If * K E I ( Y LIBRARY UNIVERSITY OF CALIFORNIA 7H- PRINCIPLES OF ECONOMICS THE SATISFACTION OF HUMAN WANTS SO FAR AS THEIR SATISFACTION DEPENDS ON MATERIAL RESOURCES BY GROVER PEASE 1OSBORNE CINCINNATI ROBERT CLARKE AND COMPANY 1893 Copyright 1890, 1893. BY GROVER PEASE OSBORNE. All Rights Reserved. PBEFACE. I have long been of the opinion that, in the study of economic science, we can safely start with no nar- rower subject than the Satisfaction of Human Wants, To avoid a seeming trespass upon the realm of the spiritual, it is necessary to add the limiting qualifica- tion, so far as this satisfaction depends on material resources^ or the labor of human beings. The objec- tion which naturally occurs to the reader is that this subject is too broad, and that it is necessary to take a single division of it ; e. g., the science of wealth. But this is not a natural division, and, I am convinced, is too indefinite. For wealth, as defined by the writers who make it the subject of Political Economy, is simply that which has exchange value. Now, ex- change value is not solid ground. It depends on four things : the quality of the object, the quantity avail- able, the number of people who want it, and what they have to give for it. It is nothing but a relation between -various elements. Water is wealth under some circumstances, and not under others. I believe that the only method which will give us certainty is one that goes back to the wants themselves, and to the resources for their satisfaction. Wants are real things ; the resources for their satisfaction are real, (1) M89672S Z PKEFACE, Those in different countries and different ages can be compared. The relations between wants and re- sources, and between the resources themselves, can be studied under value both in use and in exchange. No subject is large in outline, which is all that is proposed in the present work. It is something to properly define a subject, and state its natural divi- sions. Instead of wealth, we consider the resources which the world, or better a single nation, has for the satisfaction of the wants of its people ; next the num- ber of people and the wants to be satisfied. Who is ta own or control the various classes of these resources, and what are the reasons for such ownership ? Then we take up the methods by which the resources can be most economically used ; then the principles of their exchange between various owners ; and, last, the dis- tribution of such resources as are produced by modern methods, among the various interests which contribute to their production. The subject does not, after all, seem so much broader than that which political economists attempt to cover under the head of wealth, and it has the advantage of resting on firm ground ; we are more likely to see things as they are, and to put them in their right relations. The first object of this work is to present the subject in proper outline. The titles of the various books and chapters are intended to be an analysis of the subject,, The reader will perhaps be struck with the entire omission of all reference to the tariff question, and yet he will see that its treatment does not naturally PREFACE. O belong to the subject. It is, of course, one of the many applications of the principles of exchange. But the applications of the principles of exchange, and of those of the other natural divisions of this treatise, are world-wide. I have been the more willing to omit such discussion in order to emphasize the fact that Political Economy is not the science of free trade or protection, as nine out of ten people suppose. Most persons who feel obliged to make some remark to a student of Political Economy will at once ask, "Are you in favor of free trade or protection ? " evidently supposing that there are but two kinds of political economists. I should not have hesitated, however, to discuss the tariff question had the plan of this treatise demanded it. It is not hi every respect pleasant to be classed with a " school," because one may not wish to be held re- sponsible for all the views of those with whom he may agree in the main. Many persons suppose that if they know to which of three or four schools a writer belongs, they know all he has to say. I believe, how- ever, that most of the fundamental truths of economic science are to be found in what has been called " the orthodox English school," which includes so many -eminent authors in England and the United States. I have sought to make an original investigation on what I believe to be the only true line of study ; but truths once discovered, whether by English or German writers, must be used by all who come after them. Attention is called to the outline of the subject as given in the titles of the various books and chapters ; 4 PREFACE. to the Introduction, the first four chapters of Book L, the first and last chapters of Book II., and the first chapter of Book III. In Book IV. the reader will notice the emphasis put upon the continued employ- ment of labor, and the cost of labor to the laborer. The old and correct view of the distribution of the product between the three elements, " land, capital and labor," is recognized in Book VI., but the larger portion of the space is devoted to the further distribu- tion of the great share of economic labor among the classes of laborers whose interests are naturally op- posed, each to all the others. The reader will please notice the share of " good name," a very large share usually overlooked, and the distinction between the laborer who works for himself, the laborer who works for wages in production, and the laborer who satis- fies wants directly. The titles of the chapters under " Distribution " give the final shares. Some portions of this volume were published in 1890 and 1891. G. P. O. CINCINNATI, July, 1893, CONTENTS. PAGE. INTRODUCTION Wants, 9 BOOK I. THE RESOURCES FOR THE SATISFACTION OF WANTS. CHAPTER I. THE RESOURCES OF NATURE, 21 Permanent Consumable. CHAPTER II. THE ABILITY TO LABOR, 32 Satisfies wants Directly and Indirectly. CHAPTER III. THE PRODUCTIONS OF HUMAN INDUSTRY, . 38 Permanent or Consumable Satisfy Wants Directly and Indirectly. CHAPTER IV. SOCIETY 46 Satisfies Wants Directly and Indirectly. CHAPTER V. UTILITY OF THE RESOURCES, 49 CHAPTER VI. VALUE IN USE, 57 BOOK II. POPULATION THE NUMBER OF PEOPLE WHOSE WANTS ARE TO BE SATISFIED. INTRODUCTION The Relation of Wants to Resources is Shown by Value in Use, 65 CHAPTER I. POPULATION AND THE RESOURCES OF NA- TURE 66 CHAPTER II. POPULATION AND LABOR, 87 (5) 6 CONTENTS. CHAPTER III. POPULATION AND PRODUCED WEALTH, . 96 CHAPTER IV. POPULATION AND SOCIETY, 103 CHAPTER V. THE LAW OF THE INCREASE OP POPULA- TION, 116 CHAPTER VI. APPLICATIONS OF THE LAW OF THE IN- CREASE OF POPULATION, ..... 135 BOOK III. OWNERSHIP AND CONTROL OF THE RESOURCES FOR THE SATISFACTION OF WANTS. CHAPTER I. PRIVATE PROPERTY OR SOCIALISM, . . . 151 CHAPTER II. THE OWNERSHIP AND CONTROL OF LABOR, 160 CHAPTER III. THE OWNERSHIP AND CONTROL OF THE RESOURCES OF NATURE, 165 CHAPTER IV. THE OWNERSHIP AND CONTROL OF THE RESOURCES PRODUCED BY HUMAN IN- DUSTRY, . * 181 CHAPTER V. CONTROL OF SOCIETY, 189 Individualism and Socialism. BOOK IV. ECONOMICAL USE OF THE RESOURCES. INTRODUCTION, . 201 CHAPTER I. THE ECONOMICAL USE OF LABOR, . . 203 PART I. The Constant Employment of Labor, . . 203 PART II. The Irksomeness of Labor 209 PART III. The Division of Labor, ....... 214 PART IV. The Development of Labor Power, and the Prohibition of Certain Forms of Labor, 221 CONTENTS. 7 PAGE. CHAPTER II. ECONOMICAL USE OF THE KESOURCES OF NATURE, 225 PART I. Permanent Natural Kesources, 225 PART II. Consumable Natural Kesources, .... 231 PART III. Public and Private Use of the Resources of Nature, 234 CHAPTER III. ECONOMICAL USE OF PRODUCED WEALTH, 242 CHAPTER IV. THE USE OF THE RESOURCE OF SOCIETY, 252 CHAPTER V. THE PURPOSES FOR WHICH THE RE- SOURCES SHALL BE USED, .... 256 BOOK V. EXCHANGE. CHAPTER I. How EXCHANGE 'SATISFIES WANTS, . . 272 CHAPTER II. THE PRICE OF A DOLLAR, . v . . . 275 CHAPTER III. EXCHANGE VALUES, 280 CHAPTER IV. THE LIMITS OF VALUES IN EXCHANGE ARE FIXED BY VALUE IN USE, . 285 CHAPTER V. SUPPLY AND DEMAND, 289 CHAPTER VI. COST OF PRODUCTION, 296 CHAPTER VII. MONOPOLY, 306 CHAPTER VIII. MONEY, 312 PART I. Qualities of a Good Money, 313 PART II. What Determines the Value of Money ? 325 PART III. Efforts to Secure a Money of Uniform Value, 330 CHAPTER IX. SUBSTITUTES FOR MONEY, 335 O CONTENTS. BOOK VI. DISTRIBUTION OF PRODUCED WEALTH. PAGE. INTRODUCTION. CHAPTER I. RENT THE SHARE OF THOSE WHO HAVE POSSESSION OF THE RESOUR- CES OF NATURE, 355 CHAPTER II. INTEREST THE SHARE OF PRODUCED WEALTH, 363 CHAPTER III. THE SHARE OF GOOD NAME, .... 375 CHAPTER IV. THE SHARE OF MONOPOLY, .... 382 CHAPTER Y. THE SHARE OF THE PRODUCER PROFITS OF PRODUCTION, 397 CHAPTER VI. THE SHARE OF THE MERCHANT PROFITS OF EXCHANGE, 406 CHAPTER VII. THE SHARE OF THE LABORER WHO WORKS FOR HIMSELF, 411 CHAPTER VIII. THE SHARE OF THE LABORER WHO WORKS FOR WAGES, 420 CHAPTER IX. THE SHARE OF LABOR WHICH SATISFIES WANTS DIRECTLY, 436 CHAPTER X. THE BOOTY OF THE ROBBER, AND THE WINNINGS OF THE GAMBLER, . . 441 CHAPTER XI. THE SHARE OF THE GOVERNMENT, . . 445 INTRODUCTION. Economy is the making the most of our resources. The man who gets as much out of an income of five thousand dollars a year as other men from an income of ten thousand, is an economist ; while he who lives on five hundred a year, and does not secure the com- forts and advantages which other men obtain for three hundred, is a spendthrift. Economy consists in using our resources to the best advantage, in making what we have go as far as possible. There are more opportunities for the exercise of economy in society or a nation than in the case of a single individual; we have only to call to mind the difference between a civilized nation, such as the United States, and the state of barbarism in which the Indians dwelt, to see how much economy has done toward the promotion of material comfort. The difference is far greater than would at first appear ; because, under the 10 INTRODUCTION. uneconomical methods of savage life, the entire terri- tory of the United States could support only a few hundred thousand people ; whereas, with such economies as are now employed, the same territory supports more than sixty millions. Even if the people, on the average, had no better living than the savages, the same territory maintains a hundred times as many people. Econom- ical methods result in the supporting of a larger population, quite as often as in giving a better living to the individual members of society. If the resources for the satisfaction of human wants were unlimited; if there were all the food and clothing and dwellings and furniture which the world could possibly use ; and if these could all be renewed without effort then there might be no need of the science of Economics. The fact that the world's resources are limited that land is limited, that timber and minerals can not be had in a condition fit for use without great labor ; that man's power of labor is limited ; that there is not, at present, enough of material goods to give to every person in the world a comfortable living makes it of the highest importance that we use the resources we have to the best advantage. Economy is the making the most of the resources of an individual, a community, or a nation. WANTS. The heaven of the Esquimau is said to be a happy island in a warmer climate, with great kettles of walrus meat, always boiling, beside which a good Esquimau may sit and eat, forever and forever. This is the Es- WANTS. 11 qtiimau idea of happiness ; this is the sum of an Es- quimau's wants. The wants of a highly civilized man are a thousand times as great. There are some needs and desires which belong to man, as man, and which he has in common with the brutes. Air and food and water are necessary to life. There are other wants, such as the desire for personal adornment, which are universal, and as old as the his- tory of the race. Still other wants, such as those which distinguish the civilized man from the savage, have been developed by circumstances, or created by various influences. THE CREATION, DEVELOPMENT AND SUPPRESSION OF WANTS. The rudiments of most wants exist in the nature of man ; but they are modified and developed and new wants are created, by the circumstances in which individuals and nations are placed. The follow- ing influences have been at work in the development of the wants of civilized nations as we find them to-day : 1. Physical surroundings. Climate and the diffi- culty of obtaining food, the need of shelter, danger from wild beasts and savage men, nearness to the sea, the variety of efforts necessary to secure a livelihood all these, and many other circumstances, have had much to do with' the development of men and nations. 2. Education, as it is given by man and nature. The influence and teaching of the schools, the pulpit and the press, the home education of early life, and the influence of natural surroundings, go to form one's wants. Religious and moral teaching have had an enor- mous influence in moulding the wants of mankind. Mo- 12 INTRODUCTION. hammedanism and Christianity have produced different types of nations. The difference between Protestant and Catholic countries must be explained, in part, by the influence of different forms of religion. 3. The customs and opinions of society. By so^ ciety we mean the people with whom one lives and associates ; it may be the other members of an Indian tribe. Men like to do as others do ; they are influenced very greatly by what others think of them. Particular methods of living, which may have become established by accident, are adopted by children born into the tribe or society, or who come into it from another locality. Most boys who learn to chew tobacco, do so for no other reason than that it is the fashion of the boys or men with whom they associate. People follow many of the customs of society, simply because they are customs. 4. Habit. A habit is the result of continuing or repeating any act for a sufficient length of time, and it frequently creates a real want. It matters not how the habit is begun, whether by accident, a desire to con- form to the customs of society, or through the influence of education. When the habit, good or bad, is once formed, the wants of the man are, so far, changed. 5. Satisfying wants or leaving them unsatisfied. The mere fact of satisfying wants or of leaving them unsatisfied is one of the principal causes of their devel- opment, change in character, or complete suppression. Many wants, if regularly satisfied, tend to increase in strength. There are also many which if left unsatis fied will diminish in intensity ; and some will die out WANTS. 13 entirely. The desire for works of art is strengthened by the study of art. The desire for knowledge is in- creased by its acquisition. If a person of very simple habits and tastes is suddenly furnished with the means of gratifying them, he will be surprised to see how fast his wants will grow. The direction of their growth may be determined by accident, but it is sure to influence his life for good or evil. On the other hand, if one has not the means of satisfying many of the wants the gratification of which is not necessary to life, he turns toward something else, and in a measure loses his old desires. Very close to this is the fact that the mere turning of attention to a particular want, and keeping the means of its satisfaction before one, will usually increase its intensity. Merchants and manufacturers know that they must create a demand for some lines of goods be- fore they can be sold. The vender of peanuts locates his stand on the street corner, where the odor of roast- ing will reach passers-by. The display of goods in shop windows, and most of the various kinds of adver- tising, are not so much to inform people where they can procure certain commodities, as to create a demand for them. Trade and manufacturers have as much to do with creating waitts as with satisfying them ; and many wants which manufacturers and merchants have created, die out when these men no longer stimulate them. The saloon-keeper not only satisfies, but creates, wants by an attractive display of his beverages. The withholding of the means for the satisfaction of wants, tends to keep them in abeyance ; but as soon as 14 INTRODUCTION. one is able easily to satisfy the more common wants, a. great crop of others will spring up. It is easier to- create wants than to suppress them. 6. Inheritance. A powerful factor in fixing the wants of a race is the law of inheritance. It has been said that to educate a man requires at least three generations. The character of the men of New Eng- land was determined, not so much by the rocks and the sea and the rugged country, as by the intellectual and moral character of their ancestors in old England. The gain or loss made in life is in a measure fixed, and transmitted from father to son. The nature of the wants of one generation is the most powerful fac- tor in determining the wants of the next. The historical study of the development of wants is an interesting subject by itself, but is not necessary to an understanding of the means of their satisfaction. Still more important to the moralist, are the various influences now at work forming the wants of the com- ing generations. The well-being of the race may be advanced, to the extent of all that lies between the highest civilization and the lowest barbarism, by the development or the suppression of the various wants of its members. What one wants, determines, to a great ^* extent, what he is, and will become. It is, indeed, one of the claims of Christianity that it possesses supernat- ural power to modify and actually revolutionize the wants of its adherents. This is the highest claim that any system can make. Wants seek their satisfaction, and often find or make a way to it through seeming impossibilities. What a man thinks he wants, is,. WANTS. 15 therefore, of the highest importance ; not only to him- self, but to those who live in society with him. No field of study can be more inviting to the practical philanthropist. The, history of civilization is the his- tory of the development, the creation, and the sup- pression of human wants. SPIRITUAL AND KELIGIOUS WANTS. There are mental, spiritual and religious wants which can not be satisfied by material resources ; and, to that extent, they do not come under this enquiry. A happy state of mind may give one great comfort in life, even with very indifferent surroundings. It is one of the claims of Christianity, that its followers may receive spiritual help ; and that there are wants in the nature of man which only spiritual influences will satisfy. Our science has to do with satisfactions only to the extent that they depend on material resources. So far as a house of worship, an organ, or the labor of a minister, aids in the satisfaction of religious wants, our science takes account of them ; but in so far as they must be satisfied by divine power, supernatural or spiritual in- fluences, or the condition of the soul itself, this science does not reach them. Surely, this division between, the material and the spiritual is a natural one. While we thus put theology and religion first, as* the greatest things in the world, there is no question that the Social Sciences hold the second place. A science which helps us to use to better advantage the resources which God has given us, which feeds the hungry, and enables more people to live in cleanliness and decency, and improves the condition of men > 2 16 INTRODUCTION. stands next to the spiritual element in religion. A true social science is, indeed, one of the fruits of the spiritual power of. Christianity; since it is mainly Christian men who are engaged in the practical work of philanthropy. In " each one for himself," the struggle results in a terrible waste. The remedy is not Socialism. It is the mastery of social problems by those who love their fellow-men, and are ready to sac- rifice something for their welfare. The more general, economic knowledge becomes, the more likely we are to adopt methods of justice, and methods which give the best opportunity for the development of the indi- vidual. The great interest in the study of Economics is one of the results of Christianity. Let it be understood, however, that it is a science by itself, and that the line between it and the spiritual element of ^Christianity is distinct and broad. ALL WANTS SHOULD NOT BE SATISFIED. It is evidently neither for the interest of the individual nor of society that all wants be satisfied. But to dis- criminate between the wants which should and should not be satisfied, is the duty of the moralist, rather than of the economist. The same economic principles apply, in the main, to all classes of wants, regardless of the moral element in their satisfaction. As a stu- dent of economics, one may seek for the general prin- ciples which cover the economical satisfaction of all wants ; as a moralist, the same person may be called on to decide what wants ought not to be satisfied. In treating of wants in detail, we should not go out of our way to show how the drunkard can be furnished WANTS. 17 with liquor at the least cost ; but the laws which gov- ern the production of corn are the same, whether it is ground into meal or distilled into whisky. There will be differences of opinion concerning the propriety of satisfying* numerous wants. General principles ap- ply to all alike. When it comes to questions of de- , tail, there are large classes of wants that do not call for special treatment. It is necessary, however, to emphasize the fact that there are wants which ought not to be satisfied. It should be remembered, also, that the word want is not synonymous with wish or desire. Its meaning is more nearly that of need, or something lacking. The term wants is not, however, synony- mous with needs ; it has a meaning of its own, in- cluding elements from both the others. The fact that a given desire can be satisfied by economic laws does not make it right to satisfy it. It is not uncommon to hear one attempt to justify a wrong by showing that the act was in accordance with economic laws; but this is no more a justification than for a murderer to say that he killed a man by using his knowledge of the poisonous nature of certain chemical compounds, or of the laws governing the ex- plosion of dynamite. All knowledge is power, and all power is dangerous. But the world is better off for its knowledge of chemistry and electricity, as well as for its knowledge of Political Economy. There is no doubt that oppression exists, and that crimes are com- mitted by the use of economic laws. They are no more frequent because of the knowledge, but the 18 INTRODUCTION. knowledge is sometimes used as an excuse for the crime. One may rob his neighbor, through the action of the laws of supply and demand ; but the showing how he did it, is no more a justification than for a desperado to explain how he stabbed a man. Thi& point needs emphasis, because of the fact that some works on Political Economy leave the impression upon the reader that any act is right, if it can be shown to be in accordance with the laws of supply and demand ; e. Satisfies Wants Directly and Indirectly. CHAPTER V. UTILITY OP THE RESOURCES, .... 4 CHAPTER VI. VALUE IN USE, 57 BOOK I. THE RESOURCES FOR THE SATIS- FACTION OF WANTS. The resources which the world has for the satisfac- tion of wants are properly divided into four classes : I. The Resources of Nature. II. Labor. III. The Productions of Human Industry. IV. Society. CHAPTER I. THE RESOURCES OF NATURE. The earth as it was before man appeared, or as it has since been modified by natural causes, with the sun that shines upon it, and all the physical forces con- nected with it, are natural resources. Man had noth- ing to do with their creation. They are the gifts of Nature, or of God, to the human race. The earth was created for man, and intended to answer the needs of each generation, as its members are born and die. Some of the older political economists comprised all the resources of nature under the term "Land," on the theory that land includes the wter which covers (21) 22 RESOURCES FOR SATISFACTION OF WANTS. it, the air above it, the minerals found beneath it, the animals that roam over it, and the forces connected with it. It is a question of names; but names are important, and the attempt to use common words out of their ordinary signification has been productive of great mischief. 1. Land, in its common acceptation, is the most important of the natural resources. It is the surface of the earth, whether covered by water or not. The first utility which land possesses for man is that of a place of residence ; a place to stand or lie down upon ; a place to build his wigwam or his palace ; a door-yard or a lawn for his children's playground or his own enjoyment ; a place to give him access to the sunlight and the air ; ground to separate him from his neighbors, for, much as he desires society, he likes a lit- tle space at times between himself and others. He wants a little ground, a portion of the earth's surface, which he can control, and he never realizes its value until he is deprived of it in a crowded city. This use is wholly apart from anything which the land may produce. The occupant may use it for two purposes, to make a garden or grow fruit ; but he desires the land for out- door space, even if he grows nothing but grass and shade trees. A great deal of land is needed for strictly resident purposes. Even on the American farm a certain por- tion is usually set aside for the house lot and grounds, and the whole farm is a range for the farmer's chil- dren. It fills to a partial extent the wealthy English- man's desire for a private park. The farm is not, THE RESOURCES OF NATURE. 23 alone, a place for the production of crops ; it is a broad residence property, which in a city or crowded country can be enjoyed only by one with large wealth. The second use of land is for commerce and manu- factures. Factories occupy more land than is often supposed, and some establishments require many times as much outdoor yard room as is covered by buildings. It is not the amount of land, but the location, that makes the site important ; and the location is of still more consequence in commerce. The point where land -and water commerce meet is vital, and the land avail- .able for commerce at favorable points is very limited. Ocean navigation must terminate in a harbor where ships can lie in safety, with a depth of water where railroads and ships can transfer their freight. There must also be room for the breaking up of cargoes and the interchange of goods among different lines of transportation, to reach different countries, and dif- ferent parts of the same country ; in short, room for a commercial city. Land in such localities is not abun- dant. He who controls it can levy an enormous toll for its use. So, in interior transportation. At Chi- cago, railroads meet the lake, and a large tract of land is required for commercial purposes. Roads, i. e., facilities for communication and transportation, re- quire land, and a great deal of it. The acreage of the wagon roads in the United States is large. Railroads usually have a hundred feet in width, twelve acres to the mile, and to the land thus used must be added large acreage for yard room in cities, and still more land rendered useless by railroad traffic. 24 RESOURCES FOR SATISFACTION OF WAXTS. The uses of land for residence, manufactures and commerce were to a great extent overlooked in the- past. Eicardo wrought out his principles of " diminish- ing returns " and the whole theory of " rent " from agricultural land. In a new country, such as the United States was a few years ago, agriculture is the main purpose for which land is needed. The pro- portion of labor required for the production of raw materials a hundred years ago was many times greater than now. In the early discussion of land, therefore,, almost all illustrations were drawn from agricultural land, and almost all reasoning based upon it. While land used for residence, manufactures and commerce is still small in area when compared with that used for agriculture, it is large in the aggregate. The most troublesome questions center about it. Principles which appear abstract in connection with land in the country, become very practical when applied to land in cities. Land for agriculture, as for all other purposes, should be considered as mere extension. The bottom lands of rivers have a wealth of vegetable mould which is a- mine to draw upon, and the barren sand or the disin- tegrating limestone can be made productive by the- efforts of man ; but without the acreage, no man can make a farm. The natural fertility of the soil, ac- cumulated through ages, should be classed with mines,. ;which can be exhausted in the using. The land is measured by acres, not by fertility. Land is merely the extension of the earth's surface. THE RESOURCES OF NATURE. 25 2. Water may be placed next to land in enumerat- ing the Natural Resources. It covers three-fourths of the earth's surface ; it separates continents with ad- vantage to nations; it is a highway for commerce. And this highway is not a canal which is only a line between two points ; it is a body of water which affords each country an opportunity for commerce with all the others. No railway system can be so perfect as an ocean over which ships can sail anywhere. By it the cost of carriage is reduced below that of any other possible means. Lakes and rivers, with the oppor- tunity for canals, form a system of interior water transportation of scarcely less importance. The influence of the oceans and great lakes on climate must not be forgotten. They insure an abundant rain- fall, and make the general cultivation of the soil pos- sible. Indeed, the water which covers so much of the earth may be said to make the rest habitable, and to afford to continents and nations that isolation which in the past has been necessary to the highest civilization. These large bodies of water also satisfy wants, directly, by affording countless desirable residence sites. The cottage by the sea or lake, in summer, has become popular because of the water and the air. A city on the ocean harbor or the lake has an advantage over one in the interior. The United States would lose immensely were the great lakes to be filled by some convulsion of nature. There are many persons who would like to see them drained, if they could get possession of the land at the bottom ; but the loss to- "2-3 RESOURCES FOR SATISFACTION OF WANTS. the whole country would be a thousand tunes the gain of the few. The use of water-power is also of great advantage. It is true that the real power here is the force of gravi- tation, and the sun-force which lifts the water from the ocean to fall in rain on high levels, so that the force of gravitation can act on it in its descent to the sea ; but the water is a convenient means of using this force, and the water-power of the world enables us to satisfy wants with far less labor. It will, also, endure after the coal has been burned up. For cleansing purposes no substitute could be found. The earth is washed by the rain, and the use of the hose from water-works is one of the methods of mak- ing great cities habitable. For domestic uses the amount of water required is small, but its value is very high. When the quantity is greatly reduced, its value becomes that of life itself. For drinking pur- poses, it is simply one of the resources of nature, absolutely essential, without which everything else would be worthless. The difficulty of supplying a dense population with pure water, or even with water fit for drinking, is very great. 3. The Atmosphere is the next resource which nature furnishes to satisfy wants. It is usually left out of the account, simply because so abundant. In taking an account of stock, in order to see what we Iiave to satisfy wants with, we are not to omit the most important resource of all, simply because there happens to be a good deal of it. We are rather to be thankful that the stock is so large. This resource THE RESOURCES OF NATURE. 2T might have been placed first, because it is most essen- tial of all to life. One may live for a considerable period with nothing else ; but five minutes' deprivation of air is fatal. There are places and times when, not- withstanding its abundance on the earth, air suitable for human beings is difficult to obtain. Some one has imagined that the time will come when it will be pumped into the densely populated parts of cities and distributed as water now is. The problem of supply- ing it pure to our homes in the winter season, has re- ceived much attention. At present, however, we are only taking account of stock, and put down an im- mense volume of air, comparatively pure over the ocean, and with varying qualities on the land. 4. The fourth group of resources is the Forces of" Nature, including the power exerted by the sun, its light, heat, and chemical influence ; the attraction of gravitation, and the molecular forces. The sun is as much a resource for the production of grain as the land. The power of gravitation is not only utilized in the water-wheel, but holds buildings in their places.. All growth of plant life is dependent on natural forces. With the creation of these forces man has had nothing to do ; they existed before him ; they act continuously with a power beside which the physical power of man is infinitesimal. Man may discover and use, he can not create or increase them. It must not be forgotten, in all our future reasoning, that we have this power of natural forces, great almost beyond human conception^ as one of the resources for the satisfaction of wants. 28 RESOURCES FOR SATISFACTION OF WANTS. 5. The Minerals of the earth constitute the fifth resource. Man has had nothing to do with their for- mation ; he digs them out when he needs them. It may cost him some labor to find them, but he only dis- covers, he does not create them. In this respect they are like the natural forces. With minerals must be classed the natural fertility of the soil. This natural fertility, formed by the decay of vegetation in the past, much as the coal is formed from vegetable matter, is something apart from the land ; and may be used up, leaving us many acres of land as before. In popular language the land is said to be exhausted ; which means that its fertility is exhausted, as a mine is exhausted. The land remains, and can be made productive again. 6. The sixth natural resource is the Forests or Timber. 7. To the list must be added Wild Animals and Fish, which are very important resources for the satis- faction of the wants of a savage. This completes the list of resources which nature provides for man. It is well to spread them all out before us, that we may see what we have, and not con- fuse them with other general classes yet to follow. They are : 1. Land. 2. Water. 3. Air. 4. The Forces of Nature. 5. The Minerals and Natural Fertility of the Soil. 6. Timber. 7. Wild Animals and Fish. THE KESOURCES OF NATURE. 29 PERMANENT AND CONSUMABLE. The first four of the Natural Resources are permanent ; that is, they are not destroyed by use. The air and the water and the land are used by the men of each generation as it occupies the earth, and are left to those who follow. The sun shines eternally, and the forces of nature will act forever. The land can not be destroyed by the using ; great temporary injury may be inflicted, but not beyond the power of repair. It is not so with the last three resources. Minerals are consumed in the using. Coal is destroyed in the burning; and although iron continues to exist in an- other form, the ore from which it is made is destroyed. When the bed of ore is exhausted, it will not be re- plenished within any time we can take into account. When a substance is transformed, as iron ore into iron, it is said to be consumed, in the production of something else. We have a new substance, but no longer the old : we can not have both. Timber, wild animals and fish, while they are con- sumed in the using, differ from the minerals, in that they may be speedily reproduced by nature, alone, or with the efforts of man. The difference is, that while the ore is consiuned in the production of commercial iron which goes to erect a building, and while the tim- ber is cut down and consumed in the production of lumber for the same building, the timber will grow again. The hard-shot forest is soon replenished with game. Fish may be taken for ages, and nature main- tain the supply. All of these three classes of Natural .Resources minerals, timber and fish are Consuma- 30 RESOURCES FOR SATISFACTION OF WANTS. ~ble Resources, because consumed in the using ; and the distinction between them and the Permanent Re- sources is quite important. Our classification will then stand : I. Resources of Nature 1. Land. > 2. Water. [ Permanent Natural 3. Air. Resources. 4. The Forces of Nature. J 5. Minerals. ^ Consumable. 6. Timber. ) Consumable, but can 7. Wild Animals and Fish. ) be replaced. DIRECTLY AND INDIRECTLY. The Resources of Nature satisfy wants, directly or indirectly. The air when breathed satisfies a want directly. So, also, land when used for residence purposes. The occupant wants the land, and not something that can be pro- duced from it. The savage satisfies his wants, directly by wild fruits, fish and game. A resource satisfies wants indirectly when it aids in the production of some other resource, or enables some other resource to be used in satisfying a want. It is only a means to an end. Such is land used for agricul- ture, or a water-power employed in turning the wheels- of a factory. Coal satisfies wants, directly, when burned in a parlor grate ; indirectly, when used in making steam for a factory. We shall find that this distinction between the satis- faction of wants directly, or indirectly, runs through all of our subject, and should never be lost sight of. It will be convenient often to speak of the Resources. THE RESOURCES OF NATURE. 31 of Nature as Natural Wealth. There is a difference of opinion as to the proper use of the term " wealth," but with the qualifying word there is no danger of misunderstanding, and this use of the term is also in accordance with popular language. It is the wealth of nature, or Natural Wealth. CHAPTER II. THE ABILITY TO LABOE. Next to the Resources of Nature comes that of hu- man labor. The Natural Resources are placed first, be- cause they are first in the order of time. Without them the existence of man would be impossible. Labor comes next, because it first makes use of the Natural Resources ; and is thus next in the order of time. We should distinguish the ability to labor from the labor actually put forth. It is the ability which men possess which constitutes the Resource, and this ability may exceed many times the labor actually performed. We are now taking account of stock, of what the world has to satisfy wants with, and this account must include all the ability which men possess to per- form labor of any kind, of either hand or brain. Labor, in all works on Politial Economy, includes the efforts of both body and mind. The terms " Working man " and " Laboring man " are used in the popular sense to denote muscular labor, but the simple term " Labor " is used, especially in economic writings, to include mental labor as well as physical. We are obliged to have some general term, and there is no other. It is not a question of the irksome- ness of the different kinds of labor; it is only the power to do, to accomplish something in satisfying the world's wants. It is indeed impossible to separate (32) THE ABILITY TO LABOR. 33 entirely mental and physical labor. The lowest form of labor requires some brains, else the work is better done by a machine ; and the more brains, the better. The work of the trainmen on the railway would per- haps be classed as manual labor, yet a high order of mental effort is required. The man who knows nothing, will find that muscular strength will not put lim in charge of a locomotive ; though some strength and endurance are required in addition to mental abil- ity, in order to run it. The profession of civil engin- eering would be classed as brain work, yet some "branches of it require more muscular exertion than is put forth by a street laborer. What the world wants is results, whether accomplished by manual or mental labor, or both combined. Under the general term *' Labor " we therefore include all the ability which men possess to do the world's work. There is great difference in the mere muscular -strength of men, and still more difference in the en- ergy with which they use that strength. One English- man is worth five or six of the natives of India, even for the most common employment. The skill which some men possess, the knowledge they have, and the intelligence that directs, are of far more importance than the power to lift and' carry. We can not sepa- rate the knowledge and skill of the man from the man himself . All the power he has to do, the skill of eye or hand, all that he knows, his intellect and judg- ment, his mental capacity to acquire knowledge and ,skill, all these go to make up his ability to labor. "The locomotive engineer easily does his work, because 34 RESOURCES FOR SATISFACTION OF WANTS. of his knowledge and skill and mental make-up. A. hundred Indians could not do it ; the more there were of them, the worse it would be for the engine. The power of a successful physician consists wholly in his knowledge and skill and judgment. No amount of ignorant labor could do what he does. The manage- ment of railways and factories, rendering the physical labor employed many times as efficient, is the result of skill and knowledge and mental qualities. The most valuable ability to labor is that of superintendence. One man may save the labor of a thousand. A poor superintendent may cost his company many times the salary of a man competent for the place. The great labor-saving inventions are due to intelligence and knowledge. The power to invent is the power to la- bor ; and one man by an invention may save the labor of a multitude. Under the ability to labor we must also include all the knowledge and experience gained from past ages. This knowledge and experience can be used only as it is known by living men. There are " Lost arts." What the world possessed in them died with the men who understood them. If they are rediscovered, so much more is added to the power of labor. Unlike the Natural Resources, which remain the same from age to age, Labor is a continually changing force. For the purpose of satisfying wants, its power has increased many times since civilization began, and is increasing with great rapidity to-day. A hundred men can do the work done by a thousand a century ago, not alone because of machinery ; but because of THE ABILITY TO LABOR. 35 the skill in using it, because of the knowledge of new methods. The high degree of skill and mechanical ingenuity shown in the United States is the result of training for generations. The natural aptitude is largely inherited. The power of the world to work, is the fine hand, and brain, and mind inherited from the past. All the knowledge in the world to-day, even the habit of labor, is inherited ; and it is useless to expect to educate a savage race to a high degree of ability to work, except through generations. Labor, as a re- source for satisfying wants, is the ability of men to -do. It is more mental than physical. In this age, muscular power is the smallest part of it. The knowl- edge of Nature's resources and laws, as discovered by physical and chemical research, and the practical spirit and power of invention which enable the men of the present day to make use of the idle forces of the past, to use steam and electricity where past ages employed human muscle, these make up the greater part of the resource of Labor. The ability of a people to labor, therefore, does not depend on their number, so much as on their physical .and mental qualities. We should also add their mor- al qualities ; since men of moral character, when the comparison is made between large numbers, are able to accomplish much more labor during a lifetime than others. The ability of the native white population of the United States exceeds by a thousand-fold that of an equal number of people in Central Africa. No mistake is greater than to estimate the ability of a na- tion to labor by the number of its people. The time 36 RESOURCES FOR SATISFACTION OF WANTS. may come when all the work that is done to-day can be done by one-tenth of the people now engaged. If this should be the case, the result would not be the idleness of the other nine-tenths, but the doing of more work, and the better satisfaction of wants. DIRECTLY AND INDIRECTLY. Labor satisfies wants directly or indirectly : Directly, when one does some- thing for himself or another; indirectly, when he helps to produce some articles for use. As soon as a boy is old enough to wash and dress himself, he has begun to satisfy some of his own wants, directly. The amount of labor expended in doing for one's self and by members of a family in caring for one another, is a large part of all the manual labor performed. Most politi- cal economists leave it out of the account altogether,, because it is not paid for. Such labor is not the only kind for the direct satisfaction of wants. The teacher, preacher, singer, lawyer, and physician satisfy wants- directly, by teaching, preaching, conducting one's case at law, and prescribing when one is ill. Farmers, on the other hand, satisfy wants indi- rectly. Their labor is employed in the production of commodities, wheat, corn, cotton, beef, etc., which commodities satisfy wants. Neither is it the labor of the artist, but the picture he has painted, that we want. He satisfies a want indirectly, through his pic- ture. Many of the older political economists divided la- borers into " Producers and non-producers," which, division has been very misleading, and was frequently supposed to reflect unfavorably on those classed as THE ABILITY TO LABOR. 37 non-producers ; whereas, many of the so-called non- producers are engaged in the most important work of the world. They do not produce commodities, for the reason that they satisfy wants directly ; and the ob- ject which the world has is not production, but the satisfaction of wants. Some of the world's workers satisfy wants directly ', by a short cut ; others satisfy them in a more roundabout way, by producing some- thing which can be used in satisfying wants. A singer satisfies wants, directly, when he sings before an audience ; a sculptor satisfies a want, not directly, but by producing a statue from a block of marble, and the statue satisfies the want. Here are two ar- tists, perhaps of equal rank; the one satisfies wants directly, the other indirectly. If it be asked, which class is engaged in the more honorable employment, the reply is, there is no difference so far as this divi- sion is concerned ; since the employments usually counted the most honorable are divided between the two. The preacher, teacher and lawyer satisfy wants directly; the editor and author of books, indirectly. The distinction is, however, of the greatest economical importance, and of more importance in the considera- tion of Labor than of the other Kesources. CHAPTER III. THE PRODUCTIONS OF HUMAN INDUSTRY. It may at first appear that the goods produced by human industry are of so many kinds as to defy classi- fication ; yet a little reflection will show that nearly all of the most important fall at once into very few classes, and that for many reasons it is important that these few classes be sharply defined. 1. Buildings. A large part of all the produced wealth in the world is in buildings. They are a per- manent resource ; for while nothing made by man en- dures forever, these endure for many years. They are permanent in contrast with food, which is consumed in the satisfaction of hunger ; or with clothing, which lasts perhaps a year, and when once worn is practically unfitted for other persons. Permanent resources once produced remain to satisfy wants for a long period, often for successive generations ; while consumable re- sources must be replaced with new productions each year. One builds a house for a lifetime ; he raises a new crop of wheat each year. Buildings are of two classes : Residences, most pub- lic buildings, and others which satisfy wants directly ; and factories and commercial buildings, which satisfy wants indirectly. A house is an object in itself. When one has gained it, perhaps at the cost of many years' labor, he feels that a very important want, both (38) PRODUCTIONS OF HUMAN INDUSTRY. 39 for himself and family, has been satisfied for his life- time. The resource is permanent, and it satisfies wants directly. Dwellings must necessarily form a very large portion of all the produced resources in the world, since every family needs a dwelling of some kind ; and most civilized men are willing to expend a large part of their labor in securing the use of one for their families. Buildings which satisfy wants indirectly also com- pose a large portion of the produced wealth in the world. The costly stores and warehouses of a great city, the factories of cities and factory towns, nearly .all the structures in the land, except residences, sat- isfy wants indirectly. Factories are erected, not as an end in themselves, but to produce something that will satisfy wants. Buildings are therefore divided into two classes: Dwellings, with a few others satisfying wants directly ; -and buildings satisfying wants indirectly. 2. fools and Machinery. Next to factories and buildings used for commercial purposes, come tools and machinery. Even tools form a considerable stock, since some must be in the hands of every workman ; but the machinery in the modern factory, and all that in use in our present civilization, of itself exceeds the produced wealth of ancient times. With a few excep- tions, tools and machinery satisfy wants indirectly; they are not an end, but the means of further produc- tion. 3. Roads. Roads include all improvements 011 land or water by which transportation, travel or com- 40 RESOURCES FOR SATISFACTION OF WANTS. munication is facilitated; such as common highways,, railroads, street railways, river and harbor improve- ments, canals, telegraph and telephone lines, etc. A lake or ocean needing no improvement is solely a re- source of nature ; ships sail over it as an emigrant drives his team over a trackless prairie. But when a highway is turnpiked and drained, a railroad bed is graded and blasted and ironed, telegraph lines are erected, rivers are cleared and dredged, and harbors- are improved, the improvements are a part of the Pro- ductions of Human Industry. Roads are an impor- tant element of civilization. They include nothing but the track or the wires of a telegraph line. The wagons driven on the highway, the rolling stock of a railroad, the ship and the canal boat belong to the class of Tools and Machinery. 4. Improvements on Land. We must always dis- tinguish sharply between land and its improvements. Land is the gift of nature, and can not be increased ; improvements are the work of man. Both buildings- and roads are usually regarded as improvements on land, and in law are classed as real estate. Land is- so essential that it is impossible to produce many per- manent resources without connecting them in some way with it. Buildings can not be erected except upon it ; one must get possession of a piece of ground before he can build. Roads can be made only over it. But while buildings and roads are properly enough called improvements on land, they are so distinct, so- numerous and important, that it is more convenient to put them in a class by themselves ; and to reserve the PRODUCTIONS OF HUMAN INDUSTRY. 41 title " Improvements on Land " for those more closely connected with the soil. The most important of these are improvements on agricultural land ; such as the drainage of swamps, the increase in the fertility of the soil by well-known methods of cultivation hedges, orchards, vineyards, fences, and all that goes to make a good farm better than land in a state of nature. Their market value may be more than that of the land itself. An interest- ing question is that of timber, and one's understand- ing of it is a good test of his grasp of the relation of land to improvements. In a new and heavily- wooded country the removal of timber is popularly regarded as an improvement. There is no way of mak- ing a farm except by clearing the forest. In after years the timber is greatly needed ; the land would be more desirable with the timber on. The facts are, that timber is not land, but timber. It is always a blunder to misname anything. Timber is not land; but, like land, is one of the Resources of Nature. Unlike land, it is consumed in the using. As a mine is worked out and exhausted, so a forest is destroyed. A new settler may remove the timber to get at the land ; but the simple fact is, he has destroyed the tim- ber. When there is abundance of it, more than his generation wants, its loss will not be felt ; and it en- ables him to get the benefit of the use of the land. When more people come, the timber is wanted and, if standing, would perhaps be worth more in the market than the land from which it was taken. Improvements on agricultural land, in the main, 42 RESOURCES FOR SATISFACTION OF WANTS. satisfy wants indirectly. A swamp is drained in or- der that it may produce better crops. Orchards are planted, not for the trees, but for the fruit they are expected to produce. Improvements on residence and public grounds, on the contrary, usually satisfy wants directly. A lawn in city or country is made to please the eye. Trees are planted, not- for fruit, but for shade. One wants the lawn and the trees about his dwelling. So, public and private parks are im- provements on land which satisfy wants directly. If the reader will stop to think for a moment, he will see how large a portion of all the resources pro- duced by human industry is included in these four classes. It is much more than half. If we were to stop our classification here, we should find the arrang- ing of the greater part of Produced Resources in these four classes, of inestimable value in our further study. There remain, however : 5. Finished Goods which Satisfy Wants Directly. These are of two classes: permanent, and those which will be consumed in the using. Of the first, re articles like pictures and statuary. It is true, they will not last forever, but thousands of people may look at a painting without injury to it. These goods, like buildings, satisfy a want without being in- jured thereby. We can, therefore, afford to bestow great labor upon them ; knowing that when once pro- duced, they will remain for a long period to satisfy w^nts, perhaps of many people besides the owner. Some of this class of goods, of which household fur- niture is the most important example, have only a low- PRODUCTIONS OF HUMAN INDUSTRY. 43 er degree of permanency. They wear out with use ;. they cease to satisfy wants because of changes in style, etc. Nevertheless, they are often handed down from father to son, or more often from mother to daughter. Few people expect to furnish a house anew every year ; the majority of people regard good furniture as purchased to last for many years, if not for a lifetime. The second class of finished goods is those that are consumed in the using. The most important of these is the food supply. Clothing is not absolutely destroyed with once using, but is practically rendered worthless for the use of any other person, and is rap- idly worn out. Some goods will occur to the reader which seem to fall into one of these two divisions as readily as into the other. They are destroyed in the using, but they last for a considerable time. Since a year is the nat- ural measure of the production of goods, those which are usually replaced year by year should always be classed as consumable. To be classed as permanent^ goods should be capable of lasting, under favorable circumstances, at least the greater part of a lifetime. They should be goods which one does not expect to re- place as he does the clothing he wears ; they should be like books ; while one may intend to buy other books on the same subject, he does not expect to replace the same book. 6. Materials and Goods in Process of Produc- tion. The aim of all production is to satisfy wants. Finished products may be buildings, or roads or tools. 