state of things if no 
 man could be found who would black another 
 man's shoes for less than a dollar ? Suppose, 
 first, that all were proud and shiftless, and then 
 make other suppositions. 
 
 53. " Discuss -the effects of the exportation of 
 capital (i) from England, (2) from Ireland." (M. 
 219.) 
 
 54. Can you assign any meaning to " over- 
 production" in any case whatever. 
 
 Jevons, Theory, 219-221. 
 
 55. A cause of industrial depression was said 
 to be "that the power to consume has not kept 
 pace with the power to produce. It is not the 
 fault of the power of production, [i. e., it is not 
 over production.] It is a fault on the other 
 side." 
 
20 ECONOMIC PROBLEMS. 
 
 If production should exceed consumption, what 
 would become of the difference ? If consumption 
 should exceed production, where would we get 
 the difference ? 
 
 Cairnes, Principles, 31-36. 
 
 56. What are the economic objections to gamb- 
 ling? 
 
 Cf. Jevons, 172-174. Spencer, Study of Sociology, 306. 
 
 57. In a certain city a piece of grading was 
 to be done. It was known and admitted that it 
 would cost 15 cents per cubic foot to do it by 
 contract and 45 cents per foot to do it by days 
 labor. Some favored doing it the latter way and 
 replied to the objection of greater cost that there 
 would be no loss or injury to the interest of the 
 city because the money would be paid to laborers 
 resident in the city, and so would stay there. 
 Show the fallacy of this reasoning. 
 
 58. Suppose that, in consequence of great re- 
 duction in the cost of transportation between the 
 United States and England, the gains of agricul- 
 ture in England should greatly decline, what 
 would be the successive stages of effect, and what 
 the ultimate effect on the wealth of England, and 
 why ? (M. 38.) What would be the effect in the 
 United States? 
 
ELEMENTARY PRINCIPLES. 21 
 
 59. What is the value of the obelisk in the 
 Central Park? Its first cost to its modern owner 
 was o. It cost $100,000 to move it and set it up. 
 
 Jevons, Theory, 174-180. 
 
 60. A one dollar bank note is in circulation, 
 which is a counterfeit, but no one has detected it. 
 What is its value? 
 
 The promoters of a stock company, by puffing- 
 it in the newspapers, have run the stock up to 
 150. What is the value of it? 
 
 A false bottom was put into an elevator bin so 
 that it held 50 bushels when it was supposed to 
 hold 10,000. What was the effect on the market 
 price of wheat ? What was the value of wheat ? 
 
 A piece of cloth was sold for all wool for $1.00 
 a yard. It contained 10 per cent, cotton. What 
 was its value ? 
 
 A grocer tampered with his scales so that he 
 sold 15 ounces for a pound. He charged " 10 cts. 
 a pound" for sugar. What was the value of 
 sugar ? 
 
 61. A piece of land was owned by 15 persons. 
 Desiring to divide without selling it, they em- 
 ployed three real estate experts to divide it into 
 15 parts which should be of equal value. This 
 was done. The next year the tax assessors as- 
 
22 ECONOMIC PROBLEMS. 
 
 sessed the 15 shares at amounts varying from 
 $900 to $2,850. 
 
 What lisrht does this incident throw on value ? 
 
 62. In 1870 a house was built which cost 
 $100,000. In 1876 it was appraised in an estate 
 at $75,000 because that was judged to be what it 
 would sell for. In 1880 it was sold for $150,000. 
 There were those who claimed in 1876 that it 
 should be appraised at what it cost in 1870, or at 
 what it would sell for in 1880 so far as they could 
 then foresee that. What do you say ? 
 
 63. What causes determine the market value 
 of oysters? 
 
 Cairnes, Principles, 141-146. 
 
 64. " Suppose a considerable rise in the price 
 of wool to be foreseen, how should farmers ex- 
 pect the prices of mutton, beef and hides, respec- 
 tively to be affected, and why ?' 4 (M. 868.) 
 
 65. The Dutch East India Co. used to destroy 
 part of the spice crop in order to enhance its 
 profits. Was there a fallacy in the proceeding ? 
 (M. 5470 
 
 Adam Smith, II., 101. 
 
III. 
 
 POPULATION. 
 
 66. Population increases up to the limit of 
 the sustaining 1 power of the land at a given stage 
 of the arts and under a given standard of living, 
 or, mortality and reproduction are equal at the 
 limit, on a given stage of the arts, and with a 
 given standard of living. Explain and prove this 
 law. 
 
 Spencer, Biology, II., 479. Cairnes, Logical Method, 149-181. 
 Roscher, II., 273-336. Mill, I., ch. 10. 
 
 Fawcett, Pauperism, Chap. III. 
 
 67. What is over-population ? What is under- 
 population? British India has 200 to the square 
 mile; Belgium, 469; Rhode Island, 254. Which 
 comes nearer to over-population and which to 
 under-population ? 
 
 Roscher, II., 337-341. 
 
 68. How is the ratio Land : Population affec- 
 ted by advance in the arts and higher standard 
 of living ? 
 
 Adam Smith, I., 262. 
 
24 ECONOMIC PROBLEMS. 
 
 69. The law of population and the law of the 
 diminishing return show that, other things being 
 constant, the human race, in the process of time, 
 must advance towards misery, pestilence, famine 
 and war. State in detail what " the other things" 
 are? Are they constant? If they vary, what 
 makes them do so? Define civilization from this 
 point of view. Show what produces civilization ; 
 what it consists of; what its effects are. Do any 
 of your facts or deductions bring out " excep- 
 tions" to the laws of population and the diminish- 
 ing return, or prove those laws untrue ? 
 
 Princeton Review, November, 1881, p. 303. 
 
 70. What is the importance for land rent, 
 wages, rate of interest, and so for the status of 
 the population, of the ratio Land : Population ? 
 What is the limit of that ratio ? 
 
 71. Make a complete catalogue of food-plants 
 and discuss their comparative economic value. 
 
IV. 
 LAND AND RENT. 
 
 72. Discuss the following definitions of rent : 
 " Rent is that portion of the produce of the 
 earth which is paid to the landlord for the use of 
 the original and indestructible powers of the 
 soil." 
 
 Rent is the price paid for the use of an appro- 
 priated natural monopoly. 
 
 Ricardo, 34. Walker, 203. McCulloch's Adam Smith, 444. 
 Adam Smith, I., 151, Rogers's note. 
 
 73. State the law of the diminishing return. 
 Mention as many things as you can to which it 
 applies. Why do we find our population scat- 
 tered sparsely over our whole territory and not 
 concentrated on the Atlantic coast ? Why is 
 American agriculture slovenly? Why have our 
 agricultural colleges obtained few students of the 
 science of agriculture ? Why is forestry neg- 
 lected in the United States? Why are we not a 
 pains taking people? Why are we not frugal? 
 
 Marshall, 21-26. Walker, Land, 45-6. 
 
 ' 25 
 
26 ECONOMIC PROBLEMS. 
 
 74. If the land of a certain district consti- 
 tuting an economic unit (i. e. such that, with 
 existing means of transportation, no staples of 
 food could profitably be brought into it) were all 
 of a uniform quality, would none of it bear rent? 
 
 Adam Smith, I., 151-169, with Rogers's notes. 
 
 75. A court has been established in Ireland to 
 adjust rents between landlord and tenant. Is 
 this the same thing as fixing wages or prices by 
 some public authority? 
 
 Cairnes, Essays, 202-231. 
 
 76. It is argued that the system of "judicial 
 rents" will produce two sets of landlords instead 
 of one. What is the argument? Is it sound? 
 It is argued that fifteen years hence another 
 equally arbitrary interference with contract will 
 be necessary. What is the ground of that argu- 
 ment? 
 
 77. Can a class of peasant proprietors be 
 brought into existence by any legislative ma- 
 chinery? 
 
 78. What are the social and economic objec- 
 tions to the French system for the inheritance of 
 
LAND AND RENT. 2/ 
 
 land ? What are the objections to the English 
 custom of settlements? 
 
 Mill, V., 10, 4. Edinburgh Review, XL., 350. 
 
 Nation, XV., 218 ; XX., 312. Le Play, I., 271-293. 
 
 Probyn, 122-126 ; 184-212, cf. 108 ; 291-312. 
 
 Brodrick, 129-151. Walker, Land, 212 fg. Letourneau, 440. 
 
 Pollock, 181-5. Fawcett, Pauperism, chap. VI. 
 
 79. Discuss historically and logically this the- 
 sis : The tenure of land of the tiller of the soil is 
 always most fixed where personal independence 
 is lowest, and, the more liberty and individualism 
 are developed, the more precarious is the tenure 
 of land. At what point does fixity of tenure 
 turn from the bondage of the villain to the bless- 
 ing of the free man ? 
 
 Cunningham, 54, 97, in, 197-199. Seebohm, 176-178. 
 
 80. Do you know of any place where the 
 "margin of cultivation" or the " Ricardian acre" 
 can be seen? Where would you look for it? 
 Does it contravene the Ricardian law of rent to 
 show that the " margin of cultivation" for Eng- 
 land is in the United States? 
 
 81. "Few Irish farms have been able to fur- 
 nish the family of the actual cultivator with a 
 comfortable subsistence, and leave something 
 over to be contributed to the support of another 
 family in a certain ease. In England, owins: to a 
 
28 ECONOMIC PROBLEMS. 
 
 greater abundance of capital, and the existence 
 of manufactures, the landlord has been compelled 
 to put up with a smaller share, because the far- 
 mer's standard of living- was higher, and his tra- 
 ditions of comfort and respectability so strong, 
 that no landlord could compel him to lower them 
 in order to pay a greater rent." 
 
 82. Definition of a fair rent: "A rent which 
 might be fairly paid, and yet permit a tenant not 
 deficient in those qualities of industry and provi- 
 dence which are expected in any walk of life to 
 live and thrive." 
 
 83. Is there any rent on a fishery, or a quarry? 
 Is there any rent on a water power? Is stump- 
 age a kind of rent ? Is there any rent on a mine ? 
 Note Rogers's comment (Adam Smith, I., 177), 
 and test his doctrine by the facts of the coal 
 trade in the United States. 
 
 Adam Smith, I., 171-185. Mill, III., 5, 3- 
 
 84. If one man owned New York harbor 
 could he obtain rent for it ? How great would 
 the rent be? What now becomes of what he 
 would get ? 
 
LAND AND RKN I . 
 
 85. " How are pasture rents, shooting rents, 
 and ground rents of dwellings determined re- 
 spectively?" (M. 643.) 
 
 86. A picture by a great artist and an acre ol 
 land sold in 1825 for the same price. In 1875 the 
 same picture and the same acre changed hands 
 again for ten times as much each. Is there any 
 reason why the state should sequestrate all the 
 increased value (" unearned increment") in one 
 case and not in the other? (M. 725.) 
 
 87. It is said that a publisher pays Mr. Tenny- 
 son .4,000 per annum for the exclusive right to 
 publish everything written by Mr. T. Is there 
 here anything analogous to rent ? If any analogy, 
 how far imperfect? 
 
 t 
 
 88. A manager pays a prima donna so much 
 for each evening's performance. How far is 
 there here any analogy to rent ? 
 
 89. What are latifundiaf Where can we see 
 latifundia to-day, or the nearest resemblance to 
 them? 
 
 Letourneau. 424. 
 
30 ECONOMIC PROBLEMS. 
 
 90. Discuss the proposition that the United 
 States shall sell no more land without reserving 
 the right to demand in future years the unearned 
 increment. Hitherto the popular land policy in 
 the United States has been that the land should 
 be given away freely, or at a nominal price, to 
 actual settlers. Has this been a mistake? What 
 is the fact about the tenure of land in the theory 
 of American law as compared with the same in 
 the theory of English law ? 
 
 Sumner, Jackson, 184-191. 
 
 91. Under what head would you classify the 
 income of a patentee or an author ; wages, profits, 
 or rent? (M. 23.) 
 
 92. Write an essay on Village Communities. 
 
 Maine. Village Communities; De Lavelaye, Primitive Property; 
 Seebohm, the English Village Community; Wallace, Russia. 
 
V. 
 
 WAGES. 
 
 93. Mention as many different ways as you 
 know of, in which labor has received, or does 
 receive, remuneration for its share in production. 
 
 94. Obviously it is necessary, in order to un- 
 derstand the operation of the industrial system, 
 to trace the steps of one action and reaction with 
 care and detail. But production, exchange, dis- 
 tribution, and consumption, production, exchange, 
 etc., follow each other in a never ending series. 
 They in fact overlap at consumption and produc- 
 tion, as when the laborer, his energies revived by 
 sleep and breakfast, takes up his spade and again 
 tills the ground. It is in distribution, however, 
 that the replacement of the capital tajces place, 
 and we must begin to study a complete reaction 
 either with consumption or production. It really 
 is immaterial, save that our point of cessation 
 must correspond with our point of beginning. If 
 we follow through one reaction, we shall find 
 that it will cover the consumption, transmutation, 
 and replacement of the capital and a distribution 
 
32 ECONOMIC PROBLEMS. 
 
 and adjustment of it to begin a new enterprise. 
 Criticise. 
 
 95. Wages are the remuneration of labor. 
 Wages are the sum paid per unit of time by 
 
 the employer to the employee, in return for which 
 the employee contracts to employ his productive 
 energy during a specified time in such manner as 
 the employer may direct. 
 
 Criticise these definitions. 
 
 Cf. Adam Smith, I., 67, 69. 
 
 96. Describe in detail the contract or com- 
 petitive wages system as a part of the modern 
 industrial system, and show what the relations of 
 employer and employee and their mutual rights 
 and duties are in it. Who constitute the wages 
 class ? Is there any distinctly differentiated wages 
 class in the United States? Under what circum- 
 stances is such a class distinctly differentiated ? 
 
 Walker, Pol. Econ., 379. 
 
 Stirling in Grant's Recess Studies, 309-333. 
 
 Jenkin, ibid., 171-187. 
 
 97. Cairnes argues that we cannot apply the 
 law of supply and demand to labor, because the 
 supply of labor is produced by biological forces 
 and not as commodities are produced. What is 
 the fallacy of this argument? 
 
 Cairnes, Principles, 152-3. 
 
\\ACF.S. 33 
 
 98. If a change takes place in the supply of 
 la Dor, will a proportionate change take place in 
 wages? (Cf. question 33.) 
 
 Rogers, Prices, I., 265, 275. 
 
 99. An author who defines wages as the share 
 of labor in the product, writes: "The industrial 
 conditions were more favorable to the payment 
 of wages in the United States, while in England 
 the financial conditions were more favorable." 
 Does he violate his definition ? What is the force 
 of the antithesis in the italicized words? 
 
