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diff --git a/27698.txt b/27698.txt new file mode 100644 index 0000000..5682793 --- /dev/null +++ b/27698.txt @@ -0,0 +1,20610 @@ +The Project Gutenberg EBook of Principles Of Political Economy by William +Roscher + + + +This eBook is for the use of anyone anywhere at no cost and with almost no +restrictions whatsoever. You may copy it, give it away or re-use it under +the terms of the Project Gutenberg License included with this eBook or +online at http://www.gutenberg.org/license + + + +Title: Principles Of Political Economy + +Author: William Roscher + +Release Date: January 4, 2009 [Ebook #27698] + +Language: English + +Character set encoding: US-ASCII + + +***START OF THE PROJECT GUTENBERG EBOOK PRINCIPLES OF POLITICAL ECONOMY*** + + + + + + Principles Of Political Economy + + By + + William Roscher, + + Professor of Political Economy at the University of Leipzig, + + Corresponding Member of the Institute of France, + + Privy Counsellor To His Majesty, + + The King Of Saxony. + + From the Thirteenth (1877) German Edition. + + With Additional Chapters Furnished By The Author, + + For This First English And American Edition, + + On Paper Money, International Trade, + + And The Protective System; + + And A Preliminary Essay + + On The Historical Method In Political Economy + + (From the French) + + By + + L. Wolowski + + The Whole Translated By + + John J. Lalor, A. M. + + Vol. I. + + New York: + + Henry Holt & Co. + + 1878 + + + + + +CONTENTS + + +Translator's Preface. +Author's Preface. (1st Edition.) +From The Author's Prefaces. (2d to 11th Edition.) +Preliminary Essay. +Introduction. + Chapter I. Fundamental Ideas. + Section I. Goods--Wants. + Section II. Goods.--Economic Goods. + Section III. Goods.--The Three Classes Of Goods. + Section IV. Of Value.--Value In Use. + Section V. Value.--Value In Exchange. + Section VI. Value.--Alleged Contradiction Between Value In Use And + Value In Exchange. + Section VII. Resources Or Means (Vermoegen). + Section VIII. Valuation Of Resources. + Section IX. Wealth. + Section X. Wealth.--Signs Of National Wealth. + Section XI. Of Economy (Husbandry). + Section XII. Economy.--Grades Of Economy. + Section XIII. Political Economy.--The Economic Organism. + Section XIV. Origin Of A Nation's Economy. + Section XV. Diseases Of The Social Organism. + Chapter II. Position Of Political Economy In The Circle Of Related + Sciences. + Section XVI. Political Or National Economy. + Section XVII. Sciences Relating To National Life.--The Science Of + Public Economy.--The Science Of Finance. + Section XVIII. Sciences Relating To National Life.--Statistics. + Section XIX. Private Economy--Cameralistic Science. + Section XX. Private Economy. (Continued.) + Section XXI. What Political Economy Treats Of. + Chapter III. The Methods Of Political Economy. + Section XXII. Former Methods. + Section XXIII. The Idealistic Method. + Section XXIV. The Idealistic Method. (Continued.) + Section XXV. The Idealistic Method. (Continued.) + Section XXVI. The Historical Method--The Anatomy And Physiology Of + Public Economy. + Section XXVII. Advantages Of The Historical Or Physiological Method. + Section XXVIII. Advantages Of The Historical Method. (Continued.) + Section XXIX. The Practical Character Of The Historical Method In + Political Economy. +Book I. The Production Of Goods. + Chapter I. Factors Of Production. + Section XXX. Meaning Of Production. + Section XXXI. The Factors Of Production.--External Nature. + Section XXXII. External Nature.--The Sea.--Climate. + Section XXXIII. External Nature.--Gifts Of Nature With Value In + Exchange. + Section XXXIV. External Nature. (Continued.) + Section XXXV. External Nature.--Elements Of Agricultural + Productiveness. + Section XXXVI. External Nature.--Further Divisions Of Nature's Gifts. + Section XXXVII. External Nature.--The Geographical Character Of A + Country. + Section XXXVIII. Of Labor.--Divisions Of Labor. + Section XXXIX. Labor.--Taste For Labor.--Piece-Wages. + Section XL. Labor.--Labor-Power Of Individuals. + Section XLI. Labor.--Effect Of The Esteem In Which It Is Held. + Section XLII. Of Capital.--The Classes Of Goods Of Which A Nation's + Capital Is Made Up. + Section XLIII. Capital.--Productive Capital. + Section XLIV. Capital.--Fixed Capital, And Circulating Capital. + Section XLV. Capital.--How It Originates. + Chapter II. Co-Operation Of The Factors. + Section XLVI. The Productive Cooeperation Of The Three Factors. + Section XLVII. Productive Co-Operation Of The Three Factors. The + Three Great Periods Of A Nation's Economy. + Section XLVIII. Critical History Of The Idea Of Productiveness. + Section XLIX. Critical History Of The Idea Of Productiveness.--The + Doctrine Of The Physiocrates. + Section L. The Same Subject Continued. + Section LI. The Same Subject Continued. + Section LII. Idea Of Productiveness. + Section LIII. The Same Subject Continued. + Section LIV. Importance Of A Due Proportion In The Different + Branches Of Productiveness. + Section LV. The Degree Of Productiveness. + Chapter III. The Organization Of Labor. + Section LVI. Development Of The Division Of Labor. + Section LVII. Development Of The Division Of Labor.--Its Extent At + Different Periods. + Section LVIII. Advantages Of The Division Of Labor. + Section LIX. Conditions Of The Division Of Labor. + Section LX. Influence Of The Extent Of The Market On The Division Of + Labor. + Section LXI. The Division Of Labor--Means Of Increasing It. + Section LXII. The Reverse, Or Dark Side Of The Division Of Labor. + Section LXIII. Dark Side Of The Division Of Labor.--Its Gain And + Loss. + Section LXIV. The Co-Operation Of Labor. + Section LXV. The Principle Of Stability, Or Of The Continuity Of + Work. + Section LXVI. Advantage Of Large Enterprises. + Chapter IV. Freedom And Slavery. + Section LXVII. The Origin Of Slavery. + Section LXVIII. The Same Subject Continued. + Section LXIX. Origin Of Slavery.--Want Of Freedom. + Section LXX. Emancipation. + Section LXXI. Disadvantages Of Slavery. + Section LXXII. Effect Of An Advance In Civilization On Slavery. + Section LXXIII. The Same Subject Continued. + Section LXXIV. The Same Subject Continued. + Section LXXV. The Same Subject Continued. + Section LXXVI. (Appendix To Chapter IV.) The Domestic Servant + System. + Chapter V. Community Of Goods And Private Property. Capital--Property. + Section LXXVII. Capital.--Importance Of Private Property. + Section LXXVIII. Socialism And Communism. + Section LXXIX. Socialism And Communism. (Continued.) + Section LXXX. Socialism And Communism. (Continued.) + Section LXXXI. Community Of Goods. + Section LXXXII. The Organization Of Labor. + Section LXXXIII. The Organization Of Labor. (Continued.) + Section LXXXIV. The Organization Of Labor. (Continued.) + Section LXXXV. The Right Of Inheritance. + Section LXXXVI. Economic Utility Of The Right Of Inheritance. + Section LXXXVII. Landed Property. + Section LXXXVIII. Landed Property. (Continued.) + Chapter VI. Credit. + Section LXXXIX. Credit In General. + Section XC. Credit--Effects Of Credit. + Section XCI. Debtor Laws. + Section XCII. History Of Credit Laws. + Section XCIII. Means Of Promoting Credit. + Section XCIV. Letters Of Respite (Specialmoratorien). +Book II. The Circulation Of Goods. + Chapter I. Circulation In General. + Section XCV. Meaning Of The Circulation Of Goods. + Section XCVI. Rapidity Of Circulation. + Section XCVII. Freedom Of Competition. + Section XCVIII. How Goods Are Paid For.--The Rent For Goods. + Section XCIX. Freedom Of Competition And International Trade. + Chapter II. Prices + Section C. Prices In General. + Section CI. Effect Of The Struggle Of Opposing Interests On Price. + Section CII. Demand. + Section CIII. Demand.--Indispensable Goods. + Section CIV. Influence Of Purchaser's Solvability On Prices. + Section CV. Supply. + Section CVI. The Cost Of Production. + Section CVII. Equilibrium Of Prices. + Section CVIII. Effect Of A Rise Of Price Much Above Cost. + Section CIX. Effect Of A Decline Of Price Below Cost. + Chapter CX. Different Cost Of Production Of The Same Goods. + Section CXI. Different Cost Of Production Of The Same Goods. + (Continued.) + Section CXII. Exceptions. + Section CXIII. Exceptions. (Continued.) + Section CXIV. Prices Fixed By Government. + Section CXV. Influence Of Growing Civilization On Prices. + Chapter III. Money In General. + Section CXVI. Instrument Of Exchange. Measure Of Value. Barter. + Section CXVII. Effect Of The Introduction Of Money. + Section CXVIII. The Different Kinds Of Money. + Section CXIX. The Metals As Money. + Section CXX. Money--The Precious Metals. + Section CXXI. Value In Use And Value In Exchange Of Money. + Section CXXII. Value In Exchange Of Money. + Section CXXIII. The Quantity Of Money A Nation Needs. + Section CXXIV. The Quantity Of Money A Nation Needs. (Continued.) + Section CXXV. Uniformity Of The Value In Exchange Of The Precious + Metals. + Section CXXVI. Uniformity Of The Value In Exchange Of The Precious + Metals. (Continued.) + Chapter IV. History Of Prices. + Section CXXVII. Measure Of Prices,--Constant Measure. + Section CXXVIII. Value In Exchange Estimated In Labor. + Section CXXIX. The Precious Metals The Best Measure Of Prices. + Section CXXX. History Of The Prices Of The Chief Wants Of Life. + Section CXXXI. History Of The Prices Of The Chief Wants Of Life. + (Continued.) + Section CXXXII. History Of The Prices Of The Chief Wants Of Life. + (Continued.) + Section CXXXIII. History Of The Prices Of The Chief Wants Of Life. + (Continued.) + Section CXXXIV. History Of The Prices Of The Chief Wants Of Life. + (Continued.) + Section CXXXV. History Of The Values Of The Precious Metals.--In + Antiquity And In The Middle Ages. + Section CXXXVI. Effect On The Discovery Of American Mines Etc. On + The Value Of The Precious Metals. + Section CXXXVII. Revolution In Prices At The Beginning Of Modern + History. + Section CXXXVIII. Revolution In Prices.--Influence Of The + Non-Monetary Use Of Gold And Silver. + Section CXXXIX. History Of Prices.--Californian And Australian + Discoveries. + Section CXL. Revolution In Prices.--Its Influence On The National + Resources. + Section CXLI. Effect Of An Enhancement Of The Price Of The Precious + Metals. + Section CXLII. The Price Of Gold As Compared With That Of Silver. + Section CXLIII. The Price Of Gold As Compared With That Of Silver. + (Continued.) + Appendix I. Paper Money. + Section I. Paper Money And Money-Paper. + Section II. Advantages And Disadvantages Of Paper Money. + Section III. Kinds Of Redemption. + Section IV. Compulsory Circulation. + Section V. Resumption Of Specie Payments. + Section VI. Paper Money--A Curse Or A Blessing? +Footnotes + + + + + + +DEDICATION. + + +TO + +WILLIAM H. GAYLORD, ESQ., + +_COUNSELLOR AT LAW_, + +OF CLEVELAND, OHIO, + +TO WHOSE BROTHERLY CARE IT IS LARGELY DUE THAT I LIVED TO +TRANSLATE THEM, + +THESE VOLUMES + +ARE AFFECTIONATELY INSCRIBED. + + + + + +TRANSLATOR'S PREFACE. + + +Our literature is rich enough in works on the principles of Political +Economy. So far as the translator is informed, however, it possesses none +in which the science is treated in accordance with the historical method. +We may therefore venture to express the hope that this translation will +fill a place hitherto unoccupied in the literatures of England and +America, and fill it all the more efficiently and acceptably, as Professor +ROSCHER is the founder and still the leader of the historical school of +Political Economy. Were this the only recommendation of our undertaking, +it would not be a useless one. But a glance at Professor ROSCHER'S book +will convince even the most hasty reader that its pages fascinate by their +interest and are rich in treasures of erudition which should not remain +inaccessible to the English student from being locked up in a foreign +tongue. + +The present translation has received, throughout, the revision of the +author, and should any imperfections remain in the rendering of his +thought into English, the blame is certainly not his, for his revision has +been most minute. + +The three appendices have been supplied by Professor ROSCHER expressly for +this edition. As they are intended to form a part of the work on the +Political Economy of Industry and Commerce, on which he is now engaged, he +authorizes their publication in English, only by the publishers of this +edition of his principles; and only for the purpose of being added to the +present translation. He desires especially that their appearance in their +present shape should not in any way interfere with any of his rights in +his forthcoming volume, and that they should not be translated into any +language nor translated back into German. + +The essay of Mr. WOLOWSKI, on the historical method in Political Economy +constitutes no part of Professor ROSCHER'S book, and neither he nor its +author, but only the translator, is responsible for its appearance here. +In it the reader will find a short sketch of the life of Professor +ROSCHER, brought down to the date at which the essay was written. The +translator has little to add to that sketch, all the information he +possesses in addition to what it contains being embraced in the following +lines from a letter received by him from the author in answer to a request +that he would supply the biographical data not to be found in WOLOWSKI'S +essay: "You might perhaps say ... that I have repeatedly declined calls to +the Universities of Munich, Vienna and Berlin, but that I have never +regretted remaining in Leipzig." + +The acknowledgments of the translator are due, in the first place, to the +eminent author himself, for the revision of the plate-proof of the entire +work, and then to Professor WILLIAM F. ALLEN, of the University of +Wisconsin, for his interest in the progress of the enterprise, and for +many valuable suggestions; also to Professor W. G. SUMNER, of Yale +College, for some excellent hints as to the best translation of certain +words in the Appendix on Paper Money. + + + + + +AUTHOR'S PREFACE. (1ST EDITION.) + + +My _System der Volkswirthschaft_ shall, _Deo volente_, be completed in +four parts. The second shall contain the national economy of agriculture +and the related branches of natural production; the third, the national +economy of industry and commerce; the fourth, of the economy of the state +and of the commune (_Gemeindehaushalt_). While the entire work shall +constitute one systematic whole, each part shall have its own appropriate +title, constitute an independent treatise, and be sold separately. + +Of the peculiar method which I have followed in this work, and which will +produce still better fruits in the succeeding volumes, I have given a +sufficient explanation in §§ 26 ff., and all I desire now is to say a few +words on the relation the notes bear to the text. The careful reader will +soon be convinced that of the many citations in this work, not one has +been made from a vain desire of the display of erudition. Part of them +serves as the necessary proof of surprising facts adduced, but which are +little known. Another part of them is intended to incite the reader to the +study of certain questions nearly related to those treated in the text, +but which are still different from them. The object of the greater number +is to supply information concerning the history of economic principles. As +far as the sources at my command permitted, I have endeavored to point out +the first germs, the chief stages of development, the contrasts, and, +finally, what has been thus far attained in economic science. This +sometimes required some little victory over self, inasmuch as I was +conscious of having independently discovered certain facts, when I +afterwards found that some old and long-forgotten writer had made similar +observations. Thus, this work may serve both as a handbook and as a +history of the literature of Political Economy. Students of the science +know how little has thus far been done by writers in this direction. And +hence I shall be very grateful to those who labor in the same field, if +they will, either by writing to me personally, or through the medium of +the press, inform me when I have erred in ascribing a truth, or a +scientifically important error, to its earliest author. + +I have already said in the title that this work is intended not for the +learned only, but for all educated men, for men of a serious turn of mind, +who desire truth and science for their own sake. Like that ancient +historian, whom I honor above all others as my teacher, I desire that my +work should be useful to those, {~GREEK SMALL LETTER OMICRON WITH DASIA AND OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER BETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER UPSILON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA WITH OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON~} {~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER EPSILON WITH OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON WITH VARIA~} {~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER EPSILON WITH VARIA~}{~GREEK SMALL LETTER FINAL SIGMA~} +{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH VARIA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON WITH VARIA~} {~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON WITH PSILI AND PERISPOMENI~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA WITH VARIA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON WITH VARIA~} {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMEGA WITH OXIA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH VARIA~} +{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA~}. (_Thucydides_ I, 22.) + +UNIVERSITY OF LEIPZIG, + +_End of May, 1854._ + + + + + +FROM THE AUTHOR'S PREFACES. (2D TO 11TH EDITION.) + + +The preface to the second edition is dated October, 1856; that to the +third, April, 1858; that to the fourth, April, 1861; that to the fifth, +November, 1863; that to the sixth, November, 1865; that to the seventh, +November, 1868; that to the eighth, August, 1869; that to the ninth, +March, 1871; that to the tenth, May, 1873; that to the eleventh +(unaltered), December, 1873. Each successive edition, nearly, has been +announced as an improved and enlarged one; and the tenth edition contains +one hundred and fifty-six pages more than the first, although in places, a +large number of abbreviations had been made from previous editions. There +are many things in some of the previous editions which criticism induced +me, long since, to change. I have considered it my duty to the public, who +gave my work so warm and friendly a reception, to take into consideration, +in each successive edition, not only my own new investigations, but those +also of all others with which I became acquainted, and, whenever possible, +to correct statistical illustrations from the latest sources. I have +especially, in each following edition, enriched a number of paragraphs +with here and there historical, ethnographic and statistical features. +Plutarch is certainly right, spite of the fact that pedants may abuse him +for it, when he says, that trifling acts, a word and even a jest, are +often more important, as characterizing the life of a people or an age, +than great battles which cost the lives of tens of thousands of men. + +I have changed the titles "Ricardo's Law of Rent," and "The Malthusian Law +of the Increase of Population," which I formerly used, for others. But I +would not be misunderstood here. I hold it to be a duty of reverence in +the learned--as it has long been practiced in the case of the natural +sciences--in the sciences of the human mind to call the natural laws, +methods etc., in acquainting us with which, some one particular +investigator has won very distinguished merit, by the name of that +investigator. In the case of the law of rent, the application of this rule +would as unquestionably entitle Ricardo to this honor as it would Malthus +in that of the increase of population, spite of the fact that Ricardo may +not have succeeded in finding the best possible form of the abstraction, +and although Malthus even, in a one-sided reaction against a former still +greater one-sidedness, was not always able to steer clear of positive and +negative errors. Recent science has endeavored, and successfully, to +examine the facts which contradict the Ricardoan and Malthusian +formulations of the laws in question, and to extend the formulas +accordingly. I have myself contributed hereto to the extent of my ability. +But, in the interval, it is not hard to comprehend that, while this +process of elucidation is going on, most scholars, those especially +possessed more of a dogmatic than of a historical turn of mind, should +estimate these two leaders more in accordance with their few defects than +with the great merits of their discoveries. If, therefore, I now drop the +title "Malthusian law," it is to guard hasty readers from the illusion +that §§ 242 seq. teach what the great crowd understand by Malthusianism; +when they might, perhaps, omit that portion entirely. For my own part, I +have no doubt that, when the process of elucidation above referred to +shall have been thoroughly finished, the future will accord both to +Ricardo and Malthus their full meed of honor as political economists and +discoverers of the first rank.(1) + + + + + +PRELIMINARY ESSAY. + + +Preliminary Essay On The Application Of The Historical Method To The Study + Of Political Economy, + + By M. Wolowski, + + Member Of The Institute Of France. + + + "_Nunquam bene percipiemus usu necessarium nisi et noverimus jus + illud usu non necessarium. Nexum est et colligatum alterum alteri. + Nulli sunt servi nobis, cur quaestiones de servis vexamus? Digna + imperito vox._"--_Cuj._, vii, in titul. Dig. De Justitia et + Jure.(2) + + + "_Homo sum, humani nihil a me alienum puto._"--_Terence._(3) + + + "_Ista praepotens, ac gloriosa philosophia._"--_Cicero_, De Or., I, + 43.(4) + + + + +I. + + +It is no foolish desire to make a vain display of citations, that induces +us, at the beginning of this essay, intended to point out the results of +the application of a new method to the study of Political Economy, to +invoke the authority of a poet and moralist, of a jurisconsult and of a +philosopher. The writer finds in the words just quoted the loftiest +expression of the thought which dictates these lines, viz.: that the +impartial researches of history, a profound feeling of man's moral and +material wants, and the light of philosophy, should govern in the teaching +of a science, the object of which is to show us how those things which are +intended to satisfy our wants are produced and distributed among the +several classes or individuals of a nation; how they are exchanged one +against another, and how they are consumed. + +The nineteenth century affords us something more than the admirable +spectacle of the rapid and fertile development of mechanical power and +natural forces. This is but one of the aspects, we might even say but one +of the results, of the general progress of the human mind. The renovation +of moral and intellectual studies has served as a starting point for the +application to facts of the conquests of thought. Science has preceded +art. + +In the foremost rank of the studies just referred to is _philosophy_, +which initiates us into the knowledge of human nature, the basis of right, +and which translates its legitimate aspirations into a language which we +can understand; _history_, that _prophetess_ of the truth, as one of the +ancients called it, which places before us the faithful picture of times +past, not by simply putting together a skeleton of facts, but by following +the living progress of events and the organic development of institutions. +Such, at least, has been the work of those noble minds who have +consecrated their energies to the resuscitation of ages past, in their +true shape, and such is the service for which we are indebted to them for +the successful accomplishment of the reformation of historical studies, +which they attempted with such rare devotion and such marvelous sagacity. + +This renovation of history has exerted the most fertile influence in the +region of philosophy, in that of law, and we believe that it will prove no +less useful in that of Political Economy. It has served to put us on our +guard against being easily misled by _a priori_ notions. + +By exhibiting to us the results of the life and of the experience of +centuries, by teaching us by what steps the human mind has risen to its +present eminence, and what the education given it in the past has been, it +has enabled us to ascend from phenomena to the principles which preside +over them; from facts to the law; and it has substituted for arbitrary +assumptions and purely ideal systems, the slow but progressive work of the +genius of nations. Not that it turns a deaf ear to the exalted lessons of +philosophy, nor that it denies the _eternal relations resulting from the +nature of things_. Far from it. On the contrary, it supplies a solid basis +to intellectual investigations, and, so to speak, an answer for all the +moral sciences, to this saying of Roederer: "Politics is a field which has +been traversed thus far only in a balloon; it is time to put foot on solid +ground." + +Neither does history, as thus understood, confine itself to mere +description; it also assumes the office of judge. While it pulls down much +that passion and inaccuracy have reared, and thus restores respect for the +past, it does not turn that past into a fetish. It looks it boldly in the +face and questions it, instead of prostrating itself before it and +worshipping it with downcast eyes. Thus, by plainly showing us the many +bonds which tie us to it, it escapes at once both the rashness of +impatience and the wearisomeness of routine. + +The impartiality it inculcates is not indifference; and there is no danger +that the justice it metes out to past ages shall degenerate into a vain +scepticism or a convenient optimism. + +The study of history, thus understood, has another advantage; it accustoms +us to those patient and disinterested investigations, to those lengthy +labors, the positive result of which at first escapes us for a time, only +to burst on our eyes, with so much more brilliancy, when rigorous research +has succeeded in discovering it. It frees us from the deadly constraint of +immediate utility. + +There is nothing more fatal to science than the feverish impatience for +results which obtains only too much in our own days, and which induces +people to run after him who is in the greatest hurry, and which leads to +hasty conclusions. + +"Research undertaken from a disinterested love of science," says the +learned Hugo, one of the masters of the historical school of law in +Germany,(5) "that research which at first promises no other advantage but +truth and the culture of the mind, is precisely that which brings us the +richest rewards. Would we not be behind, in all the sciences, if we had +clung only to those principles, the utility of which in practice was +already known? Do we not, to-day, from many a discovery, reap advantages +of which its author never dreamed?" + +Doubtless this tendency, unless restrained by other demands, is not exempt +from danger. We may be carried away by the attraction peculiar to these +noble studies, withdraw into antiquity and fall into a species of +historical mysticism which ends in the affirmation, that whatever has been +is true, absolutely, and which, instead of confining itself to the +explanation of transitory phenomena, invests them with all the dignity of +principles. We shall endeavor to avoid the peril pointed out by +Mallebranche. "Learned men study rather to acquire a chimerical greatness +in the imagination of other men, than to acquire greater breadth and +strength of mind themselves. They make their heads a kind of store-room, +into which they gather, without order or discrimination, everything which +has a look of erudition,--I mean to say everything which may seem rare or +extraordinary and excite the wonder of other people. They glory in getting +together, in this archaeological museum, antiques with nothing that is rich +or solid about them, and the price of which depends on nothing but fancy, +chance or passion." + +A display of erudition may obscure the truth, and bury it under its +weight, instead of bringing it out into relief. By concentrating the mind +on the material vestiges of the past, it may withdraw it from the +intellectual movement of the present, and give us a race of scholars, of +great merit, doubtless, but who move about like strangers among their +contemporaries. + +Without a sense for the practical, and without ideas of an elevated +nature, a person may, indeed, be a man of erudition--he cannot be a +historian. As the proverb says, the forest cannot be seen, for the trees. +That this noble study may bear its best and most useful fruit; that is, +that it should preserve us against ambitious _formulas_ and destructive +chimeras, we must pursue another way. + +"The world," says Montaigne, "is incapable of curing itself. It is so +impatient of what burthens it, that it thinks only of how it shall rid +itself of it, without inquiring at what price. A thousand examples show us +that it cures itself ordinarily at its own cost. The getting rid of the +present evil is not cure, unless there be a general amendment of +condition. Good does not immediately succeed evil. One evil, and a worse, +may follow another, like Caesar's assassins, who brought the republic to +such a pass, that they had reason to repent the meddling with it." Such, +too frequently, is the lot of those who, abandoning themselves to their +imagination, and without consulting the past, mix together promises of +liberty and the despotism of Utopias which they would impose on nations +under pretext of enfranchising them. Despising the work of the ages, they +think they can build upon a soil shaken by destruction and crumbled, until +it may be likened to moving sand. + +Contempt for the past is associated with a passion for reform. Men think +of destroying that which should only be transformed. They condemn +everything that has been, unconditionally, and launch out towards a new +future. The suffering which has been gone through irritates and troubles +the mind. The work of pulling down is so easy, it is supposed that the +work of building up is equally so. Hence systems rise, as if the world +were to begin anew. The pride of liberty and of human action becomes the +principle of science; and, like all new principles, it pretends to +exclusive and absolute dominion. Rationalism governs; abstract philosophy +ignores the traditions and the requirements of the life of nations; and +finds now in it, as in geometry, nothing but principles and deductions. +The memory of recent oppression causes us to act as Tarquin did, and to +level down the higher classes instead of elevating the inferior. Liberty +and equality then govern by their negative side, instead of exercising the +positive and beneficent influence they should have, to develop all forces +to their utmost, to ennoble the mind, to give more elasticity to the soul +and greater vigor to thought, to give birth to those varied forms and to +that moral energy, which should bring us nearer to final equality in the +bosom of God.(6) + +We forget that no one is born _free_, and that every one ought to endeavor +to become so, + + + Feindlich ist des Mannes Streben + Mit zermalmender Gewalt + Geht der Wilde durch des Leben + Ohne Rast und Aufenthalt, + + --_Schiller_. + + +and make himself worthy of liberty, by the exercise of manly virtue! +Because the form has been changed, we believe that we have changed human +nature. + +It is easy to understand, why, where these ideas prevail, the study of the +past should be neglected and despised. Efforts are made to avoid it. Why, +it is asked, revive memories of oppression and misery? The old world is +wrecked. It is annihilated. Peace to its ashes! Or else, after it has been +destroyed, it is sought for again; and, under pretext of eradicating the +evils existing in it, an attack is made on the eternal basis on which +human society rests, on the laws not made by man, and which it is not +given to man to change. The world becomes one vast laboratory, in which +the rashest experiments are multiplied in number, in which mankind is but +clay in the hands of the potter which every pretended "thinker" may mould +at will, by giving him the false appearances of independence and of an +emancipated being. + +And, indeed, if the will of man be all-powerful, if states are to be +distinguished from one another only by their boundaries, if everything may +be changed like the scenery in a play by a flourish of the magic wand of a +system, if man may arbitrarily make the right, if nations can be put +through evolutions like a regiment of troops; what a field would the world +present for attempts at the realization of the wildest dreams, and what a +temptation would be offered to take possession, by main force, of the +government of human affairs, to destroy the rights of property and the +rights of capital, to gratify ardent longings without trouble, and provide +the much coveted means of enjoyment. The Titans have tried to scale the +heavens, and have fallen into the most degrading materialism. Purely +speculative dogmatism sinks into materialism. + +All is changed, both men and things. Yet we hear the same old style of +declamation. There are those who wish to plough up the soil which the +harrow of the revolution went over yesterday; and they believe they are +marching in the way of progress. They do not see that they have mistaken +their age, and that the bold attempts of the past have now come to possess +a directly opposite meaning. Without stopping to inquire to what side the +new world inclines, they repeat the same words, and swear _in verba +magistri_, and go the road of destruction, believing themselves to be +creating the world anew! + +Nothing is more natural than that these excesses should produce other +excesses, in a contrary direction. Moved by hatred or fear of +revolutionary absolutism, nations seek an asylum in governmental +absolutism, or they retrograde towards the middle ages, and consider the +mutual bond of protection and dependence of that period as the ideal and +the realization of true liberty. History is no longer the organic +development of social life, and man, like a soldier that thoughtlessly and +capriciously has gone beyond his place of supplies, is obliged to retrace +his steps. The reaction is clearly defined. The past is opposed to the +present, not as a lesson to be turned to advantage, but as a model which +must be hastily accepted; and men become revolutionary in a backward +direction. + +However, history, rigorously studied, knows neither these complaisances +nor these weaknesses. It does not descend to the apotheosis of a past +which cannot return again. The real historical spirit consists in rightly +discerning what belongs to each epoch. Its object is, by no means, to call +back the dead to life, but to explain why and how they lived. In harmony +with a healthy philosophy, it assigns a limit to the vagaries of arbitrary +will, beyond which the latter cannot go. It unceasingly calls us back, +from the heights of abstraction, to positive facts and things. + +In the creation of systems, only one thing was wont to be forgotten, men, +who were treated, in them, like so many ciphers; for intellectual +despotism has this in common with all despotic authority. History teaches +us that we can reach nothing great or lasting, but by addressing ourselves +to the soul. If the soul decays, there can be no longer great thoughts or +great actions. Society lives by the spirit which inhabits it. It may, for +an instant, submit to the empire of force, but, in the long run, it +hearkens only to the voice of justice. It was thus that the greatest +revolution which history records, that of Christianity, was accomplished. +It addressed itself only to the soul; but by changing the hearts of men, +it transformed society entirely. + +The violent struggle between an imperious dogmatism and an unintelligent +and mistaken attempt at a retrogressive movement is resolved into a higher +view, which permits the union of conservatism and progress. Violent +attempts and rash endeavors made, threatened to bring contempt on the +noblest teachings of philosophy, and to make them repulsive to man; and, +on the other hand, a blind respect for the institutions consecrated by +history threatened to stifle all examination and all freedom of judgment. + +But a healthier doctrine has permitted us to understand, that we are +continuing the work of preceding generations; that we are developing the +germs which they successively sowed; that we are perfecting that which +they had only sketched, and that we are letting drop that which has no +support in the social condition of man. Every thing is connected; each +thing is linked to every other; nothing is repeated. The hopes of sudden +and total renovation, based on absolute formulas, vanish before the touch +of this solid study. This shows us how firm and unshaken are those reforms +which have begun by taking hold of the minds of men, the precise spirit of +which had penetrated into the souls of whole nations before they had +manifested themselves in facts. + +Law and Economy constitute a part of the life of nations in the same way +that language and customs do. The power of history in no way contradicts +the supremacy of reason. + + + + +II. + + +These two tendencies, the rationalistic and the historical, are everywhere +found face to face. They carry on an eternal warfare, which is renewed in +every age, under new names and new forms. Accomplished facts and +renovating thought divide the world between them. They at one time +moderate its speed, and at others, spur it on its way. But these two +forces, instead of compromising the destinies of humanity by their +opposing action, maintain and balance them, as the contrary impulses given +by the hand of the Great Architect has peopled the universe with worlds +which gravitate in space. + +Victor Cousin, a very competent authority on the subject, has said that +the history of philosophy is the torch of philosophy itself. The +remarkable works which have enriched it in this direction are well known. +History, on its side, is enlightened by philosophy. Thus, it teaches us +not to despise facts, but at the same time not to be slaves to precedent. +It does equal justice to the incredulous and to the fanatic, to too supple +practitioners and to intractable theorizers. + +We may doubtless say with Henri Klimrath, who, in connection with a few +others, had undertaken the work of the restoration of historical study in +its application to French law, that there is an absolute, true, beautiful, +good and just, the _ratio recta summi Jovis_,(7) the supreme reason +founded in the nature of things.(8) The eternal truths taught by +philosophy constitute the higher law, a law which dates not from the day +on which it was reduced to writing, but from the day of its birth; and it +was born with the divine intelligence itself. "_Qui non tum denique +incipit lex esse, cum scripta est, sed tum cum orta est. Orta autem simul +est cum mente divina._"(9) And Troplong rightly adds: "There are rules +anterior to all positive laws. I cannot grant that the action of +conscience and the idea of right are the work of the legislator. It is not +law that made the family, property, liberty, equality, the idea of good +and evil. It may, indeed, give organization to all these things, but in +doing so, it is only working on the foundation which nature has laid, and +it is perfect in proportion as it comes nearer to the eternal, immutable +laws which the Creator has engraved on our hearts. What changes is not the +eternal law, the revelation of which comes to man incessantly and by a +necessary action, but the form in which humanity clothes it, the +institutions which man builds on its immutable foundation."(10) + +We therefore believe in the law of nature, and regret that our opinion is +not shared by Mr. Roscher, at least that he does not explicitly enough +express his faith in it, nor apply it broadly enough in the beautiful work +which we are happy to render accessible to the French public.(11) We +believe in it in its philosophical sense, and not simply in the juridical +sense attached to it by Ulpian. "Let us not," observes Portalis, "confound +the physical order of nature, common to all animated beings, with the +natural law which is peculiar to man. We call _natural law_, the +principles which govern man considered as a moral being, that is, as an +intelligent and free being, intended to live in the society of other +beings, intelligent and free like himself."(12) Ulpian's famous tripartite +division, of natural law, the law of nations, and the civil law, is proof, +from the meaning he attaches to them, either of a misunderstanding or of +the imperfect idea which the Stoics had conceived of the essence of +natural law. In vain Cujas exhausted all the resources of his noble +intellect to explain it.(13) + +It is necessary to draw a distinction between physical law and the law +(_droit_) of intelligent beings. Doubtless the existence of men as well as +that of animals is limited by time. They both live and die; but the soul +escapes the necessities of material nature. + +The moment there is question of _right_, intelligence governs, reason +comes into play, and the science of right and wrong is appealed to as a +guide. Hence the _natural_ law of the human species is not the physical +law which all creatures obey. + +It was necessary for us to insist upon these principles. It was necessary +for us to show that there is a law independent of positive and local law, +a law which is not the expression of an arbitrary will, but an emanation +from the nature of things.(14) + +Hence come the features in common which we meet with everywhere, and the +variable forms which develop law in harmony with the special conditions of +each civil society. + +We must descend into the very depths of human nature to discover these +eternal and permanent laws; and if the mere effort of the mind should not +reach them directly, they might be discovered in the phenomena of the life +of nations. History affords us the counter-proof and confirmation of the +philosophical doctrine. + +The development of society does not afford a mathematical expression of +these higher truths. It gives them a form which is unceasingly modified in +the written law. The person who discovers in them nothing but an absolute +rule, looks upon the changes as evidences of caprice and error. He alone +understands the revolutions of things who knows their cause and the +necessity which produces them. + +Solon was right when he gave the Athenians not the most perfect laws, but +the best which they could bear. + +It is not in the attempts contemporary with the infancy of society, or +nearly so, that we are to look for the complete realization of the +precepts of the natural law; for principles obey the rule laid down by +Aristotle. "The nature of each thing is precisely that which constitutes +its end; and when each being has attained its entire development, we say +that that is its own proper nature."(15) + +The ideas of natural law are purified in proportion as society grows +enlightened and free; but the truth appears only successively in the +phases it passes through. It allows us to grasp one aspect of itself after +another, but does not surrender itself entirely, at any one moment, to the +investigations of the historian or the jurisconsult. + +History and philosophy interpenetrate and complement one another. + + + + +III. + + +The two schools, that of philosophy and that of history have met in our +day, in the field of law. Who is there that does not remember the great +and noble contest carried on, about the beginning of this century, between +two descendants of Frenchmen who had sought a refuge in Germany, and who +united in their own persons, and in so marvelous a manner, the different +aptitudes of the country they owed their origin to, and of the land that +gave them birth,--between Thibaut and Savigny? + +It would be difficult to find a scientific question of a higher character, +debated by champions more worthy to throw light upon it. + +The _Code Napoleon_ had appeared. It had, to use Rossi's happy expression, +transferred into law the social revolution produced by the destruction of +privilege. It was the practical formula expressive of the conquests which +had been made. + +The philosophy of the eighteenth century had previously inspired the +Prussian Code. And yet, it was on the question of codification that this +memorable controversy was carried on. The two principal combatants, while +manfully battling, the one against the other, continued to hold each other +in high esteem, and the profound study of law was developed in the midst +of the _melee_. + +We cannot delay long on this subject, nor analyze the arguments advanced +by Thibaut(16) and Savigny.(17) What interests us at present is not so +much the question debated, as the intellectual movement to which it gave +birth. Savigny sustained the ancient law, Thibaut attacked it. Numerous +and distinguished jurisconsults ranged themselves on the one side and the +other. A new school grew up which, with the most brilliant success, made +law throw light on history and history on law. + +The application of the historical method to the study of law was +productive of the most happy results. + +Without acknowledging it to themselves, the chiefs of the contending +parties were each obeying a political impulse. Savigny was by his birth +and his tastes carried into the camp of conservatism; Thibaut, led by his +convictions, into the liberal ranks. Nevertheless, the natural elevation +of their genius preserved them from all exaggeration. The glorious +defender of tradition preserved a liberal spirit, and the ardent advocate +of reform desired no upheaval. + +In what more nearly concerns the question with which we are now occupied, +Savigny--while he maintained that law was something contingent, human, +national; and while he brought out into relief the practical and exalted +character of its successive developments which introduced reform and +guarded against revolution--developments which, not confiding in the letter +of the written law, unceasingly feed the living and created law, that law +called in the energetic language of a great jurisconsult, a law _ecrit es +coeurs des citoyens_--is far from denying the importance of a high and +healthy philosophy which directs man in the uninterrupted labor to which +he is called, in the sphere of jurisprudence. + +Men can no more renounce law than language, the forms of which last they +have gradually modified in order to better translate their thoughts into +words. The legislator's task is the successive elaboration of obligatory +provisions. He will sometimes oppose and sometimes second the natural +progress of law; but, in doing so, it will ever be necessary for him to +ascend to the nature of things, and grasp their relations, if he would not +go astray in practice, or lose himself among the successive and partial +changes to which the illustrious Berlin professor would confine the +legitimate ambition of legislative power. To go beyond this, in an age +like ours, seemed to him to be a work of destruction. However, far from +denying the influence of thought, and therefore of philosophy, acting +within its sphere, Savigny invokes its fertile aid. + +Thibaut, on the other hand, with more confidence in the powers of the +spirit of modern times, did not believe a good codification to be +impossible. His starting point had been a cry for national independence. +He well knew how much veneration was due those institutions which were the +slow and progressive work of national genius, and what was the power they +possessed. He wished, therefore, to reform, not to abolish them. He well +understood that the greatness of the _Code Napoleon_ itself, and the +respect which it inspired were due to the fact that its roots ran deep +into the soil of the past, even while the modern idea it contained shone +like a bright light in the world of things. Hence, without contesting the +value of history, he refused to acknowledge its right to exclusive +reign.(18) + +The life and activity prevailing in the study of law, and the brilliant +successes that study has recently achieved, are due, in great part, to the +illustrious representatives of the historical school. We may add, here, +that the French historical school, which has so worthily inherited the +spirit of Montesquieu, has not achieved less in this direction than the +older German school. It has reconciled the opposing but not mutually +hostile, tendencies of Savigny and Thibaut. It has conscientiously +scrutinized facts to show their concatenation, and to allow their meaning +and bearing to be clearly grasped. A French jurisconsult, who is at the +same time our highest authority in the natural law, opened the way by his +excellent essays on the necessity of reforming the historical studies +applicable to law; on the influence of the legists on French +civilization(19) etc.; and by his prefaces, equal in value to whole works, +on hypothecation, sales, loans, partnership, charter-parties etc. He may +truly be said to have renewed the ancient and prolific alliance of history +and law. + +Instead of pursuing a pure abstraction, this historical school has +confined itself to the knowledge of the life of man and the evolution of +society. It has applied to law, with what success is well known, the +principle which has regenerated the social sciences, philosophy, letters, +history, Political Economy,--sciences which are, so to speak, different +provinces of one intellectual empire, which interpenetrate one another +without being confounded one with another, between which no jealous +barrier should be raised, and between which reciprocity of exchange should +be encouraged by the suppression of factitious duties, which have existed +only too long. + + + + +IV. + + +We need not dwell any longer on the character of the historical method as +applied to law, nor on the services it has already rendered. On this +point, there can be no two opinions. And, if any one wonders that we +should speak of it at all, in a work on Political Economy, we can only say +to him, that we have done so to call his attention to an instructive +precedent, and for the further reason that the same method is peculiarly +well adapted to the study of Political Economy. Its advantages are the +same here, its tendencies the same, and the same motives exist to induce +us to use it here. In describing the successive phases of the question in +the case of law, we have performed an important part of the task we had +imposed upon ourselves, of vindicating the employment of the historical +method, in the sphere of Political Economy. + +The study of history is the best and most powerful antidote against social +romances and ideal fancies. Francois Beaudouin was right when he said: +"_Caeca sine historia jurisprudentia_;" and we are very sure that, without +history as an element in it, Political Economy runs a great risk of +walking blindfold. + +The human mind has need of being able to know where it is at any moment, +surrounded, as it is, by so many roads, running in so many different +directions. It ought to account to itself for its progress, its deviations +from the right path, and for its mistakes.(20) History alone can throw any +light on questions which are not simply intellectual curiosities, but +which, rather, are most deeply concerned with the vital interests of +society. It confirms the noble teachings of philosophy, by showing how our +life is made up of one unchanging tissue of relations, and how man, even +if he may vary their colors, and change their design, cannot renew their +texture. + +It teaches us to admire nothing, and to despise nothing, beyond measure. +It enlightens us concerning questions of a very complicated nature. +Witnessing the evolutions of humanity, following the development of social +facts and theories, we better discern principles, and grow wary in +relation to the alchemists of thought, who imagine that society may be +made to undergo a transformation between the rising and the setting of the +sun. + +As there is a natural law, so, too, there are certain principles of +Political Economy which emanate from philosophy, and may be reduced to one +supreme principle; that of liberty and responsibility. The domain of +Political Economy is the _labor_ of generations. But we reject with all +our strength, the materialistic doctrine which, inexplicably confusing +matters, endeavors to assimilate ideas so distinct as intelligence and +things; and which would descend so low as to employ the dynamometer to +measure the creative force of man and its results, and which sees only +figures where there is a living soul. + +Man is an intelligent being, served by organs,(21) by _personal_ organs, +with which the Creator has endowed him, by giving him a body provided with +marvellous aptitudes, by _external_ organs which he finds in nature +subjected to his power. Man was created in the image of God, say the +Scriptures, and these words contain a deep meaning. He alone, of all +terrestrial beings, possesses a spark of divine intelligence. He alone has +been called to pursue the magnificent work of creation, by giving a new +face to a world to which he cannot add so much as an atom. + +_Labor_ is nothing but the action of spirit on itself and on matter.(22) +Hence its dignity and grandeur. Hence, also, the difficulties in the way +of economic studies; since, to consider them only as concerned with +questions of material production, is to forget that the products of +industry are made for man, not man for industrial products; to ignore the +close relationship between their fruitful investigations and the whole +circle of the moral sciences; to debase them and to mutilate them. + +From the moment that science concerns itself with man only, and the action +of the mind; from the moment that its end becomes not simply material +enjoyment, but moral elevation, the questions it discusses become indeed +more complex, but the answer, when found, is more prolific in results. +Wealth, then, is treated only as one of the forces of civilization. Other +interests than purely material ones occupy the first place. This +matter-of-fact philosophy which, according to Bacon's precept, seeks to +improve the conditions of life, bears in mind, that the most fruitful +source of material development lies in intellectual development. It humbly +recognizes that it is not the first-born of the family, and draws new +strength from this avowal. From the moment that it is the mind which +_produces_ and which governs the world, intellectual and moral perfection +become the cause and effect of material progress. "But seek ye first the +kingdom of God and his righteousness, and all these things shall be added +unto you." + +The increase of production, then, appears an instrument of elevation in +the moral order.(23) It is energy of soul, intelligence and manly virtue +which constitute the chief source of the wealth of nations; which create +it, develop it, and preserve it. Wealth increases, declines, and +disappears with the increase, decline and disappearance of these noble +attributes of the soul. + +Labor is the child of thought. Nothing happens in the external world which +was not first conceived in the mind. The hand is the servant of the +intellect; and its work is successful, beautiful or useful in proportion +to the activity and development of the intellect, and in proportion as the +just, the beautiful and the good exert their power over it. + +Production is, therefore, not a material, but a spiritual, work. How, +then, can acts and their morality be separated? How not understand that +the market of labor has its own distinct laws, and that education, even +from a material stand-point, becomes the highest interest and the most +important duty of society, since on it depends the efficiency of labor? + +From the time that, after a long series of years, the doctrine of +Christianity had permeated the law of the civilized world; from the time +that the teaching of Paul, that all men are children of one Father, took +form and body, and that the principle of the equality of all men before +their Maker, was supplemented by the doctrine and by the practice of that +equality before the laws, the thinking masses have endeavored to discover +the wherefore of their actions, and the why of their sufferings. They have +called the past to account, and inquired why they have obtained so limited +a share. + +The people, therefore, think; and it is, therefore, a matter of importance +that they should think aright. It is of importance, that they should be +guarded against fallacious Utopian promises. Henceforth, there is no +security for the stability of the world but in the contentment of minds. +There is no rest for mankind, unless men will understand the conditions of +their destiny; unless, instead of running, + + + "Toujours insatiable et jamais assouvis," + + +after the intoxicating cup of material enjoyment--for wants not governed by +the intellect and the heart are infinite in number, and the gratification +of one gives birth to another--they submit to the law of sacrifice, and +give play to the noblest faculty with which the Creator has endowed us, +moral empire over self. + +We shall meet on this road, hard of ascent, not only peace of soul, but +goods, more real and more numerous, than those with which the allurements +of error would dazzle our eyes. The greatest obstacles to be overcome are +not material ones, but moral difficulties. As Franklin says, in substance, +he that tells you you can succeed, in any way but by labor and economy, is +a quack. + +But labor is more productive in proportion as it is more intelligent, as +hand and mind keep pace with each other, as good moral habits generate +order and voluntary discipline. + +Economy is sacrifice, binding the present to the future, widening the +horizon of thought, inspiring foresight, lengthening the lever of human +activity, by providing it with new instruments. + +Life ceases to be a worry about how the body shall be sustained, and the +material world becomes the shadow of the spiritual. The former is made to +serve the latter, and man's free effort lifts him into a higher region of +thought, and into a larger field of action. The more mind there is put +into a piece of work, says Channing, the more it is worth. + +We, men of to-day, are lookers-on at a marvelous spectacle. Steam furrows +the earth. Industry has taken an immense start. Mechanical force bends the +most rebellious materials. Chemistry, physics and the natural sciences are +discovering a new world. But whence all this? What is the principle of +this new life? We answer: intellectual and moral progress. Mind has grown; +the soul has been expanded. God has permitted man to be free, and +furnished him with the means to be so. + +Thus man, as Mignet has said, becomes that mighty creature to whom God has +given the earth for the vast theater of his action, the universe as the +inexhaustible object of his knowledge, the forces of nature for the +growing service of his wants, by allowing him, by ever increasing +information, to obtain an ever increasing amount of well-being. + +Man is free.--1789 put in action the sublime precept of the gospel. He +holds his destiny in his own hands. But the rights which he enjoys impose +new duties on him. If _equality_ be the sentiment which predominates in +our day, we should take care not to confound it with the leveling of +Communism. Nor is it externally to us, but within ourselves, that it +should be developed, by intellectual and moral culture. + +History preserves the student from being led astray by a too servile +adherence to any system. It exposes the folly of the "social contract," +and of the idyllic dreams of the advantages of savage life. It shows that +nature, instead of being prodigal of her treasures, distributes them with +a niggardly hand, and that it is necessary to conquer her by labor, +intelligence and patience before we can control her. + +It shows us human liberty growing stronger every day, thanks to moral and +intellectual progress, supported by the two powerful props of property, +the complement of man, the material reflection of his spiritual power; and +capital, the fruit of abstinence, the symbol of moral power and the result +of enlightened activity. + +History walks with a firm step, because it feels secure in a knowledge of +the laws of human nature, and in its experience of the successive +manifestations of social life. Instead of the vagueness of ideal +conceptions, it allows us to grasp and to appreciate what is real in life. +It does not confine itself to the study of man. It makes us acquainted +with _men_, whose wants extend and are ennobled in proportion to the +perfection of their faculties. The feelings and the intellect are +simultaneously developed in man. The savage is the most egotistical of +men. + +Hence, we believe that Political Economy cannot dispense with the services +of morals and philosophy, of history and law; for these are branches of +one common trunk, through all of which the self-same sap circulates. + + + + +V. + + +The isolation of the theory of Political Economy is peculiar to our own +day. In more remote times, we find this study confounded with the other +moral sciences, of which it was an integral part. When the genius of Adam +Smith gave it a distinct character, he did not desire to separate it from +those branches of knowledge without which it could only remain a bleached +plant from the absence of the sunlight of ethics. + +We must renounce the singular idea,(24) that thousands of years could pass +away without leaving any trace of what enlightened men had thought and +elaborated in the matter of Political Economy, among so many nations, and +that people should never have thought of cultivating this rich +intellectual domain, while in every other direction, it is easy for us to +ascend by a road already cleared up to the most remote antiquity. + +It has already been acknowledged, that the _classic domain_, fertilized by +intellectual culture on a large scale and on a small one, was exceedingly +rich in valuable indications, although they do not present themselves +under the distinct form, which later affected the different branches of +public life. + +As to the pretended _primitive simplicity_ of the middle ages, which it is +claimed, prevailed during that period, a species of economic vegetation, +those who maintain it forget the long series of communistic theories +which, at near intervals, found expression in many a bloody struggle, and +whose repression required the combined efforts of Church and State. + +Doubtless, it is not in their modern forms that the elements of +politico-economical science are to be found, in the past. But when we +succeed in reuniting the scattered and broken parts; when we have made our +way into the customs, decrees, ordinances, capitularies, laws and +regulations of those times; when, so to speak, we come, unaware, upon the +life of nations, in the most ingenuous and confidential documents which +reflect it most faithfully because most simply, we may well be astonished +at the results obtained. Where we expected, perhaps, to find only +erudition, we reap a rich harvest of lessons which are all the more +valuable for being disinterested. + +Legislative and administrative acts frequently develop real economic +doctrines. It is easy to discover in them the onward course of a theory +which plunges directly into practical applications. + +What results might we not expect from these efforts, if the genius of +investigation and of divination, which has so elevated historical studies +in our day, should have an observing and penetrating eye in this +direction! How limited was the field on which Guerard erected the +scientific monument which he has left us in his _Polyptique d'Irminon_; +and how precious are the lessons he leaves us, since we have here to do, +not with the history of professed doctrines or unlooked-for events, but +with the historical development of economic society which shows us the +living march of principles. + + + + +VI. + + +Political Economy is not, as we have just said, a new science. It has been +a distinct science only a short time. Until the eighteenth century, it was +confounded with philosophy, morals, politics, law and history. But it does +not follow, that, because it has grown so in importance, as to deserve a +place of its own, its intimate relationship with the noble studies which +had until then absorbed it should cease. There is another consequence also +to be deduced from this. From the moment that Political Economy ceases to +be considered a new science, it finds a long series of ancestors behind +it, since it is compelled to investigate a past to which so many bonds +unite it. This duty may increase its difficulties, but, at the same time, +it singularly adds to the attractions of a study which, instead of +presenting us only with the arid deductions of dogmatism, comes to us with +all the freshness and all the color of life. + +We may allow those who make Political Economy simply a piece of arithmetic +to ignore these retrospective studies and their importance; for +mathematics has little to do with history. But it is otherwise with the +life of nations. These would discover whence they come, in order to learn +whither they are tending. + +They are not obeying a vain interest of curiosity, as J. B. Say supposed, +when, in sketching a short history of the progress of Political Economy, +he said: "However, every kind of history has a right to gratify +curiosity." It is a thing to be regretted, that this eminent thinker could +thus ignore one of the essential elements of the science to which he +rendered such great and unquestioned services. A sense for the historical +was wanting in him. "The history of a science," he writes,(25) "is not +like the narration of things that have happened. What would it profit us +to make a collection of absurd opinions, of decried doctrines which +deserved to be decried? It would be at once useless and fastidious to thus +exhume them in case we perfectly knew the public economy of social bodies. +It can be of little concern to us to learn what our predecessors have +dreamed about this subject, and to describe the long series of mistakes in +practice which have retarded man's progress in the research after truth. +Error is a thing to be forgotten, not learned." As if that which was once +to be found in time is not to-day to be found in space; as if there ever +was an institution that did not have its _raison d' etre_ and had not +constituted a resting place in the search after a higher truth or of a +more intelligent and salutary application of an old one! There are a great +many actual systems and a great many present facts which can be understood +only by the help of history; and how frequently would not an acquaintance +with history serve to keep us from taking for marvelous inventions the +antiquated machinery of other ages, whose only advantage and only merit +are that they have remained unknown. How much of the pretended daring of +innovators has been old trumpery which the wisdom of the times had cast +off as rubbish. Besides, as Bacon has said: "Verumtamen saepe necessarium +est, quod non est optimum." + + + + +VII. + + +It is not the result of mere chance that the greatest economists have been +both historians and philosophers. We need only mention Adam Smith, Turgot, +Malthus, Sismondi, Droz, Rossi and Leon Faucher. It is too frequently +forgotten that the father of modern Political Economy, Adam Smith, looked +upon the science as only one part of the course of moral philosophy which +he taught at Glasgow, and which embraced four divisions: + +1. _Universal theology._--The existence and attributes of God; principles +or faculties of the human mind, the basis of religion. + +2. _Ethics._--Theory of the moral sentiments. + +3. _Moral principles relating to justice._--In this, as we learn from one +of Adam Smith's pupils in a sketch preserved by David Stewart, he followed +a plan which seems to have been suggested to him by Montesquieu. He +endeavored to trace the successive advances of jurisprudence from the most +barbarous times to the most polished. He carefully showed how the arts +which minister to subsistence, and to the accumulation of property, act on +laws and governments, and are productive of advances and changes in them +analogous to those they experience themselves. + +In the first part of his course, as we learn from the same authority, he +examined the various political regulations not founded on the principle of +justice but in expediency, the object of which is to increase the wealth, +the power and the prosperity of the state. From this point of view, he +considered the political institutions relating to commerce, finance, the +ecclesiastical and military establishments. His lectures on the different +subjects constitute the substance of the work he afterwards published on +the wealth of nations. A pupil of Hutcheson, Adam Smith always applied the +experimental method, "which, instead of losing itself in magnificent and +hazardous speculations, attaches itself to certain and universal facts +discovered to us by our own consciousness, by language, literature, +history and society."(26) Before taking the professorship of philosophy, +Adam Smith had taught belleslettres and rhetoric in Edinburgh, in 1748. He +had written a work on the origin and formation of languages; and it was +because he had profoundly studied the moral sciences that it was given to +him to inaugurate a new science and to become a great economist. Mr. +Cousin has laid great stress on Adam Smith's taste and talent for history. +"Whatever the subject he treats, he turns his eyes backward over the road +traversed before himself, and he illuminates every object on his path by +the aid of the torch which reflection has placed in his hand. Thus, in +Political Economy, his principles not only prepare the future but renew +the past, and discover the reason, heretofore unknown, of ancient facts +which history had gathered together without understanding them. It is not +saying enough to remark that Adam Smith possessed a great variety of +historical information; we must add that he possessed the real historical +spirit." Thanks to this eminent faculty of his, the Glasgow philosopher +acquired great influence over minds. In 1810, when the French empire had +reached the zenith of its greatness, Marwitz wrote: "There is a monarch as +powerful as Napoleon: Adam Smith." We need not recall Turgot's historical +researches. + +Malthus' chief title to distinction, his work on Population, is as much a +historical work as a politico-economical one; and it is not sufficiently +known that he was professor of history and Political Economy in the +college of the East India Company at Aylesbury. + +We need say no more on this subject. The works of the other writers whom +we have mentioned are too well known to permit any one to think that they +excluded history and moral science from the study of Political Economy. +Hence the school which has risen up in Germany,(27) and which is +endeavoring to do for Political Economy what Savigny, Eichhorn, Schrader, +Mommsen, Rudorff, and so many other illustrious scholars have done for +jurisprudence, cannot be rightly accused of rashness. It has done nothing +but unfurl the noble banner borne by the most venerated masters of the +science. + + + + +VIII. + + +At the head of this school stands William Roscher, professor of Political +Economy at the University of Leipzig, whose excellent work, The Principles +of Political Economy, in which he follows _the historical method_, we have +just translated. William Roscher is (1857) scarcely forty years of age. He +was born at Hanover, October 21, 1817. His laborious and simple life is +that of a worthy representative of the science. "You ask me," he wrote us +recently, "to give you some information concerning the incidents of my +life. I have, thank God, but very little to tell you. Lives whose history +it is interesting to relate are seldom happy lives." He confined himself +to giving us a few dates which are, so to say, the landmarks of a career +full of usefulness. Roscher, from 1835 to 1839, studied jurisprudence and +philology at the universities of Goettingen and Berlin. The learned +teachers who exercised the greatest influence on his intellectual +development were the historians Gervinus and Ranke, the philologist K. O. +Mueller and the Germanist Albrecht. It is easy to see that he went to a +good school, and that he profited by it. He was made doctor in 1838; +admitted in 1840 as _Privat-docent_ at Goettingen; appointed in 1843 +professor extraordinary at the same university, and called in 1844 to fill +the chair of titular professor at Erlangen. Since 1848 he has acted in the +same capacity in the University of Leipzig, where he was for six years +member of the Poor Board, where he teaches also in the agricultural +college. His fame has grown rapidly. Many of the German universities have +emulated one another for the honor of possessing him, but he has not been +willing to leave Leipzig. His first remarkable work was his doctor's +thesis: _De historicae doctrinae apud sophistas majores vestigiis_, written +in 1838. In 1842, he published his excellent work, which has since become +classical: "The Life, Labors and age of Thucydides."(28) From that time, +important works, all bearing the stamp of varied and profound scientific +acquirements, and of an erudition remarkable for sagacity and elegance, +have followed one another without interruption. In 1843, he treated the +question of luxury(29) with a master hand, and laid the foundation of his +great work--only the first part of which has thus far appeared--at the same +time tracing on a large scale the programme of a course of Political +Economy according to the historical method.(30) In 1844, he published his +historical study on Socialism and Communism,(31) and in 1845 and 1846, his +ideas on the politics and the statistics of systems of agriculture. He is, +besides, author of an excellent work on the corn-trade;(32) of a +remarkable book on the colonial system;(33) of a sketch on the three forms +of the state;(34) of a memoir on the relations between Political Economy +and classical antiquity;(35) of a work of the greatest interest, on the +history of economic doctrines in England in the sixteenth and seventeenth +centuries--a work full of the most curious researches;(36) of a book on the +economic principle of forest economy,(37) and lastly, of the great work, +the first part of which we have translated, under the title of The +Principles of Political Economy, and which is to be completed by the +successive publication of three other volumes, on the Political Economy of +Agriculture, and the related branches of primitive production, the +Political Economy of Industry and Commerce, and one on the Political +Economy of the State and the Commune. This work, when completed, will be a +real cyclopedia of the science.(38) + +Side by side with William Roscher, we must mention a young economist, +Knies, formerly professor at the University of Marburg, but whom political +persecution compelled to accept a secondary position at the gymnasium of +Schaffhausen, for a time, and who fills, to-day, in the University of +Freiburg, in Breisgau, a position more worthy of his great talent. We +hope, in a work which we intend to publish, on Political Economy in +Germany, to make the public acquainted with the works of this writer. They +deserve to attract the most serious attention. We know of few works which +equal his Political Economy, written on the historical method.(39) We +shall also have something to say of another economist, formerly professor +at Marburg, a victim, also, of the power of the elector of Hesse, +Hildebrand, now professor at the University of Zurich. His +National-OEkonomie(40) is a book replete with interest, and we have nowhere +met with a better criticism of Proudhon's system, than in its pages. If +the new school had produced but these three men, it would still have left +its impress on the history of the science. + +Other works, no less important, will claim our attention in the book to +which we have already devoted many years of labor. If we carry out our +intention, we shall review the works of a great many scholars, of great +merit, whose names only are, unfortunately, known outside of Germany. The +works of Rau, of Hermann, of Robert Mohl, of Hannsen, Helferich, Schuetz, +Kosegarten, Wirth etc., are a rich mine, from which we hope to draw much +valuable information. Nor shall we neglect the original productions of J. +Moser, the Franklin of Germany, nor the quaint, but sometimes striking, +ideas of Adam Mueller. Lastly, our learned friend, Professor Stein of +Vienna, will afford us an opportunity to show forth the merit of important +and extensive works, animated by the philosophic spirit. For the present, +we must confine ourselves to a view of the application of the historical +method to Political Economy. + +There is a rather widespread prejudice existing against this order of +works, a souvenir of the struggle carried on formerly, between Thibaut and +Savigny, which inclines people to suppose that the historical school leans +towards the political doctrines of the past, and that it is hostile to the +liberal spirit of modern times. Nothing can be farther from the truth. The +names of Roscher, Knies and Hildebrand are sufficient to remove this +prejudice. Their works, inspired by an enlightened love for progress, do +not allow of such a misconstruction. The historical point of view does not +consist in the worship of the past, any more than in the depreciation of +the present. It does not view the succession of phenomena as a fluctuation +of events without unity or purpose. On the contrary, the historical method +harmonizes wonderfully well with the wants of genuine progress. The +changes accomplished bear testimony to the free and creative power of man, +acting within the limit permitted to it by the degrees of intelligence +reached, of the development of morals, and of individual liberty. The +philosophy of Political Economy, which is the result of this calm +teaching, free from the passions of party--for science acknowledges no +adherence to party--is like that of law, opposed to the, more or less, +ingenious or rash dreams, which build the world over again in thought. In +showing how, at all times, humanity has understood and applied the +principles which govern the production of wealth, it may say, with the +Roman jurisconsult: "Justitiam namque colimus ... aequum ab iniquo +separantes ... veram nisi fallor philosophiam, non simulatam affectantes." +"The human mind," says Rossi, "endeavoring to attain to a knowledge of +itself, estimating its strength, taking a method, and applying it with a +consciousness of its mode of procedure to the knowledge of all things; +such is philosophy. Without it, there is no science in any branch of human +knowledge." Thus do we rise, with the aid of a critical mind, by careful +investigation and great sagacity, to the truths founded on observations +made. + + + + +IX. + + +There is another method, which, starting out from principles, evident of +themselves, develops science by way of conclusions drawn, after the manner +of the geometricians. The apparent severity and simplicity of this method +are very seductive, and very dangerous, when we have to deal not with +figures, but with men; when the varied, complex and delicate exigencies +which accumulate when human nature comes into play do not exactly square +with the formula; and, when instead of dealing with abstractions, we have +to tackle realities. One of our venerated teachers, the illustrious Rossi, +thought he might remove the difficulty by drawing a distinction between +_pure_ Political Economy and _applied_ Political Economy. It is not +without a certain amount of hesitation that we dare differ with so high an +authority; but confess we must, this distinction is far from satisfying +us. The doubt it has left in our mind has been the principal cause which +has inclined us to the historical method. "Rational Political Economy," +says Rossi, "is the science which investigates the nature, the causes and +the movement of wealth, by basing itself on the general and constant facts +of human nature, and of the external world. In applied Political Economy, +the science is taken as the mean. Account is taken of external facts. +Nationality, time and place play an important part." + +Let us for a moment accept these definitions; what is the consequence? +That there are two sciences, the one of which, purely speculative, has +more to do with philosophy than with the permanent conflicts which agitate +the world; the other of which could not alone furnish us with rules in +practice, nor with a formulary for the measures to be taken in a given +case, since such a pretension would be both vain and ridiculous, but which +would inform the practical judgment of men charged with the solution of +the numberless difficult and complicated questions which come up every +day. If pure science refuses to interfere in the affairs of this world; +if, as the learned originator of the doctrine we are just now considering +gives us to understand, it would compromise the solution of questions by +the intoxication of logic, and the ambition of perfect system; if, +consequently, it is to be worshipped like a motionless and inactive +divinity, how could this platonic satisfaction suffice us? Would not the +opponents of economic doctrines be disposed to acknowledge all the +principles, provided the consequences to be drawn from them were left to +themselves; and would they not come to us, bristling with arguments drawn +from the circumstances of nationality, time and space, to refute the +possibility of applying pure science? + + + On ne vaincra jamais les Romains que dans Rome. + + +This, therefore, is the ground we must explore. We must develop applied +Political Economy which takes cognizance of external circumstances. To do +this, no one will question that the best and most decisive of methods is +the historical, which concerns itself with time, space and nationality, +and which leads to proper reformation where reformation is wanted. + +Moreover, principles will be no less firmly established by historical +induction than by dogmatic deduction, and, moreover, science will be +inseparable from art. We are not of those who deny principles, or who +challenge them. What we desire is, that they should not be worshiped as +fetiches, but that they should enter into the very life-blood of nations. + +Further: the abstract deductions of pure science do not leave us without +disquietude, since they treat man much more like a material than like a +moral force. Under the vigorous procedure of speculative mathematics, man +becomes a constant quantity for all times and all countries, whereas he +is, in reality, a variable quantity. All the elements put in play are +ideal entities, the reverse of which we find in poetry, where + + + Tout prend un corps, une ame, un esprit, un visage! + + +and where everything loses the character of life, and is transformed into +inanimate units. Man is something different from the sum of the services +he may be made to render, and from the sum of enjoyments which may be +procured for him. We must not run the risk of lowering him to the level of +a living tool; and from the moment that we are required to take his moral +destiny into account, what becomes of abstract calculation? + + + + +X. + + +We have been wrong, says Rossi, in reproaching Quesnay for his famous +_laissez faire, laissez passer_, which is pure science. We, also, are of +opinion that the reproach was ill founded, for it proceeded from a wrong +conception of the principle itself. But it seems to us that, far from +condemning this doctrine in its serious application, the historical method +may serve to explain and to justify it. Employing less of rigidity and +dryness in form, it reaches consequences more in harmony with social life. +But it is not to be imagined that we do not meet in this way with many +ancient and glorious precedents. The great principles of industrial +liberty, as well as those of commercial liberty, originated in France. +Forbonnais was right when he said: "We may congratulate ourselves on being +able to find, in our old books and ancient ordinances, wherewith to +vindicate for ourselves the right to that light which we generally +supposed to have been revealed to the English and Dutch before us." The +further Forbonnais carried his researches into our annals, the greater the +number of traces of opposition to the prejudices in favor of exclusion and +monopoly, so long made principles of administrative policy, did he +find.(41) + +The famous axiom, _laissez faire_, and _laissez passer_, the subversive +tendencies of which people affect to condemn, was not invented by Quesnay. +He only gave a scientific bearing to what was the inspiration of a +merchant called Legendre. The latter, consulted by Colbert on the best +means of protecting commerce, dropped these words which have since become +so celebrated. + +We must not lose sight of their real meaning, nor misunderstand the +intention which dictated them. What Quesnay said was this: "Let everything +alone which is injurious, neither to good morals, nor to liberty, nor to +property, nor to personal security. Allow everything to be sold which has +been produced without crime." And he added: "Only freedom judges aright; +only competition never sells too dear, and always pays a reasonable and +legitimate price." Far from being the absence of rule, liberty is the rule +itself. To _laisser faire_ the good is to prevent evil.(42) + +There is need of institutions to complete the exercise of the independence +acquired by labor, and of laws to regulate that exercise. The _laisser +faire_ and _laisser passer_ of economists is, in no way, like the absolute +formula, which some have denounced and others sought to utilize, as +relieving authority of all care and all intervention. + +To understand this maxim aright, we must go back to the oppressive regime +of ancient society. Quesnay's formula was, first of all, a protest against +the restraints which hampered the free development of labor. But it did +not tend to abrogate the office of legislator, nor to deprive society or +the individual of the support of the public power which watches over the +fulfillment of our destiny. + +It may have seemed convenient to find in the gravity of a +politico-economical principle, an excuse for the sweets of legislative and +administrative _far niente_, but it is generally conceded that the role of +authority has grown, rather than diminished, under the regime of the +liberty of labor. The task is, in our days, a hard one, both for +individuals and nations; for liberty dispenses its favors only to the +masculine virtues of a laborious and an enlightened people. + +Liberty is not license. It refuses to bend under the yoke, but it submits +to rule. The mission of authority is not to constrain, but to counsel; not +to command, but to help accomplish; not to absorb individual activity, but +to develop it. It does not pretend to raise a convenient indifference on +the part of government, nor the indolent withdrawal of all protective +influence to the dignity of a principle. To say, on the other hand, that +the _laisser faire_ and _laisser passer_ of the economists means: Let +robbery alone; let fraud alone etc., is to amuse one's self playing upon +words, and to argue in a manner unworthy of any serious answer. Under +pretext of painting a picture of economic doctrine, we are given its +caricature. Such has never been the system, to the elaboration of which +the purest hearts and noblest intellects have devoted themselves. A +negation does not constitute the science of Political Economy. + +It is very convenient to inclose humanity within a circle of action, drawn +with rigorous precision, and to govern movements seen in advance. But such +artificial conceptions mutilate the activity of man. To guarantee man all +liberty, and prevent its abuse--such are the data of the problem. The work +is a great and difficult one. Far from yielding in point of elevation to +ideal systems, it is superior to them in extent and variety of +combinations. Those who ignore its bearing, yield, it may be, to a certain +indolence of intellect. Restrained within its natural limits, the famous +_laisser faire_ and _laisser passer_ of the Physiocrates deserves even +to-day our respect and our confidence. It ought to be preserved in the +grateful memory of men, side by side with the maxim which Quesnay +succeeded in having printed at Versailles, by the hand of Louis XV +himself: "Pauvres paysans, pauvre royaume; pauvre royaume, pauvre +souverain."(43) + + + + +XI. + + +To return to the question of method. Rossi made use of an ingenious +example to explain his thought:(44) "Are," he inquires, "these deductions +[of pure science] perfectly legitimate; are these consequences always +true? It is incontestably true that a projectile, discharged at a certain +angle, will describe a certain curve; this is a mathematical truth. It is +equally true, that the resistance offered to the projectile by the medium +through which it moves modifies the speculative result in practice, to +some extent; this is a truth of observation. Is the mathematical deduction +false? By no means; but it supposes a vacuum. I hasten to acknowledge it. +Speculative economy also neglects certain facts and leaves certain +resistances out of account." Now, from the moment that we have to deal +with human interests, it is not possible to suppose a vacuum, to neglect +the most vulgar facts, and the most common instances of resistance, nor to +lose one's self in abstraction. The correctives of applied Political +Economy either may not wipe out this original sin, or else they run great +danger of covering up the principles themselves. In ballistics, again, we +may measure the resistance which the medium in which we are obliged to +operate, makes the force of impulsion and the target both obey the same +law, and yield to the same process of calculation. But is it thus when you +touch upon man's innermost and most sensitive part? Is there not danger +that the hypotheses may be deceitful, and that you may be accused of +toiling in a vacuum? We well know the solid reason that may be opposed to +sarcasm of this nature; but is it expedient to lay one's self open to it? + +Moreover, the consequences are not great enough to warrant us to expose +ourselves to the danger. The principles of pure science are very small in +number. They might even, be easily reduced to one, of which M. Cousin has +been the eloquent interpreter--human liberty. This liberty has no need of +Political Economy to shine with the luster of evidence; nothing can +prevail against it. We can prove that it is as fecund as it is +respectable; but if the science of wealth should endeavor to demonstrate +the contrary, the primordial bases of society, liberty, property and the +family would not be less sacred nor less necessary, for they are the right +of humanity. They could not be put aside, even under pretext of any +mechanism which would claim to produce more.