44 RESOURCES FOR SATISFACTION OF WANTS. designed to aid in producing something else ; but the final object is to produce something which will satisfy wants, directly. Thus, our last class was " Finished goods satisfying wants directly." There is a still larger class of goods in the process of production. Many of these are finished so far as one producer is con- cerned. Wool is to the farmer a finished product, but it does not satisfy wants in this condition. Cloth is considered by the manufacturer a finished product, but it is really only a material for further production. Not until it is made into clothing is it ready to satisfy wants. The quantity of materials, and goods which are destined to become materials, is many times greater than the finished products. Of the completed products of human industry, sat- isfying wants directly, which are speedily consumed in the using, it is not desirable that the world should have a large stock on hand. The labor of preserving and taking care of these products for even one year is considerable. Wants change with the fashions. These commodities can be produced anew every year, and it is necessary only to have a stock sufficient to last from year to year, and to guard against all danger of fail- ure. Improved land, good roads, good machinery, and skilled labor, are far more important than a stock of provisions and consumable goods ; always assuming that there is a sufficient amount of the latter to last until more can be produced by ordinary methods. Of domestic animals some will become food mate- rial, and some are used like machinery in the work of production. PRODUCTIONS OF HUMAN INDUSTRY. 45 The productions of human industry will, for con- venience, frequently be called Produced Wealth. The use of the prefixes Natural and Produced will avoid any confusion with the idea of wealth as the term is used by some writers. Both Natural and Pro- duced Wealth include many resources not covered by the term wealth as used by those who define it by the term value. It is not the intention here to enter into a discussion of the meaning of disputed terms. Let the reader attach whatever meaning to the word " Wealth " he has been accustomed ; but regard these as two new terms, which are here defined. Natural Wealth is the Resources of Nature. Produced Wealth is the Resources Produced by Human Industry. The question of value does not enter into these definitions. CHAPTER IV. SOCIETY. The fourth resource for the satisfaction of wants is Society. This is the presence and companionship of human beings, considered apart from their ability to labor. Robinson Crusoe led a dreary life, and the so- ciety of even his man Friday was appreciated. Society includes the home ; and, in addition to the relations of father, mother, wife, brother, sister, the presence of companions, neighbors and friends satisfies many of the noblest wants of humanity. The drift toward the cities is partly to get in a crowd, to see and associate with more people. The mere presence of human beings does not consti- tute society ; it does not necessarily make society that satisfies the wants of others. Many of the produc- tions of industry are only rubbish which we would pay something to have -removed. So, there are men and women who are a curse to the other people of the earth. Some of them we remove to work-houses and prisons. Society may be at fault to some extent for their character we are not now discussing that point but, as they are, the earth would be better off without them. Churches and missionary societies succeed in reforming many of them; and one object of philan- thropic work is to improve the character of the disa- greeable and wicked, for the sake of others as well as (46) SOCIETY. 47 for their own sake. It is necessary here only to call attention to the fact that not all human beings satisfy the want of others for society. This want, indeed, can be met only by persons with habits and tastes to some extent like our own. Chi- nese may be society for Chinamen; but even if an American desires their labor, he seldom wisftes their companionship ; and if he has no use for their labor he would pay something to have them removed from his neighborhood. Social circles naturally form among people of the same race and nationality, and are lim- ited to those whose habits are very similar. The want satisfied by society is so real that it is often expressed by a high money value. A residence lot of a few feet front sells for twenty thousand dol- lars, when other lots equally near and convenient to the business center of the same city can be had for five thousand. They are equally desirable in every re- spect except the single one of the neighbors who live on the same street and in the vicinity. Fifteen thou- sand dollars is, in this instance, the commercial value of the society of a particular neighborhood. The development of a society which shall better- satisfy the wants of its members is as legitimate a subject for discussion in our science as the production* of food or dwellings, but it is far more difficult. Society Satisfies Wants Indirectly. Society satis- fies want indirectly by affording opportunity for the division of labor, and by permitting the production of goods in large quantities. The advantage of the division of labor a technical 4 48 RESOURCES FOR SATISFACTION OF WANTS. phrase made popular by Adam Smith will be shown further on. Such division, by which each one does a particular kind of work, is possible only where there is a considerable number of people. If each man devotes his entire time to a single branch of labor, the num- ber of workmen must be very large. It must be much larger than the number of trades and branches of trades, since in order that one man may work all the time at so simple a thing as bending piano wires, hundreds or thousands of men must be employed in each branch of the more common trades. The advantage of producing goods in large quanti- ties is well understood. Cotton prints are now manu- factured at a cost of less than five cents a yard ; if made in small quantities, they could not be produced at a cost of fifty cents. But cotton prints can not be made in large quantities unless there is a large num- "ber of people to use them. One person can teach thirty children of the same age and attainments as well as she could teach one, perhaps with more advan- tage to each. If there were only one child to be taught, the labor would be proportionately thirty times as great. It is the satisfaction of human wants, so far as they can be satisfied by these four classes of Resources, that forms the subject of this volume. That is, the satisfac- tion of wants so far as they can be satisfied by the Re- sources of Nature, Labor, the Productions of Human Industry, and Society, or the presence and companion- ship of human beings. CHAPTER V. UTILITY OF THE RESOURCES. Utility is the quality of an object which makes it useful, or fits it to satisfy human wants. Utility re- sides in the object. It is a quality of the object and not of the user. The quality of sweetness which is in sugar makes it useful and is its utility. This quality is not at all dependent on the number of people who use it, or on the quantity which may be desired. The popular idea of utility is the correct one. Iron, wood, water, air, grain, fruits these are useful, or have utility. All Resources for the Satisfaction of Wants possess utility. It is the possession of this quality that makes them resources. It is to be regretted that Professor Jevons, in his admirable work, "The Theory of Political Economy," uses the word "Utility" in the sense of "Value in Use." There are three ideas which we must keep dis- tinct Utility, Value in Use, and Value in Exchange. It has been the mistake of many political economists to attempt to dispense with one of the three, whereas not one of them can be spared. One who reads Pro- fessor Jevons, or other writers who have followed him, should remember that by " Utility " he means precisely what will hereafter be denned as Value in Use ; and that the Utility here considered is an entirely different thing. It is a question of names, not of ideas. (49) 50 RESOURCES FOR SATISFACTION OF WANTS. It should be noticed that an article may have the utility of satisfying wants directly, as food and cloth- ing ; or of satisfying them indirectly, as the plow by which the farmer fits the ground for a crop. An object may have more than one utility, and most objects have. Water, for example, has the utility of satisfying thirst, and thus of preserving life. It has a lower utility of cleansing, and a still lower utility of furnishing the means of navigation. Objects are used for their highest utility first ; and when they are suf- ficiently numerous to satisfy the more important wants,, lower utilities come into play. If one had an allow- ance of only a pint of water per day, it might all be- needed for quenching thirst ; but where water is- abundant, it is used for less important purposes. These different utilities in the same object may be as distinct as different utilities in different objects. New utilities are constantly being discovered, sometimes in objects which have been used for other purposes, and often in objects heretofore useless. It was a great step forward when it was learned that anthracite coal could be burned. A utility of what seemed a black stone was discovered. The utilities of many objects can be increased by human effort. It is one of the objects of labor to in- crease them. The knife-blade has a higher utility than the iron ore or the steel from which it was made. Great labor has been put forth to convert the steel into knife-blades ; and it was expended solely to give more utility to the steel. Gain in utility is always a benefit to mankind, because it increases the power of UTILITY OF THE RESOURCES. 51 the Resources in satisfying human wants. The greater the utilities, population remaining the same, the better can wants be satisfied. 1. THE UTILITIES OF THE RESOURCES OF NATURE. Strictly speaking, the Utilities of the Resources of Nature can seldom be increased. They are as they were created, and nearly all additions to them are classed as Produced Wealth. The ditch which drains the swamp, the fences and buildings put upon the land by man, are all Produced Wealth. The knife-blade itself is classed as Produced Wealth. The land, the air and the water remain largely as they are from age to age. To some slight extent they are modified, usually more to their damage than to their improvement. Air may be vitiated by a manu- facturing establishment, and its utility decreased. A stream of water may be polluted by the drainage of the factory, and its utility for drinking purposes destroyed. The natural fertility of land may be exhausted, and the forms of consumable natural wealth, such as coal ;and timber, are actually destroyed with the use, and their utility is gone. On the other hand, the atmos- phere is sometimes purified by the drainage of the swamp, but this is a comparatively slight change. The general principle is that the utility of Natural Re- sources remains much the same from century to cen- tury. There has been a continued discovery of new utili- ties of the Natural Resources, and this discovery is sometimes mistaken for an increase in the utility of the resources themselves. When it was first found 52 RESOURCES FOR SATISFACTION OF WANTS. that the red ore could be smelted, and wrought into iron bars, an unsuspected utility in this seeming stone was discovered. The world was so much the richer^ just as an individual would be who should discover a buried treasure hidden on the estate he had inherited from his ancestors. There would be no more gold in the world than before, but he discovered that which was hidden. There have been many discoveries of new utilities in well-known objects. When it was learned that water could be converted into steam, and the steam into power, the world was so much the richer. 2. UTILITY OF PRODUCED WEALTH. The utility of Produced Wealth, on the contrary, can be very greatly increased. Indeed, this is the main object of labor. Take a bar of steel and convert it into watch- springs ; the utility is many times as great. Take lumber and brick, and build them into a dwelling ; the utility is far greater than that of the materials. The wool produced by the farmer is manufactured, with great labor, into cloth and clothing. Indeed, the object of expending labor upon materials is to increase their utility ; and the object of all labor, which does- not satisfy wants directly, is to increase the utility of some part of Produced Wealth. A very considerable portion of Produced Wealth consists in improvements on land, which may seem to be an increase in the utility of Natural Resources. A swamp is drained, and the waste land bears a Crop. Sometimes Produced Wealth is so united with land as- really to become a part of it, in which case the utility UTILITY OF THE RESOURCES. 53 of the land is increased by human labor. It is usually much better to treat of all improvements on land apart from the land. They may be destroyed, but the land will remain forever. Minerals and timber when once removed from the land are regarded as Produced Wealth. The timber is like a crop which can be grown again in years ; and while minerals can not be replaced, their removal from the soil, and their great transformation, make it neces- sary to treat them as Produced Wealth. We need never lose sight of the element of Natural Wealth in them. 3. UTILITY OF LABOR. The utility of labor is its power to satisfy wants, either directly or indirectly. We have before seen that great difference exists in the power of men to labor ; that the services of some men will accomplish a hundred times as much as those of others ; that is, they possess far more utility. There are, however, many utilities of labor. Most men have the power of doing a considerable number of useful things. Under modern civilization, each group of men learns to do things which others can not do ; and they acquire skill, which makes their labor many times as useful. The utility of labor can be very greatly increased. This is one of the objects of education, and almost the only object of learning a trade, or acquiring skill in any department. It would doubtless be profitable to the world to give even more attention to increasing the utility of the labor of the rising generation. With more general education and better training, there is 54 RESOUKCES FOR SATISFACTION OF WANTS. no reason why the next generation might not be able to accomplish much more than the present, with no more exertion. 4. UTILITY OF SOCIETY. It is one of the dis- tinctive features of this book that it treats, not only of the subject of Economics from the point of view of human wants, and of the resources for their satis- faction, but that it also takes account of Society as one of the great resources for the satisfaction of wants, equal in importance to that of labor and produced wealth. As soon as men are provided with the lowest necessities of life, the desire for society becomes one of the strongest of all. The boy thirsts for com- panionship. He is not happy unless he can be with other boys. The condition of a single human being on an island is the most pitiable possible to conceive. From the lowest conditions of life to the highest, so- ciety is equally desired and equally important. The utility of Society must be carefully distin- guished from the utility of Labor. A good workman may be a thief, or a very undesirable companion. A pleasant companion may have little power of labor. Society and Labor are both embodied in human beings, but have nothing else in common. As the utility of labor can be greatly increased by the education or training of the workman, the business manager, and the scientific investigator, so the utility of society can be greatly increased by the education of the people in morals and manners, in general intel- ligence, and in all that goes to make a desirable com- panion. UTILITY OF THE RESOURCES. 55 The utility of some parts of society is a negative -quantity ; so much less, or worse, than no society. It was the custom of England, years ago, to transport criminals beyond the high seas, in order to get rid of their society. Undoubtedly, if any village, and espe- cially any city of considerable size, could be free from the presence of a certain portion of its people, it would be a much more desirable place to live in. This sort of society is a negative quantity. It is a damage to the city and the people ; and the world would be better off if these undesirable persons did not exist. Oc- casionally undesirable society is found in connection with considerable labor power, and heartless capitalists are willing to inflict any sort of people upon a nation, if they can thereby secure labor cheaper, and make some money out of it. Such employers are the en- emies of the well-being of the human race. The improvement of society, that is, the increase in its utility for the satisfaction of wants, consists in eliminating undesirable elements, and in preventing their increase. Most of the recent immigration, how- ever much it may add to the labor power of the coun- try, introduces very undesirable elements of society. This is the practical objection to the Chinese. While they have labor power, their utility for the purpose of society is a negative quantity, and lowers the average utility of society as a whole. Positive efforts for the increase of social utilities are those of the churches and schools, and all moral in- fluences which tend to make men better companions. The present high utility of American society is very 56 RESOURCES FOR SATISFACTION OF WANTS. largely due to schools and churches, although inherited traits count for a great deal. Improvement in moral, intellectual, and social character is, of course, to be made mainly among the young. A proper education of the children of any country, provided it were free from the influence of immigration, would, in a few generations, greatly increase the utility of the society of the nation. Every city would be a far more desir- able place of residence. Contrast life in a convict colony with life in a colony composed of Christian people ! Contrast life among idiots, the stupid and ignorant, with life among intelligent and well-informed persons ! Contrast life among the Indians with the life of a New England city or village ! It is as im- portant that we make provision for desirable society in the future as that we build houses and factories. CHAPTER VI. VALUE IN USE. Value in Use depends both on Utility and the num- ber and wants of the people. Nothing can have value which is not useful, but Value in Use shows how scarce an article is. So long as there are more objects than the people can possibly use, they have no value ; but when the number of people increases, so that articles of any kind become scarce, this scarcity is expressed by Value in Use. The scarcer they become, the higher the value. Value in Use must not be confused with Value in Exchange. Exchange Value is merely what one can get for a thing in the open market. There will be no confusion if we remember that Value in Use is what a thing is worth to use ; Value in Exchange is what it is worth to sell. " Exchange " will be the subject of a subsequent book, and Exchange Value will, of course, be treated in that place. Value in Use is the scarcity of useful things. It shows the relation between useful things and the num- ber of people who desire them. Value always means scarcity, and high values are always unfortunate for the world. Let a traveler in the desert be perishing with thirst ; an allowance of a quart of water per day would have the value of life to him. Water ordina- rily has no value, because it is abundant. One of its (57) 58 RESOURCES FOR SATISFACTION OF WANTS. utilities is that of preserving life, and when it becomes sufficiently scarce its value is equal to this utility. A gallon of water per day would have a higher value to this traveler than a single quart, but not greatly higher. The quart preserves his life. A gallon is convenient for cooling his face and hands, a minor con- sideration. A hogshead of water per day might have but little more value than a gallon, since a gallon would be all he could use. Where he has a hogshead per day, one quart is practically nothing, because he can spare any particular quart and still have more than he needs. If there were all the wheat that the world could use, its value would be much less than at present, and more people would be able to use wheat as an article of food instead of some cheaper grain. A high value shows great scarcity ; that there is in- sufficient for the satisfaction of all wants. No values mean abundance. High values mean scarcity. The popular notion that high values are desirable arises from the fact that each man desires a high Ex- change Value for what he has to sell, in order that he may get as much of other things in return as possible. Value in Use is what a thing is worth to use. Value in Exchange is what it is worth to sell. Now, if one has something to sell, the higher its value, the more of other goods can he get for it. Hence, each man de- sires that the value of his own possessions be as high as possible, but he also desires that the value of all other things which he has to buy be as low as possible. The things he has to sell can only have a high value when they are scarce. A large crop lowers the price VALUE IN USE. 59 of grain ; large production reduces the value of goods, sometimes almost to nothing. It is certainly to the in- terests of the world that goods be plenty. It would be fortunate for us if many other necessities of life were as plenty as the air and water, which, although they possess the highest Utility, seldom have any Val- ue at all, simply because they are abundant. It is not easy for us to get this idea firmly in our minds, that Value means scarcity; that is, the scar- city of useful things. Their Value in Use shows how scarce they are. Neither must we forget that the* dif- ference between Value in Use and Value in Exchange is that one is what a thing is worth to use, and the other is what it is worth to sell, or what one can get for it. An article may have a very high Value in Use to a particular person, though he could get nothing for it in the market. The Value in Exchange is nothing. So a horse may be worth nothing to a man to use, since he has no use for him ; yet he may have a Value in Exchange, since he can be sold for something. In- deed, it is when the Value in Exchange is higher than the Value in Use of the article that exchange takes place. Measure of Value in Use. We estimate the Value in Use of any particular object by comparing it with some other with which we are more familiar. The Value in Use is the satisfaction which the object gives to the user. He compares this satisfaction with that from some other object. He says : " The coat is worth more to me than the picture, seeing that in my circumstances it satisfies my wants better." In 60 RESOURCES FOR SATISFACTION OF WANTS. common language we are continually comparing the wants of things in this way. " This is worth more to me than that ; we would rather have this than a dozen of the other." An Average Value in Use. It will readily be seen that the Value in Use of an object to one person is sometimes a hundred times as great as to another ; perhaps because the first has all he wants of it, and the second has none. Its average Value, in Use be- comes the basis of Value in Exchange, and will be con- sid!ered farther on. Value in Use Decreases with Quantity. It will also be seen that the more one has of a given object the less its value becomes to him, until, when he has more than he can use, the value of any particular portion is nothing. One suit of clothes is a necessity, and has a very high Value in Use. A second is a conven- ience, but has a much lower value, since one can very easily get along without it. Ten suits have more value than two, but very little more; while, perhaps, a hundred suits of clothing would have no more Value in Use lo most men than ten, since ten would satisfy all their wants. This is also true of money, which re- presents all purchasable commodities. It is not true that a dollar is worth as much to one man as to another. To the laborer in a city who receives one dollar per day, that one dollar may mean support of himself and his family, and have the Value in Use of life itself, or of life out of the poorhouse. A second dol- lar per day has also a very high value to him, but not so much as the first. Ten dollars per day would have VALUE IN USE. 61 a still higher value, since it would enable him to satisfy more wants ; but not five times as great a value as two dollars per day since the wants satisfied by the ad- ditional eight dollars are by no means to be compared with those supplied from the first two. To one whose income is a hundred dollars per day, an addition of a single dollar would have very little Value in Use, since the additional wants which it would enable him to supply would be of small consequence. Compare the additional wants which that dollar would supply with the food and clothing of the man who receives but one dollar a day. The greater one's income, there- fore, the less is a dollar worth to him. That is, the Value in Use of money, after one has a certain in- come, decreases very rapidly. BOOK II. POPULATION. BOOK n. POPULATION THE NUMBER OF PEOPLE WHOSE WANTS ARE TO BE SATISFIED. INTRODUCTION The Relation of Wants to Resources is Shown by Value in Use, 65 CHAPTER I. POPULATION AND THE RESOURCES OF NATURE, 66 CHAPTER II. POPULATION AND LABOR, 87 CHAPTER III. POPULATION AND PRODUCED WEALTH, . 96 CHAPTER IV. POPULATION AND SOCIETY, 103 CHAPTER V. THE LAW OF THE INCREASE OF POPULA- TION, 116 CHAPTER VI. APPLICATIONS OF THE LAW OF THE IN- CREASE OF POPULATION, 135 BOOK II. POPULATION: THE NUMBER OF PEOPLE WHOSE WANTS ARE TO BE SATISFIED. It is obvious that the absolute extent of the Re- sources for the Satisfaction of Wants is of less import- ance than their relative extent, when compared with the population. A million dollars is a large fortune for a single family ; it divides into ten smaller fortunes for ten families. If divided among a hundred families, they have ten thousand each. If there are a thousand families, it means only one thousand for each ; if the families number ten thousand, the million becomes only a, hundred dollars for each. The satisfaction of the wants of the people depends" not so much on the abso- lute wealth of a country as on its wealth relative to the number of people. The relation between Wants and Resources shows itself in Value in Use. In the last chapter, we saw that Value in Use always means scarcity of useful things ; the scarcer an article, the higher the value. But articles become scarce through increase in the number of the people, as well as by the diminution of the goods. Value hi Use shows the relation between Wants and Resources. (65) CHAPTER I. POPULATION AND THE RESOURCES OF NATURE. It is obvious that the Resources of Nature can not be increased. Man has had nothing to do with creat- ing them, and as they were in the beginning so will they remain, except so far as Nature, by earthquakes, by upheavals, and the wearing down of the land by wind and rain, and the action of her own powers, changes . them. Land, in the sense used in Political Economy, is nothing but the extension of the earth's surface, and the earth's surface can not be increased. The atmosphere remains the same, contaminated and purified by Nature's chemical laws. The water is lifted from the ocean's surface and blown over mountain and prairie, to be carried by the rivers back to the sea ; but the volume of water on the earth's surface remains the same. The forces of Nature act continually ; gravi- tation has pulled with the same power since man ap- peared, and will doubtless continue the same as long as the world shall exist. A few of the less important Resources of Nature, such as timber and wild animals, may be destroyed; but no increase of Nature's re- sources comes with increase in population. Let no one suppose, however, that increase of popu- lation necessarily means less of the Resources of Nature for each one, because there is enough for a vast multi- tude. One can drink as much from a pitcher as from (66) POPULATION AND THE RESOURCES OF NATURE. 67 a fountain. A mountain spring which feeds a river may supply a hundred families as well as one. If there are few people living by it, the immigration of several more does not mean less water for each. The newcomers use what before was unused. In an earlier day, an emigrant settled on a vast prairie, and could use but a small portion of the land about him. He welcomed neighbors who would take a claim next his own. He had all the land he wanted; and there was plenty for others. The newcomers took from him no Resources of Nature, and added to his resources that of Society. The earth was made for a great population. It is to be subdued and filled with people. It may be filled, however, or any particular country may be filled, so that all the Resources of Nature are in use by some one. The population about the spring may be so great that there is not water enough for all ; and can be sup- plied only by bringing it from afar, either by hand with great labor, or by elaborate works of engineering, at great expense. The prairie may become so thickly settled that when the farmer's sons want a farm, they must be content with a few acres, where their father had hundreds. There is no more land in a State with ten million people than when there were only ten thousand. The Resources of Nature do not increase with the population. They seem unlimited so long as there is more than can be used ; the pressure begins to be felt as soon as all the land is occupied. It is a very slight pressure at first, and increases as the Resources of 68 POPULATION. Nature appear scarce, and become more valuable with the increase of population. DISCOVERY. While the Resources of Nature are no greater now than when man appeared on the earth, they were not all discovered at once. To the ancients, all beyond the sea was boundless speculation. Little by little, and again by great leaps, man has pressed on to see what treasures nature had for him. He discov- ered America. He sailed around the globe. He pressed far up into the frozen latitudes of the North. He has crossed the dark continent, and penetrated into darkest Africa. There is not much more for him to discover in the way of mere extension of the earth's surface. It is not so with the Forces of Nature. Here, in- deed, great discoveries have been made. The last few years have been a great period of discovery in the methods of using power by means of electricity. We realize now, as our fathers did not, something of the magnitude of the power stored up in nature which be- longs to man to use. There is no reason to believe that discoveries on this line are at an end. There is much mineral wealth yet undiscovered. The world is waiting for a cheap method of producing aluminum from common clay. No one knows whether such cheap extraction is possible. If it is, another re-, source of nature may be made available. We must distinguish sharply between discovery and production. The land of the world exists, whether civilized man has explored it or not. Minerals are buried in its depths, whether he has staked out his. POPULATION AND THE EESOURCES OF NATURE. 69 mines or not. Natural gas filled the porous rock and sand a hundred years ago, as truly as when it was reached by the first drill. The laws which govern the use of electricity were the same a thousand years ago. When it is said, therefore, that the Kesources of Nature can not be increased, it does not follow that provision may not be made for supplying the wants of more people. Natural Resources may be discovered, and we can never tell when we have completed our dis- coveries. The wealth of nature is great : how great we do not know. It is certainly far greater than any one hi the last century imagined. A very considerable portion of the labor of the world is now engaged in discovery, rather than in production. He who finds more of nature's wealth, and makes it available to mankind, renders a service as truly as he who produces a machine from the crude iron. A LIMIT TO NATURAL RESOURCES. It is evident that, notwithstanding discovery, there must be a limit to Natural Resources, though we can not with certainty say where that limit is. We know what we have ; each new discovery shows that there has always been something we did not see ; but discovery is limited to what there is to discover. When Columbus touched land in the Western hemisphere no one knew what might be found beyond the coast line. We know now that we have reached the limit ; that we have found, in outline, all the land there is to find outside the frozen zones. The limit to discovery was the land that actually existed. No explorer can find what is not there. The discovery of the forces of nature must 70 POPULATION. be limited to the forces that exist. We simply find what is. How MANY PEOPLE WILL THE RESOURCES OF NA- TURE SUPPORT WITH COMFORT ? Quantity of Land Required for Residence Purposes. Land is used for three purposes : residence, manufacturing and com- merce, and agriculture. It might seem to the savage that there could never be so many people in the world as to make the land required for mere residence a mat- ter of any consequence. But not only is the acreage used for residence very considerable when each has all he wants, but the most desirable residence land is ex- tremely limited. A rough measure of the land desired for residence is the common village lot. In cities few families are able to afford the land they need. In the country village, where land is comparatively cheap, so that a little, more or less, does not greatly add to the cost of a home, we are likely to find the average man using all the land he wants. The most common size of lots in such villages is four rods by eight (66 x 132 feet), including, to the center of the street in front, one- fourth of an acre. Many residents desire acre lots. The amount of land one desires in a well-regulated village is limited by the annual expense of maintaining walks and streets in front, lighting streets, etc., and of keep- ing his own ground in proper order. One such lot is all that the majority of people wish to take care of. If we accept this common village lot as a standard, allow something for cross streets, park, and grounds for school and other public buildings, and something for ihe few families who desire larger grounds, sometimes POPULATION AND THE RESOURCES OF NATURE. 71 iive or ten acres, we shall have, in round numbers, two thousand residences to the square mile. This is a con- venient, practical estimate of the amount of land de- ,sired for residence purposes by the majority of the people, if it costs nothing. Smaller lots than these bring people closer together than most of them desire io live. Larger lots put neighbors farther away than many desire, and add to the expense of maintenance of the ground and streets. It is to be remembered that this measure is not assumed ; it is the one found in existence in thousands of villages. It is certain that the average family desires more, rather than less, land than this. Two thousand residences to the square mile means a population of ten thousand people. Where more than this live within a square mile, the land is overcrowded for the highest welfare of all. In cities there are fre- quently more than ten times this number people packed tier above tier, ten stories high ; but even when supplied with all modern conveniences, they lack the ground, sunlight, and the air. How desirable is a lit- tle land about a residence in a great city, is shown by the price that wealth pays for it. Grounds about a dwelling become a luxury which only the rich can af- ford. The wants of those who are deprived of them can not be said to be satisfied. The horrible condi- tion of the tenement houses of the poor in the large ities has been so often described that the description need not be repeated. Something of this is due to the habits of the inmates, something to poorly con- structed buildings ; but more to the lack of land. A 72 POPULATION. little ground about a dwelling is a great sanitary meas- ure, even for those who care nothing for sanitary laws. One of the problems of the modern philanthropist is to break up the population of the densest portion of the cities, and scatter the people over a wide extent of country. When a residence district is overcrowded, the election of buildings becomes more costly. A two-story house in a village can be built at a comparatively low cost. Where buildings are ten stories high, foundations must be deep and massive, and walls heavy. They must be nearly fire-proof, to prevent the d?,nger of a whole city being swept away in a night. When buildings- are low and isolated, they cost comparatively little ; and the space between them, of itself, affords protec- tion against an extensive fire. In a densely populated residence district, the desire^ for land can never be perfectly supplied, and the lim- ited satisfaction is had at greatly increased cost. In round numbers, then, we may say that ten thou- sand people per square mile is the limit for the simple purpose of residence, where the desire for residence land is satisfied. For other reasons, people may prefer to live where the population is a hundred thousand per square mile, but at a sacrifice of the desire and need of land. In the Jewish quarter of New York the popu- lation is estimated at 330,000 to the square mile. The most densely populated portion of London has 170,- 000 to the square mile. It is to be remembered, also, that the entire country can not be built over in this way. A city implies great stretches of land or water POPULATION AND THE RESOURCES OF NATURE. 73 beyond, separating it from other cities. It is because of the free air in this open country around, that the densely populated city is rendered habitable. On the other hand, where the limit of overpopula- tion is not passed, a certain density of population is of great advantage. The anxiety of a new country for settlers is due in part to land speculators, but it is also caused by a popular appreciation of the fact that the presence of a considerable number of the right sort of people is a mutual advantage. Nearly all of these advantages are obtained long before over- crowding begins. A good public school has seven or eight grades below the high school. The course in the latter is three or four years, making from ten to twelve distmct classes from the beginning to the end. These classes can be taught to much better advantage when separated. In order that there may be pupils for classes in the higher grades, there must be enough for two or three schools in the lower at least five hundred pupils in all ; and seven or eight hundred could be taught more economically. Since more than one- fourth of the entire population is of school age, schools with five hundred pupils mean only a total population of two thousand, if all persons between the ages of six and eighteen are in school, as they should be. In a high school the classes should not be as large as in the low- er grades, and one hundred scholars are sufficient for a four years' course. The number of persons between the ages of fourteen and eighteen, fifteen and nine- teen, or sixteen and twenty a period of four years is >out seven per cent of the entire population. Villages 74 POPULATION. of two thousand will have, on an average, one hundred and forty persons who should be in a high school. A population of two thousand is required to sustain good schools economically. Unfortunately, most pupils are compelled to leave school at an earlier age, so that a somewhat larger population is now required to sustain a good high school in an economical way. We may hope that the day will come, when it will be the excep- tion that any one leaves school under eighteen or twenty years of age. With the diverse religious views of the people of the United States, several churches are likely to be main- tained in each village or city. Any minister prefers to preach to a congregation of three hundred, rather than less. It is pretty well agreed among the clergy that it is better that a church consist of at least four or five hundred members. Some hold that larger churches should be divided, but no one would place the desira- ble limit below three hundred. To gather churches of this size, of even four religious denominations, means at least four or five thousand people. There is reason to believe that the fuel of the fu- ture, in towns large enough to sustain a plant, will be gas. Rock gas has shown us how convenient such fuel is. It is freely stated in many cities that if the supply of natural gas were to fail, the pipes would be utilized for the distribution of manufactured gas for fuel. The experiment of fuel gas for dwellings is sure to be attempted. To make its success possible, there must be a considerable population. Coal-gas works an not be erected and maintained for a few families. POPULATION AND THE RESOURCES OF NATURE. 75- What is true of gas is also true of water works. Gas and water, distributed under pressure, are now among the common conveniences of modern life. Neither can be had in a hamlet. The necessity of a considerable number of people for the maintenance of shops, stores, and the thousand conveniences of a city, is apparent to all. To say just where the line lies between the greatest convenience and overcrowded territory is, of course, impossible. The largest city has some advantages over the next- smaller. It must not be forgotten that many of these advantages belong to it simply because it is larger than others. The best of everything is likely to drift to the metropolis. If it were not half as large, the best would still be there, so long as there was no larger place. Oliver Wendell Holmes thought the jealousy of the country village was because the city drained it of its best men. It is not the absolute, but the relative size, that determines where the best men of any calling go, and there can be but one largest. In round numbers, we may say that a city of five thousand intelligent people, of the same race and gen- eral methods of living, make possible nearly all the substantial advantages which come from the massing of population. As good public schools may be main- tained as are found in the largest city, at far less ex- pense and risk. Churches of the more prominent de- nominations can be well maintained. Gas and water works can be economically operated. Merchants will not be able to keep as large a variety of some lines of goods, as if there were more people to sell to, but with 76 POPULATION. all the more common goods they can supply their cus- tomers as well as any city. We have assumed an in- telligent American white population. Cities differ greatly in this respect, and there are many places of ten thousand inhabitants which do not afford the ad- vantages to be found in others of five thousand. It is evident that here, as elsewhere, the greatest advantage is found in the " golden mean," where population is neither too sparse nor too dense. Only a small part of the land of this nation is new required for residence purposes ; but the scarcity is no less real because confined to cities and towns. Some land is not well suited for residences. Some is much more desirable than other on account of natural loca- tion. The desire to live in cities is not alone on ac- count of the crowd ; it is because of the factories and the opportunity of obtaining employment. The scar- city of residence land in the city may be caused by artificial means ; yet with certain methods of factory production it is necessary to bring large numbers of people together during the day. They must live some- where, and the natural limits of residence land must be taken into account. The production of goods may be carried on with less labor in a densely populated place ; but, on account of the scarcity of land in that vicinity, the cost of satisfying the wants of the labor- ers is far greater. Rapid and cheap transportation, by which persons are carried miles away from their work at the close of the day, is some relief. A better provision is the moving of factories to the country. Land Required for Factories and POPULATION AND THE RESOURCES OF NATURE. 11 The quantity of the best land for factories and com- merce is very limited. In a new country there may be water-power enough for all mills and factories. As population increases, the best mill-sites are soon taken. Where there are but few people, there is plenty of room in the best harbors for all ships which visit their 'Coast. As the people multiply, the best wharf -groun d is taken ; and that must be very poor which can be had for nothing. Later, any land which can be made available, even with great expense for improvement, commands a high price. All this shows that certain kinds of land, land suitable for manufacturing and commercial purposes, becomes scarcer as population in- creases. People must use inferior sites, or improve other sites at greater cost. They must do with less room than is desirable. It is not as easy to estimate the actual amount of land needed for manufacturing and commerce as for residence. The needed acreage is not great, but the acres fitted for the purpose are few. There are few harbors on the sea coast, and the wharf lines are limited. Up to a certain limit the pressure is scarcely felt. When that limit is passed, a larger population may be of advantage in some re- spects ; but, for this purpose, it means proportionally less for the people, with great danger of monopoly by the few. Land Required for Agriculture. The larger portion of the land in civilized countries is used for agriculture. The Indian wants thousands of acres to roam over. In Great Britain, a considerable portion of the country is enclosed in parks for hunting and 78 POPULATION. private pleasure, showing the desire for great pleasure- grounds. This fact indicates that in the future there may be more great public parks for the people ; and> for many reasons, a larger part of the land than is now devoted to that purpose, in the older parts of the United States, might well be maintained in park or forest, for the good of all. No doubt a fair satisfac- tion of the better wants of mankind would consider- ably reduce the acreage of land now used for agri- culture. Nevertheless, the price of agricultural land shows the scarcity of the more desirable portions. Al- though the atmosphere is essential to life, it brings na price, because there is more of it than can be used. For the same reason, land is often sold in new countries for less than the cost of surveying ; because there is so much land, and so few people. In European countries, it sells for what seems, to an American farmer, an ex- travagant figure ; because there is so little land, and so many people. The Western ranchman likes to meas- ure his ranch in square miles; the Western farmer thinks a hundred and sixty acres a moderate farm. There are more people as we travel from the West to- the East, with less land for each. Within a certain limit higher culture produces more, with less labor, from the smaller farm. After this limit is passed^ although the amount of produce from an acre can still be increased, it is with greater proportional labor, so that the laborer gets less than before. This is the origin of the famous phrase, "diminishing returns." DIMINISHING RETURNS. Diminishing returns doesr not mean a smaller return from land, but a smaller re POPULATION AND THE RESOURCES OF NATURE. 79 turn from labor ; not a smaller return from labor in factories, but a smaller return from labor on land. The Western cattle king, now passing away, valued land very lightly. One of them, perhaps, owns some hundreds of acres by the streams, and has the title to v a strip which shuts others out of a considerable region be- yond. He may have used Government land, pasturing his herds in common with the other kings, branding the calves at the annual "round-up," and enforcing the property right of his brand with his Winchester rifle, and a band of determined cowboys. Not that he often had to fight for his rights. There was a mutual understanding that they were to be respected. The returns to labor were enormous ; the returns from an acre of land, very small. A dozen men could tend a great herd of cattle that pastured on thousands of acres of land. Great fortunes were made by the owner ; which, even if divided equally among all the men employed, would have given each one several times the compensation he could have earned in the older States. It is not surprising that such cattle kings resisted the opening of the country to settlement in farms of one hundred and sixty acres. The hundred-and-sixty-acre farmer, however, gets a large return from his labor compared with the five-acre farmer. He does not cultivate his land so well, but he cultivates more of it with less labor, and the total re- turn to him is far greater. Illinois has a reputation as a great corn State, but the average yield of corn per acre in Illinois is less than in Ohio. There are more acres planted. The Illinois farmer plants a field 6 80 POPULATION. of forty or eighty acres, does most of the work by two-horse machinery, and gets a large crop for the labor bestowed. The Ohio farmer plants perhaps ten acres to the other's forty, bestows as much labor on a ten-acre field as an Illinois farmer on forty acres, and gets more corn to the acre, but not four times as much. He does not get as many bushels for each day's work. If one asks why he does not plant more acres, the obvious reply is that he has no more acres to plant. The price of land is so much higher than in Illinois that he can not afford to buy more. There are more people, more farmers, with less land for each. To the English farmer it is a surprise to see land in Ohio cultivated so poorly. American farming appears slovenly. The reply is, it pays better to work more land than to give the high English culture. The American farmer gets a greater return for his labor, but not so much from an acre of land. It is a sort of stock argument with some that we ought to cultivate our land better. Part of the ap- parent force of this statement lies in the pride of a nice farm. A farmer owes it to his neighbors to keep his farm in good order, and to keep down unsightly weeds, whether it pays or not. It is also true that, up to a certain limit, more labor, better cultivation, pays. If the average production of wheat be fifteen bushels per acre, it is possible that if one will bestow twice the labor, and double the cost of fertilizers, etc., he can get thirty bushels. That is, without regard to the price of his land, by doubling the cost of production he can double the product. But how is it, after he POPULATION AND THE RESOURCES OF NATURE. 81 Teaches the thirty-bushel product ? If he now doubles the labor on a single acre, will he get sixty bushels ? If so, would again doubling the labor on an acre bring & hundred and twenty bushels ? Every farmer can tell the foolishness of such an attempt. He will point to a slovenly farmer, who gets half a crop ; and say that if that man would work twice as hard he would get twice as much off his land ; but when one has al- ready brought his land up to a certain state of cultiva- tion, which, in this country, is called good farming, it is impossible to get increased returns in proportion to the increase of labor and cost. Every good farmer knows that more work will bring better crops, but not in proportion. Doubling the labor and expense may increase the crops twenty-five or fifty per cent.; but it is more profitable to work more land. So much effort has been made to break the force of this obvious truth as certain as the axioms of geom- etry that we can afford to look at it from another point of view. A good American farmer who owns one hundred and sixty acres of land is visited by three Englishmen, who tell him that he does not work land as they do in England, and that it would pay him to cultivate it better. They propose that he divide his farm among the four ; he to retain the forty acres with dwelling house and buildings, and to give them forty acres of bare land apiece. Say they : " Now, you just put as much labor and capital on this forty acres as you have on the one hundred and sixty, and you will make as much money, and we will all have a farm apiece." An American farmer would not be caught 82 POPULATION. with this chaff. He knows he could get more off any forty acres of his farm, but not four times as much. If he is a good farmer, he has cultivated his land nearly up to the point of diminishing returns ; that is, additional labor and capital applied to his land will not bring as great a' return as that now bestowed. It would pay him better to work more land, provided the additional land could be had for nothing. Whenever an accurate calculation shows that it will pay better to cultivate additional land, rent free, than to put more work on that under cultivation, the point of diminishing returns has been reached. The limits of diminishing returns may be reached in one country, but not in another ; in one State, but not in the entire United States. The only thing that is sure is, that there is a limit to the returns to labor on agricultural land. When it is passed, land is be- coming scarce in proportion to the population. It may support twice the present number of people, but at an increased cost of labor. A point would be reached has been reached in many countries of the world where the average man must be content with less food, or poorer food and clothing, than if there were fewer people for the land to support. Like Lot and Abra- ham, the land is not able to bear them. The remedy at that time was emigration. It is the remedy which the Old World is trying, in shipping t9 us its surplus population. Calling a Farm by Some Other Name. The last attempt to break the logic of the law of diminish- ing returns is to call a farm a factory. There are POPULATION AND THE RESOURCES OF NATURE. 83 some people who take great delight in calling a thing by some other name, with the idea that the change of name will change the thing. The object in calling a farm a factory is to assume that agricultural produce -can be manufactured like cotton cloth, at less expense for large quantities than for small. The suggestion is to use fertilizers of the highest strength, containing the elements of the crop to be raised. One Frenchman proposes to warm the soil by buried steam-pipes, and to transform the whole land into a reeking swamp of the torrid zone. The answer is that, even if the law of diminishing returns did not apply here, as it does, there is a limit to the power of the air and the sun- light. We may have a few city hotbed vegetable gar- dens, because of the wide expanse of country between. The air sweeps over the prairie and the farm, and its volume is sufficient to purify the city, and for the hotbed garden. There is a limit to the amount of con- centrated fertilizers, and decaying vegetable and ani- mal matter, that may with impunity be heaped on a given space of ground, and transformed into vegeta- tion. The experiment of sewage farms has been tried as a means of disposing of the sewage of cities ; the growth of vegetation is rank and unfit for human food ; where it has been fed to cows, there have been serious doubts of the wholesomeness of their milk. It is a good way of disposing of the sewage of a city, but it would be most . unfortunate if the whole country were transformed into one vast sewage farm. Great spaces of clear, open country are needed for the sake of densely populated cities spaces occupied by ordinary 84 POPULATION. | farms, with nature's methods of production, not forced much beyond that of the English agriculture. It is impossible, however, to increase the production of land, even by the most artificial means, beyond cer- tain limits, without increasing the cost of production. It is impossible to get rid of the law of diminishing returns. There is a limit to the number of bushels of wheat that can be raised to the acre, even though the ground be heated by steam-pipes, and overcharged with fertilizers, until the grain is unfit for use. When the limit is reached, the wheat will be produced at ten. times the cost to a Dakota farmer. All improvements in agriculture are to be welcomed. The limitations imposed are found in the extent of the earth's surface, the air, the sunlight, and the natural forces. The earth might have been larger than it is. The extent of land might have been greater, and that of water less ; but we have only so many square miles,, only so many acres, in a given division. The earth is large enough for vast multitudes, for numbers of which no man can form a vivid conception ; but it would be foolish to shut our eyes to the limits of the land and its productive capacity. The consideration of the law of diminishing returns has been a little tedious to the reader, yet it was scarcely possible to make it shorter or simpler. With- out an understanding of it, we should make great mis- takes. Ignorance of this natural law has permitted many intelligent men to fall into laughable absurdities. VALUE IN USE OF THE KESOURCES OF NATURE. The Value in Use of land is determined by the num- POPULATION AND THE RESOURCES OF NATURE. 