 100. Mill (II., 3, i and again p. 207, end of 
 chap. X.) speaks of the laborers as one of the 
 classes amongst whom the product is divided. At 
 the beginning of chap. XI. and afterwards, he 
 says that wages are paid out of capital. Is there 
 an inconsistency here? If so, what is the cause 
 of it, and how is it to be solved? Does he use 
 two different definitions of " wages " ? 
 
 Cf. also IV., chap. 3. 
 
 Princeton Review, November, 1882, p. 251. 
 
 101. Sidgwick (p. 318), commenting on the 
 confusion between product and capital noticed in 
 the last question, says : " This confusion seems to 
 be best avoided by considering the assistance to 
 production rendered by labor whatever form it 
 
34 ECONOMIC PROBLEMS. 
 
 may take as constituting- the real capital of the 
 employer who purchases it ; and the commodities 
 that continually pass into the consumption of the 
 laborers as their share of the produce." Criticise 
 this proposition. Note that " assistance " is said 
 to be capital, and the assistance of the employee 
 to be the capital of the employer. 
 
 102. Sidgwick says again (same page) : " The 
 employer purchases the result of a week's labor, 
 which thereby becomes a part of his capital ; and 
 may be conceived, if we omit for simplicity's sake 
 the medium of exchange, to give the laborer in 
 return some of the finished product of his indus- 
 try/' Criticise this view. 
 
 103. "As the employer generally makes a 
 profit, the payment of wages is, so far as he is 
 concerned, but the return to the laborer of a 
 portion of the capital he has received from the 
 labor : so far as the employee is concerned, it is 
 but the receipt of a portion of the capital his labor 
 has previously produced." How does this doc- 
 trine differ from that in the last question ? 
 
 104. It is held that the laborer is the residual 
 claimant of the product of industry after rent, 
 profits, and wages of superintendence have been 
 paid out of it. Criticise this doctrine. How, 
 
WAGES. 35 
 
 under this doctrine or that of the last three 
 questions, would } r ou account for the great ad- 
 vance in wages and other remuneration of labor 
 after the great Plague of 1348 ? 
 
 Walker, Pol. Econ., 265. Adam Smith, I., 109, Rogers's note. 
 Cunningham, 188-195. Rogers, Prices, I., 265. 
 
 Rogers, Work and Wages, chap. VIII. 
 
 105. Sidgwick says (p. 322) : " What remains 
 after subtracting the aggregate price paid for the 
 use of capital (including land) is obviously the 
 share of labor in the aggregate." Criticise that 
 doctrine. How would this and the doctrine of 
 the last question differ from the old doctrine that 
 wages and profits are the leavings of each other? 
 
 106. Competitive or contract wages and prof- 
 its are in no sense the leavings of each other. 
 They are not parts of the same whole. The 
 wages come out of capital. Hence one who has 
 no capital of his own, or borrowed, can not 
 become an employer, however great a chance of 
 profit he may see. The profits come out of the 
 product. The two (capital and product) stand, 
 one before and the other after the transmutation 
 of capital which occurs in every period of pro- 
 duction, and they are as distinct as the plow- 
 man's dinner in April and the farmer's sheaf in 
 August, or as the tailor's coat which he is wear- 
 ing and the employer's coat which the tailor is 
 
36 ECONOMIC PROBLEMS. 
 
 making. The complementary parts of capital 
 are raw material and fixed capital. The wages 
 enter into the product, not as an explicit, but an 
 implicit, arithmetical factor. The product con- 
 sists of the replacement of the capital, profits, and 
 rent. The replacement of the capital consists oi 
 wages, raw material, and wear of fixed capital. 
 Hence we get two equations, letting x wages 
 
 an d/= profits: x-\-y-\-z capital ; (x+y-\ 
 
 product. Capital and product bear no known 
 relation to each other. Hence no ratio of x to t 
 can possibly be derived, although it is plain that 
 an increase of x, other factors remaining constant, 
 would be- unfavorable to /. Expand and criticise. 
 
 Mill, I., 2, 2 ; 4, i, 2. Cairnes, Principles, 159-180. 
 Walker, Pol. Econ., 380. 
 
 107. Wages do not belong in distribution at 
 all. They belong under the head of consumption 
 productive consumption of capital carried for- 
 ward and constantly re-applied, from one period 
 of production to another, to sustain society and 
 increase the power of man over nature. Hence 
 the doctrine that wages are paid out of capital is 
 alone consistent with any sound knowledge of 
 the evolution of industry and the growth of 
 society. If we treat economics under two heads, 
 statics and dynamics, discarding the old divisions 
 
WAGES. 37 
 
 as unphilosophical, wages will fall in the depart- 
 ment of dynamics. They are the tie which unites 
 two parties in the application of capital to pro- 
 duction, viz: one who wants to live by the 
 increase of his capital and cannot do so without 
 productive effort ; the other, who wants to live 
 by productive effort but cannot do so, in a highly 
 organized society, without capital. Hence the 
 two motives unite them in a contract relation 
 whose general aim is their common interest, but 
 within which their interests are antagonistic. 
 Hence nothing can benefit either which (like 
 limiting production) is hostile to their common 
 interest, and, under free competition, if either of 
 them wins a temporary advantage over the other, 
 he will have to pay it back again with interest, 
 but probably to the net advantage of both. 
 Hence their antagonism, if carried out by legiti- 
 mate means, is the law of life and growth and 
 not an evil at all. Cf. question 41. Criticise this 
 doctrine. 
 
 108. "The capital of the employer is, by no 
 means, the real source of the wages of even the 
 workmen employed by him. It is only the 
 immediate reservoir through which wages are 
 paid out, until the purchasers of the commodities 
 produced by that labor make good the advance 
 and thereby encourage the undertaker to pur- 
 
38 ECONOMIC PROBLEMS. 
 
 chase additional labor." Show the fallacy. Is 
 " reservoir " a valid analogy? Suppose that the 
 product found no purchasers, or was burned up ? 
 
 Roscher, II., 56. 
 
 109. Macleod, whose fundamental proposition 
 is that " credit is capital," argues that wages 
 are paid in credit, i. e. that the employer pays 
 his laborers with bank notes. These notes " have 
 been part of the ' wages-fund ' and have been 
 * capital ' exactly as if they had been sovereigns." 
 " Hence we see that not only the accumulation 
 of past profits is brought into the wages-fund, 
 but also the anticipation of future profits. * * 
 Every future profit has a present value, and that 
 present value may be brought into the ' wages- 
 fund ' and made 'capital' of." Criticise the use 
 of credit, capital, and money in this argument. 
 Show that on this argument only, if it should be 
 admitted, would it be true that wages can come 
 out of product. 
 
 Macleod, IL, 120-128. 
 
 110. If an industry was generally depressed, 
 but one employer was, by exception, making 
 high profits, what rate of wages would he pay? 
 If an industry was highly prosperous, but one 
 employer was, by exception, making no profits, 
 what rate of wages would he pay ? 
 
 Princeton Review, November, 1882, p. 255. 
 
WAGES. 39 
 
 111. Is it the same thing to say that wages 
 are determined by the supply and demand of 
 labor, and that wages are determined by the 
 ratio of capital available for wages to laborers 
 ready to work ? 
 
 Mill, II., ii, r. Princeton Review, November, 1882, p. 259. 
 
 112. What is the effect of an increased de- 
 mand for commodities on the wages fund? 
 
 Cairnes, Principles, 194-200. 
 
 113. What is the relation between prices of 
 products and wages of the laborers who make 
 those products ? 
 
 Mill, II., ii, 2. Cairnes, Principles, 200-210. 
 Rogers, Prices, IV., 491. 
 
 114:. What is the fallacy of connecting wages 
 by a sliding scale with the price of the product? 
 
 Marshall, 216. 
 
 115. If the intervals at which wages are paid 
 are longer than the period of production in any 
 industry, are the wages paid out of product, or 
 is the employer swindling the employee? If the 
 latter, show how. 
 
 116. Cairnes teaches that the capital is divided, 
 at the beginning of the period of production, into 
 
40 ECONOMIC PROBLEMS. 
 
 fixed capital, raw material, and wages fund. 
 Later he argues that, if trades unions could suc- 
 ceed in putting up wages, they would reduce 
 profits so low as to check accumulation. Show 
 the inconsistency and show where the error lies. 
 Princeton Review, November, 1882, p. 252. 
 
 117. What is the effect to be expected on the 
 wages of laborers from insurance against acci- 
 dent, sickness, or death, (i) if the employers pay 
 for it in whole or in part ; (2) if " the state" pays 
 tor it in whole or in part? 
 
 Fawcett, Pol. Econ., 6th Ed., Chap. XI. 
 
 118. It is said that the gains of the venturer 
 (wages of superintendence) are analogous to rent. 
 What ground is there for this opinion ? Is the 
 venturer the landlord, the farmer, or the land ? 
 
 Walker, Pol. Econ., 247-255. Mill, III., 5, 4. 
 
 119. If the land of Great Britain should be 
 confiscated, would the wages of any employments 
 be affected ? If so, which ones, and why ? 
 
 120. If trades unions should establish a rule 
 that women should have the same wages as men 
 wherever they are employed in similar, work, 
 would that rule be for the benefit of women or of 
 men? 
 
 Mill, IL, 14, 5. 
 
WAGES. 41 
 
 131. Suppose that working time should be re- 
 duced 20 per cent., what would be the effect on 
 real wages, on profits, and on prices? Compare 
 scarcity-high-wages with plenty-high-wages. 
 
 Cf. Rogers, Prices, IV., 491. 
 
 132. " The maintenance of a standard of com- 
 fort among laborers is like the maintenance of a 
 sea wall ; if a section give way all defense is lost. 
 Examine how far this is true, and investigate the 
 limits of defensible rules that laborers as a body 
 may impose on their associates." (M. 409.) 
 
 To what extent have trades union rules aimed 
 at or attained the end of maintaining the standard 
 of comfort? 
 
 133. Do you think that the protective taxes 
 lower the standard of living of American wage 
 receivers? 
 
 Strikes and trades union rules do not 
 have equal chances of success in all trades. 
 Their chances are better according as the trade 
 is a monopoly on account of physical circum- 
 stances, or special training, or skill, and accord- 
 ing as the public is annoyed by any interruption 
 of the industry. Prove this. 
 
 Thornton, 340-360. Marshall, 187-198. Price, Chap. VIII. 
 Sumner, What Classes Owe, Chap. VI. 
 
42 ECONOMIC PROBLEMS. 
 
 125. Is there any ground for believing that 
 struggles between employers and employees can 
 be done away with by arbitration ? Can arbitra- 
 tion be employed in the making of a contract or 
 is it confined to the interpretation of a contract? 
 
 Marshall, 214-217. 
 
 126. Is it for the advantage of the wages class 
 to find some new and cheaper article of diet ? 
 
 Is it for the advantage of the wages class that 
 the wives and children of men of that class should 
 work for wages? 
 
 Is it a sign of advance in the community when 
 we see more boys employed as cash boys, mes- 
 sengers, etc. ? 
 
 Adam Smith, I., 76, 168-170. Mill, II., 14, 4, 5- 
 Walker, Pol. Econ., 321. McCulloch's Adam Smith, 467. 
 
 127. What is the effect on wages of having 
 part of the population soldiers, pensioners, pau- 
 pers and convicts, or an undue proportion of them 
 priests, monks and civil servants ? Are not such 
 persons withdrawn from competition in the labor 
 supply? How does your answer bear on the 
 question whether convicts ought to be employed 
 or kept idle? 
 
 The farmers of the United States are told that 
 it is for their interest to pay protective taxes tc 
 
WAGES. 43 
 
 support manufactures, because otherwise the 
 manufacturing population would all compete in 
 agriculture. What is the fallacy of this argu- 
 ment ? Connect your answer to this question 
 with the answer to the last ? 
 
 Sumner, Argument, etc., 7. 
 
 128. Discuss briefly the employment of con- 
 victs, in its economic aspects ; discriminate the 
 cases where they are employed under superin- 
 tendents, or on a contract system ; at the market 
 price or below; all in one trade, or in a number 
 of trades. 
 
 Mill. II., 14, 4, 5- 
 
 129. Can the landowners of Great Britain 
 take all the advantage of the natural deposits of 
 coal and metal in that country, and not let 
 British wage receivers have a share in the bounty 
 of nature to their country ? 
 
 Cairnes, Principles, 54-57. 
 
 130. What is the effect on wages and profits of 
 exporting capital ? 
 
 Can any connection be traced between the 
 exportation of capital and the migration of labor ? 
 
 Suppose that English capital builds a railroad 
 
44 ECONOMIC PROBLEMS. 
 
 in Iowa and an English laborer migrates to Iowa, 
 settles on the railroad line, and cultivates land. 
 What are the economic effects on all the parties 
 interested, and on the wealth of the two coun- 
 tries? 
 
 Adam Smith, II., 216, Rogers's note. 
 
 131. What is "store-pay?" Show by an analy- 
 sis of the transaction why it is very injurious 
 to wage receivers. Do the phenomena of store- 
 pay throw any light for the economist on con- 
 tract wages ? 
 
 132. An American landowner is often also a 
 mechanic ; say, for instance, a carpenter. He 
 builds a barn for some one and agrees to take his 
 pay in a lump sum when the barn is done. 
 What is the economic analysis of such a case? 
 Does it throw any light on the theory of wages? 
 
 133. How would the economist describe in the 
 technical language of his science that which the 
 popular dialect describes as " living from hand 
 to mouth?" Describe any persons in savage or 
 civilized life who so live? Can any inferences as 
 to a sound wages system be drawn from the 
 phenomena of living from hand to mouth ? 
 
WACKS. 45 
 
 13-4. "A high rate of wages indicates, not a 
 high, but a low cost of production for all com- 
 modities measured in which the wages are high." 
 Prove this. 
 
 Cairnes, Principles, 382-386. 
 
 135. " Show how a rise or fall of the average 
 rate of wages within a country acts on its external 
 trade." (M. 435.) 
 
 Cairnes, Principles, 318-341. 
 
 136. " In the island of Laputa a law was passed 
 compelling each workman to work with his left 
 hand tied behind his back, and the law was justi- 
 fied on the ground that the demand for labor was 
 more than doubled by it. Examine this argu- 
 ment." (M. 443.) Would the human race be 
 better off on earth if each person had only one 
 arm? If a race should be evolved which had 
 four arms, would it be doomed to misery and 
 extinction ? 
 
 137. Some coal-workers want a diminution of 
 the out-put of coal as a means of keeping up their 
 wages. How far, if at all, would the means 
 accomplish the end ? (M. 444.) Would the hu- 
 man race be better off if the richness of the exist- 
 ing deposits of coal was reduced ten per cent. ? 
 
46 ECONOMIC PROBLEMS. 
 
 138. "The day-laborer, feeling- himself more 
 of a man than formerly, must oftener wear a 
 white laundered shirt, but he cannot pay over 50 
 cents for one. The demand of the higher civili- 
 zation of the day-laborer must be met, and white 
 laundered shirts are supplied at retail for 50 
 cents or even for 37 cents. But the wages of the 
 women who make them have been reduced to 8 
 cents per shirt." Show the fallacy. Can a man 
 raise his standard of living at the expense of 
 others, just because he wants to? Does true rise 
 in the standard of living of one lower the wages 
 of others ? 
 