(45) These sovereign +principles of economy flow from the moral law, and they have no reason to +dread the power of facts, for the prosperity of nations depends on the +respect with which they are surrounded and the guarantees by which they +are protected. + +We have spoken of the moral law; and, indeed, in our opinion, it is +impossible to banish it from the domain of public economy. Any other point +of view seems to us too narrow. And when we see eminent men go astray in +the pursuit of an ideal which fails to take the human soul into account, +and which finds nothing but equations where there are feelings and ideas, +we cannot help thinking that they are unfaithful to the thought of the +founder of the science, Adam Smith. Man is not simply a piece of +machinery. He does not blindly submit to external impulse. Rather is he +himself, the greatest of impulses. But to govern things, he must first +learn to conquer himself. Personal interest is the powerful motive which +he obeys. Man does not live alone, in a state of isolation, in the world. +_Vae soli!_ He lives in society and profits by the relations which he forms +with other beings, intelligent like himself, and for whom he has a natural +feeling of sympathy. + +The good that comes to them yields satisfaction to him, and the evil that +befalls them falls on him likewise. He cannot turn back entirely upon his +own personality. Besides his own interest, he feels and shares another +interest--the interest of all. Personal interest is perfectly legitimate. +The love of self cannot be condemned. The Savior himself has enjoined us +to love our neighbor as ourselves. To love him more than ourselves is a +very high and beautiful virtue. It is the self-abnegation which inspired +Christian heroes. But heroism is rare, and cannot be imposed, nor taken, +as a rule. Personal interest is a powerful stimulant, and the superior +harmony of social relations makes it contribute to the general good. + +What must be condemned is a fatal deviation of this sentiment which +destroys its effect and narrows its actions. What we need to prevent is +the degeneration of personal interest into an egotism which parches, +instead of fertilizing, and which compromises the future by the exclusive +search after present advantage; for egotism is short-sighted. On the other +hand, the broader and more generous feeling which inclines us to +sympathize with our fellow beings in their sorrows, and to unite our +destiny to theirs; that is, the feeling of the general interest, has a +limit too. + +It would be falsified if it absorbed the individual; if it destroyed the +most powerful motive-force by drying up the abundant source of activity; +if it attacked moral energy by enervating responsibility; if it extended +the circle of results obtained to such an extent that scarcely any one +should feel the rebound. + +The evil produced by egotism, that sad travesty of personal interest, +appears under a form quite as formidable when the general interest takes +the form of communism. The cooeperation of personal interest and of the +general interest is always necessary, both for individual profit and +social advantage. There is as much danger in annihilating the individual +as in exalting him. History furnishes us with memorable examples of this. +It does not allow us to go astray in the narrow ways of a peevish and +jealous personality, nor to lose ourselves in the vague labyrinth of a +chimerical and false communism. The latter would destroy what constitutes +the power and dignity of man. It would wipe out the most prominent +features of his noble nature, by destroying the support of energy and +activity and the food of moral force. + + + + +XII. + + +But, we are told, Political Economy is only the science of selfishness; +Adam Smith is the prophet of individualism; grow rich _per fas et nefas_ +is its ultimate teaching. Such a judgment is evidence of much levity and +little enlightenment. How could the man who conceived the study of human +interests on so large a scale, the philosopher who acknowledged Hutcheson +as his master and gave his ideas a still more expansive character, be the +apostle of egotism; and how can the science which he founded be its +gospel? There is here an error of fact and a defect of appreciation. +Hutcheson had based moral philosophy on the feeling which, according to +him, engendered all the other virtues, on benevolence, which is +disinterested, busied with the welfare of others, with the public weal and +the general interest. Adam Smith went further, and sought to base it on a +still more energetic feeling, on sympathy. + +The first sentence of his Theory of the Moral Sentiments, which is a full +resume of his theory, is as follows: "How selfish soever man may be +supposed, there are evidently some principles in his nature which interest +him in the fortune of others, and render their happiness necessary to him, +though he derives nothing from it, except the pleasure of seeing it." And +this is no empty declaration on his part. It is the thought which of all +in his book is nearest to his heart; and hence he energetically assails +those philosophers who look upon self-love and the refinements of +self-love as the universal cause of all our sentiments, and seek to +explain sympathy by self-love. + +La Rochefoucauld, Mandeville and Helvetius never met with a more +determined or energetic adversary. Nowhere have the sweet and amiable +virtues, such as ingenuous condescension, indulgent humanity, and the +respectable and severe virtues, such as disinterestedness and self-control +which subject our movements to the requirements of the dignity of our +nature, been better understood or interpreted. Adam Smith is the +philosopher of sympathy.(46) His theory triumphs over the cowardly and +shameful egotism which concentrates the moral life of the individual in +himself, and separates it from the life of the human race of the _outre_ +stoicism which refuses the aid of sentiment to reason.(47) According to +him, the law of private morals is sympathy; the law of natural +jurisprudence, justice; the law of the production of wealth, free labor. +But while he defended this principle with energy, he did not become guilty +of a real recantation by worshiping the idol he had just overthrown. He +would have been culpable of the strangest of all contradictions if he had +made the vice which he had just lacerated the very pivot of another part +of his teaching. + +We regret that this essay, which has already very much exceeded the limits +we assigned it in the beginning, will not permit us to reproduce here +Knies' beautiful demonstration, in which he so learnedly and eloquently +vindicates Adam Smith from this strange imputation, thereby placing +Political Economy on its true basis, the basis of morals, by removing in a +decisive way, all pretext of error and all means of subterfuge. This part +is one of the best features in his most excellent work on "Political +Economy, from the historical Point of View." We shall return to this +matter. + + + + +XIII. + + +What is there that political economists have not been charged with? They +have been accused, above all, of a cold heartedness and cruelty, and the +sentence passed on them has been resumed in these words: "Political +Economy has no bowels!" Indeed, the representative of the science, who has +been most attacked and who has been held up as a picture of impassible +insensibility; on whom have been heaped the most bloody outrages, is +Malthus. Let us hear him. He tells us in his work on Political Economy, +that if a country had no other means to grow rich, except by seeking for +success in the struggle with other countries, at the cost of a reduction +of the wages of labor, he would unhesitatingly say: Away with such riches; +that it is much to be desired that the working classes should be well +remunerated, and this for a reason much more important than all the +considerations relating to wealth; that is, the happiness of the great +mass of society. And he goes on to say, that he knows nothing more +detestable than the idea of knowingly condemning the laboring classes to +cover themselves with rags, to lodge in wretched huts, to enable us to +sell a few more stuffs and calicoes to foreign countries. Certain it is, +that no defender, however determined, of the laboring classes, has said +anything stronger or more deeply felt. The reason is, that nothing was +more foreign to Malthus' ideas than the systematic rigidity of +mathematical theories of wealth; that, a minister of the Gospel, he had +meditated on its high precepts. His whole doctrine is based on the moral +idea. "He was profoundly convinced that there are principles in Political +Economy which are true only in as far as they are restricted within +certain limits. He saw the principal difficulty of the science in the +frequent combination of complicated causes, in the action and reaction of +causes on one another, and in the necessity of setting limits or making +exceptions to a great number of important propositions." Here we are ever +brought back to the undulating ground of living science, instead of having +to follow the rectilineal way traced out by the dead letter. We are always +driven back, whatever may be pretended to the contrary, to the realities +of which history alone possesses the secret. The idea of wealth cannot +absorb everything when there is question of judging and enlightening men. +To do this, it is necessary to know the various phases of social +housekeeping, what nations have thought of economic interests which have +never ceased to interest them greatly, what they have attempted and what +they have attained. + +Hence, we must turn over the leaves of the book of the past, and study its +economic aspect, as we have studied its political and literary aspect. We +must follow living nations through their divers periods of development, +and fathom the causes of the destruction of those that are dead. When we +are dealing with the comparative study of the economic destinies of +nations, our investigations are limited to a small number of individual +nations--a further reason not to omit any, and above all, to scrutinize, as +an anatomist would with his scalpel, the principle of life of those which +are no more. We may, by accounting to ourselves for the immense variety of +phenomena which are brought to light by the _application_ of principles to +facts, and in which nothing is absolute or permanent, in which, on the +contrary, everything is relative and successive, acquire that sureness of +touch and correctness of vision which are among the most valuable +conquests of science. + +It would be a mistake to suppose that theory simplifies practical +solutions. Far from providing us with a sort of formulary, it teaches us +to put our finger on a number of difficulties. It brings to the surface +the many aspects and fertile and varied considerations, the examination of +which is the mission of the real statesman and legislator. In this way, +the action of thought and the power of the moral idea are revealed with +most _eclat_. Man ceases to be an inert element, and manifests himself as +a sensible being, and the sublime thought of Pascal: "Humanity is like one +man who lives and learns always," is verified by the result. The wish to +violently abdicate the past, it would be vain and rash to attempt to +realize. The lessons it transmits to us are as instructive as the picture +it unrolls before our eyes is attractive. We have no longer but to see and +hear, to be cured of the most generous impatience with what is, and to +retreat from the most perilous attempts. + + + + +XIV. + + +The unvarying testimony of ages affirms the continued and gradual +amelioration of man by individual energy and moral thought.(48) Want and +suffering have urged him forward. Foresight, labor, sacrifice and virtue +have in part redeemed him. No right has been lessened or usurped, and +every step in civilization has been a step in the way of freedom. Instead +of making the latter responsible for a material and moral wretchedness +which it is called upon to cure, we may prove, that, in proportion as real +liberty and legal guarantees increase, evil diminishes. + +We do not desire to yield to a convenient optimism, and deny the +sufferings which weigh only too heavily on the world. We are far from +having reached the end assigned to our efforts; but let not the hope we +entertain of further progress blind us to that which has already been +accomplished. This latter shows us that we are on the right road, and that +we have not done unwisely in giving free rein to the human faculties. +Sudden changes are made only in theaters. In the real world, the march of +progress is slow and laborious. It may be accelerated by a happy hit; but +it would be vain to try to hurry it. + +Man still suffers. No one desires to deny the evil, but only to estimate +its extent. Yet it cannot be gainsaid that its fatal empire is narrowing +instead of enlarging. Especially is it the progress accomplished in the +higher regions of intellect and of the feelings which here exerts its +beneficent influence. On our moral greatness depends our material power. +The elevation or debasement of character, the energy or debility of the +will--such is the first source of good or evil. The world, a Chalmers +rightly says, is so constituted that we should be materially happy if we +were morally good. + +Industrial progress helps, we have said, towards moral perfection. It is +not the source of that perfection, but its instrument; for ignorance and +misery, its habitual attendants, are poor advisers. Political Economy +shows how the goods of this world are multiplied. It shows how modest +comfort may become more and more general, and thus an impetus be given to +all noble virtues without awakening a blind passion for riches. It teaches +moderation instead of exciting covetousness, nor does it come in conflict +with the sublime words of Saint Augustine: "The family of men, living by +faith, use the goods of the earth as strangers here, not to be captivated +by them or turned away by them from the goal to which they tend, which is +God, but to find in them a support which, far from aggravating, lightens +the burthen of this perishable body which weighs down the soul." + + + + +XV. + + +Looked at from below, all things diverge. Looked at from above, all things +run into one another and combine with one another. It is one of the great +merits of the historical method, that it raises the point of observation +and gives the observer the support of tradition and good sense, that +master of life; that it prevents a divorce between different branches of +knowledge of the same order, which constitute but one intellectual family, +which there is no question of confounding, and which it would be dangerous +to isolate. + +Aristotle, that universal genius, had discovered Political Economy, and it +was the historical method which revealed it to him. Be it added, that the +great philosopher had seen but one phase of the science, chrematistics, +and that his ideas here bear the impress of the age in which he lived. +Aristotle, however, distinguished this science from all others and from +domestic economy, which is so akin to it. Doubtless, he did not found the +modern study of Political Economy, but his powerful intellect gave him a +presentiment of it. + +The honor of producing at once, Adam Smith, Quesnay and Turgot belongs to +the eighteenth century. It was in the course of philosophy at Glasgow that +this study found a definite place. The illustrious founder of the science +of Political Economy did not contemplate dissolving the ancient alliance +between it and the moral sciences, history, philosophy, jurisprudence, +belles-lettres--all of which he had explored and studied profoundly. Let +those whose ambition it is to walk, even at a distance, in the footsteps +of Adam Smith, not forget what was the cradle of the noble study to which +they have devoted their intellects. + +L. WOLOWSKI. + + + + + +INTRODUCTION. + + + + + Chapter I. + + +Fundamental Ideas. + + + + Section I. + + +Goods--Wants. + + +The starting point, as well as the object-point of our science is Man.(49) + +Every man has numberless wants, physical and intellectual.(50)(51) Wants +are either necessaries, decencies (_Anstandsbeduerfnisse_) or luxuries. The +non-satisfaction of necessary wants causes disease or death; that of the +wants of decency endangers one's social position.(52) The much greater +number, and the longer continuance of his wants are among the most +striking differences between man and the brute:(53) wants such as +clothing, fuel,(54) tools, and those resulting from his much longer period +of infancy; which last, together with other causes, has contributed so +largely to make marriage necessary and universal. While the lower animals +have no wants, but necessities, and while their aggregate-want, even in +the longest series of generations, admits of no qualitative increase, the +circle of man's wants is susceptible of indefinite extension.(55) And, +indeed, every advance in culture made by man finds expression in an +increase in the number and in the keenness of his rational wants. No man +who distinguishes himself in anything, but feels spurred thereto by a +peculiar want; and this want is both the cause and the effect of the power +which is peculiar to him. No one but the poet feels the want of poetizing; +no one but the philosopher, of philosophizing. In every particular, +intellectual or physical, in which the man is in advance of the child, he +experiences new wants unknown to the child. Our education consists, for +the most part, in awakening wants and providing for their satisfaction. + +Goods are anything which can be used, whether directly or indirectly, for +the satisfaction of any true(56) or legitimate human want,(57) and whose +utility, for this purpose, is recognized. Hence, the idea goods is an +essentially relative one. Every change in man's wants, or knowledge, is +accompanied by a rapid, corresponding change, either in the limits of the +circle(58) of goods, or in their relative importance. Thus, the tobacco +plant has, probably, existed thousands of years. It became goods, however, +only from the time that man recognized its use for smoking, snuffing etc., +and experienced the want of it for these purposes. In a similar way, the +limestone of the Solenhofen quarries has become _goods_, of considerable +importance, only since the invention of lithography; decaying bones, only +since that of bone-dust manure; caoutchouc since about 1825, and +gutta-percha, only since 1844. On the other hand, charms,(59) philters, +and even relics, since the decay of faith in their efficacy, have lost the +quality of goods. If the aggregate income of all mankind were, by some +sudden revolution, to be equally divided among all, diamonds, for +instance, would greatly decline in value, for the reason that it is +dependent, in great part, on the wants generated by vanity, or by the +desire of outshining others. Beer, tobacco etc., would rise in the scale +as goods, because the circle of those to whose wants they minister would +have been very greatly extended. On the whole, advancement in civilization +has uniformly the effect, of itself, to increase the quantity and number +of goods, the wants and knowledge of men being thereby increased. We +should reach the ideal here, if all men experienced only true or +legitimate wants, but these completely; if they could see their way, +clearly, to the satisfaction of them, and find the means of satisfying +them with just the amount of effort most conducive to their +physico-intellectual development.(60) + + + + Section II. + + +Goods.--Economic Goods. + + +By economy (_Wirthschaft_=husbandry or housekeeping), we mean the +systematized activity of man, to satisfy his need (_Bedarf_=requisite) of +external goods.(61) This treatise is concerned only with economic goods +(ends or means of economy).(62) The greater the advance of civilization or +human culture, the less apt are men to pursue the satisfaction of their +wants, isolated from their fellows, or, in other words, to carry on their +economies or husbandries apart from one another. The more numerous the +wants of men, and the more different in kind their faculties are, the more +natural does exchange(63) become. Since all goods derive their character +as goods from the fact that they are destined to satisfy human wants, the +very possibility of exchange must greatly increase the possibility of +things to become goods. Think of the machinist, whose products are used +only by the astronomer, while the latter is never in a way to manufacture +them for himself. (_Hufeland._) Commerce is the series of combinations, +created by the interchange of services: "a living net of relations, which +wants and services are ever weaving and unweaving." (_Hermann._) As a +rule, with an advance in civilization, there is an increase in the number +of goods, which become economic goods, and in the number of economic goods +which become commercial goods (objects or means promotive of +commerce).(64) But this is to be considered a real advancement only to the +extent that that which is obtained is superior to that which was possessed +before, in consequence of the specialization of callings or the greater +division of labor (§ 48 ff.). When a little street Arab exacts money from +a stranger for pointing out the way, we rightly censure him; but no one +would find it improper if he should first fit himself to play the part of +a guide, and then live by his calling.(65) + + + + Section III. + + +Goods.--The Three Classes Of Goods. + + +All economic goods are divided into three classes: + +A. _Persons or personal services._ It is entirely repugnant to the feeling +of humanity to regard a man's person in its entirety as an instrument +intended to satisfy the wants of another.(66) Yet this happens wherever +slavery exists; in its coarsest form, in cannibalism. Among civilized +nations, we can speak, under this head, only of individual services or +capabilities of persons; or, indeed, of the aggregate of the services +rendered by them during a time determined at pleasure, or a short +time.(67) + +B. _Things_, both moveable and immovable.(68) + +C. _Relations_ to persons or things which may frequently be estimated just +as accurately as material goods. (The _res incorporales_ of the Roman +law.) I need only mention what is called good-will, which freely, and to +the advantage of customers themselves, but still with a limited amount of +certainty, attaches to certain localities, and for which tavern-keepers, +sometimes, as in theaters, depots and clubs, pay so enormous a rent.(69) +When a newspaper is sold, the purchaser frequently buys nothing but the +existing relations between his colaborers, subscribers etc. No small part +of the value of a good business firm consists in the confidence with which +it inspires all who deal with it, thus sparing them a world of care and +trouble.(70) A general may be of incalculable value to an army which he +has himself helped organize. In another, or in the service of a country +not his own, he might be entirely valueless, incapable of accomplishing +anything.(71) With the progress of civilization, as man becomes more +social, the number of valuable relations increases, while that of +legalized monopolies is wont to decrease. (_Schaeffle._)(72) + + + + Section IV. + + +Of Value.--Value In Use. + + +The economic value of goods is the importance they possess for the +purposes of man, considered as engaged in economy (housekeeping, +husbandry.(73)) + +Looked at from the point of view of the person who wishes to employ them +in his use directly, doubtless the oldest point of view, value appears +first as value in use; and here, according to the difference of subjective +purposes it is intended to subserve, we may speak of production value or +enjoyment-value; and of this last, in turn, as utilization-value, or +consumption-value. The value in use of goods, is greater in proportion as +the number of wants they are calculated to satisfy are more general and +more urgent, and in proportion as they are gratified by them more fully, +surely, durably, easily and pleasantly.(74) Hence, it is seldom possible +to find an accurate mathematical expression of the relation which exists +between the value in use of different goods.(75) Thus, it is possible to +estimate the nutritive power of different kinds of goods, the value of +wheat or of hay for instance, but not the goodness or quality of their +taste, of the attractiveness of their appearance, etc. + +But, the more men become used to comparing the aggregate of human wants, +and the aggregate of the goods which minister to the satisfaction of these +wants, as if they were two great wholes, gradually shading each into the +other, the more does the value in use of the different kinds of goods +assume, for purposes of social rating or estimation, a fungible +character.(76) If a new kind of goods be produced or discovered, which +satisfies the same wants in a more complete manner than another, the +latter, although it has suffered no change, generally loses in the value +put upon it, especially if the new goods can be produced in any desired +quantity. An instance of this is the change effected in the value of the +dyers weed, woad, by the introduction of indigo. + +Things present in quantities greater than the amount necessary to supply +the want they satisfy, preserve their full value in use, to the limit of +that want, after which they are simply an element of possible future +value, dependent on an increase of the want; but they have no value for +present use.(77) + +The economic valuation of goods, however, is by no means exhausted, so far +as the isolated individual housekeeper is concerned, by the mere +establishing of its value in use. As the systematic effort of every +rational individual in his household management is directed towards the +obtaining, by a minimum of sacrifice of pleasure and energy, a maximum +satisfaction of his wants, even an Adam or a Crusoe is, in his economy, +compelled to estimate not only what the goods to be acquired accomplish +(value in use) but also what they will cost--cost-value. Even the most +indispensable kind of goods, for instance atmospheric air, is considered +to have no value, when it can be obtained in sufficient quantity, without +any sacrifice whatever.(78) + + + + Section V. + + +Value.--Value In Exchange. + + +The value in exchange of goods, or the quality which makes them +exchangeable against other goods, is based on a combination of their value +in use with their cost-value, such as men in their intercourse with one +another will make.(79) Without value in use, value in exchange(80) is +unthinkable. + +But there are many, and even indispensable goods which are not at all +susceptible of being exchanged; for instance, the light and heat of the +sun, the open sea etc.(81) Other goods, although capable of being +exchanged, have no value in exchange, because they exist in +superabundance, and may be obtained by everyone, without trouble and +without reward; for instance, drinking-water in most places, ice in +winter, and wood in the primeval forest.(82) Moreover, the idea of such +"free goods" is in great part relative. The water of a river may, for +drinking purposes, be "free" goods, and yet, for purposes of irrigation, +have great value in exchange. (_John Stuart Mill_). + +But, goods, to obtain value in exchange, must, in addition to their value +in use, a value which must be recognized(83) by a certain number of +persons, at least, have the capacity of becoming the exclusive property of +some one individual, and therefore of being alienated or transferred; and +this alienation or transfer must be desired because of the difficulty to +become possessed of them in any other way.(84) + + + + Section VI. + + +Value.--Alleged Contradiction Between Value In Use And Value In Exchange. + + +Recent, and especially socialistic,(85) writers have alluded to the great +"contradiction" between value in use and value in exchange. This +contradiction, however, vanishes when the above idea of economy, and the +two sides or aspects, which economic value presents, are kept steadily in +view. It is said, for instance, that a pound of gold has a much greater +value in exchange than a pound of iron; while the value in use of iron, is +incomparably greater than that of gold. I question this latter statement. +True it is, that the need of iron is much more universal and urgent than +the need of gold. On the other hand, a pound of gold yields satisfaction +to the want of that metal, much greater than is yielded by a pound of +iron, to the want of iron. We may speak of a contradiction between value +in use and value in exchange, at the farthest, only in case the existing +quantity of an article in trade, which can be done without, is not +estimated correspondingly lower than the whole existing supply of a thing +which is indispensable. But this is a case which cannot often occur. When, +for instance, wheat is very dear, as in years of scarcity, people prefer +to pay a very high price for it rather than to dispense, even in part, +with its use; and so of all the necessaries of life. As people progress in +economic culture, they become more expert in adapting the value in +exchange of related goods, not only to their cost-value, but also to their +value in use.(86)(87) + +The lower the state of a nation's economy, the more isolated men live from +one another, the greater is the prominence given by them to value in use, +as compared with value in exchange, a fact which makes a valuation of +resources, which shall be universally applicable, a more difficult +matter.(88)(89)(90) + + + + Section VII. + + +Resources Or Means (Vermoegen). + + +_Resources_, or _means_, in the sense in which we here use the term, are +the aggregate of economic goods owned by a physical or legal person, after +deduction is made of the person's debts, and all valuable and rightful +claims have been added.(91) Hence, there are private resources, +corporative resources, municipal resources, etc., state resources, +national resources and the world's resources. In estimating the resources +of a whole people, it is, of course, necessary to make deduction of the +debts due by the individual members of the nation to their fellow +countrymen. + + + + Section VIII. + + +Valuation Of Resources. + + +It has often been made a question, whether the valuation of resources +should be based on the value in use, or the value in exchange of their +constituent parts.(92) The latter has, of course, no interest, except in +so far as we are concerned with the possibility of obtaining the control +of part of the resources, or means, of another, by the surrender of a part +of one's own goods. In estimating the value of private resources, which +require to be made continually an object of trade, this point is, of +course, of the greatest importance. If certain of their component +elements, lands, for instance, belonging to a _fidei commissum_, are +incapable of entering immediately into the market, at least the revenue +they yield is measured by its value in exchange. + +It is quite otherwise, even with the resources of a whole nation. Such +resources are, evidently, much more independent, and have much less need +of being exchanged against their equals, than private resources. The +foreign commerce, of the greatest and most advanced nations, has, +hitherto, been but a small quota of their internal commerce.(93) A +valuation, therefore, based on value in exchange, however interesting it +might be to enable us to determine how property is shared by the different +classes and persons that compose the nation, would afford but little +information concerning the absolute amount of the national wealth. This, +of course, applies in a much higher degree to the resources of the whole +world. + +If, now, we were to estimate the resources of an entire people, or even of +the world, by summing up the value in exchange of their several component +parts, many very important elements would be left out of the account +entirely; as for instance, harbors, navigable streams, numberless +relations which have, indeed, no value in exchange whatever, but which are +of the highest importance, because promotive of the economy of the nation. +The same may be said of made roads of every description, the +politico-economical value of which may be much greater than the value in +exchange of their stock, than their cost of production etc. The increase +of the value in exchange of any of the branches of the resources of a +physical or legal person contributes towards really enriching the nation +or the world, only in case that the increased value in exchange is based +on an increased utility in quality or quantity. Should an earthquake +suddenly dry up a number of our springs, and thus give value in exchange +to the drinking water from the remaining ones, we should, indeed, witness +the introduction of a new object into the list of exchangeable goods; the +owners of springs would be able to command a larger portion of the +national resources, but at the expense of the rest of the population; and +the whole country would have become poorer in goods by the catastrophe. +Even the value in exchange of the national resources would not be +increased; for all other goods, which, hitherto, as compared with water, +had an unlimited capacity for exchange, would lose just as much of that +capacity as water had gained, as compared with them.(94) On the other +hand, if a new mineral spring should be discovered, the great value in use +of the water of which gave it value in exchange, the resources of the +nation would be really increased, not only in point of utility, but in +exchange value; for no other goods, formerly known, would, in consequence +of the discovery, lose in their exchange power.(95) + + + + Section IX. + + +Wealth. + + +The possession of large and also of potentially lasting resources; +objectively, such resources themselves, we call wealth. But it must be +large in a two-fold sense; large as compared with the rational wants of +its possessor, and large, also, as compared with the resources of other +people, especially with the resources of those in the same condition of +life. To be called rich, it is not enough "to have a sufficiency," (the +individual side); it is necessary to have more than others.(96) If all men +were possessed of a great deal, but all of an exactly equal amount, each +would be compelled, it may be conjectured, to be his own chimney-sweep, +his own scavenger and "boot-black." And how could anyone, then, be +properly called wealthy? This is the social side of the idea of +wealth.(97) Hence, a person, with the same resources, might be very +wealthy in a provincial town, while, in the capital, he could enjoy only +moderate comfort.(98) + + + + Section X. + + +Wealth.--Signs Of National Wealth. + + +We should have a very imperfect idea of the wealth of a people (§ 8) if we +should estimate it at the value in exchange of the sum(99)-total of the +component parts of the national resources. By the following signs, +however, an approximative notion of the value in use of the resources of a +nation may be obtained: + +A. When, even the lower classes, who compose everywhere the greatest +portion of the people, are comfortable, in a condition worthy of human +beings. Thus, C. Dupin is surprised at the great quantities of meat, +butter, cheese and tea entered on the accounts of the poor-houses in +England, and the great care taken to have these of the best quality.(100) +A good symptom of such a state of things is a high average duration of +human life, especially when there is a relatively large number of births. +(§ 246.) + +B. When a considerable outlay, devoted to the satisfaction of the more +refined wants, is voluntarily made, and by those only possessed of a +proper economic sense. Thus, in England, the various mission, bible, and +tract societies had, in 1841, an aggregate income of L630,000. The +expeditions in search of Franklin cost over a million pounds sterling. The +state outlay also belongs to this category, provided, that taxes are +collected and loans obtained, without any noticeable oppression. The sum +of 20,000,000 pounds sterling, voted, in 1833, by the British Parliament +for the abolition of slavery, is one of the happiest signs of the national +wealth of England.(101) + +C. A large number of valuable buildings, and permanent improvements; for +instance, roads of every description, works for purposes of irrigation and +drainage. Thus, in London, from September, 1843, to September, 1845, there +were constructed squares and streets with an aggregate length of 11.1 +geographical miles. The number of newly built houses in London, between +1843 and 1847, was nearly 27,000. And so, in England and Wales there are +492 geographical miles of navigable canals, while their navigable rivers +are estimated to have a length of only 449 miles. The number of miles of +railroad, in the British Empire, in 1865, was 2,897 geographical miles, +and they cost 459 million of pounds; in 1870, it was 3,270 geographical +miles, at an aggregate cost of 650 millions sterling. + +D. The frequent occurrence of heavy commercial payments, which finds +expression especially in the magnitude and costliness of the most usual +medium of exchange. Thus, all payments are made in England in paper (for +sums of at least five pounds sterling) or in gold coin. Silver is used +only as small change, like copper in most other countries. (_Infra_, § +118, seq.)(102) + +E. Frequent loans to foreign nations. Hence, Storch divides all countries +into borrowing or poor countries, loaning or rich countries, and +independent countries which hold a middle place between the two +former.(103) + + + + Section XI. + + +Of Economy (Husbandry). + + +All normal economy(104) (husbandry) aims at securing a maximum of personal +advantage with a minimum of cost or outlay.(105) And there are always two +intellectual incentives at the foundation of this economy. There is, +first, self-interest, the positive manifestation of which is the effort to +acquire as much of the world's goods as possible, and the negative +expression of which, the effort to lose as little of them as +possible--acquisitiveness--saving. Self-interest, losing its moral, and +assuming a guilty, character, degenerates into egotism; acquisitiveness, +into covetousness; and the disposition to save, into avarice--the +_solipsismus_ of Kant. The incentive to ameliorate one's condition is +common to all men, no matter how varied the form or different the +intensity of its manifestation. It guides us all from the cradle to the +grave. It may be restricted within certain limits, but never entirely +extinguished. It is, in the domain of economy, what the instinct of +self-preservation is to our physical existence, a powerful principle of +creation, preservation and of renewed life (I. Thessal., 4, 11, +seq.).(106) Then there is the incentive of the demand of God's voice +within us, the voice of conscience, whether we call it, in philosophic +outline "the adumbration of the ideas of equity, right, benevolence, of +perfection and inner freedom," or, framing our lives in accordance with +them, the striving after the Kingdom of God.(107) It matters not, how much +the image of God may have been disfigured in most men, there is no one in +whom the longing for it has so far disappeared as to leave no trace +behind. This puts bounds to our self-interest, and transmutes it into an +earthly means to enable us to approximate to an eternal ideal. + +As, in the structure of the world, the apparently opposing tendencies of +the centrifugal and centripetal forces produce the harmony of the spheres, +so, in the social life of man, self-interest and conscience produce in him +the feeling for the common good.(108) This sentiment of the common +interest is the foundation on which rise in successive gradation, the life +of the family, of the community, of the nation and of humanity, the last +of which should be coincident with the life of the Church. It, alone, can +realize the kingdom of heaven on earth. Through this sentiment alone can +religion be made active and moral. Only through it, can self-interest be +made really sure and always to the purpose. Even the most calculating mind +must acknowledge, that numberless institutions, relations etc., are useful +and even necessary to many individuals, which can be established or +maintained only from a sense of the general welfare, for the reason that +no one individual could make the sacrifice required to establish or +maintain them. And so, since commerce has wrought the interests of all men +into one great piece of net-work, the best means of obtaining wherewith to +satisfy our own wants is to help others satisfy theirs. Self-interest +causes every one to choose the course in life in which he shall meet with +the least competition and the most abundant patronage; in other words, +that which answers to the most pressing and least satisfied want of the +community. As a rule, the physician who cures the greatest number of +patients with the greatest skill, and the manufacturer who produces the +best goods cheapest, will grow to be the richest. It is, moreover, easy to +see that, according as the circle of common interests grows smaller, it +approximates to self-interest; and to "the Kingdom of God"(109) as it +grows larger. And yet, all these circles respectively condition one +another. Cosmopolitanism or church-zeal, without love of country; +patriotism, without fidelity to the community in which one lives, or love +of one's family, are more than suspicious. The reverse is also true. This +is a chief connecting link between the great apparent opposites.(110)(111) + + + + Section XII. + + +Economy.--Grades Of Economy. + + +Thanks to this feeling for the common weal, the eternal and destructive +war--the _bellum omnium contra omnes_--which an unscrupulous self-interest +would not fail to generate among men engaged in the isolated prosecution +of their own economic interests, ceases in the higher, well-ordered +organization(112) of society. On it are based the various forms of economy +in common: family-economy, corporation or association-economy, municipal +economy, and national economy.(113) And these forms of economy in common +are so essentially the condition and complement of individual economy, +that the latter, without them, could either not be maintained at all, or, +at least, only in the very lowest stage of civilization. + +Although the higher science of Political Economy has, nearly always, been +conceived(114) as treating of the aggregate national activity of a people, +there have been many, recently, who consider Political Economy as no real +whole, but only as a mere abstraction. This is true, especially of many +unconditional free-trade theorizers, partly from a repugnance toward the +governmental guardianship of private businesses or economy. It is true, +also, of certain philosophers who consider the idea, "the people," as +merely nominal.(115) There are, however, two things necessary to warrant +us to call a thing made up of a number of parts, one real whole: the parts +and the whole must have a reciprocal action upon one another, and the +whole, as such, must have a demonstrable action of its own. (_Drobisch._) +In this sense, "the people" is, unquestionably, a reality, and not alone +the individuals who constitute the "people." Besides, it is truly said +that all husbandry or economy supposes a will ("systematized activity" +etc., _supra_, § 2). Such a will is ascribed to individuals, to legal +persons, to the state, but not, however, to "the people," as a whole. But +this will need not be an entirely conscious one, as is plain from the case +of the less gifted and less cultured individuals engaged in household +economy. The systemization in the public economy of a people finds its +clearest expression in economic laws, and in the institutions of the +state. But it finds expression, also, without the intervention of the +state, in the laws established by use, and by the opinions of jurists or +courts, in community of speech, of customs and tastes etc.: things which +have an important economic meaning, which depend on the common nature of +the land, of race and history, and which influence the state, at least as +much as they are influenced by it.(116)(117) + +The most that can be said, at present, so far as an economy of mankind, or +a world-economy, is concerned, is, that it may be shown that important +preparations have been made for it. We are approaching more nearly to it +by the ways of the more and more cosmopolitan character of science, the +increasing international cooeperation of labor, the improvement in the +means of transportation, growing emigration, the greater love of peace, +and the greater toleration of nations etc. + + + + Section XIII. + + +Political Economy.--The Economic Organism. + + +The idea conveyed by the word _organism_, is doubtless, one of the most +obscure of all ideas; and I am so far from desiring to explain(118) by +that idea, the meaning of public or national economy, that I would only +use the word _organism_ as the shortest and most familiar expression of a +number of problems, which it is the purpose of the following investigation +to solve. + +There are two points, especially, of importance here. In the motion of any +machine, it is possible to distinguish with the utmost accuracy, between +the cause and the effect of the motion: the blowing of the wind, for +instance, is simply and purely, the cause of the friction of the +mill-stones in a wind-mill, and is not in the least influenced or +conditioned by the latter. But, in the public economy of every people, +patient thought soon shows the observer, that the most important +simultaneous events or phenomena mutually condition one another. Thus, a +flourishing state of agriculture is impossible without flourishing +industries; but, conversely, the prosperity of the latter supposes the +prosperity of the former, as a condition precedent. It is as in the human +body. The motions of respiration are produced by the action of the spinal +cord; and the spinal cord, in turn, continues to work only through the +blood, that is, by the help of respiration. In all cases like this, we are +forced, when accounting for phenomena, to move about in a circle, unless +we admit the existence of an organic life, of which every individual fact +is only the manifestation.(119)(120) + +It is, also, undeniable, that human insight into the operation and utility +of a machine must always precede the existence of the machine itself. This +human insight is parent to the plan, and the plan, in turn, is parent to +the machine. The very reverse of this is true in the case of organisms, +those "divine machines" as Leibnitz called them. Men had digested food and +reproduced their kind, thousands of years before physiologists had +attained to a true theory of digestion or reproduction. I do not, indeed, +by any means, pretend, that the public economy of nations is governed by +natural necessity, in the same degree, as for instance, the human body. We +shall find, however, that the minute arbitrary variations usual here and +there in the course of its development, generally compensate for one +another, in accordance with the law of large numbers. Here, too, we find +harmonies, frequently of wonderful beauty, which existed long before any +one dreamt of them; innumerable _natural laws_,(121) whose operation does +not depend on their recognition by individuals, and, over which, only he +can obtain power who has learned to obey them. (_Bacon_)(122)(123)(124) +But it should never be lost sight of, that the natural laws governing the +public economy of a people, like those of the human mind, are +distinguished in one very essential point from those of the material +world. They have to do with free rational beings, who, because they are +thus free and rational, are responsible to God and their conscience, and +constitute in their aggregate a species capable of progress. + + + + Section XIV. + + +Origin Of A Nation's Economy. + + +The public economy of a people has its origin simultaneously with the +people. It is neither the invention of man nor the revelation of God. It +is the natural product of the faculties and propensities which make man +man.(125) Just as it may be shown, that the family which lives isolated +from all others, contains, in itself, the germs of all political +organization,(126) so may it be demonstrated, that every independent +household management contains the germs of all politico-economical +activity. The public economy of a nation grows with the nation. With the +nation, it blooms and ripens. Its season of blossoming and of maturity is +the period of its greatest strength, and, at the same time, of the most +perfect development of all its more important organs.(127) In respect to +it, the economic endeavors of any epoch may be said to be represented by +two great parties, the one progressive, the other, conservative. The +former would hasten the period of the nation's richest and most varied +development, the latter postpone its departure as long as possible; and +hence it comes, that a people's economic decline is sometimes taken for +progress, by the former class, and their progress for decline, by the +latter. As a rule, the union and equilibrium of these parties are wont to +be the greatest at the period of maturity, because, then, intelligence and +the spirit of sacrifice for the common good are most general.(128) + +Finally, the public economy of a nation declines with the people. +(_Infra_, § 263 ff.) + + + + Section XV. + + +Diseases Of The Social Organism. + + +If the public economy of a people be an organism, we must expect to find +that the perturbations, which affect it, present some analogies to the +diseases of the body physical. We may, therefore, hope to learn much that +may be of use in practice, from the tried methods of medicine.(129) In the +diseases of the body economic, it is necessary to distinguish accurately, +between the nature of the disease and its external symptoms, although it +may be necessary to combat the latter directly, and not merely with a view +to alleviation. Following the example of the physician, we should +particularly direct our attention to the curative method which nature +itself would pursue, were art not to intervene. "The curative power of +nature is no peculiar power; it is the result of a series of happy +adjustments, by means of which the morbid perturbation itself sets in +motion the springs which may either destroy the evil or paralyze its +action. It is, in fact, nothing but the original power which formed the +body and preserves its life in contact with the external causes of +perturbation and the internal disorder provoked by these causes." +(_Ruete._) + + + + + Chapter II. + + +Position Of Political Economy In The Circle Of Related Sciences. + + + + Section XVI. + + +Political Or National Economy. + + +By the science of national,(130) or Political Economy, we understand the +science which has to do with the laws of the development of the economy of +a nation, or with its economic national life. (Philosophy of the history +of Political Economy, according to von Mangoldt.) Like all the political +sciences, or sciences of _national life_, it is concerned, on the one +hand, with the consideration of the individual man, and on the other, it +extends its investigations to the whole of human kind.(131) + +National life, like all life, is a whole, the various phenomena of which +are most intimately connected with one another. Hence it is, that to +understand one side of it scientifically, it is necessary to know all its +sides. But, especially, is it necessary to fix one's attention on the +following seven: language, religion, art, science, law, the state and +economy.(132) Without language, all higher mental activity is unthinkable; +without religion, all else would lose its firmest foundation and highest +aim. Through art, alone, do all these sides attain to beauty; through +science, alone, to clearness. Law arises, the moment conflicts of will +become inevitable and an adjustment is desired. The state has to do with +them, in so far as they have any external force or validity. Indeed, there +is no human relation, not even the highest and the sweetest, but has its +economic interests. It is, therefore, natural, that each of the sciences +which relate to these various regions of human life should, in part, +presuppose all others, and, in part, serve as a basis for them.(133) + +But in the midst of this universal relationship, it is easy to see that +law, the state and economy constitute a family, as it were apart and more +closely connected. (The social sciences, in the narrower sense of the +expression.) + +They are confined almost exclusively to what Schleiermacher has called +"effective action" (_wirksame Handeln_), while art and science belong +almost entirely to the "action of representation" (_darstellenden +Handeln_); and religion and language combine both kinds. Law, the state, +and economy too, have their roots so deep in the physical and intellectual +imperfection of man, that we can scarcely imagine their continuance beyond +his life on earth (Gospel of Matthew, 22, 30). But within these limits, +their several provinces and the subjects with which they are concerned are +almost coincident. They only consider these from different points of view: +the science of politics from that of sovereignty; the science of Political +Economy from that of the satisfaction of the requirement of external goods +by the people; the science of law from that of the prevention or the +peaceable adjustment of conflicts of will. As every economic act, +consciously or unconsciously, supposes forms of law, so, by far the +greater number of the laws relating to rights, and the greater number of +judgments in the matter of rights, contain an economic element. In +numberless cases, the science of law gives us only the external _how_; the +deeper _why_ is revealed to us by the science of Political +Economy.(134)(135) And, as to the state, who, for instance, can appreciate +the political significance of a nobility, without understanding the +economic character of rent, and of the possession of large landed estates? +Who can politically appreciate the inferior classes of society, unless +initiated into a knowledge of the laws that govern wages and population? +It were much easier to cultivate psychology without physiology! "The state +is society protected by force" (_Herbart_). There are two bases to all +material power:(136) wealth and warlike ability ({~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ETA WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA~}--{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}, +according to Thucydides); and how much the latter has need of the former +is well expressed by the familiar saying of Montecuccoli: "Money is not +only the first, but the second and third condition of war."(137) + +Frederick the Great calls finance the pulse of the state, and Richelieu, +the point of support which Archimedes was in search of, to move the world. +In all modern nations, the history of the debates on the raising of +revenue and of the passing of budgets is, at the same time, the history of +parliamentary life; and most great revolutions, the Reformation of the +sixteenth century not excepted, if not caused have been promoted, by +financial embarrassment. + + + + Section XVII. + + +Sciences Relating To National Life.--The Science Of Public Economy.--The +Science Of Finance. + + +If, by the public economy of a nation, we understand economic legislation +and the governmental guidance or direction of the economy of private +persons,(138) the science of public economy becomes, so far as its form is +concerned, a branch of political science, while as to its matter, its +subject is almost coincident with that of Political Economy. Hence it is, +that so many writers use the terms public economy, or the economy of the +state (_Staatswirthschaft_), and National Economy (_Volkswirthschaft_), as +synonymous.(139) The hypothesis, in accordance with which, this science +should discard all consideration of the state, or should refuse to +presuppose its formation,(140) would lead us into an ideal region, +difficult to define, probably entirely impossible, and inaccessible to +experience. + +Just as clear, is the close connection between politics and Political +Economy, in the case of the science of finance, or of the science of +governmental house-keeping, otherwise the administration of public +affairs. The latter, evidently, so far as its end is concerned, belongs to +politics, but so far as the means to that end are concerned, to National +Economy. As the physiologist cannot understand the action of the human +body, without understanding that of the head; so we would not be able to +grasp the organic whole of national economy, if we were to leave the +state, the greatest economy of all, the one which uninterruptedly and +irresistibly acts on all others, out of consideration.(141) + +By the term _police_, we mean the state power whose office it is, without +mediation, to prevent all disturbances of external order among the +people.(142) It may extend its action into all the domains of national +life mentioned above, whenever external order is there threatened, or +calls for protection; but its action is important especially in the +domains of law and economy. The science of the _police power_, therefore, +of all those doctrines resulting from investigation into national life, +takes up only one phase of each of them; and the phases of doctrine thus +taken up, it combines into a whole, for practical ends. Its relation to +those sciences is like that of surgery to the medical sciences, or like +the science of legal procedure to the science of law. + + + + Section XVIII. + + +Sciences Relating To National Life.--Statistics. + + +Statistics we call the picture or representation of social life at given +periods of time, and especially at the present time, drawn on a scale in +accordance with the laws of development discovered by means of the +theoretical sciences above named; as it were, a section through the +stream. (_Schloezer_ calls them: history standing still.)(143) Statistics, +as thus defined, are as far removed from saying too much as from saying +too little. To give a complete tableau of their object, statistics should, +of course, take in the life of a people, in all its aspects. But they +should look upon such facts only as their own property, the meaning of +which they are able to understand; that is, such only as can be ranged +under known laws of development. Unintelligible facts are collected only +in the hope of penetrating into their meaning in the future, by comparing +them with one another. In the meantime, they are to the statistician only +what unfinished experiments are to the investigator of nature. + +The view is daily gaining ground, that statistics should be +occupied--without, however, confining themselves to them--with present +facts, with "facts affecting society and the state, which are susceptible +of being expressed in figures."(144) The more deceptive the immediate +observation of an individual, isolated fact is, in cases where a great +number of simultaneous or scattered individual isolated facts of national +life should be observed, the more important it is to discover proper +numerical relations, by noting all the like acts or experiences of men, +the time and place in question, and the relation of the aggregate of these +phenomena, to the sum-total of the population, or to the sum-total of +corresponding phenomena in other places. When this is done, and the facts +are completely enumerated and correctly recorded, there is no danger of +subjective error. And this species of "political and social measuring," as +Hildebrand calls it, may be applied, not only to quantities, but to all +qualities accessible to the observation of the senses; since the +individual or isolated qualities of the things enumerated, may be again +made objects of enumeration. Without doubt, this mode of numerical +procedure is the most perfect for all those divisions of statistics in +which it can be followed; and hence, it should be our endeavor to make the +numerical side of statistics as comprehensive as possible. But, one side +of a science is not a science itself. As there is no natural science +proper called microscopy, embracing all the observations made by means of +the microscope, so care should be taken not to deduce the principle of a +science from the chief instrument it employs. There will always be many +and important facts in national life which can not be subjected to +numerical calculation, although they may be established with the usual +amount of historical certainty. Were statistics to be limited, in the +manner mentioned above, they would remain a collection of fragments, and +instead of being a science, properly so-called, become a method.(145) + +Besides, it is evident, that, of statistics in general, economic +statistics constitute a chief part, and precisely the part most accessible +to numerical treatment. As these economic statistics need to be always +directed by the light of Political Economy, they also furnish it with rich +materials for the continuation of its structure, and for the strengthening +of such foundations as it already has. They, are, moreover, the +indispensable condition of the application of economic theorems to +practice. + + + + Section XIX. + + +Private Economy--Cameralistic Science. + + +The meaning of the term cameralistic science (_Cameralwissenschaft_) can +be explained only by the history of the cameralistic system.(146) From the +end of the middle ages, we find, in most German countries, an institution +called the Council (_Kammer_) whose province it was to administer the +public domain, and to watch over regal rights. At first, a mere +governmental commission, it was not long before it developed into an +independent board. This change had taken place in Burgundy as early as the +year 1409. It was in that country that the emperor Maximilian became +acquainted with the institution; and by the erection of the aulic councils +at Innspruck and Vienna (1498 and 1501), he gave the principal impulse to +the imitation of it in Germany. As, at that time, the division of labor +was very little developed, and personal and collegial authority all the +more developed in consequence, it is easy to conceive that a great part of +all the new and rapidly increasing business of police administration was +confided to these councils. They were charged especially with what is +known to-day as economic police (_Wirthschaftspolizei_) and an important +part of the administration of justice, in its lower departments, was +turned over to their subordinates. The most eminent men who wrote, in the +seventeenth century, on cameralistic matters, laid great stress on the +point, that it was the duty of the aulic councils to entertain not only +fiscal questions, but that it was within their province also, to determine +questions of economic police.(147) The interest of absolute princes must +have greatly favored these cameralistic institutions, for they were in +their hands docile tools, which escaped the annoying intervention of the +states of their realms. + +By degrees, the knowledge necessary to these council officials, and which +found no place in the lectures on law, were formed into a special body of +doctrine. After such men as Morhof and Thomasius had prepared the +way,(148) Frederick William I., himself a clever cameralist, and author of +the masterly financial system of Prussia, took the important step of +founding, at Halle and Frankfurt on the Oder, special chairs of economy +and cameralistic science; which, considering the time, were very ably +filled by Gasser and Dithmar. (1727.) There was thus formed in the German +universities a distinct school of cameralists, which, through Jung, Roessig +and Schmalz, reached to the nineteenth century. The term cameralistic +science, the creature of chance, was used, it must be said, with very +various limits to its meaning.(149) + +However, Political Economy in Germany developed out of the science of law +and the cameralistic sciences, while in England and Italy it had its +origin chiefly in the study of questions of finance and foreign commerce. + + + + Section XX. + + +Private Economy. (Continued.) + + +If we abstract from cameralistic science as it was understood in the last +century, what it has in common with all economy,(150) and therefore with +public economy, next that which belongs to the aggregate of governmental +economy, there remains only a number of rules, such as those which govern +the principal branches of private business, and which indicate how they +are to be carried on with the greatest advantage to those who engage in +them. Such are forest and rural economy, mining science, technology, +including architecture, and all that concerns founderies, and commercial +science. Now that the expression cameralistic science is altogether +obsolete, the aggregate of these might be designated by the name private +economy. Obviously, we should have here, neither a simple nor pure +science, but only a compilation of natural-philosophical and economic +lemmas. Thus, in agriculture, for instance, a knowledge of the different +kinds of soil, of the tillage of land, of the different plants and animals +etc., belongs to the domain of natural science; while all that relates to +the cost of production, the employment of capital, the wages of labor, the +exchange of products, net product and the price of land, are purely +politico-economical. The political economists also require a knowledge of +the natural side of the cameralistic sciences. Such a knowledge is +indispensable to every detailed and living theory, and especially to the +application of economic science to practice. The great difference lies in +this, that the cameralist interests himself in the production of material +goods for their own sake, while the political economist regards them only +in their relations to national life.(151) + +It would seem, moreover, that political economists, especially in Germany, +have attached too much importance to putting formal bounds to their +special science. Why not rather follow the example of the students of +nature who care little whether this or that discovery belongs to physics +or chemistry, to astronomy or mathematics, provided, only, very many and +important discoveries are made?(152) + + + + Section XXI. + + +What Political Economy Treats Of. + + +Political Economy treats chiefly of the material interests of nations. It +inquires how the various wants of the people of a country, especially +those of food, clothing, fuel, shelter, of the sexual instinct etc., may +be satisfied; how the satisfaction of these wants influences the aggregate +national life, and how in turn, they are influenced by the national life. +(Gospel of Matth., 4, 4.) This alone suffices to enable us to estimate the +importance of the science. The relation of virtue to wealth is likened by +Bacon to that of an army to its baggage. In Xenophon's opinion, wealth is +really useful only to him who knows how to make a good use of it. From an +economic point of view, the happiest man is he who has accumulated most, +honorably, and used it best.(153) That, even in a material sense, the +intellect of a people is their most important element, is evident from the +example of the Chinese, who were so long acquainted with printing, powder, +and the mariner's compass, without, by their means, attaining to +intelligent public opinion, forming a good army, or coming to an +understanding of the art of navigation, to any great extent. + +The undervaluing of economic matters, for which ages of inferior +cultivation, our own middle ages for instance, are now praised and now +blamed, was really a rare exception even during these ages.(154) Other +kinds of acquisition and enjoyment then occupied the foreground; but there +never was a time, when gain and enjoyment in general were not favorite +objects of pursuit, and held in high esteem. The physical wants of +uncultured men cry out much louder than intellectual ones. (§ 2, 14.)(155) +On the other hand, in over-cultivated ages, when decay begins, an +over-estimation of material things is wont to become general.(156) The +mere servants of mammon, whether as political economists or as private +individuals, may see their depravity faithfully reflected in communism as +in a mirror. We should not overlook the fact that it is with whole nations +as with the individual man who amasses his own fortune. He reaches the +culminating point of his wealth generally after he has passed the prime of +life. The most flourishing period of a nation's existence is wont just to +precede its decay, and to introduce it.(157) Hence, here nothing could be +more untrue, as Macchiavelli has remarked, than the general opinion that +money is the sinew of war.(158) + + + + + Chapter III. + + +The Methods Of Political Economy. + + + + Section XXII. + + +Former Methods. + + +The methods(159) which would apply to any science of national life, +principles borrowed from any other science, are now generally looked upon +as obsolete. This is true, especially, of the theological method which +prevailed, almost exclusively during the middle ages,(160) and of the +juridical method of the seventeenth century. + +It would be much more in harmony with the intellectual tendencies of the +time, to adopt a mathematical mode of treatment in Political Economy, +involving, as such a mode of treatment does, not the matter of the +science, but only a formal principle. That which is general in Political +Economy has, it must be acknowledged, much that is analogous to the +mathematical sciences. Like the latter, it swarms with abstractions.(161) +Just as there are, strictly speaking, no mathematical lines or points in +nature, and no mathematical lever, there is nowhere such a thing as +production or rent, entirely pure and simple. The mathematical laws of +motion operate in a hypothetical vacuum, and, where applied, are subjected +to important modifications, in consequence of atmospheric resistance. +Something similar is true of most of the laws of our science; as, for +instance, those in accordance with which the price of commodities is fixed +by the buyer and seller. It also, always supposes the parties to the +contract to be guided only by a sense of their own best interest, and not +to be influenced by secondary considerations. It is not, therefore, to be +wondered at, that many authors have endeavored to clothe the laws of +Political Economy in algebraic formulae.(162) And, indeed, wherever +magnitudes and the relations of magnitudes to one another are treated of, +it must be possible to subject them to calculation. Herbart has shown that +this is so in the case of psychology;(163) and all the sciences which +treat of national life, especially our own, are psychological.(164) But +the advantages of the mathematical mode of expression diminish as the +facts to which it is applied become more complicated. This is true even in +the ordinary psychology of the individual. How much more, therefore, in +the portraying of national life! Here the algebraic formulae would soon +become so complicated, as to make all further progress in the operation +next to impossible.(165) Their employment, especially in a science whose +sphere it is, at present, to increase the number of the facts observed, to +make them the object of exhaustive investigation, and vary the +combinations into which they may be made to enter, is a matter of great +difficulty, if not entirely impossible.(166) For, most assuredly, as our +science has to do with men, it must take them and treat them as they +actually are, moved at once by very different and non-economic motives, +belonging to an entirely definite people, state, age etc. The abstraction +according to which all men are by nature the same, different only in +consequence of a difference of education, position in life etc., all +equally well equipped, skillful and free in the matter of economic +production and consumption, is one which, as Ricardo and von Thuenen have +shown, must pass as an indispensable stage in the preparatory labors of +political economists. It would be especially well, when an economic fact +is produced by the cooperation of many different factors, for the +investigator to mentally isolate the factor of which, for the time being, +he wishes to examine the peculiar nature. All other factors should, for a +time, be considered as not operating, and as unchangeable, and then the +question asked, What would be the effect of a change in the factor to be +examined, whether the change be occasioned by enlarging or diminishing it? +But it never should be lost sight of, that such a one is only an +abstraction after all, for which, not only in the transition to practice, +but even in finished theory, we must turn to the infinite variety of real +life.(167) + +There are two important inquiries in all sciences whose subject matter is +national or social life: 1. What _is_? (What has been? How did it become +so? etc.) 2. What _should be_? The greater number of political economists +have confounded these questions one with the other, but not all to the +same extent.(168) + +When a careful distinction is made between them, the contrast between the +(realistic) physiological or historical, and the idealistic methods is +brought out.(169) + + + + Section XXIII. + + +The Idealistic Method. + + +Any one who has read a goodly number of idealistic works treating of +public economy (the state, law etc.) cannot have failed to be struck by +the enormous differences, and even contradictions, as to what theorizers +have considered desirable and necessary. There is scarcely an important +point which the highest authorities may not be cited for or against. We +must not close our eyes to this fact. "The giddiness that comes from +contemplating the depths of knowledge is the beginning of philosophy, as +the god Thaumas was, according to the fable, the father of Iris." +(_Plato._) In a precisely similar manner, the student of public economy +(politics, the philosophy of law etc.) must familiarize himself with the +variations that have taken place in what men, at different periods of +history, have required of the state and public economy, until he is lost +in wonder at the contemplation. + + + + Section XXIII. + + +The Idealistic Method. (Continued.) + + +It is impossible to fail to notice at once that those ideal descriptions +which have enjoyed great fame and exerted great influence, depart very +little from the real conditions of the public economy (of the state, law +etc.) surrounding their authors.(170) This is not mere chance. The power +of great theorizers, as, indeed, of all great men, lies, as a rule, in +this, that they satisfy the want of their own time to an unusual extent; +and it is the peculiar task of theorizers to give expression to this want +with scientific clearness, and to justify it with scientific depth. But +the real wants of a people will, in the long run, be satisfied in +life,(171) so far as this is possible to the moral imperfection of man. We +should at least be on our guard when we hear it said that whole nations +have been forced into an "unnatural" course by priests, tyrants and +cavilers. For, to leave human freedom and divine Providence out of +consideration entirely, how is such a thing possible? The supposed tyrants +are generally part and parcel of the people themselves; all their +resources are derived from the people. They must have been new +Archimedeses standing outside of their own world. (Compare, however, +_infra_, § 263.) + +It is true, that if the result of the growth of generations be to +gradually produce a different people, these different men may require +different institutions. Then a struggle arises between the old and those +of the younger generation; the former wish to retain what has been tested +by time, the latter to seek for the satisfaction of their new wants by new +means. As the sea always oscillates between the flowing and ebbing of the +tides, so the life of nations, between periods of repose and of crisis: +periods of repose, when existing forms answer to the real substance of +things, and of crisis, when the changed substance or contents seeks to +build up a new form for itself. Such crises are called _reforms_ when they +are effected in a peaceful way, and in accordance with positive law. When +accomplished in violation of law, they are called revolutions.(172) + +That every revolution, it matters not how great the need of the change +produced by it, is as such an enormous evil, a serious, and sometimes, +fatal disease of the body politic, is self-evident. The injury to morals +which the spectacle of victorious wrong almost always produces can be +healed, as a rule, only in the following generation. Where law has been +once trampled on, the "right of the stronger" will prevail; and the +stronger is, to some extent, the most unscrupulous and reckless in the +choice of the means to be employed. Hence, the well-known fact, that in +revolutionary times the worst so frequently remain the victors. The +counter-revolution which is wont to follow on the heels of revolution, and +with a corresponding violence, is a compensation only to the most +shortsighted. It allows the disease, the familiarizing of the people with +the infringement of law, to continue, until the hitherto sound parts are +attacked. Hence, a people should, if they would have it go well with them, +in the changes in the form of things which they make, take as their model +Time, whose reforms are the surest and most irresistible, but, at the same +time, as Bacon says, so gradual that they cannot be seen or observed at +any one moment. It is true, that, as all that is great is difficult, so +also is the carrying out of uninterrupted reform. Its carrying out, +indeed, supposes two things: a constitution so wisely planned as to keep +the doors open both to the disappearing institutions of the past and to +the coming institutions of the future; and, among all classes of the +people, a moral control of themselves, so absolute that, no matter what +the inconvenience, or how great the sacrifice, legal ways shall alone be +used. In this manner, two of the greatest and apparently most +contradictory wants of every legal or moral person, the want of +uninterrupted continuity and that of free development, may be satisfied. + + + + Section XXV. + + +The Idealistic Method. (Continued.) + + +It is doubtless true that all economic laws, and all economic institutions +are made for the people, not the people for such laws and institutions. +Their mutability is, therefore, by no means such an evil as mankind should +endeavor to remove, but is wholesome and laudable, so far as it runs +parallel with the transformation of the people, and the changes which +their wants have undergone.(173) Hence, there is no reason why the most +various ideal systems should contradict one another. Any one of them may +be right, but, of course, only for one people and one age. In this case, +the only error would be, if they should claim to be universally +applicable. There can no more be an economic ideal adapted to the various +wants of every people, than a garment which should fit every individual. +The leading-strings of children and the staff of age would be great +annoyances to the man. "Reason becomes nonsense and beneficence a +torment." Hence, whoever would elaborate the ideal of the best public +economy--and the greater number of political economists have really wished +to do this--should, if he would be perfectly true, and at the same time +practical, place in juxta position as many different ideals as there are +different types of people.(174) He would, moreover, have to revise his +work every few years; for, in proportion as a people change, and new wants +originate, the economic ideal suitable to them must change also. But it is +impossible to accomplish this on so large a scale. Besides, to appreciate +the present thus instantaneously, and to perfectly feel the pulse of time +thus uninterruptedly, requires a species of talent different from what +even the most distinguished scientists are wont to possess; talents of an +entirely practical nature, such as become a great minister of the interior +or of finance. And it is an acknowledged fact, that even the cleverest of +such practicioners, as the younger Pitt said of himself, generally feel +their way instinctively, and do not see it with the clearness necessary to +indicate it to others. + + + + Section XXVI. + + +The Historical Method--The Anatomy And Physiology Of Public Economy. + + +We refuse entirely to lend ourselves in theory to the construction of such +ideal systems. Our aim is simply to describe man's economic nature and +economic wants, to investigate the laws and the character of the +institutions which are adapted to the satisfaction of these wants, and the +greater or less amount of success by which they have been attended.(175) +Our task is, therefore, so to speak, the anatomy and physiology of social +or national economy! + +These are matters to be found within the domain of reality, susceptible of +demonstration or refutation by the ordinary operations of science; +entirely true or entirely false, and, therefore, in the former case, not +liable to become obsolete. We proceed after the manner of the investigator +of nature. We, too, have our dissecting knife and microscope, and we have +an advantage over the student of nature in this, that the self-observation +of the body is exceedingly limited, while that of mind is almost +unlimited. There are other respects, however, in which he has the +advantage over us. When he wishes to study a given species, he may make a +hundred or a thousand experiments, and use a hundred or a thousand +individuals for his purpose. Hence, he can easily control each separate +observation, and distinguish the exception from the rule. But, how many +nations are there which we can make use of for purposes of comparison? +Their very fewness makes it all the more imperative to compare them all. +Doubtless, comparison cannot supply the place of observation; but +observation may be thus rendered more thorough, many-sided, and richer in +the number of its points of view. Interested alike in the differences and +resemblances, we must first form our rules from the latter, consider the +former as the exceptions, and then endeavor to explain them. (_Infra_, § +266). + + + + Section XXVII. + + +Advantages Of The Historical Or Physiological Method. + + +The thorough application of this method will do away with a great number +of controversies on important questions.(176) Men are as far removed from +being devils as from being angels. We meet with few who are only guided by +ideal motives, but with few, also, who hearken only to the voice of +egotism, and care for nothing but themselves. It may, therefore, be +assumed, that any view current on certain tangible interests which concern +man very nearly, and which has been shared by great parties and even by +whole peoples for generations, is not based only on ignorance or a +perverse love of wrong. The error consists more frequently in applying +measures wholesome and even absolutely necessary under certain +circumstances, to circumstances entirely different. And here, a thorough +insight into the conditions of the measure suffices to compose the +differences between the two parties. Once the natural laws of Political +Economy are sufficiently known and recognized, all that is needed, in any +given instance, is more exact and reliable statistics of the fact +involved, to reconcile all party controversies on questions of the +politics of public economy, so far, at least, as these controversies arise +from a difference of opinion. It may be that science may never attain to +this, in consequence of the new problems which are ever arising and +demanding a solution. It may be, too, that in the greater number of party +controversies, the opposed purposes of the parties play a more important +part even than the opposed views. Be this as it may, it is necessary, +especially in an age as deeply agitated as our own, when every good +citizen is in duty bound to ally himself to party, that every honest +party-man should seek to secure, amid the ocean of ephemeral opinions, a +firm island of scientific truth, as universally recognized as truth as are +the principles of mathematical physics by physicians of the most various +schools. + + + + Section XXVIII. + + +Advantages Of The Historical Method. (Continued.) + + +Another characteristic feature of the historical method is that it does +away with the feeling of self-sufficiency, and the braggadocio which cause +most men to ridicule what they do not understand, and the higher to look +down with contempt on lower civilizations. Whoever is acquainted with the +laws of the development of the plant, cannot fail to see in the seed the +germ of its growth, and in its flower, the herald of decay. If there were +inhabitants of the moon, and one of them should visit our earth, and find +children and grown people side by side, while ignorant of the laws of +human development, would he not look upon the most beautiful child as a +mere monster, with an enormous head, with arms and legs of stunted growth, +useless genitals, and destitute of reason? The folly of such a judgment +would be obvious to every one; and yet we meet with thousands like it on +the state and the public economy of nations when in lower stages of +civilization, and this, even among the most distinguished writers.(177) + +We may, indeed, make a critical comparison of different forms, each of +which answers perfectly to its object or contents; but such a comparison +can possess historical objectivity, only when it is based on a correct +view of the peculiar course of development followed by the people in +question. + +The forms of the period of maturity may be considered the most perfect; +earlier forms as the immature, and the later as those of the age of +decline.(178) But it is a matter of the greatest difficulty, accurately to +determine the culminating point of a people's civilization. The old man +believes, as a rule, that the times are growing worse, because he is no +longer in a way to utilize them; the young man, as a rule, that they are +growing better, because he hopes to turn them to account. It is, however, +always a purely empirical question; and in the solution of it, the +observer's eye may acquire a singular acuteness by the comparative study +of as many nations as possible, especially of those which have already +passed away.(179) + +Could anyone contemplate the history of mankind as a a whole, of which the +histories of individual nations are but the parts, the successive steps in +the evolution of humanity would of course afford him a similar objective +rule for all these points in which whole peoples permanently differ from +one another.(180) + + + + Section XXIX. + + +The Practical Character Of The Historical Method In Political Economy. + + +Before I close, I must refer to a possible objection which may be made to +historical or physiological Political Economy: that it may indeed be +taught, but that it cannot be a practical science. If it be assumed that +those principles only are practical, which may be applied immediately by +every reader, in practice, this work must disclaim all pretensions to that +title. I doubt very much if, in this sense, there is a single science +susceptible of a practical exposition.(181) Genuine practitioners, who +know life with its thousands of relations by experience, will be the first +to grant that such a collection of prescriptions, when the question is the +knowledge and guidance of men, would be misleading and dangerous in +proportion as such prescriptions were positive and apodictic, that is +non-practical and doctrinarian. + +Our endeavor has been, not to write a practical book, but to train our +readers to be practical. To this end, we have sought to describe the laws +of nature which man cannot control, but, at most, only utilize. We call +the attention of the reader to the different points of view, from which +every economic fact must be observed, to do justice to every claim. We +would like to accustom the reader, when he is examining the most +insignificant politico-economical fact, never to lose sight of the whole, +not only of public economy but of national life. We are very strongly of +the opinion, that only he can form a correct judgment and defend his views +against all objections, on such questions as to where, how and when +certain liens and charges, monopolies, privileges, services etc., should +be abolished, who fully understands why they were once imposed or +introduced. Especially, do we not desire to impress a certain number of +rules of action on those who have confided themselves to our guidance, +after having first demonstrated their excellence. Our highest ambition is +to put our readers in a way to discover such rules of direction for +themselves, after they have conscientiously weighed all the facts, +untrammeled by any earthly authority whatever.(182)(183) + + + + + + Book I. + + +THE PRODUCTION OF GOODS. + + + + + Chapter I. + + +Factors Of Production. + + + + Section XXX. + + +Meaning Of Production. + + +To create new matter is more than it is given to man to do. Hence, by the +term production, in its widest sense, we mean simply the bringing forth of +new goods--the discovery of new utilities, the change or transformation of +already existing goods into new utilities,(184) the creation of means for +the satisfaction of human wants, out of the aggregate of matter originally +present in the world. (_Producere!_) We confine ourselves, however, in +this to economic goods, as defined in § 2. In a secondary and more limited +sense, production is an increase of resources, in so far as the goods +produced satisfy a greater human want, than those employed in the +production itself.(185)(186)(187) + +It would, however, be an error to suppose, that the creation of certain +utilities for the producer himself, or for others, constitutes the only +end of economic production. The more perfect economic production becomes, +the greater grows the pleasure the producer feels in his products, which +pleasure is at once the effect and the cause of his success. Hence, +production is to a great extent its own end. That this is so in the case +of artists is well known. "If you want only progeny from her, a mortal can +beget them as well. Let him who rejoices in the goddess, not seek in her +the woman," says Schiller. There is not a really clever workman but has +something artistic in his mode of production. And even the meanest +productive activity, provided it is neither over-driven nor misdirected, +must of itself exert a good influence on the physical and moral +development or preservation of the producer. An idle brain is the devil's +workshop.(188) + + + + Section XXXI. + + +The Factors Of Production.--External Nature.