85 ber and character and condition of the people who de- sire to use it, or on whom its use depends. The land on which the city of Chicago stands was a few years ago worthless because there was nobody to use it. There was a vast unoccupied territory to the west of it. There were a few settlers, but the land had no value, because value means scarcity. As soon as this Western land was occupied, there was need of a commercial metropolis, and the natural place for this is a harbor on the lake. The site of Chicago now comes into use because of the people west of it. Very little value is given to any particular city lot by the improvements on that lot itself. The value comes from the people who live on other land about it. Improvements on one lot give value to others in the neighborhood, because they ensure a large and better population. The value of land is not determined alone by the population immediately about it, but often by that thousands of miles distant. The value of land in the Dakotas is influenced by the number and character of the people in London. Dakota land has the utility of producing wheat, but would have no more value than water unless there were people to eat that wheat. The^ population of the British isles thus increases the value-- of land in Dakota. Were there fewer people in Eng- land, or were they unable to afford wheat as an article- of diet, there would be no foreign demand. With the present state of commerce, the value of land is often affected by the population of very distant places, and by the convenience of communication and transporta- tion. Land is no longer scarce or plenty with sole, 86 POPULATION. reference to the people in the immediate neighborhood. It may be scarce with reference to those who draw their supplies from it half way round the globe. The value of the land suitable for raising tea in India and China and Japan, will be affected by the number of people in the entire earth, and by their tastes ; that is, their wants. The question is not, Is such land scarce with reference to the people in India ? but, Is it scarce with reference to the people of the earth ? The value of any given piece of land is the scarcity of that kind of land, or of land which people like as well as this ; and its scarcity is caused by the number of people who want it. Utility of land remaining the same, it becomes valuable in proportion to its scarcity, and its scarcity is increased with the number of people dependent on it, and with the development of their wants. VALUE OF OTHER NATURAL KESOURCES. Fortu- nately, most of these are so plenty as to have no value, either in use or exchange, except under unusual cir- cumstances. In the well-known story of the Black Hole in Calcutta, there was not air enough for all the prisoners ; and those who got the little there was lived, while the others died. The utility of air was no greater than before, but its scarcity gave it the value in use of life itself. The atmosphere is often injured by the ex- halations from swamps, or the products of factories. Here pure air, if it could be furnished, would have a Value in Use. Wild animals, timber, and other useful natural ob- jects, may become valuable as population increases, through their scarcity. CHAPTER H. POPULATION AND LABOR The Resource of Labor, or rather of the ability to perform labor, differs from the Resources of Nature in almost every respect. It is embodied in the people whose wants are to be satisfied. One of the mistakes of the orthodox English school of political economy, which has done so much for the science, is in consider- ing Labor too much as a machine, or as something apart from the people. It was, of course, assumed that the laborer must eat and be clothed, but the steam-engine must also be supplied with coal, and there was an un- conscious tendency to treat of the laborer as if he were an engine rather than a man. This tendency was not because of any heartlessness on the part of the investigators, many of whom would have given their own lives for the welfare of humanity ; but was rather the result of incorrect methods of study, and a mistake in the definition of the subject on which they wrote. We are to keep in mind the fact that we are dealing with men men with wants and power to labor, both embodied in the same individual. We can not separate the laborer from the man whose wants are to be satisfied. We may consider, now his power to labor, and again his wants as man ; but in each case we are to remember the other. The resource of Labor differs from the Natural Re- (87) 88 POPULATION. sources in that it can be increased. We see that there is no more land in the world to-day, no more air, water, or minerals, than there were thousands of years ago. There will be no more thousands of years hence. The extent of the Resources of Nature is entirely unaf- fected by the increase of population. But the in- crease of population is likely to bring more laborers into the field. The more people, the more there are to work ; and there is no reason why the ability to labor should not keep pace with the increase of popu- lation. If the islands of Great Britain were so full that there was not room enough in all the land for a house for each family, there would be great scarcity of Natural Resources (in fact, people would die off long before that point was reached), but there need be na scarcity of labor. Labor would be a drug in the market ; there would be more of it than could by any possibility be used. Land, air, sunlight, water, the products of the soil all these would be at a premium. We are always to guard against the mistaken notion that any one resource is sufficient for the satisfaction of wants. To Adam Smith belongs the glory of bringing into clearer light the importance of Labor,, and it has since been the basis of many a treatise on Political Economy. But any system of economics built on Labor alone is false, because Labor alone is useless. So, Natural Resources without Labor are useless. Each is like the half of a pair of shears they must be riveted together. But because the ability to labor may be expected to- increase with the increase of population, it by no- POPULATION AND LABOE. 89* means follows that it always does so. The ability of any nation to labor is never in proportion to the num- ber of its people. It is the sort of men, rather than the number of men, which determines the power of a nation. If the reader will recall what was said in an earlier chapter, he will at once see how little the num- ber of people, and how much the character of the people, has to do with determining a nation's ability to do. It is not so much the mere muscular power as the vital energy, which determines its use. Even in this respect, a good American workman is worth five or ten times as much as the men of many nations of the earth ; but in intellectual power, the power of adapting means to ends, power of inventing, ability to use the Resources of Nature, he may be worth hundreds or thousands of indolent Africans. We may imagine, therefore, the population of a country to remain stationary, as does that of France^ and the power of labor to increase with great rapidity, perhaps to be multiplied many tunes during a single generation. Let us suppose a few hundred thousand people, for convenience, isolated on an island. They are people of the average ability of those in the United States, and are living as we do here. Let it be agreed that every boy and girl shall receive the best training and education that can be had from the most competent instructors in the little nation. There are manual training schools, apprenticeship in various trades under the workmen most competent to teach, intellectual culture in short, all is done that can be done for the development, education, mental, physical,. 90 POPULATION. and technical training of each child in the State. Who can doubt that the ability of the second generation to labor would be double that of the first, though its numbers should be exactly the same ? There would be some increase in the average physical ability, in mus- cular power and vital energy; but this would be of little consequence compared with the general and technical knowledge the knowing how. Even the latter would be small in comparison with the enormous power of invention which would follow so general edu- cation, by means of which the Resources of Nature would be used to better advantage, and results accom- plished beyond the power of any number of ignorant though muscular men. Labor is something more than muscular exertion. Some one has said that it consists in moving things. It would be nearer the truth to say it consists in moving things to the right place. Know- ing what is the right place, and the method of moving with the least exertion, is the greatest part of it. On the other hand, the population might be doubled by the immigration of Poles or Italians, but the power of labor would not be proportionally increased. It is not alone the efficiency of the laborers, but the proportion of laborers to idlers, that must be taken into account. In some nations, at some times, labor has been counted a disgrace. The citizen lived for war, the hunt and chase. Even at the present day, in European countries, there is a class of wealthy men who do little toward the satisfaction of wants, and procure the services of others, by inherited fortunes. Even in this country, we sometimes hear it regretted POPULATION AND LABOK. 91 that there is no leisure class ; that is, no idle class. This is partly because we are a new country, and pop- ulation is not yet too dense. There is still among us a respect for the man who works by hand or brain. Our most honored citizens have been great lawyers, great physicians, great preachers, and men who have conducted large business enterprises. In England, the most learned physician and the most successful business man are held to occupy a position decidedly inferior to that of an idling nobleman, living on the in- heritance of the past or debts contracted in the pres- ent. There is a decided tendency in this country toward the same condition of affairs; but, neverthe- less, a larger proportion of our people are engaged in some form of active employment than in any other nation in the world. The power of labor in a nation, other things being equal, is greatest when the largest number of people work. The power of labor in a new country, such as a newly settled State in the West, is likely to be greater than in an older country, because a larger pro- portion of the people are actively employed. Many of the brightest and most intelligent young men go West. The older, and those unable to endure hardships, are more likely to remain at home. A population com- posed entirely of men and women between the ages of twenty and fifty, in vigorous health, with high physi- cal and mental powers, would have abundance of la- bor ; perhaps two or three hours a day would be suffi- cient to secure to all a fairly comfortable living. With a population of which one-third are children, 92 POPULATION. a considerable portion aged, a large number sick or feeble, some intellectually incapable of making labor effective, and a certain percentage who refuse to work because possessed of sufficient property to employ oth- ers as servants we have the effective working force greatly reduced, and consequently more hours of la- bor are required. The relation of population to labor may be summed up by saying : Labor naturally increases or decreases with the population, but depends on the physical and mental ability of the people, and the proportion of the entire population which is engaged in active work. The ability of a nation to labor should increase much faster than the population, because of the better education and technical training of each new genera- tion, and the experience it has gained from the past. The time will undoubtedly come when we shall consid- er the first twenty years of life as sacredly set apart to education ; when public opinion will not tolerate the support of parents by minor children ; when the State will see that the period of natural growth is used to fit the man for the active work of life. Not that chil- dren will do no work ; but only so much as is an aid to education, and the learning of a trade or business. VALUE OF LABOR. Labor is seldom so plenty as to have no value, because most men dislike to work. When labor has no value, they will not work, and hence the labor offered becomes scarce enough to give it a value. One of the wants we have to satisfy is that of a desire for leisure, and the satisfaction of this reduces the available labor power. Hence, labor POPULATION AND LABOR. 93 that can be had for nothing, that will be put forth whether the man gains anything or not, is so little that it is very scarce as compared with the work to be -done. If there were so many men who preferred work to idleness that there was nothing for all of them to -do, labor would have no value at all, though the utility would be the same as at present. Such instances are occasionally found. There are just enough of such laborers to make the principle clear. There are a great many people who write very fair poetry, who find so much pleasure in writing it, and seeing it in print, that they prefer to do this kind of work to doing nothing. This grade of poetry has a certain utility. A limited amount of it is printed in various newspapers, but the work possesses no value, because it is not scarce. Poetry of a higher grade, such as Whittier wrote, is scarce. It has, of course, a much higher utility, but it has value also, because of its scarcity. Value to the Laborer. The foregoing has reference io the value of the results accomplished, but there is another side, which is the laborer's side. It is the value of labor to him, or rather the value of freedom from toil. Certain kinds of labor are disagreeable, and would be done by no one if it were not to satisfy some want of his own, or to obtain a reward from others. Nearly all forms of labor are disagreeable when carried beyond a certain number of hours per week ; so that the laborer, in endeavoring to satisfy his own wants, finds that one of those wants is freedom from exer- tion. He who has inherited a fortune which gives him 94 POPULATION. control over the labor of others, may spend his time,, not in idleness, but in systematic pleasure-seeking. If he labors, it is in some special ways. He does work which he enjoys, or labors from benevolent motives in order to benefit others. It is true that many wealthy men seek to increase their fortunes for vari- ous reasons, among them the mere love and satisfac- tion of increasing them ; but the labor they perform is of the kind they enjoy, although it may not seem desirable to others. Most men work more than they wish to. The value of labor is precisely the value of ease. In considering whether he will work a day for a certain reward, a man asks himself whether he pre- fers it to a day of leisure. Men and nations differ greatly in this respect. Some would prefer a certain number of hours of labor during the year to freedom from toil. They are conscious that work is good for them, that they are better off with a reason- able amount of it than with idleness. The English^ Americans, and Germans are types of laboring na- tions ; there are other natural loafing nations, such as the Turks, native Africans, and, in general, people of lower civilization. They love idleness, and value their leisure very highly. They must have sufficient food to prevent starvation, and clothing enough for bodily pro- tection, and will therefore work a little to preserve life ; but anything further seems to them a less good than ease. Among them labor has a very high value, because there is so little of it ; their laziness makes it very scarce, and the amount of work performed is very small in proportion to their needs. POPULATION AND LABOR. 95 Labor, from the point of view of the laborer, fol- lows the same law as other values, so fully illustrated before. Its clisagreeableness increases very rapidly with its quantity. Value in Use shows the relation between Wants and Resources. In the case of Labor, value shows the re- lation of the labor power of the population to the wants of the population. If people are naturally in- dolent, labor power is small in proportion to wants, and the value of additional hours of work appears to them very great. On the other hand, their labor power may be far in excess of their wants, so that they would willingly assist a neighbor, and the value of labor would be very low. The value of labor is probably higher among civilized nations at the present time than ever before, because of the great increase of wants ; so that labor is actually scarce in proportion to the wants it has to satisfy. The actual power of labor should be raised to its highest point through the development of the indi- vidual, and the increase of skill and knowledge. The wants of the people should not increase beyond a point which will require reasonable exertion from the great mass of the population. We may assume that it is desirable that men should have great skill and knowledge, and great labor power, and that wants, should increase to the point which will demand such laborers. Such a race of men will certainly rank far above those whose wants are fewer, and powers o labor less. CHAPTER III. POPULATION AND PRODUCED WEALTH. Produced Wealth has no such relation to population as has Labor. Labor is embodied in population ; Pro- duced Wealth is entirely independent of the number of people. It may increase with great rapidity when population is decreasing, or it may decrease with great rapidity when population is increasing. How MUCH PRODUCED WEALTH is NEEDED? As with Natural Wealth, it is well to inquire how much Produced Wealth is needed by a given number of peo- ple. At first it would seem that there could not be too much ; but it is evident that we require only a lim- ited quantity of various classes of goods; but that -without a certain quantity of these goods, proportional to the number of people, either want or great suffer- ing must result. Indeed, it is impossible to maintain ;a large population except by means of vast accumula- tion of Produced Wealth. It will be more convenient to notice, first, that which satisfies wants directly. The quantity of wheat which can be eaten in a single year is limited ; per- haps three hundred and fifty million bushels is suffi- cient for all the people of the United States. Fortu- nately, this grain can be stored and carried over into the next year, with some expense ; but there is no great advantage in a large supply at the beginning of (96) POPULATION AND PRODUCED WEALTH. 97 harvest. Fruit has, however, often been suffered to rot on the ground, because there was more than the people could use. The quantity of clothing required by a nation is also limited. There is no great advan- tage in a stock sufficient for more than a year ; it is better that it be produced as needed. The same is true of dwellings. One or two houses is usually all that a family desires. If we have a house for each family, we may need better dwellings, but not more. This is one side. On the other hand, if there is too little of any of these goods, or, what is the same thing, too many people in proportion to them, there must be suffering. No matter how great the Natural Re- sources ; no matter how great our labor power we are compelled to produce for the future rather than the present. Most production requires a year. Unless there is food enough to last until the next crop ripens, there must be suffering, no matter how large a crop may be anticipated. When a shipload of immigrants lands, they require shelter at once. They could not in a densely populated country build them houses, from the beginning, in much less than a year. In a new timbered country one could, with the aid of his neigh- bors, roll up a very comfortable log house in a few days ; but not in New York City or its suburbs. One wants clothing to-day ; it will take a long tune to raise a flock of sheep, shear the wool and manufacture it into cloth. He can not raise a crop of cotton and turn it into cloth except with many months' labor. We need a vast stock of all this sort of wealth to supply the people until more can be produced. The quantity 98 POPULATION. required is not unlimited ; it bears a certain relation to- the population. The articles of luxury which a given population needs are not limited in number, or in the labor which can be bestowed in their production ; but the quantity of each sort of goods desired is limited precisely as in the instances before enumerated. Only a certain num- ber of pianos are wanted; although many persons would desire a better instrument. As a nation grows wealthy, the variety of articles of luxury and of art greatly increases ; and better quality is sought for. It is seldom that there is enough of these forms of Pro- duced Wealth for all the people. In some periods, and among some peoples, wants have been more nearly sat- isfied than at present, because the wants were fewer. With the general increase of intelligence and culture,, the desire for articles of luxury has greatly increased ; and the ability to make use of costly productions is vastly greater than ever before. Wants have, per- haps, developed more rapidly than the means for their satisfaction. With the standard of living desired by educated and cultivated people, the quantity of Pro- duced Wealth required to satisfy wants is so great that it has never been, and perhaps never can be, sufficient for a great population. The most common type of Produced Wealth which satisfies wants indirectly, is machinery. Its purpose is to aid in the production of something, such as clothing,, which can be used to satisfy wants, directly. While there is need of a great deal of machinery and many factories in the world, the factories for the production- POPULATION AND PRODUCED WEALTH. 99 of any one article are limited by the population of a nation, or the market in foreign nations. There can easily be enough cotton factories to produce all the cotton goods that can be worn in the United States. There can be as many railways as are needed. Some- times a single railway between two points could act- ually handle all the business at less cost than two. A large population, however, needs a vast amount of machinery, railroads, etc., and could not be sus- tained, with even the modern comforts of the poorer classes, without it. Without machinery and factories, .a considerable portion of the American people would perish, and the greater portion of the remainder be re- duced to the condition of the poor in the middle ages. It is evident that the larger the population, the more machinery and factories are needed. The limit of profitable accumulation of machinery, satisfying wants indirectly, is greatly increased with each new invention. It is possible for the world to be a great deal richer in proportion to the population than it was a generation or a century ago. What could the world have in early tunes ? Flocks of sheep, herds of cattle, castles, dwellings, and a little rude machinery and works of art. Many utterly useless things, such .as the pyramids, were produced with great labor. With the progress of invention, vast wealth is profit- able in the form of machinery, and the importance of Produced Wealth is greater than ever before. It is evident that population can not increase beyond a, certain ratio to the Produced Wealth of the land. If there are too many people, some must starve, no 100 POPULATION. matter how great the Natural Resources and the power of labor. Some may starve while others have an abundance, or all may be on short rations, but the weakest or poorest must finally die of hunger. The desirable state of affairs is that there shall be enough for the common wants of all. VALUE OF PRODUCED WEALTH. Produced Wealth is not permanent. Time destroys it all, or it is main- tained in its original condition only by constant labor in repairs. When destroyed, it can also be replaced. Were it not that men are looking forward to this de- struction and replacement, its value would be deter- mined entirely by its scarcity. If there were more dwellings than people could use, they would have no- more value than mountain scenery. If there were more clothing of a certain kind than people could wear, it would have no more value than the water of the river. It would be as useful as before, but, like the water, being no longer scarce its value has de- parted. People look forward to further production ; they know that, however great the stock of clothing in the United States may be, it will all be worn out in a few years, and that more must be produced. When Produced Wealth is scarce, in proportion to- the population, and its value therefore high, every ef- fort will be made to increase it. In this respect it- differs from Natural Wealth, which can not be in- creased. When any form of Produced Wealth is so abundant that its value is low, production is dimin- ished, and the stock is reduced by consumption. All Produced Wealth is the result of saving. As POPULATION AND PRODUCED WEALTH. 101 it is a common saying, "It is not what one earns, but what he saves, that makes him rich ; " so it is not what society produces, but what it saves, that consti- tutes the vast resource of the productions of human industry which were classified in an earlier chapter. A nation may consume during a year the total pro- duction of all its people. Here, there is no saving, and no increase in Produced Wealth. The people may even eat up and wear out the stock of goods saved over from former years. The stock of goods deterio- rates by mere lapse of time, and, unless replaced from year to year, will naturally diminish ; buildings grow old and fall into decay ; machinery rusts out, as well as wears out. Nothing remains as good as new, even if unused. There are two principal causes which promote sav- ing and the increase of Produced Wealth. The first is the desire for a provision for the future. One lays by for a rainy day, for the time of sickness, for a year of failure of crops, for old age. This desire to save varies greatly with different people and different na- tions. Where it is strong, the stock of the produc- tions of industry is certain to be large, because people will live in some way, and save a portion of what they get. Opportunities for saving, such as building and loan associations, a postal savings-bank, the purchase of a piece of property to be paid for in the future all promote habits of saving on the part of the people. It is sometimes said that certain men did not begin to grow rich until they ran in debt ; the reason being that they saved what before they spent on themselves or families. 102 POPULATION. The second cause of saving is the need of some form of capital. A workman or a manufacturer sees that he could succeed better by the aid of new machinery, and saves to buy it or to pay for it. While it is true that Produced Wealth is always the result of saving, it would be equally true to say that it is usually the result of extra labor. An easy-going settler in the West, living in a sod house or dug-out, iinds himself just able to make both ends meet in pro- viding for himself and family. If, now, himself and boys were to work more hours a day, and in the extra hours mold and burn brick from the clay on his farm, and afterward lay them in the walls of a house with their own hands, they might have a better dwelling as a result of extra labor. It would, of course, be sav- ings, since they might have used this extra labor to produce some luxury to eat or to wear. But it is directly the result of additional labor. This is prob- ably true of the greater part of all accumulations of the productions of human industry. Most men naturally consume all they produce, or get possession of. When they realize the necessity of saving something, of some capital or machinery to use, or of a house to live in, they get it rather by additional labor than by saving out of present products. CHAPTER IV. POPULATION AND SOCIETY. Society, like labor, is embodied in population. The number of people in whom one can be personally in- terested is very limited. A traveling man once stated that he knew twenty-five hundred physicians, whom he could call by name. Few individuals have the capac- ity to remember so much about so many people. An acquaintance with a few hundred is all that most per- sons care for, or are able to keep up. There is, how- ever, a desire for the presence of a much larger num- ber than one can become personally acquainted with. ^Te like to see a crowd on the street or at a place of entertainment. Part of the pleasure of a lecture comes from the hundreds, or thousands, who may be in the same room, in sympathy with each other so far as the common object of the evening is concerned. There is a satisfaction in numbers, in the consciousness that thousands are enjoying the same magazine, or book, that we are reading. *Even without a personal ac- quaintance, we may have a general knowledge of men, and may be in sympathy with vast numbers. The world would not be as satisfactory as it is, if the num- ber of people were limited to those we could person- ally know. It has also been said, in an earlier chapter, that a large number of people is necessary in order that pro- (103) 104 POPULATION. duction may be carried on to the best advantage, and wants satisfied in the most economical way. It is im- possible, with all the resources at the world's com- mand, to satisfy wants without a division of labor. Undoubtedly a very considerable division of labor could be had in a community of a few thousand peo- ple. There would be farmers, carpenters, blacksmiths, physicians, teachers, merchants, etc., and the division might be carried far enough to give more than half the advantage enjoyed at present. By means of for- eign commerce the division of labor may include all the world, so that even a small nation may reap the advantages of it. It should be understood that, in this respect, numbers satisfy wants by their presence, not by their efforts. This is the distinction between Society and Labor. Looked at as laborers, people satisfy their own wants, and aid in the satisfaction of the wants of others. Looked at as society, others unite with us in desiring the same goods, and creating a demand for large quan- tities. A thousand people need a thousand times as much as one, and the supply for the thousand may be produced at one-tenth the cost to each individual. In many instances the saving is even greater. The cost of a certain weekly newspaper exceeds five hundred dol- lars a week before a single copy is printed. If such a paper were produced for one man, a wealthy prince, it would cost him at least twenty-five thousand dollars a year. It is furnished to its subscribers at four dol- lars. Its publication is possible only because thou- sands of people want it ; but this means a population POPULATION AND SOCIETY. 105 of millions. One could hardly afford to cultivate his voice for a lifetime to sing to one person ; but if he is to sing to thousands, each listener may enjoy the pleas- ure, and the cost for all not greatly exceed that for an audience of one. Most of the common comforts and luxuries of life are furnished as cheap as they are, because produced in large quantities. It is the wants, and not the number of people, that make a demand for large quantities of goods, and their cheap production possible. If only one person in every hundred thousand desired a particular book, there would scarcely be a demand for seven hundred copies in the United States, not enough to pay for publication. If one person in every hundred wishes the book, it would require a nation of only a hundred thousand people to take a thousand copies. The pres- ence of Italian " dagoes " does not add at all to the demand for the rarer articles. For the common pro- ductions, such as sugar, shoes and cotton, the demand of a single million people is enough to make produc- tion economical. It is the number and character of the wants, and not the number and character of the people, we are taking into account in estimating the advantage of Society. A large variety of wants em- bodied in few people (provided we have the means of production) are just as advantageous in affording a large market as the same number of wants with a. larger population. To make this clear, suppose twa countries, one with a million people, the other with ten millions. Let us suppose that by reason of su- perior intelligence, knowledge and self-control, the 106 POPULATION. labor power of the one million is as great as that of the ten millions. This is no unreasonable supposition. A million picked men of the United States would have as great labor power as fifty million native Africans. Let us also suppose that the wants of our nation of one million are as numerous, and as great, as those of the ten millions. This, also, is no unreasonable suppo- sition. They can not eat ten times as great a quantity of food, but they will desire a greater variety of food, which may require as much labor power to produce. They may actually wish ten times as much clothing. They will wish many things, such as pianos, that the savages do not care for. We assume that they are homogeneous, of comparatively like tastes, so that a considerable portion of the people desire the same class of goods. Now, by our supposition, the labor power of the two nations is equally great, the sum of the wants is equally great; hence goods can be pro- duced in as large quantities in the one nation as in the other. The advantage, indeed, is on the side of the civilized nation. It does not take a very large number of people to cause a demand for the common necessa- ries of life, since every person wants the same thing in nearly the same quantities. Every person uses sugar, shoes and wheat. Ten thousand families are enough to give employment to several men in raising wheat, even with improved machinery ; and it could be pro- duced, if there were only ten thousand families in the world, without very much more labor, per bushel, than at present. A very small and thinly settled country lias people enough to make possible the production on POPULATION AND SOCIETY. 10T a large scale of the common necessities of life. When it comes to the more costly comforts and luxuries, the demand is from a very small percentage of the people. The higher the civilization, the larger the proportion of the population which wants them. We may imagine a nation so well educated that every " family will desire the best books, and the highest class of magazines, with all the comforts of a well-to-do family of the United States. With such a civilization, there may be in a country of fifty thousand people as large a de- mand for the rarer kinds of goods as would exist among five million Poles with a few American over- seers. Many persons want these things who can not get them, but they will never be produced until people desire them. Compare the wants of a tribe of Afri- can savages, or of an Indian tribe, with those of a merchant or mechanic in the United States ! While, therefore, the presence of a considerable number of people is desirable, there is a limit to the number required by the need for Society. A hundred million persons may afford no better opportunity for- the economical satisfaction of wants than ten million. Indeed, there is reason to believe that a population of one million highly cultured people would afford op- portunity for carrying the division of labor as far as is for the advantage of the race, and give, practically, all the economic advantages to be had from large numbers. Both their wants and their labor power would be from ten to fifty times as great as those of an equal number of savages. They would gain greatly by exchange with other nations, in articles which 108 POPULATION. could be better produced elsewhere. There will al- ways be some things in the production of which some one nation will have a decided advantage. But in the satisfaction of most of the wants of its people, it is probable that, leaving out advantages of climate and soil, a nation of one million people of the highest in- telligence and knowledge, would be able to reap so nearly all the advantages of a division of labor that the rest can be safely disregarded. The difference be- tween one family providing for all its wants, and a division of labor among a million people, is almost be- yond the power of imagination. Most of the advan- tages will have been gained before we reach the mill- ion limit, and the gain from further additions will be barely perceptible. In this, we have assumed an educated and cultured population, equal to the best and most intelligent in the United States ; let us say the best million of the sixty-five. It will be readily seen how the presence of this million people would give us nearly all the advantages we now enjoy. The demand for very many goods does not now extend much further. It is the number of wants, combined with labor power to satisfy them, that creates the demand and makes the division of labor possible ; the char- acter^ rather than the number of the people. In satisfying the wants that grow out of the need of Society, then, as well as those which come from our need of the other resources, we find that a con- siderable population is an advantage, but that there is a limit beyond which this advantage ceases. We have thus far said nothing about the agreeable- POPULATION AND SOCIETY. 109 ness or disagreeableiiess of neighbors as a part of So- ciety. After it has increased to a few dozen people, the social advantage of a larger number depends alto- gether on their character. When there come to us cultured and Christian Englishmen, our society is en- riched by so much. When we receive a shipload of the lowest Poles, Italians or Chinamen, we have more .people, but society is so much the worse. We have them to govern, or rather (to our shame be it said) to help govern us. We come in contact with their vices. Their filth is a source of sanitary danger. Socially, they are so much rubbish, which we could well afford to pay something to get rid of. Whatever advantage is gained from their labor is more than lost by their presence. The gain from their labor accrues to a few wealthy manufacturers. The loss is the loss of the entire people. It is unfortunate for us to add to our population a single person who has not already a desir- able standard of living, and labor power enough to maintain it. VALUE or SOCIETY. The value of the society of one class of people is very different from that of an- other class. To have value, Society must first have utility. The presence of a highway robber has no utility to a traveler. The presence of a friend dur- ing the journey might be very useful. The society of Chinese has no utility for Americans, even when their labor is desired. The society of families of intelli- gence, good morals and agreeable disposition is of very high utility. In the satisfaction of wants indi- rectly, the society of a thousand Hottentots, who con- 110 POPULATION. sumed no goods, would add very little to the oppor- tunity of increase in economic production through the division of labor. The society of a thousand average American families would add materially to the wants to be satisfied and to the demand for goods. Granting that the society of any particular persons or class has utility for us, its value, like the value of all resources, depends on its scarcity. The man who has all the agreeable acquaintances he can meet, does not greatly care for more. The presence of his man Friday had great value to Robinson Crusoe. The presence of another man would have been desirable, but not worth so much to him. So in satisfying wants indirectly. A single family can divide the necessary labor between its members, to great advantage. A thousand families can carry the division of labor to an extent which will gain the major part of all that is possible to be gained by this means. The value of the society of another thousand would not be anything like that of the first thousand. The value of the society of a tenth million would be very little. As in most other instances^ value de- creases very rapidly as the want becomes partially satisfied. A little of anything desired is a hundred times the value of the same quantity after the want is nearly satisfied. Our object is to satisfy wants. The quantity of anything which man desires is limited. Value is what a given quantity is worth to him. After he has all he wants, an additional quantity is worth nothing. Long before one's wants are fully satisfied, the value of the article decreases. The value of So- POPULATION AND SOCIETY. Ill ciety a hundred years ago, in the United States, found expression in the desire to get more men of a good class from Europe. Now it has no value at all, and the instincts of the people have led to a realization of the fact. The country now has all the people it needs. In all this it must not be forgotten we are consider- ing Value in Use, and not Value in Exchange. We may sum up the last four chapters as follows : 1. The Resources of Nature can not be increased; but are very abundant, and will satisfy the wants of a certain number of people better than when population is less dense. When the number exceeds a certain limit, in a given state of civilization and progress, there is less of the Resources of Nature for each one; this limit is the point of diminishing returns to labor bestowed on land. The discovery of new Natural Resources opens the way for satisfying the wants of a larger population, but discovery is not cre- ation, and nothing can be discovered which does not exist. 2. The labor power of nations is seldom in propor- tion to their population ; the labor power of any nation may be multiplied many times with no increase in the population ; and there may be a great increase in population with very little increase in labor power. The labor power of a nation depends on the kind of people rather than on their number. With no immi- gration, however, there is no reason why increase of labor power should not keep pace with population ; and, with education and proper training, the power of 8 112 POPULATION. the people to labor should increase faster than their number. 3. The accumulated Resources Produced by Hu- man Industry bear no fixed relation to the number of people. 4, The advantage of Society depends on the char- acter, and not on the number of people. There is an almost inestimable advantage in a popu- lation large enough for the purposes previously de- scribed ; but this number is comparatively small, and there is only slight gain in further increase. It is 'evident, then, that the wants of each person can be satisfied much more easily and fully by an in- crease of population up to a certain limit. When that limit is passed, there will at first be a slight gain in some ways and a loss in others ; and it is probable that the population might be doubled, and, it may be, multiplied by ten, without greatly affecting the welfare of each individual ; but with continued increase in the number of people there is certain to come a time when the satisfaction of the wants of each individual will be far more difficult than if the population were smaller. Not more difficult than it was a half century ago, but more difficult than it would be now, were there fewer people. This condition of things has been reached in England. England suffers from many traditions, the presence of privileged classes, and misgovernment. No doubt the average welfare of each individual might be far greater than it is, but it is impossible that each should have as much as if there were fewer people on the island. The condition of affairs is disguised by POPULATION AND SOCIETY. 113 importations from foreign countries, so that the En- glish people use not only the land of England, but the wheat fields of the Dakotas and Southern Russia. Were the English people shut up in England, the im- possibility of each having as much as if there were fewer would be plainly seen. Her statesmen realize this, and are sending colonies to all the world. She is seeking, not for more lands to conquer, but for more lands to colonize. In this country, the question is not one of emigra- tion, but of immigration. Ideas penetrate the masses of the people slowly, and when once accepted retain their hold long after changed conditions have made them dangerous. At the close of the Revolutionary War, we were a small people with a great country, and little of the land was in actual use. There was room for millions more ; and our fathers rightly judged that the nation would be better able to defend itself .against foreign powers if it had more men. There is .also a pride in numbers. We like to brag of how great we are, and how many we are. The fathers were right in holding that an addition of a few more mil- lions of men like themselves would be of great advan- tage. The men who came were of a good class. They expected hardships in the New World, and they were men of the temper and ability to meet them. The idea that immigration is an advantage remained in the minds of the people after immigration became one of our greatest dangers. The early immigrants were not objectionable as society. They were English, Scotch, Irish and German people like ourselves, whose chil- 114 POPULATION. dren and grandchildren are to-day among the best of American citizens. All this is now changed. This country, if not full,, is so nearly filled that land and other Natural Re- sources should be saved for the children of those now here. It is to be remembered that when there is land enough and room enough, population increases very rapidly, without immigration. We should soon be a hundred million if no other emigrants came to our shores. Were there land enough without crowding, a generation thereafter would see two hundred millions. The majority of the people we are now receiving from abroad are no longer desirable. We have long since passed the point where increase of numbers is of any advantage. We have more than enough to use the Resources of Nature beyond the limit of diminishing returns ; more than enough for society and to afford the widest opportunity for the division of labor. There is still room for the cultured Englishman and German. They add diversity to our society, and their continued coming will be a gain. But they are only a fraction of one per cent, of the immigrants we get. Most of those who come to us are not the best, but the worst, of the nation which sends them. The Italians are here in large force, and they are the class of Ital- ians which Italy is glad to spare. We have narrowly escaped being overwhelmed by a flood from China. It illustrates the strength of old terms and sentences from which the idea has departed, to see how many good men of New England were horrified at the thought of restricting Chinese immigration. They appeared POPULATION AND SOCIETY. 115 utterly heartless and brutal in regard to their own countrymen. They were not so in reality; it was merely the strength of old methods of thought, and the habit of saying : " America is to be an asylum for all nations." As if the splendid civilization of Amer- ica is to be buried under the rubbish cast off from all nations in the world ! Many of these men were Chris- tians and firm believers in the Scriptures. When the Lord saw that the race of men was so wicked that nothing could be made out of them, he destroyed them with a flood, in order that the world might be filled of the descendants of one family, better than the others. It is a mistake to suppose that the teaching or the spirit of the Bible requires us to open this civilization to the influence of the lowest classes of every nation in the world. The United States was originally settled by men of splendid stock. They brought with them the most advanced ideas of their time. The doctrines of religious liberty, of moral and religious training, of general education, of political liberty restrained by firm government, of the development of the individual these and many others have helped to make the nation what it is. To permit it to be buried under a flood of Chinese, Italians, Poles, and the lowest people of every nation in the world, would seem to be the thought of a demon determined to arrest the progress of the race. Our duty to send missionaries to teach the gospel in heathen lands is clear. Our duty to pro- tect our homes and our land against the incoming flood of ignorance and vice, is no less clear. CHAPTER V. THE LAW OF THE INCREASE OF POPULATION. Malthus occupies the same relation to the subject of Population as Adam Smith to that of Labor. Per- haps no man has been more misrepresented, not be- cause of any lack of clearness in his writing, but be- cause what he wrote is seldom read, except by special students of the subject; and flippant writers have found it convenient to use his name for almost any- thing they pleased. Malthus was an English clergy- man, the father of eleven children, a Christian who desired to alleviate human misery, and to do all that lay in his power toward the development of the race in its highest character. His " Essay on Population," published a hundred years ago, was mainly devoted to an historical investigation of the causes which have kept population down to its present limit. He was a keen logician, a careful investigator, and the world owes him a great debt. John Stuart Mill pressed the same views somewhat farther than did Malthus ; yet so has the name of Malthus been identified with the subject of population, that no one thinks of any other name in connection with it. One who writes to-day has the advantage, not only of Malthus' investigation, but of all criticism that has been made upon it, and of the new truth evolved through the discussions of a hundred years. I have (116) THE LAW OF THE INCREASE OF POPULATION. 117 sought neither to avoid nor to follow the methods of statement of Adam Smith on Labor, or of Malthus on Population. My only purpose is to present what seems the truth on each subject, in as direct and simple a manner as I am able. Men, like plants and animals, tend to fill any coun- try in a period which is very brief compared with human history. Clear off the forest, and a crop of weeds springs up the first season. They were not there before, because there was not room enough for them to grow. If the ground is kept clear of other growths, the seeds of a single plant will soon cover a large area with luxuriant vegetation. Nature is very prolific, and there is no limit to the possible increase of any species of plant or animal, except the lack of room, subsistence, or conditions of life favorable to it. Were every other species of vegetation kept down, a single bushel of wheat could cover all that portion of the earth in which the climate is fitted to its growth, in a period of twelve years. A few horses left in South America filled all the plains. There are but few animals which would not fill the whole earth with, their kind in a hundred years if there were no other animals to interfere with them. Man is no exception-, to the law of rapid increase where there is room for- him. To find that room we must take a new country,, where there is work for all, with a living, respectable in the eyes of one's neighbors, for all who are willing to work ; and where there is no reason for delay in mar- riage. An approach to such a condition of things was found in this country a few generations ago. People 118 POPULATION. had a poorer living than at present, but there was more equality. Young people were expected to marry at an early age, and it was generally believed that the mar- ried man made as good a living as the single man. The conditions for the rapid increase of population were far from the most favorable ; but from 1790, the time when the first census was taken, the population of the entire United States doubled, by natural increase, in twenty-three years ; and doubled again in about the same period. There was very little immigration. The census of 1790 showed a population of less than 4,000,000 ; fifty years later, in 1840, there were more than 17,000,000. Malthus assumed a tendency of population to double, in round numbers, as often as once every twenty-five years ; but under favorable cir- cumstances, with plenty of room, and no doubt of a livelihood for each one and his family, it is evident that population would increase much more rapidly, prob- .ably doubling every eighteen or twenty years. The precise period is, however, of little importance com- pared with the fact that the increase is in geometrical progression. Geometrical progression is familiar to most persons, in the story of the horse-shoe nails ; yet we are all astonished at the results, the moment we make the calculation. The number of people on the earth at present is estimated at 1,500,000,000. If the population of the United States were only 60,000,- 000, and were to double every twenty-five years, in twenty-five years there would be 120,000,000 ; in fifty years, 240,000,000; in seventy-five years, 480,000,- 000 ; in one hundred years, 960,000,000 ; in one hun- THE LAW OF THE INCREASE OF POPULATION. 