 139. In a shoe town a retail shoe-dealer under- 
 sells all his competitors 25 cents per pair. He 
 " obtains from the manufacturer his lowest price 
 for making 100 cases as per sample. He then 
 offers to pay so much a sum less than the manu- 
 facturer's estimate and pay cash. The manufac- 
 turer, rather than lose a good cash order, consents 
 to make the goods, but not being able to reduce 
 the cost of raw materials takes the discount out of 
 labor." Argued that the wages receivers work 
 against themselves and each other by buying as 
 cheaply as they can. Show the fallacy. 
 
WAGES. 
 
 47 / 
 
 140. Ricardo said (p. 241): " In America and 
 many other countries, where the food of man is 
 easily provided, there is not nearly such great 
 temptation to employ machinery as in England, 
 where food is high, and costs much labor for its 
 production." Criticise this. What is the fact 
 about the " temptation to employ " labor-saving 
 machinery in the United States, and what is the 
 reason for it ? 
 
 141. Ricardo goes on : " The same cause that 
 raises [the wages of] labor, [i. e. greater cost at 
 which food is obtained for an increasing popula- 
 tion] does not raise the value of machines, and, 
 therefore, with every augmentation of capital, a 
 greater proportion of it is employed on machin- 
 ery." Is the doctrine here laid down true? Is 
 the reason given for it correct ? 
 
 Cairnes, Principles, 174-180. 
 
 142. Define and illustrate industrial copart- 
 nership. Whence comes the gain by industrial 
 copartnership ? Is the principle capable of indefi- 
 nite extension and application? If not, what are 
 its limits? What permanent good will the plan 
 accomplish, if it is generally employed? Why is 
 it not popular with trades unionists? 
 
 Thornton, 363-397. Fawcett, Pauperism, chap. V. Taylor. 
 
48 ECONOMIC PROBLEMS. 
 
 What are the reasons for the gain in 
 cooperative stores? Is the principle of such 
 stores capable of indefinite expansion and appli- 
 cation ? If not, what is the limit? What would 
 result if cooperative stores should entirely dis- 
 place private establishments? Will such stores 
 produce a permanent improvement? If so, what 
 will it be? 
 
 Thornton, 397-418 
 
 1-44:. Cooperation in production and distribu- 
 tion aims to reduce or do away with wages of 
 superintendence. Would this be a great gain? 
 Is it possible ? 
 
 Holyoake, II., 86. 
 
 1-45. By aiding and encouraging the accumu- 
 lation of capital, cooperative stores operate a kind 
 of natural selection on the non-capitalist class, 
 selecting out those who have the will and energy 
 to better themselves, and helping them on, while 
 depressing by just so much more those who are 
 shiftless. If the selected women marry only the 
 selected men, the separation between these two 
 sections of what was once one class widens from 
 time to time. Expand and prove this or refute it. 
 
 Holyoake, II., 193-4. 
 
WACKS. 49 
 
 146. Having in mind your answer to the last 
 question, discuss a proposition to provide decent 
 lodgings for the miserable, by the interference of 
 the municipality in a way involving expense to 
 tax payers. 
 
 147. Using your answers to the last two ques- 
 tions, show which kind of schemes for social aid 
 favor the survival of the fittest, and which kind 
 favor the survival of the unfittest. Can any 
 scheme have any other effect than one of these 
 two? 
 
 148. What is the effect of free common schools 
 on the comparative wages of skilled and unskilled 
 laborers ? 
 
 What is the effect of free schools, including 
 high schools, on the salary of female teachers? 
 
 What is the effect of endowed colleges and 
 seminaries on the salary of clergymen ? 
 
 What would be the effect of technical and 
 industrial schools, maintained by taxation, on the 
 wages of artisans ? 
 
 Adam Smith, I., 136-142 ; II., 363, and Rogers's note. 
 
 149. " On what does the rate of interest de- 
 pend? Is it affected by the amount of the cur- 
 rency? Does the rate of interest affect the price 
 of land or stocks?" (M. 561 ; 565.) 
 
 Mill, III., 23, 4. Jevons, Theory, 277-280. 
 
VI. 
 
 CONSUMPTION. 
 
 150. The most important phenomenon in dis- 
 tribution, distinguishing distribution from con- 
 sumption, is the replacement of the capital. 
 Expand and explain. 
 
 151. Show the need of investigating con- 
 sumption as a department of political economy. 
 Show that the proposition : a demand for com- 
 modities is not a demand for labor, is a guiding 
 principle for a correct study of consumption. 
 
 152. Translate "A demand for commodities 
 is not a demand for labor" into other and less 
 technical terms in order to bring out its meaning. 
 
 153. At the end of a certain period of produc- 
 tion A, B, C, D, etc., were each a creditor in the 
 market for $i ,000. A bought and took as his share 
 that value in jewelry. B took means of subsist- 
 ence and lived in idleness while consuming them. 
 C took the same but distributed part amongst 
 
 5 
 
CONSUMPTION. 51 
 
 servants who served him while he was idle. D 
 took the same and gave part to laborers who 
 dug an ornamental lake in his grounds. E took 
 the same and gave it to laborers who built a rail- 
 road which was not needed and could not pay 
 working expenses. F took his partly in the 
 same, partly in tools and seed, and employed 
 laborers to produce a crop of corn. G took his 
 in tools, etc., which were wanted by certain 
 foreigners to whom he lent them on interest. 
 
 o 
 
 Thus the second period of production passed. 
 What was the effect of the course pursued by 
 each of these men on the capital of the com- 
 munity in the third period of production, and on 
 the interest of wage receivers in the second 
 period and afterwards ? 
 
 154. Show that "a demand for commodities is 
 not, etc.," traverses the following fallacies: 
 
 (1) That the spendthrift is the benefactor of 
 the wage receiver. 
 
 (2) That wages paid measure cost of produc- 
 tion. 
 
 (3) That wages are or may be paid out of 
 product. 
 
 (4) That trades-union rules benefit wage-re- 
 ceivers by " making work." 
 
 (5) That we " want work " when we want 
 wages. 
 
52 ECONOMIC PROBLEMS. 
 
 (6) That we need to take measures to " give a 
 circulation to money." 
 
 (7) That we want " an industry" when we want 
 goods. 
 
 Adam Smith, I., 343-353. Mill, L, 5, 9. Marshall, 16. 
 Cairnes, Principles, 48-54 ; 194-196 ; 249 ; 254. 
 
 155. How do the things- which are luxuries 
 vary from time to time ? What definiteness can 
 be given to the notion of a luxury ? 
 
 156. Is there any cause for anxiety on ac- 
 count of the large amount of " foreign luxuries" 
 which are imported into the United States? 
 
 157. Luxurious consumption is selfish and 
 unsocial ; productive consumption causes activity 
 in a great number and variety of social functions, 
 and multiplies the active relations of the con- 
 sumer with others. Criticise this assertion. 
 
 158. Discuss the economic effects on a com- 
 munity of an increased expenditure for theatrical 
 and similar entertainments. 
 
 159. What judgment is to be passed on " an 
 idle rich man" who has no vices, regarding him 
 and his behavior solely from the economic stand- 
 point ? 
 
CONSUMPTION. 53 
 
 160. A writer on behalf of the Chinese in 
 California estimates their earnings at fifteen mil- 
 lion dollars, and then makes this argument to 
 show the good they do to that State: "Of this 
 sum, ten per cent, having been deducted for 
 savings, thirteen and one-half million dollars will 
 pass into general circulation, remaining to enrich 
 the State, or passing out of it to pay the debts of 
 the general population. It is a stream of wealth 
 which enriches the whole region." Did he prop- 
 erly use his facts to prove his case ? 
 
 161. " Luzerne County contains an area of 
 1,350 square miles. Until the development of 
 the coal trade, the agricultural production of the 
 county was in excess of the home consumption. 
 Now a different state of affairs exists. The rapid 
 increase of population from 1860 to 1870, amount- 
 ing to 90,000, changed the former order of things, 
 and notwithstanding she contains within her lim- 
 its some of the most fertile lands in the State, her 
 agricultural productions now fall far short of 
 the amount necessary for home consumption. 
 Nearly one-half of her citizens are non-producers, 
 relying upon the coal interest either directly or 
 indirectly for their employment or support." 
 
 162. " If one-third of the present agricultural 
 laborers in the (Western) States would become 
 
54 ECONOMIC PROBLEMS. 
 
 mechanics, miners, etc., and thus consumers of 
 their former products, the other two-thirds 
 would find no trouble in sending- their dimin- 
 ished surplus to the East at reasonable rates, and 
 would retain at home the money now sent abroad 
 to purchase manufactured articles for their own 
 consumption." 
 
 163. State the economic effects to all parties 
 concerned, on the island and elsewhere, if a cer- 
 tain island, otherwise only sparsely populated, 
 should become a sanitary resort. 
 
 16-4. An Irish landlord had an income from 
 rent of x For four years he kept up a certain 
 establishment, hiring servants and buying sup- 
 plies wherever he lived, and exchanging his sur- 
 plus income entirely for products of France, i. e. 
 wine, brandy, silks, laces, ribbons, etc. The first 
 year he lived on his estate, the second in Dublin, 
 the third in London, and the fourth in Paris. 
 Was he an " absentee" in his second year? What 
 was the effect on the wealth of France, England, 
 or Ireland, or on the interests of any class in any 
 one of these countries, of his changes in his place 
 of living ? 
 
 He then changed his policy. He kept up the 
 same establishment and hired servants and 
 bought supplies wherever he lived, as before, 
 
CONSUMPTION. 55 
 
 but he saved and made capital of his surplus. 
 The first year he lived in Paris and invested his 
 savings there. The next year he staid in Paris 
 but sent all his savings to Ireland for investment. 
 The third year he lived on his estate in Ireland 
 and invested all his savings there. The fourth 
 year he staid in Ireland, but sent all his savings 
 to Paris for investment. What was the effect of 
 his new policy in each of the four years on the 
 wealth of France and Ireland, and on the inter- 
 ests of any class in either? 
 
 165. A owns some land, some railroad 
 
 and a share in a factory, in Colorado. Does the 
 ownership of either of these pieces of property 
 create a duty for him to live in Colorado ; if so, 
 of which? 
 
 Is there any class in Colorado for whose in- 
 terest it is that he should live there ? If so, 
 what class? 
 
 166. Would you say that a man might live any- 
 where on earth that he chose, undisturbed by the 
 fear lest he was doing wrong, or neglecting his 
 duty to some of his fellow men, by living in one 
 place rather than another? If not, modify the 
 statement as you think necessary. 
 
 Would it make any difference with your an- 
 swer whether you regarded the feudal relations 
 
56 ECONOMIC PROBLEMS. 
 
 of landlord and tenant as entirely superseded by 
 contract relations, or not? 
 
 167. " We are glad to see this determination 
 among millionaires not to be outdone by one 
 another [in building expensive steam yachts]. 
 It is a rivalry in which all take the greatest 
 interest, and by which all are indirectly bene- 
 fited." " Extravagance, when practiced by mil- 
 lionaires is a blessed thing. It causes a freer 
 circulation of money, affords the laboring man 
 work, feeds women and children, and affects, in 
 fact, every industry, no matter how small." 
 
 168. "There was a notion that the money 
 appropriated by the river and harbor bill was 
 thrown away. Where? Probably ninety per 
 cent, went into muscle and labor." 
 
 169. Suppose that, by a change in climate, the 
 household consumption of coal in the United 
 States should be reduced one-half, what would 
 be the effect on the wealth of the country ? 
 (M. 36.) 
 
 170. Suppose that we should succeed in pro- 
 ducing a horse-power by electricity at one-half 
 the cost of producing the same by steam, what 
 
CONSUMPTION. 57 
 
 would be the immediate and what the ultimate 
 effect on the wealth of the country? and on par- 
 ticular parts of its wealth? 
 
 171. Describe the state of society which would 
 be produced if, as fast as capital was accumulated, 
 it was put to productive employment, none of it 
 being consumed luxuriously, and if this was kept 
 up for, say, fifty years. 
 
VII. 
 MONEY, CURRENCY AND BANKING. 
 
 17/3. Money is any commodity which is set 
 apart by common consent to serve as a medium 
 of exchange. Analyze and justify, or criticise 
 and correct this definition. 
 
 173. Is money a measure of value? If so, 
 why not include another specification in the defi- 
 nition? Define carefully " a measure of value." 
 It has been objected that value is a ratio (e.g., $) 
 and that we cannot measure a ratio. Is that 
 objection valid? Is money a "denominator of 
 value ?" Does " denominator of value " cover all 
 that is correct and essential in " measure of 
 value?" 
 
 McCulloch's Adam Smith, 480 fg., and Art. Money in tne 
 Encyc. Britan. 8th ed. 
 
 17-4. Currency is a collective term for all 
 forms of credit instruments by which the use of 
 the medium of exchange (money) is dispensed 
 with, the instruments of credit serving as records 
 and evidence of the rights of the parties until 
 
MONEY, CURRENCY AND BANKING. 59 
 
 such time as value may be given and received for 
 value. Instruments of credit are not a cheap 
 kind of money. There is no such thing- as cheap 
 money. Instruments of credit are not in any 
 sense " substitutes for money," or " representa- 
 tives of money." Explain and criticise this de- 
 finition. Test it in the case of bank-notes, checks, 
 promissory notes, book debts. 
 
 175. In barter, one thing is given for another. 
 In the money system, one thing is given for 
 money and money is given for the other. In the 
 credit system, the instruments of credit are not 
 "media of exchange." One thing is given as 
 half of a barter, and a credit instrument (trans- 
 ferable or not) is created as a record and evi- 
 dence of the fact, and of a debt. When the other 
 thing is given the barter is concluded and the evi- 
 dence of debt is cancelled. The utility of credit 
 is that it makes money unnecessary. Criticise 
 and explain. Show why, as credit becomes more 
 general, the function of money as a measure of 
 value becomes more and more important. 
 
 176. Show that, historically, money was first 
 invented and used as a measure of value; that, 
 in time, when the "money system" had super- 
 seded barter, the function of money as a medium 
 
60 ECONOMIC PROBLEMS. 
 
 ot exchange came to predominate ; that the func- 
 tion of measure of value is now again becoming 
 the more important as credit institutions are de- 
 veloped. 
 