(189) + + +The division of natural forces which formerly obtained, into organic, +chemical and mechanical, is of no great importance in Political Economy. +The tendency is more and more to resolve organic forces partly into +chemical and partly into mechanical. Between mechanical and chemical +forces, again, the boundary is not fixed, heat being always capable of +producing motion, and motion always of producing heat. Hence, it is all +the more important for us to find a division of the economic gifts +(matter, forces(190) and relations) of external nature, into such as are +capable of acquiring exchange value, and such as are not. (See § 5.) + +A. Those gifts of nature which, because they cannot be appropriated by any +one, or which at least are inexhaustible as compared with the wants of +man, and therefore never have a direct value in exchange, belong either to +the class of _free_ goods, in the fullest sense of the word, as, for +instance, sunlight and the atmosphere (_supra_, § 5);(191) or they +constitute, by reason of their peculiar and intransmissible connection +with the whole country, an essential element of the national resources. + + + + Section XXXII. + + +External Nature.--The Sea.--Climate. + + +To the last category belongs, for instance, the sea, the only natural +boundary of a country, which from a military point of view, constitutes a +protection to it, without, at the same time, disturbing peaceful traffic. +(_Riedel._) Here, also belong ocean currents, especially when uniformly +supported by regular winds,(192) the ebb and flow of the tides, which +constitute a piece of commercial machinery of the very greatest +importance, particularly when they affect the waters of rivers to a great +distance.(193) In this age, when the love of travel is so great and so +universal, what prices are paid in many places by strangers for the beauty +of a landscape, to its owner. + +Special mention should be here made of climate, and of its heat or +moisture. The lines called isothermal, that is, lines of equal annual +heat, are, therefore, of greatest importance to public economy, because +the "zones of production" depend mainly on them.(194) However, we are +concerned here, not only with the average temperature of the whole year, +but especially with the distribution of heat among the several parts of +the day and the different seasons of the year, and the maximum summer heat +and winter cold (the isothermal and iso-cheimenal lines). Coast lands are +wont to have a milder winter and a cooler summer than continental ones +with an equal average yearly heat. This produces a great difference in +vegetation, because there are a great many plants which can endure the +winter's cold very well, but require a hot summer; and _vice versa_.(195) +Were it not for this fact, in connection with the winter-sleep of plants, +a large portion of the north would be entirely uninhabitable. Besides, the +temperature of a place does not depend exclusively on its latitude, or on +its height above the sea-level.(196) The humidity of the climate is, as a +rule, great in proportion to the quantity of water in its neighborhood, +and to the height of its temperature; although, for instance, in Europe, +the number of rainy days increases, the further we advance towards the +north.(197) Although the distance of a place from the equator and its +height above the level of the sea have, in many respects, a similar effect +(vertical, horizontal isothermal lines and zones of production), +mountainous regions are uniformly distinguished by a greater degree of +humidity, which makes them better adapted for pasturage and +forest-culture. But the flora of a locality, being the resultant of all +its conditions, affords us a much better criterion of the value of the +climate for economic purposes, than the most accurate thermometric +observations. Other things being equal, the productive force of nature +operates, doubtless, with most energy, in warm climates. The more remote a +country is from the equator, the more is its fertility confined to its +lowest parts.(198) Greater heat will, as a rule, ripen the same product +sooner, and thus permit the same land to be used several times in the same +year.(199) Each individual harvest, as a rule, is more abundant,(200) and +the products better in many respects. The fruit, for instance, and wine, +contain more sugar,(201) and oleaginous plants contain more oil. Lastly, +since nature in warm countries is so much more generous, it may be +utilized by man with less regard for consequences. There is less need of +extensive woods, of large winter supplies, especially for animals;(202) +fewer buildings are demanded, and there is also less demand for human and +brute labor, since the work of plowing, sowing etc., extends over a +greater portion of the year.(203) It is true, on the other hand, that also +the destructive force of nature is greater in warmer than in colder +countries. (§ 209.)(204) + + + + Section XXXIII. + + +External Nature.--Gifts Of Nature With Value In Exchange. + + +B. Those gifts of external nature which may become objects of private +property, and at the same time possess sufficient relative scarcity to +give them value in exchange, are either movable, and exhaustible in a +given place, or firmly connected with the land. The first category +embraces, for instance, such wild animals and plants as serve some useful +purpose, minerals, above all, fossil combustible matter(205)--the "black +diamonds," coal, of which, with its canals, Franklin said that it had made +England what it is. The economical effect of their moveable character is +best seen, when the use made of an ordinary stratum of coal is compared +with that of a protracted subterranean fire in a coal mine.(206) The +latter can be directly useful only to those in its immediate vicinity. +Every lower layer of the burning coal would be less useful. An increase of +its actual power by accumulation in time or place is scarcely possible. In +all these respects, the movable coal is incomparably better adapted to the +satisfaction of man's wants. It may be said that the capacity of heat for +drying, distilling, melting and hardening purposes, of imparting rapid +motion to heavy objects by the production of confined steam, is, at least, +a thousand times as great when a thousand bushels of coal are consumed as +when one is consumed. In most cases even the concentration of a large +quantity of coal will increase, the result not only absolutely, but +relatively.(207)(208) + + + + Section XXXIV. + + +External Nature. (Continued.) + + +The materials, forces and relations or conditions of external nature, +immovably connected with parts of the land, even when in themselves +exhaustless, either allow only of a definite amount of economic +utilization, as, for instance, the mechanical force of a given waterfall, +which can drive only a definite number of mills of a definite size;(209) +or their increased utilization is accompanied by difficulties which +increase with still greater rapidity. This last is the case, especially in +the employment of land for agricultural purposes. It is, according to +Senior, one of the four fundamental axioms of Political Economy, that +additional labor, spent on a given quantity of land, produces, as a rule, +a relatively smaller yield; assuming, of course, that the art of +agriculture remains the same. It is not possible to determine either +generally, or in particular cases, the precise point at which agriculture +should stop, to prevent relatively smaller returns from increased +expenditure of labor and capital. Improvements in the art of agriculture +may remove it a great distance. But, that there is such a point admits of +no doubt. No one will believe that an acre of land can be made to produce +a quantity of the means of subsistence sufficient to support all Europe, +no matter what the amount of seed used, or of manure etc. employed.(210) +This is most apparent in forest-economy, where the absolute increase of +the so-called wood-capital becomes, after a certain time, smaller from +year to year.(211) + + + + Section XXXV. + + +External Nature.--Elements Of Agricultural Productiveness. + + +In treating of the agricultural productiveness of a piece of land, it is +necessary to distinguish three things,--its bearing-capacity, its capacity +for cultivation, and its direct capacity to afford food to plants.(212) +Plants grow by drawing a part of the elements which enter into their +composition from the atmosphere, and a part from the earth through the +agencies of sunlight and of water. While the air, the sun's heat, and in +most parts of the world, water, are free and inexhaustible goods, the +earth's supply of food for plants must be considered as analogous, so far +as its exhaustibility and capacity to be appropriated are concerned, to +the beds of coal and of ore etc. which occur in mining districts. This is +certainly true, with a few important differences, however, as for +instance, that, as a rule, it is impossible, except through the +cultivation of plants, to obtain from the earth the stores of plant food +which it contains;(213) and that it is possible to husbandry to replace +the portion of these stores taken from the earth by the harvest, through +the agency of manures.(214) + +Incomparably more important in the economic valuation of a piece of land +is its capacity for cultivation, because this depends much less on the +good or bad quality of the husbandman's art. I mean here the so-called +physical constitution of the vegetable soil; its water-holding power, its +consistency (light or heavy soil) on which the difficulty of working it +depends; its ability to dry, in a shorter or longer time, and its +accompanying diminution in volume; its ability to draw moisture from the +atmosphere and to absorb the various kinds of gases; its heat-absorbing +and heat-containing power (hot, warm and cold soils).(215) Much depends +here on the depth of the vegetable soil and on the constitution of the +sub-soil, which, for instance, when it is very permeable, improves a very +moist soil, but in the form of meadow iron-ore (_Wiesenerz_), works great +injury. The vertical form of the land is also a very important element in +estimating the natural fertility of the soil. In mountainous districts, +the quantity of land which can be used (and with what labor!) is wont to +be relatively smaller than in low lands. Hence it is, that the former +become too small for their inhabitants; who, therefore, swarm over the +plains lying before them either as settlers or conquerors.(216) In the +eastern hemisphere, the northern slopes of mountain regions are most +unfavorably situated, although the southern slopes are frequently +subjected to more trying and more sudden variations of thawing and +freezing weather.(217) + +But all these more special qualities of the soil must be distinguished +from their general basis, the bearing or carrying capacity which land +possesses as a mere superficies, and which the most naked rock (Malta!), +and the bed of a flowing stream (the floating gardens of China!) possess +to some extent, since there is a possibility of establishing a +plant-feeding surface on them. This bearing capacity, which in most +instances is given only by nature, and which can be added to only to a +very limited extent and at great outlay, is wont, when the population is +very dense, to acquire considerable exchange value in the +vicinity.(218)(219) + + + + Section XXXVI. + + +External Nature.--Further Divisions Of Nature's Gifts. + + +The gifts of nature, we further divide into those which can be directly +enjoyed and those which are of use only indirectly, by facilitating +production. (Natural means of enjoyment,--means of acquisition.)(220) An +extreme superfluity of the former is as disastrous to civilization as a +too great scarcity of them. How simple the economy of a tropical country! +A banana field will support twenty-five times as many men as a wheat field +(_K. Ritter_); and with infinitely less labor; for all that is needed is +to cut the stems with their ripened fruit, to loosen the earth a little +and very superficially, when new stems shoot up.(221) At the base of the +mountains of Mexico, a father needs labor only two days in the week to +support his family. Hence, nothing so much excites the wonder of the +traveler there as the diminutiveness of the cultivated ground surrounding +each Indian hut.(222) But in these earthly paradises, where, as Byron +said, even bread is gathered like fruit, the powers of man slumber as +certainly as they grow torpid in polar deserts.(223) The sentence: "In the +sweat of thy brow shalt thou eat bread," has been a blessing to mankind. +Athens was not only the literary and political, but also the economic +capital of Greece; and yet Attica was one of the most sterile countries in +the world.(224) Unfortunate Messina, on the other hand, was the most +fertile province of Greece. In modern times, no countries of equal extent +have produced as many great captains, statesmen, savants and artists as +Holland, whose securest portions are as unfertile as those which are +fertile are threatened by the sea. On the other hand, how lately and +imperfectly has the so-called black-earth of southern Russia fallen under +the influence of civilization!(225) + + + + Section XXXVII. + + +External Nature.--The Geographical Character Of A Country. + + +The geographical character of a country is, as a rule,(226) most +intimately connected, not only with its flora and fauna, but also with the +character of its people. One of the crowning glories of the progress of +modern science is, that it has recognized anew the power of this wonderful +organism, and that it has made geography an explanatory medium between +nature and history. The conditions most favorable to the development of +civilization are found in a well developed country which slopes gradually +through a series of intermediate terraces from a mountain summit to a +plain; especially when they are connected with one another by a good +system of streams; since here the opposite peculiarities of the +populations of the highlands and coast-lands(227) tend to produce a +nationality both one and varied. Where the transitions are too abrupt, as +for instance, in New Holland, they easily impede inter-communication; and, +still more, where the several parts of the country are of very great +extent; as, for example, the desert of North Africa, the plateau of South +Africa or that of Central Asia. Europe is favored above all other parts of +the world by the happy combination of mountain and plain.(228) We might +pursue the parallel existing between the soil and the character of a +people into the minutest details, and discover, even in the difference +between Spanish, French, German and Hungarian wines, a reflection of the +different characters of the people.(229) + +But whence is this? Can it be that dead nature has thus irresistibly +affected the living mind? We do not need to give a materialistic answer to +the question.(230) Almost every people has migrated at some period of its +existence. Urged on by their peculiar tastes and tendencies, they settled +in the places most in harmony with their character. A higher hand was over +them; one which, we should unreservedly trust, placed them in such +external circumstances as were most favorable to the development of all +their faculties. + +But the influences of man on nature are no less notable than those of +nature upon man. The greater number of domestic animals and plants which +Europe possesses to-day, it has been obliged to introduce from other parts +of the globe.(231) In the interior of Gaul, the vine rarely ripened, at +the time of Christ.(232) On the other hand, Mesopotamia, formerly one of +the gardens of the world, is now covered with dried-up canals, filled a +little below the surface with heaps of brick and broken vases, the remains +and other vestiges of a once dense population. Its former rich alluvial +soil, now almost calcined, produces at present scarcely anything except a +few saline plants, mimosas etc.(233) The higher the civilization of a +people, the less does it depend on the nature of the country. + + + + Section XXXVIII. + + +Of Labor.--Divisions Of Labor. + + +Man's capacity for most economic labor is so closely connected with the +exquisite articulation of the human hand, that Buffon could say without +exaggeration that reason and the hand made man man.(234) But it is true of +economic labor, as of all other labor, that it is more efficient in +proportion as mind predominates over matter. + +The best division of economic labor is the following:(235) + +A. Discoveries and inventions.(236) + +B. Occupation of the spontaneous gifts of nature, as, for instance, of +wild plants, wild animals, and of minerals.(237) Where this is the only +kind of economic labor, man is necessarily dependent on nature in a high +degree. + +C. The production of raw materials; that is, a direction given to nature +in order to the production of raw materials, by stock-raising, +agriculture, forest-culture etc., but not by mining. + +D. The transformation (_Verarbeitung_) of raw material by means of +manufactories, factories, the trades etc. + +E. The distribution of stores of goods among those who are to use them +directly, whether from people to people or from place to place +(wholesale), or among the individuals of the same place (retail).(238) To +this class also belong leasing, renting, loaning, etc. + +F. Services, in the more limited sense of the term, which embraces +personal as well as incorporeal goods; as, for instance, the labors of the +doctor, teacher; virtuoso, of the statesman, judge, and of preachers, +whose office it is, by way of eminence, to produce and preserve the +immaterial wealth, known as the State and the Church.(239) + +The order followed in the above classification is that in which the +different classes of labor are wont to be historically developed. + + + + Section XXXIX. + + +Labor.--Taste For Labor.--Piece-Wages. + + +Man's taste for labor is conditioned especially by the extent to which, +and the security with which, he may hope to enjoy the fruit of his labor +himself. Hence it is that, as a rule, the slave (§ 71, ff.) and socager +work least willingly, the day laborer with less industry than the +piece-worker,(240) who is at the same time more satisfied with himself, +and gives most satisfaction to his master,(241) since he acquires more +both for himself and for his master. The superiority of piece-paid labor +is greater in proportion as the workman calculates his own advantage. It +is, therefore, smallest in the case of ingenuous uneducated workmen, and +in that of the really conscientious.(242) The fear of seeing one's +condition grow worse, through want of industry, exerts an influence +precisely similar to the hope of improving it. In both respects, free +competition (§ 97) must be considered one of the principal means of +furthering the taste for labor.(243) + +Among the causes which have contributed to make England the first country +in the world, viewed from a politico-economical stand-point, English +writers on Political Economy have pointed out as one of the principal, the +prevalence there of piece-wages.(244) Payment by the piece should, of +course, be practiced, only in cases in which the work may be broken up +into a series of isolated tasks, and is completed by such a series. Hence, +it is not applicable where a great many different things are required of +the same workman; nor in relations in which continuity, as, for instance, +of the inclination or disposition of the workman is the chief thing.(245) +The further the division of labor is carried in our day, the greater the +part money plays in our social economy, and the more lasting relations are +dissolved, the more general becomes piece-work, which, with all its +material advantages, has, speaking morally, its dark side. +(_Atomism!_)(246) In a great many branches of manufactures it has been +relinquished because the excellence of his work suffered from the +workman's haste, and because he could not be properly controlled.(247) It +is rather the quantity than the quality of work which increases with +piece-work, and where the quality of the work is what is desired, this +system has not the same field. And where it obtains, as, for instance, in +the case of ordinary type-setters, resort is had to payment by the day for +compositors engaged on mathematical treatises, fac-similes, inscriptions +etc. On the side of the workman, it is generally only the idle and awkward +who oppose piece-work on principle. It is a subject of regret that the +best and most industrious workmen are carried away by it to an extent +detrimental to their health.(248) However, many of the deficiencies of the +piece-wage principle may be removed by agreements made with whole groups +of workmen; provided, always, that the groups are not too large to prevent +the mutual knowledge and surveillance of their members.(249) The quantity +of work is greatest, its quality best, and the material(250) employed used +most sparingly, when the workman works on his own account, or has a share +in the profits. This last is proper only in those branches of the business +the success of which depends on the quality of the work. To compel the +workman to share in the profits alone will not do, because he is generally +too poor to run any risk or to do long without his earnings. The system of +paying "commissions," therefore, is to be recommended all the more +strongly, since it is a combination of fixed wages with a share in the +profits. This system is very prevalent in North America, where a great +deal has to be confided to the workmen. It is practiced, also, in the +whale fisheries, and on the Greek ships in the Levant engaged in coasting, +where much more depends on the care of the sailors than on the ability of +the captain.(251) It presupposes good workmen, equal almost to their +master in education,(252) for instance, in the case of overseers of labor; +since every better inducement to the taste for labor which is not only +juster but more complicative, is not only a condition but also the effect +of higher culture. But if the economy of a people is ripe for share-wages, +and masters begin to introduce them in earnest in individual cases, the +work produced will be improved to such a degree that it can not be long +before all others will be necessitated to follow them.(253) + +If, however, workmen are to enjoy the fruit of their industry, it is +necessary, first of all, that public order should be secure. Even the most +industrious become discouraged where despotism or anarchy prevails. On the +other hand, even the greatest security is no sufficient incentive to a +nation of fatalists.(254) + + + + Section XL. + + +Labor.--Labor-Power Of Individuals. + + +The average labor-power of individuals varies very much in different +nations.(255) The reason of this is, in part, doubtless a difference in +natural endowments. Thus, for instance, no people surpass the English and +Anglo-American in energy, none the German in intelligence in work or the +French in taste. Where we can assume that the same meaning is attached to +the expression, "military capacity," by the different recruiting bureaus, +important conclusions as to the physical labor-power of different +localities may be drawn from the ratio existing between the number of +those fit for military service and those who are legally liable to +military duty.(256) + +But these conclusions are greatly modified by the state of civilization +and that of society. Where the laboring classes are despised and paid in a +manner unworthy of human beings, the badness of their work will be in +keeping with the estimation in which it is held. The reverse of this, +also, is usually true under different circumstances. (§ 173.) Thus, it has +been noticed in France, that native workmen, provided with as substantial +food as English workmen, are scarcely inferior to the the latter in the +technic value of their labor.(257) A Mecklenburg day laborer eats almost +twice as much as a Thuringian workman, but then he accomplishes almost +twice as much. Hence, employers gain in the long run by paying their +workmen well. As civilization advances, the same number of workmen become, +not only more industrious and more capable, but the same quantity and +quality of labor becomes, as a rule, cheaper.(258) + +The moral culture of a people exerts the greatest influence here. In every +private undertaking, a great part of the expense attending it, and in +every state, a great part of the expense of its police system, and of its +system of administering justice, is occasioned only by the dishonesty of +men. If all this expense could be dispensed with, and full confidence +placed in individuals, it would be possible to devote much more time and +energy to positively useful labor.(259) In estimating the labor-power of +different nations or different periods of time, the division of population +according to age is also of importance. As a rule, the labor-power of +males is greatest from the age of twenty-five to the age of forty-five. +The more numerous, therefore, the class of the population between these +ages is, the more favorably, other things being equal, is it situated as +regards labor.(260)(261) But, as a rule, the relative number of full-grown +people is greatest in highly civilized nations. (§ 248.)(262) + + + + Section XLI. + + +Labor.--Effect Of The Esteem In Which It Is Held. + + +As civilization advances, labor becomes more honorable. All barbarous +nations despise it as slavish. _Pigrum et iners videtur sudore adquirere +quod possis sanguine parare_: has been the motto of all medieval times. In +heathen Iceland, the owner of a piece of land might be deprived of it by +an adversary who could overpower him in single combat. This mode of +acquisition was considered more honorable than purchase. It was Thor's own +form of investiture. The ideas of the Romans on rightful acquisition may +be inferred from the word _mancipium_ (manu capere).(263) Pure +Christianity, on the other hand, preached the honorableness of labor from +the first (Thess. 4, 11; II. Thess. 3, 8 seq.; Eph. 4, 28). And so in the +time of the Reformation,(264) when Christendom was returning to its +primitive purity. + +In keeping with this is the fact, that the most cultivated nations, and +the same may be said of individuals, value time most highly. "Time is +money." (_Benjamin Franklin._) An English proverb calls time the stuff of +which life is made.(265) While in negro nations, individuals do not even +know their own age; while in Russia, there are very few clocks to strike +the hours, even in the towers of churches, in England, a watch is +considered an indispensable article of apparel, even for very young people +and for some of the lower orders of society.(266) Railroads operate in +this respect as a kind of national clock. The introduction of machinery +and the more minute division of labor, make punctuality a necessity. While +South Americans and West Indians are frightfully careless in their every +movement, a carelessness which betrays itself even in their drawling +speech,(267) the life of a New Englander has been compared to the rush of +a locomotive. In the markets of Central Asia, nothing strikes the European +with so much surprise as the little value put upon time by the merchants +of India and Bucharia, who are fully satisfied when, after endless +waiting, they succeed in obtaining a somewhat higher price for their +wares.(268) + + + + Section XLII. + + +Of Capital.--The Classes Of Goods Of Which A Nation's Capital Is Made Up. + + +Capital(269) we call every product laid by for purposes of further +production. (§ 220).(270) + +Hence, the capital of a nation consists especially of the following +classes of goods: + +A. _Soil-improvements_, for instance, drainage and irrigation works, +dikes, hedges etc., which are, indeed, sometimes so far part of the land +itself that it is difficult to distinguish them from it.(271) To this +class belong all permanent plantations. + +B. _Buildings_, which embrace workshops and storehouses as well as +dwellings; also artificial roads of all kinds. + +C. _Tools, machines and utensils_ of every description;(272) the latter +especially for personal service, and for the preservation and +transportation of other goods. A machine is distinguished from a tool in +that the moving power of the former is not communicated to it immediately +by the human body, which only directs it; while the latter serves as a +species of equipment, or as a better substitute for some member of man's +body.(273) To be of advantage, these three kinds of capital must save more +labor or fatigue than it has cost to produce them. Tools are, however, +older than machines. The aborigines of Australia used only a lance and a +club in hunting; the somewhat more civilized American Indians, the bow and +arrow; Europeans use firearms: in all of which a gradual progress is +observable. Of the blind forces which communicate motion to machines, +water was the first used, then the wind, and last of all, steam.(274) + +D. _Useful and laboring animals_, in so far as they are raised, fed and +developed by human care. + +E. _Materials for transformation_ (_Verwandlungsstoffe_): either the +principal material which constitutes the essential substance of a new +product, the yarn of the weaver for instance, the raw wool, silk or cotton +of the spinner; or the secondary material which, indeed, enters into the +work, but only for purposes of ornamentation, as gold-leaf, lac, colors +etc. + +F. _Auxiliary substances_, which are consumed in production, but do not +constitute a visible part of the raw product,(275) as coal in a smithy, +powder in the chase or in mining, muriatic acid, in the preparation of +gelatin, chlorine in bleaching etc. + +G. _Means of subsistence_ for the producers, which are advanced to them +until production is complete. + +H. _Commercial stock_, which the merchant keeps always on hand to meet the +wants of his customers. + +I. _Money_ as the principal tool in every trade that is made. + +K. There is also what may be called _incorporeal capital_ (quasi-capital +according to _Schmitthenner_), which is as much the result of production +as any other capital, and is used in production, but which, for the most +part, is not exhausted by use. There are species of this kind of capital +which may be transferred, as for instance, the good will of a +well-established firm. Others are as inseparably connected with human +capacity for labor as soil-improvements with a piece of land; e.g., the +greater dexterity acquired by a workman through scientific study, or the +greater confidence he has acquired by long trial.(276) The state itself is +the most important incorporeal capital of every nation, since it is +clearly indispensable, at least indirectly, to economic production.(277) + +The greater portion of the national capital is in a state of constant +transformation. It is being continually destroyed and reproduced. But from +the stand-point of private economy, as well as from that of the whole +people, we say that capital is preserved, increased or diminished +according as its value is preserved, increased or diminished.(278) +_Pretium succedit in locum roi et res in locum pretii._ "The greater part +in value of the wealth now existing in England, has been produced by human +hands within the last twelve months. A very small proportion indeed of +that large aggregate was in existence ten years ago; of the present +productive capital of the country, scarcely any part except farm-houses +and a few ships and machines; and even these would not, in most cases, +have survived so long, if fresh labor had not been employed within that +period in putting them into repair.... Capital is kept in existence from +age to age like population, not by preservation, but by reproduction." +(_J. S. Mill_.) + + + + Section XLIII. + + +Capital.--Productive Capital. + + +Capital, according to the employment that can be given it, may be divided +into such as affects the production of material goods, and such as affects +personal goods or useful relations. The former, under the name of +productive capital, is, in recent politico-economical literature, usually +opposed to capital in use.(279) Evidently any one of the two kinds of +capital mentioned above, may be used for both purposes.(280) Indeed, the +two classes are, in many respects, coincident. Thus, a livery-stable +carriage or a circulating library is productive capital to its proprietor, +and capital in use(281) (_Gebrauchskapital_) to the nation in general; +although the circulating library from which an Arkwright obtains technic +information, or the livery-stable vehicle which carries a Borsig to his +counting-room, has certainly been used in the production of material +goods. Almost all capital in use may be converted into productive capital, +and hence, the former might be called quiescent capital, and the latter +working capital.(282) One of the principal differences between productive +capital and capital in use is, that the former, even when most judiciously +employed, does not so immediately replace itself, as the latter, by its +returns.(283) On the other hand, the real dividing line between capital in +use, and objects consumed which are not capital, is, and it is in complete +harmony with our definition of capital, that the latter are subject not +only to a more speedy destruction and one which is always contemplated, +while in the case of the former, its destruction is only the unintended +reverse-side of its use. + +Among a highly civilized people, a great amount of capital in use, as +compared with the productive capital of the country, may be considered a +sure sign of great wealth. When this is the case, the people, without +losing the desire of further acquisition, think that they have enough to +richly enjoy the present. I need only call to mind the munificence +displayed by the middle classes in England, in their silver plate and +other domestic utensils. But the people of Russia, and Mexico also, can +make no mean display of silverware.(284) Here luxury is only a symptom of +the disinclination or inability of the inhabitants of the country to use +their capital in the production of wealth. How much richer would Spain be +to-day, if it had employed the idle capital spent in the ornamentation of +its churches in constructing roads and canals!(285) Most nations in a low +state of civilization suffer from the absence of legal guarantees. Each +one is compelled to turn his property into a shape in which it can be most +easily transferred from one place to another and hidden. This is the +principal reason why the Orientals possess, relatively speaking, so many +precious stones and so much of the precious metals. The same cause +accounts for the simplicity of their dwellings.(286) On the other hand, +productive capital is to be found in the greatest proportion among +civilized nations which are making very rapid strides towards wealth, the +people of the United States, for instance. + + + + Section XLIV. + + +Capital.--Fixed Capital, And Circulating Capital. + + +Capital, according as it is employed, is divided into fixed capital and +circulating capital. Fixed capital may be used many times in production by +its owner; circulating capital only once. The value of the latter kind of +capital passes wholly into the value of the new product. In the case of +the former kind of capital, only the value of its use passes into the new +product. (_Hermann._) Hence, the farmer's beasts of burthen belong to his +fixed capital; their food, and his cattle intended for the slaughter, to +his circulating capital. In a manufactory of machines, a boiler intended +for sale is circulating capital; while a similar one, held in reserve for +the machines used in production, is fixed capital. Ricardo attributes a +somewhat different meaning to these two terms: he calls fixed capital that +which is slowly consumed, and circulating, that which disappears +rapidly.(287) Fixed capital is, indeed, produced and preserved by +circulating capital; but it is, for the most part, transformed again into +circulating capital.(288) Besides, it is only by means of the latter, that +the former can be productively employed.(289) The relative importance of +fixed and circulating capital to a country depends upon whether the +country is an advanced or only an advancing one. A people with very much +and very fixed capital are indeed very rich; but run the risk of offering +many vulnerable points to an aggressive enemy, and of thus turning the +easily jeopardized mammon into an idol. To make a passing sacrifice of the +country that the people and the state may be saved, as did the Scythians +against Darius, the Athenians against Xerxes, and the Russians against +Napoleon, becomes difficult, in proportion as the nation has become richer +in fixed capital.(290) But, as the destination of the latter is changed +with much greater difficulty than that of circulating capital, highly +cultivated nations would find it very hard to satisfy new wants, if they +could not always appropriate the results of additional savings to the +production of new fixed capital. + + + + Section XLV. + + +Capital.--How It Originates. + + +Capital is mainly the result of saving which withdraws new products from +the immediate enjoyment-consumption of their possessor, and preserves +them, or at least their value, to serve as the basis of a lasting +use.(291) As capital represents the solidarity of the economic past, +present and future, it, as a rule, reaches back into the past and forward +into the future, through a period of time longer in proportion as its +amount and efficiency are greater.(292) Those producers, too, whose +products perish rapidly may, also, effect savings by exchanging their +products and capitalizing their counter-value. Thus, the actor, whose +playing leaves after it nothing but a memory, may use the wheat received +by him from a farmer who came to listen to him, in the employment of an +iron-worker, and invest the product permanently in a railroad. The +transformation may be effected by means of money, bonds etc., but it is +none the less real on that account. Order, foresight and self-restraint +are the intellectual conditions precedent of saving and capital. The +childish and hail-fellow-well-met disposition which cares only for the +present is inimical to it. True, the desire of saving can be developed +only where there are legal guarantees to ownership;(293) guarantees which +are both the conditions precedent and the effect of all economic +civilization.(294) The Indians, Esquimaux etc., had to be taught for the +first time by the missionaries and merchants--and it was with the greatest +difficulty it was done--to save their booty, and spare the natural sources +of their acquisition. Originally, they were, in the heat and excitement of +their wild hunting and fishing, wont to destroy on the spot what they +could not enjoy in the moment.(295) In the lowest stages of civilization, +the first saving of capital of any importance is effected frequently +through robbery or in the way of slavery.(296) In both cases, it is the +stronger who compel the weaker to consume less than they produce. See +_infra_, § 68. Where civilization is at its highest, the inclination to +save, as a rule, is very marked.(297) It begins to decline where a people +are themselves declining in civilization, and especially where legal +guarantees have lost their force. + +But capital may be increased even without personal sacrifice; as for +instance, by mere occupation, as of certain goods, not hitherto recognized +as such. Thus, also, by the establishment of valuable relations, the +advantages of which either become the common good of all; or which, +because at the exclusive command of one individual, obtain value in +exchange. The progress of civilization itself may increase the value of +existing capital. Thus, for instance, a house, considered as capital, may +double in value if a frequented street be opened in its neighborhood. To +this category belong all improvements in the arts which enable existing +capital to achieve more than it could before. The invention of the compass +increased the value of the capital employed in the merchant marine to an +extent that cannot be calculated.(298) The increase of capital effected by +saving soon finds a limit unless such limit is widened by the progress of +civilization.(299)(300) + + + + + Chapter II. + + +Co-Operation Of The Factors. + + + + Section XLVI. + + +The Productive Cooeperation Of The Three Factors. + + +All economic production generally demands the cooeperation of the three +factors: external nature, labor and capital. But with the political +economist, labor is the principal thing; and not merely because all +capital presupposes labor, nor because every combination of the three +factors is an act of labor; but, in general, because "the human mind's +idea of means and ends makes all goods goods for the first time." +(_Hufeland._) + +Leaving the free forces of nature, surrounded by which we live and work, +out of consideration, and also the fact that all raw material is due to +nature, land is the indispensable foundation of all economy. But how +little can unassisted nature do to satisfy human wants! How much less to +produce goods possessed of value in exchange! A virgin forest, for +instance, sold in its natural state, has, indeed, value in exchange, but +only because it is taken into account that it can be cleared, and that +there are means of transportation already existing.(301) The greater part +of the forces of nature are latent to nomads and nations of hunters. When +labor develops, they are set free to assist it.(302) It is very seldom +that any thing can be produced without capital. Even the poorest gatherer +of wild berries needs a basket and must be clothed.(303) Were there no +capital, every individual would have to begin at the very beginning every +moment. Life would be possible only in a tropical climate. No man, since +the days of Adam, has been able to labor, except on the condition that a +considerable advance of capital had been made upon him. There is not a +nail in all England, says Senior, which cannot directly or indirectly +directly be traced back to savings made before the Norman conquest.(304) + + + + Section XLVII. + + +Productive Co-Operation Of The Three Factors. The Three Great Periods Of A +Nation's Economy. + + +The relation of the three factors to one another is necessarily very +different in different branches of production. For instance, in the case +of cattle-raising on a prairie, labor does very little, land almost +everything. Hence an extensive, thinly populated country is best adapted +to this species of production. But where land is scarce, as in wealthy and +populous cities, human activity should be directed into those branches of +industry which need capital and labor, as manufactures and the trades. (§ +198.)(305) + +Looked at from this point of view, the history of the development of the +public economy of every people may be divided into three great periods. In +the earliest period, nature is the element that predominates everywhere. +The woods, waters and meadows afford food almost spontaneously to a scanty +population. This is the Saturnian or golden age of which the sagas tell. +Wealth, properly speaking, does not exist here, and those who do not +possess a piece of land run the risk of becoming completely dependent on, +or even the slave of a land owner. In the second period, that through +which all modern nations have passed since the later part of the middle +ages, the element, labor, acquires an ever increasing importance. Labor +favors the origin and development of cities as well as exclusive rights, +the rights of boroughs and guilds by means of which labor is, so to speak, +capitalized. A middle class is formed intermediate between the serfs and +the owners of the soil. In the third period, capital, if we may so speak, +gives tone to everything. The value of land is vastly increased by the +expenditure of capital on it, and in manufactures, machine labor +preponderates over the labor of the human hand.(306) The national wealth +undergoes a daily increase; and it is the "capitalism" which first gives +an independent existence to the economic activity of man; just in the same +way that law is, as it were, emancipated from land-ownership, from the +church and the family only in the constitutional state +(_Rechtsstaat_).(307) But, during this period, the middle class with its +moderate ease and solid culture may decrease in numbers, and colossal +wealth be confronted with the most abject misery.(308) Although these +three periods may be shown to exist in the history of all highly civilized +countries, the nations of antiquity, relatively speaking, never advanced +far beyond the second, even in their palmiest days. A great part of that +which is accomplished among us by means of capital and of machines, the +Greeks and Romans performed by the labor of slaves. Leaving Christianity +out of the question, nearly all the minor differences between the public +economy of the ancients and that of the moderns may be reduced to this +fundamental distinction.(309)(310) + + + + Section XLVIII. + + +Critical History Of The Idea Of Productiveness. + + +In this chapter, the dogma-historical (_dogmengeschichtliche_) part is of +the utmost importance, because it treats of the connection between the +deepest fundamental notions and the principal branches of practical life. +It is clear that every political economist must construct his exposition +of productiveness on his prior notions of goods and value. We must, +therefore, draw a distinction between expositions which are logical but +altogether too narrow, and wholly erroneous ones.(311) + +Thus, the Mercantile System admits every mode of applying the three +factors of production, but considers them really productive only in so far +as they increase the quantity of the precious metals possessed by the +nation, either through the agency of mining at home, or by means of +foreign trade. This view stands and falls with the altogether too limited +idea of national wealth before mentioned (§ 9), which this system +advocated.(312) The majority of the followers of the Mercantile System +ascribe more power to industry to attract gold and silver from foreign +parts, than to agriculture, and to the finer kinds of industry than to the +coarser; to active and direct trade, more than to passive and indirect +trade. + + + + Section XLIX. + + +Critical History Of The Idea Of Productiveness.--The Doctrine Of The +Physiocrates. + + +The doctrine of the Physiocrates is to be explained in part by a very +natural reaction from the narrow-heartedness of the Mercantile System, and +at the same time, by a presentiment, misunderstood, of the true theory of +rent. (§ 150 ff.). Of the six classes of labor mentioned above (§ 38), +those only are called productive which increase the quantity of raw +material useful for human ends. All the other classes, it matters not how +useful, are called sterile, salaried, because they draw their income only +from the superabundance of land-owners and the workers of the soil. +Tradesmen, in the narrower sense of the term, produce only a change in the +form of the material, the higher value of which depends on the quantity of +other material consumed for the purposes of the tradesman's labor. If any +of this material is saved, the value of their products sinks, although to +the advantage of the economy of the whole nation. In any case, industry +could create no wealth, but only make existing wealth more lasting. It +might, so to speak, accumulate the value of the quantity of food consumed +during the building of a house in the house itself.(313) + +But if tradesmen really earned, in the value of their products, only what +they had consumed during their labor, it would be difficult for them to +find employers to provide them with capital. Everyone will acknowledge, +that a Thorwaldsen and an ordinary stone-cutter, with the same block of +marble, the same implements, the same food, would necessarily, after the +same time, turn out exceedingly different values.(314) And, even in the +case that industry should add to the raw material only precisely the same +amount of value as had been consumed by the workmen, can it be said that +the work ceases to be productive simply because it is consumed by the +workmen themselves? If that were so, agriculture even, would, in most +countries with a low civilization, be unproductive.(315) + +Commerce, according to the theory of the Physiocrates, only transfers +already existing wealth from one hand to another. What the merchants gain +by it is at the cost of the nation. Hence, it is desirable that this loss +should be as small as possible. Hence sterility!(316) But, the more +important branches of business, especially wholesale trade, are connected +with a transportation of goods (_Verri_), either from one place or from +one period of time, into another. Here the genuine merchant speculates +essentially on the difference of the values in use which are afterwards +greater than before.(317) The ice shipped yearly from Boston to tropical +lands met a much more urgent and wide-spread want there than it would if +it had remained at home. And thus the storage of grain in large quantities +after a bountiful harvest withdraws, indeed, an object of enjoyment from +the consumption of the people; but its sale, after a bad harvest, +undoubtedly increases their enjoyment in a much greater degree than it was +before diminished. Besides, the condition of both parties to the contract +is usually improved in all normal trade. (_Condillac._)(318) No one parts +with exchangeable goods unless they are of less use to him than the ones +he receives in return.(319) And so, the value in use of a nation's +resources is really increased by commerce. To the other attributes of +goods it adds one of the principal conditions of all use, accessibility +(_Kudler_), with which it either newly endows them, or which it increases +in degree. To this end, the merchant makes use of tools, just as the +manufacturer does. What spinning-wheels, looms and workshops are to the +latter, ships, warehouses, cranes etc., are to the former. If production +be not complete until the thing produced is made fit for its last end, +consumption, commerce may be looked upon as the last link in the chain of +productive labor. It, at the same time, constitutes a series of +intermediate links; as without it no division of labor is possible, and +without a division of labor, no higher economic productiveness.(320) How +commerce may increase the value in exchange of goods, and without in any +way injuring the purchaser, needs no further illustration.(321) + + + + Section L. + + +The Same Subject Continued. + + +Even Adam Smith called services, in the narrower sense of the term (§ 3), +the grave and important ones of the statesman, clergyman and physician, as +well as the "frivolous" ones of the opera singer, ballet-dancer and +buffoon, unproductive. The labor of none of these can be fixed or +incorporated in any particular object.(322)(323) But how strange it is +that the labor of a violin-maker is called productive, while that of the +violin-player is called unproductive; although the product of the former +has no other object than to be played on by the latter? (_Garnier_.) Is it +not strange that the hog-raiser should be called productive, and the +educator of man unproductive (_List_); the apothecary, who prepares a +salve which alleviates for the moment, productive, the physician, +unproductive, spite of the fact that his prescription in relation to diet, +or his surgical operation, may radically cure the severest disease? + +If the productiveness of an employment of the factors of production be +made to depend on whether it is attended by a material result, no one will +deny that the labor of the plowman, for instance, is productive; and no +one, of Adam Smith's school, at least, that that of the clerk, who orders +the raw material for the owner of the manufactory, is. They have +participated indirectly in the production. But, has not the servant of the +state, who protects the property of its citizens, or the physician, who +preserves the health of the producer, an equally mediate but indispensable +share in it? The field-guard who keeps the crows away, every one calls +productive; why, not, then, the soldier, who keeps away a far worse enemy +from the whole land? (_McCulloch._) But the entire division of business +into two branches, the one directly, and the other indirectly productive, +can be defended only as respects certain kinds of goods. +(_Schmitthenner._) The labor of the judge, for instance, is only +indirectly productive in the manufacture of shoes, inasmuch as he +guarantees the payment of the shoemaker's account. On the other hand, the +shoemaker contributes only very indirectly to the general security which +the law affords, by protecting the judge's foot.(324) + +Nor can any effectual inferiority of service be claimed, simply because +the productive power of one branch of business is, measured by the +duration of its results, greater than another.(325) What is more +perishable than a loaf of bread bought for dinner? What more imperishable +than the _monumentum aere perennius_ of a Horace? The labor expended on +persons and on relations (_Verhaeltnissen_) is, both as to the extent and +duration of its results, much less capable of being estimated than any +other; but its capacity of accumulation and its power of propagation are +greater than any other. It is in the domain of the "immaterial," that man +is most "creative." (_Lueder._)(326) Finally, neither should the greater +indispensableness of the more material branches of business be too +generally asserted. Agriculture produces grain which is indispensable, and +tobacco which is not; industry, cloth, as well as lace; commerce draws +from the same part of the world rhubarb and edible bird's-nests; and so, +to _services_ belong the indispensable ones of the educator and judge, as +well as those of the rope-dancer and bear-leader, which can be dispensed +with.(327) Indeed, the dividing line between material and intellectual +production cannot, by any means, be closely drawn.(328) + + + + Section LI. + + +The Same Subject Continued. + + +The greater number of recent writers(329) have, therefore, come to be of +the opinion that every useful business which ministers to the whole +people's requirement of external goods possesses economic +productiveness.(330) But it makes a great difference to science, whether a +view is considered true because no one has suggested a doubt of its +correctness, or because all doubts as to its truth have been triumphantly +removed. + + + + Section LII. + + +Idea Of Productiveness. + + +It should never be lost sight of, that the public economy of a people +should be considered an organism, which, when its growth is healthy, +always develops more varied organs, but always in a due proportion, which +are not only carried by the body, but also in turn serve to carry it. The +aggregate of the wants of the entire public economy etc., is satisfied by +the aggregate activity of the people. Every individual who employs his +lands, labor or capital for the whole, receives his share of the aggregate +produce, whether he contributed or not to the creation of the kind of +produce in which he is paid. Thus, in a pin-manufactory, the workman who +is occupied solely in making the heads of pins is not paid in pins or +pin-heads, but in a part of the aggregate result of the manufacture, in +money. Every department of business, therefore, for the achievements of +which there is a rational demand, and which are remunerated in proportion +to their deserts, has labored productively. It is unproductive only when +no one will need what it has brought forth, or when no one will pay for +it; but, in this case, what is true of the writer without readers--that he +is unproductive--and of the singer without hearers, is equally true of the +peasant whose corn rots in his granary, because he can find no sale for +it.(331) + + + + Section LIII. + + +The Same Subject Continued. + + +In this matter, again, there is an important difference to be observed +between private or individual economy and economy in its widest sense, in +the sense of a world-economy. The productiveness of labor is estimated in +the case of the former, according to the value in exchange of its result; +in the case of the latter, according to its value in use. There is a great +number of employments which are very remunerative to private individuals, +but which are entirely unproductive, and even injurious, so far as mankind +is concerned; for the reason that they take from others as much as, or +even more than they procure to those engaged in them. Here belong, besides +formal crimes against property, games of chance,(332) usurious +speculations (§ 113) and measures taken to entice customers away from +other competitors. Again, scientific experiments, means of communication +etc., may be entirely unproductive in the individual economy of the +undertaker, and yet be of more profit to mankind in general, than they +have cost the former.(333) In this respect the nation's economy holds a +middle place between individual economy and the world's economy.(334) +Strictly speaking, only those employments should be called productive +which increase the world's resources. Hence, the work of government should +be called so, only in so far as its expenses are covered by the taxes paid +willingly by the more reasonable portion of the citizens; and also only in +so far as its work is really necessary to the attainment of its end.(335) +The productiveness of an employment supposes, also, that it is not carried +on at the cost of other employments which it is more difficult to do +without. In a healthy nation we may, in this matter, rely, to a certain +extent, on the judgment of public opinion, which knows how to appreciate, +at their just value, professional gamblers, pettifoggers and the luxury of +soldiers. The greater, freer and more cultivated a nation is, the more +probable is it that the productiveness of private economy is also +national-economical productiveness, and that national-economical +productiveness is world-economical productiveness.(336) + + + + Section LIV. + + +Importance Of A Due Proportion In The Different Branches Of +Productiveness. + + +Much always depends on the due proportion of the different branches of +productiveness to one another. Thus, Spain, for instance, has remained +poor under the most advantageous circumstances in the world,(337) because +it allowed a disproportionate preponderance of personal services. The +character of the Spanish people has always given them a leaning towards +aristocratic pride and economic idleness. Tradesmen, in that country, +sought, as a rule, to amass merely enough to enable them to live on the +interest of their capital; after which they, by way of preference, removed +it into some other province, where they might be considered as among the +nobility; or they withdrew into a monastery. Even in 1781, the Madrid +Academy thought it incumbent on it to propose a prize for the best essay +in support of the thesis: "The useful trades in no way detract from +personal honor."(338) During the century in which the country was in its +greatest glory, the whole people were bent on being to all Europe what +nobles, officers and officials are to a single nation. "Whoever wishes to +make his fortune," said Cervantes, "let him seek the church, the sea +(i.e., go as an adventurer to America) or the king's palace." Under Philip +III., there were in Spain nine hundred and eighty-eight nunneries, and +thirty-two thousand mendicant friars. The number of monasteries trebled +between 1574 and 1624, and the number of monks increased in a yet greater +ratio. A great many of its manufactories, much of its commerce, and not a +few of its most important farms were controlled by foreigners, especially +by Italians. There were, it seems, in 1610, one hundred and sixty thousand +foreign tradesmen living in Castile. In 1787, there were still 188,625 +priests, monks, nuns, etc.; 280,092 servants; 480,589 nobles; 964,571 day +laborers; 987,187 peasants; 310,739 mechanics and manufacturers; 34,339 +merchants.(339) As a counterpart to this, the United States had, in 1840, +about 77.5 per cent. of its population engaged in agriculture, 16.8 in +manufactures and mining, 4.2 in shipping and commerce, 1.3 in the learned +professions.(340) + +We might be tempted, in view of this contrast, to return once more to the +unproductiveness of personal services. It is not, however, the direction +given to the forces of production, but the squandering of them, that is +injurious. When the Magyar, through mere vanity, drives a yoke of from +four to six horses where two are enough; or when, as in 1831, Irish +agriculture employed 1,131,715 workmen to produce a value of thirty-six +million pounds sterling, while that of Great Britain(341) produced one +hundred and fifty millions a year, and employed only 1,055,982 workmen, +these causes are as sure to impoverish the country, as the waste of the +Spaniards in supporting such an army of clergy and servants. Of course, +the temptation to waste wealth on parks is greater than to waste it in +vegetable gardens! The probability that a man will ruin himself by keeping +too many servants is greater than that he will do the same by employing +too many operatives.(342) And all the more, as there are many and +especially important services which regulate their own remuneration: thus, +as a rule, those of the statesman, those of the military in times of war, +and those of the priest in the age of superstition.(343) + + + + Section LV. + + +The Degree Of Productiveness. + + +Concerning the degree of productiveness, it may be remarked that that +application of the factors of production is most productive, which, with +the least expenditure of means, satisfies the greatest want in the economy +of a people. Here, there is a continual change, corresponding precisely to +the change in wants and faculties. After a bad harvest, for instance, the +labor which procures grain from foreign countries or the supplies of +former years, is most productive; and, after an earthquake which has +destroyed a large city, the labor of the builder. Agriculture is, as a +rule, the more productive labor of undeveloped nations, and industry of +highly developed nations.(344)(345) + + + + + Chapter III. + + +The Organization Of Labor. + + + + Section LVI. + + +Development Of The Division Of Labor. + + +The larger a tree grows to be, the more boughs and branches does it put +forth. The more perfect any species of animal is, the more does it stand +in need of a special organ for each special purpose. And thus the division +of labor has developed and kept pace with the development of human +society. While Crusoe was obliged to provide for all his wants by his own +labor, we find that in the wildest Indian family the male is employed in +war, the chase, in fishing, in the manufacture of arms and boats, and in +the transportation of the latter during long marches; the female, on the +other hand, in the preparation of food, in the hewing of wood, the curing +of skins, the sewing of clothes, in the building and preservation of the +wig-wam, the care of children, and the carriage of baggage when on the +march.(346) These occupations, at first entirely domestic, became, by +degrees, separate industries, which are constantly subject to further +subdivision.(347) + + + + Section LVII. + + +Development Of The Division Of Labor.--Its Extent At Different Periods. + + +In the middle age of a people, the division of labor is not carried to any +great extent. The courtiers of King Frotho III. advised him to marry, +"since otherwise his majesty's ragged linen would never be mended." Saint +Dunstan, although he occupied a high position in politics and in the +Church, was an excellent blacksmith, bell-founder and designer of ladies' +robes. Chriemhild in the Nibelungenlied was an industrious and skillful +milliner. In the corresponding period of Grecian and Roman history, we +find Penelope and Lucretia at the loom, Nausicaa, a laundress, the +daughter of the king of the Lestrigons, fetching water from the spring, +Odysseus, a carpenter, a queen of Macedonia as a cook, and finally the +distaff of Tanaquil.(348) In the highlands of Scotland, in 1797, there +were a great many peasants all of whose clothing was home-made, with the +exception of their caps; nothing coming from abroad except the tailor, his +needles and iron tools generally. But the peasant himself was the weaver, +fuller, dyer, tanner, shoemaker etc. of his own family:(349) every man +jack of all trades.(350) + +In present England, on the other hand, the manufacture of watches is +divided into one hundred and two branches which have to be specially +learned; only the so-called "watch-finisher" carries on other branches +besides. In Wolverhampton, it may happen that a man, employed in the +manufacture of keys, may not be able to make a whole key after an +apprenticeship of ten years, for the reason that during all that time he +may have been engaged only in filing.(351) In English agriculture there +are, according to German notions, very few complete wholes. A well-marked +distinction exists there between the cultivators of corn and breeders of +cattle; and the latter are again divided into breeders of young cattle, +into fatteners of cattle etc. Its industries are, in large part, separated +into provinces. Thus, linen manufactures are confined almost exclusively +to Leeds and Dundee, woolen manufactures, to Leeds,(352) cotton +manufactures, to Manchester, and Glasgow, pottery to Stafford, coarse iron +to South Wales, hardwares to Birmingham, cutlery to Sheffield. And so in +the different quarters of the city. Thus, in large towns, the banks, +stores, offices etc., are found in one portion, with scarcely any +intervening dwelling houses. + +On the division of labor depends all differences of estate and class, and +all human culture. It cannot be claimed that a division of labor does not +exist among animals;(353) but those animals among which something +analogous to a division of labor among men exists, are raised far above +all others by their human-like economy and the relative importance of +their achievements.(354) + + + + Section LVIII. + + +Advantages Of The Division Of Labor. + + +The advantages of all suitable division of labor, consequent upon the +natural differences of human faculties and dispositions, are the +following: + +A. _The greater skill of the workman._ Even physically, many capacities +are, by an indefinite number of repetitions of the same operation, +enhanced to an extraordinary degree; which, however, renders the +performance of other operations more difficult. Thus, the man who has +developed his muscles and hardened his hands working in a smithy, renders +himself incapable of becoming a violin-player or an operating +oculist.(355) Here belongs especially the possibility of turning every +kind of labor-power to greatest account. Even children(356) and old men +may be made, in this way, to play a part in the production of goods. It +becomes practicable, too, to relieve men endowed with superior faculties +from common labor, and allow them to devote themselves exclusively to the +development of the peculiar powers with which nature has gifted them.(357) + +B. _A great saving of time and trouble._ The simpler the operation +performed by a single workman, the more easily is it learned; the smaller +is the price paid or apprenticeship, which depends on this, at least, that +beginners perform poorer work and are paid more poorly. "The shortest way +to the end is most easily found when the end itself is near, and can be +kept continually in view." (_J. B. Say_.) Where the same workman combines +different operations, a great deal of time is lost in changing tools etc. +Besides, it always takes some time for a workman to get rightly under way +of his work. The person who changes thus frequently becomes more easily +indolent. Lastly, there is a great number of operations which demand the +same aggregate amount of effort, no matter what the number of objects on +which they are performed. It is thus, for instance, with shepherds, +mail-carriers etc.(358) The post carries a thousand letters with almost as +much ease as one; and the entire life of a wholesale dealer would scarcely +suffice to carry all the letters which he mails in a single day, to their +place of destination. During the middle ages, every man was obliged to +watch over his own personal safety and the maintenance of his own rights; +while in 1850, in Great Britain, twenty-one million people are protected +in their persons and property, in an infinitely more effectual manner, and +at less cost, by fifteen thousand soldiers, and by a much smaller number +of policemen, whose place it is to preserve public order. (_Senior_.) +Something similar takes place among merchants, and it may be admitted as +correct in principle, that every new intermediary, freely recognized by +both sides in commerce,(359) makes labor better or less expensive. + +C. As the land of a country is, in a sense, the natural extension of the +national body, _the international division of labor_ affords an indirect +means, but frequently an indispensable one, of procuring the products of +foreign countries and climates.(360) If the English people wished to +obtain themselves, and without having recourse to any intermediary, the +quantity of tea which they annually consume, it is possible that its whole +agricultural population would not suffice to procure it; while, at +present, it is obtained by the labor of forty-five thousand industrial +workmen. (_Senior_.) Moreover, the division of labor increases not only +the aptitude of the workman but also his incentive to productive labor, +since it guarantees to every one the certainty of being able, by means of +exchange, to enjoy the productions of every other person.(361) + + + + Section LIX. + + +Conditions Of The Division Of Labor. + + +It is by its division, that labor, considered as a factor of production, +is raised to the highest degree of efficiency. Its results in any given +industry are, therefore, more important in proportion as the element labor +predominates in it. Hence, these results are much smaller, in agriculture, +for instance, than in the trades, or in personal services.(362) The most +expert sower or harvester cannot be employed the whole year through in +sowing or harvesting. Some kind of rotation of crops, some kind of +combination of tillage and stock-raising is necessary to every +agriculturist. On this depends the importance of the technic secondary +industries of agriculture, which are, in principle, opposed to the +division of labor. Hence, too, almost any person engaged in a trade, no +matter of what kind, supposes a greater number of customers than a tiller +of the land of the same rank. + +The more labor is divided, the greater is the amount of capital necessary +to it.(363) It may be even said, that all preparatory labor becomes +capital in its relation to subsequent labor. If ten isolated workmen can +produce ten dozen articles of any kind, daily, and, after the introduction +of a more efficient division of labor, fifty dozen, the employer must +provide them, in the latter case, not only with five times as much +capital, but probably with fifty times as much, as then, five hundred +dozen are making continually. + + + + Section LX. + + +Influence Of The Extent Of The Market On The Division Of Labor. + + +But it is the extent of the market especially which determines the limits +of the division of labor; for there is a direct and necessary relation +between the division of labor and the exchange of its surplus. Hence, the +division of labor may be carried farthest in the case of those products +which are most easily transported from place to place, and which, at the +same time, possess the utility that is most widely recognized. The +smallness of the market may depend upon the scantiness of the population, +or upon its scattered condition;(364) upon their smaller ability to pay, +or upon the bad means of communication at their disposal.(365) Hence it +is, that in villages, small cities, and still more on isolated farms, many +branches of business are carried on by one person, which are divided among +many in larger cities; and this is especially true in the case of +businesses which have a chiefly local demand.(366) While, in small places, +the barber is also frequently the physician, in larger ones there are +dentists, oculists, accoucheurs, surgeons etc.(367); and while, in the +former, the tavern keeper is both dry goods merchant and grocer, there +are, in the latter, tea merchants, cigar-dealers, dealers in mourning +goods (in London childbed-linen warehouses) etc., and hotels for all the +different classes of travelers. There can be a distinct class of porters, +hack-men etc., only where commerce is very active.(368) And even in cities +like Paris, where the costly industries that minister to luxury, that of +the jeweler, for instance, admit of only a limited division of labor, this +effect depends on the smallness of the market; a market, indeed, which +geographically may extend over the whole earth, but which, in an economic +sense, must always remain small, on account of the small number of +customers who have the ability to pay for their products. The real wonders +produced by the division of labor and the employment of machinery we must +look for in the manufacture of the cheapest and commonest +commodities.(369) + + + + Section LXI. + + +The Division Of Labor--Means Of Increasing It. + + +Whoever, therefore, would increase the division of labor among the people, +must, first of all, extend their market; and this is done most efficiently +by improving the means of communication. Even in our day, it is over the +water-highroads that the heaviest articles are carried with the least +expenditure of force;(370) but where civilization is not advanced, these +highroads possess still greater advantages, because of their safety, +convenience and priority. And here is the explanation of the intimate +connection of the beginnings of all civilizations with the existence, near +the scene of such beginnings, of good natural water-roads. "Even the +wildest inhabitant of the sea coast very soon obtains the idea of +distance, which is altogether wanting to the inhabitant of the primeval +forest. No sooner does he catch sight of the far-off island than his +yearning after the distant assumes a well-defined character. Bits of wood +floating past him suggest to his mind the best material to buoy himself up +upon the water, and a fish the best form for his craft." (_Klemm._) Hence +the Mediterranean sea, especially the eastern portion, with the various +peoples and products of its coasts, with its numerous islands, peninsulas +and bays, its easy navigation, but little influenced by the tides or by +ocean currents, was the principal seat of ancient civilization.(371) The +literal meaning of Attica is coast-land. (_Strabo._) The colonization of a +new country is wont, where possible, to begin on the coast, especially on +islands near the coast; and to follow the course of rivers into the +interior. Even whole continents occupy, for the most part, in the history +of the world, the position assigned them by their coast-development.(372) +While it is hard to determine whether, in the case of the European +continent, its limbs predominate or its trunk, Africa may be said to be a +trunk without members. Its islands, most of them insignificant in +themselves, are almost entirely cut off from it by ocean currents. This +explains why Madagascar had not, by any means, the influence on African +civilization which Crete, Sicily and Britain have had on the civilization +of Europe. Asia occupies, in this respect, about a middle position between +Europe and Africa. The trunk of that continent bears to its members about +the proportion of 670,000 to 150,000 square miles. And what is worst of +all, the middle of the whole is an almost insurmountable wall between +north, south, east and west Asia. Hence the tenacious peculiarity and +isolated development of the Chinese, Malayan, Indian and Arabic +civilizations; while the three peninsulas of southern Europe, for +instance, have affected one another so largely, and in so many different +ways.(373) The northern hemisphere compared with the southern, presents a +contrast similar to that between Europe and Africa, or of the rich +coast-groups of the Atlantic compared with the poor ones of the +Pacific.(374) But it is most especially, large, well-watered plains that +are best adapted to the construction of roads, and thus to facilitate the +division of labor. And while we find, in many countries, that the +mountainous regions reached a certain stage of development earlier than +any others, because they were more easily protected by military force, we +find, too, that even here, plains, have, for the most part, had the +largest share of power and of civilization (northern Italy, northern +France, the plains of Switzerland and north Germany). See § 36.(375) We +must not, however, fail to consider the reverse side of the picture of the +great highways of the world. The same reasons that raise them to the +dignity of lines of commerce, make them lines of war; and even the +contagion of great plagues and of the ruling vices follows, as a rule, the +avenues of trade. + + + + Section LXII. + + +The Reverse, Or Dark Side Of The Division Of Labor. + + +There are hardships often attending the highly developed division of +labor, the dark and bright sides of which are most strikingly observable +only in large cities. However, when it is charged with adding to the +natural inequality of men, the accusation can be met only by the answer, +that, without the division of labor, we should be all equally poor and +equally coarse; for each one would be absorbed by the necessity of +providing for his lower wants, and no one would be in a way to develop his +higher faculties. Even the poorest man has more enjoyment in consequence +of the division of labor, than he could have living in a state of +isolation from his fellow men. The most wretched among us, the invalid +without property of any kind, the father of a family with more children +than he can support, would simply starve in the primeval forest. + +Those socialists who never tire of preaching "association," overlook for +the most part, the great, free association which our needs, wants or +tastes are ever changing, and which is given us, as of course, by the +division of labor.(376) Yet the skill produced by the division of labor is +unavoidably connected with a corresponding one-sidedness. The Russians, +for instance, are exceedingly apt, but they rarely distinguish themselves +in any thing.(377) Love of his avocation, or pride in it, is a thing +unknown to the Russian workman. He shirks all continuous labor.(378) +Experience has shown that the Neapolitans and Italians, in general, +exhibit great skill when they work alone; but that when a great many of +them work together, they become rapidly confused. The English, on the +other hand, are slow to learn anything new, or to overcome unlooked for +difficulties; but they have no equals as workmen in organized +industries.(379) The difficulty experienced in seeking a new calling, +where a high division of labor obtains, arises as much from the fact that +each person here has received a more one-sided training, as from the +necessity he is under of competing from the first with only consummate +workers. Rousseau's school has laid too much stress on the tendency of +higher civilization to diminish individual independence. _Quand on sait +creuser un canot, battre l'ennemi, construire une cabane, vivre de peu, +faire cent lieues dans les forets sans autre guide que le vent et le +soleil, sans autre provision qu'un arc et des fleches; c'est __ alors +qu'on est un homme!_(380) We might reply that to build a steamship or a +palace, and to travel around the world are far better. (_Dunoyer._) Even +physically, civilized man is superior to the savage, as might be inferred +from the greater average duration of life of the former. Of course, +extremes should not be compared, nor should we contrast the frame of a +weaver or student with that of a savage chief.(381) + +In a similar way, the one-sidedness of the international division of labor +may be pregnant with great danger to national independence. + + + + Section LXIII. + + +Dark Side Of The Division Of Labor.--Its Gain And Loss. + + +Where, indeed, the one-sidedness produced by the division of labor goes so +far as to cause the degeneration(382) of the workman's personality, the +human loss of the nation is greater than the material gain purchased by +it. Thus the occupation of polishing metals or gilding, when continued for +a long time without interruption, invariably ruins the health. What must +be the aspect of the soul of a workman who, for forty years has done +nothing but watch the moment when silver has reached the degree of fusion +which precedes vaporization! who is blind to all else, but receives a good +fat salary for his services.(383) Schleiermacher rightly declared all +human action which is purely mechanical, through which man becomes a +living tool (slave!) immoral. When the division of labor has reached this +point, machines should take the place of men. The morality of a profession +may be measured by the degree in which it corresponds with the universal +calling of the race.(384) It is not, therefore, a piece of inconsistency +but rather a deeply felt want, when, where civilization is at its highest, +so many demands are made that the division of labor should take a +retrograde path. The practice of gymnastic exercises by the sedentary +classes, universal military duty, the participation of citizens in +municipal government and in political affairs, of laymen in the government +of the church, of the wealthy in the administration of charity; all these +things are, from a materialistic stand-point, considered a great +squandering of time. It may be, that, if the division of labor were more +rigidly carried out, we might, by its means, obtain more perfect results +with less economic expense. But the whole man is of more importance than +the sum of his achievements and enjoyments. (Luke, 9:25.) Wo to the nation +where only jurists have a developed sense of the right, where political +judgment and cultivated patriotism are the portion of only officials and +placemen, where only the standing army has warlike courage, and the clergy +only conscious religiousness; where parents leave all care for education +to the teachers of the various branches of learning, and where physical +vigor is to be found only among the proletarians. Hence there is nothing +more ruinous than premature one-sided education in a single trade or +profession--a thing which often happens from poverty before the foundations +of the general education becoming a human being have been laid. The higher +a man's position, the more should he, so to speak, be a representative of +the whole human race. Who, for instance, would wish to see a ruler brought +up as men are to a special branch of science or to a special +profession?(385)(386) The best corrective for the one-sidedness produced +by a high division of labor consists in the extension and many-sided +employment of leisure time, both of which are made more easy by the same +high civilization which always accompanies the division of labor.(387) + + + + Section LXIV. + + +The Co-Operation Of Labor. + + +The cooeperation or combination(388) of labor must, however, always +correspond to the division of labor. Both are but different sides of the +one idea of social labor; the separation of different kinds of labor, in +so far as they would disturb one another, and the union or combination of +them so far as they help one another.(389) The vintner or grower of flax +would necessarily die of hunger if he could not certainly count on the +grower of corn. The workman in a pin-factory, who prepares only the heads +of pins, must be sure of his colleagues who sharpen the points, if his +labor would not be entirely in vain. The labor of the merchant is not even +thinkable without that of the different producers between whom he +mediates. Where the production of a certain article depends on the +services of six different kinds of labor, one of which, however, demands +thrice the time, and another twice the time of the rest, it is clear, +that, in order that the business may be properly carried on, so many +workmen should be employed that their number divided by 9 should leave no +remainder. (_Rau._) The union or combination of different kinds of labor +is most perfect when the workmen live nearest together; when, therefore, +they are not separated by great difficulties of transportation; or in +different countries, in which case, a war might tear all to pieces. + + + + Section LXV. + + +The Principle Of Stability, Or Of The Continuity Of Work. + + +Cooeperation in time is of equal importance: the principle of the +stability, or of the continuity of labor. When a workman dies, it is +necessary to be able to calculate on a substitute. It is well known that +it is much harder to begin a business, than it is, afterwards, to improve +and enlarge it; and this, the more complicated it is. A new enterprise +will take root easily, only where there are several similar ones already +in existence; a new manufacturing establishment, for instance, where by +the existence of other such establishments, the requisite habits of the +workmen, of capitalists and of the public in general, have been previously +developed. The skill of workmen is propagated especially by observation +and the personal emulation of the young; whence it is, that the +introduction of new industries is best made by the immigration of skilled +workmen.(390) Hence the baleful influence of such interruptions, as for +instance, the repeal of the edict of Nantes. Hence too, it is, that +despotism and the reign of the populace are so unfavorable to the economy +of a country, where there can be no guarantee of a consistent observance +and development of the laws. To the best applications of the principle of +the continuity of labor belong the church-building of the middle ages, the +national canals, the street and fortification systems of modern times; all +of which have been created only by the cooeperation of several generations +to the same end.(391) The most striking means by which such a cooeperation +has been advanced in modern times is public credit, "a draft on +posterity;" yet, all saving is, in principle, the same. The most powerful +element in the cooeperation in time of labor is the economy in common of +the family, although it differs in degree, according to the different +kinds of family inheritance. Where, as among the English middle classes, +it is customary to secure the business property of the family to one child +by will, and to entrust the conduct of the business, during the life of +the father, to the devisee, to provide for the other children by +insurance, by savings etc., made from the surplus of the business, there +may be old firms which remain always new, however; because they combine +the experience of age with the energy of youth, and are never broken up by +a division of the inheritance. But the compulsory equality of heirs, which +actually obtains in France, compels almost every new generation to begin +with a new firm. (See § 85 seq.)(392) + + + + Section LXVI. + + +Advantage Of Large Enterprises. + + +On the results of the division and cooeperation of labor rests the superior +advantage of all great undertakings, and they are, therefore, smaller in +agriculture than in industry. "It is harder to acquire the first thousand +than the second million." Abstraction made of the conditions of capital +and of the market, the limit up to which the growing magnitude of an +enterprise becomes more advantageous, lies in the increasing difficulty of +superintendence. Numberless commercial improvements, such as the +post-office, railroads, telegraphs, exchange, banks etc., have operated +powerfully to extend these limits. It is frequently possible, even in +small enterprises, to secure the advantages of large enterprises, by +association among those concerned. They must, of course, possess the +necessary capital. If they have not got it, as property, they must borrow +it. It is, of course, peculiarly difficult here to preserve the necessary +unity, without which the cooeperation of labor becomes the confusion of +labor. The more moral and intelligent the participants are and the simpler +the business, the more extensive may it become, and the more probable will +be its success. (§ 90.)(393)(394)(395) + + + + + Chapter IV. + + +Freedom And Slavery. + + + + Section LXVII. + + +The Origin Of Slavery. + + +An institution like that of personal bondage, which, it can be shown, has +existed, among all nations of which history gives us information, at one +time or another, must have very general causes. Among these may be +mentioned especially subjection through war. It is not possible to +calculate how much the principle, that it was proper to reduce the man to +slavery whom it was considered right to kill, contributed to make war less +bloody in an uncivilized age.(396) A nation of hunters is almost compelled +to grant no quarter; the conqueror would be obliged either to feed his +prisoner or to put arms in his hands. It is certainly a great humanitarian +advance, when this state of things is superseded by slavery among nomadic +nations.(397) + +In times of peace, economic dependence is the result of poverty, excessive +debt etc.(398) Where there is no division of labor, the individual has no +means of supplying his wants, except by cultivating a spot of ground. But, +how can the poor wretch who has neither capital(399) nor land exchange +anything of value for either? Such an advance, where there is no security +in law, can be made only on the credit of a very important pledge. But the +man who is destitute of all property can offer nothing but the productive +power of himself or of his family.(400) And so it is with the small landed +proprietor who has lost all his capital;(401) for, considering the +superabundance of land, the part which he possesses has value in exchange +only to the extent that it is joined with the certainty of being +cultivated; and here is the origin of the _glebae adscriptio_. The +hereditary transmission of the relation to the children seems to be +equally useful to them; or who, were this not the case, would think of +providing them with food? It also frequently happens that poor parents +prefer to sell their children to seeing them starve.(402) Hence the +strange fact that most nations have the most rigid system of slavery +precisely at the time that the soil produces food most readily. We need +only cite the instance of the South Sea Islands, at the time of their +discovery. In many negro countries, where the people have not yet learned +to use animals for transportation, the lowest classes, although they enjoy +a nominal liberty, are used as beasts of burden.(403) + + + + Section LXVIII. + + +The Same Subject Continued. + + +In all very low stages of civilization, the greatest absence of the +feeling of wants, and the greatest indolence, are wont to prevail, and in +the highest degree. As soon as their merest necessities are provided for, +men begin to look upon labor as a disgraceful occupation, and indolence as +the highest kind of enjoyment. (§ 41, 213 ff.) Sustained and voluntary +efforts, in any number, then become possible only by the creation of new +wants; but these new wants suppose a higher civilization. Escape from this +sorry circle is then effected in the most humane manner, through the +agency of foreign teachers; inasmuch as the representatives of a more +highly cultivated people (missionaries, merchants etc.), by their own +example, make the nation acquainted with more wants, and at the same time +help toward their satisfaction.