119 dred and twenty-five years, 1,920,000,000, nearly one- fourth more than the present population of the globe. Either the United States, England or Germany would re-people the earth in less than a hundred and fifty years, if the inhabitants of every other land were swept off by a pestilence. A single million people would fill the United States with 64,000,000, its pres- ent population, in less than a hundred and fifty years. The question of the future is whether the people of the United States in the next century shall be de- scended from the best element of American citizens, or from Chinese, Italians, and other immigrants. India is f ull of people 240,000,000 ; China's population could overrun the entire earth in less than a century if it had the opportunity. For a hundred years, every possible effort has been made to break the force of these statements, which one would suppose must be almost self-evident. It is diffi- cult to see how any one can doubt their truth the mo- ment his attention is called to them, but some strange ideas have been advanced. The most common objection is that these statements can not possibly be true, because, as a matter of fact, population has not usually increased at the rate men- tioned. But no one said that it had. Such an increase for a thousand years would be an impossibility, because the earth would not support the people. It is only affirmed that it is the tendency of population to in- crease at this rate, that it will do so where there is room for it where the people feel reasonably sure of a, living, and where the increase is not checked by ex- 120 POPULATION. ternal causes, sucli as war or pestilence. Mr. J. E Cairnes has illustrated the truth by centrifugal and centripetal forces : the tendency of the attraction of gravitation is to draw a planet to the sun, while the tendency of its momentum is to fly off in a straight, line ; the result of the combined action is to cause the planet to move in an ellipse around the attracting body. We should make little progress in science if we did not understand and measure both these forces ; when we say the tendency of the attraction of gravita- tion is to draw a planet to the sun, we mean that it would draw it there were there no opposing forces. The tendency is a real force, which must be taken ac- ; count of, though the actual result can not be ascer- tained except by estimating the combined effect of aD the forces. The final check to the increase of population is lack of subsistence, not for all, but for the poor. But there are other checks which diminish the rate of increase, and in most civilized countries prevent its reaching the point where any considerable portion of the people suffer from lack of food. War. War has always been one means by which population has been kept down. As the animals have been hunted by man, so men have been hunted by each other. A Scotch laird said he did not care how hard-shot his estate might be, by one who leased it for hunting, since there were always enough animals left to replenish it. But for the natural power of men to multiply rapidly, the race of men might have become extinct in the barbarous wars of savage tribes* THE LAW OF THE INCREASE OF POPULATION. 121 uch civilized nations as the Greeks and Romans, and Eastern nations before them, carried death where they carried their arms. The number of people may be no less to-day than if there had been no wars ; the de- struction of war has given room for more rapid in- crease in time of peace, and the limit of subsistence has not been so quickly reached. There is reason to hope that the slaughter of men by each other will, in time, be abandoned, and this check to the increase of population will then be removed. Cruelty. Closely allied to war is simple cruelty. Human life has often been held very cheap. Slavery, oppression, and cruelty of all kinds, have destroyed life recklessly all through the world's history. Savage tribes have put to death all that came in their way, women and children as well as men ; and some of the highest civilizations of the ancient world have shown more cruelty than the savage. The history of the world is red with blood. Unfortunately, it has often been the best men whose lives were lost. Could the earth have been peopled by their descendants, instead of their slayers, civilization might have made more rapid progress. Suppose the Huguenots had not been slaughtered, there might have been no more people in France to-day, but a considerable portion of the French population would now be descended from those Huguenots. Suppose the Christian martyrs could have peopled the earth instead of their slayers ! Pestilence. Pestilence is sometimes only a part of the destruction caused by famine ; but, aside from this y the loss of lives from such raging diseases as cholera,. 122 POPULATION. and even smallpox before the principle of vaccination was discovered, has contributed greatly to the keeping down of population. Such pestilences as the Black Death of the fourteenth century have contributed their share. All pestilences, not the result of fam- ine, are filth diseases ; not so often caused by filthy habits in the immediate sufferers, or even in the na- tions where they work their greatest destruction, as by those of other people and other lands in which they originate. The filth of the East has been the cause of cholera in Western nations. With the spread of medical and sanitary science, a pestilence will soon be a thing of the past. Smallpox is practically under control, and the present generation can scarcely under- stand the ravages it made a century ago. There is very little to fear from cholera in this country, not- withstanding the certainty that it will be occasionally brought to our shores. The lower nations will in time learn more of sanitary science, and pestilences will be- come less frequent in the East. These great checks to the increase of population are certain to act with less power in the future, and may in time be entirely removed. With the history of the past before us, it seems pe- culiarly fortunate that this tendency to rapid increase of population exists. It has enabled man to fill the earth, to repeople localities almost depopulated by war and pestilence, and has provided a powerful force which almost immediately closes up any gap in the number of people, when there are fewer than the land will com- fortably support. THE LAW OF THE INCREASE OF POPULATION. 123 Overcrowding. Where the population has not been kept down by war and pestilence, the simple crowding* of people in narrow quarters itself tends to prevent a rapid increase in their number, through an increased death rate. It is true that the death rate in great cities of the present is less than in many parts of the country, because of the excellence of modern sanitary arrangements ; but this is only true of the city as a whole. In the localities which are the more closely crowded with the poor, the death rate, especially among- children, is far greater than in the city at large, or in the country. It is not possible to obtain accurate sta- tistics of ancient times, but; from what is known of the methods of living, there can scarcely be a doubt that the mortality caused by the huddling together of people in cities has been a powerful check on the increase of the population. The sanitary arrangements where people are few, may be even worse than in crowded cities, but the isolation and wide space of country are themselves among the best sanitary measures. A fam- ily of ten people may occupy a house of two small rooms in the country, but this is a very different thing- from two rooms in a tenement house in a city, with other families over and under and around them, and no ground to step upon but the crowded street. As with war and pestilence, this check is also rapidly dis- appearing, or rather, in consequence of sanitary ar- rangements, population will bear much greater crowd- ing than before. In such cities as Glasgow, the pro- vision, even for the poor, is so good that we must ex- pect a rapidly diminishing death rate ; and the most 124 POPULATION. crowded portions of the largest cities in the world may be made more healthful than some country villages. All this, however, is accomplished at a rapidly increas- ing cost as population becomes more dense. Famine. When the natural tendency of popula- tion to increase is not overcome by other methods, it soon presses upon subsistence. We do not mean by this that the earth is not able to produce ten times more than it does at present ; but that in the state of civilization at any given period, population will press upon the subsistence which is actually produced by the methods of the period. Shortage is first shown in fre- quently recurring famines. In good years there is suf- ficient, but there is only a small reserve accumulated for bad years; and a series of bad years, or a year in which the product is greatly reduced, means a fam- ine. It is, of course, the poor who suffer. There will always be enough for a large portion of the popula- tion, and those who have most wealth will be able to secure abundance ; but though a few may have more than they need, and may waste in carelessness, there is not enough for all, even if it were equally divided. This is true of all recent famines in Russia, India and China. A few years ago, in northern China, the peo- ple had eaten the green earth bare, and were dying of hunger ; the tales of the famine in Russia in 1891-92 made little impression on our ears, for we accepted the fact that the suffering must be great, and cared to hear as little about it as we might. In some provinces, the people ate everything that could be eaten, and then lay down to die. Comparatively few people die of actual THE LAW OF THE INCREASE OF POPULATION. 125 starvation, even in a famine. Insufficiency of food "brings disease. A general state of unhealthfulness prevails, and those who die of diseases caused by in- sufficient food, and from other effects of the famine, .are many more than those who actually starve. If no other cause acts to prevent the increase of population in accordance with its natural tendency, we may be sure we shall always find its growth checked here. It is easy to say that with better methods of produc- tion, better government, and more equal distribution of products, the present population of every province of Russia could easily be supported ; but it is certain that in the present condition of Russian society these improvements will not be made, even with the certainty of a famine in some province every few years. Popu- lation has reached the limit of subsistence in the pres- ent state of society in that country. The tune will come when it will support twice as many in greater comfort ; but twice as many people at present would mean more deaths from starvation, and greater suffer- ing to all. Neither has the pressure of population upon subsistence anywhere in the world's history, of itself, tended to improved methods of cultivation, or to a provision for the support of a larger number. The greatest progress has been made in countries like the United States, which have not been overpopulated, and where the opportunities for each one to improve his condition are, therefore, so much the greater. The im- provement of the individual leads to practical improve- ment in methods of production. Progress in over- crowded countries is due to other causes, and is in 126 POPULATION. spite of the pressure of population on subsistence,, rather than in consequence of it. oC*~ Def erred Marriages. The checks which tend to prevent the increase of population thus far noticed may all be reduced to misery, vice or crime. They are such as we are seeking to avoid. The population has been kept down by starvation, overcrowding and pes- tilence, and by wars, murders and other crimes. There is an entirely different class of influences, which in civilized countries operate to counteract the tendency of population to increase with its natural rapidity. The most important of these is the delay of marriage through one's inability to support a family in the man- ner he desires or considers respectable. In a new country, where we suppose population to increase with less restraint, people marry at an early age. It is evident that early marriages mean larger families. It is not simply that each family has a larger number of children ; they have them earlier in life, and the second and third generations begin sooner. Many a man now marries at thirty who would have married at twenty-five or earlier had he been able to support a wife. All causes which tend to delay marriage act as a check on the increase of population. These causes- increase as population presses harder upon subsistence. In a new country such restraints are little felt. It i& the popular opinion that a man gets along better after marriage than before. As the country grows older and more densely populated, he sees that he can not pro- vide for a family in the way he regards necessary, and defers marriage until he has learned a trade, or ac- THE LAW OF THE INCREASE OF POPULATION. 127 cumulated a little money, or finished his studies and established himself in his profession, or got a start in business, or secured a position which will enable Jhim to support a wife and family. All this may take ten years. The unfortunate feature of this influence is that it acts to prevent the increase of the better classes of the people, and leaves the gap to be filled by the descendants of the worthless and the ignorant. Those who are satisfied to live and bring up a family in squalor marry young, so that the great increase in population in every country comes from them. It would be better for the future if the conditions could be reversed ; if it were the intelligent, the enterpris- ing, and the best element among the people which marries young, and if the greater portion of the next generation could be their descendants instead of those of the reckless, the shiftless, and the ignorant. If there were no pressure of population upon subsistence, it would be so. If every man felt able to bring up his family in what he regards as a condition of decency,, early marriages would be the rule. This was the con- dition of affairs seventy-five or a hundred years ago. The energetic young man believed in his ability to- make a living which his neighbors would regard as re- spectable, and marriages among the better class of people were as early, and families as large, as among; the others. The opening of new employments to women ha& had a very decided effect in preventing or delaying marriages among the better classes. Many a woman now supports herself who a hundred years ago would 9 128 POPULATION. have married before she was eighteen, because mar- riage was the only avenue open to her. If unmarried, she remained at her father's, or with relatives, in a position thought inferior to the married state. If she were compelled to earn her own living, domestic ser- vice was almost the only employment open to her. All this has been changed. Women have almost a monop- oly of teaching in the common schools. They have become telegraph operators, stenographers, typewriters, clerks and saleswomen, and are practicing law and medicine. A still larger number are at work in fac- tories, and nearly every employment which woman chooses to enter is now open to her. This must have an influence on marriage. Fewer women are likely to marry merely for a home. Women who are able to support themselves with the respect of society are not likely to marry except from choice. The effect is Tather to defer marriage for a few years than to pre- vent it, although fewer marriages take place than would occur under other conditions. Public, opinion has much to do with the number of marriages. In many instances this has been thrown on the side of early marriages, and men were led to feel that he who brought up a family rendered a ser- vice to his country. Such a public opinion must lead to somewhat earlier marriages, on the average, since one will take more risks of being able to provide for the future. Where public opinion is on the other side, and says that one has no right to marry and bur- den society with a family which he will not be able to support, it must tend to make even the reckless more THE LAW OF THE INCREASE OF POPULATION. 129 prudent. The less intelligent members of the commu- nity, those who would never read a book on Political Economy, are more likely to be reached by this in- fluence than by any other. In fact, public opinion is almost the only force which acts to defer marriages among the ignorant and the lower classes of society. Their death rate, however, owing to unsanitary sur- roundings, is abnormally high. An attempt has been made in some countries to reg- ulate marriages by law, and to refuse permission to marry unless some satisfactory evidence of ability to support a family is given. The effect of such laws, as might have been expected, has always been an increase of the number of illegitimate births, and of immo- rality. Such laws do, however, act as a check on the increase of population. Other legal prohibitions and regulations have often had a very decided effect on the increase of popula- tion. The requirement that one must serve in the army until a certain age tends to defer marriage. Poor Laws, especially laws where relief is given outside of almshouses, have the opposite effect of increasing the population. We have seen that the fear of want and starvation is almost as powerful a check as starvation itself; but where one knows that neither he nor his children will be allowed to starve, he trusts to luck and the poor laws. It is true there is an independence which prefers star- vation to charity ; but this independence is not pos- sessed by all, and is very easily weakened. Once let a man be driven by distress to accept aid, and his 130 POPULATION. independence is broken ; he soon comes to seek for aid, and to prefer charity to labor. It is in the cities and old countries, where population is dense, that we find so many sad instances of this kind. How much crime has to do as a check to the increase of population can not well be determined. In China population is almost held stationary by the murder of infants, especially females ; and the ex- posure and murder of infants was common among many nations of ancient times. Crime, including the murder of infants, and lesser crimes and vices, has undoubtedly been a powerful check to the increase of population ; but the extent of its effect can be only guessed. Enough has certainly been said to explain the meaning of the statement, " tendency of population to increase, and to double as often as once in every twenty-five years." Enough of the causes which check this natural increase war, pestilence, famine, overcrowding, crime, and the delay of marriage have been enumerated to show the power of the in- fluences which have tended to prevent the increase of population in the past. If these causes had not acted, we may be sure that starvation would have effected the same result. It would seem that no one could argue that, because population has not increased at a certain rate since the beginning of history, it has no tendency to increase at that rate. Had there been no checks to their increase, a single thousand people would have become 1,000,000,000,000,000 in a thousand years. We know that population will not THE LAW OF THE INCREASE OF POPULATION. 131 increase at the rate of a favorable new country, because, even with all the improvements and discov- eries that can be made, there will be no room for it. The law of the rapid increase of population is in harmony with all other laws of nature. Nature is very prolific, and provides abundantly for the increase of all living things. If the law of population were different, man would be an exception to every other living thing upon the earth. With the world's history of war and crime and cruelty, if there had not been this tendency of population to increase with startling rapidity, whenever it had the oppor- tunity, the race might have become extinct. The fact that population increases in geometrical progression has been the occasion for many attacks on Malthus. It is not probable that he himself at- tached much importance to this particular form of statement, and many modern political economists have been inclined to state the truth in some other way. But the fact that every increase in population becomes the basis for further increase makes it geometrical progression. This is what distinguishes geometrical progression from arithmetical. The rate of increase may change ; and the tendency to increase has been limited in the past by the various checks described ; some of the most cruel we may hope will soon cease to act. The natural rate of increase of population would doubtless be found to be somewhat different among different races and peoples ; but there is probably no civilized race which would not double in twenty-five 132 POPULATION. years, or less, were all checks, such as war, cruelty,, pestilence, etc., removed ; and were there abundant room in the country, with sanitary surroundings, and opportunity for every honest laborer to support a family in respectability. It is not probable, however, that Malthus meant to lay any particular stress on any assumed rate of increase. He selected twenty-five years for illustration because it is a round number, and he believed that iistory had shown that the tendency is to double in shorter periods. It would certainly be unfortunate for us to lay much stress on any particular rate of in- crease. The important fact is the tendency of any people to fill rapidly any country where there is room for them. There can be no doubt that, if other in- habitants were swept away, a thousand people of any civilized nation would very soon fill the whole earth. This tendency is fortunate, though it often entails suffering* But it forces on us the question, What people are to be the ancestors of the people of the future the intelligent or the ignorant? the moral or the degraded? There has been another attempt to break the force of the law of the increase of population, which should be treated with more respect. It has been assumed that the tendency of population to increase decreases with the age of the world, or of any nation or people, and with the advance of civilization ; so that it ap- proaches the point where the death rate and the birth rate will be equal. This assumption for it is a pure assumption has naturally arisen from the fact THE LAW OF THE INCREASE OF POPULATION. 133 that the rate of increase in some countries has dimin- ished through the action of deferred marriages, and other checks, which do not show any weakening of the natural tendency of population to increase as rapidly as ever, under favorable circumstances. The best example of a population nearly stationary is that of France. It is stated that in the provinces, where the land is divided into small holdings, young people as a rule do not marry until there is a place for a new family. They wait until a holding is vacated by death, or some place filled by people in their station in life is opened ; so that the population is practically kept stationary through deferred marriages. How much crime, especially in the cities of France, has to do with keeping the population within its present limits, it is impossible to say. As it becomes more dense than can be supported with the greatest comfort to all, a great variety of checks come into play to prevent its increase. The fear of starvation, or of want, or insufficiency, or even inability to live in the manner which one's acquaintances will regard as re- spectable, is often as potent an influence as starvation itself. But this does not go to show that the natural tendency is weakened in any degree, only that other influences have come into play. The French people would certainly fill this earth in less than two hundred years, were all other nations suddenly destroyed by a flood. That the tendency of population to increase is not weakened is shown by the knowledge we all have of society and history. Who can doubt that if a 134 POPULATION. thousand Englishmen, Germans or Frenchmen were placed in an unoccupied country, where more men are as desirable as they were in the early days of this re- public, where the position of each is not far from equal, and there is no doubt of satisfactory provision for all, the increase of population would be as rapid as in the first fifty years of the United States ? Im- agine society in a state of socialism, and the state to agree to provide for all, and the children of all, does any one doubt that the population would increase as fast as in the early days of this republic ? CHAPTER VI. APPLICATIONS OF THE LAW OF THE INCREASE OF POPULATION. 1. EMIGRATION. The most natural remedy for an overpopulated country is emigration. It is by this means that the whole earth has been peopled. Men go West, where land is more abundant, where there is more room for new families. England has sent her colonies all over the world ; she laid the foundation of the United States, and is now filling Australia and New Zealand. So long as there is unoccupied land, or land occupied by savages, it may be peopled from the older nations of the world. The new country is for- tunate if the emigration is of the best blood of the old, as happened with this country before the Revolution. Yet when even the worst class of people are selected, they seem to do better than at home. New surround- ings, more room, the encouragement to exertion wliich more room brings, appear to build up the strength and character of a majority of the emigrants ; and their descendants are likely to show a still greater advance. We can not expect them to equal those from better stock, but they appear to make more progress than in the country whence they came. Countries suitable for settlement are, however, fill- ing rapidly. Europe and Asia have as many people as they can support to the best advantage in the pres- (135) 136 POPULATION. f- ent state of the world's progress. England is now en- deavoring to settle the country north of the United States ; but the cold northern regions can support only a sparse population. South America is largely peo- pled by men of lower civilization, many of them de- scended from Indians. With the methods employed by modern European nations and the United States,. that country would give room for a vast population. The greater portion of South America lies in the tor- rid zone, which is not so suitable for settlement. The southern portion, especially that occupied by the Ar- gentine Republic, appears to offer the best opportunity of any country in the world, for the surplus popula- tion of other nations, but even this land is limited. Australia, by reason of the climate, offers little land for settlement except the coast line and the northern portions. Only a very few, except the original inhabit- ants, can live'in the interior. There are three million Englishmen on the island about the population of the United States before the Revolutionary War and they will fill it with people in a short time. Of Africa, the northern part, except a narrow strip on the sea, is a barren desert ; Egypt is full ; the southern portion of the continent is in the possession of the English and Dutch; the central portion has re- cently been opened by explorers, but whether the in- tense heat will permit any considerable immigration, is still an open question. Civilization will result in a great increase of the native population, but it is doubt- ful if Africa offers a place for any extensive emigra- tion from Europe. APPLICATIONS OF THE LAWS OF POPULATION. 13T A survey of the world shows very little land avail- able for emigration from other countries. Most na- tions are rapidly coming to understand that all room will soon be filled by their own people, and prefer to keep it for their descendants rather than for foreigners. Every great country in the Old World is seeking for a place to plant colonies. China would be glad to take Australia, but the people, backed by English iron- clads, absolutely refuse them admission. They under- stand that they have no more land than they need for their own children. European countries have been sending their people to the United States, but it is not to be supposed that public opinion here will tolerate this much longer. Each nation must soon come to take care of its own people; and emigration as a check on the rapid increase of population will soon be a thing of the past. EEFUSAL TO PERMIT IMMIGRATION. Understand- ing the power of any people to fill its own country in a comparatively short space of time, it would seem that the instinct of self-preservation would cause an absolute prohibition of immigration long before the point of diminishing returns is reached. It is not strange that a new country, such as the United States a hundred years ago, or Australia at the present time, with land unoccupied, should desire the immigration of people lilce themselves from the country from which they came. But that they should desire this after they have become numerous enough to reap all the advantages of a large population, is something to excite wonder. It is partly accounted for by the slowness- 138 POPULATION. with which ideas permeate the mass of the people in ordinary times, and partly by the fact that a few persons can make a great deal of money out of such immigration at the expense of the entire nation. It is through these men, and their friends and supporters, that ideas favorable to the admission of immigrants are industriously circulated. WHO SHALL PEOPLE THIS LAND ? The most im- portant deduction from the law of the last chapter is that, since the descendants of a very few thousand people are able to fill any country in a comparatively short period, the future of the world depends on the nations or classes of people from which posterity is to come. It is particularly fortunate that England rather than China has been the colony-planting nation, press- ing into new lands and filling them with the English rather than the Chinese race. It was also fortunate for this nation that our early immigration came from the English, the German and the Irish races, rather than from Asia. The present immigration is one of the most unfortunate that could exist. With a few desirable immigrants, we are receiving the scum of Europe criminals, paupers, and diseased persons, which the older nations are willing to pay something to get rid of. There is a large emigration from Italy, Austria and Russia. The persecution of the Russian Jews has driven numbers of them to our shores a very undesirable class not so much because they are Jews, as because of their ignorance and Iiabits of life. It is not even the addition of this half million people annually to our population that APPLICATIONS OF THE LAWS OF POPULATION. 139 f is our greatest danger; it is the fact that it will be their children, rather than the children of those who have made the United States what it is, that will people this land in the future. That there may be no doubt about this, let us see what " room for population to increase " implies. In the struggle for existence it is not the best plants, the most desirable, that succeed ; it is usually the weeds that overrun the ground. The more desirable plants need external help. They do not survive on the laissez faire, or let alone, principle. The farmer has a con- tinual fight, all the long summer, to raise his crop. Weeds crowd out the corn. The farmer uproots them, fights them, keeps them out of his field, to give hi& corn a chance to take possession of the ground. The question is whether the weeds or the corn shall have the land. Free competition always gives it to the weeds. Every farmer knows this, and keeps the weeds out. When Darwin said " the survival of the fittest " he had no reference to the morally fittest, but to plants and animals which could best live in the conditions about them. The pest of the Canada thistle survives, because it is better fitted to the conditions than is useful grain. Let the field alone, and it will soon be covered with Canada thistles, with no grain to be seen ; and the seeds of the weeds will be borne by the wind to stock other fields, and crowd out other grain. Vermin multiply, because fitted to the con- ditions around them. Some plants can stand the cold ; others, perhaps more desirable, are killed by it. The Chinaman can live on less than an American, and 140 POPULATION. therefore fits the conditions of a crowded population. When the American comes in competition with him, he must either starve or live as these Chinese live; assuming that there are Chinese enough to make the competition real. Many of us have unconsciously transferred Darwin's phrase, " survival of the fittest," to the morally fittest, using it in a sense in which it is utterly false, and which he never intended. The number of people which a land will sustain depends on how they live, as well as on how much they are able to produce. Take the American mechanic, farmer or merchant ; he desires to live de- cently and with what he regards as necessary comforts. He thinks it would have been better not to have been born than to live on a lower scale. He wants a house for his family, or, if in a city, room enough for privacy. He wants sanitary surroundings, conditions for a fair degree of cleanliness, comfortable clothing, schools for his children, and some intellectual enter- tainment. Let one see what the New England factory girls demanded, and how they used the little money received as wages! Compare such lives with the Chinese quarter of California, with Italian dagoes, and with the quarters occupied chiefly by the poorer immi- grants in New York and Chicago. It costs something to live on the American plan. The poorest of our people live in a way that is princely compared to many of the poor of the Old World. Now, when it comes to a struggle for existence, those who can live the cheapest, and at the same time do the work, crowd out those who must live on a better plan, if they live at APPLICATIONS OF THE LAWS OF POPULATION. 141 all. Especially is this true of a country as well settled as the United States has come to be, where the Resources of Nature, and especially the land of the country, are in the hands of private owners ; and where the great mass of the people are more and more com- pelled to work for wages. It is not a question of how much can be produced ; it is rather a question of what one can get the work done for. The Chinaman, living as he does, regards the wages of an ordinary American workman as princely, and can afford to accept pay on which a self-respecting American family would actually starve. We would think that it would be better for him and his children to starve than to adopt the Chinese method of life. Let Chinese im- migration be free, and enough of the three hundred and fifty millions come over to take the place of the American workman, and what is he to do ? It is easy to see what the best of them will do. They will not marry, for one thing. Even now such a man defers marriage until he sees a prospect of being able to sup- port a family. As a single man he may compete with Chinamen, but the children of Americans (except of the wealthy class) will become fewer each year. The Chinese have hardly begun to bring their families here as yet, but if they had a real footing they could sup- port a family with the wages that would scarce keep an unmarried American in decency. The numerous descendants of the Chinaman would promptly fill the gap caused by the lack of children of Americans. With free immigration from China, it would be but a few generations before we should see the great mass 142 POPULATION. of the people of this land descendants of Chinese or other immigrants. Good men lament the small increase of the old American population, and think there is something wrong in the fact that men of American descent do not marry earlier, and that there are so few children of the old American stock; but their lamentations will not alter the fact. There is some- thing wrong, and it is that there is 110 room for the increase of Americans ; that ignorant and foolish peo- ple have invited the degraded of every nation under the sun to come and fill up the land, instead of pre- serving it for the descendants of those who founded and made this nation. What has been said of the Chinese is true of nearly all of our present immigration, which, it is to be re- membered, is of an entirely different character from what it was twenty years ago. In some respects Rus- sian, Italian, and immigration from some other parts of Europe, is even worse than that of the Chinese. They are near akin to us in race, and if not too nu- merous are more likely to assimilate with us ; but the danger of the crowding out of the old American pop- ulation is still greater than from an equal number of Chinese. The European immigrants bring their fami- lies with them ; their children are numerous, and al- though they expect better wages than the Chinese, their competition tends to degrade the American la- borer. He can not live as they do. He ought not to live in that way. The only chance he has in compe- tition with them is in the fact they have so much larger families to support than he ; and this means that they APPLICATIONS OF THE LAWS OF POPULATION. 143 are crowding his descendants out, and that their large families are to take the land. There is no room for the American population to increase ; there is room for that -of the European immigrant. This tendency is somewhat affected by the higher death rate of the for- eigner, but nevertheless the rate of his increase is even now far greater than that of the American people. The very rich are exempted from these conditions, be- cause the question of providing for a family need not trouble them. It is the great bulk of the sturdy American people, the best material to make a nation out of that the world has ever seen, who are slowly be- ing replaced by the lowest people of Europe and their descendants. The foreigner can live in harder condi- tions, on poorer food, and in more filthy surroundings. There is no doubt that the people of any nation will rapidly increase where there is room for them, but room is a relative term. There is room only for a certain number of hills of corn to an acre, if the crop is brought to its greatest perfection. The farmer will per- haps plant the hills not less than four feet apart, each way. This may seem to be a waste of land, but it is all the corn there is really room for. There is plenty of room for weeds, however, between the rows ; they will grow close together. Let them alone, and they will kill the corn. Families, like corn, need a little space between. The highest state of civilization and of manhood requires nourishing food, comfortable cloth- ing, and many things which can be had only where population is not too dense. But when there are all the people who can subsist in the manner in which it is 10 144 POPULATION. desirable that the race should live, there is plenty of room for Chinese, the Italian and the Russian. He can live between the rows of corn, and pack his chil- dren into a Chinese quarter, or an Italian tenement house. Let him alone, and his descendants will crowd out the American. There is room for a hundred of him where there is room for one American family. The most important application of the law of the increase of population, then, is that, so far as we are able to control the matter, room should be given the best nations to expand, that the earth may be peopled by the best rather than the poorest. The people of Australia and New Zealand understand this better than we. While there is at present room for more people there, they propose to save the land for their own de- scendants. The same course should be at once adopted by the United States. Independent of the character of the immigrants, the people of this nation have an interest in preserving the United States for their chil- dren, and children's children. There is no people in the world from whom a race of high social order is so like- ly to come as from us. To abandon this land to the people whom Europe is anxious to get rid of, is a crime against the human race. But what about the increase of population within a nation itself ? In China, India and Russia, population is kept within its present limits partly by starvation ; not by starvation each year in every part of the coun- try, but by frequently recurring famines in extensive districts. In India, population was formerly kept with- in its old limits largely by wars and the cruelty of the APPLICATIONS OF THE LAWS OF POPULATION. 145 upper classes. With* the settled government of the English this cause has been removed, and population presses harder on subsistence, notwithstanding the great increase in the productiveness of the country, un- der English rule. People seldom die of actual hunger. Insufficient food leads to disease and death from other causes. In the United States there has been a very decided <;heck to the increase of the better classes through a deferring of marriage, because of the unwillingness of men to marry until they can support a family, and be- cause of the opening of employments to women. If this would be no hardship, and would act as a powerful stimulant to the voter's real ability to help rule.. Suppose the requirement to be a knowledge of the branches usually taught in the common schools. Therei is no one who could not master them some time in his. life, if he chose to exert himself. Such a rule, in the^ United States, might at first disfranchise half the voters; but who can doubt that it would give us a government far better for all those who were disfran- 13 192 OWNERSHIP AND CONTROL OF RESOURCES. cliised as well as the others? The moral standard would be no lower, and the average intelligence of the voting population would be vastly increased. An en- tirely different set of men would be chosen as repre- sentatives. So far as those who were disfranchised are concerned, they can be divided into two classes : first, those who feel it something of a disgrace to be de- prived of the privilege of voting ; and, second, those who care nothing about it. The first class would com- ply with the educational requirement within a few years. The prize of the suffrage would do more to make education universal and popular than any other possible influence. As regards those who do not care enough for the suffrage to obtain the requisite knowl- edge, it is safe to say that they will not be deeply con- cerned over the loss of the right to vote. The chief -care should be that no impossible standard is set up,, and no man deprived of the suffrage who has the will to obtain it. So far as the experience of the world has taught us, we may believe that among civilized nations the best form of government attainable will be one where the power resides in the votes of a very large body of the people ; and that the only requirements of the suffrage should be intelligence, common morality, and such education as is in the power of each to obtain, at some period of his life, if not at the earliest age fixed for the casting of a vote. The question of the advisa- bility of inviting woman to take part in the govern- ment need not be discussed here. It probably depends CONTROL OF SOCIETY. 193 on the answers to two questions : First, would it give us a better government ? Second, would it be best for woman? Having noticed the more important principles con- nected with the ownership and control of each of the four classes of resources, we should in this chapter return for a moment to the question of Socialism, since it has as much to do with the control of Society as with the ownership of property. Socialism is government action which practically prohibits every individual from engaging in Production or Exchange on his own account. The difference be- tween government management of all the business of the country, or only certain lines of it, is radical. In the one case the government enters a field occupied by thousands of others, leaving them as free as before ; in the other, it drives all private enterprise out, and takes the whole field to itself. The mere management of a few public interests by the government does not shut out private enterprise. Schools, to be sure, stand on a somewhat different footing from Production and Exchange, but the public schools of the United States do not prevent great numbers of private schools. The post-office does not prevent the express companies from carrying matter that might go by mail. It is always well to have the possibility of competition of private parties with government business. But even if the government has a monopoly in certain enterprises, it leaves all the other business free to the citizen. The burden of proof is on those who advocate government 194 OWNERSHIP AND CONTROL OF RESOURCES. control of any specified business. The lines of busi- ness which may properly come under the direct con- trol of the government are comparatively few, and are likely to involve large interests. They are pre- cisely those which would otherwise be carried on by great corporations, and probably by monopolies. All other lines of business remain, and are so numerous that they form in the aggregate by far the greater part of all the productive business of the country. Suppose that all natural monopolies were turned over to public management that street-car lines, and even railways, were run by government officials, as they are in many countries in Europe. How much would this interfere with the opportunity of the ordinary citizen ? He would probably have a better chance than before, since the government must treat all alike, and large corporations would not be able to crush out the smaller by reason of discrimination in freight rates. People may well say that when a business gets so large as to number thousands of stockholders, managed by officers elected by their votes, especially if it is of such a na- ture that there can be no competition, it would better be managed by the government. It may, or may not, be wise for the government to extend its business op- erations : that is another question. What we wish ta emphasize here is the radical difference between shut- ting the citizen out of all business and the admission of the government as another business firm a busi- ness firm which competes only with the large corpora- tions, likely to become monopolies ; and which in any case leaves the field as free to the ordinary citizen as> CONTROL OF SOCIETY. 195 l>efore. Socialism is distinguished from all other or- ganizations of society. Its characteristic is that it -shuts out the citizen from production, not that it ad- mits the government to some departments. Socialism demands that all the instruments of production shall be owned by the State, It is here that it is irrecon- cilably opposed to Individualism. It allows within certain limits, it is true, the use by each one of his income in his own way ; but in Production and Ex- change it permits no independent action, and here absolutely destroys Individualism. There are, indeed, three well-marked schools of thought: first, the laissez faire, composed of those who would make the government merely a police force ; sec- ond, those who would have it undertake such lines of busi- ness as experience shows can be much better managed by public than by private enterprise, and, under general regulations, compel all private business to be conduct- ed in a way that will not interfere with the highest in- terests of the whole people ; and third, the Socialists, who destroy all individual enterprise, prohibit the in- dividual from engaging in business, and have every- thing done by the State. The difference between the last two schools is a hundred times as great as between the second and the first. It would be as great a mis- take to call the second Socialists as to class them with the laissez faire school. As in other instances, extremes meet. Socialists and men of the laissez faire school unite in the claim that everything which is not laissez faire is Social- ism. The former wish to gain adherents by represent- 196 OWNERSHIP AND CONTROL OF RESOURCES. ing that the difference is only one of degree. The laissezfaire school hope to prevent any further exten- tion of government powers by crying " Socialism ! " The cry was for a time effective. It was easier ta make people believe that the management of a street- car line by a city " is only a step toward Socialism," which, if taken, " other steps are sure to follow," than to discuss the question on its merits. But the cry has now come to have the reverse effect from that intend- ed, and has done immeasurable injury. People have reasoned, " If municipal control of gas-works is So- cialism, Socialism must be a good thing." This indis- criminate attack by the laissez faire school on enter- prises which the people are coming to approve, is one of the causes for the remarkable increase in the num- ber of good men who call themselves Socialists. Now the great mass of common-sense men, who are neither Socialists nor in favor of letting everything alone until it goes to destruction, need to define their position. They must not allow themselves to be classed with So- cialists, Christian or any other kind. They are to say that, while we do not believe in unnecessary interfer- ence with private business, we do not intend to let em- ployers alone who work children under ten years of age in factories. We do not intend to let the father alone who is breaking down the health of his child, ta throw it, when a man, a burden on society. We do not intend to let a corporation alone that is unduly oppressive to the people. We propose to move care- fully, but we have no hesitation in giving the control of any business, like the post-office, to the government CONTROL OF SOCIETY. 197 when there is good reason to believe it will be for the best interests of the people. We should show that none of these things are in any way related to Social- ism ; that the management of natural monopolies by the government is not Socialism ; that the government of Germany, which owns the railroads, is not Social- ism ; and that the city of Paris, as now governed, is not a socialistic organization. They should indig- nantly refuse to be classed with Socialists, because So- cialism is utterlv opposed to their spirit. There can be nothing more unfortunate than for the people to suppose that control of some natural monopo- lies by the government, means that all private enter- prise shall be abandoned. It is only the intellectually weak man who fears that the doing of some things in- volves the doing of everything. There is no doubt that the minds of the people have been somewhat confused on this subject ; and that many advocates of government control of such public under- takings as seem necessary, fear that they are Socialists. They are nothing of the kind. Neither is a govern- ment which engages in necessary public undertakings, in as much danger of becoming socialistic as one man- aged on the " let alone " principle. One extreme tends to drive people to the other. When the mass of the people understand that the highest Individualism does not prevent the government from undertaking any- thing which is shown to be for the best interests of the public, does not prevent regulations for the humane treatment of children, or designed to secure their edu- cation, the converts to Socialism can never become 198 OWNERSHIP AND CONTROL OF RESOURCES. numerous enough to enslave society. Socialism is to be fought on the ground of its tyranny, its proposal to enslave the minority by the power of the majority, and its attempt to prevent the individual from engaging in Production or Exchange. BOOK IV. ECONOMICAL USE OF THE RE- SOURCES. BOOK IV. ECONOMICAL USE OF THE RESOURCES. INTRODUCTION, 20L CHAPTER I. THE ECONOMICAL USK OK LABOR, . . 203 PART I. The Constant Employment of Labor, . . 203 PART II. The Irksomeness of Labor, 209 PART III. The Division of Labor, 214 PART IV. The Development of Labor Power, and the Prohibition of Certain Forms of Labor, 221 CHAPTER II. ECONOMICAL USE OK THE RESOURCES OK NATURE, 225 PART I. Permanent Natural Resources, .... 225 PART II. Consumable Natural Resources, . . . 231 PART III. Public and Private Use of the Resources of Nature, 234 CHAPTER III. ECONOMICAL USE OF PRODUCED WEALTH, 242 CHAPTER IV. THE USE OF THE RESOURCE OF SOCIETY, 252 CHAPTER V. THE PURPOSES FOR WHICH THE RE- SOURCES SHALL, BE USED, .... 25$ BOOK IV. ECOKOMICAI, USE OF THE RE- SOURCES. This subject is not the same as " Production " in the older books on Political Economy, but includes it. Our point of view is entirely different from that of the older political economists. They treated of the "Pro- duction of Wealth," its Distribution and Exchange ; we are treating of the Satisfaction of Human Wants. Many of these wants are satisfied, directly, by labor without the intervention of wealth at all. The teacher, singer, preacher, as well as most persons engaged in personal service, satisfy wants directly, instead of by the roundabout way of producing something which shall afterward be used in their satisfaction. The economical use of the Resources is of even more importance than their extent. Our Resources are greater than in former times. We have dis- covered many Resources of Nature unknown to the past; the power of labor is greater in proportion to the population ; and the accumulations of Produced Wealth are vastly larger, but the better satisfaction of wants is due as much to modern methods of using the Resources as to their increase. Not only are wants (201) 202 ECONOMICAL USE OF THE KESOURCES. letter satisfied, but the world is able to provide for far larger numbers of people. Methods of using the Kesources also determine to some extent whose wants shall be satisfied, irrespective of the question of the ownership of property. In Book I. we saw what Ke- sources a nation has for the satisfaction of the wants of its people ; in Book II. we considered the number of people whose wants are to be satisfied ; in Book III., the ownership or control of these Resources ; and we now come to the question of their practical use in satisfying the wants of the people of a nation. We shall find that the simplest plan is to treat of the use of each Resource separately. Such treatment can be only of general principles. The detailed use of the Resources must be determined, each one for himself ; and skill in details brings fortunes to many. We can not pursue the subject so as to determine how a farm or a factory should be carried on. This re- quires a knowledge of business, of thousands of minor matters. Few men can learn more than one line of production. But there are certain fundamental prin- ciples, such as a statesman should understand, which underlie all business, all methods of production, and all methods of satisfying wants. We may take up the four great classes of Resources in any order, but it will be more convenient, as in the last book, to begin with Labor. CHAPTEK I. THE ECONOMICAL USE OF LABOR. PART I. THE CONSTANT EMPLOYMENT OF LABOR, The first requirement for the economical use of labor is to use it to provide for the constant employment of all the labor of a country. No waste is so great as- that of idleness. The chief misfortune of financial panics, and of a change in the value of money, is that multitudes of men are thrown out of employment, and fill the country with an army of idlers or tramps. The work that these men might have done is so much loss. The loss from the idleness of a thousand men is just a& real as that from the destruction of a million dollars' worth of property by fire. This explains, in part, why a country sometimes seems to recover so quickly from disasters. Let us suppose a part of a city to be burned. Here is a real loss of Produced Wealth. The city must be built up again, and the burned structures may be replaced by new which are even better than the old. Here is a call for additional labor. If there are thousands of idle men all over the country willing to work for pay, they may be at once employed. Some will be put at work in the city where the loss occurred; others will be added to the working force of mills in other parts of the country, for the production of build- ing material, builders' hardware, glass every one of the thousands of articles which go to replace the build- ings destroyed. The additional work will not all be (203) 204 ECONOMICAL USE OF THE RESOURCES. clone by new men. Factories which were running 011 short time may now increase their hours of labor. When the city is rebuilt, if we could trace the pro- cesses, we might find that it was all extra work ; that is, hours of labor which would not have been put in had there been no fire. The balance sheet of the country may show as well at the end of the rebuilding as before the fire. There has been a great loss ; but there has been an equal gain in additional labor per- formed. The loss has been replaced by men who would otherwise have been idle, or worked fewer hours. There has been a shifting of property. The owners of the buildings have lost, and the workmen of the country have gained. We have assumed that there was a large body of men out of employment, or of men who would work more hours. On the contrary, if all men were at work before the fire, and the city is rebuilt by labor taken from some other form of production, the country is so much the poorer. The single truth now before us is, the misfortune of the idleness of large numbers of men. Labor is a Resource for the Satisfaction of Wants which, if not used to-day, is lost; since the work that would have been done to-day can not be done to-morrow. Every month of enforced idleness is so much loss to the country. For it must be remembered that one must live whether he works or not ; if he has nothing saved, he must borrow ; if he can not borrow, he must live on the charity of others. The view of some of the English political economists has been too much that of the ECONOMICAL USE OF LABOR. 