 177. "Of the money daily used a very small 
 percentage is bank-notes. The great bulk is 
 checks, drafts and telegrams. The telegraph 
 transmits millions upon millions of bank credits 
 from Boston to New York, Chicago, London, 
 etc., etc., and the reverse, where the telegram is 
 the only money used." If, instead of telegraph- 
 ing, a man should telephone, would his words be 
 money? In the contribution box in church were 
 specie, greenbacks and bank-notes. A gentle- 
 man put in his card with $1.00 written in the cor- 
 ner. If the greenbacks and bank-notes were 
 money, was the card money ? A play-writer, 
 being under personal obligation to an actor sent 
 him a card on which was written, " Good for a 
 three-act comedy." Was this card money, if 
 greenbacks and bank-notes are money? Is any 
 definition of money possible if it goes beyond 
 the selected commodity ? 
 
 178. How would the question, whether Clear- 
 ing House Certificates are money or not, affect 
 or be affected by different definitions of money ? 
 
MONEY, CURRENCY AND BANKING. 6l 
 
 179. A public-house keeper gave a glass of 
 beer to a shoemaker and put a chalk-mark on the 
 door against the shoemaker's name. After a cer- 
 tain time the shoemaker made and delivered to 
 the landlord a pair of shoes, thereby cancelling 
 the score. Was the chalk-mark money?, Was it 
 currency? Suppose that the shoemaker had sold 
 the shoes for a bank-note and paid his score with 
 the note, would the note be money? Would it 
 be currency ? Would the chalk-mark then be 
 money? Or currency? Suppose that the land- 
 lord gave a receipt for the payment, would that 
 be money? Would it be currency? What criti- 
 cism do these questions suggest on the definition 
 that money is any medium of exchange? 
 
 180. Show the fallacy of any definition of 
 money which puts checks in one category and 
 bank-notes in another. Is it a correct criterion 
 to say that bank-notes are taken in " final " pay- 
 ment, or " without recourse?" 
 
 Walker, Money, 399. 
 
 181. "Credit, no doubt, is a comparatively 
 fragile and perishable instrument for transferring 
 wealth." The "credit" of a banker who is 
 barely solvent, if solvent at all, is said to be part 
 of the capital of the bank, " provided we are 
 careful to point out that such capital is of fragile 
 
62 ECONOMIC PROBLEMS. 
 
 nature, liable to sudden destruction in case of a 
 panic." Criticise the notions of credit, capital 
 and medium of exchange. Note especially " ira- 
 gile." 
 
 Sidgwick, 129, 239. 
 
 182. Define depreciation and appreciation of 
 the currency. What causes may produce either? 
 What are the effects of either? 
 
 More generally, what determines the value of 
 the currency ? 
 
 Hertzka, 20-76 ; 192-224. Chevalier on Gold, 124-137. 
 
 Cairnes, Essays, 53-77. 
 
 183. Define carefully the effect of habit in re- 
 gard to money. 
 
 184:. State the law of the distribution of the 
 precious metals. 
 
 Walker, Money, Chap. III. 
 
 185. A coin is a piece of metal convenient 
 for circulation which is assayed for quality, 
 weighed for quantity, and stamped by authority 
 as a guarantee of weight and fineness. Expand 
 and explain. Is a coin a highly developed tool? 
 Sketch the history of coins. 
 
 Art. Coinage, in Lalor's Cyclopedia. 
 
MONEY, CURRENCY AND BANKING. 63 
 
 186. Some say that gold and silver are plainly 
 indicated by Providence as the materials for 
 money ; others say that we use gold for money 
 only because it is the most convenient thing we 
 know of for the purpose. Which do you think 
 right? 
 
 187. If we work a gold mine, gold comes out. 
 What goes in? On what does it depend whether 
 the community gains or loses by the exchange? 
 
 Adam Smith, I., 184; II., 141-4. 
 Cairnes, Essays, 43-52. 
 
 188. What facts go to determine the amount 
 of money which a country needs? 
 
 Mill, III., 9, 3. Roscher L, 366-374. Chevalier III,, 615-650. 
 Walker, Money, 44-76. 
 
 189. May an English cobbler get gold at less 
 cost than a California miner? 
 
 Mill, III., 19, i, 2. Cairnes, Essays, 103. 
 
 Roscher, I., 378-380. 
 
 190. In what respect is it an advantage to get 
 gold first after it leaves the mines? What was 
 the effect on Spain of being the first through 
 whose hands the gold of America passed in the 
 sixteenth century? 
 
 Adam Smith, I., 199; II., 86-88. Cairnes, Essays, 93-108. 
 
 Cairnes, Principles, 412-14. 
 
64 ECONOMIC PROBLEMS. 
 
 191. One nation having conquered another in 
 war forced it to pay a great war ^indemnity. 
 Trace the effects on capital, money, prices, 
 wages, profits and credit in each country. 
 
 Price, 380-382. 
 
 192. France paid to Grermany over a thousand 
 million dollars. What were the actual transac- 
 tions by which this payment was made? Anal- 
 yze those transactions and show their significance 
 in an economic or financial point of view. 
 
 Say, 195. Giffen, Chap. I. 
 
 193. The mint price of gold, .900 fine, at the 
 San Francisco and Philadelphia mints is $18.604. 
 Why then is gold ever shipped from California to 
 New York ? (M. 990.) 
 
 194. Give the history of the trade dollar? 
 What was the object aimed at by the coin when 
 first coined ? Was it a desirable object, and was 
 coining the trade dollar a good means of accom- 
 plishing it? What is now the difficulty and dan- 
 ger connected with the trade dollar? What 
 legal ground of obligation exists, if any, why the 
 United States should redeem those coins at par 
 in gold? 
 
MONEY, CURRKNCV AND BANKIXti. 65 
 
 195. We read in the money article, "The 
 price for silver bullion in London is 5o{| pence 
 per ounce. Here the bullion value of the 412^ 
 grains silver dollar is $0.849." What is the mar- 
 gin for expenses and profits in exporting a silver 
 dollar to London, exchange being 4.84? 
 
 196. What is demonetization? 
 
 197. State the causes of the recent change in 
 the relative value of gold and silver. 
 
 See authorities under question 202. Crump, 254-267. 
 
 198. What have been the great changes in the 
 relative value of gold and silver during the Chris- 
 tian era? 
 
 Soetbeer, 114, fg. Chevalier, Economic Politique^ III., 354-465. 
 
 199. Has the ratio 1:154 for the value of gold 
 to that of silver any historical or scientific pres- 
 tige over any other ratio? Note that at the end 
 of the i6th century writers on money regarded 
 the relation 1:12 as " normal ' ; or as " given by God 
 and observed by nature." 
 
 Soetbeer, 127. 
 
 200. The Alternate (or Alternative) or Dou- 
 ble Standard consists in a free mint for either 
 gold or silver, the gold and silver dollar (or 
 
66 ECONOMIC PROBLEMS. 
 
 other unit) having a ratio of weight (fineness 
 beirg the same) which is fixed by law, 
 
 Bimetalism is a project for forming a league of 
 civilized States to carry out an agreement to 
 coin gold and silver at a ratio of 15^ to I, on 
 the assumption that fluctuations in the value of 
 the metals can in that way be restrained within 
 such limits that there will be a concurrent circu- 
 lation of the two metals, and that the whole 
 amount of both metals may be' available for 
 money. 
 
 Expand and explain these definitions. Note 
 especially "free mint" and the function ascribed 
 to law, in the first; also, "project," "league," 
 " i$y 2 : i," "assumption," " such limits," and the 
 notion about the desirableness of a large supply 
 of money, in the second. 
 
 201. Give the history of the French coinage 
 system from 1785 to 1873. Give the history of 
 tnc Latin Union. Did France resume specie 
 payments in 1878 on the double standard ? 
 
 Give the history of English coinage since 
 1700. What brought about the legislation of 
 1816? 
 
 Give the history of coinage in the United 
 States since 1790. What were the motives of the 
 Bland Silver Act? Wh.it have been its effects? 
 
MONEY, CURRENCY AND BANKING. 67 
 
 Have they been such as the advocates of the act 
 expected? Whit further effects are to be ex- 
 pected ? 
 
 Articles on Coinage in Macleod's Dictionary of Political Econ- 
 omy and Lalor's Cyclopedia. 
 
 Princeton Review, Nov., 1879, p. 551. Le Touz6, 121-140. 
 
 202. The Alternate Standard and Bimetalism 
 or Concurrent Circulation stand on a totally 
 different plane. The former contains no scien- 
 tific absurdity. The question of adopting it is 
 purely one of expediency. A concurrent circu- 
 lation is a scientific absurdity and a practical 
 impossibility. It is scientifically as absurd as 
 perpetual motion, or perpetual inertia, because 
 it proposes to annul economic force. It is prac- 
 tically impossible because the league of States 
 would become weaker, not stronger, the more 
 members it embraced. Expand and prove. 
 
 Princeton Review, Nov., 1879. Hertzka, 270-288. 
 
 Walker, Pol. Econ., 406-417; Money, 243-271 ; Money and 
 Trade, 136-196. Horton, 29-36. Seyd., 584-680. Giffen, 197- 
 207 ; 286-310. Sidgwick, 453-4. Le Touz, 148-9. 
 
 203. "Imagine two reservoirs of water, each 
 subject to independent variations of supply and 
 demand. In the absence of any connecting pipe 
 the level of the water in each reservoir will be 
 subject to its own fluctuations only. But if we 
 open a connection, the water in both will assume 
 
68 ECONOMIC PROBLEMS. 
 
 a certain mean level, and the effects of any exces- 
 sive supply or demand will be distributed over 
 the whole area of both reservoirs." Show the 
 fallacy of this analogy to prove that a compensa- 
 tory action can be established by the mint law 
 fixing a ratio of value of gold to silver, by which 
 compensatory action fluctuations in the value of 
 the metals will be neutralized. 
 
 Jevons, Money, 139-40. 
 
 204. Supposing that the bimetalic project could 
 be set going, and that the theory on which it is 
 based were sound, and that a new supply of gold 
 should be won from a new California, what would 
 be the effect on the interests of different parties? 
 
 Hertzka, 277, 
 
 205. Why did the Latin Union close its mints 
 against silver in 1874, and following years ? Was 
 the so-called "compensatory action" of the French 
 system accomplished at a loss to France or not? 
 
 Hertzka, 268. 
 
 206. If it should be granted that the alterna- 
 tive standard favors debtors, and that it is right 
 to favor debtors, would that exhaust the effect of 
 the alternation ? If not, what would be its wider 
 effects on classes and nations ? 
 
 Hertzka, 291-298. 
 
MONEY, CURRENCY AND BANKING. 69 
 
 207. Under the alternate standard the standard 
 of value would have more numerous fluctuations, 
 but less wide fluctuations, than under a single 
 standard. Prove this. Which is the more im- 
 portant fact in regard to fluctuations, magnitude 
 or frequency ? 
 
 208. Is anyone the richer by obtaining money 
 unless by way of gift, theft, or gambling? (M. 
 899.) 
 
 209. In 1880 the nickel in a five-cent piece 
 was worth three cents. The silver in four quar- 
 ters or ten dimes was worth eighty cents "cents' 7 
 being hundredths of a gold dollar. A, B, and C 
 each paid a five cent fare. A, paid with a nickel 
 five-cent piece. B, gave a trade dollar which 
 was taken for ninety cents. He received three 
 quarters and a dime in return. C, gave a gold 
 dollar and received three quarters and two 
 dimes. What value in gold did each pay for his 
 ride? 
 
 210. Herbert Spencer argued that the func- 
 tion- of coining money would have been better 
 performed by private enterprise, Jevons ob- 
 
7<3 ECONOMIC PROBLEMS. 
 
 jected that the gain in coining comes from mak- 
 ing bad money not good, so that competition 
 would run downwards not upwards. Hence, he 
 thought that coining was a peculiar industry 
 which the State ought to, or must, undertake. 
 A third person, commenting on this difference 
 of Spencer and Jevons, said that, if governments 
 had left coining to individual enterprise, the 
 Rothschilds would have given us a universal 
 money fifty years ago. Who was in the right, 
 and why ? 
 
 Jevons, Money, 64, 82. Spencer, Social Statics, 438. Cf. Sidg- 
 wick, 450-452. 
 
 211. Credit is not a thing but a personal rela- 
 tion. Hence it cannot be capital. It transfers 
 capital. Expand and illustrate this statement, or 
 refute it, if you think it incorrect. Show the ad- 
 vantages of credit and how it aids industry. 
 
 212. A bank is an institution which facilitates 
 the borrowing and lending of capital. Expand 
 and explain this definition. Show what false 
 notions of a bank it excludes. Does a bank deal 
 in credit or debt? Is it an essential function of a 
 " bank " to issue notes ? 
 
 Sumner, Tackson, 230, 233-4, 319, 362. 
 
;Y, CURRENCY AND BANK IN' I. 
 
 213. BALANCE SHEET OF AN ENGLISH COUNTRY 
 BANK. 
 
 Liabilities. million. 
 
 Deposits, .... 1.74 
 
 Circulation, ... .05 
 Acceptances of London 
 
 bankers, . . .01 
 
 Capital, ... .18 
 
 Guarantee fund, . . .04 
 
 Profit to date, . . .01 
 
 2.05 
 
 Assets. million. 
 
 Cash, in London, and at call, .27 
 Government funds, . . .33 
 Indianandcolon.gov. secur., .44 
 Other securities, . . .06 
 Discounts, . . .14 
 
 Loans, 74 
 
 Bank premises, . . .03 
 
 2.05 
 
 What does this statement show in regard to 
 the kind and proportion of the operations of this 
 bank, its prosperity, and its ability to withstand 
 a financial storm ? 
 
 Gilbart, 98-108 ; 470-488. 
 
 21-4. BALANCE SHEET OF A SCOTCH BANK. 
 
 Liabilities. million. 
 
 Deposits, . . . 10.08 
 
 Circulation, . . .60 
 
 Fourteen day drafts, . .13 
 
 Acceptances, . . .17 
 
 Capital, .... i.oo 
 
 Rest or reserve, . . .75 
 
 Semi-ann. dividend, . .07 
 
 Balance, ... .02 
 
 12.85 
 
 Assets. million. 
 
 Cash on hand or in London, 2.08 
 Consols and colon, secur., 1.43 
 Bk. of Eng. and other stocks, .38 
 Discounts, . . . 6.85 
 Short loans, . . 1.58 
 
 Secur. against acceptances, .17 
 Bank premises, . . .20 
 Property paying rent, . .13 
 
 12.85 
 
 What can you learn from this statement about 
 the kind of business which the bank is carrying 
 
72 
 
 ECONOMIC PROBLEMS. 
 
 on, its prosperity, and its power to stand against 
 a financial storm ? 
 
 Gilbart, 489-522. Macleod, Dictionary, Banking in Scotland. 
 
 215. BALANCE SHEET OF A LONDON JOINT STOCK 
 BANK. 
 
 Liabilities. 
 Deposits, 
 
 Circular notes etc., 
 Acceptances, . 
 Endorsements, . 
 Capital, . 
 Rest, . 
 Profits, . 
 
 million. 
 