(404) But, in the case of nations whose +civilization is completely isolated, or having intercourse only with +others equally low, progress is the creature of force exclusively. The +barbarous isolation of families ceases when the strongest and most +powerful force the weaker into their service. It is now that _the division +of labor really begins_: the victor devotes himself entirely to work of a +higher order, to statesmanship, war, worship etc.; the very doing of which +is generally a pleasure in itself. The vanquished perform the lower. The +one-half of the people are forced to labor for something beyond their own +brute wants. And it is, here as elsewhere, the first step that costs.(405) +(§ 45.) + + + + Section LXIX. + + +Origin Of Slavery.--Want Of Freedom. + + +It is not to be supposed that slavery, at this stage, is so oppressive +even to those who have been deprived of their freedom. The feeling of +moral degradation which slavery, abstraction even made of its abuses, +awakens in us, is unknown in a very uncivilized age.(406) The child +willingly obeys the orders of strangers, and is hired out to service by +his parents etc. The want or craving for liberty keeps pace with the +intellectual growth of a people. The systematic over-working of servants +or slaves, in the interest of their masters, is scarcely thinkable in an +uncultured age, when, in the absence of commercial intercourse, every +family consumes what it produces.(407) The only thing which the slave has +to fear is an occasional outburst of tyranny on the part of the master, a +thing which is far from unfrequent in all the relations of low +civilizations. Fear restrains masters to a certain extent; for, in those +early days, how few were the institutions of state which could protect +them against the vengeance of their slaves!(408)(409) + + + + Section LXX. + + +Emancipation. + + +As states grow greater and men's manners gentler, the ranks of slavery are +less and less liable to be recruited through the agency of war.(410) It +then becomes necessary to have recourse to the family to keep up their +number, which makes their condition much more endurable, and which +supposes that it has been made more endurable in other respects +beforehand. Modern states, are, as a rule, larger than the ancient were. +The Germans had, long before the time of Charlemagne, treated prisoners of +war of German origin more mildly than those of Gallic or Slavic +origin.(411) The condition of the latter even improved from the time that +nations began to think of making permanent conquests. Since the Slavic +wars of the tenth century, certainly since the Lithuanian contests, it +seems that prisoners of war were not reduced to slavery.(412) Chivalry, +and allowing prisoners to go free, on their word of honor, contributed +largely to this result. + +The more productive agriculture is, the more numerous the wants of land +owners, the more extensive the division of labor and commercial +intercourse become, the easier it is for a large class of the community to +obtain support for themselves and families without cultivating land of +their own. (Wages.) When exchanges through the medium of money become +customary, the chief argument for slavery disappears; and the strong, rich +and able man can, without having recourse to force, command the labor of +other men. Every further advance in economic culture must necessarily help +forward in this direction. Thus, without the plow, for instance, we should +all be really only so many _glebae adscripti_. It is due especially to the +ever increasing perfection of tools, machines and operations, that the +slave of antiquity was transformed into the serf of the middle ages, and +afterwards into the day laborer of modern times.(413) It is more +particularly to be remarked, that machines, since 1750, "first made the +constitutional liberty of many, instead of the feudal freedom of a few, +possible." (_Schaeffle._) + + + + Section LXXI. + + +Disadvantages Of Slavery. + + +Slavery promotes the division of labor only in the very beginning. The +more dependent the slave is, the worse he works. Whatever he spoils or +allows to go to waste injures only his master. Hence it is that +slave-husbandry is only one degree removed from what the Germans call +_Raubbau_, and which means, as nearly as we can translate it, the most +thoughtless and wasteful management possible.(414) Whatever he consumes is +simply so much gain to himself. Industry and skill are injurious to him, +because, if remarkable for these qualities, his master exacts more work +from him and is more adverse to setting him at liberty. Instead of the +numberless incentives of the free workman: care for the future, for his +family, honor and comfort, the slave is generally moved by one--the fear of +ill-treatment, and to this he gradually becomes insensible.(415) The +division of labor demanded by manufactures, and which is to be found for +the most part only where each person is at liberty to choose his own +avocation, is scarcely supposable where slavery, in the strict sense of +the word, prevails. The same is true of the spirit of invention and +improvement.(416) And even where the milder _glebae __ adscriptio_ obtains, +the division of labor is much hindered. Hence, competent judges all agree +on the badness of slave labor;(417) which, as for instance in the United +States, was used only where the slaves were crowded together in large +numbers and could therefore be easily superintended. And not only are the +slaves themselves indolent, but their masters as well; more particularly +in slave countries where all labor is considered disgraceful. What must be +the national husbandry of a people, one half of whom refuse to do anything +that is right and proper, through malice, and the other half through +pride! As soon as, on account of increased population and consequent +increased consumption, this enormous waste of force can be endured no +longer, free workmen become more profitable, not only to themselves and to +the whole community, but to the greater number of the individuals who +compose it.(418) On the Bernstoff estates the quantity of rye harvested +before and after emancipation was as 3:8-{~VULGAR FRACTION ONE THIRD~}; of barley-corn as 4:9-{~VULGAR FRACTION ONE THIRD~}; of +oat-grain as 2-{~VULGAR FRACTION TWO THIRDS~}:8.(419) + +The owners of serfs, especially, are apt to be very wasteful of their +labor, because they imagine that they obtain it gratis. Tucker has made a +curious calculation tending to show that when civilization reaches a +certain point, the master's self-interest leads to emancipation. In +Russia, where there are seventy-five persons to the English square mile, +it seemed to him that serfdom was still a good economic speculation. In +western Europe, where there were one hundred and ten persons to the square +mile, freedom, in all relations of master and servant, he considered more +advantageous to all parties. Emancipation began in England in the +fourteenth century, when that country had a population of forty to the +square mile, and was completed in the seventeenth, when the population was +ninety-two to the square mile.(420) Tucker concludes, that the turning +point comes, when the population is relatively to the number of square +miles as 66:1.(421) Such a calculation cannot, of course, be universally +true. The free workman can usually command a much larger portion of the +sum total of economic profits than can the slave or serf, who must be +satisfied with the minimum necessary to support life.(422) Hence, free +labor is more profitable to masters only when production in general is so +much enhanced thereby that a greater quantity of goods falls to their +share also. But this will always be the case where workmen are capable of +development.(423) + + + + Section LXXII. + + +Effect Of An Advance In Civilization On Slavery. + + +At the same time, the same degree of servitude becomes more and more +oppressive to the bondman as civilization advances. The greater his +intellectual progress, the more does he feel the want of liberty, and the +more keenly he experiences the degradation of his condition. The +development of luxury digs a gulf between master and servant which grows +wider every day. (§ 227 ff.) As commerce extends, it becomes more +profitable for the master to exact excessive work from his slave. In the +West Indies, it was a problem which every slaveholder solved for himself, +whether, by immoderately increased production, which cost the lives of +many slaves, the gain in sugar was greater than the loss occasioned by the +consequent death of the negroes.(424) When, with the advance of +civilization, the state guarantees to all more certain protection of their +rights than they enjoyed in a less advanced stage of social improvement, +the last check on masters, the fear of the vengeance of their slaves, is +removed.(425) Demoralization naturally increases in the same proportion; +and that of the master as well as that of his servants.(426) + + + + Section LXXIII. + + +The Same Subject Continued. + + +This explains why it is that, in all countries, the power of the state, in +a period of transition towards a higher civilization, has endeavored to +render slavery milder. Great credit is due the Church in this regard. It +soon extinguished slavery entirely in Scandinavia,(427) and in portions of +Europe it abolished at least the sale of prisoners to foreign +countries.(428) The _Concilium Agatheuse_, in the year 506, decreed that +serfs should not be killed by their masters at pleasure,(429) but that +they should be brought before a tribunal of justice. (The manorial +tribunals of more recent times.) Moreover, the numberless holidays of the +church operated greatly in favor of the bondmen. Pope Alexander III. +recommended their gradual emancipation.(430) One of the principal steps in +the way of progress was made when they could no longer be sold singly, but +only with the village or on the estate to which they belonged.(431) The +feudal aristocracy improved the condition of the bondmen by reducing a +great number of freemen to their level.(432) This could not be effected +without a real amelioration of slavery; and, later, when the feudal +aristocracy declined, the older serfs were, with those who had been +formerly free, raised from their abject condition. The sense of chivalry +would not permit a lord to be served by a bondman. The old adage "the serf +lives to serve and serves to live," by degrees, lost its force. Serfs were +required to perform certain tasks on the lands of their master and to pay +him a certain quantity of the produce of their own. Heriots +(_mortuarium_), which became usual from the 8th century (_J. Grimm_), may +be considered evidence that even bondmen were permitted to acquire and +hold property in their own right. Thus was one of the chief disadvantages +of slavery, in an economic sense, removed.(433) It may be affirmed, as +characteristic of the aristocracy of feudal times, that they treated +those, who like the serfs were entirely at their mercy, with much more +consideration than those who were free, and, although dependent on them, +had certain rights guaranteed by contract. The absolute monarchy found in +nearly all nations, at the opening of modern times, was forced by its +struggle with the mediaeval aristocracy to favor the emancipation of the +serfs and of the lower classes. Even in Russia, Iwan III. (1462-1505) +seems to have restored to the peasantry the right of migration, of which +they had been deprived by the invasion of the Mongols, nor did they lose +it again until the great troubles at the beginning of the seventeenth +century, which gave the ruling power to the nobility.(434) + +Where civilization has reached its highest development, the irresistible +power of public opinion, governed by the ideas of the universal +brotherhood of man and of democratic equality, causes the abolition of all +irredeemable and of all hereditary relations of servitude.(435)(436)(437) + + + + Section LXXIV. + + +The Same Subject Continued. + + +It cannot be doubted, that an entirely direct leap from complete servitude +to complete freedom may be attended by many evils. No man is "born +free,"(438) but only with a faculty for freedom; but this faculty must be +developed. The knowledge and respect for law, and the self-control, which +are the conditions and limits of freedom, are never acquired without +labor, seldom without the making of grave mistakes, and never except +through the practice of them. As a rule, both parties, masters as well as +servants, would like to get rid immediately of all the inconveniences of +the former condition and yet continue to enjoy its advantages. The +servant, for instance, will now yield no more the specific obedience of +former times, but demands still specific mildness from the land-owner, or +loaner of capital, his former master. It is inevitable that there should +be complaints on both sides.(439) But in the higher stages of economic +culture, the relation of paternal protection and childlike obedience +between the different classes of the people, which, even in medieval +times, never obtained in all its purity, is certainly unrecallable. Hence +it is, that all hope of a better condition of things is based only on +this, that the lower classes may as soon as possible attain to true +independence.(440) + + + + Section LXXV. + + +The Same Subject Continued. + + +Even in antiquity, the principal nations of the world could not keep the +humanizing influence of civilization from making itself felt on their +slaves. And if they did not go so far as to bring about the total +abolition of slavery, it is unhesitatingly to be attributed to their +religious inferiority.(441) In Athens, during the Peloponnesian war, it +was almost impossible to distinguish the slaves from the poorer freemen by +their looks or dress. Their treatment was mild in proportion as desertion +was easier by reason of the smallness of the state or the frequency of +war. It was forbidden to beat them; and only a court of justice could +punish them with death.(442) Emancipation, in individual cases, was very +frequent, and the names of Agoratos and of the law-reviser Nicomachos show +how great a part an emancipated slave might play in the nation.(443) The +helot system of the Lacedemonians preserved much longer a great deal more +of medieval barbarism; but even here, we may infer from the frequent +uprisings and emancipations of the helots, from their services in war +etc., that their lot was made less hard than it had been.(444) + +Among the Romans, with whom war and conquest were so long considered(445) +the principal means of acquisition, slavery was relatively very hard.(446) +But, later, there came to be several different grades of slavery (_servi +ordinarii_ and _mediastini_ etc.); and in slavery, every gradation denotes +some amelioration of condition.(447) The slave obtained the right to +possess resources of his own (_peculium_).(448) In addition to this, +emancipation became much more frequent in the later republic; so much so, +that Augustus considered it necessary to pass laws taxing frivolous +emancipation. (_L. Aelia Sentia_ and _Furia_.)(449) Where men like +Terence, Roscius, Tiro, Phaedrus and the father of Horace rose from the +condition of slavery, the treatment of slaves cannot have been entirely +brutalizing.(450) Under the emperors who oppressed the free citizens, +legislation was directed more than ever towards the protection of the +slaves.(451) Instead of permanent slavery, a condition of things was +introduced and became more general every day, one in which the bondman +might contract a legal marriage, have property of his own, and in which he +was protected against an arbitrary increase of the quota he had to pay his +master, whether in money or produce, although he still remained bound to +the land. This class was formed not only of the _originarii_, or those +born into it, but also of a large number of impoverished freemen, +barbarian prisoners of war etc.(452)(453) + + + + Section LXXVI. (Appendix To Chapter IV.) + + +The Domestic Servant System. + + +In most countries the servant system developed itself gradually out of +serfdom, or of some condition of tutelage analogous thereto. This is seen +most clearly in the long continuance of forced service, by which the +subjects of the lord of the fee were compelled to allow their children to +remain in the court of the lord as servants, either without any +remuneration whatever, or for very low wages fixed by long continued +custom.(454) Here, also, belongs the right of correction, so generally +accorded to masters in former times. In the higher stages of civilization, +the whole relation is wont to be resolved more and more into freedom of +competition; and this process is wont to take place earliest and most +strikingly in the cities. Where vast numbers of men are brought together, +demand and supply of services meet most easily. The nearer in the course +of this development the servant system approaches to piece-wages and +day-wages, the shorter does the customary (presumptive) duration of the +contract last,(455) the more voluntary is the period of leave-taking by +both parties;(456) the more does the entire relation tend to be limited to +single acts of service agreed upon in advance (§ 39), and the more +frequently do both parties endeavor to supply the place of the domestic +servants by workmen who receive wages and live outside of the family.(457) +The extreme of this direction at present is the servant-institutes in +cities, the more movable and more democratic character of which finds +expression in this, that they have extended the use of personal services +to a lower circle of consumers than could previously have thought of +employing them. In English agriculture this transition was completed +mainly in the third decade of this century. The change was unquestionably +favorable to the improvement of the art of agriculture, but it was +frequently damaging to the social relation existing between the rich and +the poor in the country.(458) In Germany, the sale of the public domains, +conscription and _Landwehr_ duty have operated in this direction.(459) +Hence it is, for instance, that in Prussia, the servants, in 1816, were +15.18 per cent. of the entire male population over 14 years of age, and +17.84 per cent. of the entire female population over 14 years of age. In +1861, on the other hand, there were only 11.88 and 12.93 per cent., +respectively, while the number of day laborers and workmen, in the same +time, increased from 16.29 per cent. males, and 10.87 per cent. females, +to 20.95 and 16.65 per cent., respectively.(460) In most civilized +countries, the grade of society from which servants are recruited grows +lower and lower as the spirit of independence extends to the deeper strata +of humanity.(461) + +The servant class may continue a long time yet to be a school of +development for those of the lower classes, who, ripe in body, are not +intellectually independent; just as the duty of bearing arms has been a +school of improvement for all male youth. Life-long servants are as seldom +to be desired as life-long soldiers. + +In most places, the long transition period from complete bondage to free +competition was governed by a police system of wardship, which was very +unfavorable to the servant class. Such especially was the provision that +all young people of the lower classes, who could not expressly show that +they were employed under the paternal roof or at some trade, should be +compelled to seek some outside or inland work;(462) such also was the +strict prohibition of "usurious" wage-claims, and the "decoying" of +servants from their masters.(463) Besides, a great many provisions +relating to servants, and based on views belonging to an older economic +condition, were intended to throw obstacles in the way of farm hands and +country servants(464) becoming servants in towns; and, on the other hand, +to facilitate the speedy abandonment of service in all cases in which the +servant desired to marry.(465) All these preferences in favor of one class +of contractors, and at the cost of another, are radically opposed to the +modern political spirit. The laws relating to servants are wont, in our +day, to have but one object, the prevention, by registration with the +police, of fraud and breach of contract, and of all strife and litigation +by the legally formulating of the conditions which are very frequently +tacitly understood. + +The ideal of the relation of master and servant is attained when it is +considered by both as a part of the life of a Christian family.(466) +Hence, benevolence on the one side and devotedness on the other, fidelity +on both sides, disinterested care for the present and future interests +each of the other _tanquam sua_; and especially for each other's eternal +future. Whether this state of mutual feeling is best furthered by the +patriarchal system, by a police system, or by free competition, it is +scarcely possible to say. It may, however, be affirmed that it depends +upon a mutual and continued denial of self not easy to attain. Where it +really prevails, all the advantages of the piece-work system are obtained +in a worthy and organic manner, and without its atomistic drawbacks.(467) + + + + + Chapter V. + + +Community Of Goods And Private Property. Capital--Property. + + + + Section LXXVII. + + +Capital.--Importance Of Private Property. + + +As human labor can attain its full development, only on the supposition +that personal freedom is allowed to develop to its full economic +importance and dimensions, so capital can develop its full productive +power only on the supposition of the existence of the freedom of personal +property. Who would save anything, that is, give up present enjoyment, if +he were not certain of future enjoyment?(468) The legitimacy of private +property has, since the time of Locke,(469) been based, by the greater +number of political economists, on the right inherent in every workman, +either to consume or to save the product of his labor. But it should not +be forgotten here that, at least in the higher stages of the economy of a +nation, scarcely any work or saving is possible without the cooeperation of +society. And society must be conceived not only as the sum-total of the +now living individuals that compose it, but in its entire past, present +and future, and also as being led and borne onward by eternal ideas and +wants.(470) + + + + Section LXXVIII. + + +Socialism And Communism. + + +In opposition to this, the idea of a community of goods has found favor, +especially in times when the four following conditions met:(471) + +A. _A well-defined, confrontation of rich and-poor._ So long as there is a +middle class of considerable numbers between them, the two extremes are +kept, by its moral force, from coming into collision. There is no greater +preservative against envy of the superior classes and contempt for the +inferior, than the gradual and unbroken fading of one class of society +into another. _Sperate miseri, cavete felices!_ In such a state of social +organization, we find the utmost and freshest productive activity at every +round of the great ladder. Those at the bottom are straining every nerve +to rise, and those higher up, not to fall below. But where the rich and +the poor are separated by an abyss which there is no hope of ever +crossing, how pride on the one side and envy on the other rage! and +especially in the _foci_ of industry, the great cities, where the deepest +misery is found side by side with the most brazen-faced luxury, and where +the wretched themselves conscious of their numbers, mutually excite their +own bad passions. It cannot, unfortunately, be denied, that when a nation +has attained the acme of its development, we find a multitude of +tendencies prevailing to make the rich richer and the poor, at least +relatively poorer, and thus to diminish the numbers of the middle class +from both sides; unless, indeed, remedial influences are brought to bear +and to operate in a contrary direction.(472) + +B. _A high degree of the division of labor_, by which, on the one hand, +the mutual dependence of man on man grows ever greater, but by which, at +the same time, the eye of the uncultured man becomes less and less able to +perceive the connection existing between merit and reward, or service and +remuneration. Let us betake ourselves in imagination to Crusoe's island. +There, when one man, after the labor of many months, has hollowed out a +tree into a canoe, with no tools but an animal's tooth, it does not occur +to another who, in the meantime was, it may be, sleeping on his bear-skin, +to contest the right of the former to the fruit of his labor. How +different this from the condition of things where civilization is +advanced, as it is in our day; where the banker, by a single stroke of his +pen, seems to earn a thousand times more than a day-laborer in a week; +where, in the case of those who loan money on interest, their debtors too +frequently forget how laborious was the process of acquiring the loaned +capital by the possessors, or their predecessors in ownership. More +especially, we have, in times of "over-population," whole masses of honest +men asking not alms, but only work, an opportunity to earn their bread, +and yet on the verge of starvation.(473) + +C. _A violent shaking or perplexing of public opinion in its relation to +the feeling of Right, by revolutions_, especially when they follow rapidly +one on the heels of another, and take opposite directions. On such +occasions, both parties have generally prostituted themselves for the sake +of the favor of the masses; and the latter have become conscious of the +changes which the force of their arms may effect. In this way, it is +impossible that until order is again entirely established, the reins of +power should not be slackened in many ways at the demands of the +multitude. In this way, too, they are stirred up to the making of +pretentious claims which it is afterwards very difficult to silence. In +every long and far-reaching revolution, whether undertaken in the interest +of the crown, the nobility or the middle classes, we find, side by side +with the seed it intended to sow, the tares of communism sprout up. + +D. _Pretensions of the lower classes in consequence of a democratic +constitution._ Communism is the logically not inconsistent exaggeration of +the principle of equality. Men who always hear themselves designated as +"the sovereign people," and their welfare as the supreme law of the state, +are more apt than others to feel more keenly the distance which separates +their own misery from the superabundance of others. And, indeed, to what +an extent our physical wants are determined by our intellectual mould! The +Greenlander feels comfortable in his mud hut, with his oil-jug. An +Englishman in the same condition would despair.(474)(475) + + + + Section LXXIX. + + +Socialism And Communism. (Continued.) + + +What has just been said will serve to explain why, in the following four +periods of the world's history, socialistic and communistic ideas have +been most widespread: among the ancients at the time of the decline of +Greece,(476) and in that of the degeneration of the Roman Republic;(477) +among the moderns in the age of the Reformation,(478) and again, in our +own day.(479) + + + + Section LXXX. + + +Socialism And Communism. (Continued.) + + +We thus see, that the attempts made by socialism and communism are, by no +means, phenomena unheard of in the past, and peculiar to modern times, as +the blind adherents and opponents of them would have us believe. They are +rather diseases of the body social, which have affected every highly +civilized nation at certain periods of its existence. If the body be too +weak to react healthily and curatively (§ 84), the evil is very apt to +lead to the decline of all true freedom and order. The communist, viewing +all other things, especially the organization of the state, only as +instruments to supply his material and absolute wants, considers the +liberal either as a fool who is ever pursuing the phantoms of the brain, +or as a knave who covers his own selfishness under the mask of the public +welfare.(480) Hence the adherents of communism are satisfied with any form +of government which seems to offer them most, and this a ruthless +despotism can do, at least, for the moment. And, although they are ever +ready for any revolution in the form of government, and easily to be won +over to it, they are most readily captivated by a despotic revolution. On +the other hand, when communism seriously threatens all that constitutes +the wealth of a people, the owners of that wealth are compelled to fly to +any refuge which holds out the promise to protect them from it, although +by seeking that same refuge they may destroy their own political +freedom.(481) The Achean league, which under the leadership of Aratos, the +"enemy of tyrants," had come into existence, promising so much hope, +beheld itself later, and mainly through fear of the contagious effects of +Spartan socialism under Cleomenes, compelled to unite with the +Macedonians, that is, to give themselves up entirely. (§ 204). + + + + Section LXXXI. + + +Community Of Goods. + + +We now, for the present, turn our gaze from the frightful revolution, +destructive of all civilization, which would necessarily precede the +establishment of a community of goods,(482) and inquire what would be the +consequences. Among angels ("gods and sons of gods" of Plato) and mere +animals, a community of goods might, perhaps, exist without producing +injury. And so, too, it might exist among men bound one to the other by +the bonds of the truest love. The life of every model family is +accompanied by a species of community of goods.(483) But in more extensive +social organizations, this love is never found except as an element of the +most exalted religious enthusiasm, which, as a rule, is of very short +duration; of which the Acts of the Apostles (II, 44 ff, 32 ff, V, I, II) +affords us the best known and most beautiful example.(484) + +Where this love does not exist, each participant in the community of goods +will, as a rule, seek to do the least and enjoy the most possible.(485) In +a society of one hundred thousand members, each individual would be +interested in the results of its aggregate frugality only indirectly, and +only to the extent of a one-hundred thousandth part of the whole; that is, +practically, not at all.(486) Individual selfishness would expend itself +entirely on the division of what the whole community produced. It would, +consequently, and almost always be detrimental to the whole, and to the +other individuals of the society; whereas, at present, it does so only in +exceptional cases. When Louis Blanc, as Mably had before him, recommended +that the _point d' honneur_ should take the place of the _interet +personnel_, as a spur to production, and a check on consumption, and cited +the army as an illustration of its workings, he forgot, among other +things, the thirty cases in which the _code militaire_ pronounces sentence +of death on the violators of its provisions. And, as a matter of fact, the +Muenster Anabaptists could not help punishing with death every +transgression of their communistic precepts.(487) If, in a community in +which the principles of communism were rigorously carried out, all the +burthens and enjoyments of life were equal, and equally divided according +to the ideas of the crowd, men like Thaer, Arkwright, and others of their +class, who now provide bread for hundreds of thousands from their studies +and laboratories, would then be able, at most, with a rake and shovel, to +provide food for three or four. The division of labor, with its infinite +amount of productive force, would, for the most part, cease. Nor would the +consequence be that the humbler classes would be freed from work of a +coarse, mechanical, unintellectual and severe nature; but that the higher +classes would be dragged down to engage in it likewise. And what an +increase there would be in the number of consumers at the same time! Every +man would, with a light heart, follow the most imperious of human impulses +if the whole community were to educate his children. But we have seen that +a community of goods is desired most urgently in times of over-population. +Hence, here it would make the evil greater yet, by increasing consumption +and diminishing production. + +Where there are now one thousand wealthy persons, and one hundred thousand +proletarians, there would be, after one generation, no one wealthy and two +hundred thousand proletarians. Misery and want would be universal.(488) +For the purpose of giving the crowd a very agreeable,(489) but rather +short-lived period of pleasure, a period simply of transition, almost all +that constitutes the wealth of a nation, all the higher goods of life, +would have to be cast to the waves, and henceforth all men would have to +content themselves with the gratifications afforded by potatoes, brandy +and the pleasures of the most sensual of appetites. And then, the equal +education of all, demanded by the communists, would have no result but +this, that no one would acquire a higher scientific training.(490) But, +after all, there lurks concealed in communism much more of envy than is +generally supposed. + + + + Section LXXXII. + + +The Organization Of Labor. + + +Most theoretical adherents of the doctrine of a community of goods, +feeling(491) more or less the weight of the above objections, have +supplemented it with the idea of an organization of labor(492) or the +centralized superintendence of all production and consumption, either by +the government already existing, or by one to be created anew. Such a +government would be, of course, a despotism such as the world has scarcely +yet seen, a Caesaro-Papacy, usurping both the place and power of Father of +the universal Family.(493) But the evils mentioned above would be entailed +none the less. Every incentive which now moves man to industry or +frugality would disappear, and nothing remain but universal philanthrophy; +or, if you will, but patriotism, virtues which are not wanting even now. +Even guardianship of the government newly created would be carried on in a +very loose manner; for it would be exercised without any feeling of +personal interest, even in the most favorable case supposable. It is well +known and easily understood, that state industries are never engaged in, +in the long run, with the same zeal, nor crowned with the same success, as +competing private industries. It is well known, too, how intimate the +connection is between the political freedom of a people and their economic +production; that, for instance, England's greater wealth, as compared with +that of Turkey, depends, most largely, on the freedom that obtains in the +former country and the servitude that prevails in the latter.(494) And we +may inquire just here, what the result would be, if the despotism of +government should go ten times farther that it has ever gone in Turkey, +when, moreover, the despot who led the state, was not an individual with +his few officials, but the whole crowd, with its million eyes and million +hands. It would, practically, be to give every producer an escort of a +policeman and a revenue agent, as if he were a prisoner. + +And where would be the gain? A division of wealth which would seem unjust +to many would exist now as well as before, because the idle and the +unskillful would receive the same reward as the most industrious and +skillful.(495) The opposition of one class of society to another, so much +complained of, would continue. The only difference would be, that whereas, +it now comes from the weak, it would then come from the strong.(496) +Compulsory association is certainly more prolific in strife and crime than +is a state of society in which everybody manages his own affairs. + +A journey on foot, in company with others, is allowed, on all hands, to be +a very good test of friendship. But, a community of goods would, in the +strictest sense of the word, be a journey on foot through the whole of +life with numberless "friends." Here, every one would believe himself +entitled to possess whatever pleased him. And, who would decide; since so +many communists preach the dissolution and extinction of all government, +and the reign of anarchy? Besides, there can be no doubt, that the +difference of human talents and human wants, would soon, spite of every +law, lead to a difference in property again. Hence, that first revolution +would have to be repeated from time to time--a real Sisyphus labor! No +sooner have the bees produced anything, than the drones come, and divide +anew! + + + + Section LXXXIII. + + +The Organization Of Labor. (Continued.) + + +Experience, however, teaches us, that, in all the lower stages of +civilization, a community of goods exists to a greater or lesser +extent.(497) The institution of private property has been more fully +evolved out of this condition of things, only in proportion as well-being +and culture have been developed as cause and effect of such well-being. +Thus, among most nations of hunters and fishermen, the idea of private +property was unknown when these nations were first discovered. This is, +indeed, very natural. Their chief spring of production flows as if of +itself, apparently inexhaustible; and the hunter can hardly think of such +a thing as saving any of his booty.(498) And, among nomadic nations, the +land is a great meadow held in common; and the industry of plunder is +considered, as it is in all inferior stages of civilization, especially +honorable.(499) The _conquistadores_ of Peru found there something very +like a community of goods, under the despotic guardianship of the state, +viz.: a yearly division of all lands among the people, in proportion to +their rank; the cultivation of these lands in common, under the +superintendence of the state, and to the sound of music. But, at the stage +of civilization that Peru was then in, land is about the only resource +possessed. The results were the usual ones. A country like Peru, with only +one city, no beasts of burthen, no plows, no trades and no commerce, +cannot possibly be rich.(500) That the constitution of Lycurgus +established a sort of community of goods among the Spartans, is well +known. I need only recall the public education, the meals in common, the +authorization of stealing,(501) the prohibition of trade, of the precious +metals and fine furniture, the equal division of property and the +inalienable character of the land(502) etc. With such laws, Sparta could +neither be, nor desire to become, wealthy. Of all Greek states of any +historical importance, it preserved longest the economic peculiarities +belonging to a low stage of civilization. Among most modern nations, the +fundamental idea of their land laws, which had their origin in the middle +ages, is, that each family is only the usufructuary, and that the +community is the sovereign proprietor of the soil. This community of +landed possession finds expression, among other things, in the vast extent +of communal woods and pasturages, in the varied intersecting of parcels of +land one by the other, which, indeed, change proprietors from time to +time, and in the common working of the land, carried as far as possible +etc.(503) In all medieval times,(504) not only the individual is +considered an owner of the land, but, over and above him, the family. At +the same time, we are wont to find existing an amount of mortmain property +in the hands of corporations, monastery lands, crown lands and domains of +very great importance.(505) All these institutions have declined in number +and shown a disposition to disappear, in proportion as national husbandry +or economy has grown more productive. + + + + Section LXXXIV. + + +The Organization Of Labor. (Continued.) + + +To this tendency we find, indeed, another, and a no less powerful one, +opposed. Everywhere as civilization advances, the sphere of action of the +state grows larger, and the ends it serves more numerous. + +In its origin, government was established to preserve only the external +security of its subjects. By degrees, it comes to look after their +internal legal security, by enforcing internal peace, prohibiting revenge +for bloodshed etc. It next extends its care to the well-being, the +culture, and even to the comfort of the people. But the claims of the +state must grow in the same proportion as the service it renders. While +Lowe, in 1822, estimated the yearly net income of the British people at +L251,000,000; the government expenses,(506) in 1813 and 1814, averaged +L106,000,000, and these sums were voluntarily devoted to public purposes +by parliament. And so, between 1685 and 1841, the population of England +more than trebled its numbers, But, in the same period of time, the outlay +of the state increased forty fold. (_Macaulay_.) Simultaneously with this +development of things, it becomes more and more usual by the exercise of +the power of eminent domain and others like it, to sacrifice private +rights, acquired by the very best of titles, to the preponderating common +good. We may allude, further, to the duty, universally imposed in modern +times, of performing military service, to the national systems of public +instruction in so many countries; to the large number of societies, +joint-stock companies, popular holidays; but particularly to the +associations for insurance of every description. And so it may, indeed, be +claimed that we have come nearer to a community of goods than could have +been dreamed of a hundred years ago.(507) And yet, these are, for the most +part, institutions in which we find reflected the peculiar strength and +solidity of our age. Whoever wishes to compare the power of one people +with that of another, must take into account not only the elements which +constitute their intellectual and physical force, but especially their +inclination to permit these elements to cooeperate for public +purposes.(508) + +We may now inquire: At what point does this increasing community cease to +be a gain? This is as easily determined generally, as it is difficult to +say what the limit to it is in particular instances. Progress in the +direction of a community of interests of this nature is beneficial, only +so long but certainly as long as it corresponds with the feeling +entertained by the community, that they have interests in common. Hence it +is, that such a noble kind of communism reigns in art and literature, one +which causes the stronger to willingly labor for the weaker, and with the +greatest success.(509) And so, too, the christian care of the poor, even +were it carried to the height of the Gospel counsels (Luke, 3:11), would +be no direct obstacle in the way of the development of a nation's public +economy, provided it were given, and accepted, only as christian +benevolence. Every approximation towards a community of goods should be +effected by the love of the rich for the poor, not by the hatred of the +poor for the rich. If all men were true Christians, a community of goods +might exist without danger. But then, also, the institution of private +property would have no dark side to it. Every employer would give his +workmen the highest wages possible, and demand in return only the smallest +possible sacrifice.(510)(511) + + + + Section LXXXV. + + +The Right Of Inheritance. + + +The right of inheritance to resources has its origin in a combination of +the idea of the family with the idea of property. And, indeed, this +combination of ideas is a very natural one. The larger portion of mankind +consider the pleasures of the family as the highest attainable, and +endeavor, whenever their economic means make it at all possible, to secure +them. At the same time, the selfishness of most men is not confined to +their own persons, but extends also to their posterity. Hence it is that +bed and board, _eonnubium_ and _commercium_, have, from time immemorial, +been considered correlative ideas; and, to all the more logical +socialists, a community of wives (or celibacy)(512) is as dear as a +community of goods.(513) (§ 245.) And in practice, the greater number of +nations of hunters, who, according to our conceptions, have no knowledge +of a real family and no knowledge of property, have a custom of burying +with the dead the things they used, to kill their cattle etc., or to +deprive minor children of their inheritance.(514) + + + + Section LXXXVI. + + +Economic Utility Of The Right Of Inheritance. + + +The certainty, that the material welfare of their children depends, in +great part, on their industry and frugality, is one of the most powerful +incentives to good, in the case of most men. And this is the basis of the +economic utility of the family right of inheritance.(515) There is +scarcely any other institution which opposes over-population with such +efficiency, for the reason, that the obstacle placed in its way here is +placed very directly, at the point where it can make itself felt most, +viz.: in the life of the family itself. The weaker the family feeling, the +less does the abolition of the right of inheritance interfere with the +economic interests of a nation. Hence, for instance, it is, that taxes +imposed upon legacies, bequests, testamentary gifts etc., are less +objectionable in proportion as they affect only those in the more remote +degrees of relationship in which inheritance is something merely +accidental. While, when a nation is yet in the intermediate stages of +civilization, the _family_ right of inheritance seems to be very strong, +especially as regards landed property, a consequence of the fact, that a +superior kind of title to such property is recognized to exist in the +family; at a period, when individualism becomes more developed, the +liberty of devise by will is wont to prevail more and more.(516) Then the +right of inheritance becomes, so to speak, a more elevated species of +personal property, a prolongation of the same beyond the grave. Should +testamentary freedom be too much hampered, selfishness would manifest +itself in a way much more detrimental to economic interests, viz.: in the +consumption of wealth, during the lifetime of its owner. Every man would +be but a life annuitant of his own property. + +But, at the same time, in periods of moral decline, complete freedom may +degenerate so as to produce evils equally great. The wealthy Boeotians, in +the later days of Hellenic history, were wont to form themselves into +dissolute drinking companies; and not only the childless, but even fathers +of families made over their property to these companies, limiting their +offspring to a portion which it was made their duty to let them have. It +was so in Rome, also, in Cicero's time, when every acquaintance of +standing took it very ill if not remembered in the will of the testator, +and where Octavian, for instance, in the last twenty years of his reign, +received about 70,000,000 thalers through legacies left him by his +"friends."(517) Here, the repeal of the law making it obligatory on +testators to leave a certain proportion of their wealth to their children +would remove the last safe-guard of their material welfare.(518) + + + + Section LXXXVII. + + +Landed Property. + + +As land, in its uncultivated state, has neither been produced by man, nor +can be entirely consumed by him, the above demonstration of the necessity +of private property cannot without any more ado, be extended to land.(519) +Hence, individual property in land is everywhere much more recent than +individual property in capital.(520) + +But a certain expenditure of capital and labor is necessary that land may +be used productively, and, in most instances, this employment of capital +and labor is of long duration, irrevocable in the very nature of things, +and one the fruits of which can be reaped only after some time has +elapsed. Now, this cooperation of capital and labor is such, that no one +would undertake to employ them in the cultivation of the land, had he not +the strongest assurance of possessing it. Hence, agriculture in its most +rudimentary stage supposes ownership of the land, at least from the time +that it is "tickled with the hoe," until it "smiles with the harvest;" or, +to express it more accurately, all the time intervening between the work +of the plow and the labor of the sickle. The more, afterwards, population +and civilization increase, the more products must be wrung from the soil. +But this can be accomplished only by means of its more _intensive_ +cultivation (higher farming), by lavishing a greater amount of capital and +labor on it, and, as a rule, by extending the circle of agricultural +operations by means of combinations more and more artificial. Hence, the +progress of civilization demands an ever increasing fixity, and a more +pronounced shaping of landed property (the _specification_ of jurists), in +the interests of all who share in this progress, and even of those who own +no landed property themselves. Were there no property in land, every one +would find it more difficult and laborious to gratify his want of +agricultural products;(521) and the products themselves would be of an +inferior kind. + +Thus, for instance, in Camargo, the lackmus was formerly prepared from +plants to be had "free" in the woods. It was then, however, much dearer +than it is now that the plants are artificially raised on landed +property.(522) It is otherwise with the fisheries. The appropriation of +rivers or seas would not tend to increase the abundance of their products, +and hence this appropriation is, on the whole, rare.(523) + + + + Section LXXXVIII. + + +Landed Property. (Continued.) + + +Whenever this admixture of capital and labor with land has taken place to +no great extent, private property in land is not found developed in any +degree. Thus, there are even now many half-civilized countries in which +the land is forfeited because not tilled for many years, and where it may +be occupied by the first person who will cultivate it.(524) In Europe, +common possession of forests and pasture lands asserted itself much longer +than that of arable land, because, in the case of the former, labor and +capital play a much less important part in the management of them. And +yet, even in the case of arable land etc., and, in the highest stages of +civilization, the property-quality is yet less developed than the +property-quality of capital. How seldom do we find _fidei commissa_ of +capital, or capital juridically tied up. We find that the law of all +ancient nations drew a marked distinction between moveable and immoveable +property, and that the power of disposing of the former by sale, pledge, +in dowry, partition etc., was a much freer one. And even now, the police +power which may be exercised over moveable property is much more +restricted than that over houses and land.(525) The justice of the +exclusive right of possession to what one has earned and saved is obvious +to every one. On the other hand, the appropriation of "original and +indestructible natural forces" has its basis not so much in justice as in +the general good; and the state has always considered itself entitled to +attach to the "monopoly of land," which it accorded to the first +possessor, all kinds of limitations and conditions in the interest of the +common good, and sometimes to consider private property in land in the +light of a semi-public function.(526) I may instance the feudal principles +of the latter portion of the middle ages, which are so far removed from +our ideas of private property in land; and yet, of which many echoes are +heard, even in our day, and are not without their influence in practice. +Thus, further, for instance, even in England, the greater number of the +poor-rates, of taxes for the support of the established church, the +maintenance of public highways etc., are heaped upon the rent of land. +Many socialists have proposed to make the state the sole proprietor of the +soil,(527) sometimes adding the condition, that the previous private +owners should be compensated in capital, when it would be at least +supposable that private capital might be enticed to cultivate it, if long +and sure leases of it were made. This would be a "good" demesne-husbandry, +extending over the entire country. We need only glance at those kingdoms +in which something analogous is to be found, especially the despotisms of +the east,(528) to divine that such a system does not suffice to insure the +real productiveness of a nation's economy.(529) + + + + + Chapter VI. + + +Credit. + + + + Section LXXXIX. + + +Credit In General. + + +Credit(530) is the power of disposition over the goods of another,(531) +voluntarily granted in consideration of the mere promise of the +counter-value.(532) As Franklin says: A good pay is master of another +man's purse. Hence, it is evident that whoever would obtain credit must be +believed to possess the ability as well as the intention to fulfill his +promise. Where this belief is based simply on the opinion entertained of +the person of the debtor, we speak of personal credit,(533) in +contradistinction especially to the credit based on bailment, pledge, +hypothecation etc. The longer the time between the making of the promise +and the period fixed for its fulfillment, the less certain is the latter, +where the security is simply the person of the debtor. It is chiefly in +very uncivilized nations and also in nations in their decrepitude, and +during periods of anarchy, and in despotisms, that personal security +stands higher than any other. The same is true, though for other reasons, +in very energetic civilized nations, where the people put a high estimate +on the element of labor in their economy, among whose members legal +security is, indeed, found, but where the peculiar sensitiveness of +speculation would be too much hampered by the more sluggish nature of +other credits; as, for instance, in North America, and even in ancient +Rome. Civilized nations that have reached the stationary economic state, +on this account much prefer the greater security and the absence of care +which accompany non-personal credit.(534) In estimating the ability of the +debtor to meet his promise, we must take into account, especially, the +disposable character of his resources; otherwise it would be impossible to +understand why the merchant may so frequently obtain a loan on his stock +equal to its whole value, while the owner of land can place it as security +only to the extent of half its value. + +Credit, on the whole, grows in importance with an advance in civilization, +and this is true especially of credit intended for productive purposes. +This is a consequence of the greater division of labor which causes +unfinished products to be put on the market more and more +frequently,--products which come to have a value only after some time, but +which, when that time has elapsed, have present value. And, indeed, as the +world advances and civilization grows, it becomes much easier to forecast +the future with certainty. The future, also, then becomes more a source of +solicitude, and fixed capital, as a consequence, plays a part which grows +daily more important. The limit to the development of credit is this: it +is safe only when the debtor invests his borrowed goods in the production +of, to say the least, their equivalent. This is why the personality of the +state, clothed with immortality and with a formally boundless power of +taxation, is so often seduced into engaging in transactions of credit +which are never self-discharged.(535) The social diseases of panics and of +extravagant enterprises stand in the same relation to credit that unbelief +and superstition do to true religion.(536) (_Schaeffle_.) + + + + Section XC. + + +Credit--Effects Of Credit. + + +As regards the effects of credit, we may remark, that it is as powerless +directly to produce new capital as is the division of labor to produce new +workmen. To every credit of the creditor corresponds a debit of the +debtor. As Turgot said: _Tout credit est un emprunt_.(537)(538)(539) But, +on the other hand, credit facilitates the transmission of the elements of +production, especially of capital, from one hand to another.(540) When, +therefore, the debtor employs the capital that he has borrowed, more +productively than the creditor would have done, the whole country is a +gainer; as it is a loser, on the contrary, when a person engaged in +industry advances to the idler, the frugal man to the spendthrift, the +solid man to the wild speculator. In declining nations, where every new +development hastens decay, the latter alternative may be the prevailing +one; and, especially here, may the usurious giving of credit by the shrewd +to the simple lead to ruinous debtor-slavery. Among a vigorous and +energetic people, the former is apt to govern, as it is only by the +productive employment of the loans made that they are permanently enabled +to pay interest. Here credit is an invaluable means, not only of putting +idle capital in motion, and of making active capital still more active, +but especially of concentrating capital, by which it may gain as much in +productive power as labor does by the cooeperation of labor. This is +effected, very frequently, by means of joint-stock companies, the +principle of which recommends them especially in enterprises where +stationary capital is required rather than circulating capital, and where +capital generally plays a greater part than labor; and where this labor +can be subjected to provisions which may be accurately laid down +beforehand; as, for instance, in the case of docks, insurance companies, +banks,(541) etc. Banks, then, become real reservoirs of capital, provided +they are properly and judiciously established and managed; real reservoirs +which receive in one place the capital which is superfluous elsewhere, in +order to supply some other place with that which is necessary to it. The +more confidence increases, the more are even the smallest driblets of +capital awakened from their slumbers, and made active and productive. It +is only by means of credit that the help of foreign capital can be +obtained for home production. Indeed, credit, considered as an exchange of +probable future goods against actually existing goods, is one of the +principal functions of the temporal solidarity of the economy of nations. +(_Schaeffle_.) Without credit, there would be very little place for +speculation proper. + +We may see how the possibility of giving and receiving credit promotes +wealth, by contemplating the poorer classes, whose poverty, both as cause +and effect, is very closely related to the absence of credit. And here we +have a suggestion of the reverse to the bright side of the picture of +credit, analogous to that mentioned in § 62 of the cooeperation of labor, +viz.: that it tends to intensify inequality among men. The man who is +distinguished by the amount of his wealth, or by his position is naturally +known to a much wider circle than others are. From which it follows, that +he may, by the way of credit, increase his power, already so much greater +in the economic world, by a much larger multiplier.(542) Hence, it need +not surprise us, that the great obtain credit from those in a lower +position, at least as frequently as they give them credit in turn. + +On the side of the creditor, the possibility of making loans is a powerful +incentive to frugality. Were there no credit, those who were not in a +condition to employ their capital productively would make savings only +within very narrow limits.(543) + + + + Section XCI. + + +Debtor Laws. + + +Private credit is always conditioned, and in a great many ways, by the +situation of the whole nation's business; in other words, by their +politico-economical situation. It is especially in the higher stages of +civilization, that one bankrupt may easily drag numberless others down +with him; and where the laws are bad or powerless, not even the wealthiest +man can predicate his own solvency for any length of time in advance. One +of the most important conditions of credit is the certainty that, if the +debtor's good will to meet his obligations should fail, it shall be +supplied by the compulsory process of the courts. Hence, the importance of +a judicial procedure, at once impartial, enlightened, prompt and +cheap.(544) The more vigorous the laws relating to debt are in preventing +dishonesty on the part of the debtor, the more advantageous are they to +honorable and honest debtors. Adam Smith has rightly said, that in +countries in which creditors are not completely protected by the courts, +the honorable man who borrows money is in the same condition as the +notoriously dishonest man or the spendthrift, in better governed +countries. He finds it more difficult to borrow and is obliged to pay a +higher rate of interest.(545) Rigorous debtor laws, on the other hand, +diminish in the whole nation the amount of "bad debts," that is, a not +insignificant portion of the cost of production. They, at the same time, +promote, as far as it is in the power of laws to do it, national honor and +the mutual confidence of man in man. The excellence of their debtor laws, +in their most flourishing period, was one of the principal elements which +contributed to make Athens and Rome of such importance in the history of +the world.(546) + + + + Section XCII. + + +History Of Credit Laws. + + +In the history of laws relating to credit, we may distinguish, in a great +many countries, three stages of development. + +A. The laws, in the first stage, are very severe. In the Germanic middle +age the insolvent was disgraced. He became the slave of his creditor (_zu +Hand und Halfter_), who might imprison him, fetter him (_stoecken und +bloecken_), and probably kill him. A Norwegian law allowed the creditor, +when his debtor would not work and his friends would not ransom him, to +take him before the court, and "to lop off from his body what part he +will, above or below."(547) To judge of these provisions correctly, it is +necessary to bear in mind the many ways in which family resources were at +this time bound and tied up, and not forget "the power of defiance in +these iron natures."(548) (_Niebuhr_.) + +B. The canon law introduced milder principles. Gregory the Great had +already prohibited the holding on to the body of the debtor.(549) On this +account, during the latter portion of the middle ages, it was customary to +stipulate by contract that the provisions of the ancient law should govern +in this matter, to submit to imprisonment etc.(550) The influence of the +Roman law made it gradually more usual, in the case of insolvent debtors, +to demand no more from them than the assignment of their property for the +benefit of their creditors. This, however, led to numerous frauds; and +these became more frequent in proportion as the laws governing the +property of parties while the marriage relation existed between them, and +as executions against landed property etc. were defective. + +C. Hence, in more highly civilized times, there has been a return to the +severity of earlier ages. Persons engaged in commerce, especially those +whose capital is so volatile, and to whom time is a thing so precious, can +scarcely dispense willingly with personal imprisonment for debt. Hence, +legislation on bills of exchange, sanctioned especially by imprisonment of +the person, plays a very important part in the commercial cities of the +seventeenth century, as it did, naturally, much earlier in Italy and the +Netherlands.(551) Modern laws in many cases punish the bankrupt whenever +an examination of his books, kept after approved methods, does not +demonstrate his innocence.(552) The great facility of fraudulent +bankruptcy, where commerce has attained a high degree of development and +complication; the absence of honor shown in engaging in speculation for +one's own gain with a stranger's capital, and without the real owner's +knowledge; the comparatively small number of blameless and irreproachable +bankruptcies,(553) certainly justify these provisions.(554)(555) + + + + Section XCIII. + + +Means Of Promoting Credit. + + +One of the most efficient means of promoting credit consists in +legislation intended to dry up the source of bad debts, by placing +obstacles in the way of reckless or usurious credits for objects of luxury +or pleasure, to bad customers.(556) But the application of these laws +should be clear and simple as to their matter, and require no inquiries, +relating to the person, impracticable for a business man to make.(557) +Thus, for instance, a short period of limitation established by statute in +the matter of advances made for ordinary money-claims is a beneficial +restraint, as well on the creditor as on the debtor, since it prevents the +accumulation of a multitude of small debts which almost imperceptibly but +at the same time irresistibly overpower the debtor under their +weight.(558) Another efficient means is associations of business men to +circulate lists of bad debtors, and to prosecute their own demands in +common.(559) On the other hand, experience has shown that imprisonment for +debt, as a means of enforcing a creditor's claim, where the amount of the +debt is very small and such as only very poor debtors are apt to incur, is +of little service. It is even injurious, because a great many sellers +would rely on that means of compelling payment in the future instead of +demanding it immediately, as they should do in the interest both of +themselves and of their customers. As a rule, it is only rich creditors +who can resort to it with success, a class who compel payment through this +means by wringing it from the debtor's relations more frequently than from +the debtor himself. The working out of debts in correctional institutions +seems, for the same reasons, to fail of its object, since even well +governed institutions scarcely cover their current expenses from the +income derived from this source.(560) The inequitable character of +imprisonment for debt lies in this, that it punishes the unfortunate +debtor as severely as it does the malicious one. It must be clearly +distinguished from the imprisonment recognized by the courts as a +punishment for reckless or fraudulent bankruptcy.(561) We must pass a +judgment similar to that on the imprisonment of the person of the debtor +on the seizure of his wages not yet due, so far, at least, as an amount +absolutely necessary to save himself and family from want, is not +excepted. The prohibition of such seizure, beyond this, would amount to a +declaration that all workmen without capital, even the best, should be +considered unworthy of credit.(562) We may also include in this category +such laws as except from execution the necessary tools of a tradesman, +since to deprive him of them would be to prevent his employing even his +labor to satisfy(563) his creditors' claims. + + + + Section XCIV. + + +Letters Of Respite (Specialmoratorien). + + +_Special letters of respite_ (_Specialmoratorien_) are a suspension of the +laws relating to debt, made in favor of an individual. (_Quinquennalia._) +They were intended to protect not only the debtor, but also the aggregate +of creditors against the short-sighted severity of one of their number. +They were wont to be given especially when the debtor showed that +immediate execution would not only have the effect of ruining himself, but +of sending his creditors away empty handed; while, if time were given him, +he would be able to satisfy every one.(564) But the granting of such +letters has, in recent times, been prohibited(565) in nearly all countries +as arbitrary, and as a species of cabinet-justice. Nor should the granting +of them be compared with the pardoning power. In the case of a pardon, the +offended State forgives. In this case it sacrifices the unquestionable +right of one party to the very doubtful advantage of another. Where such +letters are granted in great numbers, credit cannot fail to suffer. +"_Quinquinnellen gehoeren in die Hollen!_" + +Yet in troublous times, when a great many debtors are insolvent at the +same time, the question of modifying the laws relating to debt, +temporarily, has been mooted. It has been urged on such occasions, that it +would be a matter of enormous difficulty to treat, _lege artis_, thousands +as bankrupts at once; that thousands of businesses would have to be +closed, their stocks cast upon the market at mock prices, and their +employees thrown out of employment. But, if certain privileges were to be +accorded to all who should declare themselves unable to meet their +obligations before a certain day, it would be known, at least, that the +others were in a solid condition; and this would have the effect to +strengthen the credit which had been before universally shaken. We must, +however, leaving all cases of abuse out of the question, remember, that a +really unrightful favor, granted to the debtor, may possibly entail the +ruin of his creditor. Besides, the uncertainty of the law would have a +much worse effect on credit than uncertainty as to the personal status of +individuals.(566) Where, as is the case generally in inferior stages of +civilization, debtors and creditors form two distinct classes, the +question of right is not, indeed, changed, but there is a solid basis +afforded for the political admeasurement of opposing interests. In another +work I have shown how, after great wars, land owners, who became involved +in debt, have been protected against capitalists. (See _Roscher_, +Nationaloekonomik des Ackerbaues, § 137, ff.)(567)(568) + + + + + + Book II. + + +THE CIRCULATION OF GOODS. + + + + + Chapter I. + + +Circulation In General. + + + + Section XCV. + + +Meaning Of The Circulation Of Goods. + + +The more highly developed the division of labor is, the more frequent and +necessary do exchanges become. While the hermit engaged in production +thinks only of his own wants, and the mere housekeeper of the wants of his +household, the man who is part of a nation and who plays a part in its +general economy, must bear in mind the MARKET in which goods of one kind +are exchanged against goods of other kinds. The greater, more various and +more changeable the conditions of this market are, the greater are the +intellectual faculties demanded to engage in it successfully, and to the +advantage of everybody concerned in it.(569) Goods intended to be +exchanged are called commodities. By the circulation of commodities is +meant their going over from one owner to another.(570) Among the principal +causes of circulation, we may mention the difference in the nature and +civilization of countries and peoples, the distinction between city and +country, the division of people into classes etc.(571) The rapidity of +circulation depends, on the one hand, on the quantity of commodities, and +on the other, on the degree to which the division of labor has been +carried. In both respects it is, therefore, an important indication of the +wealth of the nation, and of the world. + +Different commodities have very different degrees of capacity for +circulation (_Circulationsfaehigkeit_), that is, of certainty of finding +purchasers, and of facility of seeking purchasers. The smaller, compared +with its value, the volume and weight of a commodity are; the longer and +more conveniently it can be stored away; the more invariable and +well-known are its value in use and value in exchange: the more readily +does it go from one place to another, the more easily is it transmitted +from one period of time to another and from the possession of one person +into the possession of another. Thus, for instance, the precious metals +circulate more rapidly than industrial products; these in turn more than +raw material,(572) and immovable property circulates least rapidly of all. +An improvement in the means of transportation naturally increases the +capacity of circulation of the entire wealth of a people, and especially +of those commodities which were not before transferable as well as of +those of which the cost of transportation constituted a peculiarly large +component part of the price.(573) The greater the capacity for circulation +of any kind of goods, the greater is the power of control of its owner in +the world of trade. If we compare two men, each of whom possesses a +million of dollars, but one of whom has that million in money and the +other in land, we shall find that the former is able, for present +purposes, such as loaning to the state in case of need, aiding a +conspiracy etc., to command resources much more readily and effectively +than the latter. Under the ordinary circumstances of a nation's economy, +we find that the owner of money is very seldom in want of bread, fuel or +clothing, whereas very many owners of other property may be in want of +money.(574) True, resources which may, so to speak, take the offensive +most energetically, offer less resistance to unforeseen misfortune. The +possessor of such resources is in a condition to lose his all on the turn +of a single die. As civilization advances, the circulating capacity of a +nation's wealth increases.(575) + + + + Section XCVI. + + +Rapidity Of Circulation. + + +With an advance in a people's public economy, we find an increased +rapidity of circulation connected, both as cause and effect. Every +improvement, every thing which shortens the process of production, must +facilitate and accelerate the circulation of commodities. And so, the +perfecting of the means of transport of commodities, of the media of +exchange and of credit, an increase in the number of middlemen who make it +their business to purchase in order to sell again. On the other hand, the +more rapid the circulation of wealth, the more can it promote production. +The more rapidly, for instance, the manufacturer of cloth exchanges his +wares for money, the more rapidly may he employ the money in the purchase +of new tools and the hiring of new labor; and the sooner may he appear in +the market with new cloth. It is here precisely as it is in agriculture, +which is more productive where the seed returns several times in a year +(several crops(576)) to the hand of the peasant than it is where this +happens only once. The nearer the members of the commercial organism are +to one another, the more rapid is circulation wont to be. Hence, it is +more rapid in industry than in agriculture; in retail trade than in +wholesale; in large cities than in the country; among a dense population +than among a sparse population. + +The _regularity_ of circulation increases with economic culture. Its +concentration at large terminal points, its interruption by bad seasons of +the year, belong to the lower stages of the political economy of a people; +although bad harvests, floods, wars, revolutions etc. may, at any time, +lead to a sluggishness or to an arrest of circulation. + + + + Section XCVII. + + +Freedom Of Competition. + + +But it is especially the freedom of circulation that increases with an +advance in civilization, and this advance, like the two preceding, first +affects the home or inland circulation. Freedom of competition, the +freedom of commerce and industry, technical expressions used to designate +freedom in general in the domain of a nation's economy, is the natural +conclusion drawn from the principles of individual independence and of +private property. Hence its development is as slow as the development of +these, and attains its full growth only in highly cultivated nations, +their colonies and dependencies. In very low stages of economic +development, the circulation of goods is hampered by the absence of legal +security; later, by privileges accorded to a great number of families, +corporate bodies, municipalities, classes, etc., and later yet by the +mighty guardianship which the state exercises by its power of legislation +and even of education.(577) Each one of these epochs constitutes the end +of the preceding one, and is milder than it was. Finally comes the period +of complete freedom, when every man is permitted to manage his own affairs +even with injury to himself, provided the injury is confined to himself. + +The later times of the Roman Empire are the best illustration of how, with +the decline of the conditions which must precede freedom of competition, +that freedom itself decays.(578) + +Freedom of competition unchains all economic forces, good and bad. Hence, +when the former preponderate, it hastens the time of a people's grandeur, +as it does their decline where the latter gain the upper hand.(579) We may +say of economic freedom what may be said of all other freedom, that the +removal of external constraint can be justified and produces the greater +good of the greater number only where a stern empire over self takes its +place. Without this it would not prevent or avoid idleness, usury or +over-population. Freedom must not be simply negative. It must be positive. +If on account of the immaturity or over-maturity of a people, there be no +sturdy middle class among them, unlimited competition may become what +Bazard calls a general _sauve-qui-peut_ (let the devil take the hindmost); +what Fourier designates as a _morcellement industriel_, and a _fraude +commerciale_; what M. Chevalier denominated "a battle-field on which the +little are devoured by the big;" and in such case, as Bodz-Reymond says, +the word competition, meaning simply that each one is permitted to run in +whatever direction he may see a door open to him, is but another and a new +expression for vagabondizing. But here the evil does not lie in too great +competition, but in this, that on one side there is too little +competition.(580) The opposing principle of competition is always +monopoly, that is, as John Stuart Mill says, the taxation of industry in +the interest of indolence and even rapacity; and protection against +competition is synonymous with a dispensation from the necessity to be as +industrious and clever as other people. + +A protection of this nature, sufficiently effective to attain its end, +would not fail to arrest the efforts of those who had accomplished +something, and even to turn them backward. That freedom of competition is +a species of declaration of war,(581) among men considered as producers, +is certain; but, at the same time, it makes all men considered as +consumers members of one society, in which all the members are equally +interested, a fact too much overlooked by socialists.(582) It is the means +especially by which the greatest and ever increasing portion of the forces +of nature are raised to the character of the free and common property of +the human race.(583) "Man is not the favorite of nature in the sense that +nature has done everything for him, but in the sense that it has endowed +him with the ability to do everything for himself. The right of freedom of +competition may, therefore, be considered both the protection and the +image of this provision of nature." (_Zachariae._)(584) + +The person, therefore, who claims or asserts an exception from the rule of +free competition, has to prove his position in every individual case, +since the burthen of proof is on him. But the duty of interference on the +part of the state is positively pointed out where any interest common to +the whole people is not in a condition to assert itself; and negatively, +when the custom which hitherto had prevented an undoubted abuse has grown +too weak to continue to perform that service. In _both_ regards I would +call attention to the protection of factory children against the +concurrent selfishness of their parents and masters.(585)(586) _Supra_, § +39. + + + + Section XCVIII. + + +How Goods Are Paid For.--The Rent For Goods. + + +Payment for goods (§ 1 ff.) of any kind can be made only in other +goods.(587)(588) Hence, the greater, more varied, and the better adapted +to satisfy wants, production is, the more readily does any product find a +remunerative market; more readily in England, for instance, in spite, or +rather, because of, the great competition there, than in Greenland or +Madagascar. From this it follows that, as a rule, a person is in a better +condition to purchase more goods in proportion as he has produced more +himself. According to official accounts, the average value of a harvest of +wheat and potatoes in Prussia was formerly 332,500,000 thalers. In the +year 1850, however, it was only 262,000,000 thalers. As a matter of +course, the country people in that year could not purchase from the cities +as much as in ordinary years, by a difference of 70,000,000 thalers. This +illustrates how every class of people, who live by finding a free market +for their products, are interested in the prosperity of all other classes. +As Bastiat says: "All legitimate interests are harmonious." The more +flourishing a city, the better off are the towns around it, which furnish +it with provisions; and the richer these towns, the more flourishing is +the industry of the city which ministers to their wants.(589) It is +important that this fact should be borne steadily in mind, especially in +times of advanced civilization, when the feeling that we all have +interests in common, is too apt to grow dormant. Nothing can better serve +to awaken it again when it has become so. A nation, says Louis Blanc, in +which one portion of the people is oppressed by another, is like a man +wounded in the leg. The healthy limb is prevented by the sick one from +performing its functions.(590) + + + + Section XCIX. + + +Freedom Of Competition And International Trade. + + +Does the same rule apply to the commercial intercourse of nations? Where +the feeling that all mankind constitute one vast family is stronger than +that of their political and religious diversity; where the sense of right +and the love of peace have extinguished every dangerous spark of ambition +for empire and all warlike jealousy; where, especially, their economic +interests are rightly understood on both sides, a real conflict between +the interests of two nations must always be a phenomenon of rare +occurrence, and an exception to the general rule, which should not be +admitted until it has been clearly demonstrated to exist.(591) Highly +cultivated nations generally look upon the first steps in the civilization +of a foreign people with a more favorable eye than they do on the +subsequent progress which brings such nations nearer to themselves.(592) +Yet the realization of the above mentioned conditions on all sides is +something so improbable, unpatriotic "philanthropy" something so +suspicious,(593) the greater number of mankind so incapable of development +except under the limitations of nationality, that I should observe the +total disappearance of national jealousies only with solicitude. Nothing +so much contributed to the Macedonian and Roman conquests as the +cosmopolitanism of the later Greek philosophers.(594) + +As all commerce is based on the mutual dependence of the contracting +parties, we need not be surprised to find international commerce so +dependent. But this dependence need not, by any means, be equally great on +both sides. Rather is the individual or the nation which stands in most +urgent need of foreign goods or products the most dependent. Hence, it +seems that, in the commercial intercourse between an agricultural and an +industrial people, in which the former furnish food and the raw material +of manufactures, and the latter manufactured articles, the latter are the +more dependent. In case of war, for instance, it is much easier to +dispense for a long time with manufactured articles than with most +articles of food.(595) However, this condition of things is very much +modified, for the better, by all those circumstances on which the dominant +active commerce of a nation depends. It is, for instance, much easier for +the English, on account of their greater familiarity with, and knowledge +of the laws and nature of commerce, on account of their business +connections, their capital, credit and means of transportation, but more +particularly on account of the greater capacity of circulation of their +national resources, to find a new market in the stead of one that has been +closed to them, than it is for the Russians with their much more +immoveable system of public economy.(596) It is true, however, that an +effective blockade, which excluded both of these nations from all the +markets of the world, would be much more injurious to England than to +Russia. + + + + + Chapter II. + + +Prices. + + + + Section C. + + +Prices In General. + + +The price of a commodity is its value in exchange expressed in the quantum +of some other definite commodity, against which it is exchanged or to be +exchanged. Hence, it is possible for any commodity to have as many +different prices as there are other kinds of commodities with which it may +be compared.(597) But whenever price is spoken of, we think only of a +comparison of the commodity whose value is to be estimated, with the +commodity which, at that time and place, is most current and has the +greatest capacity for circulation. (Money.)(598) When two commodities have +changed their price-relation to each other, it is not possible, from the +simple fact of such change of relation, to determine on which side the +change has taken place. If we find that a commodity A stands to all other +commodities, C, D, E etc., in the same relation as to price as before, +while commodity B, compared with the same, has changed its place in the +scale of prices, we may infer that B, and not A, has left its former +position.(599) + +The words costly and dear, as contradistinguished from common and cheap, +both indicate a high price. We, however, call a commodity costly whose +price, compared with that of other similar commodities, is high. On the +other hand, we call a commodity dear when we compare it with itself, and +with its own average price in other places and at other times.(600) + +In individual cases, the price of a commodity is determined most usually, +and at the same time most superficially, by custom; people ask and pay for +a commodity what others have asked and paid for it. If we go deeper and +inquire what originated this customary price and may continually change +it, we come to the struggle of interests between buyers and sellers. And +if science would analyze the ultimate elements of the incentives to this +struggle and the forces engaged in it, it is necessary that it should keep +in view the entire economy of the nation, and even all national life. + + + + Section CI. + + +Effect Of The Struggle Of Opposing Interests On Price. + + +No where in the public economy of a people are the workings of +self-interest so apparent as in the determination of prices. When the +price of a commodity is once fixed by the conflict of opposing +interests,(601) the self-seeking of every individual dictates that he +should thereby gain as much as possible of the goods of others, and lose +as little as possible of his own. In this struggle, the victory is +generally to the stronger, and the price is higher or lower, according to +the superiority of the buyer or seller.(602) But who, in such case, is the +stronger? Political or physical superiority can turn the balance one way +or another only in very barbarous times, and especially in times when +legal security is small.(603) As a rule, it is the party in whom the +desire of holding on to his own commodities is strongest, and who is least +moved by the want of the wares of others. As in every conflict, confidence +in self, sometimes even unbounded confidence in self, is an important +element of success. A party to a contract of sale or barter, who considers +his immediate position decidedly stronger than that of the other party, +will scarcely depart from his demands. Hence it is, that in exchange, one +party so frequently holds back until the other has expressed his +terms.(604) How different is the price of the same pieces of land which a +new railroad enterprise is compelled to pay and the prices it would get +for them, from the adjoining owners, in case of the dissolution of the +company. + +But the struggle to raise prices or to lower them, which is always going +on, undergoes modifications of every description among all really +commercial nations, partly through the influence of the public conscience, +which brands as inhuman and blameworthy the spoilation of the opposing +party by acts which the laws do not reach. And this consideration by the +public conscience is all the more severe in proportion as real competition +in the article sold is wanting.(605) But the chief modification in this +struggle is produced by the fact, that where civilization has advanced +farthest, every commodity is offered for sale by a great many and wanted +by a great many.(606) As soon as several seek the same object, there +naturally results a rivalry among them, which induces each to attain the +desired end, even by the making of greater sacrifices than others. The +greater the supply of a commodity is, as compared with the demand for it, +the lower is its price; the greater the demand as compared with the +supply, the higher it is. And, indeed, there is question here, not only of +the _mass_ of things supplied or demanded, but also of the _intensity_ of +the supply and demand.(607) + +If the exchange-force of both contractants be equal, or, in other words, +if both, with equal knowledge, are interested in the completion of the +exchange, there results from this attitude of the parties toward each +other, what is called an equitable, or average price, in which both meet +with their deserts. Here each is a gainer, since each has parted with the +commodity which was less necessary to him, and received in exchange the +commodity which was more necessary to him. Looked at, however, from the +stand-point, not simply of a nation's but of the world's economy, the +value given and the value received are equal.(608)(609) + +As a rule, the price-relation of two commodities is determined by this +relation of demand and supply,--by the desire to possess and the difficulty +of obtaining them. We must, therefore, examine on what deeper relations +supply and demand themselves depend.(610) In the case of the purchaser, +the value in use of the commodity and his own ability to pay constitute +the maximum limit of its price, which price may, however, be modified by +the cost of producing it(611) elsewhere or at another time. In the case of +the seller, the cost of production is the minimum limit, which may, +however, be extended by the cost of procuring the commodity by the +purchaser at another time or place.(612) + + + + Section CII. + + +Demand. + + +The purchaser in his demand is wont to consider principally the value in +use of a commodity, according as it, in a higher or lower degree, +ministers to a necessary want, to a decency or to a luxury. The difference +of opinion as to which of these categories any given want belongs depends +not only on the nature of the country and the customs of its people, but, +for the most part, also, on the prejudices of class and on personal +individuality.(613) A reasonable man will employ only the surplus of the +first class in the satisfaction of wants of the second, and again only the +surplus of the second in the satisfaction of wants of the third.(614) + +If the value in use of a commodity rises or falls, and surrounding +circumstances remain unchanged, its price also rises or falls.(615)(616) + + + + Section CIII. + + +Demand.