205 manufacturer, who counts only the wages he pays ; if he shuts down his factory, he saves the wages. When we stop a steam-engine we, at least, save the coal, but when a man ceases work he does not save the necessity of food. Practically, it costs the same for him to live whether he works or not. It is true that men do live on less ; but that is because one never knows on how little he can live until he is obliged to make the ex- periment. He might live in the same way when he is at work, and save the difference between the lowest cost of living and his wages. He requires a little more food when at work, but the increased cost is not enough to be taken into account. It is also true that many men when they lose employment at one kind of labor do not actually cease to work, but earn a smaller sum in some other way, or by labor at home reduce their family expenses. But the cost of living depends very slightly on whether one is at work or not ; hence if he is doing nothing, the present available resources for the satisfaction of wants are so much less. The first requirement for the use of labor power, then, is that it be constantly employed. As a practical country mer- chant observed, " I have always noticed that where all the people worked, and were economical, they got rich or well-to-do." The steady power of continuous labor, year after year, tells. It is of the utmost importance, then, that every man has a chance to work when he desires, under con- ditions which will give him at least the greater part of the results of his own labor. Society has in some way to keep all persons from starving, whether they work 206 ECONOMICAL USE OF THE RESOURCES. or not. A few are supported by charity, and a few live by robbery ; but it would be better if all were em- ployed in useful labor. The people are the purchasers. The fact that great numbers are out of employment prevents their purchas- ing, and leaves .stocks of goods on hand. Producing must be stopped until the stocks are worked off. It is like a row of bricks. Each set of men is knocked doprn one after another, "and there is no market for anything, because nobody is producing anything, and has nothing to buy with. So long as human wants are unsatisfied, there should be opportunity for the em- ployment of men. Suppose, in a panic when thou- sands of men can find nothing to do, we should send to each one and ask him what he would buy if he had the money ! Now suppose we put this army of the unem- ployed to producing just those commodities to satis- fying their own wants ! These men would be at work, and these wants would be supplied. The workmen are the consumers ; they are their own market. It costs them no more to live when at work than when idle, and proper statistics should show where labor is most need- ed. We may be sure that it is needed somewhere so long as any wants remain unsatisfied. The direction of production is now mainly deter- mined by the demand for goods at certain prices ; but the falling off in the demand does not show itself until production has been carried too far in one direction. It sometimes seems as though there is no demand for any goods, that the market in every line is overstocked; yet we have at the same time idle men who want these ECONOMICAL USE OF LABOR. 207 very goods, but have nothing to buy with. There is capital enough ; the men must have food and clothing in any case, but no business man sees his way, from the demand and supply of the market, to undertake to set them at work at anything. The ordinary facts of demand and supply at certain prices need to be supple- mented by public statistics which will help to show where these men can be put to work with profit. They should be producing something to exchange for the surplus stocks of goods which burden the shelves of the merchant. The difficulty is not in a lack of desire for the goods, but in the fact that idle men are unable to exchange their labor for them. Financial panics are the means of throwing large numbers of men out of employment, and panics are fre- quently due to a change in the value of money. Even if there is no panic, when the value of money is steadily increasing and the prices of goods falling, men hesi- tate to engage in business. An increase in the value of money is the same as a fall in the price of goods. Now, when the prices of all goods are falling, men are afraid to manufacture. By the time the returns are to be expected the goods will be worth less, and a fall in price will absorb the profits. No one knows how great the fall will be. Everybody is cautious. Em- ployers try to keep on the safe side, but while they are on the safe side thousands of men are idle because they can find nothing to do. Business men are on the safe side because they fear a change in the value of money. Labor unions and strikes are a cause of idleness. Let us suppose that a strike succeeds : the country has 14 208 ECONOMICAL USE OF THE RESOURCES. nevertheless lost so much by the long period of idle- ness on the part of the men. Suppose that the strik- ers are maintained by the contributions of other men of their class ; and that, by reason of the labor un- ions, these contributing members do get higher wages, so that the limited number of men at work actually receive as much in wages as would the entire body of workmen, strikers included. Nevertheless, the country has lost the labor of the idle men, and they have gained nothing. They are no better off under the anx- iety of the strike than if they had been constantly em- ployed. The people have lost by the strike, and the workmen have gained nothing. Idleness is waste, and unfortunate, whether it comes by commercial panics, when employers are compelled to shut down their mills, or by strikes in good times, when men refuse to work. The opportunity for more constant employment of labor may be found in co-operation, in which the workmen own the business ; and perhaps a large part, if not all, the capital with which it is carried on. If they owned the land, the building, the machinery, and other capital necessary, they would come as near being- independent as is possible. In dull times the returns to their labor would be less, but they would at least have something to do, and get all they make. I re- alize the difficulties of co-operation as fully as any of those who think it impracticable, but the security of employment counts for much. Labor should also be used without waste of strength. Some men will expend twice as much energy as others in accomplishing the same result. This is as true of ECONOMICAL USE OF LABOR. 209 mental labor as of physical. There are a few who have learned to think directly about the subject in liand, and about nothing unnecessary to it. Other per- sons are obliged to settle many preparatory and inci- dental questions before they come to the real one. Such men must cut down a whole forest, and examine each tree, to get the one piece of timber they want. WASTED LABOR. It is assumed that labor is to be economically employed for the satisfaction of wants. Labor may, however, be wasted, when the loss is as great as that of idleness. One may work hard all day in carrying stones across the road and back again, but the world is no better off, and no more wants are sat- isfied than if he sat still by the roadside. There is un- doubtedly a great deal of wasted labor in consequence of misdirected effort. Goods are produced which no- body wants, or are made so poorly from lack of skill and knowledge that they are useless. We have little conception of the wasted labor in the world. The employer who turns it in the direction where it is all of use, has saved to the world all that would otherwise have been wasted, which may be half of all the labor he employs. All that has been said about the importance of the constant employment of labor has no force except with the implied assumption that the labor is to be used for practical purposes, and shall aid in satisfying wants. PART II. THE IRKSOMENESS OF LABOR. The desire for leisure is as real as any want we have to satisfy. Most men dislike to work, and are looking 210 ECONOMICAL USE OF THE RESOURCES. forward to more leisure, and would be glad of shorter hours. Thus far we have considered labor power simply as any other force which can be used. If all men pre- ferred labor to leisure, we should have only to consider how to get the most accomplished by the members of a given society. But the workman embodies in him- self both the labor power and the wants to be satisfied. All through the world's history there has been an effort to have one class work, and another class eat, thus completing the circle of Political Economy. The smaller class which ate, was indifferent to the larger class which worked. The modern conception is of a people nearly all of whom are engaged in some eco- nomic labor ; that is, in an effort to satisfy wants by the use of muscle or mind, or both. Where all the people work, we have no wants except the wants of the laborers ; and one of these wants is more leisure shorter hours, longer vacations, less labor. The question is, how far we shall ever be able to satisfy this general desire for leisure, and at the same time satisfy the numerous other wants ; and how this desire for leisure compares in importance with other wants. When it is a question of food and raiment for one's- self or family, the common opinion of Americans holds up to scorn the man who is unwilling to work for them to the extreme of his ability without physical injury. But there are many who hold that the provision of the common comforts of life ought, in the present stage of civilization, to leave some leisure to the workman. We observe that most labor becomes more disagree- able as the hours per day are increased. There is ECONOMICAL USE OF LABOR. 211 indeed a very general conviction that a certain amount of work is for one's benefit. Although one may desire leisure for the time being, his judgment tells him that for most men, and probably for himself, continuous employment for say five hours a day, six days in the week and forty weeks in the year, would be better than idleness. Eight hours is more than twice as irksome as four, and twelve more than twice as irksome as eight. So far as mere results are concerned, it is now the opinion of those who have collected the fullest statistics on the subject that, in the average of mechani- cal trades and shopwork, the maximum result is ac- complished by about eleven hours of labor per day. A farmer with a great variety of duties in the open air, including the care of his stock and what are called " chores," may perhaps accomplish more in sixteen hours than in less. But with the intense strain of the factory, nearly all men will do more in twelve hours than in sixteen, and in many instances more in ten than in twelve. There are a few employments in which one can accomplish more in less than ten hours, but not many. So far as the results of labor are con- cerned, the present hours of labor in most employments probably enable the workman to accomplish the maxi- mum amount. A further reduction in the hours must be'for the purpose of satisfying the desire for leisure as real a want as any beyond the mere necessities of life. Many workmen claim that as four sets of men tend- ing a machine for four hours each, can now accomplish a hundred times as much work as the same number of 212 ECONOMICAL USE OF THE RESOURCES. men working sixteen hours a day a hundred years ago., they ought to be able to secure a living with fewer hours of labor. On the other side, it should be said : (1) The saving of machinery is as great as this in only a few employments. On the farm, for example, while much machinery has been introduced, there is much that must be done at which one can accomplish little more than was effected fifty years ago. The amount of hand labor yet required is very large, and the average saving of machinery is by no means so- great as at first appears. (2) A large part of the- gain from machinery is absorbed by an increased pop- ulation. Without labor-saving machinery the present population could not be supported with anything like the degree of comfort of fifty years ago. (3) The saving of machinery is shown in the better satisfaction of wants. With all the present hardships, the condi- tion of the workingman, and of the entire people, is far better than before. (4) There has been an aver- age shortening of the hours of labor. But there is no doubt that the wants of the people, where population is not too dense, could be fairly well provided for with a further reduction in the hours of labor, especially if our industrial system was so perfect that employment could always be found by all persons willing to work. For the highest satisfaction of wants laboring men should demand that the hours and days of labor be re- duced, at least to the point of the greatest return ; that is, to the point where as much can be accomplished, year by year, as with longer days. More labor than this is waste. The employer for a month or year may ECONOMICAL USE OF LABOR. 213 gain by it, but the people, in the long run, gain nothing, and the laborer has lost the satisfaction and advantage which he might have had with shorter days. The most important regulation is that of one rest-day in seven. There hundred average horses for which the owners would take $150.00, each, if they could get no more. While the total supply is all the horses there are, the supply at $150.00 is one hundred horses. Demand is desire for any commodity. The total demand is the total desire, or all that would be taken by all the people if the price were nothing. The total demand for drinking-water is measured by the amount that is used. For practical purposes we usually have to deal with more limited demands, at fixed prices. The total demand for horses in this county is the number of the horses desired. But there are demands for less numbers at various prices. At $75.00 each, perhaps one thousand horses could be sold. At $150.00 each, not more than ten; hence the de- mand at $75.00 is for one thousand horses, the de- mand at $150.00 is for only ten. We now have the full conditions of Supply and De- mand, and assume that we are acting under free com- petition. The horses for sale constitute Supplies at various prices. The purchasers embody Demands at various prices. How many horses will change hands, and at what price or prices ? We notice, first, that assuming competition to be free, in an open market where each knows what the other pays and receives, horses of the same grade will all sell at the same price. It is true there may be a few men who would sell at $75.00 rather than not sell SUPPLY AND DEMAND. 291 at all. But they are not numerous enough to supply the demand, and competition among the purchasers will enable them to secure a higher price. So, while there are a few men who would pay $150.00 rather than not buy, the supply of horses at a lower price is so much greater that competition will enable the buyers to purchase cheaper. Each buyer will pur- chase where he can buy cheapest. Each seller will sell where he can get most. The final result will therefore "be to secure the same price for all. What will that price be, and what will be the number sold ? We have supposed ten horses of which the Value in Use to the owners is but $ 75.00, which will therefore be sold at that price if they can not get more ; and there are purchasers who will pay $150.00, each, for ten horses if they can not get them for less. Now, clearly, there must be at least ten horses sold, and the price will be somewhere between $75.00 and $150.00. But there are other purchasers, and other sellers. While only ten horses would be taken at $150.00, twenty would be taken at $140.00. Let us suppose also that while there are but ten horses for sale at $75.00 there are twenty for sale at $90.00, hence at least twenty horses will change hands, and the price will be between $90.00 and $140.00. As the price is reduced, the number of purchasers increases. At $130.00, thirty horses would be taken. Perhaps thirty horses are for sale at $100.00, so at least thirty horses will change hands, and the price will be be- tween $100.00 and $130.00. At $120.00 there is a demand for forty horses. Forty horses can be had 292 EXCHANGE. for $110.00, consequently at least that number will change hands at a price between $110.00 and $120.00. At $110.00 there is a demand for fifty horses, but while forty horses could be had at $110.00, fifty can not be had at less than $120.00, seeing the owners of the last ten find them worth more than this to use. Now, fifty horses can not change hands, because the demand for this number is at $110.00, whereas the supply is at $120.00, hence the number sold must be less than fifty ; and, as we have seen, greater than forty; the number of horses that will change hands will be between forty and fifty, and the price somewhere between $110.00 and $120.00. This somewhat lengthy supposition has been written out to familiarize ourselves with supplies and demands at various prices, and to see how both the selling price and the quantity sold are finally arrived at by the play of the forces of competition. There is not one, but many, Demands, and not one, but many, Supplies. We can not tell what the demand is until we know the price at which the exchange is proposed. We can not tell what the supply will be until we know the price offered for the goods. The Total Demand for any article is commensurate with human wants. It means all that would be used, or taken as a gift. The Total Supply is all there is of the commodity all the wheat in existence ; all the horses fit for use. The Total Supply of any article is simply the quantity of it which exists. The Demand at any particular price is the quantity which would be taken at that price. It can not be SUPPLY AND DEMAND. 293 greater than human wants, and depends as much on what people have to buy with as on the wants them- selves. A starving man can not buy a loaf of bread for five cents, if he have not the five cents. The Total Demand for grain is all that people could use. The Total Demand at a dollar a bushel is all that is wanted at that price by people who have the means to purchase it. So there are various Supplies at every possible price. While the Total Supply is all there is, the Value in Use to some owners is so great that they could scarcely be induced to sell. The supply of wheat at even ten dollars per bushel would prob- ably be found to be less than the total supply. That is, even ten dollars per bushel would not call out all the wheat in the world, although one dollar per bushel might purchase half of it. What is called the Visible Supply of an article often means no more than that portion which is offered for sale at a price slightly above the ruling market rate, and means the supply within possible trade limits. The reader can not too carefully distinguish between the different supplies at various prices, as well as between the different de- mands at various prices. The market rate at which exchanges will actually take place is that price at which demand and supply are equal. When wheat is selling for ninety cents it means that the supply at ninety cents is the same number of bushels as the de- mand at ninety cents. The supply of wheat at one dollar would be larger than the demand. The de- mand at eighty cents would be larger than the supply, but it so happens that the amount demanded and the 294 EXCHANGE. supply at ninety cents are equal ; and hence this is the rate of exchange. As the demands and the sup- plies change, so the market rate changes. While an increased demand will unsettle the mar- ket and require a higher price, no one can tell how much higher. An increased supply will lower the market rate ; but no one can tell how much it will lower it, because no one knows precisely what the de- mands at lower rates are, or what are the supplies at higher rates. Nothing but a practical understanding of the demands and supplies of each article, learned in practical business, will make an accurate judge in each case. Supply and Demand limit prices even when there is no competition, provided that all articles of the same grade are sold at the same price. Suppose all the wheat of the United States to be in the hands of a combination, so that there is no competition between the sellers. The price will depend on the number of bushels of wheat in existence. There are some per- sons who would pay $ 100.00 a bushel rather than not have it, but they would take only a limited quantity. There is more than can be consumed in the United States, and for the purpose of export one can afford to pay only ninety cents. Hence, if all the wheat is sold at the same price, it must all be sold at ninety cents. The owner sometimes finds it profitable to de- stroy half the supply because he can get more for the other half ; or, what is the same thing, to leave half unsold. In manufacturing, he may close half the fac- tories, throw men out of employment, and stop pro- SUPPLY AND DEMAND. 295 xluction. There are demands for a certain quantity of the goods at high prices. By destroying a portion, or limiting production, he is able to get high prices for the quantities sold ; and a high price for half may give more profit than a low price for the whole. While some persons would pay $ 100. 00 a bushel for wheat rather than do without it, there are others who will substitute something in its place,- if it cost more than ninety cents. So that the requirement to sell the whole quantity at a uniform price produces the same -effect as competition. This is the object of many government regulations. In railroad business it is now provided by law that all goods of the same class shall be carried for all shippers at the same price. Although the rate may be left to the railroad to fix, and although there are many shippers who would pay several times the regular rates if they could not ship for less, more business, and more income, can be got at the rates fixed than at higher ones. The law is evaded, but if the principles could be enforced, and the railroads compelled to perform proportional ser- vices at uniform prices for all parties, nearly all the benefits of competition would be secured, even though there were but one line between two points. CHAPTER VI. > COST OF PKODUCTION. We have seen that Exchange Value, the terms on which exchanges are made, is limited by Value in Use and must be between the lowest and the highest values to the parties to the trade. The limits are very wide. If it were possible for a merchant to buy at the lowest Value in Use and to sell at the highest, he would soon have a large portion of the wealth of the earth under his control. Under many circumstances, an article is worth nothing to the seller, and worth a great deal more to the purchaser that he ought to pay. We have seen that Value in Use is brought within narrower limits by competition, and is usually fixed by Supply and Demand, particularly when demand is made up of many competitors under the condition of free competition. The next question is, What determines Supply and Demand? We have seen that there are numerous Supplies of most articles, each at a different price ;. and what we call Demand is made up of many De- mands at different prices. Now, what fixes these Sup- plies and Demancts? Where articles are produced regularly, the supply, and consequently the price, usually depends upon the Cost of Production. By the cost of production we always mean, not what it has cost to produce a given (296) COST OF PRODUCTION. 297 article, but what it will cost to produce another like it. It is true that labor and capital invested in the production is sunk, and that the price of the article is fixed by the present Supply ; but there will be a fu- ture Demand ; and if the goods can not be sold this year, they may be retained for sale next year, and thus come into competition with future productions. The goods of this year can not be sold next year for more than it will cost to produce others like them, but, if they do not deteriorate in utility, they will be worth as much as new goods ; hence the holder will decline to part with them for much less than the cost of produc- tion of others like them ; and at a lower price will withdraw his supply from the market. In fact, though the total supply may be great, the supply of- fered will all be at the cost of producing other goods like the present, less interest, risk, etc. Hence the price at which a supply will come on the market will not be much less than the cost of future production. If the present demand exceeds the supply, this price will be higher. We may look at the matter with advantage in another way. Most goods are produced to sell. The manufacturer knows they will be of no use to him. He makes them because he believes that there will be a demand at a certain price. If there are indica- tions that there will not be a demand at this price, he will not produce the goods. Now, we have seen that there are demands at various prices. There is a de- mand for cotton cloth at twenty-five cents a yard, since a large quantity could be sold at that price if it 298 EXCHANGE. could not be had cheaper. There is a larger demand at ten cents ; a larger demand at five cents ; a larger demand at two cents. If the manufacturer under- stands the state of trade, he will not produce goods enough to satisfy the demand at two cents per yard, but he will endeavor to satisfy all demands above the cost of production. If he believes that the supply will be so large as to bring the price below the cost of production, he will shut up his mills. If there is reason to expect that the price will be greatly above the cost of production, he will work his mills to the utmost capacity; and perhaps double the production of goods. Competition among producers and pur- chasers, therefore, tends to limit the supply to the demand at the cost of production ; and we may lay down as a general principle that, where goods are pro- duced regularly, and the production can be increased or decreased without great loss, the price or exchange value will tend to be that of the cost of production. It may never settle into this exact price, but it will hover about it. There has been considerable discussion as to what constitutes the cost of production. For practical pur- poses under the wages system it is the cost to the pro- ducer. It is the wages he pays out, and the interest on the capital he invests, as well as the rent of the land he occupies. Strictly speaking, the interest should be computed only on what might be called free capital ; that is, the sum necessary for the support of the laborers, pur- chase of material, and general capital which he could COST OF PRODUCTION. 299^ turn in some other direction. The cost of production does not strictly imply interest on Permanent Pro- duced Wealth, since machinery can be used for no other purpose, and it may as well be used as to stand idle. Unrestricted competition, therefore, tends to re- duce the price to the cost of production, leaving the owner of fixed capital nothing for its use. This is best seen in the case of railroads. Suppose there are two railroads between two points, and they compete freely for business. Since it is better to carry freight for the cost of handling than not to carry it, if there is no agreement or understanding between the roads, unrestricted and complete competition will reduce the rate of freight to a point that leaves nothing for in- terest on the enormous capital sunk in the construc- tion of the road, and represented either by stock or debts. Competition even tends to reduce rates to a point which leaves nothing for the salary of the gen- eral manager, because in each particular instance it is better for the road to accept a rate which covers the cost of carriage than to lose the business. Here is the weakness of competition. It is well enough where little fixed capital is required ; but it is impossible to carry on great business enterprises, rail- roads, steamships, factories, or anything which re- quires vast sums of fixed capital, on the principle of unrestricted competition. The competition must be checked hi some way, either by agreement, mutual un- derstanding, or common opinion, in order to secure in- terest on the fixed capital invested. Practically, however, most business managers refuse^ 300 EXCHANGE. to compete except on terms which will allow interest on fixed capital. There are frequent instances of railroad wars, when, for a short time, goods may be carried at less than the cost of transportation ; and even retail merchants have been known, on account of rivalry, to sell at less than the cost of the goods. But it is well understood that this sort of thing can not continue. Railroad wars always come to an end. Most business managers prefer to lose, rather than make a price which will not allow something for in- terest. They recognize that to do otherwise is sui- cidal. Where there is no competition, as in the case of a single railway between two points, excess of supply will never carry the price below the cost of carriage plus the interest on fixed capital. Less business at a higher price would be more profitable. When such a road does make a price at the actual cost of carriage, allowing nothing for interest on capital, it is only to particular persons or for particular classes of goods, with the hope of making its profit from other custom- ers or on different classes of goods. In this case it does not intend to charge all persons the same price for the same service, or proportional prices for pro- portional services. As a general rule, therefore, we may say that all prices, under competition, tend to fall to the money cost of production, though this may include interest on capital invested. When they go lower than this, production must be diminished or goods produced cheaper by the lowering of wages, or otherwise. COST OF PRODUCTION. 301 It is wholesale prices that are here spoken of, be- cause, in regard to them, both buyer and seller are better informed as to the quality of the goods and the extent of the demand and supply. In retail prices, there is room for considerable margin, through the ignorance of the purchaser as to the quality and the cost of production of the goods. If the seller has the reputation of being trustworthy, so that the cus- tomer feels sure he is getting goods that are just what lie supposes, he will pay a considerable profit rather than go where he can not be sure of the quality of what he buys. Even in retail prices, competition acts through supply and demand, but there is far more margin. It limits the range of prices, but not so closely ; so that the same quality of goods may sell for fifty per cent, more in one place than in another. Competition is not inactive, however, when it fixes such limits as these. The limits of Value in Use are very much wider. The application of the Cost of Production is con- fined mainly, though not entirely, to the Resources Produced by Human Industry. It, of course, has noth- ing to do with Natural Resources, which man does not produce, except in the few instances where they can be replaced by the efforts of human industry. The Cost of Production has much more influence on those goods that are produced and consumed year by year than on those which are of a more permanent nature. Permanent Produced Wealth, such as dwell- ings, lasts for many years or even centuries. If pro- duction ceases, the supply is not, therefore, very rapidly 302 EXCHANGE. reduced. The same effect is caused, however, by are increase of population, which demands an increase in the supply. Suppose there were more dwellings in a- city than could be used. The price would naturally fall below the cost of production. Now, though pro- duction were entirely to cease, the supply would still be more than sufficient for a stationary population, un- til the buildings were destroyed by time ; and for more than a generation the price might rule below the cost of rebuilding. This has happened in some villages which have made no growth for years. If, however, population increases, the dwellings are soon insuffi- cient, not for the old, but for the increased population ; more must be built, and when the necessity for further production arises, the Exchange Value of all dwellings will be brought up to the cost of producing others as good. Thus the Exchange Value of Produced Wealth tends to the Cost of Production, in the long run. For- tunes may be made or lost while the pendulum is- swinging to one side or the other, through a period of months or years. It is to be remembered that by the Cost of Production we do not mean what an arti- cle cost when it was made that is a matter of no con- sequence in determining Exchange Value but what it is believed it will cost to make another as desirable. The fashions change ; a house built a few years ago is- out of style. One can now be built for half the money, which, though not so good in some respects^ is to most people as desirable as the old. The old is, therefore, worth what this new house would cost. In applying the Cost of Production to values, we con- COST OF PRODUCTION. 303 sider only what it will cost to make something which will satisfy wants as well as what we have. The cost may be less than half, or more than twice as much, COST OF PRODUCTION TO THE LABORER. The cost of production has thus far been considered with reference to a manufacturer who employs labor for wages. The wages are themselves fixed by Supply and Demand, but he has to take account only of what he pays, what the manufactured goods cost him. Where one produces goods by his own labor, as a country shoemaker, or the members of a co-operative factory, the cost of labor is the irksomeness of it. Under such a system there would still be a cost of production which the laborers would have to estimate in the disagreeableness of the labor. One would de- termine whether he were willing to expend labor enough in the future to replace the article for the price he is offered. If not, while he might be com- pelled to sell for what he could get, production on his part would cease. The cost of labor to the laborer is the Value in Use to him of leisure, and increases with the number of hours and disagreeableness of the work. If all production were conducted by means of co- operation, and no wages were paid, the present wages question would be carried over into the price of the goods produced ; the price would depend upon the supply of various forms of labor, and the demand for various kinds of goods. Let us suppose the men of a co-operative shoe factory have produced a quantity of shoes which they place on the market. If they can 20 304 EXCHANGE. get no more than the material cost, they would better sell them, since their labor has been already expended and is lost. But if they believe they can get no more, they will cease producing shoes ; and the supply being diminished, the price will rise. These men will not willingly remain in idleness; they will seek to pro- duce something which gives the greatest return to la- bor; and by their production they will increase the supply of something else, and hence diminish the price. The method by which labor is transferred from one product to another is seen in the case of the average farmer in the Northern States, who raises a variety of crops. One element of the cost of production to him, is his own labor, and the sacrifice of ease it in- volves. If the price of wheat rules low for a number of years, he turns his attention to the raising of wool or live stock. He may unconsciously estimate the cost of each product in the labor required to produce it. He does not raise some crops, because there is too much work about them ; though if the supply is so greatly reduced as to advance the price, farmers will be found to produce these very crops. The price of what these farmers raise will thus be governed by the cost of production to them, measured in their labor. The average price of the commodities which the farmers of a certain State produce will, therefore, be governed Iby the labor cost of producing them. This is, how- ever, only the relative cost as measured in the various commodities produced by the farmers of this State ; and has nothing to do with the cost measured in the COST OF PRODUCTION. 305 commodities produced in the distant factory, or in a State with an entirely different climate. The relative prices of wheat and wool and pork will depend on the labor cost of their production. If there were no friction, and men could freely go from one employment to another, the supply of the various productions of human industry would be con- trolled so as to be sold at prices which would give the same reward to all laborers of equal ability, in pro- portion to the disagreeableness of the labor. In practice the division can never be so simple. We meet first what Professor Cairnes called "-non- competing groups." Two men learn a trade ; the one is a printer, the other a carpenter. They may be of equal natural ability, but arrived at middle life neither can do the work of the other without years spent in learning a new trade, which can not be learned as well as in boyhood. Practically there is no competition between these men. Still less is there competition be- tween the watchmaker and the stone mason ; the law- yer and the civil engineer ; the teacher and the physi- cian. Only in common labor is the full force of com- petition felt, and here the cost of production to the laborer is estimated in the disagreeableness of the la- bor and the amount he can accomplish. Every group of laborers, however, competes within itself, and the reward within that group is likely to bear some pro- portion to the amount one is able to accomplish, or the quality of the work he does. In the professions the quality ' of the work may be so important a matter that many men have no competition, even in their own group. CHAPTER VII. MONOPOLY. Monopolies are the result of natural advantages, or of legislation, or of the combination of competitors, and are by no means to be condemned indiscriminately. If a singer is without a rival, though he can not command his own price for singing, he controls the entire supply, and can get what the people consider the full Value in Use of his song. No monopoly will enable one to obtain more than this. Artificial Monopolies are of two kinds : those granted by act of government, and enforced by its power ; and combinations of private parties who would naturally be competitors. Many privileges have been granted by governments to favorites in former times, as well as to private parties in return for some service to the government. Many of these have provoked great in- dignation. The present patent system of the United States is a monopoly for a term of years. The in- ventor is given the exclusive right of manufacture not for the same* reason that an author has the right to control the sale of his productions, but as an en- couragement to invention. The author and the inventor should never be con- fused. The principles on which copyright and patent right are granted are as different as two things can be. The inventor who has bestowed time and capital in (306) MONOPOLY. 307 Bringing out his invention, is entitled to something for his successful labor, put forth for the benefit of the whole people. As a rough measure of his reward, we give him a monopoly of his invention for a limited number of years, on the theory that perhaps no one else would have invented it within that time ; and that, in any case, this is a convenient method of re- warding him. Whether there could be a better method is a question of practical statesmanship. EFFECT OF MONOPOLY ON PRICE. What price a Monopoly will obtain will depend, first, on whether it is compelled to sell to all persons at the same price, or is able to charge each one all he can afford to pay, regardless of the others. If compelled to sell at the same price to all, it can obtain only the Value in Use to the purchaser who can afford to pay the least. Let one have a monop- oly of the supply of flour for a city. There are people who would pay a hundred dollars a barrel, rather than do without it ; others would pay fifty, others ten dol- lars. As it will be impossible to sell his goods at different prices, the holder will fix the price at which his entire stock will bring the most money. If the price be a hundred dollars per barrel, only the wealthy can afford to take it. One will, perhaps, get more money by selling at ten dollars per barrel, and selling twenty times as much. In many cases he who has a monopoly can get more by deliberately destroying a part of his product. If he has all the flour that the city can use, he can get only the price for each barrel that the poorest can afford to pay. If he destroy half 308 EXCHANGE. of his stock, the poorest of those able to consume it can pay a large price ; and his receipts for half may be, therefore, more than they would have been for the whole. Of course, suffering would be inflicted upon the people, and those who obtained flour would pay far more than otherwise, but we are considering Ex. change Value. Exchange is heartless; what control it should be subjected to is another question. Instead of destroying stock, Exchange Value can be as well maintained by limiting production. If the product can be limited, it will be sold at what it is worth to the lowest purchaser, and production can be limited until this value is above cost. The advan- tage of Monopoly consists in the power to obtain the full Value in Use to the men to whom it is worth least. It may be very much above the Cost of Pro- duction, and very much above the price which would have been fixed by Competition. WHAT PRICE WILL THE MONOPOLIST Fix? He can not fix a price above the Value in Use to the con- sumers. Within that limit, his price will depend on the quantity he can most profitably dispose of. When goods must be sold all at the same price, a very small profit on a large quantity may exceed a large profit on a small quantity. Suppose the Sugar Trust to have what it can not have an absolute monopoly. There exists a Value in Use, a demand, for a certain quan- tity at ten dollars a pound ; but it would be impossi- ble to wholesale sugar at two prices, and although the ten dollars a pound would be practically all profit, the total sum received might be less than a profit of half MONOPOLY. 309 a cent a pound on the enormous demand at five cents. Those having an absolute monopoly of this kind care- fully estimate the various demands, with the quantity desired at various prices, and fix a price which gives the greatest total profit. Many wants must, of course, be left unsupplied ; it is possible that double the wants could be supplied at a lower price, with nearly as much profit, but that is a matter of indifference to the monopoly. What it wants is the greatest total profit, and it rather prefers to make it on a small quantity than a large, since it is less trouble and risk. This is one of the arguments for the control of certain necessary monopolies by the people, of which the post- office is an example. A private monopoly would esti- mate how it could make the most money. Suppose it concluded that the largest profit could be made at car- rying letters at five cents each ; at the same time, let- ters could be carried at two cents, with a total profit nearly as large, because there would be several times as much business. If the government is in control, it will always choose to satisfy the largest number of wants at the lowest price, rather than a smaller num- ber of wants at a higher price, the total profit being the same. Not caring to make a profit at all, it may- see that, at an insignificant loss to itself, it can carry ten times the number of letters for the people at half: the cost to a private corporation, because the latter- would not accept the small loss necessary to gain the; enormous business. When the monopoly is not compelled to sell its goods at the same price to every purchaser, it can 310 EXCHANGE. charge the full Value in Use to each one ; and thus secure far higher average prices. It will, under these circumstances, perhaps make even lower prices to those unable to pay more, than the price would be if compelled to serve all alike. It can afford to sell at any price at which it makes a profit, to those to whom the goods are worth least, and may get a hundred times as much from those able to pay more. In this case, the monopoly gets the full Yalue in Use from everybody ; when it is compelled to sell at the same price, it gets only the Yalue in Use from those to whom the goods are worth least. There are, however, few complete monopolies. Nearly all have something to fear f rqm possible competition or legal enactments ; so that it is seldom that the price can be carried as high in practice as in theory. Most monopolies are contented with absorbing the greater portion of the business, and with getting a price very much less than .could be had in theory. The monopolist will naturally endeavor to fix his prices at the point which will give him the largest in- come. If he have a monopoly of the necessities of life, such as wheat in a famine, he can take all the people have, as did Joseph under Pharaoh ; though in .modern times, even if the monopolist were not pre- vented by moral considerations, the people would com- pel him to sell at some price not far above the cost of production. Few monopolies are of this character. The monopolist knows that people can find some way to do without his service ; and, besides, he wishes to reach a large number of consumers, since large MONOPOLY. 311 profits must depend on large numbers of people. He knows, also, that public sentiment may discourage the use of his goods, even at a price that would be profit- able to the user ; and the sum which he will add to the cost of production on account of his monopoly is a matter for careful judgment. The theater manager will prefer to sell a thousand seats at three dollars each to selling two thousand at one dollar, but the popular show may find that it can sell a thousand seats at twenty-five cents, when it could not sell a hundred at one dollar. Each man who controls a monopoly will settle these prices for himself in ac- cordance with the circumstances. Moral and other considerations sometimes enter in, and one does not always take all the profit his monopoly makes possible. CHAPTER VIII. MONEY. Money and its substitutes, and credit, are the prin- cipal means by which exchanges take place. With- out it, very few exchanges would be made. Few ques- tions can, therefore, be more important in Economics than the money problem. Money is anything which is generally received in exchange, not for the purpose of use, but with the ex- pectation that it will buy anything for sale. The pos- session of no mere commodity gives this power. One may be rich in land or in cattle, but he will find it very difficult to exchange these things, directly, for what he wants. Money will buy anything ; hence, if he wants to buy, he hastens to exchange his cattle for money. The only essential characteristic of money is its general acceptability. It by no means follows that all money is good money. Some very foolish schemes have passed into legislation, and nations have suffered greatly from the actions of their rulers ; but we are not to condemn these schemes by assuming that the circulating medium was not money. It is because it was money, made so- by the acquiescence of the people, that the suffering has been so great, and the loss far greater than even the sufferers realized. (312) MONET. PART I. QUALITIES OF A GOOD MONEY. UNCHANGEABLE VALUES. The first quality of a good money is unchangeableness in values. Money is- first bought by the holder with what he has to sell his labor, farm produce, manufactures, etc. and then used by him to buy other goods with. He must take into account what he has to give for a dollar, just as much as what a dollar will buy. He does not usually give the same class of goods for money that he buys with money. It is an education to learn how much a dollar will buy an education which some people never gain. We do not realize the effect of a change in the values of money on the common people when once they have become accustomed to certain values. It is desirable that the average of the values of money shall remain the same, so that the change of any par- ticular value, as in that of wheat, can be explained by a short crop or some other evident cause. There will be a constant change in the values of various articles, due to natural causes ; but some being in one direc- tion and others in the other, the tendency is to bal- ance one another. A thousand dollars ought to buy, in the wholesale market, the same average quantity of all the articles in common use by the people. A change in average prices does not show that the values of the goods have changed (since these values are measured by other goods), but that the values of money have changed ; and it is this variation in the values of money which it is all-important to avoid. At one time during the Civil War wheat sold at three 314 EXCHANGE. dollars a bushel. The price has since been less than one dollar. Does any one suppose that the values of wheat were three times as great then as now ? By no means ; a dollar is now worth three times as much. The change is not in the values of the wheat, but in the values of the money. It is the common people who suffer most by changes in the values of money in either direction. One with other business to attend to can not always be making calculations as to how much of each article a dollar ought to buy, or how much more or less it ought to buy than it did a year ago. It has required years, from childhood up, to fix in his mind the values of a dollar at all. It is no trifling part of the education to learn the lengths of a yard, foot, mile, weight of a pound and size of a gallon, so that when any distance or weight is mentioned one will have a vivid concep- tion of it. It requires more years of experience to form a vivid conception of the values of a dollar. The child knows that the nickel will buy so much candy, but it is long years before he gets fixed in his mind the prices of all goods he is likely to want. If, now, the values of the dollar change, the prices of all these goods change, or ought to change, and he has them all to learn over again. He is not likely to do it. He unconsciously estimates the dollar at its old value. If any one doubts the enormous loss to the mass of the people caused by every change in the value of money, he has only to reflect how difficult it is for even the more intelligent to change habits once formed. MONEY. 315 One becomes accustomed to expecting that a dollar will buy about so much of what he wants. If there is a change in the price of any article, he wants to know the reason why. Is it scarcer, or is the dealer making more profit? When the values of money remain the same, he can usually ascertain these facts and act ac- cordingly ; but when the values of money are contin- ually changing, the price of all articles must change with it, and he is at sea. He can not figure it out. Not one man in a thousand in the population of the United States can figure it out, and the opportunities for a few men to make money by taking a little from all the people are vastly increased. It is good times for the making of fortunes by a few, rather the lucky than the intelligent, but it is bad times for the people at large. As one does not know what he will have to pay in the future, he does not know how much he ought to have for his labor or the commodities he has for sale. It must be remembered that a fall in the value of money means a rise in prices ; and a rise in the value of money, a fall in prices always the reverse. A dollar rises in value because it will buy more wheat two bushels instead of one; but when a dollar will buy two bushels of wheat, wheat has fallen in price to fifty cents. Exchange is like a balance : when one side goes up, the other side goes down. When the value of money goes up, prices of other things go down. When the value of money goes down, the prices of other things go up. It is impossible, except by more pages of detailed 316 EXCHANGE. illustration than there is room to insert, to bring our- rt selves to realize anything like the loss which conies to the people at large by any change in the value of money. Every change tends to make the rich rel- atively richer, and the poor relatively poorer. It tends to the failure of great numbers of honest and fairly well-to-do business men, and to the building up of large fortunes. Every change in the value of money opens opportunities for a more unequal dis- tribution of wealth. Deferred Payments. Changes in the value of money in relation to debts and credits are more easily brought home to the conception of every one. In our civilization debt and credit are unavoidable. It is by the loan of capital from those who are not in a position to use it to the best advantage, to those who can profitably use it in production or business, that the wealth of the country is greatly increased, and the wants of all better supplied. But when one borrows, what is he to repay ? What can he pay ? The farmer y paper. Gold certifi- cates are now frequently seen, which say on their face that some one has deposited dollars in gold in the United States treasury, which the bearer of this cer- tificate can have by calling for it. He seldom calls, because it is more convenient to hand the paper out in payment. It would make no difference, in this case, whether we consider the paper or the gold the money, so that we do not count both. But, as a matter of fact, the gold is the money, and the certificate the evidence of title. Payments are made by transfer- ring the title to the gold from hand to hand. (This is not true of Government notes, called greenbacks, which are not certificates of deposit, but promises to pay.) An iron or a wheat money would be at once represented by paper certificates. Purchasers in a civilized country would not carry the iron about with them, but would store it in a warehouse and transfer the title by a certificate. The question of portability is therefore no longer of great consequence. This has a bearing on the use of Silver. It was 322 EXCHANGE. formerly claimed that a silver money was objectionable 011 account of its weight. Even gold has considerable weight, but both it and silver are likely to be repre- sented by paper. The cost of storing silver is no greater than that of gold when the risk of theft is taken into account, because no great value of silver can be carried off secretly. It is an admitted prov- ince of all governments to coin money. It is but a. step to storing that money and issuing certificates of title to be transferred from hand to hand in place of the money itself. No one has ever objected to the is- sue by the United States of such gold certificates. If silver coin were the only money, it would likewise be thus deposited under our present laws, and the title to its ownership transferred in ordinary trade by certificates. The question of portability, therefore,, scarcely enters into consideration. DURABILITY. A third requisite for good money is durability. It is important that money shall not wear out with the using, or deteriorate with keeping. Gold wears rapidly by the using, and the loss must be borne in the end by some one, in this country by the last user, who must bear the whole loss. A good money must not deteriorate by storage in a bank vault, or suffer too much in actual use. An exception is to be made of paper money. This costs so little to print that we can afford to wear it out and pay the expense of replacing the bills with new. Paper, on account of its portability, convenience, and the ease with which worn notes can be replaced, is certain to be the actual currency which passes from hand to hand in the fu- MONEY. 