 . 23.09 
 
 .56 
 
 .52 
 
 .07 
 
 2.8o 
 
 1.64 
 
 .25 
 
 Assets. million. 
 
 Cash and in Bk. of Eng., . 2.86 
 Money at call and short 
 
 notice, . . . 3.71 
 Government securities, . 3.57 
 Indian gov. secur., . .75 
 
 Discounts and loans, . 17.15 
 Liability of customers for 
 
 acceptances, . . .52 
 
 Liability of customers for 
 
 endorsements, . . .07 
 Bank premises, . . .30 
 
 28.95 
 
 Criticise as in question 214. 
 
 28.95 
 
 Gilbart, 462-470. 
 Bagehot, 243-266. 
 
 Crump, 23-32. 
 
 216. WEEKLY STATEMENT OF THE BANK OF 
 ENGLAND. 
 
 ISSUE DEPARTMENT. 
 
 million. 1 million. 
 
 Notes issued, 38.01 Government debt, . . 11.01 
 
 Other securities, . 4.73 
 
 Gold coin and bullion, . 22.26 
 
 38.01 
 
 38.01 
 
MONEY, CURRENCY AND BANKING. 
 
 73 
 
 
 BANKING DEPARTMENT. 
 
 
 
 million. 
 
 X 
 
 " million. 
 
 Proprietors' capital, 
 
 - 14-55 
 
 Government securities, 
 
 . 13.67 
 
 Rest, . 
 
 3.09 
 
 Other securities, 
 
 20.13 
 
 Public deposits, . 
 
 3.51 
 
 Notes, 
 
 Ii.qo 
 
 Other deposits, . 
 
 J* J * 
 
 25.02 
 
 Gold and silver coin, . 
 
 .68 
 
 Seven day and other 
 
 bills, .22 
 
 
 
 
 46.40 
 
 
 46.40 
 
 
 The Old Form. 
 
 
 Liabilities. 
 
 million. 
 
 Assets. 
 
 ' million. 
 
 Circulation, . 
 
 . 26.33 
 
 Securities, . . 
 
 35-01 
 
 Public deposits, . 
 
 3.51 
 
 Coin and bullion, 
 
 22.95 
 
 Private deposits, . 
 
 . 25.02 
 
 
 
 '54.87 57.96 
 
 Balance 3.09 mill, as in the Rest above. 
 Rate of discount, 3 per cent. 
 
 Describe from this statement the organization 
 and operation of the bank. How much was the 
 " reserve ?" What was the per centage of reserve 
 to cash liabilities? Give the same points as in 
 the last three questions. 
 
 Gilbart, 21-71 ; 254-277. Crump, 268-307. Price, 410-436. 
 Bagehot, 160-243. Hankey, 73-124. 
 
 217. What are the peculiarities in the condi- 
 tion of the bank in each of the following state- 
 menjs ? 
 
 Notes issued, 
 
 ISSUE DEPARTMENT. 
 mill. 
 . 49.2 
 
 mill. 
 
 Gov. debt, . . . u.o 
 Other secur., . . 3.9 
 
 Gold coin and bullion, . 34.2 
 
 49-3 
 
74 
 
 ECONOMIC PROBLEMS. 
 
 BANKING DEPARTMENT. 
 
 Capital, . 
 Rest, . 
 Public deposits, 
 Other deposits, 
 
 mill. 
 
 14.5 
 
 3-6 
 
 . 6.5 
 28.2 
 
 Seven day and other bills, 
 
 mill. 
 
 Government securities, . 15.2 
 Other securities, . . 16.0 
 Notes, .... 21.4 
 Coin, ... .8 
 
 534 
 Discount, 2 per cent. 
 
 What was the active circulation? 
 
 534 
 
 Notes, 
 
 ISSUE DEPARTMENT. 
 mill. 
 
 ' 33-7 
 
 mill. 
 
 Gov. debt, . . . n.o 
 Other secur., . . 3.9 
 
 Gold coin and bullion, . 18.7 
 
 33-7 
 
 Capital 
 
 Rest, 
 
 Public deposits, . . 
 Other deposits, . 
 Seven day and other bills, 
 
 BANKING DEPARTMENT. 
 mill. 
 . 14-5 
 3-1 
 3-9 
 
 18.4 
 
 mill. 
 
 Gov. secur., 
 
 11.7 
 
 Other secur., 
 
 20.7 
 
 
 
 Coin, .... 
 
 .6 
 
 40.5 
 
 Discount, Q per cent. 
 
 Notes, 
 
 ISSUE DEPARTMENT. 
 mill. 
 , 21. 1 
 
 Gov. debt, 
 
 Other secur., 
 
 Gold coin and bullion, 
 
 40-5 
 
 mill. 
 
 . n.o 
 3-0 
 6.6 
 
MOXF.Y, CURRENCY AND BANKING. 
 
 75 
 
 BANKING DEPARTMENT. 
 
 
 mill. 
 
 
 mill. 
 
 Capital, . 
 
 14-5 
 
 Gov. secur., 
 
 . 9.4 
 
 Rest, . 
 
 3-5 
 
 Other securities, . 
 
 26.1 
 
 Public deposits, 
 
 5-3 
 
 Notes, 
 
 
 Other deposits, 
 
 12.9 
 
 Coin, . 
 
 5 
 
 Seven day and other 
 
 bills, .8 
 1-1 n 
 
 
 7*7 r 
 
 Discount, 10 per cent. 
 
 218, STATEMENT OF A NATIONAL BANK. 
 
 Liabilities. $ thousand, 
 
 Capital, .... 464. 
 
 Surplus, . . . 203. 
 
 Undivided profits, . . 53. 
 
 Circulation, . 404. 
 
 Deposits, . . . 419. 
 
 Due banks, . . 27. 
 
 Resources. $ thousand. 
 
 Loans and discounts, . 708. 
 Over-drafts, . . .1 
 
 Bonds to secure circula- 
 tion (par value), . . 450. 
 Other stocks and bonds, 163. 
 Due from reserve agents, 105. 
 " " banks, . . 21. 
 Banking house, . 32. 
 
 Current expenses and taxes, 3. 
 Checks and cash items, . 4. 
 Exchanges for Clear. House, n. 
 Notes of other banks, . 15. 
 Gold, ... 30. 
 
 Silver, .... .9 
 Legal tenders, . . 9. 
 
 Redemption fund in U. S. T., 20. 
 
 $1,574- $1,574- 
 
 Criticise this statement in the same manner as 
 in question 214. 
 
 H. A. Richardson, National Banks. 
 
76 ECONOMIC PROBLEMS. 
 
 219. "So many convertible bank-notes will 
 the public use as it has a positive need for in 
 paying" with bank-notes and no more." Expand 
 and explain. How does this assertion bear on 
 the question whether " paper is better than 
 specie?" 
 
 Price, 418. 
 
 220. Criticise the notion of what a banker 
 does which appears in the following : " We have 
 to consider that the banker to a great extent 
 produces the money he lends, viz: his own obli- 
 gations, which so long- as his business flourishes, 
 he is practically never compelled to redeem; 
 and that he may easily afford to sell the use of 
 this commodity at a .price materially less than 
 the rate of interest on capital generally." A 
 banker's rate for commercial bills may be less 
 than the rate of interest " since a comparatively 
 low rate of interest on the medium of exchange 
 inexpensively produced by the banker himself 
 would be sufficient to give him normal profit on 
 his banking- capital." For " banker " read coun- 
 terfeiter and so test the notion. 
 
 Sidgwick, 262. Price, 444-458. 
 
 221. A banker " may be only just able to pay 
 what he owes to others, and yet be, so long as 
 his credit lasts, a wealthy man. Suppose that 
 
MONEY, CURRENCY AND BANKING. 7/ 
 
 he owes ;i, 000,000 (without interest) [deposits, 
 etc.], and has debts of merchants, railway com- 
 panies and the government, which together 
 could be sold for ; 1,000,000. If there were a 
 run on the bank and he had to suspend payment, 
 his wealth would be found equivalent to zero; 
 but meanwhile he obtains the interest on i,- 
 000,000, which will leave him a handsome sur- 
 plus after paying the expenses of the bank. And 
 since there is no reason why he shall not con- 
 tinue to enjoy this surplus for an indefinite 
 period, his business might obviously be sold for 
 a considerable price, even though its assets did 
 not balance its liabilities, provided that the sale 
 were a secret one, so that its credit could be 
 maintained." Would such a man add to the 
 wealth of the country? We formerly had bank- 
 ers of this description in the United States but 
 we came to regard them as swindlers. Were we 
 wrong? 
 
 Sidgwick, 129. 
 
 222. Define the " currency principle" and the 
 " banking principle." 
 
 Walker, Money, 422-442; Pol. EC., 178-180. 
 
 223. How would you calculate the value to a 
 national bank of its circulation? Suppose that a 
 bank is formed on 4 per cent, bonds which cost 
 
78 ECONOMIC PROBLEMS. 
 
 122 and have 20 years to run, the rate of dis- 
 count being- 5 per cent., what is the profit on the 
 circulation? 
 
 224:. " Explain the remark of an eminent 
 banker: 'If a customer asked me to lend him 
 10,000 sovereigns, I should answer : Withdraw. 
 If he asked me to lend him 10,000 pounds, I 
 should answer: Let us discuss the matter.'' 
 (M. 1065.) 
 
 225. " What would be the effect if all the bank- 
 notes in the Banking Department of the Bank of 
 England were suddenly destroyed?" (M. 1152.) 
 
 226. In a period of depression there is just as 
 much currency in the country as ever, but large 
 sums lie in banks, and the rate of discount on 
 call loans is exceedingly low. Why? (M. 1220.) 
 
 227. What is the money market? What is 
 dealt in there ? What more correct designations 
 might be used? 
 
 228. What is the difference between stocks 
 and bonds? What are preferred stocks and 
 second mortgage bonds? What are coupon and 
 registered bonds? 
 
MONEY, CURRENCY AND BANKING. 79 
 
 229. It is taught that the rate of interest 
 depends on the supply and demand of capital. 
 In times of crisis excessive rates of interest are 
 paid for the loan of bank notes, even of a sus- 
 pended bank. Why? and how is such a fact to 
 be reconciled with the doctrine first stated? 
 
 Adam Smith, I., 357. Walker, Money, 94-98. 
 
 230. Define carefully legal tender, showing 
 what it is and what it is not. Could Congress 
 make bits of colored paper circulate by declar- 
 ing them " legal tender?" 
 
 Princeton Review, November, 1879, p. 561. 
 
 231. Which is the better kind of paper cur- 
 rency, a government issue (greenbacks) or an 
 issue guaranteed by the government (national 
 bank notes) ? Give reasons in full. 
 
 232. If we had no public debt could we 
 have no national banks? or no national currency? 
 If greenbacks should be called in, paid, and 
 burned, and if the national bank note currency 
 should all be surrendered, and if no state banks 
 were allowed to issue notes, what would be the 
 effect on our interests or our convenience, and 
 what should we probably do? 
 
SO ECONOMIC PROBLEMS. 
 
 233. Apply the theory of value to incon- 
 vertible paper currency issued by a government. 
 
 234. Whenever instruments of credit are 
 generally used as the solvents of contracts, and 
 as the things which are passed from hand to 
 hand instead of money, and in order to avoid the 
 use of money, such instruments of credit bear 
 upon their face the word " dollar," " pound," 
 " franc," etc., by which they refer to coined 
 money which has acquired a traditional and 
 habitual, but variable purchasing power. What 
 is the difference between a bullion note, a con- 
 vertible bank note, and an inconvertible treasury 
 note, in their relation to the coin whose name 
 they bear? 
 
 235. The "fiat money" doctrine is that the 
 government stamp gives the value to a coin; 
 that the "dollar" is an ideal unit; and that the 
 government can just as well issue a note bearing 
 the inscription : " This is one dollar by Act of 
 Congress." What effect would it have on this 
 theory if at the same time a new name should be 
 invented for the " ideal unit of value," say, a 
 " Washington," and the note should read : " This 
 is one Washington by Act of Congress?" Could 
 
MONEY, CURRENCY AM) BANKING. Si 
 
 such a note " measure value ?" If not, how or 
 why could a greenback do so before 1879? 
 
 Walker, Money, 280-290. 
 
 236. If the United States should issue " fiat 
 money" now, how would it be brought into cir- 
 culation ? 
 
 Walker, Money, 288-289. 
 
 237. Can you trace any connection or relation 
 between paper money inflation and the rise of 
 city real estate ? 
 
 Mann, Chap. X. 
 
 238. "A shrinking volume of money transfers 
 property unjustly, and causes a concentration 
 and diminution of wealth. It also impairs the 
 value of existing property by eliminating from it 
 that important element of value conferred upon 
 it by the skill, energy and care of the debtors 
 from which it is wrested. ' ; 
 
 239. The people ot Guernsey wanted a mar- 
 ket, but had not money with which to build it. 
 The governor issued paper money, receivable 
 for taxes and dues to the island government, in 
 sufficient amount to pay for the market. la ten 
 
82 ECONOMIC PROBLEMS. 
 
 years the market earned its cost, which was paid 
 into the treasury in the paper money, which was 
 then burned, "and they got a market for nothing 
 only the credit of the island." 
 
 Cf. Jevons, Money, 204. 
 
 240. Describe the Clearing House and define 
 the economic advantages of it. 
 
 Jevons, Money, 263-289. Gilbart, Banking, 451-461. 
 
 241. Describe the Check Bank. 
 
 Jevons, Money, 290-298. 
 
 Macleod, Economical Philosophy, II., 510-514. 
 

 VIII. 
 INTERNATIONAL EXCHANGES. 
 
 242. " Is there any essential difference be- 
 tween trade between country and country, and 
 trade between county and county, or even be- 
 tween man and man ? What is the real nature 
 of trade in all cases?" (M. 1227.) 
 
 Cairnes, Principles, 305-6. 
 
 243. " We may often, by trading with for- 
 eigners, obtain their commodities at a smaller 
 expense of labor and capital than they cost to the 
 foreigners themselves." Explain this. 
 
 { Mill, III., 17, 2, 3, 4, 5- 
 
 24:4. Define comparative cost of production 
 and show its importance to the doctrine of inter- 
 national trade. 
 
 Cairnes, Principles, 307-317. 
 
 245. Jevons argues that England never could 
 import coal and carry on her industries in com- 
 petition with those from whom she bought the 
 coal, the cost of transportation being a constant 
 
 8-- 
 
84 ECONOMIC PROBLEMS. 
 
 premium on the transfer of the industry. Do we 
 not see coal brought from Pennsylvania, Mary- 
 land and Virginia to New England to be used in 
 industry ? How does that fact bear on Jevons' 
 doctrine? What is the correct inference? 
 
 Jevons, Coal Question, Chap. XIII. 
 