--Indispensable Goods. + + +When the supply of articles of luxury diminishes, the price of them, it is +true, rises. But as now there is a number of purchasers no longer able to +pay for them, the demand for them also decreases, and their price, as a +consequence, rises in a less degree than might be inferred from the amount +and condition of the supply merely. And so, on the other hand, an increase +of the supply which lowers the price is wont, in the case of pleasures +capable of a wide extension, such as are ministered to by fine roots, +vegetables, etc., to produce an increase of the demand, and this operates +to arrest the falling price. + +It is quite otherwise, in the case of indispensable goods, as for +instance, wheat. When there is a want of such an article, men prefer to +dispense with all other articles, to some extent, rather than to practice +frugality in bread; and all the more, as bread is not so much used as +consumed rapidly, while clothes and metallic articles last a long time. +And even after an over-abundant harvest, leaving voluntary waste out of +the question, consumption is increased by a finer separating of the flour, +an increase in the amount of corn fed to cattle, and the distillation of +spirits. Hence, demand and supply by no means run in parallel lines at +every moment; and indispensable articles tend to greater perturbations in +price than those which can be dispensed with.(617)(618) The price of +grain, especially, varies in a ratio very different from the inverse ratio +of the amount of the harvest;(619) although a formula therefor expressed +in figures, like that of Gregory King, can never be applicable +universally.(620) Farmers must everywhere and always withhold a certain +amount of their harvest for seed, for home use etc., from the market. Only +absolute necessity can induce them to draw on the quantity thus laid by. +But the ratio of this part to the whole is very different in different +countries.(621) In the higher stages of civilization, where payment in +money has taken the place of payment in produce, and all other kinds of +payment, and where the cultivator of the ground pays the wages of his +laborers almost exclusively in money, so that they, like all others, +purchase what bread they require in the market; a given deficit in the +harvest must be spread over a much larger market supply; and prices, +therefore, remain much less affected than in the lower stages of +civilization.(622) And so, it is clear that a like bad harvest must affect +prices very differently, if there be a large importation or exportation of +the means of subsistence, and if several bad harvests, or several harvests +yielding more than the average have preceded. + +In another respect yet, the price of indispensable commodities is very +sensitive, because here the mere fear of a future want of them has a far +deeper and wider influence, than has the fear of want of articles of +luxury. No matter how good the wheat crop may have been, if the weather +afterwards interferes with its harvesting, the price of wheat, in +countries in which the spirit of speculation is on the alert, will +certainly rise, because the prospect of the future crop then becomes +somewhat doubtful.(623) + + + + Section CIV. + + +Influence Of Purchaser's Solvability On Prices. + + +The purchaser, besides the value in use of the goods he desires to buy, +considers his own solvability (_Zahlungsfaehigkeit_ = ability to pay). It +is only solvent demand which can influence prices.(624) For instance, +among a people made up almost entirely of proletarians, there will be a +great many cases of starvation and death after a bad harvest, but the +price of corn will undergo only a slight increase.(625) But where the +greater number of inhabitants own property, and where the wealthy come to +the help of the poorer classes by means of poor-rates and acts of +benevolence, it is scarcely possible to assign limits to the increase of +the price of corn. By a necessary connection, when indispensable articles +grow dear, the demand for articles that can be dispensed with generally +decreases, and _vice versa_.(626) Every merchant, engaged in an extensive +business, is interested in knowing in advance the results of the corn +crop. The higher the price of a commodity rises, the narrower, of course, +grows the circle of those who can pay for it.(627)(628) + + + + Section CV. + + +Supply. + + +In the case of isolated chance exchanges, the seller, too, takes into +consideration, first of all, value in use, and compares the satisfaction +which the commodity to be parted with and that to be received are able to +afford. It is true that in making this estimate, he is subject in the +highest degree to error and deception.(629) In the well ordered trade of a +nation whose economy is highly developed, the seller, who had this very +trade in view in his production, is wont to consider almost exclusively +the value in exchange of his commodity. + + + + Section CVI. + + +The Cost Of Production. + + +As no one is willing to lose anything, every seller will consider what his +goods have cost him, and the cost of producing or procuring them as the +minimum price to be asked for them.(630) At the same time, the idea +covered by the expression cost of production, although it always embraces +whatever disappears from the resources of the producer to enter into +production, varies very much according as it is considered from the point +of view of the individual's, the nation's or the world's economy. + +An individual who pays taxes to his government, and who has rented land +and employed labor and capital to engage in production, must indeed, +besides the capital he has used in such production, call all his outlay in +interest, wages, rent, and taxes, by the name of cost of production;(631) +since, unless they all come back to him in the price of the commodity, the +entire enterprise can only injure him.(632) He will, of course, add an +equitable profit to remunerate him for his enterprise, since without such +profit, he would not be able to live or produce; or else, he would be +compelled to consume his capital. The moment the current rates of +taxation, interest, wages and rent change in a country, the cost of +production is also changed in the case of the individual engaged in +production, however unaltered the technic process may remain.(633) But +taking the nation, or all mankind into consideration, we must not lose +sight of the fact that these three great sources of income, as well as +taxation, are not, rightly speaking, sources from which income flows, but +rather channels through which the aggregate income of the nation or the +world is distributed among individuals.(634) Hence the wages of labor, for +instance, which afford the means of living to the greater part of the +population, cannot possibly be looked upon simply as a factor in economic +production. The people considered in their entirety have the soil gratis. +All saving made from rent, interest on capital, or wages, is nothing but a +change of the proportion in which the results of production were +distributed hitherto among cooeperators in production. Such a change may be +either advantageous or the reverse; but it is not a diminution of the +amount of sacrifice which the people in general must make for purposes of +production. Hence, in a politico-economical sense, to the cost of +production, belongs only the capital necessarily expended in production, +and which has disappeared as a part of the nation's resources, abstraction +made of the personal sacrifices in behalf of production.(635) The value of +the circulating capital which in the process is entirely used up, must, of +course, be entirely restored in the price, that of the fixed capital used +only to the extent that it has been used.(636) + +The risk, which the producer runs until the commodity produced is actually +consumed must also be borne in mind.(637) There are things which are a +real risk in small enterprises that by the intervention of an insurance +company, or where the enterprises are large and insure themselves, become +a more or less variable portion of the cost of production. The price of +the product, in the latter instance, rises, by this means, very regularly. +In the former case, the rise depends partly on the feeling of the people +whether their pleasure in gain is greater than their grief over a +corresponding loss.(638) + +Those enterprises which necessarily produce different products at the same +time deserve special consideration.(639) Here we may speak of "_united_ +costs of production," and all that is needed is that the aggregate of +these costs should be covered by the aggregate price of both products. +This complicates to a certain extent the calculations which the seller +must make to determine his minimum demand for each product. To ascertain +this, he must subtract from the united costs of production the amount of +value which he expects with certainty for the other product.(640) + + + + Section CVII. + + +Equilibrium Of Prices. + + +Goods whose cost of reproduction,(641) that is, the highest necessary cost +of reproduction is the same, have uniformly the same value in exchange. +Every deviation from this level immediately sets forces in motion which +endeavor to restore the level, just as the water of the sea seeks its +level, notwithstanding the mountains and abysses which the winds bring +forth from its bosom.(642)(643) + + + + Section CVIII. + + +Effect Of A Rise Of Price Much Above Cost. + + +If the market price rises high above the cost of production, producers +make a profit greater than the average profit made in the country. This +induces them, by the appropriation of new land and the employment of new +labor and capital, to increase their business. Other parties also engage +in this profitable department of trade. This competition not only makes +the means of production dearer, but must eventually, by increasing the +demand, reduce the price of the product to the ordinary level of profit, +that is to an equilibrium with other commodities.(644) Hence, in the +beginning, every diminution of the cost of production(645) turns to the +advantage of the producer; but afterwards and permanently to that of the +consumers: an economic law exceedingly beneficent in its operations, and +not unlike the action of positive legislation in the matter of patents. +There is no greater stimulus to the making of improvements than the +certainty of reward to the person who first introduces one. The moment, +however, that the improvement is imitated by all producers, the advantage +gained by it becomes the common good of the whole nation.(646) These are, +as J. B. Say says, conquests made over the gratuitous productive force of +nature. As a consequence, the value in use of a people's resources +increases; generally, also, their value in exchange, in so far as the +production of the now cheaper goods increases in a degree greater than +their cost of production has diminished.(647) + +As to the alternative so frequently discussed, whether it is preferable to +make a large percentage of profit on the sale of a small quantity of +goods, or a small percentage on a large quantity, we find that, in the +lower stages of civilization, the former is preferred, and the latter in +the higher.(648) And, indeed, the latter is not only more humane, but, in +the long run, it is more profitable to the person who adopts it as his +rule in business. In the case of commodities, he now runs but little risk +from a change of fashion, because the fashions of the masses change much +less rapidly than those of the upper circles of society. In the case of +indispensable goods, on the other hand, he may now calculate with more +certainty on the increase of population, and, therefore, on a future +market for his wares. Competition, which in former times, devoted all its +efforts to bringing about the exclusion, by law, of all rivals, is now +engaged, principally, in devising means of surpassing them by superiority +of workmanship, and in thus increasing the power of the real sources of a +nation's wealth. + + + + Section CIX. + + +Effect Of A Decline Of Price Below Cost. + + +If the market price sinks below the cost of production, the producer +naturally suffers a loss, and diminishes his stock as soon as possible. +That whole establishments engaged in industry should forsake a branch of +it which is suffering from depression and enter a flourishing one, must +ever remain a rare exception.(649) But the discouraged manufacturer may +delay renewing his stock on hand,(650) replacing his machinery by new +machinery; he may dismiss some of his workmen and diminish the number of +days during which the others shall work. Moreover, most industries are +operated by means of borrowed capital, capital which must therefore, be +returned to the lender. Under certain circumstances, however, the industry +may be continued for some time, even at a real loss,(651) so long as the +loss of interest etc., which would follow the entire suspension of the +work, exceeds the loss produced by the lowering of price, but hardly any +longer. If the supply of the commodity the price of which has fallen has +been diminished, the subsequent result depends on the causes which, in the +first place, brought about the fall in price. If the diminution in price +was caused solely by a too great supply, when this superabundant supply is +gotten rid of, the price will rise again.(652) If it were produced by a +decrease in the value in use of the commodity, the diminution of the +supply can restore the former state of things only in so far as at least a +part of the purchasers ascribe to the commodity the same value in use as +before.(653) Lastly, if the lowering of the price came from a decrease in +the number of buyers, or from a decrease in their ability to purchase, the +former price will be restored when production has been adapted to a +correspondingly smaller circle of consumers.(654) This last is true +especially when the price, without having suffered any absolute change, +has become relatively too low, on account of an increase in the cost of +production.(655) + + + + Chapter CX. + + +Different Cost Of Production Of The Same Goods. + + +Most goods are produced at the same time, but under different +circumstances, at a very different cost. In order to estimate the +influence of this fact upon price, we must distinguish between those +commodities the cheapest manner of the production of which may be extended +at pleasure, and those in the production of which it is necessary, in +order to satisfy the aggregate want of them, to call in the dearest mode +of production to aid the cheapest. + +In the former instance, the price of commodities is naturally regulated by +the least cost of production. The person who is unable to sustain this +competition permanently, would do a great deal better to abandon the +industry altogether; for it is not in his power to raise the price by +diminishing the supply; more powerful rivals would then only need to +correspondingly increase theirs.(656) + +If the same law were applicable, in the latter case, producers placed in a +less favorable situation would be compelled to immediately abandon the +market. The market, in consequence, would no longer be able to provide for +the aggregate need; and the price of the commodity would continue to rise +until the producers who had been driven from the market returned to it +again. Hence, here, price in the long run is determined by the cost of the +production of the commodity, produced under the least advantageous +conditions, while such production is necessary in order to satisfy the +aggregate need. The person engaged in production under more advantageous +conditions receives in the same price of the goods, which are cheaper to +him, an excess of profit; one which is greater in proportion as his +situation, _vis-a-vis_ of production, is superior to that of his less +favored competitors.(657)(658) + + + + Section CXI. + + +Different Cost Of Production Of The Same Goods. (Continued.) + + +Hence the price of a commodity and the ratio between its supply and demand +mutually condition each other. On the height of the price depends, in +great part, how many purchasers shall resolve to make an effectual demand; +but, at the same time, to what amount of cost of production, sellers shall +extend their supply.(659) We can speak of an equilibrium between supply +and demand only when the former corresponds with the _wish_ of those who +are ready to make good the full cost of production. (_Malthus._) It has +been asked, indeed, whether it were more natural and better that demand +should precede supply or supply demand.(660) But the inquiry is an +illogical one, when expressed in so general a manner, since supply and +demand are only two sides of the same transaction. But, we may say that in +the case of indispensable goods, the want of them (demand) is always felt +sooner than the excess of them (supply), and that in the case of goods +which may be dispensed with, including, originally, money, the reverse is +true. Besides, a person engaging in the production of any kind of goods, +can, as a rule, only seldom directly investigate the relation between +supply and demand. Generally, he can do no more than compare the market +price of the commodity with the cost at which he can produce it. Many +mistakes are inevitable here; but the making of them is the necessary +sacrifice which must be endured to purchase the more than counterbalancing +advantages of free competition.(661) + + + + Section CXII. + + +Exceptions. + + +The rule that goods which have the same cost of production have also equal +value in exchange, is applicable only to the extent that it is possible to +transfer the factors of production at will from one branch of production +to another. Where this really free competition does not exist, the price +depends entirely on the quantity of the supply, compared with the +solvability or capacity to pay of the purchaser; and hence, it may +sometimes rise far above the cost of production (monopoly-price), and +sometimes sink far below it (forced price, or under-price).(662) Such +hindrances to competition depend, in part, upon natural causes. Thus, in +the case of the works of art of a deceased artist, which cannot be +increased in number;(663) or in that of living celebrities who cannot +extend their mental activity in the same degree that their reputation has +grown. So, also, in the case of precious stones, which are sometimes found +free, and therefore cost nothing, but which, at the same time, have a high +price.(664) Many valuable agricultural products are, together with their +production, limited to a definite and sometimes very small district.(665) +It is to be regarded as a modification of such natural monopolies when +substitutes for a kind of goods which diminish, at least in part, the +demand for them, are found, at a cheaper price; for instance, ordinary +table-wines in the stead of fine wines. The rule applies much more +strictly to those goods which, on account of their greater quantity, can +replace inferior ones,(666) than it does to those where this is not +possible. + +The principal cause of forced or under-prices (_Schleuderpreise_) is the +facility with which the product deteriorates, and must, therefore, find a +quick sale, especially when its storage or transportation is attended by +further difficulties.(667) But, very durable commodities are also subject +to under-prices, and especially those which last longest, because the +supply of them can be diminished only very slowly. Thus, for instance, +houses, in a declining city. Distress-prices are found most usually in the +case of such commodities as are produced without any intention to produce +them, as for instance, rags and excrementitious substances. The more the +mere forces of nature preponderate in production, the less can the supply +be increased or decreased at pleasure, the more frequently, as a +consequence, do we find monopoly-prices and under-prices. (Compare § 131 +ff.) Thus the production of wheat is invariably connected with the order +of the seasons. Between seed-time and harvest, there are a number of +months which neither capital nor skill can shorten to any extent. The +cultivation of land, to be very much greater and more lasting, supposes so +many conditions precedent, increase of live stock, buildings etc., that it +can be attained only after a series of years. Hence it happens that wheat, +much more than manufactured products, is subject to oppressively high +prices and oppressively low ones, during a long period of time. No matter +what the influence of the forces operating in the opposite direction may +be, the price of wheat depends most largely on the result of the last +crop.(668) + + + + Section CXIII. + + +Exceptions. (Continued.) + + +Other impediments in the way of freedom of competition have their origin +in social conditions. The rule governing prices applies only where the +vendor and purchaser are equally ready to exchange. But in every case in +which the producer carries on his business, not for the sake of free gain, +but simply to obtain a means of livelihood, it may be subject to many +important exceptions.(669) The richer a seller is, the longer can he wait +for a favorable opportunity to sell. Thus, for instance, wheat is somewhat +lower in price at times when payments are universally made than at other +seasons of the year, because a great many country people are then +compelled to sell. Where the country population are universally needy, it +sinks after a harvest to an unusually low figure, and in spring rises +again very high. + +Sometimes price is affected by the agreements of the purchaser or seller, +but most readily by those of middlemen between consumer and producer.(670) +Customs peculiar to whole classes may exert the same influence, and such +customs are especially powerful in the lower stages of business and +industrial development. They, even at the present time, take the place, +frequently, of freedom of competition in retail business, in the book +business, and in the determination of lawyers' and doctors' fees, as well +as in the distribution of a nation's income among the three great branches +of its general economy,(671) deciding, instead of competition, how much +shall go to each. Wherever there are guilds, communities, castes etc. with +legal privileges; wherever there are difficulties placed in the way of +exportation and importation; wherever preemption rights or +monopolies,(672) in the strict sense of the word, exist, the leveling ebb +and flow of the elements of production may be still more seriously +interfered with. Legislation(673) of this sort injures the non-privileged +portion of the population more than it helps the privileged portion. (See +§ 97.)(674) + +The word _usury_, so arbitrarily used in every-day language, should be +admitted in science only to designate a famine-price, fraudulently and +intentionally caused or intensified. + + + + Section CXIV. + + +Prices Fixed By Government. + + +No power can, of course, fix the price of a commodity in the long run, +which cannot at the same time fix the relation of supply and demand. +Hence, set prices fixed by governmental authority can be made to play a +part in practice only in so far as they do not establish a price in +opposition to the real state of things, only to the extent that they give +undoubted expression to it in a manner in harmony with natural conditions. +With this restriction, set or fixed prices may, in the absence of real +competition, which can always best determine prices, be useful to both +parties; otherwise one party would at one time, and the other at another, +profit by an unjust advantage; but it would not be long before both would +suffer from the perturbation caused thereby in all commercial +transactions. How pleasant it is for a traveler in Switzerland, or even in +Italy, to find set prices established there.(675) Especially where +competition is prevented by state privileges, the establishment of set +prices by the state for the protection of the public may be +necessary.(676) It is more difficult to fix a set price for a commodity in +proportion to its complexity and to its variableness in quality; and where +there are different grades of quality of the same commodity, and the +transition from one grade to another is almost imperceptible, such price +is easily evaded.(677) In the case of every enterprise carried on by many +in common, where no competition is possible, it is necessary to supply the +defect by means similar to the establishment of fixed prices; as in the +case of government, by fees for governmental services, and the cooeperation +of a chamber of deputies in the imposition of taxes and the determination +of official salaries etc.(678) + + + + Section CXV. + + +Influence Of Growing Civilization On Prices. + + +On the whole, prices become more and more regular as national-economic +civilization advances. Progress in civilization tends to bring the parties +engaged in the struggle for prices that is buyers and sellers, nearer to +one another, in so far as it uniformly decreases the cost of production, +and increases the purchaser's ability to pay.(679) (See § 101.) The more +universal division of labor makes commercial intercourse more necessary to +every one, at the same time that it makes it more of a habit to him; and +hence exchange ceases more and more to be a matter of caprice or chance. +The better means of transportation and communication render it easier, in +every way, for supply and demand to meet. With the advance of general +enlightenment and education, an acquaintance with commodities also becomes +more general, and every purchaser is on a better way to be able to +estimate the cost of production which the seller has to bear. Hence, +fraudulent prices and prices founded in error become less frequent; and +all this is helped forward by the greater accuracy of weights and +measures. The increase of population makes competition more active in all +branches of trade, while at the same time, with the greater freedom of +circulation, a number of causes which previously operated to produce very +high prices in one place and very low ones in another are removed.(680) +But especially, the growth of a distinct class of merchants leads to a +uniformity in price. This class are incited by their own interest to +purchase at low prices and sell at high prices. Thus, their competition in +the former case raises prices, and lowers them in the latter.(681) In all +lower stages of civilization, the custom of making offers and beating down +in price plays a great part, while where culture is higher, the system of +fixed prices (but not by government) gains ground continually. Here +Turgot's principle is applicable, viz.: that the current price of an +article is tacitly understood when one asks a merchant the price of his +wares.(682) + +This proposition is true in the case of individuals, as well as of classes +and of whole nations.(683) It is plain, that under a system of fixed +prices we can more certainly discover what the equitable price is, than in +the heat of higgling which besides consumes a great deal of precious time. +Lastly, one of the principal requisites of a well developed scale of +prices is national honor, and this, doubtless, increases in the higher +stages of civilization, not only because of the greater moral culture +which then prevails, but also and especially because that which +constitutes a people's real and best interests is better understood.(684) +Among declining nations, many of these developments take a retrogressive +road. The very great distinction between rich and poor, between educated +and uneducated, again produces great fluctuations in price. A proletarian +people who have sunk so low as to live on potatoes will suffer much more +from variations in price and of the means of subsistence than a people who +live on wheat; for the reason that it is so difficult to export or to +preserve(685) potatoes. Nor can it be doubted, that the greatest possible +constancy of prices is the most beneficial condition that the general +economy of a people can be in. Where prices change while the cost of +production remains the same, one person can only gain what the other has +lost. But such unmerited gains and undeserved losses have an invariable +tendency to destroy the deepest roots of a people's economic activity; and +intentional speculation based upon such change usually assumes an immoral +character. (Stock-jobbing.)(686) Even if Macleod be right, that an +increase or decrease in prices is to be regarded as a warning of excess, +the former of excess of consumption, the latter of production, no one will +doubt that it is the interest of every organism to confine pain within the +smallest possible limits, even if its consequences are so beneficial to +the preservation of the whole body. + + + + + Chapter III. + + +Money In General. + + + + Section CXVI. + + +Instrument Of Exchange. Measure Of Value. Barter. + + +Wherever the division of labor is very highly developed, the continuance +of barter, or the direct exchange of one object of consumption for +another, presents difficulties well nigh insurmountable. How difficult it +would be always to find the person who could supply us with precisely what +we wanted, and at the same time have need of what we had a surplus +of.(687) But how much less frequently would it happen that one's want and +another's surplus would correspond exactly the one to the other in +quantity; that, for instance, the manufacturer of nails, desirous of +exchanging his nails for a cow, should meet a cattle-dealer who should +want exactly as many nails as a cow is worth! Here there is one chief +difficulty in the way, viz.: that there are so many commodities which +cannot be divided without causing a diminution or even a destruction of +their value; and that others cannot be stored away in any quantity without +becoming a very heavy burthen to their owner. How useful it would +therefore be, if there was one commodity which should be acceptable to +every person, at all times, especially if in addition to this, it +possessed the qualities of durability, capacity for transportation and for +being stored up and preserved. Any person who possessed a proper supply of +this one commodity would then be certain of being able to obtain all other +exchangeable commodities through its instrumentality; and every seller +would be satisfied to exchange what he had to dispose of against this +"universal commodity." If two values are equal to a third, they are equal +to each other. It is, therefore, a simple matter to use this most current +of all commodities, with which all others are most frequently compared, as +a measure of the relative values of all other exchangeable commodities. +There is need of such a measure, and it is analogous to the want +experienced by the mathematician who has a column of fractions to sum up, +and who does it by first reducing them all to a common denominator. +(_Storch._)(688) A person entrusted with the duty of assessing the values +of two hundred different articles would be obliged, if he had no such +measure to use, to burthen his memory with at least 19,900(689) different +ratios. With it, he need carry only 199 in his head. + +Such a commodity, universally in favor, and which, on that account, is +employed as an intermediary in the effecting of exchanges of the most +varied nature, in the measuring of all exchange-values and as a +value-carrier (_Werthtraeger_) in time(690)(691) and space, we call money. +(_Merce universale: Berri; produit prefere: Ganilh; marchandise +intermediare; Bastiat._)(692) + +The more enlightened portions of every business community gradually come +to require payment in the commodity which has for the time being the +greatest circulating capacity. If to this be added the sanction of the +government, and if the government itself recognizes this same "universal +commodity" as the means of payment of all debts, or as "legal tender" +(_puissance liberatoire_), where no other is expressly agreed upon, the +"universal commodity" in question then becomes money in the fullest sense +of the idea conveyed by the word.(693) + + + + Section CXVII. + + +Effect Of The Introduction Of Money. + + +By the introduction of money, most exchanges are divided into two halves: +purchase and sale.(694) We may also say with Schloezer, that by its means, +exchange, for the first time, becomes a sale, and obscure value in +exchange, clear and definite price. (_Permatio vicina emtioni_). Were +there no money, the party to an exchange, occupying the most advantageous +economic position, would possess a much greater superiority over the other +than he does now. Many a bread-buyer, especially, would be half starved +before he could agree with the seller on the quantity of bread to be +received in exchange for the commodity he had to dispose of. The producer +of the means of subsistence would here possess an extreme advantage, since +the urgent necessity of the exchange for the one party, and the power of +the other to postpone it, would make the determination of the price an +entirely arbitrary matter.(695) Hence, the development of money as the +instrument of trade, keeps pace with the development of individual +liberty. Payment of wages in money makes the workman more responsible for +his husbandry etc., but at the same time, freer, than payment in produce. +Now, also, a higher division of labor becomes possible; for the easier it +is to obtain everything else for money, the easier it is for each person +to devote himself exclusively to one branch of business.(696) Without +money, too, only ready commodities could be exchanged one against another. +Only when money has become the instrument of trade, is it possible to +separate the net from the gross returns, and, therefore, to manage income +properly. (_Schaeffle_). Now, also, it becomes for the first time really +remunerative to produce more than one needs for his own use, and to save. +Without money, the owner of any one kind of capital, who could not employ +it himself, would be obliged, if he desired to loan it, to find not only a +person who was in need of capital, but one who needed the very kind of +capital he had. For instance, the person who had one horse too many, would +be obliged to look for another who was in need of one etc. And how +difficult a task it would be to determine the amount of interest, if it +had to be paid in produce or kind, and even to make a return in produce or +kind of capital which had been presumably used. (_Storch_). Moveable +property or resources can attain importance only after the introduction of +good money, since, previous to such introduction, it was by reason of its +great variety,(697) and of its perishable nature, immensely inferior to +landed property. Hence it is, that money, in a nation's economy, is what +the blood is in the life of the animal. It is, so to speak, the common +reservoir in which all food is first dissolved, and by which, at a later +stage, the elements of nutrition and preservation are distributed to the +several organs.(698) There is, indeed, no machine which has saved as much +labor as money. (_Lauderdale_). It is true that the shadows which wealth +is wont to cast, extravagance, avarice and inequality of every kind, may +readily grow longer and darker in consequence of the introduction of +money.(699) But may not the knife which, in the hands of the surgeon, does +so much for life, become an instrument of danger in the hands of a child? +The invention of money has been rightly compared to the invention of +writing with letters.(700) We may, however, call the introduction of money +as the universal medium of exchange (money-economy),(701) in which goods +intended for use are exchanged against money(702)--instead of barter +(barter economy), which is a system of public economy (_Schaeffle_), in an, +as yet, very little developed form, man being there less sociable with his +fellow men--one of the greatest and most beneficent advances ever made by +the race.(703) + + + + Section CXVIII. + + +The Different Kinds Of Money. + + +Very different kinds of commodities have, according to circumstances, been +used as money; but uniformly only such as possess a universally recognized +economic value.(704) On the whole, people in a low stage of civilization +are wont to employ, mainly, only ordinary commodities, such as are +calculated to satisfy a vulgar and urgent want, as an instrument of +exchange. As they advance in civilization, they, at each step, choose a +more and more costly object, for this purpose,(705) and one which +ministers to the more elevated wants. + +A. Races of hunters, at least in non-tropical countries, usually use skins +as money; that is the almost exclusive product of their labor, one which +can be preserved for a long period of time, which constitutes their +principal article of clothing and their principal export in the more +highly developed regions.(706) + +B. Nomadic races and the lower agricultural races,(707) pass, by a natural +gradation, to the use of cattle as money; which supposes rich pasturages +at the disposal of all. If it were otherwise, there would be a great many +to whom payments of this kind had been made, who would not know what to do +with the cattle given them, on account of the charges for their +maintenance.(708) + + + + Section CXIX. + + +The Metals As Money. + + +C. That metals were used for the purpose of money much later than the +commodities above mentioned, and the precious metals in turn later than +the non-precious metals, cannot by any means be shown to be universally +true. Rather is gold in some countries to be obtained by the exercise of +so little skill, and both gold and silver satisfy a want(709) so live and +general, and one so early felt, that they are to be met with as an +instrument of exchange in very early times.(710) In the case of isolated +races, much depends on the nature of the metals with which the geologic +constitution of the country has furnished them.(711) In general, however, +the above law is found to prevail here. The higher the development of a +people becomes, the more frequent is the occurrence of large payments; and +to effect these, the more costly a metal is, the better, of course, it is +adapted to effect such payments. Besides, only rich nations are able to +possess the costly metals in a quantity absolutely great.(712) Among the +Jews, gold as money, dates only from the time of David.(713) King Pheidon, +of Argos, it is said, introduced silver money into Greece, about the +middle of the eighth century before Christ. Gold came into use at a much +later period.(714) The Romans struck silver money, for the first time, in +209 before Christ, and, in 207, the first gold coins.(715) Among modern +nations, Venice (1285) and Florence seem to have been the first to have +coined gold in any quantity.(716) Henry III. of England (ob. 1272), was +the first to coin gold, but with so little success, that for a long time +after, Edward III. (ob. 1377) was regarded as the first English monarch +who had coined gold.(717) How little a barbarous people are in a condition +to make use of very costly material as money, is proved by the account +which Tacitus gives of the ancient Germans, who preferred silver to gold +in trade.(718) England presents us with an instance of the other extreme. +Since 1816, silver, in that country, has been used only as a species of +change, and the circulation of gold governs in almost all commercial +transactions.(719) + +D. The local usage of some countries has raised many other commodities to +the dignity of instruments of exchange, especially where the population +are poor and the metals which might be used as money have not existed in +sufficient quantities or in the requisite proportion. But people have +always limited themselves in the material of their money to such +commodities as are universally acceptable, as uniform as may be, and +current as articles of export or import.(720) + + + + Section CXX. + + +Money--The Precious Metals. + + +That the precious metals are uniformly preferred in highly cultivated +nations(721) as the instrument of exchange, depends on the greatness and +uniformity of their value in exchange, but especially on their durability +and pliancy as to form. + +This value in exchange is great, because their beauty, which consists in +their luster and their sonorous ring,(722) gives them great value in use; +and because, at the same time, their rarity in nature makes the supply of +them relatively small,(723) and not susceptible of increase at +pleasure.(724) As they contain so large a value in so small a volume, they +are adapted to transportation from one place to another, with but little +difficulty--a matter of the greatest importance in an instrument of +exchange.(725) Hence, it is much easier to keep the demand for them and +the supply of them at a level all over the world, than it is the demand +and supply of most other commodities. And this all the more as there are +not different kinds of gold and silver, but only different qualities of +their fineness.(726) It also contributes to the uniformity of their value +in exchange, that they minister mainly only to wants of luxury. The most +indispensable commodities are subject to the greatest variations in price +(see § 103), whereas, in the case of the precious metals, the diversity of +uses to which they may be turned contributes greatly to render their +value, as instruments of exchange, more equable. If the supply of them be +small, gold and silver vessels are less in demand; a part of the old ones +are melted down, and _vice versa_. + +In durability, the precious metals surpass almost all other commodities. +They are not at all affected by air or water, and they can be corroded +only by very few fluids. Fire may, indeed, change their form, but scarcely +in any degree the value of the material of gold, and that of silver very +little, and then only when it is subjected to a very powerful blast or +draught of air.(727)(728) Hence, while by laying them by, they suffer +virtually nothing at all (a most valuable article is an article to deposit +savings in), their wear and tear from use may be very much decreased by an +admixture with other metals in the proper proportion.(729) This durability +contributes largely to keep the price of the precious metals more uniform. +By the time that the wheat crop is rightly harvested, the great bulk of +the previously stored wheat is, as a rule, consumed; and, therefore, the +supply of wheat depends almost entirely on the yield of the last crop. On +the other hand, it is probable that there is many a piece of money, the +raw material of which was dug from Thracian gold mines in the time of King +Philip or from the silver mines of Spain during the reign of Hannibal, in +circulation to-day. Compared with the immeasurable stores of gold and +silver which have gone on accumulating for thousands of years, the new +yield of them, in any one year, is lost like a drop in a bucket. Hence, +only when the yield of the mines has continued for a very long time, or +when it is exceedingly great or remarkably small, can the price of their +products change to any great extent.(730) Even during the revolution in +prices, between 1492 and 1560, the yearly decline in their prices was only +one-half of one per cent. per annum. + +Their great pliability of form has, too, very important advantages for our +purpose: first, that they can be divided very accurately into very small +parts, and that the volume of every part corresponds exactly to the value +of the part;(731) and secondly, that they take an impression at very +little cost, an impression which is an authoritative and trustworthy +expression of their weight and quality, thus saving the commercial public +the perilous trouble of weighing and testing them every time they are +used.(732)(733)(734) This duty the state, as a rule, assumes. (Coinage.) +When its authority, however, is not recognized, as is generally the case +in international trade, gold and silver bars are even now used, and have, +therefore, to be weighed and tested.(735)(736) + + + + Section CXXI. + + +Value In Use And Value In Exchange Of Money. + + +The original value in use of the precious metals, to satisfy certain wants +of luxury in the most aesthetic and the most substantial manner, continues +still; but with the advance of civilization, the employment of gold and +silver for this purpose has fallen farther and farther behind the more +recent employment of these metals as the best material for money. And +since now the services rendered by money may be divided into two classes: +storing up or preservation, and the transmission (division, concentration) +of values,(737) the former always plays a greater part in the earlier +states of the development of trade by money; and the latter plays the +larger part in the later stages of the same development. We may best +compare money to the other machines or instruments of commerce.(738) + +The person who, in times when there is a dearth of goods, and especially +of capital, complains of a want of money, commits the same error as if he +ascribed a scarcity or absence of grain, when it exists, to a too small +number of wagons to carry it, or to the narrowness of country highways. +The inference may, indeed, be sometimes well-founded, but certainly only +by way of exception; and yet it is generally the first which +politico-economical quacks think of in practice.(739) Like all tools or +instruments, money constitutes a part of an individual's or a nation's, or +of the world's capital. Considered from the point of view of private +business or economy, money is circulating capital, but from the point of +view of the world's economy, it is fixed capital.(740) + + + + Section CXXII. + + +Value In Exchange Of Money. + + +The value in exchange of money is said to be high when all other +commodities estimated in money are cheap; and low in the opposite case. We +have here to do with the application of the most general of all laws of +price; therefore, with the demand and supply of money. The demand for it +depends on the wants and the means of payment of its purchasers. +Therefore, if a country has little trade, it will, on this account, need +only few instruments of trade, that is, of little money to effect +exchanges. If it be poor in other goods, it will get little money in +exchange. In the former respect, there is a beneficent principle of +equalization or compensation which decreases the price-variations of +money, no matter of what kind, in the necessity, when the number of +business transactions remains the same and money becomes cheaper, to use +more of it, and less when it becomes dearer.(741) The supply of money is, +in the long run, dependent chiefly on the cost of production. But since +the cost of production in different mines is very different, the value in +exchange of the precious metals is determined by the cost of producing +them from the poorest mines which must be worked in order to supply the +aggregate want of them. (See § 110.)(742) The more unfavorable the +conditions of their production are, the greater is the quantity of +commodities which must be given for a pound of gold, silver etc.; that +producers may not be deterred from the prosecution of their work. The +extremes of the value in exchange of money are dependent on the use for +which it is intended. That value cannot rise higher than to the point at +which single pieces of money become inconvenient on account of their +smallness, nor sink lower than the point at which a similar inconvenience +is produced by their too great size. In both instances, it would become +necessary to have recourse to other instruments of exchange. + + + + Section CXXIII. + + +The Quantity Of Money A Nation Needs. + + +How great the amount of money needed in the entire economy of any state +is, cannot be always rightly determined, either by the amount of the +national resources, or by the number of the population.(743) It is a very +easy thing to refute the opinion, that the aggregate amount of cash money +in a country constitutes an equivalent of the aggregate amount of all +other commodities to be found there at any time, in such a way that the +two pans of this great scales (_Locke_) hang always in a state of +equilibrium, and that an increase of the amount of money, the amount of +all other commodities remaining the same, must be productive of an exactly +corresponding decrease in the value of each piece of money.(744) Think +only of the great many commodities which are obtained and consumed without +any exchange whatever! Rather does the amount of money necessary to keep +the value in exchange of the money employed in a people's public economy +unaltered,(745) depend on the cooperation of the following conditions: + +A. _The number and extent of such commercial transactions as are effected +by means of money_;(746) a relation which, evidently, increases (see § 56, +ff.) with every advance in the division of labor. Hence the transition +from serfdom and socage service to free labor, from domestic-servant labor +to day-labor and piece-work, from feudal military service to that of paid +and standing armies, from land-privileges and allowances in produce, such +as fire-bote etc., to the payment of officials in money, from dues in +produce to taxes in money, and regular lease-hold interests, from +requisitions to loans of money; in a word, from the barter-economy +(_Naturalwirthschaft_) of the middle ages to the trade by means of money +in the higher stages of civilization, that is, from the "feudal" to the +"commercial" system must, of itself, increase the money-need +(_Geldbedarf_) of a people. + +B. _The rapidity of the circulation of money_; because, in most commercial +transactions, one dollar which circulates ten times a year really performs +the same service as ten dollars which go from hand to hand once in a year; +just as the economic use of a ship employed in the transportation of +commodities does not depend on its commodiousness alone but on its +rapidity also.(747) The economic use of money does not depend on its +amount simply. Says _Sismondi_: "The amount of the medium of circulation +in a state must be equal to the sum of the payments made in it in a given +time, divided by the sum of the times the former has, on an average, +changed owners within that time."(748) Under given economic circumstances, +the rapidity of the medium of circulation is, taken all in all, not by any +means an arbitrary matter. It will happen very seldom that one man will +purchase or consume a commodity in order that another may not want +money.(749) Were the greater number of money-earners (and in nations with +a healthy economic life this number is always made up of men noted for the +good management of their own affairs) inclined to pay out the money which +they had taken in, rapidly, a very active production would prevail +everywhere; and this, in turn, supposes general commercial freedom and +great legal security. The less these conditions are developed, the more +difficult it becomes, not only to lay out the money received to-day +productively to-morrow, but the more imperatively does a proper foresight +demand, that a reserve-fund should be maintained for times of necessity. +(See § 43.)(750) Even in the same age and among the same people, money +moves most slowly under the influences of troublesome and critical epochs; +for the dangers of war and sedition, of impending burdensome taxation, +commercial gluts and numerous cases of bankruptcy uniformly operate to +make the possessors of money hold anxiously to their present supply.(751) + +In less civilized countries, the same condition of things leads the people +even to bury their money-treasures. In large cities, the circulation of +money is generally more rapid than in the country districts; in a thickly +populated than in a thinly populated country; and in trade than in +agriculture.(752) Every improvement in the means of intercommunication +tends to facilitate it. The rich man possesses, as a rule, less money, +relatively speaking, than the poorer man. Hence, a more equable division +of a nation's resources among the people would increase the amount of +money needed.(753) While the concentration, as to time, of circulation +into few great terms of payment is calculated of itself to cause a large +sum of money to remain idle in the interval,(754) its concentration in +space in large commercial cities must dispense with the necessity of a +great number of instruments of exchange. In England, it is customary for +every man in comfortable circumstances, as soon as he receives any money, +to deposit with a banker, and to make all his payments by means of checks +upon the latter. Cash money is now employed by Londoners only in payment +of wages, and in trade between retail dealers and consumers. The banker is +there the common cashier of a great number of private individuals, and is +in a condition to make their payments for them with a much smaller amount +of money, especially when they are to be made by one of his depositors to +another.(755) This "union of money-chests" (_Kassenvereinigung_) has been +effected also on a larger scale; inasmuch as bankers, in greater or +smaller numbers, are wont to have one bank as a center; and the country +banks, in turn, to be in constant relation with the great moneyed +institutions of London, subject to a species of general superintendence by +the Bank of England. These great monetary institutions have, so to speak, +a common rendezvous at the Clearing-House, where the greater part of their +payments are made by a mere off-setting of debits and credits;(756) and +this bank is, as it were, the cashier-in-chief of the nation, and in +possession of almost the entire cash stores of the English people.(757) + +C. _The quantity and rapidity of circulation of the representatives of +money._ These, in so far as they are worthy of the name here given them, +depend on the credit of those who issue them; that is, on the certainty +that they shall, at the time fixed, be redeemed in money. To this category +belong the paper money of the state which bears no interest, and the +treasury-notes of the state which do bear interest, bank notes, bills of +exchange, promissory notes, book-credits of private persons, sometimes +even certificates of the storage of goods in public stores. It is +estimated, that, at the present time, nine-tenths of all the payments made +in Great Britain are effected without the aid of money, or even of +bank-notes.(758) The capacity of a person to make purchases does not +depend simply on the amount of money he possesses, but on his credit +likewise. The person who buys on credit, contributes as much to raise the +price of commodities as the person who buys for cash; with this exception, +however, that when the former eventually fails to redeem his promise to +pay, the price raised by him quickly falls again.(759) And, indeed, all +the various forms of credit, mentioned above, agree essentially in this, +however they may differ from one another in costliness and rapidity of +circulation. + + + + Section CXXIV. + + +The Quantity Of Money A Nation Needs. (Continued.) + + +Of the three conditions above mentioned, it is evident that the first +operates on the amount of money needed, in a direction opposite to that of +the other two. The usual course of development is this: among an advancing +people, the number of money transactions increases at first; later, when +education has become general, and the people have grown habituated to the +giving and receiving of credit, the circulation of money is accelerated, +and an increase of the substitutes for money effected. Hence, it is +perfectly natural that the money-need of a people whose public economy is +only half developed, should, in proportion to the number of inhabitants, +be greater, not only than that of a people whose economy is wholly +undeveloped, but also, than that of a people whose public economy has been +carried to the highest point of perfection.(760)(761) + + + + Section CXXV. + + +Uniformity Of The Value In Exchange Of The Precious Metals. + + +The peculiar properties of the precious metals described above (§ 120), +explains satisfactorily enough, why, at the same time, but in different +countries, they have more nearly the same value in exchange than any other +commodity whatever. Like a fluid in tubes which communicate with one +another, the precious metals seek the one same level of value the whole +world over.(762) Only, it must not be supposed that every absolute or +relative increase of the amount of money in a country must produce +immediately a corresponding diminution of the value of money; and in +addition to this cause an exportation of money.(763) If the number of +trade-transactions increases in the same proportion as the amount of +money, the value of money remains entirely unaffected.(764) The same thing +occurs when the increased influx of money, instead of overflowing the +channels of circulation, only swells the volume in the ready-money +reservoirs. By means of these stores of ready money, very large payments +may be made by one nation to another, without changing the circulation, +or, therefore, the value of money, in the slightest degree, on either +side.(765) If, indeed, such payments should continue for a long time to +flow in the same direction, they would certainly influence the +circulation, and then produce a current in the opposite direction. + +However, it may happen, that the value of money in different countries may +be permanently different, when there are lasting difficulties in the way +of the leveling influence of the incoming or outgoing current of money. +Thus, the precious metals maintain a high value in those countries +especially which can obtain them only by giving commodities difficult of +transportation for them. If, for instance, an Englishman, anxious to take +advantage of the high value of money in Poland, should cause Polish +articles, such as wheat, wood, wool etc., to be imported into England, +they would reach their destination very much increased in price, because +of the great cost of transportation. Whether Poland or England would have +to bear this cost depends on the relations of supply and demand. Certain +it is, however, that the migration of money is hereby rendered exceedingly +difficult, forbidden even within the limits of certain value-differences, +especially where the means of communication are universally bad. And so, +the smaller the number of countries which minister to the want of +commodities of precious-metal districts, the more must other nations +obtain the money they need only at second and third hand; by means of +which, naturally, money itself is made dearer each time. Now, it is, as a +rule, nations in a low stage of civilization, that engage in the +exportation of raw material, and they are the worst adapted to engaging +directly in the carrying on of trade. When, therefore, they do not possess +gold or silver mines themselves, money-value is, as a rule, highest with +them; especially as the absence of legal security and protection, which +generally obtains there, makes the value in use of the precious metals one +of great urgency to them.(766)(767) + +Direct legislative or governmental provisions may operate in the same +direction; as, for instance, the Japanese embargo laws which, not long +since, limited all foreign trade to two foreign nations.(768) I intend to +treat of the influence of taxation on the value of money, in a future work +to be written by me, on the Political Economy of the State. + + + + Section CXXVI. + + +Uniformity Of The Value In Exchange Of The Precious Metals. (Continued.) + + +Most nations can satisfy their want of the precious metals, only through +the medium of foreign trade. Hence they very naturally look upon the cost +of production of the articles of export by the exchange of which they +obtain the precious metals either directly or indirectly, as the cost of +production of these metals themselves. But, the rule that all commodities +of equal cost of production have equal value in exchange is applicable +only within the limits of the same economic territory (§ 107), for it is +frequently physically impossible, and still more frequently rendered +difficult, by laws, customs and states of mind to transfer factors of +production from one country to another simply on account of the more +advantageous market they would there find. Thus, for instance, when +England exchanges its cotton and woolen goods, and steel instruments for +Mexican silver, the cost of production of the two equivalents may be very +different, and the one party in this trade may permanently make a larger +profit than the other.(769) According to § 101, that party will be most +favored in whom the desire of holding to his own commodities is farthest +from being out-weighed by his desire to obtain the other. But, at bottom, +silver is no very indispensable article. Especially in highly civilized +commercial communities, it is easiest to obtain substitutes for it, while +the principal articles of English export are, for the most part, objects +with which to satisfy wants rather urgent in their nature, very general, +and of rapid growth; and which, besides, are not, to any extent, difficult +of transportation. It is not a matter of surprise, therefore, that English +commodities, in silver countries, are generally sold above the mean price +between the English cost of production and the Mexican, for instance, or +the cost of procuring them elsewhere; and that silver, on the other hand, +is sold in England, under the same. But this lowers the price of the +precious metals of the latter country in general. Hence a change in the +channels of international trade, which in most countries is the only +source of gold and silver, may make the price of the precious metals +dearer in one place and cheaper in another, even when the conditions of +the production of mines remain entirely unaltered.(770) In an isolated +country, any amount of gold and silver whatever would, finally, as soon as +the people had grown accustomed to it, suffice for all the wants of +circulation. But, in commerce with the rest of the world, the greater +quantity and greater cheapness of the precious metals, that is of those +commodities which are most current and are possessed of the greatest +amount of economic energy, must, without fail, be of the greatest +advantage to a country; and this irrespective of the fact that they are +under certain circumstances the symptom of an especially highly developed +public economy. If we suppose two nations, A and B, equal in every other +point, but that A has twice as much money as B, and that prices are twice +as high there as in B; yet, with the same effort or sacrifice, A could +levy twice as many taxes as B. In case of a war between them, A might pay +in ready money for the necessities of an army which had invaded B, with +one-fourth the sacrifice which B would have to make to support its army in +A, if we reverse the case, and suppose that B had invaded A.(771) + + + + + Chapter IV. + + +History Of Prices. + + + + Section CXXVII. + + +Measure Of Prices,--Constant Measure. + + +If we had a measure of prices with the same universality of application +and the same unchangeableness as the measure of length, which is +determined by astronomical calculation, we should be able, not only to +clearly understand all the data relating to value, that is to say, a not +unimportant portion of historical science, but we should, moreover, have a +practical means to condition and fix even perpetual annuities, in such a +way, that they would always afford the same economic and purchasing power +to the person receiving them. No wonder, therefore, that political +economists since Petty's time have zealously labored to find a _constant_ +measure of prices.(772) If by this we understand a species of goods such +that it should always maintain equal exchange-power, as compared with all +other commodities, the idea of a "constant" measure of prices is +unthinkable. We would have to suppose here, that not a single kind of +goods varied in its price; since, otherwise, at least as compared with +those that varied in price, the measure of prices would itself be +variable.(773) But we may, indeed, search for a kind of goods such that +its inherent elements and the elements peculiar to it, so far as it is +itself concerned, and which go to determine price, should exert the same +uniform influence at all times. If there be such a kind of goods, and its +value in exchange as compared with other kinds of goods were to vary, we +should be certain, at least, that the cause of the change was not in it, +but in them; that _it_ had not grown dearer or cheaper, but that they had +grown cheaper or dearer. Such a kind of goods would have these two +characteristics: A. A given amount of it would, under all circumstances, +have the same value in use for the same number of persons. B. It would +require, under all circumstances, the same cost to produce it, and +therefore the supply might always keep pace exactly with the number of +those who demanded it.(774) In this way the supply and demand of this kind +of goods, abstraction made of the quantity of counter-values, would +preserve forever the same invariable relation. + + + + Section CXXVIII. + + +Value In Exchange Estimated In Labor. + + +Adam Smith is of opinion that different kinds of goods, no matter how far +removed from one another they may be in time or space, have equal value in +exchange, when an equal quantum of human labor may be purchased by their +means. He adopts, because of the great differences in work, the average +work of the common manual laborer. One work-day, and the sacrifice of +"rest, freedom and happiness" therewith connected, are, under all +circumstances, attended with the same inconvenience (value). If at one +time this day's labor will exchange for more, and at another for less, of +any kind of goods, it is only because the price of the latter has fallen +or risen.(775) + +But we may ask whether the same sacrifice of liberty is as great a +hardship to a Russian as to a Bedouin; or whether the sacrifice of an +equal amount of rest is as hard for the New Englander as it is for a Turk, +or as difficult to endure on a hot day in July as in the cold of winter. +Besides, we have here to do primarily only with value in exchange; and +that value in the case of day-laborers' work is subject to very great +fluctuations. + +The elements on which the demand and supply of labor depend are not, in +themselves, invariable, nor do their variations usually compensate for one +another. In progressive nations, the value in use of day-laborers' work +increases as well as the capacity of their employers to pay them; but, at +the same time, as a rule, and at least relatively speaking, the supply of +labor diminishes on account of the increase in the cost of production of +workmen. Precisely the reverse of this happens in nations in their +decline, and in over-populated nations. The workman is subjected to the +necessity of accepting distress-prices for his work, and especially of +accepting them for a long space of time.(776) How often it happens that, +if only transitorily, when wages are declining, work improves, and _vice +versa_.(777) + +Ricardo's school employs, as the measure of the price of various kinds of +goods, the quantity of work by which the goods themselves are +produced.(778) It is evident that the same amount of common labor produces +very different results, according as it is well or badly conducted. Hence +Ricardo must have used the word labor in the sense of labor ideally +adapted to its end. But in this way it would be impossible to reduce all +the different kinds of labor to a common denominator.(779) Nor could the +peculiar effects of capitalization, or the influence of the natural or +artificial limitations of competition be estimated in terms of such a +measure. (See §§ 47, 107, 189.)(780) + + + + Section CXXIX. + + +The Precious Metals The Best Measure Of Prices. + + +It is no more possible to find a constant measure of prices than it is to +square the circle. (_J. B. Say._) If the two magnitudes to be compared are +separated from each other in space but not in time, the precious metals +constitute not only the best measure of their prices, but also a very good +one. But the precious metals are subject to very sensible and accidental +variations in price in long periods of time. If, therefore, we would +compare sums of money belonging to different times with one another, we +must first construct a price-current list of all the more important +articles of commerce for the time in question, and in the quantities they +are needed in every day life. We would next have to calculate the average +of these mean prices, and thus to determine the relative value of the +amounts to be estimated.(781) The person who should limit his comparison +to a few species of commodities, says von Mangoldt, would lose in +exactness what he gained in comprehensibility. + +In every such list, the wages of a day would occupy a very important +place. The desire of exerting an influence over the lives and actions of +other men, and the desire of relatively greater social distinction as +compared with the social distinction of others, is very general; and there +is scarcely any better evidence that it has been attained than the +possession of the power of controlling a large number of days' work. The +man who can keep one thousand day laborers is certainly, in a +politico-economical sense, an important personage. Besides, the height of +day-wages has the most direct influence on the price of many other +commodities.(782) + +No less important is the price of wheat, or rather of the principal +article of food of the people, for the time being, with which the price of +inland raw material--in so far as it can be produced from the same soil +alternately with wheat--and, in the long run, also the wages of labor, are +so essentially connected.(783) The same indispensable necessity of wheat +which causes its price to fluctuate so largely from year to year, and from +month to month, promotes the uniformity of its average price,(784) when +many years are taken into the account.(785)(786) (_Malthus._) If, by +reason of great progress made in the art of agriculture, the cost of the +production of wheat should fall to one-half of what it was, a large +increase of population would certainly not be delayed long. And so, on the +other hand, there would be a decrease of population if, by the destruction +of artificial means of irrigation, or other steps in the direction of a +retrogressive civilization, the cost of the production of wheat were to be +permanently increased. + +But even the average price of wheat, during a long series of years, is not +entirely invariable. The increasing consumption compels the nation, as a +whole, to provide for its requirement of wheat from less fertile sources, +which increases its price generally. It is true that the progress of the +science of agriculture and of the corn-trade counteract this tendency, +retard the advance of the price of wheat, and may, for a time, produce an +opposite tendency. It is true, also, that the people are induced by their +most general and vital interests to take advantage of this possibility. +But spite of the frequency of exceptions to it, the rule remains.(787) If, +therefore, we wished to so fix a perpetual annuity that it should always +be worth as much money as a certain quantity of wheat had cost, on an +average, during the three preceding decades, the thing-value of this +annuity would, on the whole, rise with an advance in civilization.(788) To +obtain something that would remain the same, it would be necessary to +combine wheat with at least one chief commodity, the intrinsic basis of +the price of which had a development independent of the price of grain; +but the whole to be made payable in money. The precious metals are, in +many respects, so diametrically opposed in properties to wheat, in their +dispensableness, transportable character and durability, for instance, +that these two classes of commodities are best adapted to act as +counter-balances to each other.(789) + + + + Section CXXX. + + +History Of The Prices Of The Chief Wants Of Life. + + +The higher civilization advances, the dearer all those commodities in the +production of which the factor nature with value in exchange predominates +are apt to become; and the cheaper, on the other hand, all those in which +labor and capital play the principal productive part.(790) This is +accounted for, not only by the almost unlimited capacity of labor and +capital to be increased, while the natural forces which have value in +exchange are susceptible of increase to so small an extent; but also, and +especially, because new additions of labor and capital are wont to cause +relatively smaller results in the production of raw material, and +relatively larger ones in industry and commerce. (§ 33, ff).(791) + +Hence, from the relations the prices of the different classes of +commodities bear to one another, we may draw important conclusions as to +the degree of civilization which a country has attained. The above law +also affords an explanation of the fact, that a young nation, which has +made no great strides in the way of development, and in which, of course, +the production of raw material preponderates, draw their commercial and +manufactured necessaries, by way of preference, from precisely the most +highly civilized foreign nations. The latter are in a condition, and +accustomed, to give the largest quantity and the best quality of +manufactured articles for a required quantity of raw material; and, of +course, _vice versa_. Hence, in this intercourse of nations, the most +urgent want, and the completest and easiest possibility of satisfying it, +meet.(792) Only very highly civilized mother-countries can hold fast to +colonial possessions in our day. + + + + Section CXXXI. + + +History Of The Prices Of The Chief Wants Of Life. (Continued.) + + +A. In the case of a great many raw materials, we repeatedly find the +following to be the course of development. In the lower stages of +civilization, they grow of themselves, and in such quantities that a small +amount of labor, and that only the labor of occupation, more than suffices +to satisfy the small demand for them. Here, naturally enough, the price of +raw materials is very low. After this, it rises with every advance made in +civilization, for two reasons: first, because the demand becomes greater +and greater; and then, because the naturally free sources of production, +called into requisition by other wants, now flow less and less +abundantly.(793) This rise in price continues until the point is reached +at which it becomes customary, instead of the mere occupation of the free +gifts of nature, to bring forth the commodities in question by the more +laborious process of production proper. From this time forward, the usual +seeking of prices for a level requires that our commodity should, like all +others which suppose an equal sacrifice of the means of production, claim +an equal value in exchange. If from any peculiar causes, the production of +this commodity is not at all possible, or if it is capable of no great +extension, its price, which would under the circumstances, be limited only +by the purchasing power of the buyer, might attain the utmost extreme +reached in prices under the spur of vanity or of the mere love of the +commodity itself. The latter is true especially in the case of +venison;(794) the former, in the case of the tame cattle,(795) fresh-water +fish,(796) and wood.(797)(798) + + + + Section CXXXII. + + +History Of The Prices Of The Chief Wants Of Life. (Continued.) + + +B. The rise in prices is observed earliest in that class of goods in +question which by reason of their small volume and their comparatively +great value, and by reason of the greater capacity to be kept in a state +of preservation for a longer time, are best adapted to seeking a more +favorable market. This applies particularly to the skins, fleece, hair, +feathers, teeth, horns, etc., of animals, in which, in the breeding of +stock, etc. people in a low stage of civilization are much more apt to +speculate than in their meat. Here it is considered, and rightly so, to be +much more profitable to raise many animals which are badly cared for, than +a few, that are well cared for; for the care bestowed on animals has, as a +rule, much more influence on the body itself than on their covering.(799) +In fisheries, caviar, sturgeon-bladders, oil and whalebone;(800) and in +forest-culture, pitch, tar, potash and, to some extent, building material +etc., play the same part.(801) + +Conversely, the price of those portions which are most difficult of +transportation, by reason of their volume or of the difficulty of +preserving them, rises latest. To this category belongs milk, the +production of which in a fresh state can be made an object of economic +speculation, only where civilization is at its very highest, and +especially in the vicinity of large cities.(802) It is indeed possible by +its transformation into butter or cheese to preserve milk and make it +capable of transportation. But to carry on such a business for the +purposes of trade, a care and a cleanliness are needed which are national +characteristics only of a highly civilized people (§ 229), and the +preparation of a superior quality of cheese, which is always a very long +process, is conditioned by the employment of capital long in advance of a +return, and which no poor nation is in a condition to make.(803) Cows are +primarily milk-producing animals.(804) Hence their price, as a rule, rises +later than that of oxen, but, in the higher stages of civilization, it +rises much more surprisingly. Something analogous is true of those +products which result from what remains after the production of other +goods or commodities. As long as this alone supplies the demand, the cost +of production of the former commodity is almost nothing, and hence its +price is very low. For this reason hogs are relatively cheap in two very +different periods of a people's national economy, in a very low stage of +civilization where forests are plentiful and they are fattened on acorns +and the nuts of the beech, and also when they may be considered as a +collateral product of some great industry, such as distilleries and +dairy-farming; and when raised by a numerous, especially a rural +population of small means and laborers, in order to turn to advantage, in +the former instance, the remains of production, and in the latter of +consumption.(805) Where neither of these two reasons obtains, the price of +hogs is wont to increase largely with an advance in +civilization.(806)(807)(808) (See Roscher, Nationaloekonomik des +Ackerbaues, §§ 177 ff.) + + + + Section CXXXIII. + + +History Of The Prices Of The Chief Wants Of Life. (Continued.) + + +C. Those raw materials which, from the very first, have been obtained by +the means of production properly so called, maintain a much greater +uniformity in price. In the lower stages of civilization, they are never +found permanently in excess; and as the economy of a people advances, the +growing dearth of natural forces may be more or less counterbalanced by +the greater cheapness of capital and labor. This is true, especially of +wheat. (See § 129, and Roscher, Nationaloekonomik des Ackerbaues, p. +43.)(809) + +D. In the case also of those raw materials which are objects of +occupation, and never of real production, as, for instance, minerals, a +progressive public economy, by altering the different elements of price in +an opposite direction, may leave their price on the whole unchanged. Here, +indeed, the discovery of new and especially of rich natural stores may +exert an incalculable influence; but such "accidents" underlie the laws of +human development only to the extent that those ages which are +intellectually most active are those also which are most industrious and +fortunate in the discovery of their natural resources.(810) + + + + Section CXXXIV. + + +History Of The Prices Of The Chief Wants Of Life. (Continued.) + + +E. The products of industry become cheaper and cheaper as economic culture +advances; whereas, for instance, in England, towards the end of the middle +ages, a single shirt was considered of importance enough to be made not +unfrequently an object of testamentary bequest.(811) And, indeed, the +price of industrial products sinks lower the more important the part +played in their production by capital and the division of labor is as +compared with the part played by the raw material.(812) On this account, +in recent times, fine cloths have grown, relatively speaking, much cheaper +than coarse ones.(813) Lead, which during the middle ages in England was +much cheaper than iron, because of the difficulty of mining the latter, +has become much dearer in our days.(814) Conversely, where raw material +plays the most important part in manufactures, the price of the +manufactured article may increase with an advance in civilization. Hence, +articles made of wood are procured at the cheapest rates in mountainous +countries, where the division of labor is not carried very far, but where +the raw material is cheap.(815) + +F. But the price of commodities decreases, especially in the higher stages +of civilization, to the extent that it is dependent on commerce.(816) Here +capital and human labor almost exclusively are effective, and the modern +improvements of communication, legal security and competition are +especially striking.(817) + +G. Since personal services are, as a rule, performed and received only by +individuals, the principle in accordance with which labor in general +becomes cheaper in the higher stages of civilization, does not apply to +them to any great extent.(818) Yet we may claim that advancing +civilization has pretty universally a twofold influence on the price paid +for personal services. In the first place, freedom of competition, with +the more accurate and equitable determination of price which it produces +(in contradistinction to servitude, privilege and custom) always tends to +obtain the upper hand; and further, by the growing combination of labor +and of use (§§ 56, ff. 207), a better and better and more clearly defined +gradation between ordinary services and those of a higher order is +effected. When the latter cannot be increased at pleasure, the price paid +for them may, as the wealth of consumers increases, become, from motives +of vanity or of custom (_Gebrauchsgruenden_), almost unlimited. The dancing +maid, to whom Herod (Mark, 6, 23) promised even the half of his kingdom, +is both in a politico-economical and in a moral sense a warning example to +over-refined nations.(819) + + + + Section CXXXV. + + +History Of The Values Of The Precious Metals.--In Antiquity And In The +Middle Ages. + + +It is impossible to write a real history of the values of the precious +metals in ancient and medieval times: the sources of information are too +few. But it does seem possible to suggest some fragments and something of +the development of that history,(820) at least in outline. + +Thus, for instance, the supply of the precious metals furnished by the +mines, in the earlier times of ancient history, was kept from entering the +market by the system which then prevailed everywhere, of hoarding treasure +by the state, by the temples etc., and later by great reserves of treasure +kept by individuals.(821) The revolutions in prices in ancient times were +produced as frequently by the sudden opening of such reservoirs, as by the +discovery of richer sources. Thus, for instance, such events as the +dissipation of Pericles' treasures, the subsidies of the Persian kings, +the spoliation of many temples in consequence of declining religiousness, +the distribution of Persian treasures by Alexander the Great,(822) had a +vast influence on the undeniable rise in the price of Greek commodities in +the century succeeding the Peleponnesian war.(823) Later, it is said that +in Rome, the price of pieces of land was doubled by the influx of Egyptian +war-booty.(824) It is a remarkable proof of the undeveloped condition of +trade in the earlier periods of ancient history, that the perturbations in +prices were, apparently, at least, so entirely local. Phoenicia, Palestine +etc., must have experienced, in the age of Solomon, a formal deluge of the +precious metals, while Greece, for instance, was then, and for centuries +after, extremely poor in them.(825) It is not, on the whole, to be +doubted, that the value in exchange of the precious metals was on a +continual decline until the most flourishing time of the Roman +emperors.(826) During the middle ages, it seems to have stood much higher +again; because the great loss of treasure caused by the migration of +nations etc., the almost complete cessation of production at the mines, +and the slowness of the circulation of money, played a much more important +part than the decrease of trade.(827)(828) + + + + Section CXXXVI. + + +Effect On The Discovery Of American Mines Etc. On The Value Of The +Precious Metals. + + +The discovery of America influenced the market of the precious metals less +by the peculiar wealth of the mines in that part of the world than by +their almost incredible number.(829) The sources of wealth that the +conquistadores first lighted upon were, however, much over-estimated.(830) +The production of the American mines first assumed great importance after +the discovery of Potosi, in 1545, which was soon followed by the working +of the American mines at Guanaxuato. (1558.) Coincident with this was the +extraordinary "chance" of Medina's invention, in 1557; by means of which, +it became possible to separate silver from foreign elements by the cool +process of amalgamation, instead of melting it as had hitherto been done; +an invention all the more important in America, for the reason that in +that country, where there is so much rich ore, there is scarcely any fuel, +in the neighborhood(831) of where it is found. During the first hundred +years the mines of Peru occupied the most prominent place; whereas they +were afterwards completely overshadowed by the Mexican.(832) According to +Humboldt,(833) the annual export of gold and silver from America to +Europe, between 1492 and 1500, amounted to 250,000 piasters; between 1500 +and 1545, to 3,000,000;(834) from that time to 1600, to 11,000,000; in the +seventeenth century, to about 16,000,000; during the first half the +eighteenth century to 22,500,000; during the second half, to 35,300,000. + +The production of gold in Brazil began to be important after the +commencement of the eighteenth century,(835) and the working of the +Mexican silver mines of Valencia, Biscaina etc. from the middle of the +same century. In the beginning of the nineteenth century, Mexico produced, +annually, 537,512 kilogrammes of silver, and 1,609 kilogrammes of gold; +Peru, 140,078 and 782 of silver and gold respectively; Buenos Ayres, +110,764 and 506; Chili, 6,827 and 2,807; New Granada, 4,714 kilogrammes of +gold; Brazil, 3,700 kilogrammes of gold; the whole of America together, +795,581 kilogrammes of silver and 14,018 kilogrammes of gold, worth about +60,750,000 thalers.(836) During the uprisings between 1810 and 1825, which +separated Spanish America from the mother country, the production of the +mines diminished as surprisingly as it had increased in the previous +generation by reason of the greater liberality of Spanish colonial +policy.(837) Since that time, a certain increase has, indeed, been +noticed, which, however, had not immediately before the discovery of the +gold mines of California by any means attained the height reached in 1808, +but only an annual production of 701,570 kilogrammes of silver, and of +15,215 kilogrammes of gold, with an aggregate value of more than +56,000,000 thalers.(838) + +In Europe, also, the obtaining of the precious metals during the fifteenth +and sixteenth centuries took a great stride, especially in Germany;(839) +but, on the other hand, the Spanish gold and silver mines were closed in +1535 by a law. In the seventeenth century, there was another lull, +followed, at the end of the eighteenth, by a second period of activity +which has not yet closed. The great development of the production of gold +in the Ural mines since 1819, and in the Altai mines since 1829,(840) the +revival of the production of silver in the old Spanish mines since +1835,(841) and Pattinson's discovery, by means of which the poorest lead +ores containing silver may be refined, are here of great importance.(842) +Shortly before 1848, it was estimated that all the mines of the old world +produced annually about 274,000 kilogrammes of silver, and 56,000 +kilogrammes of gold, with an aggregate value of over 69,000,000 +thalers.(843)(844) + + + + Section CXXXVII. + + +Revolution In Prices At The Beginning Of Modern History. + + +The mere discovery of new and richer mines need not, of itself, lower the +price of the precious metals. Their price depends on their cost of +production; and it may be very much increased, even under the most +favorable natural conditions, by the unskillfulness of labor, the dearness +of the means of subsistence, of machinery and of auxiliary substances, by +insecurity to property or to the person; by war, oppressive taxes(845) +etc. The new mines can produce a decline in the price of the precious +metals only to the extent that, for the same amount of capital and labor +expended, they, spite of all such deductions, produce a greater +result.(846) + +I opine that the price of metallic money, since the discovery of America, +has diminished until the present time in the ratio of from three to four +to one.(847) The prices of wheat in France, from 1800 to 1850, were about +seven times as great as in the second half of the fifteenth century; and +in England about six times as great. But, it is not to be overlooked here, +how wheat may have grown dearer in itself (_an sich_) and how gold +declined considerably less than silver. True, this decline of the precious +metals was not an entirely steady one. We meet at the beginning of the +modern era with a real revolution in prices. The prices of rye, in lower +Saxony, from 1525 to 1550, were twice as high as from 1475 to 1500. +According to Garnier, the French prices of wheat, from 1450 to 1500, were, +on an average, 408 francs of the present time per _setier_; from 1501 to +1520, 5 francs; from 1522 to 1540, 11.26 francs; from 1541 to 1560, 11.69 +francs; from 1561 to 1580, 21.33 francs; from 1581 to 1600, 32.51 francs; +during the first half of the seventeenth century, 22.77 francs; in the +second half, 26.83 francs; from 1701 to 1750, 19.64 francs. Similarly in +England, where wheat cost, from 1560 to 1600, 2.64 times as much as from +1450 to 1500.(848) + +Now, the increased production of the mines cannot be the only cause of +this great perturbation in prices. It commenced, in most countries, at a +time when the supplies from America were still too small to account for +such an effect. One of the chief causes of the phenomenon was, that +precisely at this period, there was in so many nations a transition from a +sluggish circulation of money, made still more sluggish by the custom +which everywhere prevailed of hoarding treasure, to a rapid circulation, +which was made still more rapid by the use of all kinds of substitutes for +money. (§ 123).(849) In the earliest ripe fruit of European civilization +(Italy), this transition had long been accomplished; and, on that account, +the value in exchange of the precious metals was there, for a long time +previous, comparatively low.