323 ture. It may be certificates stating that coin is held subject to order, or it may be notes whose redemption is in some way secured. The cost of "issuing a second gold or silver certificate, in the place of one worn out, is trifling. The gold and silver whose title is trans- ierred is not affected thereby. There are other desirable qualities of money, such ;as uniformity and divisibility. Cattle have been used as money, but not all cattle are of the same grade, and the debtor will seek to pay in the poorest. Another objection to cattle is the lack of divisibility. An ox is a large piece of money, and inconvenient for small purchases. Paper, of course, has a uniform value ; one note, of the same denomination, is as good as another ; and issues can be made of any denomina- tion. The cost of issuing a one-dollar note is the same as one for a hundred dollars, and the smaller note wears out much the more rapidly. No one now thinks of using paper for sums smaller than one dollar. In Eng- land the smallest note issued is for twenty-five dol- lars, though many favor the issue of one-pound notes. Efforts in this country to withdraw the one and two dollar bills have met popular objections, but it would be much better if all paper currency were of the de- nomination of five dollars and over. Acceptability is usually named as a quality of good money, but it is this that makes it money. Nothing is money that is not generally accepted, and anything which is generally accepted becomes money, though it may be a very poor money. 324 EXCHANGE. It is worth while to notice the difference between paper money and gold and silver certificates. Paper money is of various kinds. It has sometimes been ir- redeemable on demand, though with an expectation of payment in the future. Our present paper money is. redeemable on demand in coin. Here, it is the paper, and not the coin held for its redemption, that consti- tutes the money. It is not a certificate of title to a given quantity of gold or silver. It is a note, and the reserve is much smaller than the volume of the cur- rency. In estimating the amount of money in circu- lation, however, we should not count the specie reserve for paper money, since while it is held as a reserve it is no longer used as money. The increase in the cir- culation due to the paper is only the difference be- tween the sum of the paper and that of the reserve. We did not consider gold and silver certificates as money at all, because it is understood that payment is made by the gold and silver itself, the title to which passes from hand to hand. This is not true of paper money which exceeds the amount of its specie reserve. Of course, if one were to insist on considering the gold and silver certificates as money, we should then be driven to say that the specie to which they are the title is not money. The paper and the specie reserve can not both be money, since the currency is not in- creased by the issue of the certificates. There is no- more money than if the coin itself passed from hand- to hand, and the certificates had not been issued. MONEY. 325 PART II. WHAT DETERMINES THE VALUE OF MONEY ? We have seen the essential quality of a good money is that it shall have steadiness of value, and we are unprepared to form any opinion about the stability of any form of money until we knqw the causes on which its value depends. The value of money depends on supply and de- mand. Gold and silver have values for ornament, and for plate. If neither were used as money, there would be demand for all the gold and silver of the world, but at lower values. Let us suppose that gold is worth five dollars an ounce. Now, let it suddenly be adopted as money, and a hundred million ounces be required for the money purpose. Would not this new demand rapidly raise the value ? It might double it. It might make it ten times as great. The increase of the value of gold could increase production only to an irregular extent. If gold were raised as wheat, the new demand would have very little perma- nent effect, since double the quantity of wheat could be produced at very little increase of cost. But gold is not regularly produced. The amount accessible on the earth is limited. An increase in the value would cause the working of some mines which were before unprofitable, but, at even ten times the price, the in- crease in the amount to be had is not great. The value of gold is fixed rather by the rules of monopoly, since the quantity is limited. The value of gold will therefore be determined by the balance between the 326 EXCHANGE. demand for all purposes, and the supply. Gold has one peculiarity. Being desired for ornament, the de- mand may fce greater at a high price than at a low price. If it were worth less than silver, it would be discarded by many persons who now use it simply be- cause its cost prevents its being too common. The more valuable it becomes, the more attractive it is to them, and hence the demand may even increase with the increase in value. How much effect the demand for use as money has on the value of gold, no one can estimate. It could be shown only by the general de- monetization of the metal by all nations. The value of silver is governed by the same laws as that of gold, with the exception that the product of silver can be more easily increased. There exist vast quantities of silver-bearing rock of too low grade to work with profit. If the price were greatly increased, the output would also increase. The demand for silver to use as money is one of the demands which give it value. Were it demonetized by all nations, its value would sink precisely as would that of gold. Paper is the only remaining form of money neces- sary to consider. What gives value to paper which can be printed at a nominal cost ? 1. The anticipation of redemption, either on pre- sentation or in the future. If the promise is to pay on demand, in coin, and the paper is, in fact, redeemed over the counter of the bank without hesitation or trouble to the holder, it is worth as much as the coin. Even if specie payment be suspended, and there is a general confidence that the note will be paid at some MONEY. 327 future time, it is worth its face, less such discount as the general opinion may fix for the risk and delay. This was the condition of treasury notes for some years after the war. There was full confidence that at some time they would be redeemed in specie. 2. The quantity in circulation. The value of everything is fixed by supply and demand. If there were, or could be, no money but paper, it would be given a value by the demand for money. The larger the supply, the lower the value. PAPER MONEY REDUCES THE VALUE OF GOLD AND SILVER. A paper money increases the total supply of money. It is the same as an increase in the supply of gold and silver, which, of course, reduces their value. The value of gold depends on the sup- ply and demand for all purposes ; if paper is substi- tuted for one of its uses, the effect is the same as an increase in the supply of gold. FIAT MONEY. A paper money of altogether a dif- ferent character has been the subject of some discus- sion in the United States. It is merely stamped paper, with no promise of redemption. Would such a paper be money, and, if so, what would determine its value ? Whether it would be money or not, depends on whether it would come into general circulation. If the treasury were to issue paper on which is printed, *' This is a dollar," it would be money if it were volun- tarily accepted in payment by every one. It could be given forced circulation at the first, by enacting that it be received in payment for debts, and by govern- ment officials for their salaries. If such a law were 328 EXCHANGE. sustained by the courts, the creditor would have no redress, even though the paper were worthless and his claims were confiscated. The government official would have the choice of acceptance or resignation. But this would not make it money. The test of money is its voluntary reception by those who have something to sell. If the people should take it, it- would be money; otherwise, not. If it were accepted by the people, what would deter- mine its value ? The amount issued, and the extent to which it should be used in exchanges. If it re- placed all other money, and were accepted by every one, it would be worth nearly the sum named on ita face, as long as its issues were small. There is a demand for a certain volume of currency. There would be nothing to replace this stamped paper, ex- cept coin, which costs as much as the face of the paper. As there is a demand, and the supply is limited, there is no reason why it should depreciate in value. As soon as the supply became excessive, its value would decrease. The more issued, the less it would be worth. If, at any time, people refused to receive it, and substituted something else, the demand would be so much reduced, and its value so much lower. In case of a panic and a general refusal, it would instantly become worthless. The nearest approach to this kind of money, of late years, was the Confederate currency. This, to be sure, was a promise to pay, and was first received by the people with the expectation that it would be re- deemed. That expectation never quite vanished as MONEY. 329 long as the money circulated at all; yet the issues were so excessive, and the expectation of redemption so slight, as practically to give it, toward the end, the character of mere stamped paper. It was received because there was nothing else. It was necessary to have some medium for exchange, and this necessity gave it a trifling value. It is hardly reasonable to suppose that stamped government paper -fiat money, as it has been called could gain a circulation in the United States. Sell- ers would not voluntarily receive it. If it were once in circulation, and the habit of receiving it formed, a very limited amount might hold its value for a time. But it would be a money very dangerous to stability, and in a panic the loss in the derangement of business would be many times the cost of coin which would have filled its place. Stamped paper is not to be confused with paper money redeemable in something else than coin, or even redeemable at some future time. A paper money redeemable in interest-bearing bonds would, of course, be worth as much as the bonds. Several such schemes have been proposed, but there are dif- ficulties in the way. Such paper money would have the value of specie, as long as its issue was not ex- cessive, even though the interest-bearing bonds should fall considerably below par. The reason for the fall in the value of the bonds would be the fact that higher interest could be obtained in other investments. The demand for the money redeemable in them would, as long as the supply was not excessive, keep its value 330 EXCHANGE. up to the cheapest thing which could take its place, which is gold or silver coin. If the volume issued were greater than the amount of coin which would otherwise be in use, the money would depreciate, be- cause the supply would be greater than the demand. The money could not fall below the coin value of the bonds. If the interest-bearing bonds were to rise above par, the currency would at once be exchanged for bonds, and its place would be taken by gold and silver coin. PART III. How CAN WE SECUKE A MONEY OF UNIFORM VALUE ? This is the important quality of a good money. There are many who advocate gold as a standard. But the changes in the value of gold are very great, though not usually very sudden. By the values of any money we mean how much it will purchase in the commodities in daily use by the people, either directly, or indirectly as steel is purchased to build railroads to carry grain and manufactured goods. The fluctua- tions of gold are still further increased by the action of governments. Nearly all the annual production of gold is now required for use in the arts ; and a larger or smaller demand for use as money tends to rapidly increase or decrease the value of the metal. When the United States resumed specie payments, it was compelled to draw large quantities of gold from Europe. This increased demand could not help in- creasing the value of the metal, and thus lowering the MONEY. 331 price of goods. When Germany adopted a gold stand- ard, the effect was in the same direction. France has since been accumulating gold. The Austro-Huii- garian empire is now seeking to establish a gold basis for its currency. This bidding of all nations for gold as a reserve for currency can not fail to increase its value its price as measured by goods. If all the silver-using nations were to adopt a gold standard for their currency, it would send the values of gold up, nobody knows how far, certainly to double those at present. THE TABULAR STANDARD. For many years econ- omists have seen that this is the only honest standard of value. It has been proposed to take the wholesale prices of a certain number of commodities, from month to month, and year to year. These should in- clude all the articles which enter largely into the satis- faction of the wants of the great majority of the peo- ple. One hundred articles would perhaps give a fair average result. These articles would be taken in the proportion of the values produced each year. Let us see how much a dollar will buy of all of these hundred articles on the first day of July, 1893, and let this be the standard forever after. A thousand dollars is the quantity of these goods which a thou- sand dollars of our present money will now purchase. Here is strict justice justice to the debtor, justice to the creditor. A dollar represents a certain quantity of the world's resources. If one lends it to-day ,, when the dollar is repaid, ten years hence, it should buy just as much, no more, no less, than when he lent it. 332 EXCHANGE. On account of imagined difficulties in using a money of this kind, it has been proposed to continue the use of our gold and silver and paper as at pres- ent, and to employ the standard only for correction once each year, or term of years ; to ascertain how much a dollar will buy each day in the year, and take the average, at the end of another year, to see whether it buys more or less, and increase or reduce the amount of all promised payments accordingly. A better way would be to use the standard itself. Suppose the United States were to issue treasury notes, payable in gold or silver, it being specified that a thousand dollars is as many grains of gold or silver as will buy certain quantities of one hundred named articles at wholesale prices, the amount to be announced from month to month by the statistical of- fice. The wages of labor should be included among other things which money will buy. Every merchant in the world would have an interest in preventing an error of a fraction of a cent, and we may assume that the reports would be accurate. This would be good money. It would be paper money, the most conven- ient form ; its value would be the same from month to month, and from age to age. It could not be issued in excess, because any excess would be returned for redemption in gold. Very little would be redeemed, mostly for those who wished the gold for export, but the certainty of redemption on presentation would give value to the entire issue. One would not know how many grains of gold will be paid in redeeming a thousand-dollar bill a year hence; but he would MONEY. 833 know that a quantity will be paid which will buy just as much, and no more, in the world's markets, as the quantity of gold which would be paid to-day. The difficulty with the Tabular Standard is that it is not easy of comprehension, except by those of some education and intellectual habits. It is not an easy system to popularize. BIMETALLISM. Next to the Tabular Standard, the most practical plan for lessening the fluctuation in the value of money is bimetallism. Bimetallism is using both gold and silver at a given ratio of weight. The theory is that by permitting the use of either metal, the cheaper will be coined until the Increased demand for it raises its value to that of the other. It is not expected that the metals will fall apart at all, but that if the supply of one increase more rapidly than that of the other, it will be coined the more rapidly. Suppose, now, that the leading commercial nations agree that they will coin all the gold and silver brought to their mints, free, at an established ratio, say one ounce of gold into the same number of dollars as twenty -four ounces of silver. This means that they must use gold and silver in such proportions as may be necessary to maintain their values at the standard ratio. If the price of one metal for a time rules so high that none of it comes to the mint, these nations increase their currency only by means of the other. In an extreme case, the coins of the dearer metal would be melted up for use in the arts. Nations which agree to bimetallism must, of course, be pre- 334 EXCHANGE. pared to go to the length of using either gold or sil- ver exclusively, if necessary to maintain the ratio ; but this would never happen with a number of commercial nations in the league. The more nations in such a league the stronger. No league could maintain a ratio beyond the market value of either metal if it were wholly demonetized ; but if either metal were wholly demonetized, its value would probably sink to less than half that at present, so that the limits within which bimetallism could be maintained by a union of all the nations in the world are pretty wide. The ratio which should be selected is that which would cause the use of both metals, and of about an equal value of each. Any tendency of either metal to fall will then be counteracted by its increased use, and by a less use of the other. The two metals would be coined in such proportion as would maintain their values at the ratio fixed for their free coinage. The only way to increase the value of either metal is to use more of it ; and the way to de- crease the value of a metal is to use less of it. This would be a real double standard, and not an alternating standard as some monometallists would have us believe. If the United States, or any single nation, were now to open its mints to the free coinage of silver, it should be at some ratio not far from the market ratio of the metals at present about 25 to 1. It would then have only future fluctuations to deal with. The object of bimetallism is to limit the fluctuations in the value of money. CHAPTER IX. SUBSTITUTES FOR MONEY. There are substitutes for money, which save the use of money itself. They are not money, because they are not generally received by every one for anything he has to sell ; they are not in general circulation. 1. Bank Checks. The substitute which most read* ily occurs to every reader is bank checks. These are not in general circulation ; they usually make but one payment each before being returned to the bank. They are not accepted in complete payment, being merely an order to a bank to pay the money. If the bank pays, well ; if it refuses the check, the drawer is liable. Neither is their use general, but it is confined to a limited class. Even a large manufacturing estab- lishment does not pay its employes in checks, but in money. It pays other business firms by means of checks. Although bank checks are not money, they save the use of money. Each check saves one payment. If it were possible for every person to use checks and make all payments with them, the only use for money would be as a bank reserve. The advantage of saving the use of money depends on whether we mean gold and silver, or paper money. To save gold and silver is to release them for other purposes. The cost of a metallic currency is the in- 22 ( 335 ) 336 EXCHANGE. terest on its volume. The cost of paper money is only the printing not much more than that of bank checks. The reserve for checks should probably be as great as for paper money, so there is no great saving in a general substitution of checks for paper money. They prevent theft, are cleaner to handle, furnish a record of transactions, and are more desirable in many ways for a considerable number of people. 2. Boole Accounts. The real substitute for money is book accounts. Bank checks are only a part of a system of book-keeping by which accounts are kept between the depositors of the bank ; and, through the clearing-house (the bank of banks), between the de- positors of all banks. The simplest form of book ac- counts, as a substitute for money, is that of a country store. Let us suppose a farmer, who gets pretty much all his family uses groceries, dry goods, cloth- ing at this store. The goods are charged to him. He sells his wheat, wool, butter, eggs, to this store, receiving credit for them. There is a settlement, per- haps once a year, at which the balance is either paid in cash, or carried over to begin another year. No money need, therefore, be used between these parties ; the book account is a substitute. In this country store the exchanges are made directly, and without the intervention of money. Its only use is a measure of value. The farmer does not know exactly what he will want in exchange for the load of wheat. He trades it for his choice of anything in the store, to be delivered when he is ready for it. As he measures the quantity of wheat by a pound weight, and the SUBSTITUTES FOR MONEY. 337 wood he sells by the cord, so lie measures the value of this wheat by the dollar value. It is agreed between him and the merchant that, in exchange for this wheat, he shall have the value of a certain number of dollars in goods. He gets the goods for the wheat. The important thing to him is that the dollar measure shall not stretch. He does not want the goods to rise in price after he has sold his wheat. If the reader is curious to see how the system of exchange by book-keeping is extended beyond the country store, he is referred to almost any good de- scription of banking. The merchant buys his goods without money, and an account is made of them. He ships the country produce he takes in exchange to various business firms. They give him an order (check) on a bank for the value ; he transfers this order (directly or indirectly) to the men of whom he bought the goods. He probably divides it up by sending the orders (checks) he receives to his own bank, having it make a book account of them ; and then gives his own order (check) to the men of whom he buys goods, and the bank keeps the account. He may not handle a dollar bill in the whole transaction. He sells the farmer goods, without money. He buys the farmer's produce, without money. He sells the produce to a dozen men, and gets no money. He buys his stock of goods of various firms, and pays no money. It is trade all the way through ; and the l>anks keep the account, on the orders (checks) of the parties, as they agree on the terms of each trade. The wholesaler buys of the manufacturer without 338 EXCHANGE. money, and turns over the orders he has received from the retailer. Even international exchanges are man- aged by a system of book-keeping. When money is paid, it is gold or silver, and the shipment of one per cent, of the exchanges in gold excites comment in the newspapers. The large transactions, the great busi- ness of the world, are done by book-keeping, and not by money. One reason for this is the danger that large sums of money would be lost or stolen. The .reader may by this tune wonder if money is- used at all. It comes in for the smaller payments. The factory sells its goods for a book account, but it pays its workmen in money. Such country stores a& have been described exist, but there are more which sell for cash. The traveler pays in money. He can, not give a check for his hotel bill or railway fare. Most of the smaller transactions of life, especially be- tween strangers, are settled in cash. There is usually a balance on settlement of book accounts, which is often paid in cash. Then a vast sum of real money is required as a " reserve," to make good all the de- mands for cash that arise in this complicated business. All substitutes lessen the demand for money itself ; and, hence, lower its value. If substitutes took the place of all the money of the world, the value of gold and silver money would sink to what the demand for use in the arts would give. The money demand for gold and silver now keeps their value far above this* point. Were it not for the substitutes, and for paper money, the value of gold would be several times as. high as at present. SUBSTITUTES FOR MONEY. 339 3. Credit. Credit has been treated by some ^writers as a mystic thing, and by others as a material commodity like iron or gold or silver. Like most other popular terms, it has several significations. One is said to have credit at a bank so long as he has money deposited there ; that is, his credit is simply his own money left at a bank for convenience. But what is meant by credit in the ordinary sense, is rather the extent to which one can borrow money, or the extent to which he can purchase goods without paying for them on delivery, the sums for which he can " get trusted." The sooner we understand that credit is nothing more than the willingness of people to give goods to a purchaser on his promise to give something in ex- change for them in the future, the better. Their will- ingness is his credit. The exchange is not completed. One side transfers its goods; the other promises to transfer the agreed equivalent in the future. Whether one will or not, is a matter of opinion. Is he honest ? Will he be able ? Can he be compelled ? His credit depends on the answers to one or all of these ques- tions. One's credit can not be more than the esti- mate of his ability to pay in the future ; it is likely to be much less. His ability to pay can not be greater than the wealth that he now has, with its nat- ural increase, plus the results of his labor power, plus the goods furnished him on credit. It is, of course, possible that one may be able to give back all he has borrowed, if he preserves the goods or uses them without loss. He may also give the results of his 340 EXCHANGE. labor, less the cost of his living ; and if he has any wealth of his own at the time of incurring the debt r he may preserve it until the time of payment. In debating whether they will trust a man, people ascer- tain 1. What he is worth, how much property he now has, and estimate the likelihood of his taking care of it. If he has " made it " himself, or has taken care of it without loss for some years, he may be expected to have it at the time for payment of what he pro- poses to borrow ; and he will probably have credit to- the extent of a certain part of it. If the property is- of such a nature that he can give legal security on it, so that he can be compelled to sell it for the purpose of payment, he is still more likely to have credit- But as few people wish to resort to legal enforcement,, one's credit will also be affected by his reputation for honesty, and the likelihood that he will pay without trouble. A rough popular estimate of one's credit from this source is usually something like half of what his property is worth. 2. But if goods are given on one's promise to pay, he has the goods, and may naturally be expected to have them, or their results, at the time of payment^ It is possible, therefore, for one who has no property at all to have credit which consists of his reputation and estimated power of labor and management of business. If people generally believe a man is honest, and that he has the power of managing property so- as to make it bring the largest returns, he may have- credit to an almost unlimited extent. For the goods* SUBSTITUTES FOR MONEY. 341 loaned him are security, no matter how large their amount may be. If people believe him to be the man we have described, they believe he will have the means of payment when the time comes. So that the extent of one's credit from this source is almost un- limited, and depends entirely on his good name. 3. There is a third source of credit, which is merely one's labor power, independent of the man- agement of money loaned. A merchant will some- times advance a man food and other means for the support of his family, although he has no property, and the goods are to be consumed at once. The credit of the man in this case is his labor power. He may be working a rented farm, and the mer- chant believe he will pay when the crop matures. He may be working for wages, and will pay when he receives them. He may be going a-fishing, and will pay from his catch. This kind of credit is not usu- ally given for large sums, though the aggregate in the United States is very great. The credits by which the business of the world is chiefly carried on belong mainly to the second class named. The manufacturer can not sell his goods directly to the consumer. The goods are not wanted as fast as produced. No one knows just who* will want a particular article, nor when he will want; it. A reserve stock must be carried somewhere ; and: it should be where the consumer can easily find it > and examine it when he thinks of purchasing. The manufacturer turns the goods over to the merchant to sell. The latter might sell them on commission, 342 EXCHANGE. but this plan has not been found to work well for most lines of goods. The manufacturer therefore sells the goods to the merchant, the latter agreeing to pay for them at about the time he hopes to have sold them. Now, if the merchant is honest and competent, it is safe to let him have as many goods as he is likely to sell. When he sells the goods he will have the money. He may steal it, may use it in his living expenses ; but, if he is the right sort of man, he will do neither of these things, and will have enough to pay for the goods at their sale. Manufacturers real- ize the situation, and it is not uncommon, when in the clothing line for instance, there has been a warm winter so that the merchant could not sell the goods, to " carry him over " that is, to give him time for payment until he can sell them. The extent of a merchant's credit is thus the amount of goods he can obtain on the promise to pay in the future. With the right sort of man the goods may be suf- iicient security, and there are young business men iwho have large credit on no other basis. But the seller also looks to see what property the :merchant owns, or what other means of payment he lias, so that his credit usually rests partly on the first Tbasis named. The seller also looks to the probability of the purchaser being able to use the goods profit- ably, either as a merchant in selling, or as a manu- facturer in further production. A business man often has credit "for anything he needs in his business," but for nothing more. A manufacturer or wholesaler will let one have all the goods he thinks he can dis- SUBSTITUTES FOE MONEY. 343 pose of within the time of payment; but he would not furnish money for living expenses, speculation, or for other uses. Indeed, we should make a broad dis- tinction between the credit of men engaged in busi- ness, by which they obtain materials for use in their business, and credit for articles for unproductive con- sumption, credit for living expenses. The form of credit mentioned first under this head, is distinct from both of these. Money is there loaned on the property one has, as by a mortgage on a farm ; and the disposition of the money or goods loaned is not of so much consequence, since payment is sure in any case. Banks are supposed to deal mainly with the second class of credits. When the manufacturer has sold the merchant goods to be paid for some months hence, the bank buys the account, takes the place of the manufacturer, and receives the payment from the purchaser. It does this partly on the faith that the goods are in existence, and when returns come from them the notes will be paid. Banks dis- like to deal in accommodation paper, which is not given for goods. Credit, therefore any particular individual's credit depends on other people's opinion, not only of the value of the property he has, but of the man himself. This opinion is likely to change, and may change sud- denly. In a panic, when all persons are frightened, confidence in one's ability to pay may be destroyed. One's credit may expand, or shrink to nothing with- in a few days, and that through no fault of his own, and for no good reason. Credit is the opinion of the 344 EXCHANGE. people, and the people are fickle. It depends on the laws of the human mind. Even though the person who furnishes the goods has full confidence in the ability of the second party to pay, the opinion of others, and even of the populace, may make it unsafe to give credit. The credit of any person is therefore an uncertain and a variable quantity, depending on many causes, some of which it is impossible to foresee; and if we were to conceive of such a thing as the total credit of all people, it would be now of vast proportions, and now shrink to a small fraction of what it was before. The term " credits " is, however, often used to de- note credits already extended ; and then means the value of the goods which have been transferred from one party to another on his promise to pay, the ex- change being incomplete. More than one credit in this sense may, therefore, be based on the same goods. The manufacturer sells goods to the wholesale mer- chant ; the exchange is incomplete, and credit has- been given for their value. The wholesaler sells ta the retailer on credit ; here credit has been extended to twice the value of the goods that is, there may be notes out, based on these goods, to twice their value. As a matter of fact, the goods and credits have only been transferred to second parties. It is expected that the proceeds of their final sale will pass from hand to hand back to the original producer. The advantage of credit is that it puts goods into- the hands of those who can use them with the greatest profit. Without it, those who have wealth would be SUBSTITUTES FOR MONEY. 345 compelled to carry on all the business of the world. Other persons can often use wealth in business to better advantage than its owner. After paying him more for the use of it than he could make himself, they can still make a profit. How CREDIT SAVES THE USE OF MONEY. . Credits make possible a great extension of book ac-. counts, by which exchanges take place without the use of money. A credit itself saves no money, since the payment is only deferred. One gets the goods without the immediate use of money ; but, if he pays when he has promised, it requires just as much money to make the payment as if it had been made in the first place. But the credit gives tune for the balanc- ing of book accounts which may offset one account by another, . and no money be required. The world becomes one great clearing-house. Every one who comes to it owes other people and others owe him. By a system of book-keeping, debts cancel debts. What one gets is goods for goods. The things he has parted with pay for the things he has purchased. The trade is complete. It is made without money, by the use of accounts. Settlement of accounts, to any- thing like the present extent, would be impossible but for the time element in credit. The goods received in payment would necessarily be delivered the same day. Where purchases are made on a few weeks' credit, there is time for other transactions which bal- ance the first. The supposed case of the farmer and the general store is possible only where credit is given by one party or the other. They are supposed to have 346 EXCHANGE. a running account for a year, and during the year the transactions nearly balance each other. If no credit were given, the farmer must take goods on the day he sold produce, and to its exact value, or payment must be made in money. What is true of the farmer and the general store is true of the largest business trans- actions. Country banks keep a balance in a bank in the metropolis, thus giving them credit, in order that business may be done by accounts, and not by cash. Only through credits can book accounts become a sub- stitute for money to any great extent. BANK CREDITS. Credits which are supposed to have the most influence as a substitute for money are bank credits. A bank lends not only its own capital, but its deposits. It can safely lend a certain portion of its deposits on short time sixty or ninety days since they will not all be called for at once. But in granting applications for loans, account is taken, among other things, of the amount of money the bor- rower usually keeps on deposit in the bank. If he gives his note for a thousand dollars, that sum is sim- ply passed to his credit. He may not draw it out on the day of the loan. Part of it may remain in bank until the note is due. Seldom indeed does he draw out the actual money. He probably pays some debt or makes some purchase with a check on the bank. This check may be deposited in the same bank, in which case no money is required ; the bank has in- creased both its deposits and its loans. Even if the check is deposited in some other bank, it increases its deposits, and the loans of one bank thus appear as de- SUBSTITUTES FOR MONEY. 347 posits on the books of another. The granting of loans by banks has been compared to the issue of money. It has been said that the currency can be in- flated by bank loans as well as by the issue of paper money. It is rather a substituting of book accounts for money. So long as actual cash is not drawn from the bank by depositors, or by other banks in settle- ment, the loans enable depositors to do business by book accounts. To a certain extent all banks are one. While the loans of one bank appear as deposits in an- other, the loans of the second also appear as deposits in the first, balancing one another. If a bank is in real trouble, other banks of the city will frequently come to its aid. A large part of the business of every city is thus transacted without real money, by the aid of book accounts, as previously explained. These book accounts would be impossible but for the system of loans granted by the banks. One can make pay- ments by checks when a bank has guaranteed his checks. Where a large circle of men do business by checks, they offset one another that is, the exchanges of goods are made by means of book accounts, kept by the bank, made possible by the banks granting credit in the shape of loans. This policy is sometimes carried beyond the danger line. It is assumed that the bank has some capital, real money of its own, in the beginning, as security. If its loans are made with caution, they will even- tually pay the deposits ; but the call for the payment of deposits may be so sudden that the reserves will be exhausted before loans become due. In such cases it 348 EXCHANGE. is necessary for the bank to cease further loans, which disappoints those depending on them, and perhaps completes a financial crash. With the great experi- ence gained in the banking business, and the support banks give to others worthy of it, the system is com- paratively safe, and enables book accounts to be sub- stituted for money to an extent otherwise impossible. The one thing to be remembered is that the real substitute for money is neither bank checks nor credit in any form, but book accounts. They are made possible by credit, and checks are a part of their ma- chinery. BOOK VI. THE DISTRIBUTION OF PRODUCED WEALTH. BOOK VT. DISTRIBUTION OF PEODUCED WEALTH. INTRODUCTION. CHAPTER I. KENT THE SHARE OP THOSE WHO HAVE POSSESSION OF THE RESOUR- CES OF NATURE, 355 CHAPTER II. INTEREST THE SHARE OF PRODUCED WEALTH, 363 CHAPTER III. THE SHARE OF GOOD NAME, .... 375 CHAPTER IV. THE SHARE OF MONOPOLY, .... 382 CHAPTER V. THE SHARE OF THE PRODUCER PROFITS OF PRODUCTION, 397 CHAPTER VI. THE SHARE OF THE MERCHANT PROFITS OF EXCHANGE, . 406 CHAPTER VII. THE SHARE OF THE LABORER WHO WORKS FOR HIMSELF, 411 CHAPTER VIII. THE SHARE OF THE LABORER WHO WORKS FOR WAGES, 420 CHAPTER IX. THE SHARE OF LABOR WHICH SATISFIES WANTS DIRECTLY, 436 CHAPTER X. THE BOOTY OF THE ROBBER, AND THE WINNINGS OF THE GAMBLER, ... 441 CHAPTER XI. THE SHARE OF THE GOVERNMENT, . . 445 BOOK VI. THE DISTRIBUTION OF PRODUCED WEALTH. The ownership and control of the means of satisfy- ing wants was treated of in Book III., but the Re- sources Produced by Human Industry require further discussion, because so many persons and so many in- terests unite in their production. This book may be regarded as a continuation of Book III. When five hundred men unite in the production of shoes in a modern factory, the distribution of the proceeds is a complicated affair. Only a part of the work in pro- ducing the shoes is done by the men in the factory. The farmer who raised the animals from which the skins were taken, and the tanner who converted the skins into leather, had as much to do with the pro- duction of the shoes as the workmen in the factory. Neither will men erect buildings, and make costly machinery, without expecting something for their use. How shall the share of each interest be determined? Even if the shoes were divided among all interested parties in just proportion, what would they do with them ? They can only exchange them for other prod- ucts, and their final reward depends as much on 23 ( 351 ) 352 DISTRIBUTION OF PRODUCED WEALTH. what they get for the shoes as on the number of shoes they make. So that the question finally resolves it- self into an inquiry as to what share of the nation's product each one who contributes to its production should receive. Practically, we know, these questions are settled by Exchange. The farmer sells the hide or skins, and thus transfers to the purchaser his right to a share of the finished shoes. The tanner sells the leather to the factory, and with the sale transfers his right to a share in the finished product. Usually the workmen sell their labor, and transfer the right to their share to the employer, in return for wages. The fact that one owns his own labor implies his right to sell it, as well as to use it in production on his own account. The manufacturer sells the goods to the wholesale dealer, and he to the retailer, and he, at last, to the consumer. Each one who has contributed to the pro- duction of the goods has thus sold his share ; and the price he has received has been determined by Ex- change by the supply of what he had to contribute, iand the demand for his service, and for the finished goods. Even if each had not sold out his share as the work progressed, it would have been determined by the laws of demand and supply in Exchange. We see, then, the need of understanding the laws of Ex- change before proceeding tq distribution. Distribu- tion depends on other principles as well as those of Exchange, but we can not treat of the former without assuming some knowledge of the latter. In theory, any product of human industry should first be distributed among the interests which have DISTRIBUTION OF PRODUCED WEALTH. 353 united in its production ; then each person would use his share as he saw fit, exchanging it for such things .as he most desired, or for the services of others. There would then arise a secondary distribution, by which all the products of human industry would be distributed among the people of the nation, by each exchanging with others. In practice, we know, there is no distinction between the primary and secondary distribution. The members of a co-operative shoe factory would not divide the shoes among themselves ; but the factory would sell them for cash, and each would receive his agreed proportion of the money. With the money he must buy such things as he needs, and the quantity he can buy with a dollar is just as important as the number of dollars he receives. It is simpler, therefore, to ask, What share of the nation's products will each receive ? No more can be distributed than is produced. It is true that methods of distribution react on production. Under suitable encouragement one puts forth more effort ; with freedom and protection to property, more is produced and saved than under slavery and inse- curity. So far, therefore, as methods of distribution react on production, they indirectly increase the sum of goods to be distributed ; but in no case can more be distributed than is produced. It is a common though unformulated idea, that there exists somewhere a store of goods from which an unlimited quantity can be drawn. No such store exists. There are those who suppose that wages might be almost indefi- nitely increased, and everybody be better off. An 354 DISTRIBUTION OF PRODUCED WEALTH. increase of wages must diminish the share of some other persons, usually of other laborers, unless produc- tion is correspondingly increased. If the laborers of a country are all employed economically, an increase of wages does not mean an increase of production. The product to be distributed is, therefore, limited. The method of its distribution, and the share of each,, we are to study in this book. The essential agents of production are the Re- sources of Nature, and Labor ; and in modern produc- tion, Capital almost always contributes its aid. The older Political Economists, therefore, taught that all wealth produced was distributed into three shares land, capital and labor. This statement is correct as far as it goes ; but the great share of Labor is subdi- vided into many minor shares, and some classes of laborers have little in common. Prof. Francis A. Walker was the first to point out the importance of the share of the " Undertaker " of the business, which he distinguished from the share of the superin- tendent and the laborer. Yet this share of the un- dertaker of the business is really a part of the great share of labor in the economic sense, which includes all effort of human beings put forth for the purpose of satisfying the world's wants. We shall, therefore, consider : first, Rent, the share of those who control the Resources of Nature ; second, the share of Pro- duced Wealth ; then the shares of other interests which are to receive anything from a nation's annual product ; and, last, the shares of the various classes of laborers, which combined form the largest share of all. CHAPTER I. HENT:-THE SHAKE OF THOSE WHO HAVE CON- TROL OF THE RESOURCES OF NATURE. The word Rent as used by Political Economists has a narrower meaning than in popular speech. It never means the sum paid for the use of a building, but only that which is paid for the use of the ground on which the building stands the ground rent, as it is sometimes called. The separation of the rent of the ground from the sum paid for the use of the building is easy, and is common in practice. In some cities mostly buildings are erected on leased land, with a con- dition that there shall be a revaluation every five years ; and the rent is increased or diminished as the ground is found more or less valuable, by arbitrators or the courts. Rent has to do only with the Re- sources of Nature, and is the share of the product which the owner receives for their use. The econom- ic rent of a city lot is precisely the same, whether it serves as a foundation for a one-story or a ten-story building. The economic rent of a farm is the same whether there are buildings on it or not. We must always separate the land from the " improvements." The Resources of Nature are absolutely necessary to production. They are even more important than labor, for land uncultivated will bring forth a limited amount of food for man, and wild animals and fish (355) 356 DISTRIBUTION OF PRODUCED WEALTH. help to supply the wants of the savage; but labor alone is helpless. A thousand laborers would starve on an island of bare rock. Land is necessary for standing-room and breathing-room, and as a site for a dwelling. If the owner of an island 011 which a- thousand people were shipwrecked could enforce a mo- nopoly of the Resources of Nature, he could put all the people at work and obtain any share of the prod- uct he pleased. All that would be necessary would be to allow the people enough to prevent actual star- vation. Such an island owner could get a larger share of all that is raised on the Island than if the people were his slaves; because under freedom men will put forth greater exertions than under the fear of the lash, and the island owner need allow no more than the necessities of life in either case. This state of things was almost realized in Ireland, but would be impossible where land is plentier. On the other hand, on our fertile Western prairies, in an early day, land was worth very little. It was owned by the government, and there was more than the people could use. We can not say that any particular share of the product is due to land, and another share due to la- bor ; in one sense it is all due to land, and in another all due to labor. Both are essential to production ; either can afford to give the other nine-tenths of the product rather than do without it. It is, therefore, a question of the division of the product : and the share which the owners of the land receive for its use is- named Rent. Our object is now to find how large this share will be. KENT. 357 Rent is entirely independent of the question of pri- vate or public ownership of land, which has before been considered. There would be rent, just the same, if all the land were owned by the government ; the only difference being that the rent would be paid to the government, and make taxes unnecessary. The question of the ownership and control of the Re- sources of Nature has nothing to do with economic rent, which is the share that the one in control of the land ( whoever he is ) can claim, or gain by its use. Rent is the advantage which the owner of any particular Resource of Nature has from its possession. The older Political Economists drew their illustrations mainly from agricultural rent. They assumed that there was some land which, on account of its distance from market, poor quality, or other reason, just paid the cost of cultivation, so that the owner gained noth- ing from its possession. Indeed, every farm might have a little such land. All that the best land pro- duces in addition to the cost of .cultivation is rent. All grain of the same quality sells for the same price in the same market. If the poorest land pays for cultivation, better land pays something more, and the difference is the advantage the owner has from its possession. This advantage is rent. By poor land we mean, not only poor in quality, but in respect to markets, roads, or anything that makes it less desira- ble. One man hauls his wheat twenty miles ; another, one. The farm near market has an advantage over the one farther out, and this advantage is rent. Agricultural rent may also be illustrated from di- 358 DISTRIBUTION OF PRODUCED WEALTH. minishing returns, though the thought is not so sim- ple. Let us suppose that a farm just pays when worked to the point of diminishing returns to the la- bor bestowed on it. With the increase of population, agricultural produce becomes scarcer, prices rise until it pays to work land beyond, diminishing returns. The additional product is raised at a greater cost of labor, and the price for which it is sold pays this cost. The other portion of the product is, therefore, raised at a profit, and this profit is rent. Suppose that ten days' labor on an acre of land produces twenty bushels of wheat, and that thirty bushels can be produced with twenty days' labor. Now, unless ten bushels of wheat will pay for ten days' labor, this additional la- bor will not be bestowed. But, then, the first ten days' labor would also be paid for by the ten bushels of wheat, leaving ten bushels as rent for the land. Every farmer knows that production can not be calcu- lated thus accurately. Much depends on the seasons, and habit. Still, on an average, the tendency among intelligent farmers is to work land about as well as it will pay to work it. When it becomes more valuable, crops requiring more labor are raised; until, near a city, the land is used as a garden and is worth a hun- dred dollars a year rent. One can as well afford to pay that as to take land farther out for three dollars. Rent is the advantage derived from the possession of a particular piece of land ; what a man competent to use it can afford to pay for its use. Even agricultural rent depends more on location than on the fertility of the soil; and for purposes BENT. 359 other than agriculture, rent depends almost entirely on location. Why do merchants go to a city ? Be- cause they can sell more goods. The advantages o location may be so great that one will pay a thousand dollars a year for the use of each front foot of land to build upon. For the use of an acre of such land one could obtain $300,000 a year. This is the ad- vantage that its possession would give to the owner. This is rent. For residence purposes rent also depends mainly on location. For various reasons nearness to business, good neighborhood, fashion, sanitary surroundings, or all combined one building-lot is far more desirable than another. In what we may call the second-class cities of the United States there is a great deal of residence land, the annual rent of which exceeds a thousand dollars an acre. This is what some persons are willing to pay rather than live in less desirable locations. Economic rent is the same whether the owner uses the land himself or leases it to others. The owner of a residence lot has the use of it ; the merchant who owns his own store has all the advantage of location in his business ; the farmer gets the advantage of good land or land near market, as compared with farms which are just worth working. This advantage is estimated in what such land could be leased for. Kent is a very large share of the annual product of a nation, and increases with the increase of population and wealth. Rent is not only a large gross sum, but in densely populated countries it is a very much larger 360 DISTRIBUTION OF PRODUCED WEALTH. share of all that is produced than it is in new coun- tries. Labor must therefore have a smaller share of the annual production of any country, as population increases, even if it receives absolutely more. Why is the land of New York City in such demand ? Be- cause of the great population and wealth west of it. Remove this population, and rents would be what they were in an early day. The immense population and wealth of the United States makes necessary such a city as New York, somewhere on the Atlantic coast ; and the coast line and harbors and latitude make the present location the best place for it. A site for busi- ness here gives one a great advantage, and that ad- vantage is economic rent ; so that the owners of the land on which the city stands are now able to take immense sums from the total product of the country for the annual use of these few square miles of land. If they do business here themselves, they make these profits by reason of their location ; if they lease to others, they obtain rent from them. Either way, a large share of the immense business that passes through New York must be given to the men who own the land on which the city stands ; and this share must continue to grow larger as the population of the country increases. What is true of New York is true of Chicago and other great cities. The owners of the land on which any city stands receive a large share of the product of the country tributary to it, as rent. It is readily seen that there can be no escape from rent ; and that in an old and wealthy country, with a dense population, rent must absorb a large share o RENT. 361 the annual product, simply because a part of the land is much more desirable than other parts. Prices of goods must be high enough to pay for using the less desirable land, and the more desirable gains the ad- vantage. Is there any way by which the total share of rent can be reduced ? Evidently by a more even distribu- tion of population. If all the people flock to a few of the largest cities, the demand for residence land must be so great as to give the owner larger and larger rents. The land near the city will also be more desirable. The greater portion of the land of the country has really been placed farther from the people, by reason of the people moving away from it. The cause of rent is the unequal desirability of different pieces of land. If, now, there were more small cities and fewer large ones, so that the people were distributed more uniformly over the country, there would be no such demand for a little land near the center of one great city, and for residence land about it. The demand would be for land in smaller cities ; and there being so much more of it, rents must be comparatively low. It is not necessary here to discuss the reason for the drift of population to the large cities ; but it evidently means that the people must pay a very much larger share of the annual production of the nation to the owners of city land. What is paid to land can not go to labor. Where there is no rent, the entire product belongs to the laborers (in the economic sense of the word) who unite in its production, unless they choose to give 362 DISTRIBUTION OF PRODUCED WEALTH. a portion to the owner of Capital for its use. If an Indian cuts down a tree and hollows it into a canoe, the Resources of Nature are yet so plenty that there is no rent, and the entire canoe belongs to him. Later, if he attempts to fell a pine tree, he will find a man with a legal title demanding a share of the lumber for the removal of the tree. That is rent. That is the. advantage one has in the possession of the ground the tree stands on. In a new country, with few people, there is little rent to pay ; and the laborer gets the en- tire result of his labor. He takes timber when he wants it. He pastures his cattle in the highway, or on the commons ; or the use of the ground he fences in costs him but a trifle. It does not follow that people were better off. There is advantage in a population of a certain density dense, but not too dense. Where population is not too large, the laborer may find the net return for his labor greater, after paying rent, than it was in an earlier day when he paid none. The dense popula- tion, however, introduces a class of rent receivers who can live without work, or if they labor, as is more likely, they will have a much larger income. Distinc- tions are thus introduced into Society, and the laborer seems to have less because the others have more. The satisfaction of our wants depends, to a considerable ex- tent, on what we have as compared with others ; and it is undoubtedly true that one's satisfactions in life are actually diminished by an increase in the income of those about him. CHAPTER II. INTEREST THE SHARE OF PRODUCED WEALTH. Labor and Natural Wealth are the only Resources absolutely necessary to production. In the beginning- there were no other. Hence, Labor will receive all that is left after paying rent, provided it asks no as- sistance. The product may, however, be increased, sometimes a thousand-fold, by the aid of capital ; and the producer may find it profitable to give even a, large share to capital, and have more left for himself. He seldom pays the owner of capital as much as its use aids him in production. Capital is that part of Produced Wealth which is employed in production ; but all Produced Wealth that which satisfies wants directly as well as indirectly can obtain a share in the world's product in return for its use, and for the aid it renders in the satisfac- tion of wants. 