 246. Jevons argues that coal is exported from 
 England as a return cargo and is essential to her 
 commerce on that account. Why so? Suppose 
 that she should use up her coal and try to im- 
 port Pennsylvania coal, what obstacle to that 
 would be interposed by the same doctrine when 
 viewed from this side? 
 
 247. Give a schedule showing the headings 
 of the accounts which enter into the international 
 exchange. Show from this how fallacious must 
 be any inference about the welfare of the country 
 from the preponderance of imports or exports of 
 merchandize and specie. 
 
 
 
 248. Suppose that the English wheat crop 
 fails and England imports wheat in great quanti- 
 ties from the United States. How would this 
 probably affect the price of bills of exchange 
 on England, and the price of English products in 
 America? 
 
 Mill, III., ch. 20. 
 
INTERNATIONAL EXCHANGI S. 8$ 
 
 249. " He hoped that [the three per cent, 
 loan] would be taken entirely by our own people, 
 so that the country would be saved from the annual 
 drain of a large sum which must otherwise go 
 abroad." 
 
 250. The English law ordains that 1869 sov- 
 ereigns shall be cut from 40 troy pounds of gold, 
 ^j- fine. The French law ordains that 3100 francs 
 shall be cut from a kilogram of gold T 9 fine. 
 The law of the United States prescribes that 
 the dollar unit shall weigh 25.8 grains of gold, 
 -f$ fine. What is par of the metals between the 
 United States and each of the others, and be- 
 tween England and France ? 
 
 Seyd, 285-290, 301, 346. Le Touz6, 207-223. 
 
 251. What is the difference between long and 
 short exchange ? 
 
 Seyd, 427-433. 
 
 252. How is it that it is a mere matter of usage 
 whether we say that exchange has risen, or that 
 ic has fallen, when we mean that it has turned in 
 favor of importers? 
 
 253. Give a history of the suspension of specie 
 payments by France, 18711878. Show how the 
 
86 ECONOMIC PROBLEMS. 
 
 currency was regulated while inconvertible, and 
 what currency doctrines were established by that 
 experience. 
 
 Bonnet, two Essays on the Payment of the Indemnity and the 
 Management of the Currency. Translated. Appleton : 1875. 
 Journal des Economists, isth December, 1874 (Wolowski). 
 
 254. Is it a benefit or an injury to the United 
 States that a part of the public debt is held in 
 Europe ? 
 
 255. We read in the money article, "Posted 
 rates of sterling 1 exchange were 4.82 and 4.84^. 
 Rates for actual business were as follows : Sixty 
 days, 4.81 and 4.81*^; demand 4.83^ @ 4.84; 
 cables, 4.83^ @ 4.85 ; commercial bills were 
 4.79^2 @ 4.80." Explain this statement in de- 
 tail. The minimum rate of discount at the Bank 
 of England was 3 per cent. Perform the arith- 
 metical calculation to show why the sixty day 
 bills and demand bills differed just as they did. 
 
 Goschen, Chap. IV. 
 
 256. American securities are sold in London 
 at an arbitrary rating, ;i=$5.oo. Why 'is this 
 arbitrary rating adopted? News was received 
 that 1000 shares of stock owned in New York 
 had been sold and paid for in London at 120 per 
 
INTERNATIONAL EXCII ANCT.S. 8/ 
 
 share. Cable transfers were 4.85. Brokerage was 
 }i of one per cent, on the par value. What was 
 the net cash value in New York of the return for 
 the stock? 
 
 257. In 1832 silver was the standard of the 
 United States, the silver dollar containing- 371.25 
 grains pure silver. The sovereign contained 
 113.002 grains pure gold. The ratio of value of 
 gold to silver was 15.625 : i. The traditional par 
 of exchange was $4.44=^1. What per cent, was 
 the true par of the metals of this assumed par? 
 
 258. Show, in a gold-producing country, what 
 the relations and interaction of new gold supply, 
 prices, relative amount of imports and exports, 
 and rate of exchange would be. 
 
 259. Let it be assumed that 5,000 Americans 
 go to Europe for the summer, and spend on an 
 average $1,000.00 each; that if they did not go 
 to Europe they would spend that amount of 
 money in American watering-places. State the 
 economic effects of this European travel on differ- 
 ent classes of the population in Europe and 
 America ? 
 
88 ECONOMIC PROBLEMS. 
 
 260. " Whenever our gold is shipped to 
 Europe, it is noticed that we are spending more 
 than we are earning, and whenever a country 
 with our boundless and diversified resources 
 finds the balance of trade against it, every sensi- 
 ble man and woman should understand that it 
 means retrenchment or ruin." 
 
 "One of the virtues of extending the 
 hand of welcome to the Chinese is shown by the 
 fact that to-morrow one thousand of these leeches 
 leave San Francisco for Hong Kong bearing 
 $750,000 which they have made in this country. 
 More than 800 of them have, moreover, been 
 provided with return certificates, which enables 
 them to return and take away more of our 
 money." 
 
 262. " In earlier days the leather made [in 
 California] was shipped abroad or to the East, 
 and some portion of it was returned in manufac- 
 tured forms. The consumer had thus to pay in 
 the price of his purchases the cost of two or 
 more expensive shipments, and of several com- 
 missions. It cannot be for his interest to do this, 
 nor for the interest of the cattle raiser, who 
 produces hides, for that of the tanner who pre- 
 pares them, nor in the broadest sense for the 
 interest of the country." 
 
IX. 
 
 ECONOMIC POLICY: 
 
 < 
 
 Socialism , Adjustment of Rights, etc. 
 
 263. What are the characteristics of an in- 
 dustrial civilization ? How does the tone and 
 temper of a people trained under an industrial 
 civilization differ from that of a people trained in 
 a military or police state? Show that socialism 
 is at war with industrial civilization. 
 
 Spencer, Sociology, I., 584-590 and fg. ; II., 603-642. 
 
 264. In a modern free state, should the ques- 
 tion be: Why let alone? or: Why not let alone? 
 
 Sumner, What Classes Owe, Chap. VIII. 
 
 265. Prove that state regulation of education, 
 factories, food, lodging, etc., is all illusory so 
 long as the state does not regulate family life, or 
 that, if the state is to regulate at all effectively, 
 it must regulate the family. 
 
 Lctourneau, 401-2. Rae, 190. 
 
 89 
 
90 ECONOMIC PROBLEMS. 
 
 266. Try to make a formula to define the limits 
 of state interference. 
 
 Adam Smith, II., 306. Woolsey, I., 243-269. 
 Humboldt. Mill on Liberty. Baden-Powell, Chap. I 
 Spencer, Social Statics, Essays. 
 Rogers, Art. Free Trade, gth ed. Encyc. Britannica. 
 Sumner, What Classes Owe, 112-153. 
 
 267. If it could be proved to a laborer that a 
 man of his class in the I3th century had better 
 and surer food and clothes than he, he would not 
 for a moment think of returning to the complete 
 status of the I3th century, just on account of 
 what distinguishes the iQth century from the 
 1 3th, viz: personal liberty, independence, and 
 civil rights; but these are the blessings of which 
 free competition is the price. Criticise this 
 assertion. 
 
 Cunningham, 387-410. 
 
 268. A certain job being offered for competi- 
 tive bids, one man bid much below any others, 
 being very anxious to get it, and being willing to 
 employ certain means which other contractors 
 disliked, but by which he could make important 
 savings. When the bids were opened his was 
 rejected because, as he was told, he would ruin 
 himself. His plea that he knew his own business 
 was disregarded. What light did this case throw 
 on competition and laissez-faire? 
 
SOCIALISM 9! 
 
 269. The individual's worst troubles come 
 from the cases where the state cannot let him 
 alone, because it adopts lines of policy to which 
 he must conform. E. g. : If the state issues 
 paper money no man can separate himself from 
 those who like paper money, and go his own way 
 on his own judgment. The incidental incon- 
 veniences of laissez-faire are not to be compared 
 with the positive evils endured by a wise min- 
 ority forced to yield to a foolish majority. 
 Expand, prove, and collect other instances. 
 Show that the philosophical basis of laissez-faire 
 is in the fact that we cannot tell, before the 
 event, who is wise and who foolish. 
 
 270. Roscher says : " There is what we might 
 call a public conscience concerning merit and 
 reward, by which a definite relation of the three 
 branches of income to one another is declared 
 equitable. Every * fair-minded man' feels satis- 
 fied when this relation is realized, and this feel- 
 ing of satisfaction is one of the principal condi- 
 tions precedent to the prosperity of production, 
 inasmuch as on it depends the participation of 
 all owners of funds and forces." Does this pas- 
 sage describe facts ? 
 
 Roscher, II., 166. Walker, Polit. Econ., 281-286. 
 
92 ECONOMIC PROBLEMS. 
 
 271. If a man takes an axe and goes into the 
 woods to cut wood, what is a "just" return for 
 his day's labor? Suppose that one man's wood 
 lot is half a mile from home and another's five 
 miles from home, is there any case here under 
 the head of ''justice?" Can we say that a man 
 " must" get profits on the capital in the axe and 
 wages for his time? What would be the differ- 
 ence in regard to "just" and "must" if another 
 man owned the wood-lot, provided the axe, and 
 contracted with the first man to go and chop the 
 wood ? 
 
 272. Each productive laborer puts a share 
 into the combined social productive effort, and 
 each gets some share in the total social satisfac- 
 tion. The proportion of the effort to the satis- 
 faction is determined by supply and demand, 
 under the existing conditions of the industrial 
 system. There can be no possible conception of 
 a "just" return, or of "justice," hi this connec- 
 tion, except the true ratio of effort to satisfaction 
 produced by the free play of supply and demand 
 under existing circumstances. Criticise this 
 statement. Does "justice" have anything to 
 do with the question whether A and B get as 
 favorable a ratio of satisfaction to effort, one as 
 the other? Suppose that A were an artisan and 
 B a flunkey. 
 
SOCIALISM. 93 
 
 273. Distinguish between the right to get, 
 possess, and enjoy property, and the right to be 
 a property-holder. Which is true and which 
 false? What is the fallacy of any notion of natu- 
 ral rights? Is there any physical or metaphysi- 
 cal good which is gratuitously bestowed on the 
 human race? Show that "equality" never can 
 belong to being or having, but only to the condi- 
 tions, chances, and burdens which are created by 
 the state. 
 
 De Lavelaye, Preface, and 348-353- Rae, 186. 
 Sumner, What Classes Owe, 13-15 ; 134-136; 163-169. 
 
 274:. What classes emigrate from Europe to 
 the United States? What classes emigrate from 
 the United States to Europe? Why are the facts 
 as they are ? 
 
 275. Do you think that there is a tendency ot 
 enlightened opinion toward the establishment of 
 a right in every man born on earth to go to, and 
 live on, any part of the earth where he thinks 
 that the environment will be most favorable for 
 such a man as he is? If not, state what modifica. 
 tion you would want to make in that doctrine of 
 right before you would assent to it. 
 
94 ECONOMIC PROBLEMS. 
 
 276. If a man owns some land, a horse, and a 
 plow, is there any difference in the meaning of 
 "property " as applied to each of those things? 
 If so, what is it? 
 
 Rae, 446. 
 
 277. What are vested rights? What signifi- 
 cance have they for the happiness of man and as 
 regards the end for which the state exists ? Why 
 do some of the greatest difficulties and dangers 
 of a progressive and liberal state arise from them? 
 
 Mill, II., 2, 2. 
 
 278. To pull down those who are superior in 
 wealth, culture, talent, virtue, or education is to 
 act like an army invading a hostile country, 
 which should shoot its own advance guard. 
 Expand and prove this, or correct and refute it. 
 
 279. Can any person be held under obliga- 
 tion to contribute to the struggle for existence of 
 any other person, unless the former be shown to 
 be in some way responsible for the latter's exist- 
 ence? If so, who? and on what grounds? 
 
 Mongredien, Wealth, 233. 
 Sumner, What Classes Owe. 
 
 280. Is there any human being who, in any 
 conceivable circumstances, can rightfully say : " I 
 must live " ? 
 
SOCIALISM. 95 
 
 281. It is affirmed that the most efficacious 
 cause of the accumulation of great properties is 
 allowing women to inherit on an equal footing 
 with men. Is that true? If so, what bearing 
 does it have on current discussions about ine- 
 quality of possessions? Would it be, in other 
 respects, desirable to reverse the tendency of 
 modern times in regard to the property rights of 
 women ? 
 
 Letourneau, 184, 433-4. De Lavelaye, 217-220. 
 
 282. A Connecticut farmer declared that he 
 could not " make any money " because he could 
 not hire any laborers. He said that they all 
 demanded too high wages. A New York mer- 
 chant declared that he could not " make any 
 money " because his landlord demanded an ex- 
 travagant rent; the landlord declaring that an- 
 other tenant was ready to pay the rent demanded. 
 A person who had no capital, but who wanted 
 to carry on business, complained that he could 
 " make no money " because he had to pay such 
 high rates of interest for capital which he bor- 
 rowed. State the true significance of the facts 
 alleged in each case. What is the correct criti- 
 cism on these complaints when analyzed and 
 generalized ? What should we say of a proposed 
 law to provide one with laborers at wages to suit 
 him, another with a store at rent to suit him, and 
 the third with capital at a rate to suit him ? 
 
96 ECONOMIC PROBLEMS. 
 
 283. " State what you believe to be the chief 
 economic arguments in favor of the succession of 
 relatives to the property left by deceased persons, 
 instead of its lapse to the state." (M. 238.) 
 
 Mill, II., 2, 3. Letourneau, 440. 
 
 284. Distinguish between different kinds of fac- 
 tory acts and state their justification. (M. 1386.) 
 
 285. Is there the same justification for indus- 
 trial schools (teaching trades) as for common 
 schools (giving general culture)? (M. 1390.) 
 
 286. Is compulsory school attendance justi- 
 fiable when tax-payers are forced to orovide 
 schools?- 
 
 287. " These wretched people (in the slums of 
 London) must live somewhere, and it must be 
 near the center, where their work lies. It is 
 notorious that the Artisans' Dwelling Act has, in 
 some respects, made matters worse for them. 
 Large spaces have been cleared of fever-breeding 
 rookeries to make way for the building of decent 
 habitations ; but the rents of these are far beyond 
 the means of the abject poor. They are driven 
 to huddle more closely together in the few loath- 
 
SOCIALISM. 97 
 
 some places still left to them, and so Dives makes 
 a richer harvest out of their misery, buying up 
 property condemned as unfit for habitation, and 
 turning 1 it into a gold mine, because the poor- 
 must have shelter somewhere, even though it be 
 the shelter of a living tomb. The State must 
 make short work of this iniquitous traffic and 
 secure to the poor the rights of citizenship, the 
 right to live in something better than fever dens, 
 the right to live as something better than the un- 
 cleanest of brute beasts. This must be done 
 before the Christian missionary can have much 
 chance with them." 
 