(850) + +From the second third of the seventeenth century, the value of the medium +of circulation seems, on the whole, to have remained stationary.(851) +Tooke seeks to demonstrate the steady decline of the value of money until +late in the eighteenth century, from the fact that the wages of labor +increased during that time; but I should rather connect the latter +phenomenon with the simultaneous elevation of the classes engaged in +manual labor. And so Adam Smith infers a rise in the price of money after +the beginning of the eighteenth century, from the prices of wheat;(852) +but it would be better to consider the cause of this to be the unusually +long series of good crops.(853) An equally unusually long series of bad +harvests, during the second half of the century, accounts satisfactorily +for the simultaneous rise of the medium prices of corn. The great war +which lasted from 1793 to 1815, too, according to a very prevalent +opinion, must have caused the value of money to decline; a fact which is +generally accredited to the increase of paper money in so many states. + +Every great war may very easily have for effect to slacken the speed of +the circulation of money, to promote the hoarding and even the burial of +treasure for a rainy day, and to paralyze credit and its power to supply +the place of money. Hence, it seems preferable to seek for the cause of +the variations in price, during the great war, in the commodities +themselves whose price was affected; since their production must have been +enormously disturbed. It rendered the brawniest men and the most powerful +horses unproductive, and even employed them as agents of destruction. It +interrupted trade in a thousand ways, or drove it into unnatural channels, +and turned the intellectual interests of nations into every direction save +that of economic industry. To this must be added the absence of security +everywhere.(854) + +The cessation of these restrictions upon production, in consequence of the +restoration of peace throughout the world and the great progress +afterwards made in almost all branches of industry, explain why, from 1818 +to 1848, the precious metals have apparently stood higher than during the +period immediately preceding.(855)(856) + + + + Section CXXXVIII. + + +Revolution In Prices.--Influence Of The Non-Monetary Use Of Gold And +Silver. + + +To understand why so great an increase in the production of the precious +metals produced so small a decline of their value in exchange, we must +turn our attention to the other and further uses of gold and silver. The +amount devoted to these uses can never be very accurately determined, +since governmental stamping of every new gold or silver article would +afford no evidence as to the number of such articles manufactured out of +old articles etc.(857) Certain it is, however, that the aggregate amount +of gold and silver thus employed, increases with the increase of luxury +and wealth among modern nations, and that a quantity of the precious +metals thus used, especially when used for purposes of gilding for +instance, is irrestorably lost.(858) In addition to this, there is the +wear and tear of coin in circulation, which is naturally greater in the +case of large pieces than of small, and, therefore, in the case of silver +than of gold. There is, further, the damage caused by the loss of coin in +conflagrations and shipwrecks, and that occasioned by buried and forgotten +treasure.(859) + +But, lastly, the principal cause consists in the powerful increase of the +demand for money, which, during the last two centuries, the great impulse +given to the rapidity of circulation, and the great increase in the +substitutes for money, have scarcely been able to outweigh. Besides the +great growth of population and of wealth, at least in Europe and the new +world, I need call attention only to the immense advance made in the +division of labor, and to the transition from trade by barter to trade +through the instrumentality of money. The entire war and merchant marine +of England, about 1602, had, according to Anderson, a capacity of only +45,000 tons,--that is, not one-fifth of what the small city of Bremen has +now; a capacity which at the close of the year 1873 amounted to 237,206 +tons--while in 1872 its merchant marine alone had a capacity of 7,213,000 +tons. The aggregate foreign trade of England, France, Russia and the +United States, in 1750, amounted to about 260,000,000 thalers; in 1864, it +was over 5,400,000,000, and between 1871 and 1872, in one year, over +9,000,000,000 thalers. Nor should it be forgotten that Europe's trade with +the East, since the beginning of the sixteenth century, increased +immensely. This, at present, produces uniformly a very "unfavorable +balance" for Europe, which can be made up for only by very large shipments +of silver to foreign parts.(860) If China and India were suddenly to draw +on us for other commodities instead of gold and silver, the result would +be a great revolution in prices in Europe. + + + + Section CXXXIX. + + +History Of Prices.--Californian And Australian Discoveries. + + +Tengoborski is of opinion, that the flow of gold from Siberia alone would +have been absorbed by the ever-increasing want of civilized nations of +money; but that the coincident discoveries in California and Australia, in +September 1847, and February 1851, must sooner or later produce a +revolution in prices. And, indeed, the fecundity of these countries is +unparalleled. North America, which in 1846 produced only 3,600 pounds of +gold, according to Soetbeer, produced in the years from 1849 to 1863, +respectively, 118,000, 148,000, 178,000, 195,000, 180,000, 165,000, +165,000, 165,000, 160,000, 145,000, 125,000, 120,000, 115,000 and 110,000. +Austria produced in the years from 1851 to 1863 respectively, 27,000, +196,000, 250,000, 160,000, 170,000, 195,000, 180,000, 175,000, 160,000, +150,000, 160,000, 160,000, 170,000, pounds of gold. + +From 1864 to 1867, the aggregate production of gold in the world was, +according to the last mentioned authority, a yearly average of 188.4 +millions of thalers, and of silver, 94.8 millions. In Europe, Russia not +included, the production was, in 1863, 3,960 pounds of gold and 405,000 +pounds of silver; in the Russian Empire, 46,500 pounds of gold and 40,000 +of silver; in Mexico 12,000 pounds of gold and 1,250,000 pounds of silver; +in South and Central America, 12,500 pounds of gold and 520,000 pounds of +silver; in Africa, India and Lesser Asia, 30,000 pounds of gold and 40,000 +pounds of silver--a total of 384,000 pounds of gold, and 2,905,000 pounds +of silver. F.X. Neumann(861)(862) estimates that the whole world produced, +in the years 1868-1870, annually, 192.8 million thalers of gold, and 94 +million thalers of silver; and in 1873, of both metals, 291 million +thalers. + +The question, whether in this second half of the nineteenth century, we +are to have a revolution in prices similar to that which took place in the +sixteenth century can be answered only hypothetically. The gold diggings +now most productive will, probably, as we may judge from analogous cases +in the past, be soon exhausted.(863) But it is entirely possible that, for +a long series of years, other diggings will be found equally rich. It is +almost certain that the restless activity of the English and of North +Americans will not cease until they have exhausted the favors of +nature.(864) Every improvement in agriculture, in the means of +communication, and in the public security of the gold lands, makes the +cost of production smaller. There are doubtless in other countries a great +many _placers_ which need only to be touched with the finger of European +civilization to produce gold in abundance.(865) It would, indeed, be +necessary that this same civilization should make these same countries +better markets for the precious metals by increasing their demand. + +So far as silver is concerned, there can be no question that America +possesses mines unlimited in extent, and, as yet, almost untouched. "The +time will come," says Duport,(866) "a century sooner or later, when the +production of silver will have no other limits than those put to it by the +continual decline in the price of silver." There seems, also, to be no +lack of quicksilver, especially in California; and the cost of its +production hitherto may be lessened very much by the labor of better +workmen, machines and means of transportation.(867) All this supposes +great progress of the mining countries in civilization in general; and +yet, thus far, Mexico's republican independence etc., as compared with the +later years of the Spanish colonial system there, is a great +retrogression. The conquest of Spanish America by the United States would +give a vast impetus to economic improvement; and here, again, the increase +of production would be attended by an increased demand. + +But especially must the demand for the precious metals, which naturally +increases with the wealth, commerce and luxury of nations, constitute a +decisive element in answering our question. Nothing, for instance, were a +reduction in prices impending, would promote it so much as a series of +devastating wars or revolutions in Europe. Moreover, it should not be +forgotten, that the money market is now almost commensurable with the +world, and will soon embrace it within its limits; and that market +embraces not only the precious metals but the numberless representatives +of money and media of credit. The basin, therefore, to which the gold and +silver streams of the world are tributary is immeasurably greater than it +was in the sixteenth century; its level cannot be changed as readily, and +an equal addition made every year to its previous contents can increase it +only by a small amount.(868) Nor could a considerable decline of the value +of the precious metals be readily produced without making the circulation +of money slower, and the employment of means of credit relatively less +frequent, in consequence of which, the further decline would, to a certain +extent, be arrested.(869) In the case of other commodities a decline of +prices leads only probably to an absolutely greater demand; in the case of +money, it leads to a demand necessarily greater. That the money market in +our days can stand pretty rude shocks is evident from the fact, among +others, that the price of gold is so high as compared with that of +silver.(870)(871) + + + + Section CXL. + + +Revolution In Prices.--Its Influence On The National Resources. + + +The ulterior consequences of such a revolution in prices would contribute +to the real wealth of a people only in the sense that they would place +such a people in a way, with less sacrifice, to employ the precious metals +on a large scale in ministering to the luxuries of life. This small +advantage itself would be counterbalanced by the depreciation of the +metallic stock, and especially by the necessity of henceforth devoting a +larger quantity of gold and silver to the purposes of circulation.(872) +But such a revolution would produce a sudden reverse in the distribution +of a nation's wealth among its constituent members. All those who, by +virtue of contracts antecedently made, have payments to effect, are +benefited to the extent of the difference between the old and the actual +price, while those who are to receive such payments lose to the same +extent.(873) Therefore, those engaged in industrial enterprises improve +their condition, because they immediately increase(874) the prices of +their own productions; and, for a time at least, continue the use of +capital borrowed from others, of land leased or rented etc. at the old +prices.(875) + +Besides, at the beginning, and before a corresponding depreciation of its +value has taken place, an increase of money produces as a rule a low rate +of interest (§ 185), and an itch to buy on the part of the public. All +this may serve as a powerful stimulant to production on a large +scale.(876) Those most certain to suffer loss are officials(877) with a +fixed salary, and so-called annuitants, creditors of the nation and of +individuals. Even bankers, too, have no means to fix the value of their +wares which they see disappearing, so to speak under their eyes.(878) Of +land owners, those who are in debt gain, that is especially the poorer, +and the more speculative among them.(879) On the other hand, owners of +large estates who have alienated their tithe-rights, or right to +vassal-service etc. for capital, or for fixed sums to be paid at regular +intervals, that is, in a great many places the great mass of the nobility, +undergo a not insignificant social fall. + +The condition of those who earned a living by manual labor no doubt +deteriorated in the sixteenth century, as may be inferred from the +extraordinary activity of public charity in that period. + +Between 1500 and 1550, silver purchased, in Orleans, from 4.1 to 4.5 times +as much common labor as it does now, while silver, as compared with the +average price of twenty-seven commodities, has grown cheaper in the ratio +of only from 2.6 to 2.7:1. (_Mantellier._) It was impossible for this +class to raise the price of their wares as rapidly as that of the medium +of circulation declined, because they could not wait, nor hold back their +commodity even for a moment. (§ 164.)(880) This would, indeed, be very +different in our day. Wages, because of the facilities, both physical and +moral, which have everywhere been placed in the way of emigration, were +necessarily one of these articles which rose soonest in price, as compared +with money.(881) Lastly, the state itself profits by the diminished +thing-value, that is, real value of its public debt;(882) but it loses, at +the same time, on all taxes, duties etc., which are not estimated at a +certain percentage of the value of the articles taxed.(883) As a rule, +therefore, it would need to impose new taxes. Now, the parliamentary right +to impose taxes, however extensive it may juridically be, is, ordinarily, +of great importance in practice only when there is question of increasing +the existing burthen. Hence, this right, wherever it exists, is brought +into the utmost activity by a revolution in prices.(884)(885) + +However, the new additions of gold and silver to the already existing +supply may not immediately produce a corresponding depreciation of the +value of the precious metals. If the first receivers of the additional +supply of money exchange it rapidly for other goods, it will probably +bring them the former value in exchange of the metal. Not until it has +passed into a third or fourth person's hands is the depreciation apt to be +perceptible. It is, therefore, in this case, a great advantage to be the +first hand. The world-threatening power of Spain, in the seventeenth +century, was very essentially promoted by the American gold and silver +mines;(886) nor is it a matter of less significance to-day, that the great +mineral wealth of the world belongs to Siberia, California and Australia; +that is, especially to Russia and to countries colonized by Great Britain. +Further, as to the classes into which a nation is divided, it was only the +crown, the Church and a comparatively small number of officials, soldiers +and officers who controlled Spanish America;(887) and who can tell how the +absolute monarchy of Spain was strengthened by this fact? In the +seventeenth century, on the other hand, it is principally manufacturers +and merchants, and more especially yet, workmen, who reap the immediate +advantages of new discoveries of gold. + + + + Section CXLI. + + +Effect Of An Enhancement Of The Price Of The Precious Metals. + + +A great enhancement of the precious metals would naturally and necessarily +produce a revolution in prices in a direction(888) opposite to the one +just described, and one which would be much more injurious to a nation's +economy. Such a revolution would weigh most heavily on the most sensitive, +and the momentarily most productive classes of the people, inasmuch as the +price of the ready product as compared with advances made for the purposes +of production would be a declining one; and it would benefit those classes +who live in leisure on the fruits of previous labor. There would, at the +same time, be a perceptible growth of consumption in certain departments, +useful, no doubt, in themselves, but apt to degenerate into excess, and +which are, therefore, most easily cared for. (§ 212, seq.) To this extent, +the gold discoveries of the nineteenth century, without which an +enhancement of the price of money would undoubtedly have taken place, have +warded off a great economic malady from the nations. Moreover, this +inverted revolution in prices may be moderated by governmental measures, +such as a diminution of taxes, emissions of paper money etc.(889) + + + + Section CXLII. + + +The Price Of Gold As Compared With That Of Silver. + + +The price of gold as compared with that of silver does not, by any means, +depend entirely on the ratio of the quantities of the two to each other. +Rather is it, in the long run, determined by the average cost of +production necessary at those gold and silver mines which exist under the +most disadvantageous conditions, but which it is still necessary to work +in order to satisfy the aggregate requirement of these metals. On the +whole, with an advance of economic civilization, the dearness of gold as +compared with that of silver has been enhanced. The former, in the middle +ages, was worth from ten to twelve times as much as the latter,(890) while +now it is worth from fifteen to almost sixteen times as much.(891) In the +same period of time, also, gold in highly civilized countries is wont to +be comparatively dearer.(892) + +These facts are explained as well by the demand as by the supply. As the +production of gold requires so little skill or capital, and that of silver +so much of both, the former may be considered a natural product to a +greater extent than the latter, and therefore, the rule laid down in § 130 +is applicable to it. (_Senior._) Besides, in the higher stages of +civilization, especially when the precious metals are cheap, larger +payments are usual, to the making of which, gold is certainly best +adapted; just as in every day trade merchants are wont to accept a gold +piece in payment, even at something of a premium, while the peasantry +hesitate to do so.(893) + +It is very much of a question whether gold or silver is, on the whole, +subject to greater variations in price. The fact that gold is more +strictly a natural product would of itself constitute a powerful element +of variation. (§ 112). But, on the other hand, its greater durability and +the greater care bestowed on its preservation, have for effect to make the +existing quantity preponderate in importance over its annual increase. The +demand for gold varies more suddenly than the demand for silver. In case +of war or sedition, the former is more easily carried away or hidden. It +is also more desirable for the state for its military fund. On the other +hand, on account of its greater capacity for transportation, it may follow +such claims when made on it, more easily, from country to country. On the +whole, I am inclined to think that, for short periods of time, silver +maintains its value better, and gold for longer ones.(894) + + + + Section CXLIII. + + +The Price Of Gold As Compared With That Of Silver. (Continued.) + + +If the gold-production of California should be attended(895) by a notable +depression of the value of that metal, it becomes a question whether or +not silver would be necessarily depreciated with it. Senior claims that it +would not, for the reason that the two precious metals do not, for most +purposes, act as substitutes each of the other. If a country needed 1,000 +pounds of gold and 15,000 pounds of silver as money,(896) and these two +sums of metal were equal in value, an increase of gold by one-half, which +would depreciate its price in relation to silver to 10:1, would not +overflow the channels of circulation. The 1,500 pounds of gold are now +also equal to only 15,000 pounds of silver, and _vice versa_. + +I would put very important limitations to this assertion. Even a moderate +depreciation of gold would drive out the silver from all those countries +which had a mixed coinage made up of the two metals; and hence the supply +of silver would be increased in the other countries. And so it is quite +possible, up to a certain point, that the larger silver coin should be +replaced by small gold ones, ten and five franc pieces etc. Rau is +certainly right in his surmise that a general rise in the price of +commodities as compared with coin, the result of a great increase of gold, +would go farthest in countries in which the gold is the medium of +circulation, begin later in those which had a mixed circulation, and +continue for the the shortest time in those countries which, by force of +law, had a silver circulation only.(897)(898) + + + + + Appendix I. + + +Paper Money. + + + + Section I. + + +Paper Money And Money-Paper. + + +Paper money must be distinguished from other value-paper or +money-paper,(899) which may also run to the possessor or holder, and not +unfrequently serve as a medium of payment. In the case of these bonds or +obligations,(900) their circulating capacity is a secondary matter, and +the principal thing the authentication of an economic legal relation; +whereas paper money is intended principally, if not exclusively, to act as +money.(901) Money-paper appears in a great many different forms, but it +nearly always bears interest. Its value depends in great part on the rate +and certainty of its interest. On the other hand, the endeavor to insure a +more favorable reception for paper money by the promise of interest has +been exceedingly seldom successful.(902) And in reality, good prospects as +to interest (_Zinsaussichten_) and ease of transfer from one hand to +another are two qualities which lie in very different directions.(903) + +The many recent writers who claim for paper money the marks of +irredeemableness and forced circulation, confound the unfortunately too +frequent degeneration of an institution with its real nature. They +contradict, too, usage of speech, which, in countries where silver is the +standard, unhesitatingly calls gold coins money, although they cannot be +forced on any one.(904) The paper money issued by the state deserves, +indeed, the appellation in the fullest measure; but starting from this +point we find a number of grades in a downward direction, which may still +be called money;(905) and we shall see especially that the differences +between state paper money and bank notes so widely asserted are, in great +measure, differences not of kind but of degree. + +The idea of replacing the precious metals as a medium of circulation by a +less costly material, even the ancients were acquainted with; but with the +exception of the Carthaginians, they scarcely ever made any use of it +except in cases of need and transitorily.(906) + +Similarly, the middle ages in Europe; as in general all greater +development of the credit-system--and all paper money is credit-money--has a +natural growth only in the higher stages of civilization.(907)(908) + + + + Section II. + + +Advantages And Disadvantages Of Paper Money. + + +Where it is at all possible to give paper money the same purchasing power +as metallic money possesses, it is unquestionable that the former must +have many advantages over the latter. True, paper money is very +inconvenient for small amounts;(909) but all the more convenient for large +amounts, as well for purposes of counting as for purposes of the storing +up of values and for transmission from place to place; a matter of greater +importance in proportion to the badness of a country's means of +transportation, and to the cheapness of the metal of its currency +hitherto.(910) It seems a still more important matter to most people that +paper money dispenses with the use of a great quantity of the precious +metals for purposes of circulation, which can now either be turned into +utensils, etc. in the country itself or used in foreign countries to make +investments of capital there, or in the purchase of commodities.(911) In +national economies whose commerce is a growing one, the same advantage +finds a negative expression in this, that they are not compelled to +satisfy the increasing demand for money by procuring costly metals.(912) +Of the individual members of the nation, all these advantages of +convenience will be experienced by those who employ the paper money. The +economical or saving advantages of paper money are appropriated by the +issuers to themselves, in the form of a non-interest bearing loan, which +they make to those owners of money or to those who are entitled to a +money-claim and to whom the paper money is acceptable instead of cash +money.(913) A diminution for instance of the number of bank notes or of +state paper money does not diminish the available capital of the people. +Its only effect is that a smaller portion of it is at the disposal of the +bank or of the government. + +But in contrast with these advantages are the great disadvantages, since +paper money is wanting in most of those properties which originally made +the precious metals the best instruments of exchange and the best measures +of value. In addition to this, paper money may be increased at pleasure, +and at almost no cost; and an occasional surplus of it cannot flow either +into other branches of employment (as a surplus of metallic money may into +utensils, ornamentation, etc.) nor into other countries. And thus the +constancy of value of paper money, that is, one of the chief requisites of +all good money, is imperiled in the highest degree. True, the +payment-power, or "legal tender" character given such money by the state +may certainly supplement in some way its matter and form-value. But this +supplement or addition constitutes, in the case of large amounts(914) a +small quota; or else the quantity of money as compared with the amount of +money needed for commerce would have to be fixed very accurately; a thing +of peculiar difficulty in the case of paper money, which is almost +costless.(915) + + + + Section III. + + +Kinds Of Redemption. + + +While precious metal money carries, so to speak, by far the greater +portion of its value in itself, and this to such an extent that it appears +on the inscription found on its face, the inscription found on paper money +is almost the only reason of its value.(916) (Credit-value.) The issuer +promises in one form or another, expressly or tacitly, that he intends to +redeem the note, almost valueless in itself, in real goods; and the value +of this promise depends on the probability of its fulfillment.(917) The +only fully satisfactory kind of redemption consists in this, that every +holder of the paper money may, immediately on demand, obtain its nominal +value in good current metallic money. This only can, in the long run, keep +paper money up to its full nominal value. But experience teaches that even +with less perfect modes of redemption, paper money may maintain a part of +its nominal value, and a part greater in proportion as the following +conditions are approximated to: freedom from personal considerations, the +immediateness of the redemption, and currency of the goods by means of +which redemption is effected. Thus, for instance, the acceptance of paper +money for all debts due the state, in countries where taxation is heavy, +where there are large state industries etc.; where the lands of the state +are farmed out etc., has a great influence on its course of exchange. +Redemption in parcels of land is a very imperfect one, not only on account +of the great differences in the value of pieces of land according to +quality, situation, the times etc., but also because only a very small +number of men, especially where money is the usual medium of exchange, are +in a condition to accept parcels of land.(918) It is a question whether +the threat of punishing the refusal to accept paper money, or to accept it +at its full nominal value, can be called a negative mode of redemption. +Certain it is, however, that it is the most barbarous and in the long run +the least efficient mode, one in which the issuer calculates only on the +fear of those who accept it; and, what is most demoralizing, on the hope +they entertain that they in turn shall be able to dispose of it to others +as timid.(919)(920) + + + + Section IV. + + +Compulsory Circulation. + + +When paper money which is not completely redeemable--and it is scarcely +possible that in the long run it should be thus redeemable--has sunk below +its nominal value, the result in the case of all private paper money is +the bankruptcy (_Vermoegensbruch_) of the individual issuing it; in the +case of state paper money, the legal provision that it shall have a +compulsory circulation (_Zwangcourse_; _cours force_).(921) To what extent +the real rate of exchange of paper money shall fall in any case depends +not only on the amount issued as compared with the wants of trade, but +also and still more on the degree of confidence which the state of public +affairs inspires.(922) The first consequence attending a depreciated +currency is, that the good precious metal money is withdrawn from +circulation and even from the country; for the reason that it cannot +maintain its true value side by side with the paper money; the usual +effect in all untenable mixed standards or currencies.(923) A second, and +worse consequence is the unrightful revolution produced in so many income +and property relations, based on old contracts, to the advantage of the +debtor, to the disadvantage of the creditor, and of those who receive +nominally fixed salaries.(924) These consequences are in kind similar to +those produced by the clipping of the coin; but in degree they are much +more dangerous.(925) Besides, the depreciation of paper produces, by no +means, an equal rise in the prices of all commodities. The prices of those +commodities, the sellers of which are most favorably situated in the +struggle for prices, rise earliest and highest. This is true especially of +foreign commodities, also of those inland commodities which can be easily +exported, and most particularly of those commodities which have the +greatest capacity for circulation, for instance, gold and silver.(926) +Hence, it would be a great mistake in countries where there is an +irredeemable paper currency with compulsory circulation, to measure its +purchasing power at a special discount as compared with the precious +metals. Therefore, a depreciated paper currency has transitorily an effect +on industry similar to that of a protective tariff, and even as the +payment of export premiums; inasmuch as it enables manufacturers to permit +a part of their cost of production, viz.: that which they have to pay +their workmen, their older creditors, and in part, also, their furnishers +of raw material, to rise in a less degree than the paper money has +declined in value.(927) This is indeed a very inequitable advantage +accorded to private individuals in the face of the universal distress of +the country.(928)(929) And these bad consequences are aggravated by the +downward-path principle which a depreciated paper money always involves. +The state whose financial distress introduced the evil, sees a great +portion of its revenues melt away before its eyes;(930) while in what +concerns its outlay, nothing is more calculated to mislead it than such an +imagined creation out of nothing. And a thing which greatly contributes to +this its the frightful sensitiveness of a depreciated paper currency in +the presence of complications of foreign politics, a quality which may +cause the government as many inconveniences from without as the issue of +its paper money produced conveniences to it at home.(931) Hence recourse +is had to additional issues of paper, which are easily increased in the +same measure as the rate of exchange (_Cours_) has declined.(932) Great +private interests operate in the same direction. Between the increase of +the volume of the paper currency in circulation and its consequent +depreciation, some time always elapses; and in the mean time, either the +purchasing power of the money-owner or his loaning capital is really +greater than before. The former increases the demand for commodities, the +latter facilitates their coming into existence. However, the flight of +speculation with which the increase of paper money is wont to be +accompanied(933) in the beginning depends on an error shared by many men +as to its true value. Hence it does not last long, and the critical +shriveling up of the inflated bubbles is greater in proportion to what the +previous dimensions of these bubbles were. And now many believe that the +nation's business or economy might be kept on its course by new emissions +of paper money; and the wise ones hope, at least, to be able thereby to +postpone the catastrophe long enough to enable themselves to get their +property into a safe condition. And in fact, the restoration of a +depreciated currency is accompanied by crises entirely similar to those +which followed its first decline; only they are in an opposite +direction.(934) And hence conscientious statesmen are frequently deterred +from seeking to effect such a restoration. Yet the darkest side of a paper +currency severed of due connection with precious metal-money consists in +the frequent and violent fluctuations of value to which it is +subject.(935) The consequence of these fluctuations is, that every +commercial transaction, every credit-transaction, and even every act of +saving, in which money plays any part, is made to bear the impress of a +game of chance;(936) a consequence of far and deep reaching influence, +especially in the higher stages of civilization, where the importance of +commerce, of the credit-system, and of money-economy as +contradistinguished from barter-economy is so great; producing there a +state of uncertainty which is otherwise peculiar only to barbarous +medieval times.(937) All this discourages the best business men and the +best husbandmen more than it does any other class of people, and +demoralizes the whole economy of a nation; and demoralizes it the more in +proportion as it is easier for the state to influence the value of paper +money as compared with specie, and as its influence is more +irresistible.(938) The compulsory circulation of paper money is a much +more powerful and yet a much more simple screw by means of which to +practice extortion than is the most burdensome taxation or forced loan, +and at the same time the most comprehensive power which a government can +possess to carry out both these measures. (_Ad. Wagner._) + +All the horrors of the later Roman republic, the draining of the provinces +by robber-governors with their publicans and sinners, the building up of +monstrous fortunes without any production proper, but through usury and +rapine alone: all this is made to revive again through the instrumentality +of the national-economic disease called a paper crisis, in a less violent +form, indeed, but in one which is much more insidious and scarcely less +pernicious. + + + + Section V. + + +Resumption Of Specie Payments. + + +The healing of such a paper-money disease as we have described, it has +been endeavored to effect in three ways more particularly. + +A. By the reduction or bringing back of the depreciated paper money to its +full nominal value. And this is best done by gradually drawing paper money +into the state treasury by means of taxation or by loans, and refusing to +allow such paper money to be again issued. The consequent rise in the rate +at which the outstanding paper money notes exchange against specie is +produced not only by the diminution of the quantity of paper in +circulation, but also by the increasing confidence in the future which +such a governmental measure inspires.(939) While this mode of procedure +has in the abstract most in its favor, yet it is not to be recommended in +practice except where the depreciation of paper money has either not gone +very far or where it has existed only a short time.(940) Otherwise the +revolution in all property-relations and the disturbance of all rightful +speculation--always dangerous and easily abused--produced by the +depreciation would be repeated by the restoration of values, with this +difference only that the disturbance would be produced the second time in +an opposite direction. And that those who were previously injured should +now be compensated for the damage sustained in the first instance is +impossible in proportion as the depreciation has been of longer duration. +Many of the sufferers from the effects of depreciation are now compelled, +even as tax-payers, to contribute to the enrichment of the speculators who +have accumulated the depreciated paper into their own hands. + +B. The extreme opposite of such a course would consist in this, that the +depreciated paper should be allowed to go on sinking lower and lower until +it was practically worthless, whereupon a new currency, whether of metal +or paper, would have to appear like a new world after the waters of a +deluge had been abated. Hence, therefore, one of two things: universal +bankruptcy entered into with the clearest purpose, or the resignation of +despair!(941) + +C. The middle course between these two has, therefore, been most +frequently pursued, viz.: _the legal reduction_ of the value of the coin +(_gesetzliche Devalvirung_), which consists in reducing the nominal value +of paper money to its current value at the moment the law goes into force, +and by redeeming it either in specie or in other paper to be issued in +smaller quantities.(942) Although this has been not seldom based on the +false principle that the value of every separate amount of money is +inversely as the aggregate amount of all the money in circulation; yet it +cannot be questioned that it is only the open declaration of the state +bankruptcy which the whole measure involves, and which in most instances +has already happened beyond repair. Here there is no new and dangerous +disturbance of the nation's economy whatever; and the fluctuations of +value in the future which are inseparable from the gradual contraction of +the volume of paper, continued until it has reached its nominal value, are +avoided: this last, of course, only on the supposition that either the +pure metallic or the redeemable paper currency is rigidly adhered to.(943) +But the problem, how to protect both parties(944) to contracts entered +into at a rate of the currency different from that under which they are to +be performed, from all damage, is one which will never be perfectly +solved. Hence, of the different measures to economically preserve a state +in cases of extraordinary need, the emission of paper money with +compulsory circulation is much more universally disastrous to the people +than the effecting of loans at the very highest rate of interest, and even +than being in arrears in the matter of paying the officials and creditors +of the state.(945) + + + + Section VI. + + +Paper Money--A Curse Or A Blessing? + + +Considering the double-edged-sword character of this mighty +instrument,(946) and the frightful consequences which its abuse produces, +it is easy to conceive why so many political economists have expressed +such serious doubts as to whether, on the whole, the invention of paper +money has been more of a curse or of a blessing to mankind. The +controversy is an idle one to a certain extent, since no mature nation (or +individual), and no nation which considers itself mature will renounce the +possibility of a brilliant growth simply because it fears that it may not +be able to withstand the temptations to dangerous abuse connected +therewith. Politically, the best safeguard against such temptation is a +so-called moderate constitution, which compels the supreme power in the +state by wise and appropriate counterweights, to allow all rightful +interests to assert themselves, or at least to find expression; and itself +to make use not only of the most skillful but also of the most highly +esteemed instruments and measures. Such a constitution, indeed, cannot be +made; it must be the ripe fruit of a long continued and well conducted +national life.(947) Of the extremes of forms of government, unlimited +monarchy and democracy are about equally exposed to the paper-money +disease.(948) Aristocracies are less exposed to it, for the reason that +from their very nature they eschew centralization; and the paper-money +system is intimately connected with the latter. Nothing so strengthens the +central authority as the paper-prerogative with an unlimited power over +the prices of all commodities; and, on the other hand, whenever paper +money is to have a wide field for action, there is supposed(949) a +far-reaching and intimate interwearing of the different members of the +nation's economy with one another. And in what concerns the various +economic stages, paper money is far removed from all medieval times; and +for the same reasons that make external commerce here preponderant and +condense all commerce into caravans, staple-towns, fairs, and recommend +the collection of treasure etc.(950) Later, on the other hand, we find two +stages especially adapted to paper money. We have first, as yet +undeveloped but intellectually active (and therefore desirous of progress) +colonial countries, possessed in abundance of natural means of production +without however being able to concentrate them into the hands of an +undertaker (_Unternehmer_) for want of money.(951) Here both the saving of +the precious metals and the facilitation of transportation effected by +means of paper money are of greatest utility. And then we have very highly +developed and rich countries; not only because their economic popular +education may protect them against the dangers of paper money, but because +the rich man has relatively least need of money and may dispense with +stores of specie most readily, because of his influence over the supply of +others.(952) + + + + + + +FOOTNOTES + + + 1 The author's preface to the twelfth edition is confined to pointing + out the improvements etc., made in the eleventh. There is no new + preface to the thirteenth edition of the original, which appeared in + 1877.--TRANSLATOR. + + 2 "We shall never thoroughly understand the reason of customary law + unless we also have a knowledge of that which is not customary. The + one is connected and bound to the other. We have no slaves; why vex + ourselves with questions about slaves?--Words worthy of a novice." + + 3 "I am a man; I think nothing foreign to me that pertains to man." + + 4 "That excellent and glorious philosophy." + + 5 Introduction to the Civilistisches Magazin. + +_ 6 Dunoyer_, De la Liberte du Travail. + +_ 7 Cicero_, De Leg., I. + + 8 Discours Preliminaire du Code Civil. + +_ 9 Cicero_, De Leg., II, 4. "Legem neque hominum ingeniis excogitatam, + nec scitum aliquod esse populorum, sed aeternum quiddam quod + universum mundum regeret, imperandi, prohibendique sapientia." + _Ibid._ + + 10 Revue de Legisl. et de Jurispr. (1841, XIII, p. 39.) _Montesquieu_ + says: "The relations of justice and equity are anterior to all + positive laws." + + 11 Mr. Wolowski translated the second edition of Roscher's Principles + into French, and prefixed the present essay thereto as a preface. + Since Wolowski's translation appeared, the original work has gone + through eleven editions, been largely increased in size, and + enriched with new notes, the result of nearly twenty additional + years of research and thought. The thirteenth German edition, from + which the present translation is made, is larger than the first by + one hundred and seventy pages.--_Translator's note._ + + 12 And he adds: "Animals which yield only to an impulse or blind + instinct, come together only fortuitously or periodically and in a + manner destitute of all morality. But in the case of men, reason is + mixed up more or less with every act of their lives. Sentiment is + found side by side with desire, and right succeeds instinct. I + discover a real contract in the union of the two sexes." + + It would be impossible to present a more complete or eloquent + refutation of the definition of the Roman jurisconsults which + debases marriage to the level of the promiscuous coming together of + animals, and which limits the natural law to the law common to man + and beast. "Jus naturale est quod natura omnia animalia docuit; nam + jus istud non humani generis proprium, sed omnium animalium quae in + terra, quae in mare nascuntur, avium quoque commune est. Hinc + descendit maris atque feminae conjunctio, quam nos matrimonium + appellamus, hinc liberorum procreatio, hinc educatio; videmus etenim + caetera quoque animalia, feras etiam, istius juris peritia censeri." + D. L. I. De Just. et Jure. + + 13 Comment. in tit. Dig., De Just. et Jure, VII, 11th Naples edition. + The ingenious argument of the great jurisconsult falls to the ground + under the beautiful words of Cicero: "Ut justitia, ita jus sine + ratione non consistit; soli ratione utentes jure ac lege vivunt." De + Natura Deorum, II, 62. "Virtus ratione constat, brutae ratione non + utuntur, cujus sunt expertia, ergo jure non vivunt, et ut rationis, + sic jures sunt expertia." Besides, Cujas himself recognizes how + faulty and incomplete was the definition he was defending: "At ne + jus quidem naturale, de quo agimus, est commune omnium animalium + quatenus rationale, est, sed quatenus sensible est, sensui congruit. + Tullius participare hominem cum brutis eo quod sentit, sed ratione + ab eo differre. Et alio loco: jus naturale esse commune omnium + Quiritium, veluti ut se velint tueri: sed hoc distare hominem a + bellua, quod bellua sensu moveatur, homo etiam ratione." + +_ 14 Rossi._ + + 15 Politics, I, ch. I, II. + + 16 Ueber die Nothwendigkeit eines Allgemeinen burgerlichen Rechts fur + Deutschland. + + 17 Vom Beruf unserer Zeit fuer Gesetzgebung etc. + + 18 In one of his latest productions (Ueber die sogennante historische + und nicht historische Rechtsschule, Archives du Droit Civil, + Heidelberg, XXI 1838) the veteran of the philosophical school, + resuming a debate begun a quarter of a century before, energetically + defends himself against the erroneous interpretations which it was + sought to give to his thoughts. "Does it follow," he inquires, "that + because a man is desirous of reform, he must surrender the study of + the past? And if there be new laws to construe, how could his evil + genius deter him from the necessary knowledge of ancient laws? Is + there a single jurisconsult, who, in the hope of a better future, + despises the meaning and spirit of that which still exists? I do not + know even one.... And when I am accused of passing by the + institutions of the past with coldness and hatred in my heart, + because I was one of the first to express the hope of a better + future, a charge is laid at my door which is perfectly + incomprehensible ... I am reproached with despising the history of + law. It is a slander on me. Although I have only laughed at these + reports, one man's mistake grieved me; for that man's name was + Niebuhr.... When he [Niebuhr] returned from Italy to devote himself + entirely to science, in his retreat at Bonn, he passed through + Heidelberg, where he remained five or six days. During a great part + of that time we came frequently together. He was at first a little + cold; but Cicero made us friends. After a happy word let drop + concerning that writer, he asked me what I thought of him. I + answered laconically: 'If they were burning all the Latin authors, + and I were permitted to grant a pardon to one of them, I should say, + without hesitation: Spare the works of Cicero.' He joyfully + exclaimed: 'I have at last found a man who judges rightly of Cicero. + I share your admiration for him, and that is the reason I have given + my boy the name of Marcus.' The ice was now broken, and he frankly + told me that he could not understand how I could be an inveterate + enemy of Roman law and of the history of law. I gave him to + understand that I had simply been slandered, and I added, that, in + order to live entirely with the classics, I had always refused to + give legal advice, or act as a counsellor, although I might have + made a fortune in that way. I told him that I owed my gayety and + vigor, in great part, to my love for the classics of all ages, even + those outside the domain of jurisprudence; but that I held, above + all things, to the good qualities of the German nation, and that I + did not hesitate to say with Facciolatus: 'Expedit omnes gentes + Romanis legibus operam dare, suis vivere.' + + "When he heard those words of mine, he exclaimed with his usual + energy and vivacity: 'Habes me consentientem, labes me + consentientem.' From that moment all coldness between us was at an + end, and we approached, without any embarrassment, a host of + questions in one conversation in which I endeavored, as I had + before, to learn from him. + + "Thus I receive with sincere gratitude, all the works, both useful + and profound, which have appeared in our day on the history of law. + It would be folly in me to deny the impetus which the study of + positive law has received. New sources have been discovered. Their + newness and importance have excited the zeal of many scholars who + have studied them profoundly; a fact which made a review of the + older sources, still by far the most important, necessary. These two + circumstances soon rendered it imperative to proceed to the making + of scrupulous dogmatic researches. Thus there now is a new life + among jurisconsults, and a great activity, which, it is my hope, may + continue long." + + 19 Revue de Legisl. et de Jurisprudence, 1834-35. + +_ 20 Rossi._ + +_ 21 M. de Bonald._ + +_ 22 M. Cousin_ has brought this out in an admirable manner in his + lectures on Adam Smith. Cours de Philosophie Moderne. + +_ 23 Channing._ + +_ 24 Knies._ Die politische OEkonomie vom Standpunkte der geschichtlichen + Methode, Braunschweig, 1853. + + 25 Cours Complet d' Economie politique, II, 540, ed. Guillaumin. + +_ 26 Cousin._ + + 27 We here append an extract from _Heinrich Contzen's_ Geschichte, + Literatur, und Bedeutung der Nationaloekonomie, Cassel und Leipzig, + 1876, p. 7: "Roscher ... is rightfully considered the real founder + and the principal representative of the historical school. This + school is continually gaining in extent, and has found, both in + Germany and in France, the most distinguished disciples--men who + honor Roscher as their teacher and master, the leader whose beacon + light they follow. Roscher combines the richest positive learning + with rare clearness and plastic beauty in the presentation of his + thought. These are conceded to him on every hand; and it does not + detract from him, or alter the fact that he possesses them, that, + here and there, an ill-humored or maliciously snappish critic calls + them in question." It should be borne in mind here that Wolowski + wrote in 1857; Contzen, like Wolowski, a politico-economical writer + of mark, in 1876.--_Translator's note._ + + 28 Leben, Werk und Zeitalter des Thukydides. + +_ 29 Rau's_ Archiv., Heidelberg. This remarkable essay has since + appeared in Roscher's Ansichten der Volkswirthschalt vom + geschichtlichen Standpunkte, 1861.--_Translator's note._ + + 30 Grundriss zu Vorlesungen ueber die Staatswirthschaft nach + geschichtlichen Methode. + + 31 Berliner Zeitschrift fuer allgem Geschichte. + + 32 Ueber Kornhandel und Theuerungspolitik, 3d ed., 1852. + + 33 Untersuchungen ueber das Kolonialwesen. + + 34 Umrisse zur Naturlehre der drei Staatsformen (Berliner Zeitschrift, + 1847-1848). + + 35 Ueber das Verhaeltniss der Nationaloekonomie zum klassischen + Alterthume (K. Sachs Akademie der Wissenschaft, 1849). Also to be + found in Roscher's Ansichten etc.--_Translator._ + + 36 Zur Geschichte der englischen Volkswirthschaftslehre im 16 und 17 + Jahrh. + + 37 Ein nationaloekonom. Princep der Forstwirthschaft. + +_ 38 Roscher's_ complete work he calls "A System of Political Economy." + It embraces the four parts above referred to; but each of these + parts constitutes an independent work. The first part, or the + Principles of Political Economy, covers the ground generally covered + by English treatises on Political Economy. + + Besides the works above mentioned, _Professor Roscher_ has written + Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte, + 2d ed., Leipzig, 1861; Die deutche Nationaloekonomik an der + Grenzscheide des sechszehnten und siebenzehnten Jahrhunderts, + Leipzig, 1862; Gruendungsgeschichte des Zollvereins, Berlin, 1870; + Betrachtungen ueber die geographische Lage der grossen Staedte, + Leipzig, 1871; Bertrachtungen ueber die Waehrungsfrage der deutschen + Muenzreform, Berlin, 1872; Geschichte der Nationaloekonomik in + Deutschland, Munich, 1874; Nationaloekonomik des Ackerbaues, 8th ed., + Stuttgart, 1875.--_Translator's note._ + + 39 Die politische OEkonomie vom Standpunkte der geschichtlichen Methode. + + 40 Die National OEkonomie der Gegenwart und Zukunft. + + 41 Recherches sur les Finances de France. + +_ 42 Frederic Passy_, de la Contrainte et de la Liberte. + + 43 Poor peasantry, poor kingdom; poor kingdom, poor sovereign. + + 44 Cours d' Econ. polit., 2e., Lecon I, p. 33. + + 45 This would be: Propter vitiam, vitae perdere causas. + +_ 46 Cousin_, loc. cit., p. 276. + +_ 47 Ibid._, 274. + +_ 48 Frederic Passy_: De la Contrainte et de la Liberte. + +_ 49 Schaeffle_, Deutsche Vierteljahrsschrift (1861), emphasizes this. + _Adam Smith_, Wealth of Nations (1776), very characteristically, + begins with the yearly labor of the nation; _J. B. Say_ (Traite + d'Economie Politique, 1802), with _richesses_; _Ricardo_ (Principles + of Political Economy and Taxation, 1817), with the idea of value. + + 50 The sum total of the wants (_Bedarf_) of the Bavarian people, for a + whole year, is estimated by _Hermann_, Staatswirthschaftliche + Untersuchungen (2d ed., 1870, p. 81), at 177,000,000 florins for + food (77 millions for wheat and potatoes, 69 millions for meat, 15 + millions for milk etc., 16 millions for eggs, vegetables, salt and + spices); 50 millions for clothing, 45 millions for shelter, 37.5 + millions for fuel, 60 millions for beverages. + + 51 The original adds: _deren Gesammtheit sein Bedarf heisst_; the + aggregate of which is called his [man's] Requisite (_Bedarf_). There + being no exact equivalent in English for the word _Bedarf_ in this + connection, this note is appended.--_Translator._ + + 52 According to _Boisguillebert_ (ob. 1714) Traite des Grains, I., c. + 4, the wants _necessaire_, _commode_, _delicat_, _superflu_, + _magnifique_, arise in successive order with increasing welfare or + prosperity, and are surrendered in a reverse order, with increasing + need. _Tucker_ distinguishes necessaries, comforts, and conveniences + of the respective conditions, elegancies and refinements, and + lastly, "grand and magnificent." (Two Sermons, 1774, 29 ff.); _F. B. + W. Hermann_, loc. cit, 1st, ed., 1832, 68; necessary goods (Gueter + der Nothdurft), goods that contribute to pleasure and recuperation, + to culture and splendor. + + 53 Compare _Tucker_, On the Naturalization Bill (1751 seq.), IV, note. + + 54 No people without fire (Prometheus!); and it seems that broiling was + the earliest mode of preparing food; then followed baking in heated + cavities, and lastly came boiling in vessels. (_Klemm_, Allgemeine + Kulturgeschichte, I, 180, 343.) + + 55 There is an interesting attempt by _Faucher_, in the + Vierteljahrsschrift fuer Volkswirthschaft und Kulturgeschichte, 1868, + III, 148 ff., to determine the relative place of our various wants + according to their capacity for extension or contraction. + + 56 The qualification "true," excludes from the circle of goods, not + only all those things which might satisfy only irrational or immoral + wants (compare _Mischler_, Grundsaetze der Nationaloekonomie, 1856, I, + 187), but also vindicates the fundamental idea of the whole system + of Political Economy, as a subject of moral as well as of + psychological investigation. + + 57 Even _Aristotle_ (Eth. nicom. V, 8), considers that all things + intended to enter into commerce, should be susceptible of comparison + with one another, and that the measure of this comparison is _want_, + which is the foundation of all association among men. + + 58 An Arab helped pillage a caravan, and carried away, as his share of + the booty, a chest of pearls. He thought it a box of rice, and gave + them to his wife to cook, but finding they did not boil tender, he + threw them away. (_Niebuhr_, Beschreibung von Arabien, 383). See a + similar anecdote in _Ammian. Marcell._, _XXII_. Compare _Strabo_, + _VIII_, 381. + + 59 As soon as the Persians renounce the superstition that the daily + contemplation of a turquoise is a talisman against the "evil eye" + (_K. Ritter_, Erdkunde, VIII, 327), that precious stone will lose + much of its value. On the other hand, the amulets of antiquity, + although they have long lost the quality of goods as objects of + superstition, have now a real value for the archaeologist. + + 60 Since observation shows, that, as time runs on, matter tends more + and more to become _goods_, the blind forms of motion in nature to + become useful labor and useful sustenance, impersonal and objectless + existence to be transformed into personal property and personal + culture, _Schaeffle_ inclines to the belief that the whole mechanism + of unconsciously governing nature is destined ultimately to aid in + the realization of moral good, which alone is really valuable. Das + gesellschaftliche System der menschlichen Wirthschaft, III, Auff., + 1873, I, 3. + +_ 61 Hermann_, loc. cit, 1st ed., I, calls internal goods whatever each + of us finds in himself, the free gift of nature; also that which we + develop in ourselves by our own free action; and external, whatever + we create or obtain, through the external world, as a means of + satisfying our wants. The internal goods of one man may be external + goods to another, as, for instance, when the former conveys them + directly to the latter to be enjoyed, by words, demeanor, etc., or + indirectly, in combination with other external goods. + + 62 The exclusion of all else, has, indeed, been called one-sidedness + and materialism. But, as _Senior_ says, no one blames the writer on + tactics, because he confines his attention to military subjects; nor + is the objection raised, that by so doing, he is encouraging eternal + war. On the other hand, _J. B. Storch_ (1815) devoted a special + division of his work to the consideration of "internal goods" + (health, knowledge, morality, security, leisure,.etc.). See _Rau's_ + translation of his Manual, II, 337 ff. Compare _Gioja_, Nuovo + Prospetto delle Scienze economiche, 1815 ff. VIII. + + 63 The inclination to exchange is, according to _Adam Smith_, one of + the most important marks which distinguish man from the brute. + (Wealth of Nations, I, ch. 2). But see _Buesch_, Geldumlanf (1780), + I, § 29, on exchange among the lower animals. + + 64 Observed by _Aristot._ Polit. I, ch. 6. + + 65 The efforts of political economists to select from among the + infinite number of goods, those which should constitute the subject + of their investigations, have taken two directions in recent times. + _Bastiat_ here confines himself too exclusively to commerce. The + political economist should concern himself only with wants and + satisfactions, where the labor, which is the connecting link between + them, is undertaken by some other person for a consideration. Thus + the ordinary act of respiration lies outside the circle, that of the + diver, which is paid for, does not. (Harmonies economiques, 1850, 68 + ff.) But even Robinson Crusoe had his own system of economy. Are the + products which the farmer consumes in his own home, the work he does + himself, any the less matters of economic moment than the products + he sells, or the labors of his servants? _Schaeffle_ is right when he + says that ordinary respiration is no economic function, because it + is an unconscious necessity of nature. But his definition is too + broad, inasmuch as he places the essence of the economic character + of goods or of an act, in the conscious adaptation of means to human + ends. (Tuebinger Progr. z. 27 Sept. 1862, 9, 24 seq.) To take a walk + is no economic operation, although it may be the best means to a + very important end,--health. The same goods or the same act may have, + frequently, according to the end proposed, an economic or + non-economic character. The beauty of the human body, for instance, + however systematically made use of for purposes of vanity, is not + economic _goods_. But it is an economic speculation, base though it + be, when a man relies on his handsome figure to secure a wealthy + wife, or, for purposes of gain, allows her to pose as a model to + artists or to take part in _tableaux vivants_. According to _C. + Menger_, Grundsaetze der Volkswirthschaftslehre (1871) I, 51 ff., + there are no economic goods, but those the disposable supply of + which is, at most, equal to the quantity that is required. But is + not the largest navigable stream, even in the most thinly populated + country, an economic good? + +_ 66 Hegel_, Rechtsphilosophie, § 67. Even the use of a corpse as + manure, or for any mercantile purpose, is repugnant to our feelings, + "because of the dignity of personality." (_Schaeffle_, National + OEkonomie, 1860, 28.) In this respect, prostitution is a remnant of + slavery. _Schaeffle_ is right, when he says that to repay personal + services with material commodities which do not afford as much food + etc., as the former have cost in expenditure of vital energy, is a + slow and frequently a very cruel kind of cannibalism. (Kapitalismus + und Socialismus, 1870, 18). + +_ 67 Bornitz_, De rerum Sufficientia in Republica procuranda, 1625, + gives in this encyclopaedia of political science, together with a + dissertation on agriculture, commerce and manufactures, a complete + survey of the _ministeria_. Several modern writers refuse to look + upon personal services, or the ability to render such services, as + elements of wealth: compare _Kaufmann_, Untersuchungen im Gebiete + der politischen OEkonomie, 1830, II, Heft I. They demonstrate, + however, no more than this, that that class of goods has something + very peculiar. Thus _Malthus_, Principles of Political Economy + (1820), chap. I, sect. I, objects that they cannot be inventoried or + taxed; but can material goods be so completely? Can all the parts of + the wealth of a nation be so inventoried and taxed? _Rau_, Lehrbuch + der pol. OEkonomie (1826) I, § 46, remarks that the personal aptitude + to perform services dies with the person, and that personal services + cannot be stored up (?), etc. I appeal simply to the definition I + have given above of economic goods, and which applies equally to + services of every kind which can be performed for other people. + Besides, those who oppose this view are unable to give a + satisfactory explanation of all the phenomena of commerce. Of + course, the qualification "recognized as useful" is of the utmost + importance as a mark to determine what is goods. But a prima donna, + or a world-renowned physician, cast naked by shipwreck on the shores + of North America, is certainly, better off than a blind beggar, his + fellow sufferer. Compare _Storch_, Handbuch II, 335 ff. and his + Considerations sur la Nature du Revenu National. + +_ 68 Ad. Mueller_ compares persons, so far as they render any kind of + service, to things, and, so far as they are required to be preserved + in their individuality, to persons. The children in the "status" of + a country gentleman, for instance, are treated more as persons, and + domestics, more like things; the land partakes of a species of + personality, but not the implements of labor. (Nothwendigkeit einer + theolog. Grundlage der Staatswissenschaft, 1819, 48.) + + 69 The privilege of selling refreshments in the garden of the Palais + Royal was formerly let for 38,000 francs a year. + + 70 See the cases cited by _Hermann_, Staatswirtsch. Untersuchungen, 6 + ff. and by _Bernoulli_, Schweiz. Archiv. fuer Statistik und N. OEkon. + II, 55. Think of the firm of J. M. Farina! In Athens, good stands + were leased at a very high rent, even where there was no investment + of the lessee's capital. (_Demosthenes_, pro. Phorm., 948; adv. + Steph. I, iiii.) There is, again, the sale of inventions, while they + are still "mere ideas." According to _Schaeffle_, Theorie der + ausschliessendnen Verhaeltnisse, 1857, II ff., the value in exchange + of these relations depends on the extra income which is assured in + fact, or in law, against diminution, by the exclusion of + competition. He, therefore, recommends, instead of the word + "relations," "custom," or "publicum." But these words, by no means, + exhaust the meaning expressed by "relation." Thus, the good + administration of public affairs, although it has no value in + exchange, is one of the most valuable economic goods which a people + can possess. + + 71 The relation mentioned above of a general to an army may even have + great value in exchange. Instance, the Italian condottieri in the + fifteenth century! + + 72 Relations which take from one man, as much as they afford to their + possessor, are of value as components of a man's private fortune, + but not of the wealth of the nation. To this class belong debts due + from persons or from things, compulsory custom or good-will of every + description; as for instance, the seventy-two places of the _agents + de change_ in Paris, each of which was worth more than a million of + francs; or the right of navigating the Elbe as far as Magdeburg, + which, about the beginning of this century, was worth in every + instance about 10,000 thalers. (_Krug_, Abriss. der St. OEkonomie, + 62.) + +_ 73 Schaeffle_, N. OEkonomie, 10. In the German language, this same word + is used to designate utility, and sometimes useful objects (so + called values). A clear distinction, however, should be made between + utility and value in use. Utility is a quality of things themselves, + in relation, it is true, to human wants. Value in use is a quality + imputed to them, the result of man's thought, or of his view of + them. Thus, for instance, in a beleagured city, the stores of food + do not increase in utility, but their value in use does. Compare + _Schaeffle_, System, III, I, 170. + +_ 74 Genovesi_, Economia civile (1869), II, I, 7. _L. Say_, De la + Richesse individuelle et de la Richesse publique (1827), 29, + estimates the value of goods according to the degree of discomfort + attendant on the privation of them. + +_ 75 Friedlaender_ has, however, made a general attempt in this + direction. Theorie des Werthes (Dorpat, 1852). But says _Th. Fix_ + (Journal des Economistes, 1844, IX, 12): "It is as impossible to + establish a scale of values, as it is to find an exact mathematical + and permanent measure of our wants, passions, desires, tastes and + fancies." + + 76 Compare _Knies_, Geld und Credit, 1873, I, 126 ff. The very + respectable attempt made by _A. Samter_, Sociallehre (1875), with + the idea society-value (_Gesellschaftswerth_) covers too nearly the + idea of value in exchange. Further research will here have to be + made, with the idea of "impotent need," inasmuch as, from a high + ethical, national-dietetical point of view, the question is asked + whether, to what extent, and how, "impotent need" may be made a + potent one. + +_ 77 Friedlaender_, loc. cit, 50. If too many copies of the very best + book be published, there is a certainty that a number of them will + remain little better than waste paper. + +_ 78 Schaeffle_, System, II, aufl., 55. See also his Kapitalismus und + Socialismus, 1870, 31, 35, 43. + + 79 Thus _Kleinwaechter_ (Hildebrand's Jahrbuecher fuer N. Oek. und + Statistik, 1867, II, 318), defines value in exchange=value in use + + costliness. According to Schaeffle, it is "a covert comparison + between the cost-value and the value in use of the two kinds of + goods to be exchanged." (Kapitalismus und Socialismus, 35.) + + 80 An intermediate dealer can, so far as he is himself concerned, + attribute value in exchange to goods only to the extent that they + have use for the last person who has acquired them. Hence, _Storch_ + calls _value in use_ immediate, and _value in exchange_, mediate + value. As the English are always wont to express the immediate in + words of Germanic origin, and the mediate in words borrowed from the + Latin, _Locke_ calls value in use "worth," and value in exchange, + simply "value." (_K. Marx_, Das Kapital. Kritik der politischen + OEkonomie, 1867, I, 2.) + + 81 It is, of course, otherwise when, for instance, a beautiful sea + view, or a desirable position as regards air and sunshine, is + connected with a piece of land. + + 82 In Ravenna a cistern had greater value in exchange than a vineyard: + _Martial_, III, 56. In Paris, too, drinking water, which is + transported only with considerable trouble, costs 1-1/3 thalers per + cubic meter. We may also mention snow and ice in summer, which last + sells in the capitals of southern Europe at 0.34, silber groschens + per pound. According to _Carey_, "utility" is the measure of man's + power over nature, "value," the measure of nature's power over man. + He very inaccurately adds, that both are always in an opposite + direction. (Principles of Social Science, 1861, VI, ch. 9.) + + 83 Hence _Ad. Mueller_ calls value in use, individual value, and value + in exchange, social value. The Germans call the value of goods whose + value in use is recognized by only one person, _Affectionswerth_, + (affection-value) a value which influences its value in exchange + only when the individual who holds it in high esteem is not himself + the possessor of the goods. An instance of this latter is a piece of + paper covered with notes, intelligible only to the maker of them. + + 84 The very important difference between value in use and value in + exchange was recognized oven by Aristotle. _Aristot._ Pol. I, 9. + _Hutchinson_, System of Moral Philosophy (1755), II, 53 ff. The + Physiocrates speak very frequently of _valeur usuelle_ and _venale_, + on which, according to _Dupont_, Physiocratie, CXVIII, the + difference between _biens_ and _richesses_ is based. _La valeur d'un + septicr de ble, considere comme richesse ne consiste que dans son + prix._ (_Quesnay_, ed. Daire, 300.) _Turgot_ distinguishes between + "_valeur estimative_" and "_echangeable_ or _appreciative_;" the + former designating the relation between the amount of energy, + physical and mental, which one is willing to spend in order to + obtain the goods, to the sum total of his energies, physical and + mental; the latter the relation between the aggregate like energy of + two persons which they are willing to spend in order to procure each + of the goods to be exchanged, and the sum total of their energies in + general. (Valeurs et Monnaies, p. 87, seq., ed. Daire.) _Ad. Smith_, + in his Wealth of Nations, I, ch. 4, shows that he knew the + difference between value in use and value in exchange; but he + afterwards drops the consideration of the former, altogether. In + this respect he has had only too faithful and one-sided followers + among his countrymen, so that _Ricardo_, Principles, ch. 28, asks + what value in exchange can have in common with the capacity of + commodities to serve as food or clothing. (See, however, ch. XIX + seq.) Many "free traders" would have no objection to interpose, if a + people should abandon the cultivation of wheat, etc., to devote + themselves exclusively to the manufacture of point lace, provided + the latter had a greater value in exchange. The two degrees of the + idea of value have been examined with much thoroughness by + _Hufeland_ in his Neue Grundlegung der Staatswirthschaftskunst + (1807), I, 118 ff.; _Lotz_, Revision der Grundbegriffe (1811 ff.), + I, 31, ff.; _Storch_, Handbuch, I; _Rau_, Lehrbuch, I, 56, ff.; + _Thomas_, Theorie des Verkehrs, I, p. 11; _Knies_, Tuebing. Zeitschr. + 1855; _Bastiat's_ declaration (Harmonies, p. 171 ff.): that + "_valeur_" (by which Bastiat means only value in exchange), = _le + raport de deux services echanges_, contains a two-fold error: the + ambiguity of the word _services_, which applies equally to a + yielding or affording of utility, as to useful labor, and the error + that the labor necessary to produce a commodity, and of which the + purchaser is relieved, alone determines its value in exchange. + Compare _infra_ §§ 47, 107, 110, 115 ff., and _Knies_, loc. cit., p. + 644 ff. + +_ 85 Proudhon_, Systeme des Contradictions economiques, 1846, ch. 2. + + 86 In France, according to _Cordier_ (Memoire sur l'Agriculture de la + Flandre Francaise), the wheat harvest yielded, in + + 1817, forty-eight million hectolitres, with a value in exchange of + two thousand and forty-six million francs; in + + 1818, fifty-three million hectolitres, with a value in exchange of + one thousand and four hundred and forty-two million francs; in + + 1819, sixty-four million hectolitres, with a value in exchange of + one thousand and one hundred and seventy million francs. + + A rise in the value in exchange of wheat, such as was witnessed in + 1817, is synonymous with a decline in the value in exchange of + money, and of all those goods whose money price has not risen. It is + no objection to the views here advocated, that when the necessaries + of life are very scarce, the want of clothing, furniture, articles + of luxury etc., is not felt so keenly as at other times, and that + the value in use of these commodities really falls; and _vice + versa_. + + 87 Compare _B. Hildebrand_, N. OEkonomie der Gegenwart und Zukunft, + 1848, I, p. 316 ff. _Knies_, loc. cit. + + 88 The greater importance attached, in our days, to value in exchange, + than to value in use, is seen especially in the attitude which the + buyer, who is possessed of the more current commodity (money), + assumes toward the seller,--an attitude not unlike that of a patron + towards his client. In the interior of Africa, the possessor of + money, as such, would scarcely look down on the possessor of the + means of subsistence. The South American Indians are ready to render + an amount of service for a little brandy, which it would be in vain + to ask them to perform for ten times its value in gold. (Ausland, + Jan. 15, 1870.) The miser estimates the possibility of being able to + procure for himself, for one dollar, a hundred different articles + worth a dollar each, to be worth one hundred dollars. + + 89 When the wants of a person or of a people change, it is possible for + the value in use of one kind of goods, which had the greater + prominence before, to take the place occupied previously by its + value in exchange; and _vice versa_. Thus, the youth sells the + plaything he used in childhood; the man, the educational apparatus + of his earlier years; the old man, the implements that enabled him + to acquire wealth, and which he can no longer use except with great + effort. (_Menger_, Grundsaetze, I, 220 ff.) + +_ 90 Rau_ (Lehrbuch, I, § 61 ff.) distinguishes between the concrete or + quantitative value which a certain kind of goods may have for a + certain person, under certain circumstances, and the abstract or + species-value which a whole class of commodities may have for men in + general. + + But _F. J. Neumann_, (Tuebinger Zeitschrift, 1872, p. 288 ff.) + objects, that even the abstract value of a commodity always suggests + the relation of a definite number of concrete men to a definite + quantity of goods; else, by the expression, value of goods, is to be + understood not what it is generally meant to signify, but only the + capacity to satisfy a single want. + +_ 91 Storch_, Ueber die Natur des Nationaleinkommens (1824, 1825), 5, + defines (_Vermoegen_) thus: a source of income, permanent in its + nature, and capable of being transmitted, the possessor of which + does not need to work, on its account. Hence he does not approve of + the expression "the people's resources" (_Volksvermoegen_). + + 92 See especially _Lord Lauderdale_, Inquiry into the Nature and Origin + of Public Wealth, 1804, ch. 2. _Storch_, loc. cit. + +_ 93 Moreau de Jonnes_, Le Commerce au 19. Siecle (1825) I, 114 ff., + says that the United States imported from abroad 9.6, France 6, and + Great Britain 5.8 per cent. of their annual consumption; and + exported respectively 10.4, 6.2, 9.8 per cent. of their annual + production. The recent free trade tendencies, and the improvement in + the international means of transportation, have certainly increased + the relative importance of foreign commerce. In the kingdom of + Saxony (1853), _Engel_ estimates that 10/47 of the whole production + of the country was destined for foreign countries, and that 10/47 of + the consumption was imported. + + 94 When the land of a country becomes dearer, simply on account of the + increase of population, or goods, the quantity of which is + susceptible of increase, because the cost of production has been + increased, this cannot be considered an increase in the wealth of + the people, (_v. Mangoldt._) + + 95 Neither is value in exchange a quality inherent in goods, but only a + relation between them and other goods. Hence it is absurd to speak + of a rise or fall of all values in exchange. If the goods A lose in + capacity to be exchanged against goods B, goods B of course increase + in exchange power as compared with A, and _vice versa_. It is + necessary to guard against being misled here by the intervention of + money, that is, by the custom universal among men of employing a + definite kind of goods as a medium of exchange for all others. Yet + there are many writers who have been thus misled. Thus _Galiani_, + Delia Moneta (1750), II, p. 2, who regards the lasting increase of + the prices of all commodities as an infallible sign of national + prosperity. To the same effect is the motto of the Physiocrates: + _Abondance et cherte c'est opulence_. In its coarsest form, in + _Saint Chamans_, Nouv. Essai sur la Richesse des Nations (1824), + 456, who would have that which is now the free gift of nature, to + come to us or be produced only as the reward of toil. _Verri_, on + the other hand, Meditazioni sull. econ. pol. (1771), ch. V, thinks + that the number of buyers in a country should be as small as + possible, and that of sellers as great as possible, in order that + thus prices might be low; (as if every buyer was not, _eo ipso_, + also a seller.) + +_ 96 Kaufmann_, Untersuchungen, I, p. 165 seq. Also, _Verri_, + Meditazioni, XVII, 2. + + 97 The differences characteristic of poverty, indigence, managing to + live, fortune and wealth, cleverly treated by _von Justi_, + Staatswirthschaft, I, p. 449, seq. _Rau_, Lehrbuch I, § 76, seq., + establishes the following gradation: privation and wretchedness, + poverty, indigence, "getting on," comfort, wealth, superfluity. _L. + Say_ calls those who can satisfy the wants of luxury rich; + well-to-do, those who can command the comforts of life; and + wretched, those who cannot obtain a sufficiency of the objects of + prime necessity. In France, the limits of these situations are + marked by an income of respectively 60,000, 6,000 and 900 francs per + family, so that a family with an income of only 300 francs per year + is in a condition of wretchedness. (Traite de la Richesse, 1827, I + ff., 71 ff.) + +_ 98 Palmieri_, Ricchezza nazionale, Introd. The greater number of the + definitions of wealth are rather onesided than false. _Socrates_, + for instance, looks only at the relation existing between means and + their owner's wants. (_Xenoph._ Memor., IV, 2, 37, seq. OEconom. II, + 2 ff.). _Plato_, on the other hand, as the socialists are wont to + do, looks to the excess over that possessed by others. (Legg. V, + 742, seq.). _Xenophon's_ observations, Hiero, 4, on the nature of + wealth, are many-sided and beautiful. _Aristotle_ distinguishes + between natural and artificial wealth: {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER OMICRON WITH PSILI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PSILI~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} + {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH VARIA~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~}--{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~}. (Polit, I, 3, 9, 16.) Compare + _Cicero_, Parad. VI. The dominant idea of the so-called Mercantile + System is thus expressed in a Saxon pamphlet of 1530 + (Muentzbelangende Antwort, etc.): "Money is the real watchword; where + there is much money, there is wealth, it is clear." Compare + _Luther_, Werke, Irmisch edition, XXII, p. 200 seq. See some + excellent remarks in opposition hereto, in the Saxon pamphlet, + Gemeyne Stimmen von der Muentz, 1530. _Schroeder_, Fuerstliche + Schatz-und Rentkammer, 1686, ch XXIX. "A country grows rich in + proportion as it draws gold or money, either from the earth or from + other countries; poor, in proportion as money leaves it. The wealth + of a country must be estimated by the quantity of gold and silver in + it." See a very passionate argument against this view in + _Boisguillebert_, Dissertation sur la Nature des Richesses, written + sometime between 1697 and 1714. _Berkeley_, Querist (1735), Nos. + 562, 542. Among Englishmen, the correct view was prevalent much + earlier, especially among the founders of the American colonial + empire. See _Hachluyt_, Voyages (1600) III, 22 ff. 45 ff. 152 ff. + 165 ff. 182 ff. 266 ff; but especially the work "Virginia's Verger" + in "Purchas Pilgrims" (1625), IV, p. 809 ff. However, several + Spaniards were led by hard experience to adopt a view opposed to the + Midas-view (compare _Aristotle_, Polit. I, ch. 3, 16), by which the + first American explorers were carried away: _Garcilasso de la Vega_ + (1609), Comment. reales II, ch. 6; _Saavedra Faxardo_, Idea + Principis christiani (1640) Symb. 69: _potissimae divitiae ac opes + terrae fructus sunt, nec ditiores in regnis fodinae, quam agricultura; + plus emolumenti, acclivia montis Vesuvii latera adverunt, quam + Potosus mons_. Contemporary with those Englishmen, was the Italian, + _Giov. Botero_, who called attention to the fact, that France and + Italy were the countries of Europe richest in gold, although they + possessed no mines of the precious metal themselves: Della Ragion di + Stato (1591) p. 88 ff. Also _Sully_, who called agriculture and + cattle-breeding the breasts of the state, the real mines and pearls + of Peru. (Economies royales I, ch. 81. See however, II, p. 381). + _Montchretien_, Traite d'Economie politique (1615) 81, 172 seq. + According to _Sir D. North's_ Discourses upon Trade, 1691, wealth is + synonymous with freedom from want, and the ability to procure many + comforts, while _Temple_ (ob. 1700, Works I, 140 seq.) looks + entirely at the subjective side of wealth. _Pollexfen_, "England and + East India inconsistent in their Manufactures" (1697), considers + gold and silver as the only real wealth. To this definition Davenant + (ob. 1714), opposes another. Wealth, according to him, is whatever + places prince or people in a condition of superabundance, peace and + security. See his Works, I, p. 381 seq. He even reckons intellectual + powers, alliances etc., among the national wealth. Compare _W. + Roscher_, Zur Geschichte der englischen Volkswirthschaftslehre 1851, + in the acts of the royal Saxon Academy of Sciences, vol. III. + _Vauban_ (Dime royale 1707), Daire's edition, says: "The real wealth + of a people consists in an abundance of those things, the use of + which is so necessary to sustain the life of man, that they cannot + at all be dispensed with." By the wealth of a people _Galiani_, + Della Moneta II, c. 2, understands the aggregate of all lands, + houses, movable property, money, etc. which belong to them, but, + that the chief element of wealth, and the condition precedent of all + others, is men themselves. Hence, the process of the impoverishment + of a people in their decline, takes the following course: money + first emigrates, next, population diminishes, afterwards, the houses + fall in ruin, finally, the land itself becomes a waste. According to + _Broggia_, wealth is _un avanzo osia valore di tutto cio che avanza + al proprio consumo e bisogno_, Delle Monete, 1743, IV, 307, 314; + Cust. _Palmieri_ (ob. 1794), also says: _il superfluo constituisce + la richezza_. (Publica Felicita.) According to _Turgot_, Sur la + Formation et Distribution des Richesses 1771, § 90, the wealth of a + nation consists in the net proceeds of landed property capitalized + at the ordinary price of land, and then of the aggregate of all the + movable property of the country. _Buesch_, Geluumlauf III, § 27, + considers a certain duration of the produce or revenue as an + essential element in the idea of wealth. _Lauderdale_, Inquiry, ch. + II, distinguishes national wealth and private wealth; the former + embracing all that man covets as agreeable or desirable; while it is + one of the marks of the latter, that there should be no general + superfluity of it on hand. Several modern English economists call + wealth only that, the production of which cost human labor. Thus, + _Malthus_, Definitions (1827) p. 234. _Torrens_, Production of + Wealth, 1821, ch. I. When _Rossi_, Cours d'Economie politique, 1835, + L. 2, says: _tout chose propre a satisfaire aux besoins de l'homme + est richesse_, he demonstrates how the frequent inaccuracy of the + French language stands in the way of a close analysis. The greater + number of more recent definitions are true of resources rather than + of wealth. _Bastiat_ distinguishes between _richesse effective_ and + _relative_, the former being based on _utilite_, the latter on + _valeur_. (Harmonies, ch. 6.) + + 99 The national wealth of Athens, at the time of the hundredth + Olympiad, is estimated by _Boeckh_ (Staatshaushalt der Athen, I, p. + 636, 2d ed.) to have been from thirty to forty thousand talents, + besides the non-taxable property of the state. That of Great Britain + is estimated at about 8,000 million pounds sterling. (Athenaeum 5 + March, 1853.) _Wolowski_ estimated that of France at, at least, 116 + milliards of francs, with an annual increase of 1-1/2 milliards, (L'or + et l'Argent, 1870. Enquete, 59.) _David A. Wells_ estimated that of + the United States, in 1860, slaves not included, at 14,183 million + dollars, or $451.20 per capita, whereas in England, the per capita + wealth was about $1,000. (_Hildebrand's_ Jahib., 1870, I, 431.) The + national wealth of the kingdom of Saxony is equal to 600 million + thalers immovable, and 600 million movable, property. (_Engel_, + Statist. Zeitschr. August, 1856). That of Wuertemberg=2,710 million + florins, of which 700 millions represent movable goods, and 100 + million, claims on foreign countries. (Statistisches Handbuch, + 1863.) Of course all these estimates are very inexact. + +_ 100 Ch. Dupin_, Forces productives, p. 82. See _infra_, § 230. + + 101 Compare _Meidinger_, Das britische Reich in Europa, pp. 79, 238, + 261. + +_ 102 Davenant_ considers an increase in the number of houses, ships and + stocks of goods, as the surest sign of an increase in the national + wealth; and on the other hand, a high rate of interest, a low price + of land, small wages, a decrease of population, and an increase of + uncultivated land, as the signs of national impoverishment. (Works, + I, pp. 354, seq. II, p. 283.) _Sir M. Decker_, Essay on the Causes + of Decline of Foreign Trade (1744), 3, gives as the signs of + impoverishment, the following: a wretched condition of the poor and + of manufactures, a low price of wool, long credit to retail dealers, + frequent cases of bankruptcy, exportation of the metals, unfavorable + exchange, few new coins, many cases of unpaid rent of leased land, + and high poor rates. + +_ 103 Storch_, Handbuch, I, 45. Compare _infra_, § 187. + + 104 On the difference between human and animal economy, see _Schoen_, + Neue Untersuchungen der N. OEkonomie, (1835), 4. + + 105 Compare _Schaeffle_, System, III, Aufl. I, 2, 28. + +_ 106 Knies_, in his Polit. OEkonomie vom geschichtl. Standpunkte, 1853, + p. 160 ff., shows, very happily, how the love of one's self,--which + must, indeed, be distinguished from self-seeking--is not in conflict + with the love of one's neighbor; but that, in healthy natures, it is + found allied with a feeling of equity, and of the common good. See, + also, _F. Fuoco_, Saggi economici, Pisa, 1825, Nr. 7. _Schutz_, Das + sittliche Element in der Volswirthschaft: Tuebinger Zeitschrift fuer + Staatswissensch. 