1. PERMANENT PRODUCED WEALTH. Notice, first r that which satisfies wants directly r , such as dwellings. The dwelling continually furnishes shelter day by day, and this is almost as desirable as food. The owner has this advantage over those who have no- dwellings. He would not allow another person to use his house without something in return ; and one who is engaged in production can well afford to give part of the product for the use of such a dwelling, rather (363) 364 DISTRIBUTION OF PRODUCED WEALTH. than do without it. On the other hand, while one will erect a dwelling for his own family, he will not build one for others unless he expects to obtain some- thing for its use. Permanent Produced Wealth which satisfies wants indirectly, of which machinery is the type, vastly in- creases the product of labor. One man with a ma- chine will frequently produce as much as a hundred by hand. Ninety-nine per cent, of the product is therefore due to the machine, and only one per cent, to labor. If the laborer owns the machine, he is a hundred times better off ; if he does not own it, he can afford to give almost any share for its use. 2. CONSUMABLE PRODUCED WEALTH. The share which the owner of this obtains for its use is no less just, but the reasons for awarding it are not so appar- ent. The reason for interest is here the time element in production. A savage is obliged to supply his wants " from hand to mouth." He catches fish and kills game for the day or week, and the accumulated stores of food are small. Civilized production re- quires at least a year, and what is the producer to live on in the meantime? The crops are dependent on the seasons. One crop a year is ordinarily the rule. Although a suit of clothing may be made up in a week, this is only the last stage of the production. The cloth must be manufactured from wool or cot- ton which required a year for its growth. If the farmer or laborer has a year's supply on hand, he may depend on the sale of the product at the end of the year for another year's living. But suppose he has INTEREST. 365 nothing. If he gets food and the necessities of life for his family as does the Indian, he will have but a miserable living. If he is free to fit the ground and sow a crop, he will get ten times as much at the end of the year. If some one has a supply and will let him consume it, he can afford to return as much at the end of the year, and something besides, perhaps twice as much. The farmer in this condition usually gets his supplies of the country merchant, for which he pays " after harvest " ; and the merchant must have a higher price for the goods than if he were paid cash. Even if he sells for cash, the merchant must carry a stock of goods for some time in order to have what the people happen to want. The present wonderful methods of production would be impossible except that somebody carried a year's supply of consumable wealth. It is said that produc- tion is going on all the tune ; so wheat is growing all the time, yet it is a year from one harvest until an- other. While manufacturing is a continual process, there are vast quantities of materials and unfinished goods in process of production. This reserve stock enables laborers to be employed to the best advantage. Without it, the United States could not support a million people. We must, then, have this stock of consumable goods, and we must allow the owners in- terest enough to induce them to accumulate it. It would be better if each man had enough for himself and family to live on for one year. He could then engage in production on his own account if he thought it more profitable than working for wages. 366 DISTRIBUTION OF PRODUCED WEALTH. It is worth while here to notice a mistake of Henry- George, who assumes that wages are paid out of the product, and not out of previous accumulations. The illustrations he uses are such as, a man going with an employer on a fishing cruise, his wages being paid out- of the catch when they return. But how do the fishermen live in the meantime ? Why, they take provisions along, and they have clothing enough to last until they return. If the employe leaves a family, its members must live during his absence out of the stock of goods already accumulated. Thejr may get goods on trust at the store. The fisherman may own a house. But it is plain that both the work- man and his family must live on goods already pro- duced until more are produced. George, like many more careful writers, fails to distinguish between one's- living and his wages. If a workman's wages are more than he consumes, he may receive his living out of the stock of goods already accumulated, and wait for the remainder until the production is completed. This is sometimes the case with the farmer's " hired man." The farmer furnishes his living as he goes along, and lets him have what money he needs to use during the process of production. At the end of the year, when production is complete, he pays him the remainder of his wages. WHAT FIXES THE SHARE OF PRODUCED WEALTH? We are now ready to ask how much the owner of Produced Wealth will receive for its use. This sum is called interest. First. The interest on all forms of Produced INTEREST. 367 I Wealth tends to the same percentage. Something is usually added for risk, which may be great in one place and almost nothing in another. Ignorance of the conditions, and friction, as well as personal likes and dislikes, have some effect, but in the same locality interest on all forms of Produced Wealth tends to the same point. Let us suppose one to have a sum of money, with which he can buy anything, sufficient for the support of a number of laborers for a year. He controls the direction of production. He can build houses, a busi- ness block, a factory ; or set men to producing ma- chinery, or any other form of Permanent Wealth. Which will be produce ? Why, that for which he can get the largest annual return, and competition thus tends to make the interest on all of the investments equal. But suppose producers of consumable goods want, this money to support their workmen ? If they offer him a higher rate of interest for it than he can hope to receive from a permanent investment, he will naturally let them have it. Free capital is said to flow where it receives the highest interest, reducing the rate in one line of production and increasing it in another. What really flows is labor. The men who have the means the stocks of food and goods on which the laborer must live, are able to direct that labor where it will pay best ^-now to the production of build- ings, now to machinery or railroads, now to the ac- cumulation of a larger stock of consumable goods. The great lines of production go on the same from 24 368 DISTRIBUTION OF PRODUCED WEALTH. year to year. The diverting of a little labor from one purpose to another which promises better returns suf- fices to even up the rate of interest in all. If there is an excess of any form of Permanent Produced Wealth, interest on it may be very low, and may fall to nothing, until the increase of population makes more demand for it, or a portion is slowly worn out or destroyed by time. The interest on both classes of capital and on all forms of Produced Wealth really tends to the same point, for the reason that so large a part of all the Produced Wealth in a country is consumable certain to be used up in the support of the people in a year or so, and much of it perishable if not so used. In the last analysis the greater part of this Consumable Wealth is paid out for wages, or used for living ex- penses of farmers and other producers. Now, the enormous labor power of the country can be turned by wages in any direction, either to the replacement of the wealth consumed, or to the production of any other form of wealth which will pay the largest interest. Competition will tend to direct production to that form of wealth which will pay the largest interest, and hence to bring the interest on all the various kinds of Produced Wealth to the same rate. The reader will notice that the word " tends " has often been used in these chapters. The actual result in society is almost always brought about by a com- bination of forces, all of which act with more or less friction, and some of which neutralize others. The simplest way is to consider one force at a time. We INTEREST. 369 may be able to predict what will be its effect when acting alone and without friction ; but there may be other forces which modify the result very materially. The friction is also greater in some instances than in others. There is no surer mark of an illogical mind than the supposition that some seeming exception overthrows a principle which we have found to be true by careful investigation. Interest on various forms of Produced Wealth, as a matter of fact, varies considerably. Nevertheless, it tends toward the same point. By errors of judgment, too much of one thing is produced. If it be Permanent Wealth, it may be a long time before the population grows up to it, or it ivears out. Returns are often higher to one kind of Produced Wealth because others do not know how Iiigh they are, or fear the risk of the investment, when the owner alone knows it to be safe. These, and many other influences, cause considerable ap- parent variation in the rate of interest. Neverthe- less, when taxes, compensations for risk, and the share of profit, are deducted, we shall find that the rate of interest in the same locality varies much less on the various forms of Produced Wealth than we might suppose. Second. Not only does competition tend to reduce the rate of interest on all forms of Produced Wealth to the same rate, but it also determines the average rate of interest, as considered apart from the risk in- volved in lending. The rate of interest must be high enough to induce somebody to save a year's supply for the people, and to accumulate machinery, and 370 DISTRIBUTION OF PRODUCED WEALTH. other Permanent Wealth, or wants can not be satis- fied in the present economical way. If interest rules too low, the reserve supply for the world's support will be endangered ; if too high, competition will bring it down. A high rate of interest is a great inducement to- saving. A farmer knows {hat a ditch would increase the product of a field fifty per cent. He has not the time to dig it, but the inducement to work more hours, or to save money to hire it dug, is strong. A workman is paying $200 a year for a little house which he could build for $500, and he is likely to deny himself, and save money to get a home of hi& own. A manufacturer sees that a new machine would increase his profits fifty per cent, of its cost. The machine would pay for itself in two years. If he can not borrow the money, he will make every effort to save it. If one can rent a house for four per cent, of its cost, there is less inducement to build one ; and if a manufacturer can borrow money at four per cent., he will not make the effort to save that he made when he was paying fifty. So, if one can lend money at three per cent, a month, he will deny himself, and save to lend, since a very moderate fortune will give him an income on which he can live. When he can get only four per cent, a year, the inducement to save is less strong. More people are, therefore, saving where interest is high, and numerous small fortunes are accumulated. If interest were fifty per cent., it is probable that a very large part of the people would scrimp themselves in living, in order to save a year's- INTEREST. 371 supply of the necessities of life, and avoid the pay- ment of interest to others. As interest becomes lower, few people are willing to save, and the ma- jority will consume all they receive. Yet experience has shown that a few will continue to save all of this sort of wealth which the world needs, if they can gain even five or six per cent, for its use an in- significant sum compared with the advantage which the world gains. It is because interest is so low that laborers do not save more. It is undoubtedly true that there would be a certain amount of saving even if there were no interest. Men wish to lay by for a rainy day. But it would be ^ery little. Interest, in the economic sense, is not merely the sum paid for the use of money, but the re- turn to the owner from any form of Produced Wealth. This would mean that when one built a house he could get for its use only what the annual repairs cost, and a sum which would replace the build- ing when it is destroyed by time. It would be safer to bury his gold in the earth. What would be the in- ducement to make machinery if one hoped to get back only the cost of the machine when it is worn out? It is true that the desire to accumulate a hoard of wealth for future needs, or for posterity, would lead to considerable saving, especially by the wealthy, and the saving might take the form of machinery and build- ings ; but we can hardly imagine that such saving would be sufficient to keep the world going. The stock of Produced Wealth would diminish, and wants would be satisfied at far greater cost of labor. 372 DISTRIBUTION OF PRODUCED WEALTH. How high a rate of interest is necessary to maintain the existing stock of wealth, depends on the character of the people, their progress in civilization, and the relative amount of wealth in the country. The ac- cumulation of a great reserve requires time, and is in the beginning a slow process. Because interest rules,, for a few years in a new country, at twenty per cent.,, it does not follow that this rate is necessary to induce people to save ; but they have not had time to save the capital needed. Produced Wealth is worth this high interest to use, and there is so little to lend that there is no competition among the lenders. Wait un- til time has been given for accumulation. In Eng- land, Holland, and the United States, interest, exclu- sive of taxes and risk, has fallen as low as two per cent. The annual share of Produced Wealth is compara- tively a small one, and the share of that portion which is used in production, called capital, is smaller still. If we roughly assume that the manufactured products each year equal in value the capital invested, the pro- ducers will pay to capital interest on the investment, say six per cent. ; which would be six per cent of the product, since we assume the product equals the capi- tal employed. Certainly laborers have no reason to complain if capital receives six or ten cents out of every dollar's worth of goods produced in mills where one man turns out a hundred times as much as he could by hand. It is not expected that capital will receive anything like what it contributes to produc- tion. INTEREST. 373 In concluding this chapter it must not be forgotten that the sum paid for the use of a building includes both rent for the ground, and interest on the value o the improvements ; also that a large portion of Per- manent Produced Wealth is used by the owners, who do not pay interest to others. Its possession contrib- utes to production or to the satisfaction of their wants directly, and this benefit is a part of the share of Produced Wealth. The share of Produced Wealth is called interest, and the rate of interest is determined by competition. It tends to that point which will induce people to ac- cumulate enough Produced Wealth to enable the world's production to be carried on with the greatest economy. If interest is too high, it is a spur to ac- cumulation. If it is too low, the increase of Pro- duced Wealth goes forward less rapidly than it would otherwise. Put in another way, the average rate of interest is determined by what additional Produced Wealth is worth to use. When it is relatively abundant, addi- tional wealth is of little value. If we have all the cotton factories needed to supply the wants of the people, an additional factory would have no value in. use, and would pay a very low rate of interest on the investment. As new machines are invented, or as. we discover new methods in which Produced Wealth can be made to yield a return, interest tends to rise. The combined result of all tendencies, to-day, is toward the lowering of the rate of interest. The average rate may yet sink to two per cent. 374 DISTRIBUTION OF PRODUCED WEALTH. Interest is usually reckoned as though it were 011 money. But the real things that the manufacturer wants are not money, but labor, machinery, etc. What the laborers want is food, clothing and other comforts and luxuries of life. Money is only a con- venient way of estimating the relative value of all these things and keeping the accounts. In the last analysis it is goods, dwellings real things. We have, therefore, considered the substance and not the shadow. We are much more likely to get at the truth by dealing with real things, the things that satisfy wants, than by suffering ourselves to be confused by the idea that it is money we are seeking for. The return from all forms of Produced Wealth is interest. Even the satisfaction the owner gets from a costly painting is supposed to equal the average rate of in- terest on its value ; else he would sell it, and invest money in something else. CHAPTER III. THE SHAKE OF GOOD NAME AND ESTABLISHED BUSINESS. A " good name" and an established business are usually classed with capital, but they are not Pro- duced Wealth, because all wealth is material. Here we see the advantage of looking at things as they are. When we talk of Produced Wealth there is no danger of failing to understand precisely what the term covers, and the division is a natural one. A " good name " and established business are fre- quently the result of great labor, and are often of great advantage to the world as well as to the owner. In any case the owner is entitled to the benefit they confer upon him. One's name is a part of himself, and the good name of a business is a guarantee of its character which saves others trouble of investigation and risk of loss. Suppose one is engaged in the production of shoes. He can wear very few of them. The rest are worth only what he can get for them. The satisfaction of his wants will depend on Exchange, on how much money he can get for the shoes, and how much he can buy with the money. Now, when two factories make shoes equally good, why is it that one will receive a higher price for his goods than another? Leaving out differences in the ability of the salesmen, the (375) 376 DISTRIBUTION OF PRODUCED WEALTH. higher price comes from the reputation, or the good name of the shoes. There are two brands of soap on the market which have for years enjoyed a large sale. It is said that soap equal in every respect to either can easily be made. But can it be sold? Not at the same price except by increased cost of selling. These soaps are known. They have a good name. A great- many people have used them, and know them to pos- sess certain qualities, and have been led to believe they possess other qualities which can not be so- readily ascertained. No one not an expert is a judge of all goods from their appearance. He must buy largely on the repu- tation of the maker or the seller. If he has bought something of a certain brand and found it to be good, he feels safe in buying another article of the same make. Another manufacturer may make precisely the same goods, or those equal to them, yet the pur- chaser does not know that they are as good ; and can tell only by purchasing and using. Consequently, he will pay a little more for the well-known goods than for those he knows nothing about. If the price be- the same, he is more likely to choose those he knows. One unfamiliar with the complications of modern business, can have only a faint idea of the enormous advantage this gives the well-known maker. It may prevent another from doing business at all. The only way in which the new manufacturer can compete witk him who has a good name established, is by making a name for himself. Perhaps he attempts to do it by advertising, in which he must spend large sums. Per- THE SHARE OF GOOD NAME. 377 haps he does it by allowing the retailer larger profits. Perhaps he sends men about the country to explain the merits of his goods to merchants who will explain them to others ; or, as for example in the early sew- ing-machine trade, he sends men to the customer, direct, to explain the merits of his goods. The manufacturer whose goods are well known may do- all these things in order to maintain his reputation, but nevertheless he has a great advantage over the other. If the reputation of his goods gives him a large trade, this may enable him to manufacture cheaper ; and thus, though he sells at the same price as his competitor, he may gain larger profits. We have seen the advantage of the division and re- combination of labor, and of manufacturing on a large scale. This great gain to the world from the increased efficiency of labor may be absorbed by the large manufacturer on account of his good name. The reputation of his goods enables him to do a large business, by means of which he can manufac- ture cheaper, and sell at the same price as those who- do a small business. The reputation of his goods may also enable him to get a slightly increased price, which, in his large manufacturing, may mean great profits. One cent from each of the inhabitants of the United States would mean 1600,000.00, and while no person can deal with every one of this great population, he may deal with vast numbers of them ^ and a few cents additional from each may mean a great fortune annually. All this is the result of his reputation and good name. Numerous instances could 378' DISTRIBUTION OF PRODUCED WEALTH. be cited where the good name of an article or business could not be purchased for a million dollars. This good name may have cost the owner all or more than it is worth to him, or it may have cost less, or be the result of accident ; its advantage is the same in any case. The reputation of some goods has been made by expending vast sums in advertising. This advertising may have cost all the reputation is worth. Sometimes reputations have been built up by dis- tributing samples of the goods free, and thus induc- ing the people to use them and ascertain their merits. More often it has been made by the slow process of selling as one can, and trusting to the quality of the goods to make their own reputation ; and their good name may represent years of patient industry and effort. However it may have been obtained, a good name is of great value to any producer, and enables him to take a share of the product ; sometimes a very large share ; often a much larger share than interest. His competitor must either sell cheaper, or sell less, or expend great sums in convincing the people that his goods are equal to the other. This share of a good name is a species of monopoly. There are good and bad monopolies, which will be considered in the next chapter. Under the head of " good name " may, for conveni- ence, be included the business terms " good will," and "business," since they all follow the same law, and are economically part of the same share. The words 44 business," " name," and " good will," frequently occurring in sales of property, are parts of one thing. THE SHARE OF GOOD NAME. 379 The prospect of receiving this share is frequently- sold, or " capitalized," and is considered worth a sum which if put at interest would yield the same annual return. That is, if the " good name " of a business is worth $80 a year, and the rate of interest is taken at eight per cent., the " good name " is capitalized at $1,000. A large soap factory was recently sold for something over six million dollars. It is not likely that the plant cost half that sum. The rest was in the "good name." In this case the "good name" had been gained partly by advertising, and had cost fabulous sums. But the business had the " good name," whether it cost more or less than it was worth. The new company, by keeping up the quality of the goods, was almost certain of the share which came from the " good name " of the article. We are to remember that when " good name " is thus capitalized, it is not Produced Wealth. Wealth is always a material substance, and we have been at great pains to use the term Produced Wealth in place of the indefinite one of " capital " where there was danger of misunderstanding. It is best to look at things as they are. Produced Wealth, material sub- stance, is one thing ; the prospect of getting a share of future production on account of the good name of a product or an established business, is another. They should never be confused. The one is the share of the Resources Produced by Industry ; the other is the share of " good name." The nature of the share is not changed because some persons estimate it in terms of a principal sum which would bring as much if placed at interest. 380 DISTRIBUTION OF PRODUCED WEALTH. The share of " good name " is sometimes included in the share of profits, and sometimes in that of inter- est ; it should be included in neither. It is a share by itself. In an ordinary business which one has built up for himself, he thinks of the share of "good name" as a part of profits. He pays rent, and interest, and other expenses, and lumps the share of " good name " in with his own services and compensation for risk. In many lines of business one can not practically do otherwise. He makes more than his neighbor ; and perhaps flatters himself that the result is due to his superior business management. In reality, his larger gross profit is in consequence of the good name of his goods, or his own reputation. Since this " good name " is probably the result of his own business ef- forts, there is perhaps no reason why it should not be classed with profits, as compensation for his past ef- forts. When " good name " is " capitalized," the share is wrongly credited to interest. Let us suppose a soap factory which is sold to a company at a capitali- zation. In addition to the present value of the plant what it would cost to replace it by a new one as well adapted to the purpose a considerable sum is added for the value of the " good name " and " busi- ness." The new company is expected to pay divi- dends on the entire stock, that which represents the value of the plant as well as that which represents the capitalization of the "good name." Here the share of the " good name " is called interest. Wher- ever a " good name " and business is thus capitalized, THE SHARE OF GOOD NAME. 381 its share is included under interest. It should be sep- arated. The share of " good name " is, however, very close- ly related to that of Produced Wealth, and in all stock companies is classed as capital. It may have cost as much as the plant ; and the stockholders should have interest on it. In the one case, labor has been expended in building a factory and making ma- chinery ; in the other, labor has been expended in making a good name for the goods, and arranging with others for their sale. The labor would never have been expended except for the hope of reward. One can not make enough in one year from the good name to pay what it has cost, but he, or his succes- sors, may make the interest on what it has cost, for- ever. In this case " good name " is as justly entitled to a share as Produced Wealth. Property in " good name," " business " and " good will" should always be distinguished from property in material wealth. CHAPTER IY. THE SHARE OF MONOPOLY. The price at which goods can be sold under mo- nopoly was necessarily considered under exchange. Whatever is obtained in addition to the natural price under competition, is due to monopoly. There is monopoly in production as well as in ex- change. One may be the only producer in his line, and be able to prevent others from engaging in the manufacture of his class of goods. The share of the world's productions which he will thus be able to obtain will be gained through exchange, in a higher price for his goods than he would otherwise receive. This higher price, in the end, comes out of the con- sumer, who is probably engaged in some other form of production. NATURAL MONOPOLIES. The monopolies most im- portant to consider at present are what have come to be known as Natural Monopolies. By this term we do not mean the monopoly of natural talent, to which every one is entitled of right. We mean necessary monopolies necessary because, in the nature of the case, there can be no real competition ; necessary, be- cause the service can be so much more cheaply per- formed by one company than by two that it is practi- cally necessary to give it into the hands of one. In the case of these monopolies we must abandon the idea (382 ) THE SHARE OF MONOPOLY. 383 of competition, because it logically leads to combina- tion and higher prices. The term, Natural Monopoly, is now fixed and generally understood in this sense. It would be useless to attempt to change it. There are certain services, required by the larger portion of the people, which can be done on a large scale so much cheaper than on a small one, that they are certain to be gathered into the hands of one com- pany. Competition can not act because the small con- cern can not, in the nature of the employment, com- pete with the large one. Such is the supplying of water to cities. Not every person, but a large portion of the people, desire water furnished through a system of pipes. In a crowded city, it is necessary to require its use by all, for the health of all. If several com- panies attempt to supply the city, it necessitates sev- eral systems of pipes, each costing nearly as much as one which could serve all equally well. If the com- panies divide the city into districts, each laying its pipes in that district alone, then each of such districts has a monopoly ; since there oan be no competition with companies whose pipes do not reach that terri- tory. Hence, rival water and gas companies usually fight until one destroys the other, at a great waste ; or they combine, openly or secretly. The most important necessary monopolies are : in the cities, water, gas, electric light, street-car lines ; in the nation, the post-office, telegraph, express business, and railroads. Doubtless there are many other lines of business in which a monopoly can do the work somewhat cheaper 25 384 DISTRIBUTION OF PRODUCED WEALTH. than competition, but the advantage is not sufficient to make a monopoly certain. It is not true that the grocery business can be carried on very much cheaper in large than in small establishments. There will al- ways be competition in this business, without govern- ment interference. When competition acts, it 'can usually be trusted to give low prices. The old praise of competition was not as an end, but because it was believed that it was the best means of securing fair prices. When in the nature of the case it can not ^,ct, as with Natural Monopolies, some other means of regulating prices must be found ; and there are many who see no method save in government control. The share of the world's productions which one will be able to obtain on account of a complete or partial monopoly, depends on the principles set forth in con- sidering monopoly as affecting Exchange. One of the most important of these is the principle that the price which the monopolist can fix will depend, in the first place, on whether he is compelled to perform the same service to all persons on the same terms, or whether he is permitted to charge different prices to different people. In the former case, he can obtain only the value in use to those to whom his services are worth least ; in the latter, he can obtain the full value in use from every person with whom he deals. This statement is so important as to bear repetition ; and it is one which has usually been overlooked by political economists. In other lines of production competition requires all goods to be sold at something like the same price. A good illustration is a railroad which THE SHARE OF MONOPOLY. 385 has a monopoly of transportation at a certain point. It can charge different shippers different prices for the same service. It will, therefore, seek to get as near the value in use to each one as it can. If it is con- vinced that one person can not afford to pay more that is, that he will not ship, or will go out of the business which necessitates shipping at the established rates it will give him a reduction; seeking to get from every person as much as he can afford to pay, or the value in use. Here is, certainly, a proper field for legislation, which Congress has entered within the last few years, against great opposition. The princi- ple is that the Monopoly must sell to all at the same price ; that it must perform like services for different persons at the same rate, and that when such services vary, the rate shall not vary in undue proportion. A monopolist frequently meets with competition at some one point. Rather than lose the profit to be made here, he may sell the goods as low as he can afford. If now he can be compelled to sell every- where at the same price, his power to obtain excessive prices is partly or completely destroyed. Again the best illustration is a railway. At railway centers rates are low, perhaps too low, because of competing lines. But every road passes through many towns in which there is no other road ; and here it can charge monop- oly prices, which are " what the traffic will bear." If, now, the road is compelled to give the same or similar rates to all the towns on the line that it gives to railway centers, the benefit of competition is ex- tended to every station on the line. If it gives low 386 DISTRIBUTION OF PRODUCED WEALTH. rates anywhere, it must give them everywhere. If the competing roads at railway centers find rates are too low, they must raise them; but they must not compel other stations to make up what is lost at a railway center: Competition at the railway centers is pretty certain to make rates low enough ; and the ex- tension of these rates to every station on the line would change many railways from monopolies to com- petitive business. This principle is the foundation for the famous "long and short haul clause," of the Interstate Com- merce law. This clause provides that a road shall not make a greater charge for a less distance in the same direction, and has met the chief attack of railroad managers. Yet no juste r measure could be devised. There may, indeed, be cases in which it actually costs the road more to leave a car fifty miles short of its terminal than to carry it through, but not very much more. Now, the principle of the law is, as near as possible, the same price to all for the same service ; by which a road is compelled to fix uniform rates for those who, in their distress, or from lack of competi- tion, might be compelled to pay any price the road chose to ask. It is thus intended to carry the benefit of competition at terminal points to every one who does business with the company. It is true this may cause a raising of rates at competing points ; but it is more important that every one have an equal chance, with one price to all, than that rates should be low to anybody. The Interstate Commerce law is a question of practical statesmanship ; and while it has not ac- THE SHAKE OF MONOPOLY. 387 complished all that might be desired, its principles are steps in the right direction for the control of monop- oly. It is introduced, here only for the purpose of illustration, and not for complete discussion. Most Natural Monopolies may properly be placed under government control. Such control may be either by government ownership, or by legislation pre- scribing under what conditions the monopolies may be carried on by private parties. Either course appar- ently narrows somewhat the sphere of private enter-* prise ; but such monopolies would otherwise be con- ducted by great corporations, with the management in the hands of a few officers, and the number of people who would thus be prevented from managing a busi- ness of their own is insignificant. Every business which is of the nature of a natural monopoly has been owned and controlled by government in some civilized country. In the United States, the post- office has always been regarded as better in the hands of the government than in those of private parties. There is 110 necessity for rival post-offices in the same town. The business is much more economically man- aged under one system. No private corporation would have given us our present magnificent postal system. The government has regard for the interests of all the people, to the extent of making a uniform rate for all parts of the United States; and, although there is considerable difference in the cost of carrying a let- ter from Boston to New York or to San Francisco, and a still greater increase in the cost of carriage to out-of-the-way places, the encouragement to communi- 388 DISTRIBUTION OF PRODUCED WEALTH. cation, and the desire to make the country a more de- sirable place of residence, are arguments which justify a government in charging something more than cost in the one case, and something less in the other. The difference is more apparent than real, because a uni- form rate enables the entire service to be carried on much cheaper. Concerning the control of this most important Natural Monopoly by government owner- ship, there is no question anywhere. Railroads are frequently owned by the government in European states. In Austria the country has been divided into zones, and a uniform rate made for each zone without regard to distance, something on the principle by which letters are carried in the United States. The uniform rates, of course, simplify the business, so that the cost of carriage is less. The railroad service is not a complete Natural Monopoly, since there will always be considerable competition at large cities ; but it is practically so at local stations, and any government would undoubtedly be justified in undertaking the management of all the railroads in its territory, if no other means of control can be found. The magnitude of the task in the United States, should make this course a last resort. It would be far more difficult with us than in England, on account of the condition of our Civil Service. It would be in- tolerable that the vast number of railway employe* should be at the mercy of a political party, and so many places regarded as the spoils of an election. If men were appointed, as in England, on the merit sys- tem, wholly without regard to politics, the task would THE SHARE OF MONOPOLY. 38 be easier ; but, even then, it is one we may well shrink from. The second means of control of a Natural Monop- oly is by prescribing the conditions under which it may be carried on. The State may even require that certain things be done for the good of the whole coun- try, although a railroad may be compelled to charge- more than cost of carriage in some instances to make up the loss. For example, it is greatly to the interest of the United States to build up the smaller towns, and to prevent the massing of dense populations in cities. We may, therefore, require a railroad to per- form the same service for all persons at the same price, to give a small town the same rates as a larger one for the same distance, and to make the same price to him who ships a single car as to him who ships a, dozen. The road can make its average rates high enough to cover the cost. The solution of the rail- road question is likely to be found in the principle that roads must perform like services for all persons on the same terms; and must not give lower rates to either large cities or large shippers. The entire traffic of the road will thus be regulated by the rates at railroad centers, where competition will be likely to keep them within reasonable limits. The courts of some States have gone further, and ruled that rates must be reasonable. What is reasonable is, of course, a question of fact for a jury. This legislation is based on the old common law for common carriers ; but the economic principle for its justification is found in the fact of the Natural Monopoly, which practically pre- 390 DISTRIBUTION OF PRODUCED WEALTH. vents competition from regulating rates at all points, and to all persons. There is competition enough at some points ; but for the greater part of its stations, the road has a Natural Monopoly. The tendency is also toward consolidation, and while competition exists at railroad centers, at present, all roads may at some time in the future form parts of one great system. If so, the Natural Monopoly would be coihplete. If it be asked why similar regulations should not be made in all lines of business, the obvious reply is, that outside of monopolies competition is a suffi- cient regulator of prices, and that such regulation might destroy the business. If the law compels a Natural Monopoly to perform some service for less than cost, that all citizens may have an equal chance, the very fact that the monopoly is without competition enables it to fix its average rate high enough to cover such loss. We do, however, make other regulations for various lines of business when the public interest demands it. In the United States, the post-office and the rail- roads may be said to be at the two extremes of Nat- ural Monopolies. The first we are controlling by government ownership; the other we are attempt- ing to control by such regulations as the Interstate Commerce law. Between these two lie water-works and gas-works for cities, street-car lines, the express business, the telegraph, etc. It is now pretty gener- ally agreed that water-works are best under city man- agement. A few cities have recently built their own gas-works. In others, legislation practically fixes the THE SHARE OF MONOPOLY. 391 price of gas. The last is an unsafe plan; there is danger of practical confiscation of the property on the one hand, and of allowing enormous margins for profit on the other profits which no man could make in a business influenced by real competition. Street- car lines are controlled in most cities by roughly fix- ing the fare at five cents ; a convenient sum to handle, but one which gives great opportunity for profit or loss. There is yet considerable competition among telegraph lines, but they are a Natural Monopoly which could be carried on much cheaper under one management. There has, on this account, been a strong demand for a postal telegraph, which means government ownership. GOVERNMENT CONTROL OF NATURAL MONOPOLIES NOT SOCIALISM. It is probably good statesmanship to bring all Natural Monopolies under government control, but government control does not require gov- ernment ownership or management. The Interstate Commerce law brings the railroads to a considerable extent under government control. It would be possi- ble to leave them in the hands of private owners, and at the same time secure fair rates of charges. The essential thing about fair rates is not so much low charges as equality, so that no person or corporation can secure an improper advantage over another. We may require railroads to do business in a certain way for the good of the people ; but beyond necessary reg- ulations, they should be free to manage their business as they please. We may say, We expect you to make a reasonable profit ; but you must make it in 392 DISTRIBUTION OF PRODUCED WEALTH. certain ways, and you must not make it by methods contrary to the good of the whole people. In return for this limitation, the government is able to protect different companies from the effects of their own natural competition, where it would be destructive, either to the roads or to reasonable profits. This is not Socialism, which would destroy every one's power to engage in business for himself. It takes only a limited number of lines of business out of the hands of private control ; and those lines are certain to go into the hands of some monopoly, any way. If a business is of such a nature that it must be controlled by a monopoly, most people will prefer that that monopoly be the government. Individual- ism does not prevent the formation of partnerships. When a city is to be supplied with water, it does not destroy Individualism for the people to engage in a partnership to furnish themselves with water. Indi- vidualism only demands that all lines of business which are adapted to private management shall be re- served for private enterprise. Government ownership of railways may be very objectionable, but such own- ership is not Socialism, nor a step toward Socialism. A railway employe would have the same liberty in the service of the government as in the service of a great corporation. The equalizing of rates would give op- portunity for many small lines of business where the production is now in the hands of a monopoly. Gov- ernment ownership of railways would probably tend to an increased number of independent producers. The objections to it are the necessary extension of govern- THE SHARE OF MONOPOLY. 393 mental powers, the vast increase in the number of offices to become the spoils of every political election, and the opportunities for swindling the government which it would afford. Government ownership is common in Europe, and is a question of practical statesmanship ; but the American people hope to find a better way of securing just and equal rates for all. The price at which any monopoly can sell its goods depends on the principles set forth in the chapter on " Monopoly," in the book on " Exchange." A part of this price usually the greater part, and frequently nearly the whole of it is what would be obtained under competition. The excess, only, is the share of Monopoly. But while the percentage of the price which is due to monopoly may be very small, the ag- gregate share of a monopoly is frequently very large. A recent form of monopoly is known as the Trust, which is simply a combination of men who would naturally be competitors. The prices which they can obtain for their goods are shown under " Combina- tion," in the book on Exchange. All that is obtained over the natural price under competition, is the share of Monopoly. CAPITALIZATION. Monopolies are sometimes capi- talized, though not so frequently as " good name." Some forms of monopoly are not so certain to return a future income. When a patent right is sold, the monopoly is capitalized, but as it is expected to expire in a few years, the capitalization must be such as is expected to pay, not only interest, but the principal, within the time the right has to run. To a certain 394 DISTRIBUTION OF PRODUCED WEALTH. extent, this is true of all capitalization. If one has a monopoly of any kind of production, or any service which he can transfer, it can, of course, be capital- ized and sold. The truth that must not be forgotten is, that such capitalization is not material wealth. It does not come under the head of "Resources Produced by Human Industry," which are always material. Such capitalization represents only one's right to a share of the world's production, or perhaps only his power to take a share. It does not increase the resources for the satisfaction of wants. The apparent wealth of the country is often vastly augmented by the mere draw- ing of certain papers, but there is .no more real wealth than before. One may be making great profits out of a soap factory, by reason of its " good name " and monopolies secured by letters patent and otherwise. Now, to call the " good name " and monopoly of this factory worth a million dollars, does not increase the wealth of the country. If we call it capital, then capital is not always material wealth. It was for this reason that we treated of the " Share of Produced Wealth," in a former chapter; and did not treat of a share of Capital. Capital is too indefinite for our purposes. By "Produced Wealth," or the " Ke- sources Produced by Industry," we know what we mean. We do not always separate the share of Monopoly from the other shares which may fall to the same in- dividual or company ; and the share of Monopoly is not found in the product, as it comes from a factory, THE SHARE OF MONOPOLY. 395 but in its exchange for other things. Of the money (representing a share in all the world's products) which the monopolist receives in exchange for his prod- uct or service, a considerable part represents rent ; an- other portion is the share of interest ; the largest amount, probably, represents labor, or wages paid for labor ; and another share, the profits of business man- agement. The share which comes to one on account of monopoly is clear gain ; it is so much more than other men can make in the same line of business. There are good and bad, just and unjust, monopo- lies. The monopoly of personal talent is the highest right in the world ; it is the right of the laborer to the result of his own labor. Nobody begrudges Joseph Jefferson the income he receives from his mo- nopoly of playing Rip Van Winkle as 110 other living being can play it. No one is compelled to see him ; and the actor can honestly make the price of witness- ing the performance as high as he pleases. The mo- nopoly of " good name " is not only the right of the possessor, but is in the highest degree conducive to the interests of the people. It encourages honest goods. The producer is anxious to make a name which will lead people to buy of him again. If all men were honest, and the stamp on any piece of goods a guarantee that they are precisely as described, a good name would be worth less than now, because more common. The share of the world's produce which it pays for the good name of certain goods, is partly a penalty for the unreliability of dealers. It is the cost of protection against the swindlers and the incompetent. 396 DISTRIBUTION OF PRODUCED WEALTH. The share of Natural Monopolies is a very large one ; not because they are numerous, but because they serve so many people, and take something from each one. Frequently, the sum they draw is much larger than that of all others combined, except the share of labor. Next to the rise in value of land, they are the chief means by which large fortunes have been accu- mulated. CHAPTER V. THE SHARE OF THE PRODUCER PROFITS OF PRO- DUCTION. We now come to the great share of economic labor. Rent must be paid. Interest on Produced Wealth used in production is justly due, and must be paid if the stock of Produced Wealth is to be kept up, and production is to be carried on economically. The owner of a good name will be able to obtain a larger share of the world's goods in exchange for the goods he makes on account of it ; and is justly entitled to this share. The monopolist can always take a share, larger or smaller, on account of his monopoly ; and is often justly entitled to it. Usually, however, we seek to reduce this share ; but it is frequently impossible to do away with it, without destroying the right of prop- erty, and losing more than we would gain. Methods of reducing it, and abolishing it in some cases, have already been considered. After these shares are taken, all else belongs to La- bor. But it is to be remembered that we are using the word " labor " in the economic sense, not in the popu- lar sense of "workingman." It includes every effort of mind or hand for the satisfaction of wants. The classes of laborers in this sense are so many, and so widely separated, that it does not help us much to say, :as did some of the older economists, '* so much be- (397; 398 DISTRIBUTION OF PRODUCED WEALTH. longs to the laborer." In this and the following chapters we shall, therefore, study the shares of the various classes of laborers. It will be necessary to use the term " laborer " sometimes in the economic sense, and sometimes in the narrower popular meaning ; but the connection will be such that the reader can not misunderstand. After paying rent and interest, the shares of land, Produced Wealth, good name and Monopoly, all else belongs to the Producer, to him who engages in pro- duction, taking its risks for the sake of its profits. If the manual laborers themselves engage in business en- terprise, as in a co-operative factory, they are the pro- ducers and this share is theirs. The farmer usually owns his land and stock, and carries on business for himself ; hence the entire product belongs to him. If he is a " renter," he pays rent for the land, and prob- ably interest ; and the remainder of the product is his. If he works the land " on shares," he may give as much as a third of the product for rent. When the undertaker of any business employs men, paying wages for their labor, he steps into their place, succeeds to their rights, and has labor's share of the product. The ownership by each man of himself, and his right to his own labor, implies the right to sell that labor as well as to carry on production on his own account. Often he can get more for his labor than he could produce ; and there is no difference in prin- ciple between selling his labor and the product of his labor. A shoemaker in a small shop makes and sells shoes ; the shoemaker in a large factory sells his labor THE SHARE OF THE PRODUCER. 