 288. Would it be expedient for a State to ex- 
 pend capital in creating a colony and persuading 
 its emigrating citizens to go to that colony, 
 rather than to let them go whithersoever their 
 interest might lead them? Would it be for the 
 interest of either Germany or the United States 
 that German immigrants should take possession 
 of one State of this Union and make it a " Ger- 
 man State ?" 
 
 Roscher, II., 371. Adam Smith, II., 134-225. 
 
 289. An argument for government favor to 
 capitalists by not placing the interest on govern- 
 ment bonds at the lowest market rate: 
 
98 ECONOMIC PROBLEMS. 
 
 " If we were dealing- with the money-lenders of 
 Europe the question would be entirely different ; 
 but we are dealing with our own people ; we are 
 dealing with women, with children, with those 
 whose property is in the hands of guardians and 
 trustees ; with the farmer who has laid aside tem- 
 porarily a little money ; with the merchant who 
 has a little balance which he desires to invest in 
 a security which shall be not only absolutely safe 
 but which he may convert at any moment with- 
 out loss. Do we want to stand if I may use the 
 word jewing with this class of people to see 
 whether this rate of interest shall be 3^ or 3^ 
 or 3 per cent.? We must remember that what 
 the government will save by cheapening the rate 
 of interest this class of people of whom I have 
 spoken will to a great extent lose." 
 
 290. An American hotel-keeper who failed 
 said that "one of the drawbacks with which 
 hotel-keepers have to contend is the constant in- 
 crease of rent demanded by our landlords just as 
 soon as they discover we are making a dollar." 
 If the principle of the Irish land act is sound 
 should not the legislature appoint a commission 
 to examine into the truth of the alleged fact, and, 
 if it be found true, should not a court be ap- 
 pointed to assess the " fair rent" of a hotel? 
 
SOCIALISM. 99 
 
 291. On what grounds may railroad land grants 
 be justified? 
 
 292. It is objected to patents that they establish 
 property in an idea or device, but that no prop- 
 erty in an idea or device should be recognized 
 because two men, or any number of men, can use 
 the same idea or device without interfering with 
 each other, or using it up, but that property in 
 land or chattels is recognized because two men 
 cannot use or enjoy them at the same time. It is 
 also objected that patents are given only for pri- 
 ority, not for the invention, and that, within the 
 period of the patent, many persons might inde- 
 pendently work out the invention, but are de- 
 barred from using it, even for themselves, by the 
 patent law. Criticise these arguments. 
 
 293. "A copyright is a patent under another 
 name and applied to another class of objects, 
 writings instead of inventions." Is that state- 
 ment correct? Distinguish thoroughly between 
 copyrights on the one side and patents and tariff 
 monopolies on the other. 
 
 Ford, II., 58. 
 
 294:. Why is transportation a matter of so 
 much greater importance in the United States 
 than in England, France or Germany, and why 
 
100 ECONOMIC PROBLEMS. 
 
 are transportation questions so much more diffi- 
 cult here? 
 
 295. It is said that a railroad pool does away 
 with competition. Why is that not quite cor- 
 rect? 
 
 296. What are income bonds ? What are col- 
 lateral trust bonds ? 
 
 297. The trunk lines, by agreement, charge one 
 cent per bushel for elevator work at New York, 
 Baltimore and Philadelphia. The New York 
 railroad commissioners urged that this charge 
 should be abolished at New York. The repre- 
 sentatives of the railroads replied that to do so 
 would put the port of New York at a disadvan- 
 tage. At other ports steamships lie alongside of 
 the pier on which the elevator is, and there is an 
 elevator charge of one cent per bushel. In New 
 York the ships will not come to the elevator but 
 the grain must be lightered in floating elevators. 
 The roads pay lighterage, three-fourths of a cent 
 per bushel, and charge elevator charge of one 
 cent. If the elevator charge were abolished at 
 one place, it would be at all, and that would 
 leave New York at a disadvantage. 
 
 Criticise this allegation and inference. 
 
 Report, Hepburn Committee, 22-25, 33-4. 
 
SOCIALISM. 101 
 
 298. What is watering- stocks? Specify as 
 many varieties of it as you can think of. Could 
 a house, a newspaper, or a race-horse, be 
 " watered " in the same way ? Why do we 
 never hear of it? Why should anyone desire to 
 water stocks ? 
 
 299. A subscribed three shares in a company 
 at par. He received twelve per cent, dividend 
 and the stock was quoted at 200. The company 
 increased its capital in order to extend its busi- 
 ness. It did so by allowing each owner of three 
 shares to subscribe for and get one new share for 
 $100. A sold his "right" for $75. After the 
 increase the stock was quoted at 175. Analyze 
 this operation and show its significance for the 
 rights and interests of the public or of any par- 
 ties concerned. 
 
 300. How would you capitalize a newspaper, a 
 lease, a patent right? A company is formed to 
 build a railroad. They subscribe for first mort- 
 gage six per cent, bonds in sufficient amount to 
 build it. When it is done they make a stock 
 capital for it. Why do they adopt this method? 
 Criticise it. What should be or may be the 
 amount of the stock capital ? This stock capital 
 is said to be " ail water/' What is meant by 
 
IO2 ECONOMIC PROBLEMS. 
 
 that and is it true? What, if any, property or 
 valuable thing is behind that stock? What is 
 meant by " capitalizing the road at all which the 
 traffic will bear?" It is said' to be a wrong to 
 the public to do that,, Why? What do you 
 think about it? 
 
 301. It is argued against watering stocks that 
 if a railroad doubles its stock it has to raise its 
 rates for freight and passengers so as to force the 
 public to pay profits on the increased stock. 
 Criticise that argument, taking note of the two 
 cases, one where the road is a monopoly and the 
 other where it is in full competition with others. 
 
 302. A few able and unscrupulous men com- 
 bined and bought, at a low rate, the stock of a 
 railroad which was well situated but badly man- 
 aged. They subscribed new capital, put it in 
 good order, paid a dividend, and issued a glow- 
 ing report. The stock rose to a high figure. 
 They then doubled the stock and also issued 
 bonds on the road for a large amount. They 
 paid large dividends on the watered stock and 
 the half shares were soon as high as the whole 
 ones were before. They then bought up par- 
 allel and branch roads at low rates and sold them 
 to the former railroad for its bonds. These and 
 
SOCIALISM. 103 
 
 their stock they then sold. Next they ceased to 
 pay dividends and issued a gloomy report. 
 Thereupon the stock fell and they bought it 
 again. What had " watering stocks " to do with 
 these transactions? What had issuing annual 
 reports to do with them ? 
 
 303. A patentee found after a few years that 
 his patent brought him in $5,000 a year. Nine 
 capitalists subscribed $5,000 each to buy of him 
 nine-tenths of his right. The ten then subscribed 
 $5,000 each and formed a joint stock company to 
 develop the patent. It had still ten years to run 
 and they expected that it would earn at least an 
 average of $25,000 per year for those ten years. 
 They put the capital of the company at x dollars, 
 of which each of the ten took one-tenth at the 
 start. What difference did it make to any body 
 what the value of x was? If you were one of the 
 ten, at what value would you want x put, and 
 for what reasons ? 
 
 304. Write a short essay on the postal tele- 
 graph. Consider the possibility that telegrams 
 might be sent at a uniform rate as letters now 
 are. 
 
 Jevons, Social Reform. 
 
104 ECONOMIC PROBLEMS. 
 
 305. Write a short essay on the purchase of all 
 railroads by the federal government. 
 
 306. Write a short essay on the nationalization 
 of the land. 
 
 Fawcett, Pol. Econ., 6th ed., Chap. XI. DeLavelaye, 320-1. 
 
 307. Write an essay on " National Education, 
 i. e., on the proposition, in various forms, to have 
 the federal government meddle with education. 
 
X. 
 
 ECONOMIC POLICY: 
 
 Public Finance. 
 
 308. In what circumstances is it possible to 
 Deduce the interest on the public debt? 
 
 Leroy-Beaulieu, II., 365-376. 
 
 309. Is it possible to pay off a public debt too 
 rapidly ? What is the effect of paying it very 
 rapidly? 
 
 Sumner, Jackson, 266-72. 
 
 310. What measures the burden to a people of 
 their debt? 
 
 Is it right to put the extraordinary expenses of 
 this generation as. a burden on the next? On 
 what grounds might an argument be made for so 
 doing? 
 
 If a nation is young and growing, what will be 
 the fact with regard to the burden of the debt 
 from decade to decade. How does this fact bear 
 upon the policy of heavy taxation now to pay the 
 debt of the U. S. speedily ? 
 
 Leroy-Beaulieu, II., 308-311 ; 360-363. 
 
 105 
 
106 ECONOMIC PROBLEMS, 
 
 311. What was the experience of England with 
 a " sinking fund " between 1790 and 1828 ? 
 
 Hamilton, 80-171. Leroy-Beaulieu, II., 306-322. 
 
 Accounts and Papers, 710. 
 
 312. Has the United States ever had similar 
 cperience ? 
 
 Seybert, 759-774- 
 
 313. What is the arrangement about the sink-* 
 ing fund of the federal treasury now? Is the 
 sinking fund of any use or necessity aside from 
 the contract with the bond-holders? Has it any 
 Value in fact for them ? 
 
 W. A. Richardson, 82-85. 
 
 314:. Show that a sinking fund is not a force 
 in itself, and never can do anything towards the 
 payment of a debt beyond just the amount of 
 saving which is put into it. 
 
 315. What was the fallacy of deductions from 
 compound interest which were made the basis of 
 sinking fund doctrines a century ago? 
 
 316. How is the reduction of the English debt 
 now accomplished instead of using a sinking fund ? 
 
 Accounts, etc., 720. 
 
PUBLIC FINANCE. IO/ 
 
 317. What arc exchequer bills? What is the 
 theory of their use? 
 
 Bagehot, chap. IV. 
 
 318. It is argued by very sound and con- 
 servative economists on the continent of Europe 
 that it is expedient to connect a drawing of 
 prizes with drawings of the public debt for pay- 
 ment, because fortune and misfortune enter into 
 human life, and constantly affect the managers of 
 capital, so that to offer the small fund holder a 
 chance of a bit of good fortune is only to give 
 him a chance of the same kind. Criticise this 
 argument. 
 
 Leroy-Beaulieu, II., 246-250. 
 
XL 
 
 ECONOMIC POLICY: 
 
 Taxation. 
 
 319. Define taxation. Show its relations to 
 economic science and statecraft. Show what 
 importance it has for the welfare of the people. 
 Distinguish between arbitrary exactions by irre- 
 sponsible officials where public peace and secu- 
 rity are not assured; taxes laid for other pur- 
 poses than revenue and having- no relation to 
 good government ; and strictly economical taxa- 
 tion for which the citizen gets peace, order, and 
 security. 
 
 320. The discussion of the canon that taxa- 
 tion should be equal has been much confused by 
 the fact that the disputants sometimes mean 
 equal with respect to units of commodity or 
 property or income, and sometimes equal with 
 respect to the personal circumstances of the 
 different individuals taxed. Expand and explain 
 this statement. 
 
 108 
 
TAXATION. 109 
 
 321. Taxes diffuse themselves on the line of 
 least resistance. Expand and prove. 
 
 322. The parties to an exchange share in all 
 the burdens and hindrances of the same in the 
 direct ratio of their eagerness for the exchange, 
 and they share in the profits and advantages of 
 the same in the inverse ratio of their eagerness 
 for the exchange. This applies to taxes, freights, 
 etc. Prove this proposition. 
 
 Mill, III., 8, 2. 
 
 323. From what sources are the revenues of 
 Great Britain obtained now ? From what sources 
 are the revenues of the United States obtained ? 
 Make a comparison of the two systems of reve- 
 nue. 
 
 Wilson, 109-130. Ford, II., 137-149. 
 
 324. Give the history of financial reform in 
 England during the second quarter of this cen- 
 tury. 
 
 Wilson, 66-85. Mongredien, Free Trade. 
 
 Martineau, vols. 2, 3 and 4. 
 Levi, British Commerce. 
 
 325. What are the main points in the Peel- 
 Gladstone system of national finance? 
 
 Giffen, Chap. IX. 
 
 Molesworth, England, II., 50-228 ; II., 380, III., 225. 
 
110 ECONOMIC PROBLEMS. 
 
 326. "Under what circumstances are taxes on 
 wages transferred to the employer of labor?" 
 (M.I555-) 
 
 Adam Smith, II., 460-463 ; 466-472, Mill, V., 3, 4. 
 
 327. Criticise the Prussian class-tax. 
 
 Leroy-Beaulieu, I., 276-280 ; II., 459-461. 
 
 328. Discuss the arguments for and against a 
 legacy and succession tax. 
 
 Adam Smith, II., 453-4. Mill, V., 2, 7. Jevons, Coal, 365. 
 
 Leroy-Beaulieu, I., 489-500. Letourneau, 440. 
 
 Sumner, What Classes Owe, 49-50. 
 
 329. Discuss taxes on railroads. 
 
 Sidgwick, 574. Leroy-Beaulieu, I., 542-545. 
 
 330. Discuss an export duty on raw cotton; 
 on wheat. 
 
 Mill, V., 4, 6. , Sidgwick, 576. 
 
 331. How are we interested in the repeal erf 
 the Brazilian export duty on coffee ? 
 
 332. Coal is essential to England's industry. 
 It has been feared that her supply would be ex- 
 hausted, and it has been proposed to put an 
 export duty on it. Would that be wise ? 
 
 Jevons, Coal Question, 260-261 ; 276-278 ; 354-360. 
 Fawcett, Free Trade, 163-4. 
 
TAXATION. 1 1 1 
 
 333. Write an essay on income tax, including 
 progressive income tax. 
 
 Leroy-Beaulieu, I., 126-164 ; 422-470. 
 
 334. Write out the notes of a speech which you 
 would make, if you were a member of Congress 
 this winter, and it was proposed to abolish the 
 duty on sugar. 
 
 335. Draw up a budget for the United States 
 for the fiscal year 1883-4 on the basis of the 
 expenditures of 1882-3, showing what taxes or 
 other means of revenue you would employ to 
 provide the required amount. 
 
XII. 
 
 ECONOMIC POLICY: 
 
 Protectionism. 
 
 336. What is the English system of free 
 trade? England levies taxes on some imported 
 commodities. How is this fact to be understood 
 when she claims to have adopted free trade? 
 
 Sumner, Protection, 10. 
 
 337. Discuss export duties on raw materials 
 and fuel, prohibitions on the export of machinery, 
 prohibitions on the emigration of laborers, boun- 
 ties on the export of finished products, and taxes 
 on the imports of commodities, in their relations 
 to each other and as parts of a general system. 
 
 Adam Smith, II., 79-99 ; 120-122 ; 226-246. 
 Sumner, Protection, 31. 
 