1844, p. 132, ff. + + 107 "That they should seek the Lord if haply they might feel after him." + (Acts, 17, 27. Compare Matthew, 6:33, also I. Timothy, 5:8.) _Adam + Mueller_ in his Nothwendigkeit einer theolog. Grundlage, 49 seq., is + a strong advocate of all this, but a rather narrow one. The farmer, + he says, should first work for the love of God, then for the fruit, + that is, for the gross product, and lastly for the net product. His + work is a trust. _Mueller_ considers the business relations of men, + as they exist at present, as "the comfortless mutual slavery of + all." (Nothwendigkeit einer theolog. Grundlage, 49 ff.) The + economist, _Ch. Perin_, who writes from the Catholic + politico-economical standpoint, substitutes for conscience, + _renoncement_, as the force antagonistic to _interet_, an expression + inappropriate, because merely negative, although in perfect harmony + with the ascetic religiousness of the middle ages. (De la Richesse + dans les Societies chretiennes, 1861, II vol., passim) Compare + _Roscher_ in _Gelzer's_ Protestant. Monatsblaettern, Jan. 1863. + _Puchta_, Institutionen, I, f. 8, opposes to individualism--or the + impulse to distinguish ourselves from others, and which, when + uncontrolled, leads to egotism, pride and hate--love and right, which + are controlling powers over the former. + + 108 Even the ancients conceived Eros as a world-building principle. + According to _Schoen's_ expression, loc. cit., which it is not + difficult to misconstrue, the feeling of the common interest + manifests itself, both as law and force. And, in reality, it is + necessary that, in order not to permit the drowsy conscience to fall + too far behind self-interest, which is always awake, it should + create lasting institutions and regulations above and beyond the + caprice of the individual or of the moment; for instance, in the + family, marriage, education etc. + + 109 The more private interest ceases to be momentary, and becomes + life-long and even hereditary, the better does it harmonize with the + feeling of the common interest. + +_ 110 Perin_ says (1, 93), that the conflict of interest is reconciled in + the seeking for the attainment of the supreme good, that is God, + "who gives himself to all in equal measure, and yet always remains + the same, and out of whose fulness all may draw, and yet no one's + share grows less." But the same is true of all ideal goods, and of + every form of the feeling for the common interest, the highest of + which is, indeed, religiousness. + + 111 According to _Kant_, Anthropologie, p. 239, the desire of comfort + and well-being, and the inclination to virtue, when the former is + properly restrained by the latter, produce the highest degree of + moral, united to the highest degree of physical, good. It is well + known, that during the middle ages, in all countries except Italy + and, even up to the seventeenth century, the moral sciences were + under a one-sided theological influence, whose ascetic condemnation + of self-interest may have been well enough during a period of + violence. By virtue of a very natural reaction, and as a protest of + individualism against the constraint of absolute monarchy, the + materialists of the eighteenth century endeavored to discover, even + in the most exalted phenomena of human society, only the expression + of an enlightened self-interest. See _Mandeville's_ Fable of the + Bees, or private Vices public Virtues (1723), but especially, + _Helvetius_, De l'Esprit (1758). _Voltaire_ says, that, in all the + celebrated maxims of _De Rochefoucauld_ (1665) there is but one + truth contained, _que l'amour propre est le mobile de toutes nos + actions_. (But see, per contra, _Pufendorf_, Jus Naturae et Gentium, + 1672, II, 3, 15.) This tendency was opposed, especially by the + English, who could not be blind to the influence exerted in public + life by the feeling for the common good. _David Hume_, Treatise on + Human Nature (1739), III, 54, is of opinion that the interests of + others are, on the whole, in the case of nearly every man stronger + than even his own self interest. _Hutcheson_, System of Moral + Philosophy (1755), speaks of the innate principle of benevolence. + Man is not a perfect whole; a part belongs to his own person, part + to his family, part to the nation, part even to all humanity. + _Burke_, Inquiry into the Origin of our Ideas of the Sublime and + Beautiful (1756), distinguishes two fundamental principles of + action, that of self-preservation and that of society. On the former + is based the sense of the sublime; on the latter, of the beautiful. + According to _Ferguson_, History of Civil Society, (1767), I, 3, 4, + the "sense of union" is frequently strongest where the advantage + drawn from the connection is smallest; for instance, it is weakest + in highly cultured commercial countries. _Adam Smith_, Theory of + Moral Sentiments (1768), has been as one-sided in reducing + everything to "sympathy," as he has been in his Wealth of Nations in + reducing everything to "self-interest;" but not without the + consciousness, that to explain the reality, it is necessary to take + both into consideration (_Buckle_). It would, indeed, be just as + preposterous to base economy on self-interest alone, as to base + marriage merely on the sexual appetite. Recently, _Hermann_, + Staatswirthschaftliche Untersuchungen, 1st ed., part 1st, discovers + in self-interest, and in the feeling for the common good, the two + springs of all economy. He would even base the so-called theoretic + Political Economy, on the study of self-interest, its practice in + that of the common good. _M. Chevalier_, Cours d'Economie politique, + 1844, II, 412 ff., understands something very like this by the + contrast between liberty and centralization. The _antagonisme_ and + _association_ of _Bazard_, Exposition de la Doctrine de Saint Simon + (1829), p. 144 ff. Closer investigation will show, however, that + self-interest, which must not be confounded with egotism, and the + common interest, are neither cooerdinate nor exhaustive opposites. + Compare the beautiful contrast drawn by _Goethe_ (Pocket edition of + 1833, vol. 46, 97), between "Pietaet" and "Egoisterei." + +_ 112 Paul_, I. Corinth. 12, gives the most beautiful model description + of a social organism. Compare, however, the fable of Menenius + Agrippa in _Livy_, II, 32. + + 113 Excellent beginnings of a general theory of economies in common in + _Schaeffle_, N. OEkonomie, II, Aufl., 62 ff., 331 ff. + + 114 The French and English, with their strong political bias, use the + expressions respectively _economie politique_ and Political Economy. + In Germany, where the terms the people (_Volk_) and the state + (_Staat_) are much less nearly coextensive, the words + _Volkswirthschaft_ and _Nationaloekonomie_ are preferred. But even + _Hufeland_, who first gave currency to the term _Volkswirthschaft_ + (Grundlegung, I, 14), called attention to the peculiarity "that the + term economy suggests that there is one who economizes and guides, + an economist in chief, and that such a one is, even according to the + most correct opinion, wanting in the public economy of a people." + + 115 According to _Th. Cooper_, Lectures on the Elements of Political + Economy, (1726), 1, 15 ff. 117, the wealth of society is nothing but + the aggregate wealth of all the individuals that compose it. Each + individual looks out best for his own interests, and, hence, that + nation must be the richest, in which each individual is most + completely left to himself. (If this were so, savage nations would + be the richest!) _Cooper_ goes so far as to disapprove of the + protection afforded to commerce on the high seas by a national navy; + no naval war is worth what it costs, and merchants should protect + themselves. He says, too, that the word "nation" is an invention of + the grammarians, made to save the trouble of circumlocution, a + nonentity! _Adam Smith_ is, as might be expected, far removed from + such absurdities. (Compare Wealth of Nations, IV, ch. 2, and the end + of the fourth book.) But, even he is of opinion that men, in the + study of their own advantage are led "naturally, or rather + necessarily" (IV, ch. 2), to the employment which is most useful to + society. But here _Adam Smith_ overlooks the fact, that every + individual nation strives after earthly immortality, and is, in + consequence, frequently compelled to make immediate sacrifices for + the sake of a distant future, a thing which can never be to the + private interest of the mortal individuals who compose it. And thus, + _D. North_, Discourses upon Trade (1691), 13 seq., says, that in + commercial matters, different nations stand in precisely the same + relation to the whole world, that individual cities do to the + kingdom, and individual families to the city. Similarly, + _Boisguillebert_, Factum de la France, ch. 10, 327, Daire's edition. + _Benjamin Franklin_ (ob. 1790), Political Papers, § 4. And _J. B. + Say_, Traite d'Economie politique (1802) I, 15: every nation is, in + relation to neighboring nations, in the situation of a province in + relation to neighboring provinces. Unfortunately, such doctrine is + only too palpably refuted by every war! _J. Bentham's_ saying: _Les + interets individuels sont les seuls interets reels_ (Traite de + Legislation, I, 229). _Infra_ § 98. + + Among those who, in antiquity, most energetically maintained that + the idea of national economy is not a merely nominal one, is _Plato_ + (De Republ., IV, 420, I, 462); more recently, _Fichte_ (Der + geschlossene Handelstaat, 1800), although, in general, the + socialists attach as little importance to nationality as their most + decided opponents. Adam Mueller is a writer who deserves recognition + for his advocacy of national economy, and of the state as a whole, + paramount to individuals, and even generations. He gives war the + credit of causing the scientific knowledge of the state to cast + deeper roots, and of enlightening individuals in the most forcible + way, that they are parts of one great whole. (Elemente der + Staatskunst, 1809, I, 7, 113). He calls public economy, as a whole, + the product of all products. What, he inquires, is the use of all + wealth, if it does not guarantee itself? And this, it can do, only + through the organization of the whole people, that is, through the + nation (I, 202). _Adam Smith's_ theory of labor would be correct if + it considered the entire national life of a people itself as one + huge piece of labor. (II, 265). And so, Mueller directs his polemics + against Adam Smith's premise of a merely mercantile world-market. + (II, 290). Similarly, the protective tariff theoreticians, _Ganieh_, + Theorie de l'Economie politique (1822), II, 198 ff. and _Fr. List_, + Nationales System der politischen Oek. (1842), I, 240 ff. _Colton_, + Political Economy of the United States, 1853. _Sismondi_, Nouveaux + Principes (1819), I, 197, ridicules the opinion which resolves the + public interest into merely private interests: It is A's interest to + rob B; B, the weaker, is equally interested to let himself be + robbed, that he may fare no worse. But the state--?! + + 116 National wars are really no mere operations of the will of the + state! Since 1800, Ireland, and, since 1858, even British India, + constitute one state with England, and yet how different are the + economic tendencies of these different countries of which the + individual husbandman or business man must take cognizance! + + 117 One might also deny the reality of a stream, considered as a whole, + since its bed, no one calls a stream, and its watery contents change + every moment. And yet, it is well known to scientific geography that + every stream has its own individual character. + + 118 This would be to be guilty of explaining _ignotum_ per _ignotius_. + And yet, there are a great many modern writers who imagine that they + have said something all-sufficient, when they have told us that the + state is an organism. As early a writer as _Hufeland_ (N. + Grundlegung, I, 113), enters his protest against such abuses. The + person who would operate with this notion, should, at least, have + read the acute observations, so well calculated to dissipate + preconceived opinions, made by _Lotze_, in his Allgemeine + Physiologie des koerperlichen Lebens, 1-165. The organic conception + of national life, the life of a whole people, where the individual + organs are free and rational beings, is evidently a much more + difficult one to form than that of the animal or human body. + + 119 I first called attention, in my work on the life-work and age of + _Thucydides_, to the fact that that great historian always accounts + for causes in the following manner: A. is produced by B., and B. by + A. (_Roscher_, Leben Work und Zeitalter des Thukydides, 199 ff.; + compare especially _Thucyd._, I, 2, 7, seq.) Such a circle is not a + vicious one. All first class historians have thus explained + historical phenomena. The one-sided deduction of A. from B., and B. + from C., etc., which the so-called pragmatic writers like + _Polybius_, for instance, is the result of overlooking all + reciprocal action. _Scialoja_, Principii (1840), p. 60, makes a + somewhat similar observation for Political Economy. + + 120 Whether we call the unknown and inexplicable ground back of all + analysis, and which our analysis cannot reach, vital force, generic + form, spirit of the nation, or God's thought, is for the present a + matter of scientific indifference. All the more necessary are the + self-knowledge and honesty, in general, which admit the existence of + this background, and which do not, by denying it, deny the + connection of the whole, which is, for the most part, much more + important than the analyzed parts. But I must at the same time, + enter my energetic protest against the imputations of heresy made by + those who do not comprehend the sacred duty of science, by never + ceasing investigation, to push farther back the bounds of this + inexplicable background. + + 121 When _Hildebrand_, for instance, objects to the application of the + expression "natural law" to the economic actions of man, for the + reason that it conflicts with human freedom and man's capacity for + progress (Jahrbuecher der N. OEek. und Statistik., 1863, Heft., I), I + cannot agree with him. I use the expression "natural law" wherever I + observe uniformity, explicable in its broader connections, and not + dependent on human design. That there are such uniformities there + can be no question. I need only mention the philological law of the + so-called "permutation of consonants," which individuals follow when + speaking--certainly not through compulsion,--and, by means of which, + the progress of the speaking aggregate is made manifest. Or, I might + call attention to the well known fact, that, in populous countries + marriages and crimes, which are for the most part free, are divided + among the different age-classes in a proportion much more uniform, + from year to year, than are deaths, which are not free. I adhere all + the more firmly to the expression "natural law," because no one + takes offense at or objects to the expression, "nature of the human + soul." But to this very nature of the human soul belong the freedom + and responsibility of the individual, as well as the capacity of the + species for progress. Compare _A. Wagner_, on Law in the Apparently + capricious Actions of Man (_Die Gesetzmaessigkeit in den scheinbar + willkuerlichen menschlichen Handlungen_, 1864, p. 63 seq.), in which, + however, he only goes so far as to show that law and freedom coexist + side by side as indubitable facts, while the seeming contradiction + between the two remains. _Drobisch's_ Moralische Statistik und die + menschliche Willensfreiheit, 1867, is an important contribution to + the literature of this question. + +_ 122 Whately_, in his fourth lecture (Lectures, 1831), shows in a very + clear way, how London is supplied and provisioned by men with no + object in view but their own personal interest, each of whom is + possessed of but a very limited knowledge of the aggregate wants of + its inhabitants, and yet they work into one another's hands, in the + interests of the whole, purely instinctively, and infinitely better, + perhaps, than the operations of the most skillful governmental + commission, organized for the same purpose. + + 123 Alphonsus of Castile, the king astrologer of the thirteenth century, + is reported to have said, that the universe would have been much + better constituted, if the Creator had asked his advice beforehand. + Astronomers like Newton and Gauss have, certainly, judged otherwise. + +_ 124 MacCulloch_ remarks, that there is an essential difference between + the physical and the moral and political sciences in this, that the + principles of the former apply in all cases, those of the latter, + only in the greater number of cases--a thought very ably developed by + _Knies_, loc. cit., _passim_. If, with _Newmarch_, (London + Statistical Journal, 1861, p. 460 seq.), we could grant, that there + is no "law," except where it is possible to predict each individual + occurrence under it, there would be no such thing even as the "laws" + of the probability of life. The word "element," also, means + something very different in Political Economy from what it does in + chemistry: a combination which might be broken up, but which that + science leaves it to other sciences to do. The "element" of + Political Economy is Man. Compare _Pickford_, Einleitung in die + politische OEk., 1860, 17. + + 125 It is in this sense that _Aristotle_ (Polit., I, p. 1, 9 Schn.) + says: {~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON WITH VARIA~}{~GREEK SMALL LETTER NU~}, {~GREEK SMALL LETTER OMICRON WITH DASIA AND OXIA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER ETA WITH DASIA~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER EPSILON WITH PSILI~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA WITH VARIA~}, {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH VARIA~} {~GREEK SMALL LETTER OMICRON WITH DASIA AND OXIA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER ALPHA WITH PSILI AND OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~} + {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMICRON WITH VARIA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER ZETA~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}. According to _L. Stein, Lehrbuch der + Volkswirthschaft_, 1858, 33, the political economy of a people + begins at the point where the overplus of individuals begins. + + 126 Compare _K. L. von Haller_, Restauration der Staatswissenchaft, I, + p. 446 ff. + + 127 As _Sallust_ characterizes the political apogee of the Romans: + _Optimis moribus et maxima concordia egit populus Romanus inter + secundum atque postremum bellum Carthaginiense._ See _Augustin_ + (Civ. Dei II, 18). _Puchta_ (Institutionen, I, f. 83), with a great + deal of good sense, distinguishes in every people their individual + character from that which they share in common with all mankind. The + latter exists among savage nations, only as a germ buried under the + overpowering weight of that which is special to them. The period of + the perfect equilibrium of both elements is coincident with that of + a people's real culture. In the further course of development, the + latter, more general element becomes gradually over-powerful, + destroys the individual, and thus dissolves nationality. + + 128 Thus formulated, the principles of the two great parties, evidently, + no more contradict one another than their ordinary watchwords, + "freedom" and "order," are in contrast with one another. Hence all + the great statesmen of the best periods of history have adopted the + middle course recommended by Aristotle. + + 129 See _Lotze_, Allgemeine Pathologie, 1842. _Ruete_, Lehrbuch der + allgemeinen Therapie, 1852. These analogies, obviously, should not + be pushed too far. One of the most essential differences between the + two consists in this, that in the diseases of the body politic, + physicians and nurses are themselves part of the diseased organism. + + 130 See _Ahren's_ very beautiful exposition, Organische Staatslehre, + 1850, I, 77. National economy (_Nationaloekonomie_=public economy); + national economics (_Nationaloekonomik_=the science of public + economy). The latter term was first proposed, in Germany, in 1849, + by _Uhde_; the former was naturalized therein 1805: _v. Soden_, + Nationaloekonomie, 1805; _Jacob_, Grundsaetze der N. OEk., 1806. In + Italy, _G. Ortes_ used it as early as 1774, in his Dell Economia + nazionale, and in England it was employed, even in 1867, by + _Ferguson_, History of Civil Society, III, p. 4. Holland. + Volkshuyshoudkunde. As a rule, outside of Germany, the term + political economy, _economie politique_, one which is somewhat + calculated to mislead the student, is used. (Thus _Montchretien + sieur de Vatteville_, Traite de l'Economie _politique_, 165; later + _J. J. Rousseau_, Discours sur l'Economie politique, later yet the + Traites d'E. p., _Maillardere_, _Page_ and _J. B. Say_, 1801-1803). + Political Economy (_Sir J. Stewart_, Inquiry into the principles of + P. E., 1767); also Public Economy (_Petty_, several Essays, 1682, + 35); _Economia politica_ or _pubblica_ (the latter by _Verri_ and + _Beccaria_). The title _Economia civile_ (_Genovesi_, Lezioni, d'Ec. + civ. 1769), has found few adherents. It has, however, been used + recently by _Cernuschi_: Illusions des Societes cooeperatrices + (1866). The term, _Economie sociale_ has been used all the more in + France (Dunoyer, Nouveau Traite d'Ec. soc., 1830), since recommended + by _J. B. Say_, and employed by _Buat_ (Des vrais Principes de + l'Origine et de la Filiation du Mot Economie politique, in the + Journal des Economistes, 1852.) + +_ 131 Stein_, Lehrbuck der V. W., prefaces his "Science of Public + Economy" (pp. 329-358), by a "Science of Economy" (pp. 96-328), + which, however, treats individual economies only as the elements of + the national economy. A science of household or isolated individual + economy could, of course, treat only of the economic relations of + anchorites. Those who object that Political Economy is not a real + whole will be satisfied with the definition of it given by _F. I. + Neumann_: "The Science of the bearing of household or separate + economies to one another, and to the state as a whole." (Tueb. + Zeitschr., 1872, 267.) + + 132 In so far as these various institutions are concerned, with objects + beyond the human, or supernatural, only the manner in which they are + accepted, or in which they are made use of, is an expression of + national life. + + 133 Thus, _J. Tucker_ thinks that religion, the state and commerce, are + only the parts of one same general plan: no institution, therefore, + can be called appropriate, within the limits of the province of any + one of these, if it be clearly in opposition to the other two, + because the harmony of God's work can not be broken up. (Four Tracts + and two Sermons on political and commercial Subjects, 1774, Serm. + I.) + +_ 134 Riedel_ (National OEkonomie, 1838, I, p. 178 seq.), gives a good + illustration of the difference between the manner in which law and + Political Economy look at the same question. The law (to avoid + strife, or to settle controversies) looks upon the debtor as the + owner of the capital, and lets him run all the risk; Political + Economy, on the other hand, looking deeper into the nature of the + contract, reaches an entirely opposite result. The mere jurist has a + dangerous tendency to undervalue the reign of the laws of nature; + the mere political economist, just as readily, undervalues the + element of free will. (_Arnold_, Cultur und Recht I, 97.) In this + respect, the two sciences complement each other very well. _Roesler_ + (_Hildebrand's_ Jahrb., 1868, II, and 1869, I.) shows, and he does + not exaggerate the fact, that political economists have made + altogether too little use of the results of the science of law. + + 135 Jurists will always experience the want of divesting their isolated + ideas of their purely accidental character, by grouping them + together in such a manner as to make them constitute a complete and + independent whole. One must be possessed of profound knowledge to + perceive their necessary connection from an historico-juridical + point of view. Political Economy, with its characteristic accuracy + and practical utility, can best take its place, at the present time. + It is in the greater number of legal questions, the systematically + elaborated science of "the nature of the thing." See the able + beginnings of a policy of legislation and higher history of law, + based on Political Economy, by _H. Dankwardt_: N. OEk. und + Jurisprudenz, 3 Hefte, 1857, and my preface to _Dankwardt's_ + Nationaloekonomisch-civilistischen Studien, 1862. + + 136 The intellectual power of a people depends upon the vigorous and + harmonious development of all seven spheres of life. + +_ 137 Montecuccoli_, Besondere und geheime Kriegsnachrichten (Leipzig, + 1736). A very similar judgment by Caesar in _Dio Cass._, XLII, 49. + +_ 138 Buelan_, Handbuch der Staatswirthschaftslehre, 1835. + + 139 Thus _v. Justi_, Staatswirthschaft 1755. _Kraus_, Staatswirthschaft, + published by Auerswald, 1808; _Schmalz_, Handbuch der + Staatswirthschaft, 1808. More recently, _Hermann_, + Staatswirthschaftliche Untersuchungen, 1832. In France, the + expression _economie de l'etat_, is very seldom used. _Gavard_, + Principes del'E. d'Etat, 1796. + +_ 140 Poelitz_, Staatswissenschaften im Lichte unserer Zeit, II, 3. + Compare _Lotz_, Handbuch der Staatswirthschaft (2d ed., 1837), I, 10 + ff. + + 141 Our view of Political Economy holds a middle place between opposed + extremes. The view expressed by _Whately_, Lectures on Political + Economy (1831), No. 1, and covered by the proposed term + "catalactics," is by far too narrow. Similarly, _Macleod_, Elements + of Political Economy, 1858, I, 11. A like objection may be raised to + the earlier title of _Pritzwitz's_ book: Die Kunst reich zu + werden,--the art of growing rich. On the other hand, _Dunoyer_, + Liberte du Travail (1845), L. IX, ch. I, goes too far altogether: + "not only in what manner a nation grows rich, but according to what + laws it best succeeds, in the execution of all its functions." And + so _Storch_, Handbuch, translated into German by _Rau_, I, 9. Many + modern writers define Political Economy simply as the theory of + society; for instance, _Scialoja_, Principj. dell'Economia sociale, + 1840. _Cibrario_, E. polit. del medio Evo, III, 1842. + + 142 For the many and various definitions of the police power, see _von + Berg_, Handbuch des Polezeirechts, I, 1-12; _Butte_, Versuch der + Begruendung eines System der Polezei (1807), 6 ff.; _Rosshirt_, Ueber + den Begriff der Staatspolizoi (1817), 34 ff. One of the principal + difficulties is, that the practical domain of the police power is, + in consequence of the successive grades of civilization through + which a people passes, subject to greater modifications than any + other state power. We call attention especially to the expressions + "without mediation, to prevent," and "external order," in our + definition. The church, the school, the administration of justice + etc., act mediately towards the prevention of such disturbances; and + there are many other institutions which offer immediate protection + to order of a higher and more intellectual nature. + + 143 See the great number of earlier definitions collected in _R. von + Mohl_, Gesch. und Literatur der Staatswissenschaften III, pp. 637 + ff. There are two principal groups of them, the one of which + considers it as the science of things of political note, the other + as the science of actual or past conditions. + + 144 See _Dufau_, Traite de Statistique, 1840; _Moreau de Jonnes_, + Elements de Statistique, 1847; _Knies_, Die Statistik als + selbststaendige Wissenschaft, 1850. _B. Hildebrand_, in his + Jahrbuechern, 1866, I etc., but especially _Quetelet's_ works. For + the contrary view, see _Fallati_, Einleitung in die Wissenschaft der + Statistik der St., 1843; _Jonak_, Theorie der Statistik, 1856, and + _Heeren_, in the Goett. Gelehrten Anzeigen, 1806, No. 84, 1807, 1302. + + 145 So thinks _v. Ruemelin_ (Tuebinger Zeitschr., 1863, 653 ff.); and he + recommends in place of statistics an independent branch of learning + bordering on history and geography, to be called demography. His + statistics is a science auxiliary to all the experimental sciences + of man, just as criticism and hermeneutics are a methodological + science auxiliary to many sciences, otherwise different. It would be + difficult to justify the use of the name statistics for such a + science, as such a science corresponds to neither of the two + meanings of the word _status_ (state--condition). + + 146 The ancients understood by the term {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA~} _camera_, covered places + such especially as were vaulted, also vaults of the most varied + kind. Compare _Herod_, I, 199; _Diod._, II, 9; _Strabo_, XI, 495; + _Arrian_, Exp. _Alex._, VII, 5, 55; _Dio Cass_. XXXVI, 32; + _Sallust_, B. C., 55; _Cicero_, ad Q. fratrem III, 1; _Plin._, H. N. + XXX, 27; _Seneca_, Epist., 86; _Tacit._ Hist. III, 47; _Sueton_, + Nero, 34. During the middle ages, the meaning treasure-chamber + (_Schatzkammer_) became predominant: _camera est locus, in quem + thesaurus recoilligitur, vel conclave, in quo pecunia reservatur_ + (_Ocham_, Cap. Quid sit Scaccarium). It gradually became synonymous + with finance,--from the time of Charlemagne, or at least since Louis + II. (Charter of 874). See _Ducange_, Glossarium, v. Camera, and + _Muratori_ Antiquitt. Ital., I, 932 ff. + + 147 "A husbandman must plow and manure his land if he would reap a + harvest from it. He must fatten his cattle if he would slaughter + them; and furnish his cows with good fodder if he would have them + give good milk. In like manner, a prince should begin by assuring + his subjects healthy and abundant food, if he would take anything + from them." _von Schroeder_, Fuerstl. Schatz-und Rentkammer (1686), + preface, § 11. _Von Horneck_ before him, Oesterreich ueber alles wann + es nur will, p. 220, ed. of 1707, had expressed the idea that the + watchful solicitude for the public economy of the country was no + _parergon_, no _appendix_, to the council (_Kammer_), but its real + basis, and that it embraced many subjects which had nothing in + common with the cameralia ("_Cameralien_"). + +_ 148 Morhof_, Polyhistor (1688), III. _Thomasius_, 1728, Cautelae circa + praecognita Jurisprudentiae (1710), ch. 17. (Cautelae circa studium + oeconomicum.) Also, in his lectures on _Seckendorff's_ "Teutschen + Fuerstenstaat." Compare _Roscher_, Gesch. der N. OEk. in Deutschland, + 328 ff. + + 149 While _Dithmar_ (1731) distinguishes economy-police and cameralistic + sciences and restricts the latter to finance and taxation; _Darjes_ + (1756) comprises under the name of cameralistic science, economy + (municipal and rural), and police, as well as cameralistic subjects + in the strict sense of the term, that is, the public, domain and + regal rights. While _Nau_ (1791), in his "Ersten Linien der C.," + treats only of the branches of private economy, _Schmalz_, (1797) + treats also of national or public economy, and _Roessig_ (1792) + divides cameralistic science into the doctrine of the public demesne + and regal rights (cameralistic science in the narrower sense), and + the doctrine of taxation and police. + + 150 Thus, for instance, all that concerns domestic economy, book-keeping + and private financial administration. + +_ 151 John Stuart Mill_, Principles of Political Economy (1848), I, p. + 25, draws a distinction between the physical conditions which + influence the economic situation of a people, and the moral and + psychological conditions; which last have their origin in social + institutions or in the fundamental principles of human nature. Only + the latter belong to the domain of Political Economy. According to + _J. B. Say_, Traite, Introd., this science embraces at once + agriculture, manufactures and commerce, but only in their relation + to the increase or diminution of wealth, and does not concern itself + with the means employed to reach the desired end. As a rule, says + _Arndt_ (Naturgemaesse Volkswirthschaft, 1851, p. 16), it takes into + consideration not so much things themselves as their exchange value. + _Lotz_ (Handbuch, I, p. 6 seq.), in like manner, defines Political + Economy--the science of the one activity which constitutes the basis + of all industries etc. _F. G. Schulze_ (Ueber volkswirthschaftliche + Begruendung der Gewerbswissenschaften, 1826), characterizes Political + Economy as the science of the fundamental conditions of the + well-being of a people, in so far as they lie in human nature. + + When _Adam Smith_ (book IV, c. II) says that the government in + respect to matters of economy is inferior to the first best person + engaged in industrial pursuits, he is right only from a technic + point of view. And when _Stewart_, on the other hand, vindicates for + the state the office of a pater-familias (book II, ch. 13), he + evidently means only in national economical matters. + + 152 See also _Rau_ (Ueber die Cameralwissenschaft, Entwickelung ihres + Wesens und ihrer Theile, 1825); _Baumstark_ (Cameralistische + Enclycopaedie, 1835). + +_ 153 Xenoph._ OEconom. I, 8 ff. Cyrop. VIII; 2, 23. He saw with equal + clearness the moral light and shade of wealth. (OEcon. XI. 9. Conviv. + 4. Memor. I, 6. Cyrop. VIII, 3, 35 ff. Hiero 4.) + +_ 154 Thomas Aquinas_ values earthly goods according to the end they are + made to serve; when used for a good purpose, they have a mediately + true value. Hence it was an error of the stoics to despise them + under all circumstances. (Summa Theol. II, 2. Qu., 50, 3. 58, 2. 59, + 3. 125, 4.) + +_ 155 Whateley_ considers the savage much beneath the materialist, + instead of superior to him. The latter possesses, although he + frequently abuses it, the faculty of self-control and forethought, + which is entirely wanting in the former. (Lectures, No. 6.) + _Dunoyer_, De la Liberte du Travaeil, liv. IV, ch. I, 8, an apology + for the moral wholesomeness of civilization, since promotive of + military prowess, favorable to the development of the sciences, and + even poetical. _Baudrillart_, Manual d'OEkonomie politique, 1857, 24. + See _Fallati_, Ueber die sogennannte materiellen Tendenz der + Gegenwart, 1842. + + 156 See the inscription on the tomb of Sardanapalus: {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON WITH PERISPOMENI~}{~GREEK SMALL LETTER TAU~}{~GREEK KORONIS~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER OMEGA~}, {~GREEK SMALL LETTER OMICRON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK KORONIS~} + {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH VARIA~} {~GREEK SMALL LETTER EPSILON WITH PSILI~}{~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER BETA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER ALPHA~} {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA WITH OXIA~} {~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER TAU~}{~GREEK KORONIS~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON WITH OXIA~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}. (Strabo, XIV, + 672.) _Isaiah_, 122, 13, 56, 12, and the book of wisdom (2) + characterizes the view of the fallen Jewish people. In Greece, the + Cynic and Epicurean schools were only different phases of the same + degeneration. "Thirst, for money, and nothing else, will be the ruin + of Sparta!" (_Cicero_, De Offic, II, 22, 77.) See the magnificent + description by Demosthenes, in which he shows the over-estimation of + material things to be the principal cause of the decline of Athens, + and in which he lays great stress on the fact, that Athens, on its + decay, had a larger population, more wealth, ships, and evidences of + external power, than in its golden age. (Phil., III, 120 seq.) Also + Phil., IV, 144, cautions us against the Manchester criterion of + national prosperity. See _Plato_, De Rep., VIII. In Rome, the + principle _ommia venalia esse_ was a chief element in the total + decline and fall of the republic. (_Sallust_, Cat., 10 ff., Jug., 8 + ff.) In an age when people think they can do everything with money, + the ruin of all things is the last end of mercantile, financial and + political speculation. (_Condillac_, Le Commerce et le Gouverment, + 1776, II, 18.) + + 157 Under Pericles, the Athenian treasury of the state contained at most + 9,700 talents. (_Thucyd._ II, 13.) On the other hand, Alexander the + Great had a treasure of 180,000 talents accumulated in the citadel + of Ecbatana. (_Strabo_, XV, 731); Ptolomy II. left after him 740,000 + talents. (_Appian._ praef. 10, _Droysen_, Geschichte des Hellenismus + II, 44 ff.) In Nero's time there was many a freedman's daughter who + owned a looking glass worth a greater sum than the senate had + appropriated as a dowry to the daughter of the great Scipio. + (_Seneca_, Quaest. Natur. I, 17. Compare Cons, ad Helviam, 12.) + _McCulloch_ says that an intelligent despotism can enrich a nation + as well as freedom. (In his Discourse on the Rise, etc. of Polit. + Econ., 1825, 77 seq.) + +_ 158 Bacon_ (Sermones, 56) says that youthful states distinguish + themselves specially by their warlike instincts; mature states in + literature; old and decaying ones in industry and commerce. + _Davenant_ very happily remarks, that the development of commerce + among a people has an ambiguous value. It, indeed, increases wealth, + but, at the same time, it may introduce luxury, covetousness and + fraud, destroy virtue, do away with simplicity of manners and + customs, and then it inevitably ends in internal or external + slavery. (Works II, 275.) The simplicity of the patriarchal state, + however, cannot last always, if for no other reason, because of the + emulation of foreign nations. (1, 348, ff.) The impoverishment of + even the wealthiest nation is certainly inevitable when its morality + declines. It is especially true, that the public economy of a people + can be prosperous only where political liberty obtains, and this, + independent of the fact that wealth without freedom has no value. + (II, 336 ff., 380, ff., 285.) According to _Ferguson_, private + wealth, honestly acquired, used rightly and with moderation, managed + with a sense of independence, may be to those who possess it, an + element of self-confidence and of liberty, provided they loosen + their purse strings not through vanity or for their personal + gratification, but for commendable party purposes. But in periods of + decay, even a greater amount of wealth is very far from producing + these results. (History of Civil Society, VI, 5.) _Whately_, on the + contrary, maintains that only personal wealth--never national + wealth--has a disastrous influence on morals. Lectures, No. 2. + + 159 "The method of a science is of much greater importance than any + individual discovery, however wonderful." (_Cuvier._) + + 160 Thus, for instance, _G. Biel_ (ob. 1495), the "last of the + schoolmen," gives us his doctrine of Political Economy, in a work on + Dogmatic Theology, in the chapter on Penance, his starting point + being the inquiry, how the economic damage caused by the sinner may + be repaired. _Roscher_, Geschichte der Nationaloekonomik in + Deutchland, 1074, I, 23. The Melittotheologia, Arachnotheologia of + later times! A recent attempt in this direction has been made by + _Ad. Mueller_, Nothwendigkeit einer theologischen Grundage der + gesammten Staatswissenschaften und der Staatswirthschaft + insbesondere (1819), i.e., "necessity of a theological basis for all + political science, and especially for Political Economy." He divides + political science into two parts: the science of law, and the + science of wisdom, embracing under the latter denomination, + politics, Political Economy, etc. Law emanates from God, as supreme + judge; the science of wisdom from God, as our Supreme Father. + + 161 Abstraction is indulged in on a large scale, when a number of + elements which are always found combined in life, are here separated + and examined apart. It is precisely thus that anatomy proceeds, + dissecting each member of the human frame, separating the bones, + ligaments and muscles from one another, thus becoming the necessary + preparatory school to physiology. + + 162 Thus, for instance, _Canard_, Principes d'Economie politique (1801). + Also _Kroencke_, in several of his works, and _Count Buquoy_, in his + Theorie der Nationalwirthschaft (1816), p. 333 ff.; _Lang_, + Grundlinien einer politischen Arithmetik, Charkow, 1811, and more + especially _v. Thuenen_, Der isolirte Staat, vol. I (1842), vol. II, + 1850. See my criticism of his method in _Birnbaum's_ Georgika, 1869, + 77 ff. _Voa Thuenen's_ first volume is an essay towards a geometrical + exposition of the science. See also _Rau_, Lehrbuch I, § 154, + appendix; _von Mangoldt_, Grundriss der Volkswirthschaftslehre + (1862); _Cazaux_, Elements d'Economie privee et Principes + mathematiques de la Theorie des Richesses (1838); _F. Fuoco_, Saggi + economici (1827) II, 61 ff. _Walras_, Elements d'Econ. politique + pure (1874). _Jevons_ has recently endeavored to give Political + Economy a mathematical basis by reducing the objects of which it + treats to the calculable feelings of pleasure (+) and pain (-). The + duration of a feeling is treated as an abscissa, its intensity as + the ordinate of a curve, and its quantity as the area. Future + feelings are reduced to present ones, by allowing for their + distance, and the uncertainty of their occurrence. All this, + however, is rather curious than scientifically useful. + +_ 163 Herbart_, Ueber die Moeglichkeit und Nothwendigkeit, Mathematik auf + Psychologie anzuwenden; Kleinere Schriften, II, 417. + + 164 How detrimental it is to ignore the psychological nature of + Political Economy is evident from the errors of _Karl Marx_, who + personifies things in a manner almost mythological. Thus, according + to him, modesty should be ascribed to a coat which exchanges for a + piece of linen, and purpose to the linen, etc. (Das Kapital, 1867, + I, 19, 22, seq.) The greatest fault of this intelligent but not very + acute man, his inability to reduce complicated phenomena to their + constituent elements, is greatly increased by his way of thus + looking at things. + + 165 Compare _J. B. Say_, Traite I, introd. Thus, it would be certainly + possible to describe every individual's physiognomy by means of a + very complicated mathematical formula, and yet there is no one who + would not prefer the usual mode of taking pictures. The simple + motions of the heavenly bodies, on the contrary, are always treated + mathematically. (_Lotze_, Allgemeine Physiologie, 322 ff.) + + 166 When _Fawcett_ says that all "principles of Political Economy are + describing tendencies instead of actual results" (Manual of + Political Economy, 1863, p. 90), our method, the historical, would + give also the theory of the latter. + + 167 This was lost sight of by most writers during the second half of the + eighteenth century, because they looked upon that equality as the + really oldest condition, and its restoration the ideal to be striven + for. How much of this still clings to the present free-trade school; + see in _Roscher_, Gesch. der N. OEk. in Deutschland, 10, 17 ff. + + 168 Thus, for instance, _Ricardo_ examines, almost exclusively, the + actual condition of things, while the socialists confine themselves, + still more exclusively, to the investigation of how things should + be. It has been very usual in Germany since _Rau_ wrote, to draw a + distinction between theoretical and practical Political Economy. + There are many who think that a good manual of practical Political + Economy, dropping the introduction, demonstrations etc., would be + also a good code of law, of universal application. _Mercier de la + Riviere_ has said that he wished to propose an organization which + should be necessarily productive of all the happiness which can be + enjoyed on earth. (Ordre essentiel et naturel (1767), Disc. prelim.) + Compare, also, _Sismondi_, N. Principes, I, ch. 2. + + 169 The word method is used in an essentially different sense, when the + inquiry is, whether the inductive or deductive method is followed in + Political Economy. _J. S. Mill_ calls Political Economy, and, + indeed, all "sociology," a concrete deductive science, whose _a + priori_ conclusions, based on the laws of human nature, must be + tested by experience, either by comparing them with the concrete + phenomena themselves, or with their emperical laws. It, in this, + resembles astronomy and physics. (System of Logic VI, ch. 9. Essays + on some unsettled questions of Political E., No. 5.) According to + this, an economic fact can be said to have received a scientific + explanation only when its deductive and inductive explanations have + met and agreed. "Only those principles which, after they have been + obtained by the one, are confirmed by the other method, can be said + to have a scientific basis." (_von Mangoldt_, Grundriss, 8.) While I + agree to this view, it seems necessary to me to mention points + wherein caution is necessary: A. Even the deductive explanation of + economic facts is based on observation, namely, on the + self-observation of the person accounting for them, who, consciously + or unconsciously, must always inquire: If I had experienced or + accomplished the same fact, what should I have thought, willed and + felt? The man who cannot translate himself into the souls of others, + will give a wrong explanation of most economic facts. In the + question, for instance, of the determination of the price of an + article, the person who can look into the mind of one of the + contracting parties only, will give a one-sided explanation of the + facts. B. Moreover, every explanation, that is, satisfactory + connection of the fact seeking explanation with other facts which + are already clear, can be only provisional. The wider our horizon + grows, the deeper should our solution of all questions become. A + hundred years hence, should science increase in the mean time, the + solutions which are satisfactory to us will be looked down upon by + our posterity, as the speculations of our fathers antecedent to Adam + Smith's time are looked down upon by us. + +_ 170 Tanquam e vinculis sermocinantur_, says _Bacon_ (De Dignit. et + Augm. Scient., III, 3), of those who have written in a not + non-practical way on the laws. _Hugo_, also (Naturrecht, 1819, p. + 9), calls attention to the resemblance of the so-called laws of + nature, to the positive law in force at the time. As to political + idealism, see _Roscher_: De historicae doctrinae apud sophistas + majores vestigiis (Goett. 1838, 26 ff.). The only exceptions to this + rule are the eclectics, who form their own system from the blossoms + of all foreign ones, a system, indeed, without root, and which + therefore must soon wither. + + 171 In this place, naturally, such an assertion can be made only as a + programme to be carried out, the proof whereof is to be sought in + the rest of the work. By "the people," we do not mean the governed, + to the exclusion of the governing classes, but both classes + together. We attach to the expression the most extensive meaning + possible. We do not limit it to the present generation, but intend + it to cover all the generations from the beginning of a people's + history to its end. + + 172 The custom, which has become general, of calling all democratic + movements, and them only, revolutions (thus _Stahl_: Was ist + Revolution? 1852, and many other writers of an entirely opposite + tendency, especially in France), is not warranted. It is true that + democratic (and imperial) revolutions are more frequent than others + in our times, just as aristocratic revolutions were in the middle + ages, and monarchical at the beginning of modern history. The + essence of revolution, however, is in the operation of change + contrary to positive law, acknowledged as such by the consciousness + of the people. + + 173 Compare, especially, the first pages of _Sir J. Stewart_, Principles + of Polit. Economy. + + 174 See _Colton_, Public Economy of the United States, p. 28, who, + indeed, unwarrantedly, refers to the whole of Political Economy, + what properly belongs to its precepts. + +_ 175 Je n'impose rien, je ne propose meme rien: j'expose._ (_Ch. + Dunoyer_). _Cherbuliez_, Precis de la Science economique, 1862, p. 7 + ff., has exaggerated this idea in a strangely non-practical manner. + That the historical method does not differ essentially from the + statistical as recently recommended, see _Roscher_, Gesch. der Nat. + OEk., 1035 seq. + +_ 176 Storch_, Handbuch, II, 222. + +_ 177 Ad. Mueller_, an essentially mediaeval mind, is guilty of this same + braggadocio in an opposite direction, when he calls the "present + with its political disorders simply an intermediate state,--the + transmission of the natural or unconscious wisdom of the fathers, + through the inquisitiveness of their children to the rational + acknowledgment of that wisdom by their grandsons." (Theorie des + Geldes, 1816, pref.) + + 178 Thus, for instance, it can not be said that a model university is + better than a model public school; and yet the former is higher, + because the age to which it is adapted is doubtless intellectually + higher. + +_ 179 Knies_ (Polit. OEk., 256 seq.) remarks, that it would be a great + mistake, and it is the mistake of the majority, to consider what has + been achieved or striven for in the present, as the absolute _non + plus ultra_, and thus to look upon all future generations as called + upon to play the parts of apes and ruminators; a remark worthy to be + taken to heart. + + 180 I have, myself, no doubt, that up to the present time, mankind, as a + whole, has, from the beginning of historical knowledge, always + advanced. In individual cases, their movement has been interrupted + by so many pauses, and even by so many occasional retrogressions, + that great care must be taken not to infer superior excellence from + mere subsequency. + +_ 181 Buckle_ writes of people whose knowledge is about limited to that + which they see going on under their eyes, and who are called + practical, only because of their ignorance; and he adds that, + although they assume to despise theory, they are in fact slaves of + theory, of others' theories. + + 182 Compare this whole chapter with _Roscher_, Leben Werk und Zeitalter + des Thukydides, 1842, pp. 25, 239-275; _Roscher_, Grundries zu + Vorlesungen ueber die Staatswirthschaft nach geschichtlicher Methode, + 1843, preface; _Roscher_ Geschichte der Nat. OEk. in Deutchland + (1874), 882 f., 1017 seq., and D. Vierteljahrsschrift, ff. See also + _J. Kautz's_ learned and accurate Theorie und Geschichte der N. + OEkonomik, vol. I, 1858, II, 1860. I find no real contradiction + between the views here expressed and those of _Kautz_, when he (I, + pp. 313 ff.) introduces history and ethico-practical reason with + their ideals as sources of Political Economy, to the end that the + science may be something more than simply a picture, namely, a model + of economic life. Apart from the fact that it is only the + ethico-practical reason that can understand history at all, the + ideals of a period constitute one of the most important elements of + its history. The aspirations of an age find in them their best + expression. The historical political, economist as such, is + certainly not disinclined to form plans of reform, nor can it be + said that he is not adapted to the performance of such a task. Only, + he will scarcely recommend his reforms as absolutely better than + what they are intended to supplant. He will confine himself to + showing that there is a want which may, probably, be best satisfied + by what he proposes. See _Sartorius_, Einladungsblaetter zu + Vorlesungen ueber die Politik, 1793. + + 183 "There is a book which youth may use to grow old, and the old to + remain young--History." (_K. S. Zaccharia_). + + 184 Especially when natural science begins to be "a practical science." + (_L. Stein_). + + 185 The difference between the broader and narrower sense of production, + corresponds essentially with that of gross and net income (§ 145). + Compare also §§ 206, 211 ff. + +_ 186 Von Mangoldt_ distinguishes the coming into existence of free + values of the production undertaken for an economic purpose. + (Grundriss, 9.) + +_ 187 Gioja_, Nuovo Prospetto delle Scienze economiche (1815), I, 49 ff. + Besides positive production, there is a latent production, which + prevents the decay of goods. It is not possible to make as exact an + estimate of the latter as of the former; and much more depends in + the latter case than in the former on continuity and proper + extension. Hence, latent production is especially a state concern. + (_Knies_, Telegraph als Verkehrsmittel, 1857, 232.) + + 188 See _Schaeffle_, in the Tuebinger Univ. Programm, September 27, 1862, + on the disastrous effect on the community of idleness. The leading + of a happy life the Greeks called very appropriately, {~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER UPSILON WITH PSILI~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER NU~} + (_Garve_). + + 189 We use the expression "external nature" through the whole of this + work in contradistinction not only to the soul, but also to man's + body, designating his entire physico-intellectual activity by the + term "labor-force" (_Arbeits kraft_). + + 190 By the expression "natural forces," we designate the economically + useful changes of matter, changes of place as well as of + composition, which are made without man's cooperation; for instance, + the gigantic machinery which supplies the greater part of mankind + with water to drink, for domestic and other purposes--the evaporation + of the sea, the formation of clouds, rain, springs, rivers etc. See + _Bastiat_, Harmonies, 277. Thus the sun's rays are indirectly the + cause, not only of vegetation, but also of all wind and steam + forces. + + 191 Spite of this "freedom," it may well happen that these gifts of + nature can be utilized, in many cases, only on condition of some + expenditure. The photographer can compel the sunlight to work for + him only by means of a camera obscura, and the smithy the + atmosphere, only by means of a bellows. But neither will ever + successfully make an item, in their accounts with their customers, + of the services of the sun or air. + + 192 The most important ocean currents may be explained by two causes: + the flowing of the water from the polar seas to the equator (polar + current), and the revolution of the earth about its axis + (equinoctial current); besides which, there are the reflex currents + produced by the horizontal form of the coast-lands. Thanks to these + natural ocean highways, England is nearer to almost all the + important mercantile coasts of the world by 300 geographical miles + than the Eastern States of the American Union. The only exception is + the Atlantic coast of America north of the Equator. North Americans + to pass the line, or to double one of the two great capes, are + obliged first to traverse the ocean as far as the Azores. On the + other hand, the western coast of South America is very widely + separated from Mexico, for instance, by its ocean currents. The + colonization of America by Europe, instead of by China, is a + consequence of the direction of ocean currents, as is also the fact + that America has now the fairest prospect of influencing the + civilization of China and Japan. What an influence the warm gulf + stream has on the mild climate of north-western Europe! + + 193 While the Mississippi has no ebb or flow whatever, the influence of + the ocean is felt in the Hudson, which is 60 geographical miles + long, a distance of 29 miles from its mouth. + + 194 Thus, _A. Young_, Travels in France I, 293 ff., has defined, with + approximate accuracy, the limits within which the vine, maize and + the olive grow. And so _von Cancrin_, Dorpater Jahrbuch IV, 1, + distinguishes the ice zone, the reindeer-moss (a lichen on which the + reindeer live in winter) zone, the forest zone, the zone within the + limits of which cattle are raised; that in which the culture of rye + begins, that in which it becomes permanent; the wheat, fruit-tree, + vine, maize, olive, sugar cane and silk-worm zones. The United + States are divided into cattle-raising, wheat-raising, + cotton-raising, rice-raising and sugar-raising zones. Even in + Europe, beyond the 60th parallel of north latitude, wheat can + scarcely be cultivated; the polar limits of rye raising extend, at + most, six or seven degrees farther. Towards the north, barley + extends sometimes as far as the 70th degree. Here agriculture almost + ceases, and the inhabitants are compelled to confine themselves to + animal substances for food. On the other hand, these three cereals + are not adapted to a tropical climate, while the bread-fruit tree, + for instance, does not thrive at more than 22 degrees from the + Equator, nor the banana at more than 35. Compare _Grisebach_, Die + Vegetation der Erde nach ihrer klimatischen Anordnung. II, 1871. + + 195 Thus rye and wheat thrive in many parts of Siberia (Iakutzk) at an + annual temperature of - 7.50, while in Iceland no cereals ripen at + an annual temperature of + 4 deg.. But in the former place the summer + heat is + 16.2 deg.; the winter cold, - 39.2 deg.; in Iceland, + 12 deg. and - + 1.6 deg.. In England, the myrtle, laurel, camelia and fuchsia stand the + winter well; while the vine no where ripens. On the other hand, + Astrakan and Hungary are vine growing countries, although the former + is as cold in winter as North Cape, and although the cold is more + intense in Hungary than in the Faroe Islands, where neither the oak + nor the beech grow any longer. No good wine is produced on the + western coast of France, north of 47 deg. 20' north latitude; in + Champagne, north of 49 deg., or in the Rheingau, north of 51 deg.. In + Norway, the average heat is greater on the coast than in the heart + of the country where, however, grain ripens, while it does not on + the coast; for the mildness of the winter, no matter how great, can + make no compensation for the want of heat. On the other hand, the + cattle on the coast can remain much longer out of doors, and the sea + seldom freezes in such a way as to interfere with the fisheries. + _Blom_, Norwegen I, 39. _Boussingnault_ (Economie rurale consideree + dans ses Rapports avec la Chimie, II) has made some interesting + attempts to calculate by a mathematical process the amount of heat + necessary to vegetable, during the period of vegetation. Thus, for + instance, wheat requires about 12 deg. (Reaumur) of heat during 140 + days; that is, nearly 140 x 12 deg. = 1680 deg. Reaumur. In Venezuela, the + sugar cane requires a longer time to grow in a higher and therefore + cooler position than in a lower and warmer, and the length of time + required is in proportion to the height. + + 196 Hence it is that the isothermal lines are not parallel with the + equator or with one another. The greater number of these have two + northern and two southern summits; the former on the western coasts + of Europe and America, and the latter in eastern North America, and + in the interior of Asia. + + 197 The quantity of rain which falls every year is, at St. Petersburg + and Pesth, from 16 to 17 inches; at Berlin 19, Mannheim 21, Tuebingen + 26: in the interior of France 16-24; on the French coast 25, on the + eastern coast of England 24, on the western coast 35, in Milan 36, + Genoa 44, on the coast of most tropical lands 70-120. On the + political-economical influences of most climates, see _Gobbi_, Ueber + die Abhaengikeit der Populationskraefte von den einfachen + Grundfstoffen, 1842. + + 198 The snow limit at Mageroee in Norway is 2,200, in Iceland 2,900, in + the northern Ural 4,500, in the Alps 8,200, in the Caucasus 10,400, + and Quito 14,850 feet high. Hence it is that mountainous countries + which produce nothing in the north, make magnificent vineyards in + warmer countries. + + 199 In central Germany, even a second crop can be produced after the + corn harvest. In Arabia, the same seed produces three harvests, + because the grain which falls at the time of harvesting to the + ground, germinates immediately and suffices for new seed. + (_Niebuhr_, Beschreibung, 154.) + + 200 Thus in the northern states of the American union, wheat yields a + return of only from four to five times the amount sown; in France, + 5-6 times (_Lavoisier_): in Chili, 12 times; in northern Mexico, 17 + times; in Peru, 18 and 20 times; in southern Mexico, 25 and even 35 + times; in Germany, maize seed yields at best one hundred fold, while + in the torrid zone there is a return of from three hundred to four + hundred fold, generally. + + 201 Andalusian corn produces in the mill only one-half as much + bran-waste as Baltic wheat produces. _Bourgoing_, Tableau de + l'Espagne, II, 155. Baltic wheat contains 6-7 per cent, of azote, + and Algerian, 20-25 Per cent. (_Kabsch_, Pflanzenleben der Erde, + 1865.) + + 202 In Europe the blossoming season is retarded four days for each + degree of northern latitude. (_Schuebler_.) As we advance towards the + north, the difference becomes less noticeable, but more so as we go + towards the south. In mountainous countries a similar difference is + observable, produced by a like climatic influence. It is from about + 10 to 12 days, for a height of from 500 to 600 feet. (_Wolff_, + Naturgesetzliche Grundlagen des Ackerbaues I, p. 332 ff.) In the + cantons, in which the Swiss confederation had its origin, the + pasturage of the Alps lasts generally thirteen weeks, but in the + higher Alps it lasts only from six to seven weeks. (_Businger_, C. + Unterwalden., p. 52.) + + 203 In central Italy, winter wheat may be sown in October, November or + December; summer wheat, in February or March. (_Sismondi_, Tableau + de l'Agriculture Toscane, p. 35.) In Judaea, it was possible to + harvest figs ten months in the year. (_Joseph_, Bell. Jud., Ill, p. + 10.) On the other hand, there is Jemtland, where the peasant in many + places surrounds the northern portion of his cornfield with fagots, + and lights them in August when the north wind blows, to protect his + land from the frost; and where the expression "green years" is used + to designate those in which the harvest has to be reaped before it + is ripe. (_Forsell_, Statistik von Schweden, 24.) In the valuation + made of the lands of the kingdom of Saxony, for assessment purposes, + the cost of supporting a yoke of oxen in the lowest country is + estimated at only three-fourths of what it is in the highest + localities, because in the former, 200 work days can be calculated + upon in the year, in the latter only 159. In central Russia, the + greater part of the labor of agriculture, sowing and harvesting, has + to be finished within the space of four months. In central Germany, + they are spread over seven months. Other things being equal, seven + horses and ploughmen are needed in Russia where only four are called + for in central Germany, (_von Haxthausen_, Studien I, 174.) On the + impediments put in the way of agriculture by the climate of eastern + Prussia, see _Meitzen_, Boden und landwirthsch. Verhaeltnisse des + preussichen Staats, 1868, I, Abschn., 6. + + 204 "In both hemispheres, the zone in which the temperature decreases + most rapidly lies between the 40th and 50th degrees of north + latitude. This circumstance must have a happy influence on the + culture and industry of the nation inhabiting the neighborhood of + that zone. Here is the point where the regions of the vine touch + upon those of the olive. Nowhere in the world, do the products of + the vegetable kingdom, and the most varied wonders of agriculture, + follow with such rapidity on one another. The great variety of + products enlivens the commerce and increases the industrial activity + of agricultural nations." (_Humboldt_.) It is true, however, that + tropical countries possess, also, in their mountainous parts, the + _tierra fria_, _templada_ and _caliente_, superimposed the one on + the other. + + 205 The aggregate coal supply of Great Britain (1869) was 2,180 millions + cwt.; of Belgium (1862), 207 millions; of France (1868) 256 + millions; of Prussia (1870), 600 millions, of Austria (1870), + including brown lignite coal, 158 millions; of Russia (1868), only a + little over 9 millions. The great English coal field, in the + counties of Durham and Northumberland, embraces 732 English square + miles; that of South Wales, 1,200, with a depth of 95 feet, so that + the geographical square mile contains here 679 millions of tons, + each of twenty cwt. To obtain the same quantity of combustible + material as was furnished to Prussia, in 1865, by its coal, it would + be necessary to use up 6,331 square miles of forest, (_von Dechen_, + in _Engel's_ Zeitschrift, 1867, 258.) The supply of coal is, of + course, exhaustible while, for instance, turf-fields replace + themselves by slow degrees. Compare _Griesbach_, ueber die Bildung + des Torfs, in the Goettinger Studien, 1845, vol. I. The importance of + the coal-fields of the United States, which are twenty-two times as + large as those of Great Britain, in the distant future, cannot be + over-estimated. + + 206 I need only call attention to the earth-fire (_Erdbrand_) for the + purpose of forcing the growth of garden plants in the neighborhood + of Zwickau, which is said to have existed since 1505. + + 207 Thus, in Watt's steam engines of the larger kind, an hourly + consumption of ten pounds of coal is needed to produce a force + equivalent to that of one horse, while in the smallest machines of + only one horse power, twenty-two pounds are needed. See _Prechtl_, + Technolo. Encyklopaedie, III, 669. + + 208 It is easy to see that it is the most important substances needed in + industry which are mentioned in this section. Many political + economists have considered the principal difference between + agriculture and the industries and economies of towns to lie in the + contrast here referred to. Thus, _A. Sena_, Sulle Cause che possono + far abbondare li Regni d'oro e d'argento, dove non sono miniere, + 1613, I, 3. See the description of the difference between land and + machines in _Malthus_, Principles, III, 5; _Senior_, Outlines, 86. + But it is nothing more than a difference of gradation. Even in the + most active of businesses there is a limit which the accumulation of + means of production cannot pass without a relative diminution of the + income. This boundary is imposed by the limited nature of those + organic beings which must contribute to production either actively + or passively. Thus, for instance, a manufacturing establishment or + commercial business can be enlarged with advantage only so long as + it is still possible for one superintendent to conduct it. And so, + when cattle are furnished with very abundant and substantial food, a + pound of meat costs the producer a much higher price than when they + are more moderately supplied: sometimes in the ratio of 1.95:0.98. + _Boussingault_, Economie rurale, II. Where there is absolute + over-feeding, the producer must suffer loss. But, even inorganic + nature imposes its own limits here; as, for instance, when ships, + machines etc., on account of the insufficient strength of the + materials of which they are made, cannot be constructed beyond a + certain size. But all these limits are much narrower than those + imposed by the quality of immovability. + +_ 209 Senior_, Outlines, 26, 81 ff. See _Stewart_, Principles, II, ch. + 11; _Ortes_, E. N., I, 18, II, 18 ff. This most important principle + in Political Economy is thus illustrated by _John Stuart Mill_, + Principles, book I, ch. 12. "The limitation to production from the + properties of the soil is not like the obstacle opposed by a wall, + which stands immovable in one particular spot, and offers no + hindrance to motion short of stopping it entirely. We may rather + compare it to a highly elastic and extendible band, which is hardly + ever so violently stretched, that it could not possibly be stretched + any more, yet the pressure of which is felt long before the final + limit is reached, and felt more severely the nearer that limit is + approached." This is, if possible, more obvious in building than in + agriculture, both as to the construction of new stories and the + excavation of deeper cellars. + +_ 210 Ad. Mayer_, Das Duengerkapital und der Raubbau (Heidelberg, 1869), + sees the only conditions of production which man cannot increase at + will exclusively in the sun's rays, the employment of which also + depends on the quantity of land. Thus would he explain _Senior's_ + law. + + 211 See the tables of increase in _Cotta_, Anweisung zum Waldbau, p. + 228. _Count Buquoy_, Theorie der N. Wirthschaft, p. 54, ridicules + the absurd procedure of a great many farmers, as if by forcing the + ploughshare deeper into the soil, they could compel it to produce a + double return, and asks: if one should dig a square foot of land to + the center of the earth and manure it, who would take it off his + hands? As to the effect of manure, _Kuhlmann's_ investigations have + shown that 300 kilogrammes of guano produced in three years an + increase per _hectare_ in the yield, of 2,469 kilogrammes of hay; + while 600 kilogrammes produced an increase of only 2,870 + kilogrammes. _Schuebler_, found that where salt had been used for + manuring purposes, 40 kilogrammes produced a maximum of fertility + from which point forward every increase in the amount of salt was + attended by diminished returns, and finally led to complete + barrenness. See _Wolff_, Naturgesetzliche Grundlagen, I, 408, 412, + 502. Constantly increased irrigation would convert the land into a + swamp instead of indefinitely adding to its fertility. Nor can + abundant sowing be of any use when it reaches such a point that the + plants stand so closely together as to interfere with their proper + development. + + 212 These differences correspond with the differences in the kinds of + deterioration to which land is liable from rivers, floods, lava, + etc., soil-exhaustion, and the growing wild of the land. + + 213 From a technic point of view, it would, perhaps, be practicable, in + most instances, to obtain the phosphoric acid immediately from the + land and transfer it to other land; but the relation of the cost to + the result makes it impossible from an economical point of view. + + 214 It most certainly is always an uncommon advantage that certain kinds + of soil, rich in kali and decayed vegetable matter, yield a long + series of harvests without the addition of manure, provided, always, + that a short interval is allowed to the process of decay to replace + the exhausted plant-food. Thus in many volcanic regions. Compare on + similar districts in the Deccan: _Rilter_, Erdkunde, V, 714. + + 215 According to _Schuebler_, the absorption of water by 100 parts of + earth is, in the case of quartz-sand, 25 per cent. of its weight; + for clay, 70 per cent.; for calcareous earth, 85 per cent.; humus, + 190 per cent.; and for 100 parts of their value, respectively, 37.9, + 66.2, and 69.2 per cent. The consistency of the four kinds of earth, + in a dry state, is in the proportion of 0.100, 5, 8.7; their + adhesion in a moist state, to iron agricultural implements, is in + that of 0.17, 1.12, 0.65, 0.40. Of 100 parts of water mixed with + these kinds of earth, the evaporation in four hours, at a + temperature of 18 deg. 75' (centigrade) is 88.4, 31.3, 28 and 20.5 per + cent, respectively. The diminution of volume when the moist earth + dries, under the same degree of temperature, is, 0, 18.3, 5 and 20. + Their relative absorption of atmospheric moisture for 48 hours is as + 0, 24, 17.5 and 55; their absorption of oxygen in 30 days is + respectively 1.6, 15.3, 10.8 and 2.03 per cent.; and, lastly, their + heat-holding power is in the ratio of 95.6, 66.7, 61.8, 49. + + 216 In Austria, below the Enns, only 3.8 per cent. of the soil is + barren; in the Tyrol, 29 per cent.; in Dalmatia, 48.1 per cent. + (_Springer_). In the French Pyrenees, 43 per cent. is considered + incapable of cultivation; in the Alps, in Landes and Morbihan, 42 + per cent.; in the departments of Nord and Somme, 1.3 per cent. + (_Schnitzler_). _Franscini_ considers 36 per cent. of Switzerland + unfit for tillage. The idea "barren" is a very vague one, and hence + a comparison of different countries on this point should not be made + without great caution. + +_ 217 Wolff_, loc. cit., 353 ff. As to the manner in which soil and + climate mutually improve or injure one another, see _Schwerz_, + Prackt. Ackerbau I, 12. + + 218 In this respect, also, the fundamental difference between + agriculture and industry is very important, inasmuch as the products + of the former, equal in value to those of the latter, require a very + large supporting or bearing surface; those of industry, a very small + one. If _Nobbe's_ "water-cultivation" should ever come to assume any + great practical importance, agriculture would approach to industry + in this respect. + +_ 219 Wolkoff_ has called special attention to mere _emplacement_: + Lectures d'Economie politique rationelle (1861), pp. 90 seq., 157 + seq. _Bastiat's_ rather broad and enthusiastic assertion, that no + mere product of nature possesses value (in contradistinction to + utility), an exaggeration of his very honorable contest with the + socialists (1848!), is refuted by daily experience, as when, for + instance, discoveries are made accidentally of metallic veins, + coal-fields etc., which immediately acquire great exchange value. + +_ 220 Aristotle_ distinguishes between {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA WITH VARIA~} and {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}. (Rhet., + I, 5.) + +_ 221 Humboldt_, Essai politique, sur la N. Espagne, IV, 9, in which he + estimates the relation of the culture of the banana to that of + wheat, in respect of mere quantity, to be as 4,000 to 30,--"probably + the best gift of nature to awakening man, and the object of the most + ancient cultivation." + + 222 It was said that in Easter Island, three days' labor sufficed for a + man's maintenance through the whole year. A similar gift of nature + to tropical lands is the date tree. It is turned to so many + different uses that the Arabs of the coast of the Persian Gulf say + that it is possible to construct a ship, rig it, supply and freight + it, from date trees. Houses are built of palm wood, covered with + palm leaves, furnished with palm mats, lighted with palm chips, and + heated with palm coals. The whole architecture of these countries is + fashioned by the date tree. Date wine is the favorite intoxicating + beverage. There is a proverb current there that a good housewife can + vary the preparation of the date for her guests every day in the + month. Even the pulp is eaten. Each tree yields an average of 50-250 + lbs. of dates; and a tree may last over 200 years. An acre may + contain more than 200 trees. The labor of cultivation is very + slight, although it demands more care than the banana. Compare + _Ritter_, Erdkunde, XII, 763. An acre planted with the sago-palm + yields as much nourishment as 163 acres of wheat land. (Reise der + Frigatte Novara, II, 113.) + + 223 See _D. Hume_, Discourses No. I (On Commerce). While in hot + countries "the sun does more work for man, it diminishes human + strength itself." (_M. Wirth_.) That, however, such people, to their + surplus of the natural means of enjoyment and the consequent + laziness and absence of care, add the bright side of a joyous + disposition, is well shown by _Goethe_, Werke (16 mo., 1840), XXIII, + 246. + + 224 Noticed even by _Thucyd._, I, 2. See also _Euripides'_ comparison of + Sparta and Messina, in _Strabo_, VIII, 366. + + 225 We find, in a great many countries, that their northern portions are + endowed more sparingly by nature with means of enjoyment + (_Genussmitteln_) than southern portions, but more abundantly with + means of acquisition. (_Erwerbsmitteln_.) Hence, the former are + latest to develop; but once developed, they assume a much higher + place in civilization than the latter. This is true of Italy, Spain, + Portugal, France, the Netherlands, and the United States, and of + North America in general, as compared with South America. Something + similar may be seen in the contrast between Austria and Prussia. The + latter is colder and less fertile, but far superior to the former in + extent of coast, in rivers, and fossilized combustible matter. + + 226 The rule is not without its exceptions. Thus, for instance, Borneo + and New Guinea are physically very like each other, but zooelogically + two different worlds; the former belonging to India and the latter + to Australia. + + 227 Even language, which is the most general and most accurate + expression of the intellectual genius of a people, presents a + strikingly analogous contrast in mountainous and coast countries. + Thus, compare the Ionic, Latin, Low German, Danish and Portuguese, + with the Doric, Oscan, High German, Swedish and Spanish. + + 228 See _Strabo_, II, 126. seq. + + 229 The most striking instance, illustrative of the manner in which the + nature of a country influences the character of a people is afforded + by the difference in the development of the Aryans in India and + Persia, especially when their sojourn in the territory of the Indus + before that near the Ganges is looked upon as an intermediate stage. + + 230 French writers, especially, have exaggerated the influence of nature + over man. Thus, _Bodin_. de Repub. (1584), V, I; _Montesquieu_, + Esprit des Lois, XVII, 6. XVIII, 1, 18. _Cabanis_, Rapport du + Physique et du Moral de l'Homme (1805), IX, Memoire, Influence des + Climats. _Comte_, also, Traite de Legislation (1827), is of opinion + that "the degree of civilization which a people may attain does not + depend on the degree of development of which they are capable by + nature, but on that which their geographical situation permits them + to attain." See, also, _Herodot_., III, 106; _Hippocr_., De AEre + etc., 71; _Euripid_., Medea, 820 ff.; _Plutarch_, De Exilio, 13. The + proper mean has been found by _E.M. Arndt_, in his Anleitung zu + historischen Characterschilderungen (1810), and by _Ritter_, and his + school. See, also, _K.S. Zachariae_, Idee einer + volkswirthschaftlichen Geographic als Grundlage der praktischen N. + OEkonomie fur jedes einzelne Volk: Vierzig Buecher v. Staate, II, 79. + See, also, _Turgot_, Geographie politique, 1750, OEuvres (ed. Daire, + II, 611 ff.); _Lueder_, Nationalindustrie und Staatswirthschaft, + III, 1800 ff. + +_ 231 Malte Brun_, Precis. de la Geographie universelle, VI. pr. + +_ 232 Strabo_, IV, 178. On the climate of ancient Germany, see _Tacit_, + Germ, 2. + +_ 233 Fraser_, Travels in Koordistan and Mesopotamia, II, 5. See, also, + the description of ancient Susiana in _Strabo_ XV, 731, with that of + the new one by _M'Kinneir_, Geogr. Memoir of Persia, 92. + + 234 Thus, _Galenus_, De Usu Partium Corporis humani, L. I. The animal + nearest to man mentally, the elephant, is also possessed of a member + more like the human hand than any other animal. Its trunk was called + _manus_ by the Romans. Hence the Indians call the elephant, the + animal gifted with a hand. _Buffon's_ view is exaggerated by + Helvetius in the interests of materialism. _Aristotle_, (De partt. + anim. IV, 10), opposes the saying of Anaxagoras: {~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER ALPHA WITH VARIA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON WITH VARIA~} {~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER NU~} + {~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER OMEGA WITH OXIA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA WITH PSILI AND PERISPOMENI~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMEGA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER ZETA~}{~GREEK SMALL LETTER OMEGA WITH OXIA~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER ALPHA WITH PSILI AND OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMEGA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}. Compare _Bell_, On the human + Hand, 1836. + + 235 As to the imperfection of the ordinary division into agricultural, + industrial and commercial labor, see _John Stuart Mill_, I, ch. 2, + 9. The division of all labor into mental and physical, is not more + satisfactory; for even the basest labor is not wholly physical. See + _Buckle_, History of Civilization, vol. II. + +_ 236 Dioscorides_ and _Galen_ were acquainted with, at most, 600 plants; + _Linnaeus_, with 8,000. About 1812, about 30,000 had been described; + in 1837, about 60,000; in 1849, about 100,000. _Buckle_, History of + Civilization etc., II, p. 359. + +_ 237 Industrie extractives_, according to _Dunoyer_. When nature's + spontaneous gifts are exhausted, this _occupation_ readily becomes + _production_. + +_ 238 Industrie voituriere_, according to _Dunoyer_; _industria + traslocatrice_ in opposition to _trasformatrice_, according to + _Scialoja_. _Ortes_ distinguishes only four classes: _agricoltori_, + _artefici_, _dispensatori_ and _administratori_, or _raccoglitori_, + _manifattori_, and _difensori di bene_ (E. N. I, 2; III, 14). _A. + Walker_, Science of Wealth (1867), p. 34, knows only three classes: + transmutation, transformation, transportation. + + 239 This is not to be understood in the sense, that there ever was a + period in which these sciences were unknown. We need only mention + the position occupied by the priest and knight in the middle ages. + But, looked upon as economic labor, intended only for purposes of + free commerce, they have become very important only within a + relatively recent period of time. Thus, for instance, there was in + Lower Austria, in 1866, one lawyer or notary to every 6,569 + inhabitants; in Bohemia, to every 14,860; in Galicia, to every + 22,361; in the whole of Cis-Leithanian Austria, 12,259. In 1865, + there was in Prussia, one to every 11,149; in Bavaria, to every + 7,350; in Hanover, to every 4,946; in 1862, in Baden, one to every + 4,992; in 1867, in Saxony, one to every 3,048. _Hildebrand's_ + Tagebuch, 1868, I, 234. There was in Prussia, in 1871, one doctor to + every 3,230 inhabitants; in Berlin, to every 1,100; in Heldesheim, + to 1,803; in Cologne, to 2,120, in Marienwerder, to 7,240; in + Gumbinnen, to 10,047. _Engel_, Preuss. Statis. Zeitschrift, 1872, + 376. The verb "to plow" is, according to comparative philologists, + of more recent origin than "to weave." (_Lassen_, Indische Alterth. + I, 814 ff.) And yet agriculture, in the sense above indicated, + undoubtedly precedes industry. + + 240 Observed by _Geiler v. Kaisersberg_. Compare _Schmoller_ in the + Tuebinger Zeitschr., 1860, 483. Hour wages occupy a middle place + between day wages and piece wages. + + 241 Thus the introduction of piece wages into lower Silesia has + increased the daily earnings of workmen by one-third, one-half, and + even more. _Engel's_ Stastist. Zeitschr. (1868), p. 327. The + investigations of the German agricultural congress on the condition + of agricultural laborers in the German empire (report of _v. d. + Goltz_, 1875) show that in all Germany on an average, the daily + earnings of a contract workman (_Accordloehner_) is to the daily + summer wages of a day laborer as 15:10 (1420). On the other hand, + _Brassey_, in the construction of a railway, found that the same + workmen engaged in grading, digging, etc., cost 18 pence per yard + when paid by the day, and 7 pence when paid by the piece. (Work and + Wages, 266.) Swiss experience is, that production became 20 per + cent. cheaper under the piece wages system. (_Boehmert_, Beitr., + 109.) + + 242 According to _v. d. Goltz's_ Enquete, the earnings of workmen by the + piece, compared with the wages paid workmen by the day in summer, is + especially high in middle Franconia (16.5:10); in the Leipzig circle + of the German empire (16.6), in the Braunschweig plain (16.8), + within the jurisdiction of Hildesheim (18.1), of the Bavarian + Palatinate (18.6), in Rhenish Hesse (23.2), especially low in + Stettin (13.2:10), in Stralsund (12.4), in Schleswig Holstein (12), + in Osnabrueck, (11.7.) + + 243 According to _v. Flotow_, Anleitung zur Fertigung der + Ertragsanschlage, I, 80, four days of serf labor are equivalent to + only three of a free day laborer. According to _v. Jacob_, Ueber die + Arbeit Leibeigener und freier Bauern (1815), 21, two day laborers + are equal to three serfs, and one farm horse is equal to two + employed by serfs. It is as impossible to obtain accurate general + estimates here, as in the case of slave labor. As a rule, hope is + not only a more humane but a sharper spur to action. But if force is + employed at all, there is no doubt that the greater it is, the more + effectual it is. Wherever the right of corporal punishment has been + taken from the masters, the technic value of serfdom has uniformly + decreased. In the English West Indies, formerly, philanthropic + masters who treated their negroes with unwonted gentleness, obtained + from them, as a rule, very poor economic results. While each of the + slaves expressed the greatest indignation at the idleness of the + others when they had "so good a master," they were all equally and + excessively lazy. The weekly production of a plantation sank rapidly + under this system from thirty-three hogsheads to twenty-three, and + finally to thirteen. _Math. Levis_, Journal of a West India + Proprietor, 1834; Edinburg Review, XLV, 410. For the same reason, + the negroes in the Spanish colonies, who were treated much more + gently than those owned by other European nationalities produced + much worse work. See, however, _Columella_, De Re rust., I, 8. + + 244 According to _Howlett_, The Insufficiency of the Causes to which the + Increase of our Poor Rate have been ascribed (1788), piece wages had + become usual "a few years ago." Very recently the trades unions have + again restricted the system of piece wages (§ 176). + + 245 This system is inapplicable in the case of domestic servants + (_Gesinde_) who are a part of the household, and who afford to their + masters, besides their services, the advantage of having a person at + their disposal always about them, and whose wages are therefore in + great part their board and lodging. Still less can it apply to the + case of the family physician, whose services consist not simply in + writing prescriptions, but who is also the professional family + friend. The same may be said of the state official, clergyman etc., + from whom it is demanded that he should sacrifice his entire life to + the service of the public. Against adopting piece wages in the case + of state officials, it may be further urged that no case at law, no + act of public life is precisely similar to any other. It cannot be + applied to that of soldiers, because they are called upon for action + only after a long term of peace, during all of which they must keep + themselves in readiness for war. (_Schaeffle_, N. OEk., II, 388.) It + has also been the practice of courts, until recently, on account of + their dignity, to pay their mechanics not by the piece, wherever + that was practicable, but by a fixed salary. An able professor in a + university is of use to it not only by his lectures, but by his + reputation and example etc.; hence, here, a combination of piece + wages and of a regular salary is preferred. As to services, the + permanency of which constitutes their essential character, + remuneration is also wont to be permanent or hereditary, as in the + case of very many public officers, while civilization is as yet + unadvanced. Later, in proportion as the progress of civilization + makes itself felt, this hereditariness is wont to be confined to the + sovereign. For an opposite view, see _Boxhorn_, Institutt. politt. + (1663), 41. + + 246 Thus, the Chinese, who, by a ridiculous exaggeration bordering on + caricature of many of our recent tendencies, may afford us a warning + reflection of ourselves in our present state of civilization, rarely + labor efficiently when not watched. Only by means of piece wages or + the share-system can they be induced to do good work. _R. M. + Micking_; Recollections of Manilla and the Phillippine Islands, + 1851. + + 247 Day laborers, for instance, must be watched over during the harvest, + to prevent their idling away their time, and piece-workers to + prevent their continuing to work in spite of wet weather, binding + sheaves, for instance, which causes the sheaves to rot. In England, + it is considered almost an impossibility to induce laborers to cut + wheat close enough to the soil. (_Sinclair_, Code of Agriculture, + 102.) The haste of piece-workers, in the harvest of the rape, + occasions great loss, by the fall of the seed. In Russia the + removing of the hide from animals is paid for by the piece, and the + laborers injure a very large number of skins in their haste. + _Steinhaus_, Russlands industrielle und commercielle Verhaeltnisse, + 425. Piece-wages are to be entirely discountenanced in the reeling + of silk. See _Bernouilli_, Technologie, II, 215. A yearly salary is + to be recommended in the tending of cattle, because here a certain + connection (_Anschluss_) with individuals is desirable. In building + trades, contractors in England prefer a regular salary; but they + employ model workmen, the so-called "bell horses," to whom they pay + a large salary, and who keep the others on the strain by their + example, and who on that account are very much hated by their + colleagues. + +_ 248 Adam Smith_, W. of Nations, I, ch. 8. _Howlett_, also, l. c., + thinks that piece-wages increase the earnings of workmen, but at the + expense of their capacity for constant labor. _Count Goertz_, in his + Reise, 328, relates with what fatal effect piece-work in Demarara + tells on white laborers and their horses. After the February + Revolution, Parisian workmen demanded the abolition of piece-wages, + and obtained it in several manufactories. Revue des deux Mondes, + March 15, 1848. + + 249 In several Swiss factories, understrappers receive a salary, while + _monteurs_ work by groupe-contract. (_Boehmert_, Arbeiterveraeltnisse + und Fabrikeinrichtungen der Schw., II, 70.) Sub-contracting, where + the contract is generally made with only one person, for the most + part of more than average capacity, and this latter contracts with + other workmen on his own account entirely, is considered by + philanthropic employers of labor as one of the worst kinds of + remuneration. The more democratic system of gang-contract is much + better, although even here, it is very easy for the weaker members + of a good gang to overwork themselves. (Edinburg Review, October, + 1873, 365.) + + 250 Especially important in chemical factories. The expense of greasing + on the Rhenish railways fell, through premiums offered as rewards + for saving, from 27,000 thalers to 5,000, in spite of an increase in + the amount of traffic. (_v. Mangoldt_, Volkswirthschaftslehre, 349.) + This was, besides, the most effectual way of controlling the theft + of material. + + 251 In the cachelot fishery, the captain receives one-sixteenth, the + master, one twenty-fifth, the second master, one thirty-fifth, the + boatswain, one-sixtieth, each sailor, one eighty-fifth of the + profit. (_Humboldt_, N. Espagne, IV, 10.) This system is very common + in North America. See _Carey_ in _J. S. Mill's_ Principles, V, ch. + 9, 7. In heathen Iceland, mariners were always paid a certain quota + of the profits. _Leo_, in _Raumer's_ historischem Taschenbuch, 1835, + 524. The same was often the case in China. _McCulloch_, Comm. + Diction. v. Canton. In England, its employment was rendered very + difficult by the laws of partnership, which made each individual, + except in great chartered societies, responsible for all kinds of + debts contracted by the rest of the firm. _J. S. Mill_, B. IV, ch. + 7, 5. + + 252 The house painter Leclaire, in Paris, obtained very high results in + this respect. _Leclaire_, Repartition des Benefices du Travail, + 1842. He retained for his own services as contractor the sum of + 6,000 francs, and paid each workman the salary he had hitherto + received. What remained was, at the end of the year, equally divided + among all. _Leclaire_ assures us that he was always satisfied with + the system. The paying of a proportion of the general profits to + laborers is advisable only in case their ability of surveying the + whole is not much inferior to that of their employers. Where a + special proportion is paid, in special branches of business, it is + sufficient if their supervision extends over that particular branch. + But a sharing in the profits of business always supposes a + corresponding supervision of the business itself, and also the + keeping of accounts. + + 253 A very good remedy against indigence among the lower classes. + (_Umpfenbach_, National OEkonomie, 1867, 214.) But whether it will + ever be possible to make the remuneration of the navvy or that of a + type-setter depend on the final success of his work, _qnoere_. + +_ 254 Tournefort_, speaking of the fatalism of the Turks, says that they + always and everywhere leave the world as they found it. According to + their own proverb, no grass grows again where the Osman has set + foot. + + 255 The experiments made with the dynamometer in 1800 ff. show that the + average _force manuelle_ of an inhabitant of Van Dieman's Land is to + that of an inhabitant of New Holland, of Timor, of a French marine, + and of an English colonist in Australia, in the ratio of 50, 51, 58, + 69, 71 kilogrammes. _Peron_, Voyage de Decouverte aux Terres + australes, 2d ed., II, 417. It was found more recently in the + American army, that the average lifting-power of white soldiers was + 314 to 343 -lbs.; of white marines, 307; students, 308; negroes, + 323; mulattos, 348; and Indians, 419. _Gould_, Investigations in the + Military and Anthropolog. Statistics of American Soldiers, 1869, + 458, seq. According to English manufacturers, an English laborer + accomplishes almost as much again as a French one(?), and the latter + in turn more than an Irishman. An English contractor, who had worked + in French manufactories, expressed