399 to be employed in making shoes, because he can get more for his labor than he could for all the shoes he could make by himself. Said a Socialist, " That building belongs to the workmen who built it." Said a man in the crowd, " I laid brick on that building for four dollars a day, and the building belongs to the man who paid me the four dollars." Certainly ; what else did he pay him the four dollars for ? If the work- man wanted to put up a building for himself, wha would hinder? But what idiot would pay four dol- lars a day for nothing? The man who pays the wages concentrates in him- self all the risk, and all the chance of gain of per- haps a hundred laborers. He must sell the product under the laws of Exchange ; and many men are com- pelled to sell it for less than they have paid in rent, interest and wages. If this loss or profit were divided among the hundred laborers, it might be only a small percentage on the yearly wages of each one ; but when it is concentrated into single hands, and falls on one person, the loss or profit may be very large. The taking of such risk seems necessary. It is not gam- bling, though the chances are sometimes as great as in gambling. It is legitimate and honest business, con- ducted for the good of the nation. When one en- gages in business, he must take the chances of a good many things he can not control, as well as of his own ability in management. A very little variation may make the difference between bankruptcy or a fortune. Co-operation is the only way of avoiding the throwing of this risk on a very few persons, and co-operation 26 400 DISTRIBUTION OF PEODUCED WEALTH. lias not yet demonstrated its practicability. It is easy enough for one to divide his profits, when he makes any, among his employes, but no one will consent to share his losses ; and no one can afford to take risk without the chances of profit. By the Producer, we understand the one who under- takes the production of goods, succeeding to the share of all laborers to whom he pays wages. It is not easy to find a good name for him. In French he could be called the entrepreneur. Prof. Francis A. Walker suggested that he could naturally be called the " un- dertaker " were this word not now used in the sense of funeral director. The word " undertaker " may yet come into use to signify the one who undertakes any business on his own account, taking its risks, being responsible for it, and having its control with all loss or profit after paying rent and interest, and other shares. He has here been called the " Producer," because he engages in production, and succeeds to the share of all other laborers to whom he pays wages. The share of the Producer is what is left after paying- all other shares and wages (either in the payment of labor direct or as represented in the purchase of ma- terial), and is called Profits. Profits consist of two elements ; the first is compen- sation for the risk of business, and includes " good and bad luck " ; and the second is the result of one's own skill and business management. The risk of business we have already seen. There is a certain -amount of good and bad luck in the world. Of two men who work equally hard and manage equally well. THE SHARE OF THE PRODUCER. 401 one succeeds through good luck, and the other fails through bad luck. The result comes from unforeseen causes, often causes which nobody could . foresee. There is an effort among business men to reduce the risk from fire, and loss by sea, by means of insurance ; but insurance can not touch those more remote hap- penings on which the success or failure of business often depends. And the failures are numerous. We are dazzled by the success of the few, and do not notice the failure of the many. The second element of profits is the direct result of the economic labor of the " undertaker " of the busi- ness ; and he is as much entitled to it as any laborer to his own labor. He adds so much to the satisfac- tion of human wants. Men differ widely in their ability to manage a business. Enterprises are con- tinually failing; and others just live along, paying rent, interest, and current wages, but afford the owner perhaps less than he could get as wages. Still, the demand for goods maintains the price just high enough to keep what we may call these no-profit establishments running. But in some corner of the country we see a man, who is producing the same kind of goods of equal desirability, paying the same wages and selling at the same price ; but who is making a fortune each year, when others can hardly make both ends meet. This man may not labor two hours a day. It does not matter, so that he manages that great business as he does. Goods are probably cheaper than they would be without him. Laborers get more than they could make for themselves. His manage- 402 DISTRIBUTION OF PRODUCED WEALTH. ment enables more goods to be produced with the same effort. This is the result of his economic labor. This is his profit. The Producer does not get wages, but profits. He pays all other shares, and takes what is left ; and what is left depends, apart from risk, on his own economic labor in the direction of the busi- ness. His management may make this residue fabu- lous sums, and nobody else have any less than if the management were in less competent hands; with no profits at all. Of two farmers with the same kind of land, and who work equally hard, one gets rich, and the other barely makes a living. In a factory with an expense of a hundred thousand dollars a year, one owner may save ten per cent, over any one else in the business. The difference is in the men; and each man owns himself, and his own labor. From this it is evident that there will always be profits as long as there is a difference in the business ability of men. The entire production of a nation can not be carried on by half a dozen of the most superior "undertakers." No one knows who are the most competent except after long trial. The risk of all business in the hands of a few men is too great. It is- far better for the country that production should be in many hands. New men of ability are continually be- ing developed, and others are dropping out. Produc- tion is already concentrated in too few hands. It would be better if we had more small concerns. But if the concerns managed with a fair degree of ability just pay expenses, all below them will fail ; and all THE SHARE OF THE PRODUCER. 403 which are better managed will pay a profit. The goods will sell in the same market at the same price. The most superior management will secure large profits, which represent its superiority over the factory that just pays expenses. If we could arbitrarily raise wages, or lower the price of the goods, the factories just paying would be forced into bankruptcy; and there would not be goods enough to supply the de- mand at the new prices ; else the best factories would increase their output, and the production be cpncen- trated into fewer hands,, until they were few enough to become a Monopoly and then we have monopoly prices. This element of profits represents the differ- -ence between the ability of different Producers. Profits are limited by competition. The share of Monopoly is not profits, and has been considered in a previous chapter. Men are so anxious to be in busi- ness for themselves that they are willing to do busi- ness on very small returns. Wherever there is a chance to make large . profits, there is a rush of pro- ducers. It is this competition which keeps profits down, so that the ordinary man must conduct his bus- iness with no more than ordinary wages, and often with less. The extraordinary profits are due to great superiority in business management, and to the good luck which comes to some men as a result of the risk which ruins others. The man who makes an improve- ment in business methods usually gains a correspond- ing profit for a few years or months, until his methods can be imitated by others, when his profits sink to the normal, and the gain all goes to the consumer. 404 DISTRIBUTION OF PRODUCED WEALTH. The management spoken of in this chapter is that of the owner, or "undertaker," of the business the Producer. He may employ many superintendents, whose salaries will be fixed by the laws of Exchange. Other minor elements enter into profits, and, there- fore, the only definition which covers them is, What is left after paying all other shares. What at first may be thought to be included in profits may belong to good name or monopoly. The question may be asked, Do not profits include the enormous gain from the Division of Labor, and from modern methods of production ? Not at all. This great gain shows itself in lower prices of goods, in balancing the continually increasing share of rent, and in higher wages. The people should get the ben- efit of improved methods of production, and they get it in lower prices, except where the business is pro- tected by monopoly ; and, even then, the monopoly can seldom get more than a small fraction of the gain. Under competition there will always be business con- ducted with no profit, no matter how great the im- provement in production may be. Prices will simply be lower. Profits will be found in the better man- aged and more fortunate establishments, which are able to make something at the same prices at which some establishments just pay expenses, rent, interest, and wages to the employes. Profits are not always legitimate. If the shoe man- ufacturer uses pasteboard insoles instead of leather, the little that he may save is the result of fraud. He has robbed the consumer, and taken a larger share of THE SHARE OF THE PRODUCER. 405 the world's production than belongs to him. It is probable that the great success of many men in amass- ing wealth is due to swindling rather than to legiti- mate profits. The swindle lies, not in making as good, goods as other people at less cost, but in making arti- cles which, while they appear to be as good, are really not worth half the money. They do not wear as long as honest goods, or do not satisfy wants as well while they last. Yet the customer can not distinguish by their appearance before using. Let there be two trunks, for example ; one will stand twice as much handling as the other, and perhaps required fifty per cent, more labor to make. But, while they could readily be distinguished by an expert, a customer, who buys a trunk only a few times in the course of his life, can not detect any difference. Of course, he takes the cheaper. He pays a little less, but he has been swindled out of half his money. The manufac- turer has not made as much as the customer has lost, but he has made nearly fifty per cent, more than his honest rival. Wealth accumulated in this way is simple robbery. What one gains another loses, and the victim usually loses twice as much as the swindler gains. CHAPTER VI. THE SHARE OF THE MERCHANT PROFITS OF EX- CHANGE. In the last chapter we considered the share of the producer, and now turn to the share of those who conduct the world's exchanges. Both are profits. Yet the work of exchange is so different from that of production, that unless the two kinds of profits are dis- tinctly separated, the reader is in danger of overlook- ing either the one or the other. The share of the merchant is partly a share of La- bor, and partly compensation for risk. The mer- chant is a laborer in the economic sense ; that is, his efforts aid in the satisfaction of wants. He is the distributer of the world's productions to those who need them. And this labor is no less important than that of the producer. The Chinese grow tea, nearly enough for all the world. But how is a family to get ihe pound it desires for present use? Some one must go to China, get the tea, bring.it to America, and dis- tribute it to those who desire it, giving to each that one of the many varieties he prefers. More than this, "he must tell the people what the taste of each pound of the tea will be. A consumer can not try it before buying ; but the merchant tries it employs men to goods manufactured, these workmen gain at the ex- pense of other laborers. It often happens that the natural fall of the prices of goods in consequence of improved methods of production does not take place, because wages are advanced. In this case the work- men in that particular line reap the benefit that would naturally go to the public. WAGES. 425 It is probable that the farmers are at present the greatest sufferers. They can not increase the price of wheat, because it is fixed by the foreign demand. They get no more money than before. The wages of workmen in many lines of production carried on in factories have been increased ; and the farmer pays more for the goods he buys. It is true he suffers from monopolies, but high wages affect him ten times as much. Railroad steel and machinery cost more, and railroad charges are consequently higher ; so that the farmer gets less for his grain than if wages in rolling-mills, and among railroad men, were lower. Economically, no two interests are more opposed than those of farmers and mechanics. It is for the interest of every class of laborers to have wages in other lines of production as low as possible, in order that its own wages may buy more goods. It is for the interest of farmers that the wages of all workers in factories and on railroads should be low, in order that the money received for farm produce may buy more goods, and that freights may be cheap. There undoubtedly exists an idea among workingmen that the more wages any class receives the better for the others. Nothing could be farther from the truth. When one class gets more than the highest rate of wages consistent with present prices, other classes must receive less of real wages, because of higher prices. High wages do not increase production, and there is only so much to divide. Even where wages sink to their lowest limit, and there is free competition, other laborers reap the 426 DISTRIBUTION OF PRODUCED WEALTH. chief benefit. In the " sweat-shops " women often make clothing for a mere pittance ; but this clothing is sold cheap, and is presumably bought by other labor- ers. The millionaire has his clothes made by a fash- ionable tailor, whose workmen receive the highest wages. The clothing that is made by starving women is bought chiefly by laborers, and they get the benefit of the low wages the women receive. Here is un- doubtedly an instance where one class of laborers, the sewing women, should receive more and other laborers less ; but it shtfws how wages are a division of the greater part of all that is produced. We can not have high wages and cheap clothing at the same time. Recent investigations in London have shown that the sewing women who work for the lowest starvation wages are employed by men almost as poor as them- selves ; that the relations of employer and employe are friendly, and that the employer makes little more than the men who work under him. Wages are so low because the clothing is sold so cheap ; and the low price is the only thing that enables other poor persons to keep themselves comfortably clad. In American cities, however, it is claimed that employers in " sweat- shops " make something. Wages must be paid out of the annual production of a country. A large an- nual product, with a small population to divide it among, affords the opportunity for the highest wages. It is true that the method of manufacture of cloth, ing by the " sweating system " in London may not be the most economical, and that the work could be done cheaper in a factory ; but this does not affect the prin- WAGES. 427 ciple involved. In the case of monopoly we may have high prices of goods with low wages ; but where com- petition acts, either wages rise or prices of goods fall to the limit of lowest profit which will keep up suffi- cient production. We often fail to realize that cheap goods are of as great advantage as high wages. It should be remembered that it is only the highest natural rate of wages that can not be increased with- out raising prices, and taking from other workmen. We assumed that the workman was receiving all that the product sells for, less other necessary shares. One difficulty with the wages system is that a workman can not usually know whether he is receiving this highest natural rate of wages or not ; and we are all likely to think that we are receiving less than we should. One of the advantages of co-operation is that the workmen get all they produce, less rent, interest, etc.; and knoiv that they get it. This knowledge is the most important of all. It gives contentment to a man to know that, small as his income is, he gets all that is justly due him, all that he produces. If competition were unrestricted, and there were no friction, wages would tend to this highest natural rate. New fac- tories would spring up, and employers would seek laborers whenever wages were below this standard. A monopoly may, however, not only sell its goods at the highest price the public can afford to pay ; but employ laborers at the lowest rate at which they can afford to work. Even where there is not a complete monopoly, there are frequently partial monopolies; and there is always a good deal of friction in eco- 428 DISTRIBUTION OF PRODUCED WEALTH. nomics, as in mechanics. Hence wages often fall below the highest rate that current prices would bear. In every effort to raise wages it should be asked first, Is it expected that the proposed increase will raise the prices of the goods, and thus be paid by the con- sumers, nine-tenths of whom are other workmen, or that the additional wages can be paid by the employer without increasing prices? Where competition is active, any general increase of wages is likely to raise prices; where there is a monopoly, an increase of wages may come out of the share of monopoly, or may result in raising the prices of the goods, accord- ing to the circumstances of each case. The wages of all laborers of the same grade, in the same line of production, tend to the same rate in the same locality. But there are, as J. E. Cairnes showed us, non-competing groups, and the wages of the men in each group will be determined by the supply and demand for labor in that group, without much refer- ence to other groups. Brickmasons do not compete with jewelers, or jewelers with printers. There might be a great scarcity of blacksmiths, but carpenters could not take their places. If laborers are scarce in one line of production, the prices of the goods they make are likely to rise ; and their wages will be in- creased at the expense of the real wages of other classes. If the ranks of labor in another line of pro- duction are overcrowded, and competition is free, wages will be forced down ; and the prices of the goods they make will proportionally fall, so that all other labor- WAGES. 429 ers who use these goods will gain at the expense of the laborers who make them. It might be supposed that laborers would at once be transferred from the line of production in which wages are low to that in which they are high. This happens in the numerous employments denominated *' common labor," where no previous training is re- quired ; and the wages for a great many lines of em- ployment, therefore, remain the same. It is because the wages are the same, that the employments are classed together in the popular mind as " common la- bor." In employments which require previous train- ing, transfers are not so readily made. A man does not easily learn a new trade after middle life. Young men, however, in learning new trades, naturally select those in which wages rule highest, or in which the la- bor is most desirable. The full force of competition is not felt, even here, because many boys learn not the trades they choose, but the trades they must. Fre- quently one takes the first opportunity open to him, and the selection is almost a matter of accident. The question is frequently asked, " What can be done to increase wages ?" and it suggests another, " Are not the interests of the farmers, the grocery- keepers, and t*he innumerable small producers who work for themselves, as important as the interests of the men who work for wages ?" The economist has at heart the interests of the whole people. With the improved methods of production ought not the wage-laborer, as well as others, to get more ? Most certainly; he does get more, more nominal 430 DISTRIBUTION OF PRODUCED WEALTH. wages, and still larger real wages as measured in the goods he buys. He may not get as much as he should ; but he certainly gets more. He gets more because he produces more ; but he can not get more than he produces, with the deductions before men- tioned. Improvements in production show themselves in reduced prices, which benefit all classes, the wage- workers as well as others. The improvements in pro- duction have, fortunately, resulted in lowering the prices of such goods as the laborer uses to as great an extent as those consumed only by the wealthy. There are two reasons why the laborer feels that he has not gained as much as he should : (1.) The improvement in his condition does not appear to be as great as it is, because of the gain to all classes. One's wants are, to a certain extent, relative. He compares his condition with those about him. If all other people have as much more as he has, he seems to himself no better off than before. If everybody wears coarse clothing, it is the fashion, and one feels as well dressed as his neighbors. If other people have luxuries, one feels his poverty, even though he may have absolutely twice as much as be- fore. One considers his relative, rather than his ab- solute, income. Yet the hope of society is to elevate all of its members; and if all receive more, the la- borer may feel as poor as before. With the great in- crease in wealth of a very small class of society, the laborer is inclined to measure himself with it rather than with the average of the people. (2.) The laborer has not received as much as the WAGES. 431 improved methods of production would warrant had there been no increase in the value of land, and in the great share of rent. In a new country the share of rent is very small; as the population increases, the proportion of the product which goes to rent con- tinually grows larger. It is not only that the laborer must often pay more for the land on which to build a house than the house will cost ; but the rent of the priceless land on which great buildings in cities stand, the rent of valuable land at harbors and railroad cen- ters all rent must come out of the nation's product, and leaves less for labor. He pays more for lumber for building a house. In a new country he could build a house of logs on land which he could buy for a few dollars. Even lumber cost little, because the timber had not been cut off. The early history of this country was the golden age of the laborer, in comparison with all that had gone before. Land was plenty, and if one could not get wages, he could get a farm. Labor was scarce compared with land ; now, land is scarce compared with labor. The high wages of this country have been due, almost entirely, to the abundance of land, and the low rents as compared with the densely popu- lated lands of Europe. With the increase of popula- tion, wages must continually become a smaller share of the nation's annual product, though not absolutely smaller for the labor performed. The share of rent will grow larger; and the share of wages, smaller. Thus far, improvements in production have more than balanced the natural decrease in wages through the 28 432 DISTRIBUTION OF PRODUCED WEALTH. growth of population. With unlimited immigration there is no such thing as maintaining high wages for all classes. To increase wages does not increase pro- duction ; and no nation can have more than it produces. A high scale of living for all the people must mean a relatively small population, with abundant capital ; so that the Resources of Nature can be made to produce more goods in proportion to the people. One of the most unfortunate things about the wages system is the temptation to spend all of one's wages, whether high or low. A wage-worker has the money every week, and there are so many opportunities of getting a present satisfaction out of it, that it requires more than ordinary command of one's self to save. The farmer, on the contrary, often has to save. He can not get the money each week. When the crop is sold he has something saved. He is also compelled to save in the improvement of his land. This is o'ne of the arguments for a true plan of co-operation. Work- men could not safely allow themselves more than half of the ordinary weekly wages. At the end of the year they should have something saved, which would be needed as capital. The principles on which high wages depend are the following : 1. Other things being equal, wages are always highest in a new country, or a country with a small population relative to its Resources, because the share of rent will be less, and there will be more to go to labor. It was for this reason that real wages were so high in the early history of the United States as WAGES. 433 compared with Europe. In England the share of the land-owners is enormous, far greater than in the United States. 2. Wages can be increased through increased pro- ductiveness of labor. The same number of laborers produce more, and there is more to divide. This is the second reason for high wages in the United States, where labor is more effective than in any other country in the world. It is also the principal reason for higher wages in England than on the Continent, since English labor produces more than in any other country of Europe or Asia. 3. Wages will be highest where there is freest com- petition between employers in all lines of production, because laborers may then get the share that would otherwise go to monopoly. 4. Wages will be higher in a country like the United States, where there are numerous employers, and many men anxious to get into business for them- selves. In an enterprising country, with thousands of men on the lookout for a chance to make something, and willing to take risks, the demand for labor will be brisker than in a slow country where few new men think of undertaking production, and everything is left in the old channels. 5. Success of co-operative factories would tend to increase the wages of laborers by withdrawing many wage-laborers from the market. If co-operative fac- tories could be managed as well as private enterprises, they would soon absorb the best and most intelligent laborers of the country. 434 DISTRIBUTION OF PRODUCED WEALTH. PROFIT SHARING has been put forward prominently during the last few years as a means of increasing the income of the laborers. Its advantages are those of co-operation as far as they go. If, for example, wage- workers could accept half wages, and half profits, we might realize the advantages of co-operation. Living on half wages, they might in many cases save the profits, which they would receive at the end of the year. Profit sharing, as the term has come to be used, however, does not contemplate any reduction in wages. Its advocates are particular to insist that the employer shall also pay the very highest wages. How, then, can a producer in competition with others pay as high wages as they, and give away part of the profits, which have been reduced to the lowest possible sum by com- petition ? The answer is, that the producer expects that the offer of a share in the profits will be an in- ducement to extra exertion and saving on the part of employes, so that more will be produced at the same cost, and he will have a larger profit, which he can divide. That is, he expects to pay employes some- thing extra out of increased production due to their ex- ertions. Suppose a large corporation to make f 10,000 a year, net profit. By carefulness and extra exertion on the part of every employe, that profit might be increased, and the corporation make $12,000. It could then give its employes 2,000, and have as much left as before. Profit sharing in theory should lessen the danger of strikes, although strikes occur under it. Now, a strike inflicts a good deal of damage WAGES. 435 iii any business. Even though the employer can not afford to yield, and his men return to work in the end, lie has lost heavily. Any manufacturer would pay something to an insurance company to be guaranteed against loss from strikes. If profit sharing were sure to prevent them, the employer could afford to give a portion of the profits to employes to be protected from the damage they and their associates have the power to inflict upon him. This is an application of the principle that the way to increase the wages of labor- ers is to increase production. Profit sharing is capable of much further extension than co-operation. It is not limited to men who have saved capital, or who have the ability to manage a business for themselves. A very serious objection to profit sharing is the fact that few private employers can afford to make a statement of their business with- out risk of ruin, and the plan of offering the employes a share of the profits without telling what per cent, that share is, can hardly have permanent success. Semi -public corporations, which are now compelled to make public statements of their business, appear to afford the most favorable field for the experiment. CHAPTER IX. THE SHARE OF LABOR WHICH SATISFIES WANTS DIRECTLY. The share of labor which satisfies wants directly differs decidedly from that which satisfies wants in- directly, because it is not measured by material pro- ducts. When a hundred men have engaged in the manufacture of shoes, any one can see that their re- ward must come out of what the shoes sell for. The share of labor which satisfies wants directly is determined by exchange. This labor does not pro- duce material commodities to divide. The boy who blacks one's boots, the girl who serves in the kitchen, the lawyer who argues one's case, the singer whom thousands flock each night to hear all these satisfy wants directly. If they satisfy their own wants, as' when one blacks his own boots, or cooks his own food, they are thus far independent of others. The circle of wants and satisfactions is complete within them- selves. But when^one devotes his time to the service of others, he expects to receive a fair share of the world's products in exchange for his services. The teacher and the lawyer and the physician are at first paid in money, but this merely "represents goods and the personal services of others. Money, here as else- where, is only the means by which the exchanges take place. (436) THE SHARE OF THE LABORER. 437 How WILL THE SHARE OF THIS CLASS OF LABOR , BE DETERMINED ? 1. Partly by competition ; the supply of labor and the demand for it. The limits between which the compensation will fluctuate are the least the laborer can possibly accept, and the most others can afford to pay. The wages of servant girls are mainly fixed by competition. The girl must have shelter in the house of the employer, meals, and a sufficient sum of money for clothing. It is impossible for her to do this sort of work for less, and this is all that some girls receive. One servant may, however, be worth four times as much as another ; and may thus receive, through com- petition, higher wages. There are girls who make such poor servants that no one will give them even board and clothing ; the supply of better help is suf- ficient to avoid the necessity of employing them. Competition does not mean that every laborer will receive the same wages ; but that wages will be in proportion to ability, and that the wages of a certain grade of service will be fixed at a given rate. The wages of servant girls are by no means wholly fixed by competition. Other motives enter in, such as a desire for their welfare, custom, public opinion, etc. Instead of competition, the reward of some labor is fixed by monopoly. This is partially true of all per- sons who stand so high in their own department that 110 one can exactly take their place. Joseph Jefferson played Rip Yan Winkle as no one else could. He charged monopoly prices ; that is, the highest sum 438 DISTRIBUTION OF PRODUCED WEALTH. the public would pay. An eminent physician may charge monopoly prices, without even the limitation that the price shall be the same to all. He may put his regular charge so high that only the very wealthy can pay it, and serve some less wealthy patients for what they can afford to pay. The laborer of rare skill is entitled to monopoly prices by the highest right in the world, that of each man to his own labor. If he does nothing, the world is 110 worse off than it would be without him ; and his services are worth what he receives, else people would not pay his charges. When a woman sings as no other woman in the world can, her power is her own. She has the right to its absolute control. She is entitled to what- ever anybody is willing to pay to hear her song. A partial monopoly of labor is found in a profes- sion in which most of the members agree not to charge less than a certain sum ; or fix rates which they regard as reasonable, below which nobody is ex- pected to go. Men who do not belong to this associa- tion may charge lower prices, and competition is per- fectly free ; but the fact that a considerable number, perhaps the majority of the best members of the pro- fession, refuse their services at less than a certain price, has its influence. This method would not make it possible to raise prices above a certain rate, proba- bly not to maintain them above what the wealthier class of people regard as reasonable ; but it modifies the influence of competition, even though there is a large number of fairly competent men in the same profession practicing with lower fees. It is under- THE SHARE OF THE LABORER. 439 stood that the laborer's power of labor is his own, and that his right to what persons are willing to pay for his services is unquestioned. Any attempt to prevent other men from practicing at lower rates, by force, would be instantly, and justly, condemned. Any man has the right to serve others for as low fees as he chooses to accept, and that right must not be interfered with. 3. The share of labor which satisfies wants directly is sometimes determined by what those one serves think he ought to have ; and sometimes by the cost of living in the way which the service requires. The salary of a minister is worth a moment's study. His -congregation and duties demand that he shall live in a certain way. In a city the people would not expect him to appear in the pulpit unless fairly well dressed. As a teacher, they desire him to have books and peri- odicals ; and it is to their discredit if he lives below a certain standard. Unless the minister has means of his own, his congregation understand that they must pay what it costs him to live in the way they de- mand ; and few congregations pay any more. When his salary is fixed, the minister usually accepts the lowest sum he thinks he can live on, in the way he will be expected to live. Competition is more likely to show itself in the case of young men. Some con- gregations are always seeking for a young man ; be- cause he can live, in a way that will be creditable to them, for half the money which it will cost a man with a family. Young men are, however, inclined to insist on the same salary that the church would have to pay 440 DISTRIBUTION OF PRODUCED WEALTH. a man with a family ; and there is no reason why they should not receive it. What those interested think one ought to have, and the cost of living in the station required, has more in- fluence in fixing the reward of labor in other callings than the political economist often imagines. In some kinds of labor it makes no difference, as a matter of business, to the employer how or where a workman lives, or how he appears ; but a salesman must dress and live in a certain way, and his salary must be high enough to cover the cost of living. In conclusion, we may say that the share of labor which satisfies wants directly is determined by exchange ; and that competi- tion, combination, monopoly, custom, public sentiment, and the cost of living in a way which the service makes necessary, all have their influence. CHAPTER X. THE BOOTY OF THE ROBBER, AND THE WINNINGS OF THE GAMBLER. If during the process of production or distribution, before the product reaches the consumer, a robber or thief succeeds in making way with a portion of the goods, some other share must be diminished. In the case of the robbery of an express company, the rates for carriage are intended to cover the risk ; and hence the loss is likely to be distributed. Open seizure of goods is, however, not so common as other forms of theft. A few years since, a young man with a little money was enabled to buy stock in a well-paying railroad. By borrowing money on the stock as fast as purchased, and by other devices, he soon got a large nominal interest in the road, and had himself elected to a position which gave him the prac- tical control. He at once proceeded to rob the com- pany; and, although detected and put out of office before the road had been brought to ruin, he suc- ceeded in stealing large sums. This loss probably came out of the share of interest and the profits of the stockholders. If the rates for transportation were raised to help cover the loss, it fell, also, on shippers and producers, and through them on labor. Railroad wrecking has been common in the United States, and many large fortunes have been founded by the sheer theft of property. ( 441 ) 442 DISTRIBUTION OF PRODUCED WEALTH. The adulteration of food, and the deception in the manufacture of goods, give the largest field of robbery. What are called " shoddy goods " are those made to deceive the ignorant buyer. They do not satisfy his wants as well as he had a right to expect ; and all the profit the manufacturer, or dealer, has made by the deception is so much stolen. In most cases it seems to be stolen from the consumer ; but the consumer is probably a producer, or at least a laborer, and the final return for his labor is the goods he gets. If these goods are less satisfactory than he would have received through an honest dealer, his share of the world's product is so much less. The swindler does not usually make as much as the others lose, because the manufacture of " shoddy " goods is not economical, and it costs something to make what is of no utility. It costs something to deceive the purchaser. The robber also causes actual destruction. A gang of sheep-thieves once invaded the field of a farmer and killed a number of sheep for the pelts, which they took off and made way with. The pelts would not bring fifty cents apiece, while the sheep were worth four times as much. The thieves had, therefore, destroyed four times as much property as they got. It is usually true, both in pro- duction and distribution, that the booty of the robber or swindler takes far more from the other shares than he himself receives. It would be cheaper for society to support him in idleness. It is not necessary to stop to investigate the various methods of swindling, or theft and robbery ; but no THE ROBBER AND THE GAMBLER. 443 treatment of u Distribution " would be complete with- out calling attention to the vast quantities of the world's products which are stolen outright, and to the diminished shares of other persons on account of the dishonest methods of manufacture and trade. The booty of the robber is frequently disguised un- der the claim of " profits "; and it is sometimes im- possible for the public to know whether receipts are profits, or the result of swindling. If the swindle is not detected, the gain of the swindler is likely to pass for profits. It is well understood that gamblers can not live off each other. They must win from men who are en- gaged in other business, although what one thus wins may be passed back and forth among his class. Gam- blers produce nothing; they do nothing to satisfy wants. They must be supported by the labor of others ; and their support often costs the modest in- come of a good many families. The Louisiana lot- tery has made great fortunes for its owners, while the expenses of its management have been wasted. A great many millions of dollars are actually taken from the other shares of production by direct gambling, such as lotteries, races and gambling-houses. We may next add to this the gambling of the boards of trade in the leading cities. Not that there is no honest and necessary business conducted there ; but that it is gen- erally recognized that mere betting on future prices of grain and stocks equals or exceeds the legitimate transactions. How much of the purchase of stocks by outside parties may properly be classed with gam- 444 DISTRIBUTION OF PRODUCED WEALTH. bling, it is impossible to say. All business contains an element of risk ; but the risk of mining, of raising a crop of wheat, or of manufacturing, is in no sense to be classed with gambling, as it is sometimes done by unthinking persons. Gambling is getting money as distinguished from making money; and though few men have gotten rich by playing cards, the number of great fortunes founded on other forms of gambling is larger than is usually supposed. Gamblers waste more money than they save. CHAPTER XI. THE SHARE OF THE GOVERNMENT. The share of the annual production of a country which falls to the government consists chiefly in what it takes by taxation. The cost of government must be met in some way, and in return for the benefits conferred it takes the cost of its maintenance. A civilized government, such as the United States, is worth more to any individual than it ever takes from him, under even a bad system of taxation ; but this gives it no right to take more than is absolutely neces- sary for the maintenance of the service it furnishes. Government may be regarded as a great co-operative institution whose cost must be paid by the members, and whose benefits are shared among them. It should not unnecessarily trespass on the- freedom or the in- come of the individual. A distinction should be made between the expenses of government proper and the cost of carrying on any business in which the government may be engaged. Among the former may be mentioned : the cost of the national defense ; legislative, judicial and executive departments; the public school system; asylums for the insane, the blind and the deaf ; and hospitals for the poor and unfortunate. All these and other ex- penses are borne with no expectation of return. The second class comprises all government business (445) 446 DISTRIBUTION OF PRODUCED WEALTH. enterprises, which should ordinarily pay their own way, and in some instances a profit. The government should seldom or never undertake any business which is not a natural monopoly. The expenses of such business should never be charged as government ex- penses, and the receipts should not be entered as gov- ernment income. The accounts of each business en- terprise should be kept separate, and only its profit and loss entered among the goverment expenses. If the post-office does not pay expenses, the small loss should appear in government reports as a necessary expense of maintaining such a convenience for the people. The people should understand how much they are paying for faw and order, and how much for loss on business enterprises. This method of book- keeping would reduce the nominal national expenses, and prevent much confusion. It would also make ex- travagance more difficult. It is true that in the United States there is some separation of accounts at present by which a book-keeper can get at the f acts ; but the expenses of the post-office should not even appear in the general government statement only the net loss. The method by which government revenue shall be raised forms the general subject of taxation, which is a question of practical statemanship based on the principles of economics. However interesting and important such a subject may be, its consideration here would carry us too far from the purposes of this volume. The object of this chapter is to call atten- tion to the share of the government, without discuss- THE SHAKE OF THE GOVERNMENT. mg methods of levying it or the other shares from which it may be taken. GOVERNMENT PROPERTY. The government, as the natural trustee for the people, has in its keeping a large part of the Resources for the Satisfaction of Wants. It is the trustee for all that the people hold in common the air, the water of lakes and rivers, the highways and public parks, buildings for public schools, all public institutions, buildings for the use of government officers, ships and arms for national defense, etc. Every one must be free to run his steamboat over government waters under the same re- strictions. The streets of a city and the highways of the country are parts of the land which is recognized as government property. So also are public parks. The name " Boston Common " has become known all over the United States, and calls to mind the New England idea of reserved common wealth. Any in- come from the rent of such property is, of course, a part of the general share of the government. INDEX. Accumulation of permanent wealth, 262. Adulterations of food, 442. Atmosphere, the, 26. Bank credits, 346. Ballot, 191. Bellamy, Edward, 152. Bequest, right of, 186. Bimetallism, 333. Book accounts, 336. Booty of robber, 441. Buildings, 38. "Business," 378. Capital, 242. Capitalization, of good name, 379 ; of monopolies, 393. Child labor, 221. Chinese, 140. City, proper density of popula- tion, 70 ; model city, 253. Combination, 288. Competition, 287, 383 ; weakness of, 299. Confiscation of property invested in the resources of nature must not be permitted, 166. Control of Society, 189. Co-operation, 412 ; constant em- ployment under, 208 ; would not abolish the wages class, 417. Consumable Wealth, 261, 364. Consumable Natural Wealth, 29. Consumable Produced Wealth, 364. Copyright, 182. Cost of production, 296 ; to the laborer, 303. Credit, 339 ; bank credits, 346 ; how credits save the use of money, 345. Crime, influence on population, 130; criminals, 252. Currency, see Money. Danger of immigration, 142. Deferred marriages, effect of, 126. Deferred payments, 316. Demand, 290. Dense population, advantage of, 362. Diminishing returns, 78. Discovery of Resources of Na- ture, 68. Desire and want compared, 17. Division of labor, 214, 110. Distribution of Produced Wealth, Book VI., 351 ; how distribu- tion takes place, 352 ; primary and secondary, 353. Economical use of resources, 201 ; of Labor, 203; of Nature, 225 ; of Produced Wealth, 242. Economv, definition of, 9. (449) 450 INDEX. Emigration, 113, 135. Exchange, Book V., 271 ; bene- ficial to both parties under the circumstances, 275; cost of, 273; difficulty of, 270 ; distin- guished from production, 273 ; exchange value, 277, 280 , how exchanges satisfy wants, 271. Exchange Values, 277, 280; limits of are fixed by value in use, 285; not the cost of produc- tion, 284. Famine, 124. Farm or Factory, 82. Fish, 28, 233, 235, 240. Finished goods, 42. Financial panics, effect of, 207. Forces of nature, 27 ; discovery of, 68. Forests, 28, 239. Forestry, 239. Gambling, 443. George, Henry, mistakes of, 178, 366. Geometrical progression, 118, 131. Good luck, 400. Good name, share of, 375. "Good will," share of, 378. Government, 445 ; may require land to be brought into use as fast as needed, 228. Government land, 176. How to build a city, 227. Immigration, 113 ; refusal to per- mit, 137. Improvements on Land, 40. Inheritance, of wants, 14; of property, 185. Interest, 363 ; an inducement to save, 370 ; usually reckoned on money, 374. Interstate commerce law, 386. Irish hind tenure, 179. Irrigation, 210. Labor, 32 ; a changing force, 34 ; child labor, 223 ; consumers of direct, 259 ; constant employ- ment of, 203 ; definition of, 32 ; development of, 221 ; difference in laborers, 89 ; division of, 214; advantage of, 215; how far should it be carried? 217; tends to belittle the laborer, 219 ; direction of determined by employer, 258 ; hours of, 211 ; irksomeness of , 209; labor power depends on ability rather than on the number of the peo- ple, 35 ; ownership and control of, 160 ; prohibition of certain forms, 223 ; purposes for which it shall be used, 257 ; relation to population, 87; satisfies wants directly or indirectly, 36; satisfies wants directly, 260, 267 ; unemployed, 205 ; use in satisfying wants directly, 260 ; utility of, 53 ; value of, 92 ; value to laborer, 93 ; wasted labor, 209; when a drug in the market, 88 ; woman's labor, 224. Laborer, cost of living, 205 ; gold- en age, 431 ; improvement in condition of, 212, 430; labor- ers the purchasers, 206 ; must live, 206. INDEX. 451 Laborer's ownership of himself, 160; reasons for, 160; appar- ent exceptions, 161. Laborers, proportion to idlers, 90. Land, 22 ; for residence, 22, 70 ; factories, 23, 76 ; agriculture, 24, 77 ; government control of, 228; improvements on, 40; practical methods of use, 172; quality for residence, 70 ; for factories, 76 ; for agriculture, 77 ; speculation in, 227 ; value of, 169. Land Laws of Moses, 168. Laisscz faire, 195, 196. Law of increase of population, 116. Liberty, desire for, 160. Limit to natural resources, 69. Limiting production, 295. Limits of Exchange Value, 285. Long and short haul clause, 386. Machinery, limited use, 244. Multlins, 116, 118. Marriages, deferred, 126. Materials, 43. Merchants, share of, 418. Minerals, 28. Mill, John Stuart, on Socialism, 156; proposed plans of dealing with land, 178. Money, 312 ; durability, 322 ; fiat, 327 ; gold, 325 ; how to secure uniform value, 330 ; increase in value, 318 ; paper money, 324, 326; portability, 312; qualities of good, 313; silver, 321 ; value of, 326; substitutes for, 335; tabular standard, 331 ; what determines value of, 325. Monopoly (see also natural mo- nopoly), 306,382; capitalization of, 393 ; effect on price, 307 ; share of, 382. Monopolist, price he will fix, 308. Morality by legislation, 254. Moses, land laws of, 168. Natural wealth (see Resources of Nature), definition of, 30 31. Natural monopolies, 194, 382- 396 ; government control of, 387; not Socialism, 391. Needs and wants compared, 17. Non-competing groups of labor- ers, 428. Not right to satisfy all wants, 17. Ownership and control of re- sources, 151 ; of labor, 160 ; of resources of nature, 165 ; of resources produced by indus- try, 181. Opening of new employments to women, effect on population, 127. Overcrowding of population, 123. Paper money increases value of gold and silver, 327. Parks, 238; reservation of, 180. Penn, Wm., and the Indians, 184. People the purchasers, 206. Permanent natural resources, 225. Permanent Wealth, 262-266, 363. Personal interest in scientific study ; 165.. Poor laws, effect on increase of population, 129. Population, Book II., 65 ; appli- 452 INDEX. cations of laws, 135 ; assumed to double in 25 years, 118; checks to increase of, 120 ; in the United States, 142 ; classes who should people a country, 138; effect of education on, 147; law of increase of, 116; number of people per square mile in cities, 70 ; population and labor, 87 ; population and society, 103 ; population and Produced Wealth, 96 ; popula- tion and Resources of Nature, 60; room for increase of, 139 ; stationary, 133 ; tendency to rapid increase fortunate, 122. Population and Labor, 87. Population and Produced Wealth, 96. Population and the Resources of Nature, 66. Population and Society, 108. Practical business, 251. Price, 281. Price of a dollar, 275. Profit sharing, 434. Profitsof production, 397; limited by competition, 403. Profits of exchange, 406 ; gross and real profit, 408. Private Property, natural right of, 151 ; what resources may become, 157. Private Property or Socialism, 151. Produced Wealth (see resources produced by human industry), consumable, 364 ; definition of, 45 ; economical use of, 242 ; how much needed, 96 ; perma- nent and consumable, 244 ; per- manent use of, 363 ; saving of, 101 ; utility of, 52; value of, 100 ; what fixes share of, 366. Producers and Non-Producers, 36 Productions of Human Industry, 38 (see Resources Produced by Human Industry). Produced Wealth, 45. Production of consumable goods, 261. Profits, definition of, 404, 410; consist of two elements 400. Profits of Exchange, 406, 408. Profits of Production, 397. Profit Sharing, 434. Prohibition of certain forms of labor, 221. Property, 153, 182 ; disposition of after death, 185; moral right of, 182 ; natural right of, 153; not robbery, 185; what resources may become, 157. Public opinion, effect on marri- ages, 128. Purposes for which labor shall be used, 257. Purposes for which resources shall be used, 256. Purposes for which permanent Produced Wealth shall be used, 243. Railroads, 387-389. Rent, 175, 355; does not depend on public or private ownership, 357 ; how rent may be reduced, 361. Resources for Satisfaction of Wants, Book I., 21. INDEX. 453 Resources of Nature, 21 ; can not be increased, 66 ; classification, 28, 30; consumable, use of, 231; discovery of, 66 ; economical use of, 69; how many people will they support ? 70 ; limited, 69; must be separated from those produced by industry, 166 ; ownership and control of, 1 65 ; permanent and consum- able, 29 ; Permanent, 225 ; practical methods of using, 172; public use of, 236-241 ; public and private use of, 234 ; satisfy wants directly and indirectly, 30 ; use of inferior, 226 ; used by private parties, 235 , by the State, 235 ; utility of, 51 ; value of, 84. Resources produced by human in- dustry, 38 (see Produced Wealth) ; economical use of, 242; how much needed, 96; ownership and control of, 181 ; population and, 96 ; utility of, 52 ; value of, 100. Right of property, 154,181, 182; what it includes, 183. Rights, of children, 161 ; crimi- nals, 162; idiots and insane, 162; paupers, 162. Risk in production, 399. Roads, 39. Sale and purchase simpler than barter, 278. Savings, 101, 247, 250. Share of good name, 375 ; of the government, 445 ; of laborer who works for himself, 411 ; of laborer who works for wages, 420 ; of laborer who satisfies wants directly, 436; of the merchant, 406 ; of monopoly, 382; of Natural Wealth, 355; of Producer, 397 ; of Produced Wealth, 363. Society, 46 ; a million people compared with more, 106 ; con- trol of, 189; definition of, 46; depends on the wants and char- acter of the people rather than their number, 105; limit to the number of people desired, 107; negative utility, 55 ; popula- tion and, 103; satisfies wants by its presence, 104 ; satisfies wants directly, 46 ; indirectly, 47, 106; utility of, 54; use in satisfying wants, 252 ; value of, 106 Socialism, 151, 193 ; danger of, 182; definition of, 151, 193; distinguished from other or- ganizations of society, 193; destruction of independence, 157 ; not a means of saving society, 156 ; private property and, 151 ; slavery to society, 157. Substitutes for money, 335. Suffrage, who should have the privilege of, 190. Sunday work, waste work, 213. Supply and demand, 289, 297. Support of workmen, 207. " Survival of the fittest," mistake in popular conception of mean- ing of the term, 139. Swamps brought into use late, 229, 454 INDEX. Taxes, 163. Telephone exchange, 278. Timber, 28. 232. Title by exchange, 184. Tools and machinery, 39. Total demand, 290. Total supply, 289. ' Use of Resources, 201. Use of the resource of society, 252. Utility, 49 ; Jevon's view, 49. Unchangeable value of money, desirability of, 313. Undertaker, 354, 398, 400. Value in use, 49, 57 ; decreases with quantity, 60; means scar- city, 57 ; measure of, 59 ; shows relation between wants and re- sources, 65; of Resources of Nature, 84. Value of money. 283. Values of a dollar, 282. Visible supply, 293. Wages, 420; depend on supply and demand, 421 ; effect in raising prices, 424 ; nominal and real, 424; principles on which high wages depend, 432 ; when high, 432 ; why increase in has not been greater, 430. Wages system, 420; unfortunate, 432. Wants, 10 ; all should not be sati-fied, 17 ; creation, develop- ment and suppression of, 11 ; spiritual and religious, 15. Wants and Resources, relation between, 65, 95. War, 120. Water, 25. Wealth, 1 ; natural, 31 ; pro- duced, 45. What shall be produced? 256. Who shall people this land? 138. Wholesale and retail, 301. Wild animals, 28. Woman suffrage, 192. 14 DAY USE RETURN TO DESK FROM WHICH BORROWED LOAN DEPT. This book is due on the last date stamped below, or on the date to which renewed. Renewed books are subject to immediate recall. C ^~A\ 57CKt -* L ^r-t I^T General Library University of California Berkeley 78 U