 338. Are there are any economic advantages 
 in being the first to take a wise or right course? 
 Does a merchant or manufacturer argue well 
 who says : " I must cheat or I shall be beaten by 
 my rivals who cheat?" Can you illustrate your 
 answer by industrial copartnerships or free trade ? 
 
PKOTI-XTJOMSM. 113 
 
 If all men were honest, would honesty have com- 
 mercial value ? 
 
 Mongredien, Wealth, 209-212. 
 
 339. Mill says (p. 515): "Those are therefore 
 in the right who maintain that taxes on imports 
 are partly paid by foreigners; but they are mis- 
 taken when they say it is by the foreign pro- 
 ducer." What foreigner is it who pays? and 
 what is Mill's argument? 
 
 340. It is said that exigencies arise in the 
 history of a country when it just needs a little 
 help to lift it over a difficulty. Criticise that 
 notion. It is said that a protective tariff is just 
 what is needed to give the assistance. Assume 
 the general notion to be true and criticise the 
 special device here proposed. 
 
 Princeton Review, March, 1881, p. 247. 
 
 341. State any proposition which you think 
 you can maintain about the relation between high 
 or low wages and international competition. 
 
 Sumner, Protection, 22, 42 ; Argument, etc., 10. 
 
 342. In the United States employers say that 
 they need protection because they have to pay 
 high wages. Employees say that they want pro- 
 
114 ECONOMIC PROBLEMS. 
 
 tection so as to make their wages high. In Ger- 
 many employees say that they want protection 
 because their wages are low. In each case 
 " high " or " low " is taken with reference to 
 English wages. Criticise these arguments sepa* 
 rately and in relation to each other 
 
 Sumner, Argument, etc., 8, 9. 
 
 343. If a man goes into a store and finds a 
 piece of cloth such as he wants, does it make any 
 difference to him, in any point of view, whether 
 the cloth was made across the street or across 
 the ocean? What about the cloth alone makes a 
 difference to him ? 
 
 344. Show the inconsistency between laying 
 heavy duties on commerce and dredging out 
 harbors; between taxing commerce and subsi- 
 dizing ships ; between protecting manufacturing 
 and giving land grants to railroads which make 
 new land accessible. 
 
 Sumner, Protection, 14; Jackson, 183-4. 
 
 345. Show that, if the protectionists are right 
 in laying taxes " to develop our resources," re- 
 sources are calamities. Why was the discovery 
 of a nickel deposit in the United States a misfor- 
 tune, and why may we regret that a tin mine has 
 just been discovered ? 
 
PROTECTIONISM, 115 
 
 346. Show the fallacy of the protectionist 
 argument that capital, which would otherwise 
 be unemployed, is, by protection, drawn into 
 use; that a higher organization of industry is 
 brought about which increases production. 
 
 Sumner, Argument, etc., 5. 
 
 347. One country has a good and cheap gov- 
 ernment and therefore low taxes. Another coun- 
 try has a bad and very expensive government, 
 and therefore high taxes. In the first, industry is 
 very free and secure. In the second it is tram- 
 melled and uncertain. The former therefore 
 beats the latter even in its own markets. The 
 producers of the latter therefore demand a pro- 
 tective tax to " offset the heavier domestic taxes 
 which they have to pay," and "to put them on 
 an equality with their rivals." After such tax is 
 laid, how many independent evils is the second 
 country suffering from? . 
 
 348. Show the fallacy: "The money to re- 
 place what has been burned [at Chicago] will not 
 be sent abroad to enrich foreign manufacturers, 
 but, thanks to the wise policy of protection which 
 has built up American industry, it will stimulate 
 our own manufacturers, set our mills running 
 
Il6 ECONOMIC PROBLEMS. 
 
 faster, and give employment to thousands of idle 
 workmen." Was the fire a calamity? 
 
 Compare this case: When Pittsburg was burn- 
 ing in 1877, during a riot, the bystanders refused 
 to put out the fire, saying: " Let her burn, boys! 
 It will make work." 
 
 Cairnes, Principles, 253. Sumner, Argument, etc., 8. 
 
 349. A process having been discovered for 
 utilizing as fuel great mountains of refuse which 
 has hitherto accumulated at the mouth of coal 
 mines, the production of steel rails is greatly 
 cheapened for the mills which are near the coal 
 mines. The competition of these mills closes up 
 others less favorably situated. T s this course ol 
 things a calamity to anybody? If so, to whom? 
 Is it not a misfortune and injustice to the owners 
 and laborers in the mills which are closed that 
 they are not allowed to set up a tariff wall around 
 themselves? Suppose that the cheapening of 
 production had been accomplished in a foreign 
 country and was not available here, and then 
 answer the same questions. 
 
 350. " Upon what a narrow and stupid basis 
 do they discuss this American system of industry ! 
 They speak of it as if it were protection of the 
 mill owners, of the mine owners, of the proprie- 
 
PROTECTIONISM. Ii; 
 
 tors and managers of furnaces and of railroads 
 and of ships. Why, of course, they have their 
 share in the workings of industry, but the object 
 of it all, and the political reason of it all, is that 
 we mean to protect our wages from being beaten 
 down by the peasantry or the laborers of foreign 
 countries, whose dignity, whose manhood, whose 
 equality is not preserved." 
 
 351. " It is not enough to show that iron costs 
 less in England than it costs here. The question 
 is whether iron would not cost far more here, if 
 this country, with its enormous demand, were 
 dependent upon British manufacturers for iron." 
 Discuss the argument that we ought to develop 
 industries at home by protection in order not to 
 be at the mercy of foreign monopolists. 
 
 352. " In the first place, I freely grant that the 
 enhanced price of the protected articles repre- 
 sents a loss to the consumers, and through them 
 to the nation. Against this loss I claim that the 
 following gains, where they are gains, should be 
 offset : 
 
 First Any effect that protection may have on 
 the " margin of cultivation." 
 
 Second Any effect upon the equation of inter- 
 national demand. 
 
IlS ECONOMIC PROBLEMS. 
 
 Third Any effect upon the employment ot 
 classes (women and children) who would not 
 have found employment at all in unprotected 
 industries. 
 
 Fourth Any tendency that engaging in the 
 protected industries may have in employing 
 skilled in the place of common labor. 
 
 Fifth Any tendency which protection may 
 have to lead a nation to save rather than borrow 
 the capital its industries call for. 
 
 Sixth -Any influence which protection may 
 have upon the state of the arts and the progress 
 of invention, both in the nation and in the world 
 at large." 
 
 Examine these points. Are there such gains? 
 Can protective taxes win them ? 
 
 Mill, III., 17, 5- 
 
 353. "We must remember that a worker 
 may gain more by having his industry protected 
 than he will lose by having to pay dearly for 
 what he consumes. A system which raises prices 
 all round like that in the U. S. at present is 
 oppressive to consumers, but is most disadvan- 
 tageous to those who consume without produc- 
 ing anything, and does little, if any, injury to 
 those who produce more than they consume/' 
 
PROTECTIONISM. I IQ 
 
 354. " Last year, notwithstanding the high 
 duties, we imported of iron and steel, in their 
 various forms, a million and a half tons. These 
 required, for their production, twenty-eight mil- 
 lion days' work, and if made in our country 
 would have given steady employment at two 
 dollars a day, to one hundred thousand men, for 
 eleven months, and have left all the profits here, 
 instead of in England.' 1 
 
 355. "What I hope I have done is to show 
 that ' capital ' is subject to the law of supply and 
 demand. There are many things which affect 
 the rate at which accumulation will go on. Its 
 ultimate amount, however, is always limited, at 
 least as to circulating capital, by the number of 
 laborers, and the average amount of capital that 
 can be profitably utilized in employing them. 
 When accumulations exceed this point one or 
 more of three things may occur: i. An increase 
 of laborers. 2. Transferring some of them to 
 industries in which it takes more capital per 
 capita to keep laborers at work; or, 3, an ac- 
 cumulation occurs which depresses profits and 
 causes an industrial stagnation. 
 
 Now, when protection diverts labor from agri- 
 culture to manufacturing it allows accumulation 
 to go. on to a point it could not otherwise reach, 
 
120 ECONOMIC PROBLEMS. 
 
 because it transfers labor to employments requir- 
 ing more capital. 
 
 The yearly profits on such accumulations are 
 a pure gain to the country, and a valid offset 
 against the loss to the consumer, which is the 
 only economic effect free traders seem able to 
 comprehend." 
 
 356. Criticise the policy of commercial or 
 reciprocity treaties. 
 
 Fawcett, Free Trade, Chap. 6. Baden-Powell, 273-278. 
 
 357. The imports of the United States are not 
 sufficient to give return cargos for the ships 
 which are required to take out the exports. 
 Therefore the steamers put in bunks for the 
 westward passage and compete with each other 
 for emigrants. Show how the tariff intensifies 
 this relation of things. What, then, is the effect 
 of the tariff on the net return for American 
 wheat and cotton, on immigration, and therefore 
 on the wages of American wage-receivers? 
 
 Cf. Jevons, Coal, 253 fg. 
 
 358. Describe the comparative results of free 
 trade and protection in Victoria and New South 
 Wales. 
 
 Baden-Powell, Chap. V. 
 
PROTECTIONISM. 121 
 
 359. The Due dc Broglie wrote a book to 
 prove that under free trade the " less favored 
 nations '' would lose population and capital 
 which would find better employment elsewhere. 
 To counteract this he would not adopt the pro- 
 tective system, "nursing father of ignorance, 
 laziness and routine," but would adopt freedom 
 of commerce " under the reservation of the ex- 
 ceptions of which it admits and in the limitations 
 which science sets for it, and with liberty to 
 extend the limitations and exceptions according 
 to national circumstances." Criticise this propo- 
 sition. If the whole population and capital ot 
 France should move to Greenland, what harm 
 would it do to anybody? 
 
 360. " It might shake the Victorian protec- 
 tionist's faith in his own doctrine if he would 
 reflect that his most effectual protection against 
 the foreigner would be the exhaustion of his own 
 gold fields." Why? Put American for Victo- 
 rian, and wheat and cotton fields for gold fields, 
 and say if the argument is equally strong. 
 
 Cairnes, Essays, 33-40. Cairnes, Principles, 313-31^. 
 
 361. If a bounty is paid oi> exports, who pays 
 it and who gets it? 
 
 A-dam Smith, II., 79-86. Fawcett, Free Trade, 16-28. 
 
122 ECONOMIC PROBLEMS. 
 
 362. " With a perfectly free trade it would 
 probably be impossible for any country to refrain 
 from specializing, while the country that was 
 economically strongest would certainly gain at 
 the expense of others, as it would have an advan- 
 tage in all the bargains of international trade." 
 Show the fallacy of this passage. Define " eco- 
 nomically strongest." Note " all the bargains." 
 
 Cunningham, 410. 
 
 363. " One land would manufacture and an- 
 other produce raw materials, so that under a 
 combined regime of perfect free trade no nation 
 would be likely to consist permanently of a min- 
 gled population, of whom a large part were en- 
 gaged in tillage and another large part were in 
 manfacturing." Show, by a study of the distri- 
 bution and differentiation of industry inside the 
 United States, that this deduction is erroneous. 
 
 Cunningham, 410. 
 
 364. "A simple case will show how a duty may 
 at once protect the native manufacturer ade- 
 quately and recoup the country for the expense 
 of protecting him. Suppose that a 5 per cent, 
 duty is imposed on foreign silks, and that, in con- 
 sequence, after a certain interval, half the silks 
 consumed are the product of native industry, and 
 
PROTECTIONISM. 123 
 
 that the price of the whole has risen 2 l / 2 per 
 cent. It is obvious that, under these circum- 
 stances, the other half which comes from abroad, 
 yields the State 5 per cent., while the tax levied 
 from the consumers on the whole is only 2^ per 
 cent., so that the nation, in the aggregate, is at 
 this time losing nothing by protection except the 
 cost of collecting the tax, while a loss equivalent 
 to the whole tax falls on the foreign producers." 
 
 Show that the above, if generalized, means as 
 follows : criticise each of the assumptions, and 
 the practicability of the device ; note that it is 
 given under the art of political economy : 
 
 (i) If a tax of n per cent, is wanted, but (2) if 
 the tax in question may be used up to produce 
 
 onlv of revenue, the rest being surrendered to 
 
 J m 
 
 protection, and if another tax may be used for 
 the deficiency, and (3) if the decrease in the total 
 consumption due to advance in price, be left out 
 of account, and (4) if we assume that the price 
 over the whole outside market may be depressed 
 by the tax, and (5) if the loss and waste of years 
 in bringing about the desired result be disre- 
 garded, and (6) if the practical impossibility of 
 bringing about the supposed state of things be 
 overlooked, and (7) if the incidence of the tax, 
 variation in price, etc., be measured by the 
 price before the tax was laid, without regard 
 
124 ECONOMIC PROBLEMS. 
 
 to deterioration in quality after the tax is laid, 
 
 then, if a tax of n per cent, causes th of the 
 
 m 
 
 product to be imported and the price to advance 
 
 , the foreigner will pay n per cent, on th 
 ;// m 
 
 ot the supply and the consumer will pay per 
 
 cent, on the whole of it, which will be equal. 
 The former will be revenue and the latter can be 
 devoted to protection. 
 
 Show that, if all else were sound, this must be 
 modified to read: The foreigner would pay part 
 of the tax, and the domestic consumer might de- 
 vote to protection a sum equal to that part of the 
 tax which the foreigner pays. 
 
 Show the fallacy of the whole argument. If 
 the foreigner lowers his price for the protected 
 market, what is true of the goods which he sends 
 into that market and of his profits on them? 
 Does he really pay any of the tax? Show that 
 
 the consumer pays revenue n per cent, on im- 
 
 ;// 
 
 ported, and protection n per cent, on the part 
 m - produced at home. 
 
 Sidgwick, 491-492. London Economist, Dec. i, 1883. 
 
PROTECTIONISM. 12$ 
 
 365. Mr. Ward says that we have now, by our 
 science of sociology, attained to the matter and 
 method of scientific education. Here, then, he 
 thinks, dynamic sociology may begin ; L c., the 
 State may take measures for the application of 
 scientific education and thus move on with reg- 
 ular and uninterrupted steps to the improvement 
 of society. Criticise this opinion. 
 
 366. Show that the improvement of society 
 depends most of all on an advancing standard of 
 parenthood. If, then, we could direct our science 
 of sociology to the object of highest importance, 
 we should endeavor to determine the moral and 
 physical elements of a good parent, and to estab- 
 lish criteria for measuring and defining those ele- 
 ments. If, then, the State were provided by 
 science with these criteria, it would have to de- 
 termine a standard or limit of good parenthood, 
 and take measures to prevent the marriage of any 
 persons who were below the standard. 
 
 Prove the steps of this reasoning. Show why 
 the point of view is erroneous, and why the con- 
 ception of sociology which is here employed is 
 chimerical. ^??3 
 
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