his opinion concerning the French + to this effect: "It cannot be called work they do; it is only + looking at it and wishing it done." _Senior_, Outlines, 149. Thus, + for instance, a good English spinner with a machine of 800 spindles + could produce 66 lbs. of yarn, No. 40, while a Frenchman could + produce only 48 lbs. (_M. Mohl_, Reise durch Frankreich, 535; + compare _Dingler_, Polyt. Journal, I, 63 seq.) That the Americans + also are inferior to the English in strength and dexterity is + attested by the American _Hewitt_. See _Brentano_, Arbeitergilden, + II, 231. A Berlin wood-sawyer accomplished as much in ten days as a + West Prussian from Labiau in twenty-seven days. _J. G. Hoffmann._ + English farmers on the Hellespont prefer to pay Greek laborers L10 + per year "besides their keep," rather than L3 to Turkish laborers. + (_Lord Carlisle_, Diary in Turkish and Greek Waters, 1854, p. 77 + seq.) In Paulo-pinang, the Malayan agricultural laborer receives + $2-1/2 per month, the Malabar, $4, the Chinese, $6; for which + compensation they work respectively 26, 28 and 30 days. _Ritter_, + Erdkunde, v, 54. + + 256 Little light can be thrown on this subject by a comparison of + different countries. Thus, in France, there are 614 persons in every + 1,000 examined fit for military service; in Bavaria, 705; in + Denmark, 523; in Austria, 498; in Prussia, 284; in Saxony, 259; in + England, where the conscription is from among the lowest classes, + 665; and in Wuerttemberg, 490. (_Wappaeus_, Allg. + Bevoelkerungsstatistik, II, 71, 140.) _Massy_, Remarks on the + Examination of Recruits, 1854. (_Memminger_, Wuert. Jahrb., 1843, + 103.) The comparison of different parts of the same state is much + more instructive. Thus, in Saxony, cities afford only 197, and the + flat country only 265 per 1,000 (Saechs. statist. Ztschr., 1856, No. + 4 ff.); and in France there are among those of illegitimate birth a + very large number unfit for military service. (Journ. des Econ., + 1850, XXV, 69.) According to the Austrian Annual of military + statistics, there were in 1870, on an average, throughout the entire + monarchy, 211 per 1,000 of those liable to enter the ranks of the + military, fit for service; in the Innsbruck command, 325; in + Lemberg, 179. + +_ 257 M. Chevalier_, Cours, I, 115. _Adam Smith_, B. I, ch. 8, noticed + the great industry of well paid workmen. Among the uneducated, labor + must almost necessarily be repulsive in proportion as it is illy + remunerated. + + 258 Thus _A. Young_ remarked that wages in Ireland are wretchedly low, + while labor is far from being cheap. In his "Evidence in Respect to + the Occupation of Land in Ireland," II, 135, he says that a Scotch + day laborer at 1s. per day is cheaper than an Irish day laborer at + 1/2s. According to _McCulloch_, "Statis. Account of the British + Empire," I, 666, industrial labor in Germany and France is dearer + than in England, because in the former countries there are, _ceteris + paribus_, twice as many laborers employed in most manufactures. See + _Senior_, Lectures on Wages, 1830, 11, and the reports of the + committees of parliament, _passim_ on French manufactures (1825). + The same has been experienced in the agricultural history of + Schleswig-Holstein. See _Hanssen_, Archiv. der Politisch. OEk. IV, + 421. _La main d'oeuvre est chere en Russie des qu'il s'agit d'une + certaine capacite et d'un certain degre d'instruction + professionelle, tandis que celle de l'ouvrier ordinaire n'est nulle + part aussi bas._ (_Tegoborsky._) + + 259 Thus even _Columella_, R. R. I, 9. _J. S. Mill_, Principles, I, ch. + 7, 5. + + 260 Thus, for instance, the Lex Visigoth., VIII, 4, 16, graduates the + fine to be paid by the murderer according to the age of his victim. + It increases up to the 20th year in the case of males, and + diminishes after the 50th. In the case of females, the maximum is + attained between the ages of 15 and 40. Similarly even _Moses_, Book + III, 27. + + 261 As to what concerns the two sexes, the _force renale_ of adult males + is twice that of females in the human species. The difference + between them in youth is not so great. The force _manuelle_ of the + two sexes at the age of 30 is as 9:5. (_Quetelet_, Sur l'Homme II, + p. 73 ff.) The numerical ratio of one sex to the other varies but + little among those nations which have attained a certain degree of + civilization. See _infra_, § 245. + + 262 It is of great importance to calculate here the number of days in + the year in which the laborer is compelled to be idle on account of + sickness. _Fenger_, (Quid faciant aetas annique tempus ad frequentiam + et diuturnitatem morborum, Hafniae 1840), finds the following result: + + Between 15 and 19 years, 7.2 days. Between 35 and 39 years, 7.8 + days. + Between 20 and 24 years, 10.3 days. Between 40 and 44 years, 8.3 + days. + Between 25 and 29 years, 9.5 days. Between 45 and 49 years, 11.6 + days. + Between 30 and 34 years, 7.6 days. Between 50 and 59 years, 14.1 + days. + + According to _Villerme_, in the Annales d'Hygiene, II, + + At 60 years, 16 days. At 67 years, 42 days. + At 65 years, 31 days. At 70 years, 75 days. + + The latter table is the result of a comparison made of the tables of + seventy Scotch mutual aid societies. Compare _Digler_, Polyt. + Journal, XXIV, 168. + +_ 263 Tacit._, Germ., 14. _Leo_, in _Raumer's_ Taschenbuch, 1835, 418. + _Maxime sua esse credebant, quae: ex hostibus cepissent._ (_Gajus_ + IV, 16.) Roman auction _sub hasta_! Similar views obtained among the + Thracians. See _Herodot._, V, 6. In Sparta, even in the time of + Agesilaus, economic labor was considered unworthy of a free man, + (_Plutarch_, Ages, 26); while the Athenians, from the time of Solon, + punished idleness, and from that of Pericles "knew no other festival + but attending to their business." _Thucyd._, I. 70. For some happy + observations on this subject, see _Riehl_, Die deutsche Arbeit, + 1861. + + 264 Compare _Erasmus_ Colloq. (ed. _Stallb._), 21 ff., 213 ff., 392 ff. + +_ 265 Temple_ learned from the Dutch of his own age that the time of + industrious men is the greatest home commodity of a country. (Works + I, 129.) "A trader's time is his bread." (_Sir M. Decker_, Essay on + the Decline etc., 1744, 24.) _Walpole_, in his Testament politique + II, 385, speaks of the inferiority of the Roman Church in this + respect. I would allude to the medieaval prohibition "to sell time" + as one of the chief grounds of the prohibition of usury. (See + _Roscher_, Gesch. der N. OEk. in Deutschland, 7.) _Economia di tempo + equivale a prolungamento di esistenza._ (_Soialeja._) + +_ 266 Douville_, Voyage au Congo I, 239. See _v. Haxthausen_, Studien, + II, 439; _W. Jacob_, Production and Consumption of the precious + Metals, II, 209. The division of the day into hours dates from the + time of the sun dials of Alexandria. It was not known in Rome until + after the year of the city 491. (_Mommsen_, Roemische Geschichte, I. + 301.) + +_ 267 Pinckard_, Notes on the West Indies, 1806, II, 107. In Spain it + looks as if no one in the streets was in a hurry. What a contrast + between the _sans souci_ gait of persons at bathing places and the + resorts of pilgrims and the precipitate haste in commercial centres! + +_ 268 Meyendorff_, Voyage a Boukhara, 246. + + 269 The history of this idea affords a remarkable example of the + confusion produced by the employment of scientific terminology in + daily life. Until within a short time every possible meaning of the + word _capital_ was to be found in the dictionary of the French + Academy, its scientific politico-economical meaning alone excepted. + During the middle ages, the Latin _capitale_ was used to signify + both loaned money and cattle. (_Ducange_, s.v.) When culture was at + its highest in Greece, _Demosthenes_ entertained very good ideas of + the nature of capital which he sometimes calls {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER PHI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ETA WITH VARIA~}, sometimes + {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~}, the meaning of which he extends also to the incorporeal + capital of a good reputation. (Adv. Mid., 574; pro Phorm, 947.) The + same may be said of the Roman in conception of _peculium_. See + _Hildebrand's_ Jahrbb., 1866, I. 338. On the beginnings of the + present idea of capital among the later schoolmen, see _Funck_, + Tuebinger Ztschr., 1869, 149. The diary of _Lucas Rems_, 1491-1541 + (ed. _Greiff_, 1861), calls commercial capital, in most instances, + the chief good (_Hauptgut_) p. 37; also _Cavedal_. The words money + and capital, interest and the price of money are now confounded in + daily life, as they were formerly by most writers. In the 17th + century, _Child_ and _Locke_ may be mentioned as instances. _Hobbes_ + had some faint notion of the productive power of capital. See + _Roscher_, Zur Geschichte der englischen Volkswirthschaftslehre, 49, + 60, 102. Thus, also, in the 18th century, _Law_, Sur l'Usage des + Monnaies, 697; Trade and money (1705) 117; _Melon_, Essai politique + sur le Commerce, 1734, ch. 22; _Galiani_, Della Moneta, IV, 1, 3; + _Blackstone_, Commentaries, 1764, II, 456; _Genovesi_, Economia + civile, II, 2, 18, 13; _Stewart_, Principles, IV, 1, ch. IV; + _Verri_, Meditazioni, XIV; _Buesch_, Geldumlauf, V. 14; _A. Young_, + Political Arithmetics (1774), 1, ch. 7. _Hume_, on the other hand, + Discourses (1752), No. 4 (on interest), shows, that the rate of + interest is dependent, not as _Locke_ supposed, on the abundance or + scarcity of money, but on the state of profit and on the relation + between the demand and supply of capital. Similarly, _J. Massie_, An + Essay on the governing Causes of the Rate of Interest (1750). + _Quesnay_, Dialogue sur le Commerce, 173 (ed. Daire), shows that he + had a very clear conception of the operation, and of the principal + component parts of capital. _Turgot_, Sur la Formation et la + Distribution des Richesses, § 14, 54-79, came very near the truth, + and yet missed it. He recognized the necessity of advances which, as + a rule, are the result of saving, in every case of production. He + also distinguishes in the product of the soil, besides the _produit + net_ and the _subsistance du laboureur_, the _profit_ of the latter. + He likewise points out a great number of differences between the + "price of money" considered in its relation to trade, and in its + relation to loans. He explains the interest on capital, as + _Schroeder_, in his Schatz-und Rentkammer, 231, and _Benjamin + Franklin_, in his Inquiry into the Nature of a Paper Currency (1729) + had done before, by the fact that the owner of capital can purchase + a piece of land with his capital, and thus draw an income without + working. Money, he said, was indeed not productive, but neither was + any other thing that could be loaned or leased, with the exception + of land and cattle. _Adam Smith_ deserves the greatest credit for + his analysis of the idea of capital, although he opposes "capital" + to what the Germans call capital-in-use, the "stock for immediate + consumption." When _Canard_, Principes d'Economie politique (1801) + and _J. B. Say_, Cours pratique, 1828, I, 285, included man's power + of labor in capital, they took a retrograde step. "Labour is + Capital, primary and fundamental." _Colton_, 275. Every grown-up + individual, says _McCulloch_, Principles, 1825, II, ch. 2, may be + looked upon as a machine which has cost several years of continued + care and a considerable sum for its construction. It is only another + side of this same perversity, when _McCulloch_ seeks to force the + results produced by animals and machines into the definition of + labor. _Schlozer_, Anfangsgruende (1805), I, 21, goes so far as to + call the soul, raw material, which receives productive power from + the labor of the teacher! For a calculation of the money value of + man in the different ages of life, see Statis. Journ. XVI, 43 ff. + See, on the other hand, _Malthus_, Definitions, ch. 7; and _Rossi_, + in the Journal des Economistes, VI, 113. Nor does the view of + _Ganilh_, Systemes d'Economie politique (1809), I, 243; of _Ad. + Mueller_, Concordia, 93 ff., 211; of _Hermann_, "Staatswirth" + Untersuchungen, No. 3; of _Dunoyer_, Liberte du Travail, L. VI; of + _Bastiat_, _Carey_ and others, who include pieces of land in + themselves under the head of capital, seem to be better founded. + _Hermann_ defines capital the durable basis of every utility + possessed of value in exchange. _Schaeffle_ reckons land as nature + offers it to us, among _free_ goods. From the moment that labor and + capital are spent upon it, it becomes immovable capital, but he + concedes that it still preserves many essential points which + distinguish it from other capital. (N. OEk. Theorie der + ausschliessenden Absatzverhaeltnisse, 1867, 65 ff., 89 ff.) These + differences appear to me to be still more important than that which + land and capital have in common; especially as the historic + development of their relations proceeds for the most part in + opposite directions. Thus, for instance, as civilization advances, + land is wont to become dearer and capital cheaper. How difficult + would it be to introduce clearness into the ideas of _intensive_ and + _extensive_ agriculture, if land were accounted capital! And it is + not only always theoretically, but also very often, in practice, + possible to separate the value of a given piece of land from the + most durable capital-improvements (_Kapitalmeliorationen_) made on + it. It is only necessary to call to mind the area of buildings. + +_ 270 Marx_ makes a very arbitrary assertion when he says that only the + capital operating in trade, and even only that operating in trade + where money is used as the instrument of exchange, can properly be + called capital; and that, therefore, the modern biography of capital + dates only from the 16th century, (Das Kapital I, 106 ff.) + + 271 See, on the other hand, _Wolkoff_, Lectures d'Economie politique + rationelle, 167. + +_ 272 Hermann_ (II ed., 238 ff.) distinguishes especially _preparatory + contrivances_ auxiliary to labor, such as stationary structures + etc., vessels, tools, machines and instruments for measuring etc. + + 273 Thus, for instance, the plow and the gun are machines, the spade and + the blow-pipe are tools. A hammer may be considered as a hard, + insensible fist; the bellows as a pair of very strong and durable + lungs. Tongs take the place of fingers, just as a spoon does of the + empty hand, and the knife the place of the teeth. A great number of + machines, on the other hand, may be compared to a complete workman. + Thus, the action of the mill which grinds grain has very little + resemblance to the blowing of the wind or the running of the water, + whereas the rising and falling of the pestle in the small mortar for + throwing grenades corresponds to the motion of the arm. (_Rau_, + Lehrbuch I, § 125.) The infinite number of functions of which our + members are capable is related to their inability to attain alone + the greater number of their ends. Hence animals which require no + tools can undertake to achieve very few things. "Man is a + tool-making animal." (_B. Franklin._) + + 274 This is seen most clearly in the history of the grinding of corn. In + the time of Moses, and even of Homer, there were only hand-mills, + and originally only mortars. Later, mills set in motion by + horse-power were employed. Shortly after Cicero's time, mills driven + by water-power came into use. _Brunck_, Analecta, II, 119, Ep. 39. + Mills built on pontoons do not date farther back than the time of + Belisarius. Wind-mills have been known since the ninth century; + Dutch wind-mills, only since the middle of the 16th century. See + _Beckman_, Beitraege zur Geschichte der Erfindungen II, I ff. + + 275 Compare _Plato_, Polit., 280. + + 276 Thus, _Ganilh_, Theorie de l'Economie politique I, 133, calls the + knowledge, talents and probity of merchants, as well as their + reputation, valuable parts of their capital in trade. See, also, + _Moeser_, Patriot. Ph. II, 26. See some happy observations on the + intellectual capital of nations, as consisting of "known and unknown + preparatory labor through their history," in _Lotze_, Mikrokosomos + II, 353 seq. + + 277 Compare _Dietzel_, System der Staatsanleihen (1856), 71 ff. And, + earlier yet, _Ad. Mueller_ had looked upon taxes not in the light of + an insurance premium, but as "the interest of the invisible and yet + absolutely necessary intellectual capital of the nation." (Elemente, + III, 75.) Of course, the State is much more than a species of + capital; just as a Gothic cathedral is something more than a piece + of masonry, but does not on that account cease to be a piece of + masonry. + +_ 278 J. B. Say_, Traite d'Economie Politique I, ch. 10. Only think of + what is known in physiology as the change or transformation of + matter (_Stoffwechsel!_). + + 279 Productive capital has been rendered into German by the word + _Erwerbstamm_, by the author of "Staatswirthschaft nach + Naturgesetzen," 1819. _Malthus_, Definitions, ch. 10, and _Rau_, + Lehrbuch, I, § 51, call productive capital alone, capital. According + to _M. Chevalier_, goods lose their quality of capital as soon as + they come into the hands of a consumer. _Schaeffle_, N. OEk., II, + aufl., 59, calls capital in use _Genussvermoegen_ (resources intended + for enjoyment) and productive capital, _Kapitalvermoegen_ + (capital-resources). On the other hand, _J. B. Say_, Traite, I, 13; + _McCulloch_, Principles, II, 2, 3, _Hermann_, Staatswirthschaft. + Untersuchungen, p. 60 ff., and _v. Mangoldt_, + Volkswirthschaftslehre, 122, divide capital into capital in use and + productive capital, according as it provides the possessor with that + which he may turn to account directly or indirectly by becoming the + owner of goods through its means. _Aristotle_ distinguishes between + {~GREEK SMALL LETTER OMICRON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ALPHA~} and {~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ETA WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA~}, the former relating to {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~}; for instance, a + shuttle; the latter to {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER XI~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~}, as, for instance, bedding and + articles of dress. (Polit., I, 2, 5.) + + 280 Thus, for instance, class A embraces parks and forests; B, theaters, + churches, manufactories, arsenals, granaries, public walks and + roads. Walks can, besides, be used for the cultivation of fruit, and + roads for pleasure trips. + + 281 Translated "capital de consommation" by Wolowski, p. 96 of his + Roscher's Principles.--_Translator's note._ + + 282 Dead, or better, dormant capital is such productive capital as, for + the time being, remains unused, and which, therefore, does not yield + even personal enjoyment. The sum total of this kind of capital is + very much diminished by the agency of savings banks. Loaned capital + which has been employed unproductively evidently constitutes no + longer a part of the wealth of a people. See _infra_, § 189. + +_ 283 Wolkoff_ is so far right, when in his Lectures, p. 142, he calls + the return of capital in use not _revenu_, but _destruction + graduelle_. _Schaeffle_ is right, too, and entirely so, when he says + that only such an increase of the property, intended for enjoyment + simply, is anti-economic, as does not make the personal capacities + of labor (_Arbeitsvermoegen_) as much more productive than they would + otherwise be. N. OEk., II, aufl., 224. + +_ 284 Humboldt_, N. Espange, II, ch. 17; _v. Schloezer_, Anfangsgruende, + II, 109. Ausland, 140, No. 313. On the extraordinary wealth of even + Russian peasant women in pearls, see _v. Haxthausen_, Studien, 87, + 309. + +_ 285 Townsend_, Journey in Spain, I, 115, 310. In the patriarchal age of + the Jews, there was a relatively very large quantity of ornamental + objects in gold and silver: _Michaelis_, De Pretiis Rerum apud + Hebraeos, in the Comm. Soc. Goetting., III, 151 ff., 160. Conservative + Sparta, in the middle age of its history, was certainly not rich, + and yet it had more gold and silver than any other Grecian state: + _Plato_, Alcib., I, 123. According to _St. John_, The Hellenes, III, + 142, the ancients had relatively much more of the precious metals in + the form of objects for ornament than the moderns. The Romans, with + their usual good sense, did not make use of silver as an article of + luxury until they had attained great wealth. See _Cato_, R. R., ch. + 23, and _Seneca_, De Vita beata, ch. 21. Then the Carthaginian + ambassadors railed at their hosts because they found the same pieces + of table silver in all the houses to which they were invited. The + younger Scipio, even, did not possess more relatively than 32 pounds + of silver ware. _Mommsen_, Roemische Geschichte, II, 383. The + relatively great importance of the stores for domestic use, + nevertheless, runs through the whole of Roman history. The title _de + penu legato_, in the Pandects (Digest, XXIII, 9), points to this, + during the reign of the emperors, and in earlier times, the + derivation of _penates_ from _penu_. See _Rodbertus_, in + _Hildebrand's_ Jahrbuch, 1870, I, 365. Immense importance of the + ring in the old north countries: _Weinhold_, Altnord. Leben, 184 ff. + The age of chivalry was very rich in silver plate, cups, basins, + etc. _Buesching_, Ritterzeit und Ritterwesen, II, 137. _Anderson_, + Origin of Commerce, a. 1386. _Lord Burleigh_, in the age of queen + Elizabeth, left after him between fourteen and fifteen thousand + pounds sterling in silver ware; that is almost as much as the rest + of his whole estate; and, it would seem, that for a man of his rank, + even this was not considered a great deal. _Collins'_ Life of B., + 44. According to _Giustiniani_, cardinal Wolsey owned articles of + silver to the value of 1,500,000 ducats, and the greater number of + the lords of the time were equally well provided with them. + + 286 The Bedouins are fond of decorating their wives and children with + all the jewels that they possess, both on holidays and other days, + so that they sometimes have four or six bracelets on each arm and + fifteen ear-rings in each ear. _Burckhardt_, Bemerkungen, 188. + _Wellsted_ (Roederer's translation), I, 224. In Asia Minor, girls + wear their whole dowry in the shape of personal ornaments. + _Belgiojoso_, Revue des deux Mondes, Feb. 1, 1855. In East India + even the most wretched towns have their silver workers. The emirs of + Scinde, with an annual income of L300,000, had a treasure worth + L20,000,000, nearly L7,000,000 of which were in jewels. _Ritter_, + Erdkunde VII, p. 185. On the upper Ganges more jewels and other + ornaments are worn than on the lower, where the wealthy prefer to + spend their capital on landed estates. _Ritter_, VI, 1143. + + 287 The first beginnings of this division are to be found in _Quesnay_ + (Analyse du Tableau economique, 1758), in which he develops the + difference between _avances primitives_ and _avances annuelles_. See + also _Adam Smith_, W. of N., II, ch. 1, who, however, reduces the + difference between them mainly to the relations of possession, and + hence includes grain and seed in fixed capital. _Hermann_, Staatsw. + Untersuch., 269 ff.; _Ricardo_, Principles, ch. 1, sec. 2; + _Schmitt-henner_, Staatswissenschaften, I, 387, divides capital into + I, _infungible_, that is, 1, fixed in the strict sense of the word; + 2, transportation-capital; II, _fungible_, 1, transformable capital; + a, material (raw material, auxiliary material etc.), b, formed + products; 2, circulating capital; a, wares; b, money. _A. Walker_, + S. of W., 57, calls circulating capital that which may be easily + transferred from one branch of production to another; fixed, that + which can be used with advantage only for the purpose for which it + was originally intended. + + 288 Old wood-work is burned; old iron utensils sold; also houses when + pulled down. _Emminghaus_, Allg. Gewerbelehre, 1868, 175. + + 289 If the Mongols, for instance, should despoil China of all its + moveable property with the exception of its buried money, its + immovable property would become productive only from the time that + that money would be used to secure other moveable articles. In any + case, the production would be proportioned only to the borrowed + seed, cattle, etc. (_Sismondi_, Richesses commerciale, 1803, I, p. + 61.) + + 290 That the Athenians left everything in the lurch to oppose Xerxes, + much more readily than under Pericles, even, the flat country of + Attica. _Buechsenschuetz_ (Besitz und Erwerb im griech. Alterthum, + 589) explains by the fact that in the interval between the two + periods, fixed capital increased largely. In rude ages under the + appellation of a community or nation was understood a number of men; + and the state, while its members remained, was accounted entire. + With polished and mercantile states, the case is sometimes reverted. + The nation is a territory cultivated and improved by its owners; + destroy the possession even while the master remains, the state is + undone. _Ferguson_, Hist. of civil Society, V, 4; _v. Mangoldt_, + Volkswirthschaftslehre, 159. Fixed capital is not so sure of being + completely used up as circulating. On this point see _Schaeffle_, N. + OEk., 53. + + 291 If the aggregate productive activity of man be designated by the + word labor (just as everything produced on a piece of land is + inaccurately called its product), then all capital may be considered + as the unconsumed result of labor. The recent socialistic theory + that considers capital as the wages which have been earned but not + paid, is a gross misconception of this truth. This is the origin + only of the capital of oppressors and deceivers, and of theirs only + in part. See _infra_, § 189. + + 292 "While we are clothed in our winter garments, the spring stuffs are + already in the shops of retail dealers; the light material of next + summer's wear is already manufacturing, and the wool for our next + winter's clothing spun." Think of the study in advance which the + physician must have gone through, whom we summon to us at a moment's + notice! _Menger_, Grundsaetze, I, § 33. seq. + + 293 Thus in dangerous callings, as for instance, among soldiers and + sailors, there is very little saving. The same may be said of times + of plague. See _J. Rae_, New Principles on the Subject of Political + Economy, 1834. + + 294 That we keep our property under lock and key, while it was customary + in Plato's time to seal it up, is in itself a great advance. See + _Becker_, Charicles, I, 202 seq. Earlier yet, artificial knots were + used. _Homer_, Odyss. VII, 443. + + 295 Compare _Hearne_, Reise, nach Prinzwalesfort, 43, 58, 119. _Barrow + von Sprengel_, 282. _Humboldt_, Relation historique, II, 245. + Ausland, 1844, No. 359; 1845, No. 84. _Stein-Wappueus_, Handbuch der + Geographie, I, 310. For proof that the clergy by preaching self + denial contributed largely to the creation of capital in the earlier + part of medieval history, see _Guorard_, Polyptiques d'Irminon + Pref., 13. + + 296 On the inevitableness of slavery, where capital is needed, and no + one cares to save, see _de Metz Noblet_, Phenomenes economiques, I, + 306. + + 297 The origination of capital by "social connexions" + (_gesellschaftliche Zusammenhaenge_) _Lassalle_ (Bastiat-Schultze, + 92, 98) exaggerates into the absurdity that no capital was ever + saved. This is in part related to his confounding land with capital + (103 seq.). On the other hand, _P. L._ (_v. Lilienfeld_), Gedanken + ueber die Staatswissenschaft der Zukunft (1873), distinguishes + between the external and internal creation of capital in human + society; the latter based on the condition of every organic being, + by virtue of which the present is generated by the past, and + generates the future. The intercellular substance of plants, the + honey-comb of bees, and the blood in the animal body, correspond to + the capital of a nation. + +_ 298 Hermann_, St. Untersuchungen, 289 ff.; _List_, System der + politischen OEkonomie, I, 325 ff. Thus, for instance, capitalization + among a race of hunters may be continued longest by the creation of + herds; that of a race of shepherds by the building of houses, and by + land-improvements; that of an agricultural people by the + establishment of trades, artificial roads, etc. As to how, in + general the accumulation of goods to any great extent, supposes + exchange, and as to how, first of all, with exchange through the + existence of a superabundance wealth may originate, see _Hermann_, + loc. cit., II, Aufl., 25 ff. + + 299 The annual increase of the capital of France during the later years + of Louis Philippe's reign, was estimated at from 200 to 300 million + of francs; during the best years of Napoleon III's reign, at 600 + million. Journal des Econ., Nov., 1861, 170. The capital of the + British empire, judging from the statistics of the income tax, + increased from 1843 to 1853, in Great Britain alone, at least + L42,000,000 yearly; from 1854 to 1860, in the whole empire, at least + L114,000,000; and in 1863 alone by L130,000,000. London Statis. + Journal, 1864, 118 ff. A war carried on on English soil would + doubtless be more destructive of capital than one waged in Russia; + but Russia would recover from one like that of 1854-55 with much + greater difficulty because of the small tendency of its people to + amass capital. In countries in which the middle classes + preponderate, the influence of the amassing of capital on foreign + politics is one that favors peace. In despotic or democratic + countries, it may as readily favor war. + + 300 The "absolute formation" of capital above described is, of course, + the only one in the general economy of mankind. In the economy of + individuals, we frequently meet with another which is only + "relative," as when the increase of one's resources is attended by + as great or even greater decrease of another's. This is the case, + for instance, where privileges or monopolies are granted. The same + phenomenon is found also in the intercourse of economies of + different nations. _Supra_, § 64. + + 301 Thus _Cicero_, De Off., II, 3, 4. Nature may indeed produce mere + value in use without the cooeperation of labor, in the narrow sense + of the word; as, for instance, a forest which protects a district + from avalanches etc. But "everything which has been transformed into + goods tends constantly to return to its natural state, and to + withdraw itself from the life of goods." _Stein_, Lehrbuch. + + 302 Compare _List_, System der Polit. OEkon. But see also the very fine + discussion of _J. S. Mill_, Principles, IV, ch. VI, 2, on the + dreariness of nature, when taken exclusive possession of by man; + "with every rood of land brought into cultivation which is capable + of growing food for human beings; every flowery waste or natural + pasture plowed up; all quadrupeds or birds which are not + domesticated for man's use, exterminated as his rivals for food; + every hedgerow or superfluous tree rooted out, and scarcely a place + left where a wild shrub or flower could grow, without being + eradicated as a weed, in the name of improved agriculture." + + 303 In Paris, in 1820, the necessary tools of a rag-gatherer cost 6-1/4 + francs. _Garnier_, Elements d'Econ.-polit., 43. + + 304 It is not to be overlooked that all labor expended for a distant end + also falls under the head of capital. See _Droz_, Economie + politique, 1829, I, 6. + + 305 For a good exposition as to how England has need of more + agricultural products, the East Indies of more capital, and the West + Indies of more labor, see _Fawcett_, Manual of P. E., 110. + + 306 It is a very significant fact, that, at present, in certain European + countries, in Germany for instance, the laborer is called a _taker_, + and the capitalist a _giver_ of work. The expressions employed by + _Canard_, _Say_ and _Hermann_, teach a similar lesson. + +_ 307 Schaeffle_, Kapitalismus und Socialismus, 124 seq. + + 308 It is evident, that, absolutely considered, the predominating factor + of an earlier period may continue to increase during the following: + and, as a rule, it does continue to increase. + + 309 I need cite only the instance of the slaves, who called out the + hours, thus performing the functions of a clock: _Martial_, VIII. + 67; _Juvenal_, X. 216; _Petron._ 26; of the turning of water wheels, + in Egypt and Babylon, by human hands. _Strabo_, XVI. 738, XVII., + 807. Among the ancients, it required one shepherd, and shepherd boys + besides, to take care of twenty sheep. (_Geopon._ XVIII, 1.) In + highly cultivated regions, the number ran up to fifty. (_Demosth._, + adv. Euerg. et Mnes., 1155.) It seldom passed eighty (_Varro_, De re + rust., II. 10, 10. 2, 20), or one hundred (_Cato_, R.R. c. 10); + while, recently, five men are sufficient to take care of eighteen + hundred sheep. See _Roscher's_ discourse on the relation of + Political Economy to classical antiquity, in the reports of the + Royal Saxon Science Association, May, 1849. Also _D. Hume_, + Discourses, No. 10. + + 310 The productive power of each of the factors of production has been + over-estimated by some schools. After _Gratian_ (c. i, C. XIII. qu. + i), had clearly recognized the necessary cooeperation of the three + elements, there was in the one-sidedness with which the Reformers + emphasized God's blessing as the only source of wealth, a great + over-estimation of the factor nature. The Mercantile System + over-estimated the factor capital, in one of its most obvious + component parts, money. In later times again: "_La terre est la + source ou la matiere d'ou l'on tire la ichesse; le travail de + l'homme est la forme qui la produit. Tous les hommes d'un etat + subsistent et s'enrichissent aux depens des proprietaires des + terres._" (_Cantillon_, Sur la Nature du Commerce, 1755, I. 33, 55.) + _La terre est l'unique source des richesses._ (_Quesnay_, Maximes + generales de Gouvernement, 1758, ch. 3.) In another place, indeed, + the same writer says: _les revenus sont le produit des terres et des + hommes (Grains_, p. 276, Daire), and _Mirabeau_ frequently laid + stress on the necessary cooeperation of labor and capital. + (Landwirthschaftsphilosophie, translation by _Wichmann,_ I, 5.) + _Turgot_, Sur la Formation et Distribution des Richesses, § 7. For + an excellent refutation of this "Physiocratic" one-sidedness, which, + if all men are endowed by nature with equal rights, leads to + socialism, see _Canard_, Principes, 6. According to _Gioja_, N. + Prospetto, I. 35, the part played by labor, in the production of + _Parmesan_ cheese, is a thousand times as great as that played by + the soil; and in the production of a Dutch tulip, a hundred thousand + times as great. The English are wont, similarly, to over-estimate + the relative power of labor. (_Ponocratie_, after _Ancillon_, Essais + philosophiques, 1817, II. 327.) "Commerce and trade first spring + from the labour of men." (_North_, Discourses upon Trade, 112.) + Thus, _Locke_ (1690), Of Civil Government, II, 5, 40 ff., is of + opinion, that, at least 9/10 of the value of the products of the + soil, useful to man, are to be ascribed to labor, and, in the case + of most, even 99/100. And so, _Berkeley_ (1735), Querist, No. 38 + seq. This view is advocated in its boldest form,--a thing unusual in + the case of the independent disciples of a great master--by + _McCulloch_, Principles, II, ch. i, that it is to labor, and to + labor alone, that man owes everything that possesses any value in + exchange. Similarly, _J. Mill_, Elements (1824), III, 2. The + consequences which socialism might draw from these premises are + self-evident. _Karl Marx's_ whole system, for instance, rests, + without any attempt at demonstration, on the assumption that the + Ricardo school is right. Much more moderate views are met with + earlier. Thus, _Hobbes_, De Cive, XIII, 14, and _Leviath_., 24 (1642 + and 1651), calls _labor et parsimonia_ necessary sources of wealth; + _proventus terrae et aquae_ useful ones; and _Petty_, On Taxes (1679), + 47, says: "Labour is the father and active principle of wealth, as + lands are the mother. Land and labour together are the sources of + all wealth; without a competency of lands there would be no + subsistence, and but a very poor one without labour." _Harris_, Upon + Money and Coins, 1757, P.I. _Adam Smith_, also, in spite of the well + known passage at the beginning of his work, very frequently lays + stress on "the annual produce of land and labour." (See the passages + collected in _Leser_, Begriff des Reichthums bei A.S., 97.) + According to _Leibniz, regionis potentia consistit in terra, rebus, + hominibus_. (ed. Dutens, IV. 2, 531.) _Ricardo's_ school is wont to + bring capital under the head of labor, as saved-up labor. This is + about as correct as to say, that all that a grown man does, his + parents had done. (_Umpfenbach_, Nat. OEk., 64.) There is only one + way in which labor, and even then the expression is not exactly + correct, can be looked upon as the only factor in production; and + that is to presuppose the forces of nature as matters of course + (_als sich von selbst verstehend_), and to call the aggregate use + made of them by the human mind, labor. Or we might say with old + _Epicharmos_, that the gods sell all goods for labor. (_Xenoph_., + Memor. II. 1.) Moreover, even in purely intellectual productions, in + poetical productions for instance, nature, labor and experience, the + culture inherited from former ages (a kind of intellectual capital) + uniformly cooeperate. But how almost completely valueless in + literature are all entirely pure (empty!) productions of the fancy! + + 311 Before the predominance of the Mercantile System, _Montchretien_ + very cleverly called all trades: _parcelles et fragments de cette + sagesse divine que Dieu nous communique par le moyen de la raisen_. + By means of the three estates; _labourers, artisans, merchands, tout + etat est nourri; par eux tout profit se fait. L'utilite regle les + rangs des arts_. (Traite, 12, 45, 66.) The teaching of _P. Gregorius + Tolosanos_ (ob. 1597) on the different classes of society and the + different callings of men, is still more in keeping with the present + doctrine of production; only, in the moralizing tone of the time, he + speaks rather of their dignity than of their influence in creating + wealth: De Rep. I, 195. See, also, the earlier views of _Franc. + Patricius_ (ob. 1494), De Rep. I, 4, 7, 8. + + 312 Compare _A. Serra_, Breve Trattato delle Cause che possono far + abbondare i Regni d'Oro d'Argento, 1613. _Th. Mun_, England's + Treasure by foreign Trade, 1664. _Ch. King_, British Merchant or + Commerce Preserved, 1721. But, particularly, _A.C. Leib_, Von + Verbesserung Land und Leuten etc. (1708), who, from the point of + view of the Mercantile System, draws a very clear distinction + between the productive and unproductive classes. See, also, _infra_, + § 116. First thoroughly refuted by _W. Petty_, Political Anatomy of + Ireland, 67, 82. Quantulumcunque concerning Money (1682). _D. + North_, Discourses upon trade (1691). See _Roscher's_ Geschichte der + englischen Volkswirthschaftslehre, 77, 88, 138. And later, + especially, _Ad. Smith_, W. of N. IV., ch. 1 ff. _Adam Smith's_ + doctrine of productive and unproductive labor is to be found + already, in this period, in _Petty_, Several Essays, 127 ff. + Political Anatomy, 185 ff; also, in the anonymous work, A Discourse + of Trade, Coyn and Paper Credit, London (1697), 44, 159. + +_ 313 Quesnay_, Dialogue sur les Travaux des Artisans, 210 ff.; 289 ed. + Daire; _Turgot_, Sur la Formation etc., § 8; _Dupont_, + Correspondence avec J.B. Say, 400, ed. Daire. _B. Franklin_, Letter + to Dr. Evans (1768), and Positions Concerning National Wealth + (1769), Works ed. Sparks, VII and II. Similarly even _Aristotle_, + Oec., I, 2, says, that commerce, wage-labor and war win from men, + with or without their will; but that only agriculture obtains booty + from nature. And so _Cicero_ says of merchants: _nihil proficiunt, + nisi admodum mentiantur_. De Off., I, 42. The same view seems to + have prevailed during the middle ages. See _Thom. Aquin._, De Rebus + publicis, II, 3, 5 seq. _Luther_ entertained a like notion (Vom + Kaufhandel und Wucher, 1524). He prefers agriculture to the trades. + See the Irmischer edition of his works, XXII, 284; XXXVI, 172; LXI, + 352. _Calvin_ considered commerce both useful and honorable; so that + _ex ipsius mercatoris diligentia atque industria_, its profit may be + greater than that of agriculture. (Opp. ed. Amstelod, 1664, IX, + 223.) _Asgill_, Several Assertions proved in order to create another + Species of Money than Gold (1691): "what we call commodities is + nothing but land severed from the soil; man deals in nothing but + earth." Concerning _Cantillon_, compare § 47, note 4. How violent an + innovation the Physiocratic theory was in its time may be inferred + from what _Zincke_ writes in the Leipzig Sammlungen, X, 551 ff. + (1753), p. 20, XIII, 861. + +_ 314 Quesnay_, l. c., 189, does not ignore that many workmen earn more + than the cost of their necessary subsistence; but he claimed that + this was a result of a natural or legal monopoly of the same. The + dearer labor was, the more productive it seemed. Per contra, see + _Dohm_ on the Physiocratic system, in the Deutsch. Museum, 1778, II, + 313 ff. + +_ 315 Gournay_ (compare _Turgot_, Eloge de G., in Guillaumin's edition, + I, 266, 271 ff.), as well as _Raynal_, Histoire des Indes, vol. X, + Livre 19, spite of the similarity of their and Quesnay's views, + acknowledged on this account, the productiveness of industry. For + some remarkable examples illustrative of how it may increase the + value in exchange of raw material, see the anonymous work, Paying + Old Debts without New Taxes, London, 1723. See also _Algarotti_ (ob. + 1794), 318, in _Custodi_, Economisti classici italiani, Parte + moderna, I. Thus a cwt. of coarse cast iron is converted, in a + Berlin manufactory, into 88,440 shirt buttons worth 6-{~VULGAR FRACTION TWO THIRDS~} silver + groschens each. Hence the value is raised from 1-2 thalers to 19,653 + thalers. The increase of the value in use by industrial labor is + self-evident. + +_ 316 Quesnay_, Dialogue sur le Commerce. + + 317 Recognized very early by _Ad. Contzen_, Politicorum, Lib. VIII, C. + 10 (1629). + + 318 This did not escape the notice of Frederick II. _Von Raumer_, + Hohenstaufen, III, 535. + +_ 319 Condillac_ acknowledges the productive power both of industry and + of commerce; and that the service rendered by the state is at least + economically indispensable. (Le Commerce et le Gouvernment, 1776, I, + 6, 7, 10.) _Beccaria_, Economia pubblica (1769 ff.), IV, 4, 24. + _Boisguillebert_ (ob. 1714), Sur la Nature des Richesses, + illustrated the utility of commerce by the picture of a number of + men bound to pillars, one hundred steps apart, one with a + superabundance of food but naked, a second with a superabundance of + fuel, a third with a superabundance of clothing etc.; all of whom + perish, because unable to exchange their respective surpluses with + one another. According to _Lotz_, Revision, I, 217, "buying dear," + apart from real fraud, means only a decrease of possible gain. + +_ 320 Verri_, Meditazioni, XXIV, instead of calling the merchant + productive, calls him a mediator between producers and consumers. It + would be just as reasonable to call the shoemaker a mediator between + the production and consumption of leather; or the cloth merchant, + who cuts the material from the piece, an assistant preparatory to + the tailor. The labor of commerce is especially like that of the + fisherman or the turf digger, because they produce only in so far as + they transfer goods from inaccessible to accessible places. See, + however, _Rau_, Lehrbuch, I, § 103. See the demonstration of the + productive power of commerce in general, as well as of what is, by + way of preference, called industry, in _Ad. Smith_, W. of N., IV, + ch. 9. A much more fundamental refutation of the Physiocratic + Principle is to be found in _Jacob_, N. OEk., 204 ff. + + 321 In 1843, about 55,000 tons of ice were shipped from Boston. Less + than 25 cents per ton was paid for the ice in the first instance. + When packed on board ship, it was worth $2.55 per ton. The ultimate + sale brought $3,575,000. Ausland, 1844, No. 278. The ancients were + acquainted with a similar production of ice, the value in exchange + of which might be almost entirely reduced to the labor of commerce. + See _Xenoph._, Memor., II, I, 30; Athen. III 97: Proverbs of + Solomon, 25, 13. + + 322 W. of N., ch. 3. See, however, _Garnier's_ French translation of Ad. + Smith, Pref. p. IX and V, note 20. Similarly, _Malthus_, Principles, + ch. 1, Lect. 21. Definitions, ch. 7, 10. + +_ 323 Bacon_ had already said of the nobility, clergy and literateurs: + _sorti reipublicae nihil addunt_ (Serm., 15, 29); in opposition to + which, _Hobbes_ justly remarks, that even human labor may, like + other things, be exchanged against goods of all sorts. (Leviathan, + 24.) In the work, Discourse of Trade, Coyn and Credit, p. 44 ff., + and p. 156, the absolute necessity of "head-work" as well as bodily + labor, is conceded; but it is insisted that physicians, clergymen + and jurists can never enrich a country, and that a relatively large + number of them would even conduce to national poverty. (See + _Roscher_, Geschichte der englischen Volkswirthschaftslehre, 138.) + _David Hume_ considers merchants as productive, but says that a + doctor or lawyer can grow rich only at the expense of some one else. + (Discourses, No. 4, On Interest.) _Ferguson_ very cleverly compares + such a valuation of national wealth to that of a miser. Hist. of + Civil Society, VI, I. + + 324 Similarly _Lauderdale_, Inquiry, 355; _Lotz_, Handbuch der + Staaetswirthschaft, I, § 39, and _Rau_, Lehrbuch I, § 195, concede + only indirect productiveness to commerce. It may be shown, in a + great many instances, that such productiveness exists side by side + with direct productiveness, on account of the thousand ways in which + all economic threads are interwoven with one another. Thus _Paley_ + remarks in his work on the Principles of Morals and Politics, that a + tobacco manufacturer even may contribute indirectly to the + cultivation of grain; an actor, to industry etc. + + 325 Thus _Sismondi_, Nouveaux Principes, II, ch. 1, and, earlier, + _Mengotti_ Colbertismo, 317. (Cust.) See, on the other hand, + _Hermann_, Staatsw. Untersuchungen, 34 ff. Even _J.B. Say_ does no + manner of justice, in this respect, to personal services. He speaks + _of produits qui ne s'attachent a rien qui s'evanouissent a mesure + qu'ils naissent, qu'il est impossible d'accumuler, qui n'ajoutent + rein a la richesse nationale_. Compare Catechisme (3d ed.) 52 ff., + 174 ff. On the other hand _Dunoyer_, Liberte du Travail, L.V., + remarks that here labor and its result are made to change places; + the former like all labor is very perishable, the latter as lasting + as in the case of other kinds of labor. In the one case the utility + is fixed in things, in the other in persons. _Ad. Mueller_, Elemente + der Staatskunst passim, calls special attention to how the kinds of + labor, called unproductive by _Adam Smith_, preserve the state, and + in that way, all individual exchangeable goods. Similarly, _Storch_, + Handbuch, I, 347; _Steinlein_, Handbuch, I, 460. _Lauderdale_ (443), + however, is correct when he says, that the continued duration of the + product of labor depends, usually, more on the caprice of consumers + than on the nature of the labor. + +_ 326 Garnier_ calls attention to the fact, that there is a great + quantity of material products, such as laces, perfumes etc., that + can scarcely be ever used in further production, and, generally + speaking, one's resources for the most part are not kept in lasting + goods, but are preserved by the change of technic forms in + production. _Hermann_, I, Aufl., 115. + + 327 When _Schoen_, Nat. OEkonomie, 33, ridicules the idea of the + productiveness of personal services, by citing the instance of + prostitution carried on as a trade, he forgets that many material + goods also may conduce to the moral damage of the purchaser of them. + It is said that there are in France 3,500 retailers and colporteurs + of immoral writings and pictures, who sell yearly nine million + numbers or pieces, at a cost of six million francs! (Moniteur, 9 + Avril, 1853.) + + 328 Compare _Schaeffle_, Theorie der ausschliessenden Absatzverhaeltnise, + 1867, 135. seq. + + 329 Many of the socialists take a retrograde step in this respect, in as + much as they consider only manual labor productive. _Fourier's_ + school particularly, declaim passionately against the + unproductiveness of commerce and of most personal services. Compare + _V. Considerant_, Destinee sociale, 1851, I, 44. + + 330 Besides the above, see _Gioja_, N. Prospetto, I, 246 ff.; + _Scialoja_, 42; _J. B. Say_, Traite, I, ch. 2; _Hufeland_, N. + Grundlegung, I, 42, 54; _Gr. Soden_, Nat. OEkonomie, I, 142 ff. + _Hermann_, St. Untersuchungen, 20 ff., distinguishes three + politico-economical points of view; that of the producer, that of + the consumer, and that of the whole nation's economy. The producer + calls his labor productive, in case he receives back his outlay of + capital with the rate of profit usual in the trade of the country. + To this point of view, therefore, every service which is paid for, + according to wish, seems productive. On the other hand, the consumer + ascribes productiveness to all those kinds of labor the achievements + of which he may use, and which he can obtain at a convenient price. + Whenever, therefore, he pays for a service voluntarily, he + acknowledges its productiveness. Lastly, from a national-economical + point of view, all labor is considered productive which increases + the quantity of goods exposed for sale in the market; and this, + personal services do. The technic productiveness, which depends on + the execution of the technic ideas floating before the mind of the + workman, must be distinguished from this economic productiveness. It + is possible that, technically labor may be very productive, and yet + cause economic loss; for instance, the fine arts and the so-called + master pieces of the trades! See _Seneca_, De Benef., II, 33. _H._ + (33) furnishes a very good refutation of the doctrine that a great + deal depends on whether the labor has been paid from capital or from + income. _Eiselen_, Volkswirthschaft (1843), 27 ff., remarks, that + the laborer, for instance, who grows corn, must besides look after + his health and the preservation of his house; this is a part of his + necessary aggregate labor. Why, then, should it be called + unproductive when such secondary labor is performed by particular + persons? Otherwise the farmer would have no time whatever for his + principal business! Edinburgh Review, 1804, IV, 343 ff.; + _Wakefield_, An Essay upon Political Economy, 1804, who is concerned + mainly with the theory of the productiveness of labor. _L. + Lauderdale_ says, that when the nation's wealth is estimated + according to its value in use, all useful labor is productive; and + that when estimated according to its value in exchange, all labor + that is paid is productive. (Inquiry, ch. 3.) _Stein_ (Lehrbuch, 68; + Tueb. Zeitschr., 1868, 230) conditions the notion of productiveness + by the presence of a superfluity of values. But, it may be asked, + does a family, which does no more than support itself, labor + unproductively? (Compare, however, § 30.) _J. S. Mill_ took a + surprisingly retrograde step in the doctrine on this point, in his + Principles, I, ch. 3. Compare his Essays on some unsettled Questions + of Political Economy, No. 3. A still more surprising exaggeration in + _de Augustinis_ Instituzzioni di Economia sociale (Napoli 1837), who + goes so far as to call a person guilty of arson a productive person + because he has produced for himself "the pleasure of destruction"! + More recently, _von Mangoldt_ distinguishes between economic labor + and the labor of culture: the latter is incorporated into the man + himself, the former one employed on the external world, in order to + transform it in a way corresponding to human wants. Viewed from the + stand-point of Political Economy, the latter only is productive. + (Volkswirthschaftslehre, 1865, 26 ff.) + + 331 We might, indeed, compare original production, that which preceded + all other, to eating; the trades, to digestion; commerce, to the + movements of the several members of the body; personal services to + inspiration, and yet all are equally necessary to the life of the + body! Thus, _Gamilh_ compares agriculture to the root of a tree of + which the service rendered by the state is the top. The growth of + the latter contributes, as well as that of the former, to the + nutrition of the whole, and is far removed from exhausting the tree. + Theorie de l' E.P., II, 46 ff. "Natural production" would, indeed, + accomplish very little without the legal protection guaranteed by + the state, or without the tools furnished by industry etc. But it + is, besides, in most instances, a distortion of the truth to speak + of productive and unproductive men or classes of men. These + expressions are proper only when applied to individual kinds of + labor. See _Murhard_, Ideen ueber Nat. OEk., 88 ff. Persons seriously + ill are temporarily unproductive, and children who die early, are + unproductive for their whole life. + + 332 Not, however, in the case in which the loser estimates the pleasure + of the play higher than the loss. + +_ 333 J. B. Say_, Traite, I. ch. 1. + +_ 334 v. Cancrin_, OEkonomie der menschlichen Gesellschaften, 1845, 10, + speaks, in this case, of privative production. Among the Socialists, + _Bazard's_ expression _l'exploitation de l'homme par l'homme_, has + found loud echo; instead of which only _l'exploitation du globe par + l'homme_ should be allowed to obtain. (Exposition de la Doctrine de + St. Simon, 24.) But _von Schroeder_ had already warned the world of + "imagined food" which led only to idleness. (F. Schatz- und + Rentkammer, 191, 363.) + + 335 Therefore, there should not be too many nor too highly salaried + offices. See _Storch_, Nationaleinkommen, 33 ff. + + 336 See _v. Mangoldt_, Volkswirthschaftslehre, 29 ff. + +_ 337 Remained_, and not _become_, poor, as is generally supposed; for + the enormous wealth of Spain, under Ferdinand and Isabella, as well + as during the early period of Charles V. is only a _fable convenue_. + Charles V. said: France has a superabundance of everything, and + Spain is in want of everything. See also the embassy report of + _Navagero_ (1526), Viaggio fatto in Spagna e in Francia (Venet., + 1563), and _Ranke_, Fuersten und Volker, I, 393 ff. + + 338 The prize was won by _Arreta de Monteseguro_. The author of the + history of Portuguese Asia, translated by _Stevens_, is of opinion + (III, ch. 6), that commerce is not a proper subject for serious + history to treat. + + 339 There is a very fine description of this spirit in _Clenard_, Epist. + I. ad Latomum (1535 ff.) Compare _Juvellanos_, in _Laborde_, + Itineraire descriptif, IV, 176. _Townsend_, Journey through Spain, + II, 207, 117. _Buckle_, History of Civilization, II, ch. I. The + census of 1788 gave the number of priests and monks, soldiers, + mariners, nobles, lawyers, tax-gatherers, authors, students and + domestics, at 1,221,000, in a total of 3,800,000 men; from which + number there was a multitude of beggars, vagrants etc. to be + deducted. _Laborde_, Itineraire, II, 32 ff. The seventeen + universities and the numberless small Latin schools, with their + gratuitous instruction, and their many scholarships, misled a + disproportionately large number to engage in study. At the beginning + of this century, there were at least 200,000 priests, nuns + (_Geistliche_), etc., in a population of from three to three and a + half millions only. (_Ebeling_, Erdbeschreibung von Portugal, 66.) + _Senior_ shows that the poverty of the Osman is caused by too many + state employees, tax-farmers and retail merchants. (Journal kept in + Turkey and Greece, 1857-58.) Thus, also, _J. Tucker_, Four Tracts, + 1774, 18, contrasts men engaged in industry with rich idlers, whose + increase, possibly by immigration, would make the people a nation of + "gentlemen and ladies, footmen, grooms, laundresses etc." + _Schmitthener_, N. OEk., 656, calls a condition such as that of + Spain, "national-economical phthisis." + +_ 340 Tucker_, Progress of the U.S., 137. The following data also will + serve for a comparison: In Belgium, in 1856, it was estimated that, + leaving persons _sans profession_ out of consideration, 45.6 per + cent. were agriculturists, 37.2 industrials, 6.7 in commerce, 2.8 in + the liberal professions, 1.5 _force publique_, 2.1 _proprietaires, + rentiers, pensionnes_, 3.7 _domesticite_. In Prussia, in 1871, of + the entire male population, 28.6 per cent. were engaged in + agriculture, forest-culture, hunting and fishing: 32.3 per cent. in + mining, industry, building, and in founderies: 8.56 in trade and + commerce; 20.3 in personal services and handiwork not belonging to + any of the groups above mentioned; 2.3 in the army and navy; 3.7 in + other callings; 2.7 were renters, pensioners, and persons who lived + by selling or renting houses, reserving lodgings for themselves + therein, and persons who gave no account of their calling. (Preuss. + statisc. Zeitschr., 1875, 32. ff.) It is, however, surprising that + _Engel's_ Amtl. Jahrbuch, III, 1867, gives only 48 per cent. as + belonging to the first category, and 25 to the second. In the + kingdom of Saxony in 1861, 25.1 per cent. of the population were + agriculturists and foresters; 56.1 were engaged in industry; 7.7 in + trade and commerce; 6.8 in art, science, the service of the state + and of private persons; while 4.1 per cent were without any + particular calling, or returned none. Bavaria, in 1852, had 67.9 per + cent. of its population engaged in agriculture; 22.7 in the trades + and in manufactures; 5.5 per cent., persons living on the interest + of their money, and by performing the higher class of personal + services; 1.9 in the army; and 2 per cent. of listed poor. In + _Hermann_, Beitraege zur Statistik des Koenigreichs Bayern. In France, + according to the official reports, there were: + + _Agriculteurs_ 61.46 per cent. in 1851, 51.49 per cent. in 1866; + _Industriels et commercants_ 25.95 per cent. in 1851, 32.78 per + cent. in 1866; + _Professions liberales_ 9.73 per cent. in 1851, 9.48 per cent. in + 1866. + + To which it must be added, that, in 1851, there were 2.86 _sans + profession ou dont les professions n'ont pu etre constatees_; and + that, in 1866, on the other hand, there were 2.87 per cent. in + _professions se rattachant a l'agriculture, industrie et commerce. + (Legoyt.)_ In England and Wales, leaving the domestic class out of + consideration (women without an independent means of employment, + school children, servant girls etc.), and also the "indefinite + class," there were, in 1861, 25.3 per cent. of the population + engaged in agricultural pursuits; 60.7 in industrial; 7.8 in + commercial; and 6.06 in professional pursuits. In Italy, omitting + housewives, children and infirm persons, there were, in 1862, 57.4 + per cent. of the population engaged in agriculture; 22.9 in + industrial pursuits; 4 in commerce; and 3.9 per cent. in the army + and in the liberal professions. (Annali univ. di Statistica, Febbr., + 1866.) On Holland, in the middle of the 17th century, see _J. de + Wit_, Memoires, 34 seq. + +_ 341 Csaplovics_, Gemaelde von Ungarn II, 1. _Torrens_, The Budget: On + commercial and colonial Policy, 106 ff. + + 342 Precisely as there are more people ruined by spirituous liquors than + by bread. Time thieving is also more frequent among servants. There + is scarcely anything in agriculture analogous to the lazzaroni who + wait all day to help a gondola to land, to unload a coach, etc. + There is more in the chase, in the fisheries, or in the cattle + raising. + + 343 Compare _Bastiat_, Harmonies economiques, ch. 17. Hence _Sismondi_ + accounts it one of the chief merits of the constitutional state, + that in it, the _population gardienne_ does not regulate its own + remuneration. (N.P., I, 144.) _Saint Simon_, indeed, says that the + French members of the _Chambre_, in his time, drew a revenue from + the state, three times as large as from their own resources, and + were, therefore, deeply interested in increasing the budget. (Vues + sur la Propriete et la Legislation, 1818.) I would call attention + also to the national over-estimation and over-crowding of learned + callings from which Germany suffered, even as far back as the time + of Louis XIV. (_v. Schroeder_, Fuerstl. Schatz-und Rentkammer, 302 + ff.); to the disproportionate number of keepers of public houses, + which is related to the system of popular assemblies, and is a + regular attendant upon Democracy (_Bronner_, Der C. Aargau, I, 451.) + Taxation-legislation may here become a good means of popular + education. + + 344 This was recognized very early by _Gregor. Tolsan_, l.c. _Ad. + Mueller_, Elemente, II, 255. _Storch_, Handbuch, II, 229 ff. + (_Schleiermacher_, Christ. Sitte, 668.) _A. Smith,_ W. of N., II, + ch. 5, ascribed greater productiveness to agricultural than to + industrial labor; in the former case, not only human labor was put + in operation, but the forces of nature were compelled to cooeperate + with them. Similarly, _Malthus_, Additions (1817) to the Essay on + the Principle of Population, B. III, ch. 8-12. Principles of P. E., + 217 ff. Both thus explain the rent of land, and so far as products, + which have only value in exchange are concerned, they are right. + Hence it is all the more surprising that _Carey_, the zealous + advocate of a protective tariff and opponent of rent, comes back in + this to Adam Smith. Principles of Social Science, 1858, II, 35, and + passim. Compare also _J. B. Say_, Traite, II, ch. 8; _Sismondi_, N. + P., II, ch. 5. For the best refutation of this view, see _Ricardo_, + Principles, ch. 2, 3. Does not all labor put the force of nature in + operation? _Ad opera nihil aliud potest homo, quam ut corpora + naturalia admoveat, reliqua natura intus transigit._ (_Bacon._) + Similarly, _Verri_, Meditazioni, III, 1. An expression escapes even + _Ricardo_ himself (ch. 7), to the effect, that capitalists are the + producing class. + + 345 Relying on very superficial statistics of England and France, + _Ganilh_ advocates a theory of the productive forces of the several + branches of economy the very reverse of _Adam Smith's_. He places + foreign trade first; then follow wholesale trade, industry and + agriculture. (Theorie, I, 240 seq.) + + 346 Ausland, 1846, No. 54. Expressions still used in Europe, such as + _Spindelmagen_ (spindle-relation), _Kunkellehen_ (apron-string-hold) + etc., for instance, suggest this most ancient and purely family + division of labor. The lower classes of the population, even in the + most civilized countries, are wont to preserve some of the peculiar + customs of very primitive times. Hence it is that among + proletarians, the division of labor between males and females is + still very small. The employments usual at different stages of life + among men, and the costumes worn by them are much more uniform than + among the higher classes. See _Riehl_, Die Familie, 1855, passim. + + 347 As _Dankwardt_ shows, the _jus civile_ of the earliest Roman time is + based on the condition of isolated labor, the later _jus gentium_, + on the division of labor. N. OEk. und Jurisprudenz, 1857, Heft. I. + +_ 348 Saxo Gramm._, Hist. Dan. V, 101. _Turner_, Hist. of the A. Saxons + B. VII, ch. 11. Nibel., 351 ff. There is a French proverb: _du temps + que la reine Berthe filait_. Queen Bertha was a mythic daughter of + Charlemagne. It may be that the character meant is the old German + spinning goddess Berchta. Concerning the daughter of Otto the Great, + see _Dithmar_, Merseb. II. _Homer_, Od. V, 31 ff.; X, 106; XXIII, + 189 ff. _Herodot._, VIII, 137. _Livy_, I. 57. + +_ 349 Eden_, State of the Poor I, 558 ff. In the interior of Peru, the + priest is also usually a shop-keeper (_Poeppig_, Reise, II, 365); in + Canada, as in many of the villages of the Alps which are not often + visited, a hotel keeper. In countries with an unadvanced + civilization, the little division of labor that exists is also very + awkwardly regulated. Thus in Russia, weak children are very + frequently put to work on farms, while powerful men are found in the + city offering all kinds of eatables and the pictures of saints for + sale. (_Storch_, Gemaelde des russischen Reichs II, 364. _v. + Haxthausen_, Studien I, 335.) + +_ 350 Babbage_, Economy of Machinery, 1833, 201. _L. Faucher_, Angleterre + II, Ch. "_la Ville des Serruriers_." The industrial statistics of + Paris, furnished by _H. Say_ in 1847 and 1848, show that in that + city alone there are 325 different branches of industry, 17 of which + are concerned with the production of food; 21 with building; 32 with + the manufacture of furniture; 21 with that of clothing; 36 with that + of thread and tissues; 7 with skins and leathers; 14 with vehicles, + saddlery, and military equipment; 33 with chemicals and pottery; 33 + with working in metal, glass etc.; 35 in that of the precious metals + and jewels; 27 with printing, engraving and paper; 15 with that of + wooden-ware and wicker-ware; 34 with _articles de Paris_. Journal + des Economistes, Janv., 1853, 107. According to the industrial + almanac of Birmingham, there are in that city manufacturers of + buttons in gold, silver, metal, mother-of-pearl etc.; manufacturers + of hammers, ink-stands, coffin-nails, dog-collars, tooth-picks, + stirrups, fish-hooks, spurs, pack-needles etc. + + 351 And so with the subdivisions. Flannel is manufactured almost + exclusively in Halifax, woolen blankets between Leeds and + Huddersfield etc. + + 352 The same division of labor was developed among the Dutch in the 17th + century, and excited then the wonder of the English. See _Sir W. + Temple,_ Observations upon the U. Provinces, 1672, ch. 3. Works, I, + 128, 143. In 1615, _Montchretien_ held up the Flemish as a model to + the French, in this respect. + + 353 On the bees, see _Virgil, Georg._ IV, 158. + + 354 The principle of the division of labor was known to the ancients: + _Xenophon_, Cyri Discipl., VIII, 2, 5. _Plato_, de Rep., II, 369, + III, 394, IV, 443; _Isocrat_., Busir., 8. _Aristot_., Polit., II, 8, + 8. Among the more modern writers, compare _Thomas Aquin_., De Reg. + pr., I, 1, II, 3. _Luther_ (Works by Walch, I, 388), in his + Commentary on Genesis, 3, 19. _Petty_, Several Essays, 1682, p. 113. + Considerations upon the East India Trade, London, 1701. _Roscher_, + Geschichte der englischen Volkswirthschaftslehre, 118. _Mandeville_, + The Fable of the Bees, enlarged edition of 1723, p. 411. _Berkeley_, + Querist, 1735, No. 415, 430, 520 ff., 586: "What is everybody's + business is nobody's." _Harris_, on Money and Coins (1757), I, 16. + _J. J. Rousseau_, Emile (1762), L. III. _Turgot_, Sur la Formation + et la Distribution des Richesses, § 3, p. 50, 62, 66. _Diderot_, + Encyclopedie de l'Art, s. v. Art. _J. Tucker_, Four Tracts (1774), + p. 25 ff. _Boccaria_, Economia pubblica, I, 1, 9. But the author to + whom we owe most on this score is undoubtedly _Adam Smith_. To him + we are indebted almost entirely for our knowledge of the natural + laws developed in § 59 seq. + + 355 According to _Adam Smith_, a nailer can make 2,300 nails (_Rau_ says + 3,000 shoemaker's tacks in the Odenwalde) per day; a smith who is + only occasionally employed in the manufacture, from 800 to 1,000; + and smiths who never made nails before, from 200 to 300. A clever + filer makes 200 strokes in a minute; a skilled comb-maker can make + in a day from 60 to 70 combs of such fineness that there are from 40 + to 48 teeth to the inch in them; eight Liege brick-makers, working + together, produce 4,800 bricks per day; children employed in a + needle manufactory, in making the eyes of needles, grow so skillful + at it that they can make a small hole in the finest hair and draw + another hair through it. _Rau_, Lehrbuch I, § 115. The old proverb, + "practice makes perfect," is followed even by thieves in their great + division of labor. See _Thiele_, Die juedischen Gauner I, 87. + _Fregier_, Des Classes Dangereuses. + + 356 Children, with their thinner fingers, can point twice as many + needles in the same time as a grown person. + + 357 The manufacture of English needles demands, on the part of workmen, + degrees of skill so different that their pay varies from 6 pence to + 20 shillings per day. If the most skillful workman were to + manufacture whole needles alone, he would partly be obliged to be + satisfied with one-fortieth of what he might otherwise receive. + _Babbage_, loc. cit. + + 358 In the case of machines and in the chemical branches of industry, + the labor increases in a much smaller ratio than the material used + in production. + + 359 In opposition to monopolies, and to practical constraint which has + its source in ignorance etc. + + 360 Hence _Torrens_ calls foreign trade the "territorial division of + labour." (Essay on the Production of Wealth (1821), 155 ff.) + + 361 See _Bastiat_, Harmonies, ch. 1, for a very beautiful exposition of + the doctrine that each man receives much more from society than he + accomplishes on his part, for it. + + 362 The working together of a great number of persons is often carried + on to the detriment of agriculture, for each then waits for all the + others to work, throws all the blame on them etc. (_Columella_, I, + 9.) As many a housekeeper must have observed, two seamstresses or + ironers accomplish, in a day, less than one, in two days. Of course, + this rule does not apply in the case of work which cannot be + performed by one man, under any circumstances, or the magnitude of + which would easily discourage him, and in which mutual aid is easily + obtained; as in the raising of heavy loads, the construction of + roads, dikes etc. + +_ 363 Ad. Smith_, B., II, Introd. _Hufeland_, Neue Grundlegung, I, 215. + In many instances, a division of labor, of course, favors the saving + of capital. If every workman needed all the tools necessary to the + work in which he participates, three-fourths of them would have to + lie idle at present. _J. Rae_, New Principles on the Subject of + Political Economy, 164. + + 364 This necessity is observable, although in a peculiar form, even + where what has been called the "despotic organization of labor" + prevails, instead of freedom. + + 365 In the highlands of Scotland, in Adam Smith's time, there were no + smiths who manufactured nails only; for the reason that no smith had + a market for more than 1,000 nails a year, that is not for so many + as might be manufactured in a single day. + + 366 It is of course very different when there is question of a foreign + market, even if it be only indirectly. Thus, for instance, there are + in the Hartz mountains, persons who are simply post-makers, + trough-makers, chess-wood-makers, block-hewers, shingle-makers etc. + + 367 Too much should not be inferred from the existence among the + Egyptians of physicians, specialists for the several members of the + body. _Herodot._, II, 84. Something analogous is to be found even + among barbarous nations; but it is accounted for entirely by the + superstition of the people. See _Klemm_, Kulturgeschichte, I, 266. + + 368 In the whole of Hesse, there were under Philip the Magnanimous, only + two apothecaries, one at Cassel and one at Marburg. _Rommel_, Gesch. + v. Hessen, IV, p. 419, note. And there were no bakers among the + Romans before the time of the war with Perseus. All the bread needed + by the family was baked by the wife or by female domestics. _Plin._, + H. N. XVIII, 28. The common oven in new towns marks the period of + transition. Even yet, in the central part of France, there are + localities where each family bakes its own bread for a whole month + in advance; and, in the Alpine departments for even a year in + advance. _M. Chevalier_, Cours II, 366. + + 369 It is obvious from the foregoing that, in decaying nations, in which + the market contracts and capital decreases, the division of labor + also must grow less. + + 370 According to _Arago_, a horse uses the same amount of force to draw + 20 cwt. along an ordinary road that he does to draw 200 over a + railroad track, or 1,200 on a canal. He could carry scarcely 2 or 3 + on his back! Moniteur, 1838, No. 116. It is, however, certain that + the introduction of our railroads has somewhat detracted from the + advantages of coasts. + + 371 Compare _Humboldt_, Essai politique sur l'Ile de Cuba, II, 205. + +_ 372 Strabo_, II, 121 ff. In Europe, there is one mile of coast to every + 31 square miles in the interior; in North America, to 56; in South + America, 91; in Asia, 100; in Africa, 142. (_Humboldt._) + + 373 If the original connection of the Caspian sea and the sea of Aral + with the Frozen Ocean were still in existence, it is probable that + an Asiatic Scandinavia would have been formed in consequence. + + 374 What is true of the sea in this respect may be claimed, also, though + in a less degree, for the streams that carry the civilizing fruits + of the coasts far into the interior. Nearly all large cities not + situated on the harbors of coasts derive their importance from + rivers; especially when they have been built on spots adapted by + nature to the transhipment of merchandise. That Venice finally + eclipsed Genoa is to be ascribed, in greatest part, to its control + of an important stream, the Po. The economic importance of Holland, + of Hamburg and Bremen will, in the long run, bear the same relation + to one another as the geographical importance of the valleys of the + Rhine, Elbe and Weser. As nothing is more disastrous to a nation + than the loss of its coast (we need only cite the efforts of the + Lybian kings and, later, of Philip of Macedon to conquer the Greek + colonies on their coasts; and in more recent times, of Russia before + Peter the Great, or of the Zollverein without the shores of the + German sea), so, also, the economic and political influence of a + stream increases as one approaches its mouth. Hence the + justification of the great interest taken by Germany and Austria in + the question of the Danubian principalities. The United States + recognized this fact when they purchased Louisiana for 80,000,000 + francs. _Bignon_, Hist. de France III, 111 seq. Readers of history + are familiar with the important part played by the three Asiatic + Mesopotamias: that between the Euphrates and the Tigris; that + between the Ganges and the Brahmapootra; that between the Hoang-Ho + and the Yang-tse-Kiang, to which finally the Punjab might be added. + This relation is recognized by popular consciousness, in the case of + the Ganges, by the belief in the sacredness of the stream. No river + has had so much influence on civilization as the Nile: its + periodical risings have made the labor of agriculture + extraordinarily easy; their extent and regularity favored the + progress of astronomy; the flooding over of the land led to geodesy; + the hydraulic labors necessitated by the rising of the waters + produced a school of architecture to which the river furnished an + excellent means of transportation for the enormous masses to be + moved. _K. Ritter_, Erdkunde, I, p. 880 seq; VI, p. 1,168 seq. In + this matter, also, America and Europe have the advantage over Asia + and Africa. While the Danube is, in places, scarcely three German + miles from the Rhine--which, however, flows in an almost opposite + direction--in Asia, the eastern streams are separated from the + western, and the northern from the southern, by a strip of land + difficult to be traveled, and about 300 German miles in extent. + Besides, the principal streams of northern Asia have their exit into + the Frozen Ocean, a fact which diminishes their importance greatly. + The source of the Missouri is only about one mile distant from the + Columbia river, although the two flow towards opposite seas. + + 375 The law governing the march of civilization from the mountain to the + plain and to coast lands was observed even by _Strabo_, XIII, 592, + and partly by _Plato_, De Leg., 677 ff. + + 376 Thus, for instance, that all the customers of a shoemaker together + form a shoe-association etc. _Dunoyer_, Liberte du Travail, L. IV, + ch. 10. + +_ 377 Storch_, Handbuch, III, 188 ff. The Dutch traveler, _Usselinx_, + speaks in a similar way of the imitativeness and many-sidedness of + the Swedes (Argonautica Gustavica, 20). Chilian servants (_peones_) + are a good combination of the cook, the muleteer, builder, courier + etc. Once they have passed over a road, they never forget it. A + knife stands them in stead of most tools, and pieces of leather in + stead of nails. _Poeppig_, Reise, I, 171 ff. + +_ 378 von Haxthausen_, Studien, I, 63, 113. In 1827, a Russian hatter got + 12 rubles for a hat, a German one 35 (_Schoen_, N. OEkonomie, 78). + + 379 See the report of a large manufacturer in _Kohl_, England und Wales, + p. 332 seq. + +_ 380 Raynal_, Histoire des Indes (1780), L. XV. And so _Rousseau_, + Discours sur l'Inegalite (1754), who also declaims against all kinds + of capital; were there no ladders, men would climb better; and throw + a stone better if they had no slings. There is certainly a + misunderstood truth in this saying. It is assuredly very salutary, + in the actual state of society, in which every one's business is + transacted for him by some one else, that a time should occasionally + come when no one can take our place, and a man can only call upon + himself. And herein lies the immense value which just war, when not + much prolonged, but which is brought to a happy termination, + sometimes has upon the life of a people. + + 381 The American savages are, on an average, weaker than the whites. In + a fist-fight the Kentuckians and Virginians showed themselves far + superior to the Indians. See _Lawrence_, Lectures, 403, _supra_, § + 40. + + 382 For a very unprejudiced estimate of the dark and bright sides of the + division _of labor_, even before Adam Smith's time, see _Ferguson_, + History of of Civil Society (1767), IV, I, V, 3 ff. Also _Garve_, + Versuche, III, 41. _Adam Smith_ was not blind to the dark side of + the division _of_ labor, which, in part, he would remove by popular + instruction at the expense of the state, and by a species of + compulsory education. W. of N., V, ch. 1, 3, art. 2. One of the + chief peculiarities of _J. Moeser's_ Political Economy is his great + opposition to all highly developed division of labor. Patr. Ph., I, + 2, 21, III, 32, 34. + +_ 383 von Ledebur_, Reise in Altai, I, 384. The working together of wife + and child, introduced recently by manufacturers, cannot be + considered as a higher grade of the division of labor, but only as a + very unfavorable change in the kind of it; inasmuch as it were + better to employ the women in their domestic avocations and to leave + children to their studies and their sports. Among the higher + classes, it should be made the part of female education, to + counterbalance, in the family, the effects of the ever increasing + division of labor among the male portion, by the development of that + which is universally human--art, sociability, house-keeping etc. + +_ 384 Schleiermacher_, Christliche Sitte, 465 ff., 676 ff., 154 ff. From + a similar feeling, although much exaggerated, the Greeks of the + classic age proper considered all callings followed for gain + dishonorable, not excepting even those of the physician and of the + teacher. _Plato_, de Rep., I, 347 ff. _Aristot._, Rhet., I, 9, 27: + {~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER EPSILON WITH PSILI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER ZETA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA~} {~GREEK SMALL LETTER BETA~}{~GREEK SMALL LETTER ALPHA WITH VARIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON WITH OXIA~}{~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER NU~}, {~GREEK SMALL LETTER EPSILON WITH PSILI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER UPSILON~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER EPSILON WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ALPHA WITH OXIA~}{~GREEK SMALL LETTER RHO~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON WITH VARIA~} {~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ETA WITH VARIA~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON WITH VARIA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER ALPHA WITH PSILI AND OXIA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} + {~GREEK SMALL LETTER ZETA~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER NU~}. + + 385 As, for instance, the superintendent of a manufactory must have a + better general training, but can get along with less of a special, + than his workmen. + +_ 386 Thucydides_ says of the contemporaries of Pericles: "The same men + devote themselves, among us, in part to domestic and political + business; in part, others who busy themselves with agriculture and + industry have no mean knowledge of the affairs of state. We call + those who take no part in the former not people loving their ease, + but useless men." (II, 40.) During the succeeding period, Athens was + destroyed mainly by the ever increasing division of labor between + citizens and soldiers. For, "to separate the arts which form the + citizen and the statesman, the arts of policy and war, is an attempt + to dismember the human character, and to destroy those very arts we + mean to improve." (_Ferguson._) We know from _Valerius Maximus_, + that the Roman soldiers from the time of Marius had, doubtless, a + better technic training than their ancestors who who defeated + Hannibal; but was it in a military or political sense that they were + thus better trained? The beautiful definition of Cato intimates + something of the same nature; the good orator was _vir bonus dicendi + peritus_. (_Quintilian_, XII, I.) And so _Garve_, Versuche, IV, 51 + ff., expects from the political elevation of citizenship, of those + possessed of the right of citizens, not only usefulness in a + particular direction but the development of the whole man, a thing + hitherto expected only of the nobility. + + 387 As one's peculiar calling does not take up all his life, we must + draw a clear distinction between the one-sidedness of labor and the + one-sidedness of life, (_von Mangoldt_, Volkswirthschaftslehre, + 227.) Only the last is to be avoided at all hazards; and we find it + in the middle ages, with its limited divisions of labor, perhaps + more frequently than where civilization has attained a higher stage. + During the middle ages, it was not unusual to make feelings which + every one should cultivate at times, if only temporarily, the + lasting calling of some. Thus one prayed his whole life long, or was + engaged in contemplation, and relieved others of the necessity of + performing these duties. The consequence was, that the latter sank + as deeply in worldliness and want of the interior spirit as the + former were plunged in idleness and hypocrisy. But, on the other + hand, when, in our day, the printer relieves the writer of a portion + of the labor which might be his, the personal development of neither + suffers. + +_ 388 L'uomo e un' tal potenza, che unita all' altra non fa un eguale + alla somma, ma al quadrato della somma._ (_Genovesi._) As to how the + action of every individual man is a species of division and union of + different kinds of labor, see _Stein_, Lehrbuch, 24. + + 389 Compare _Ad. Mueller_, Elemente der Staatskunst, III, 1809. _Fr. + List_, System der polit. OEkonomie, 222 ff., 409 ff. _Wakefield_, in + his edition of Adam Smith, distinguishes two degrees of cooeperation, + simple and complex. In the case of simple labor, the same sort of + work is performed at the same time and place by several individuals, + as, for instance, by a lot of hod-carriers in building. In the other + case, there are different kinds of work performed at different times + and places, but all intended for the one greater end. Agriculture + affords room for the first especially, and it is known also to a + great number of animal species. + + 390 Flemish weavers in England, French refugees in Protestant countries; + German miners in Spain, Scandinavia, Hungary and America. + + 391 This, so very largely developed in Egypt and India, where the + principle of caste obtains, is very little developed in the + despotisms of Asia. The great princes, in the latter countries, + build largely from vanity only. Hence their successors seldom + complete their works, and scarcely repair them. Nowhere else are + there so many half completed and yet decaying buildings. _Klemm_, + Kulturgeschichte, VIII, 86. _Riedel_, N. OEkonomie I, 259, very + correctly remarks that such kinds of cooeperation as contribute most + to the propagation of skill, both in commerce and manual labor, have + less real division of labor, and vice versa. + + 392 Compare _Leplay_, La Reforme sociale en France (1864). + + 393 Concerning association in general, see _M. Chevalier_, Cours, III, + Lecon, 24, 25. On this subject so much talked of in our day, see, + more in detail, concerning its application to agriculture, my work, + Nationaloekonomik des Ackerbaues, 4, § 39, 47 ff.; 68, 133 ff.; on + its application to industry, especially where there is question of + the relation of handiwork and manufactures to large factories; see + _Roscher_, Ansichten der Volkswirthschaft, II, Aufl., 1861, + Abhandlung, IV, V. + +_ 394 Adam Smith_ remarked that the laws of the division of labor obtain + also in intellectual works; and indeed, among all nations in a very + low grade of civilization, the germs of all art and science are + found connected with theology; and later, the germs of all poetry + and history with the epic. The expression: _non defuit homini, sed + scientiae, quod nescivit Salmasius_, is a clear proof of the + insignificance of the science of the time. Think of the increase + during the last hundred years of the branches of study in our German + universities. There are now thirty-four regular professors in the + Leipzig philosophical faculty, where then there were only nine. But + here also the principle proves true, that an excessive division of + labor, where the broader connection and the deeper foundation of all + sciences disappear from the consciousness, undermines intellectual + health and freedom. And the injury here is greater and more + irreparable than in the domain of mere physical labor. See + _Hufeland_, N. Grundlegung, I, 207 ff. If we have just become + Alexandrians, we have, however, no Aristotle to hope for. + _Jurisprudentia est divinarum atque humanarum rerum notitia, justi + atque injusti scientia_ (_Ulpian_). It is remarkable that nations + who possess no real national literature of their own, when they once + get beyond the bounds of utter barbarism, learn foreign languages + etc., most easily. + + 395 The socialistic utopia of _Ch. Fourier_ (Theorie des quatre + Mouvements, 1808. Theorie de l'Unite universelle, 1822. Le nouveau + Monde industriel et societaire, 1829) are based upon the following + fundamental ideas. A. The present civilization is that of a + topsy-turvy world, especially in so far as it ascribes a "moral" (a + word always used by him in an ironical sense) self-government to + man. In Fourier's world, on the other hand, every man is supposed, + at all times, to give free rein to every _passion_; and the play of + these gratifications constitutes the _harmonie_, in which the + poorest find more enjoyment than do kings at the present time. (See + § 207 of this work.) B. The main thing to further this is a radical + reform in the division and cooperation of labor as they exist at + present. Instead of the present villages and cities, we should have + only phalansteries, each with 2,000 inhabitants, and situated in the + center of the land cultivated by them. Instead of the present + nations and states, we should have a universal confederate republic, + hierarchically graded, with French as the universal language. + According to the demands of the _passion papillonne_, each one + should carry on the most different kinds of business side by side, + and each one of them at most two hours per day; i.e., every one + should be a dilettante, no one a master, and everything should be + done as badly as possible. _Proudhon_, Contradictions economiques, + ch. 3, objects to this, that a workman must, in some way, be held + responsible for his work. _Fourier_ himself calculates that, in his + _harmonie_ all pleasures are productive labor; and that by this + constant change, one might be satisfied with from 4-1/2 to 5-1/2 hours + of sleep, and that even children 2-1/2 years old might take part in + the work. Thus, there would be a great rivalry between apple-growers + and pear-growers, so great "that more intrigues in attack and + defense [_passion cabaliste_] would arise there than in all the + cabinets of Europe," in the settling of which the growers of quinces + would act as intermediaries. There are, in addition to all this, + wonderful aids; a fructifying crown of light rises over the north + pole; oranges bloom in Siberia; the sea becomes as delicious as + lemonade; dangerous animals die, and in their stead anti-lions and + anti-whales come into being, animals useful to man, which draw his + ships for him during calms. These ideas are by no means retracted in + _Fourier's_ later works, See Nouveau Monde (Oeuvres) IV, 447. The + propositions of _Robert Owen_, A new View of Society (1812), have + much similarity with those of Fourier. They differ only in the + absence of the French barrack-like character of the phalanxes, and + the fantastic character of the presentation of the doctrine. He + would have all the land divided into districts of 1,000 acres each; + each district to have a four-cornered town with 1,000 inhabitants, + following a system of production and consumption in common, but not + with full equality; carrying on both agriculture and other business. + A principal feature here is an entirely new system of education. The + author says that man has hitherto been the slave of an execrable + trinity: positive religion, personal property and indissoluble + wedlock. (Declaration of mental independence.) + + 396 Compare _Tacitus_, Histor., II, 44. + + 397 See _Iselin_, Geschichte der Menschheit (1764), III, 7. _Bazard_, + Exposition de la Doctrine de Saint Simon, 1831, 153. Among negro + nations deprivation of freedom is one of the most usual punishments + for crime; but the criminal has the option of substituting his wife + or child for himself. _L.A. de Oliveira Mendez_, in the Memor. + econom. of the Royal Academy of Lisbon, vol. IV, I, 1812. As to + slavery on account of crime among the Germans, see _Grimm,_ D. + Rechtsalterth., 328 seq. + + 398 Loss at play was a frequent cause of slavery among the ancient + Germans. _Tacit._, Germ., 24. For the principal causes of slavery + among the Israelites, see the books of Moses, II, 22, 3; III, 25, + 39; IV, 21, 26 seq.; among the Indians, Laws of Menu, VIII, 415. The + first serfs of Russia were prisoners of war and their children. The + laws of Jaroslaws recognize, besides, the following causes: + insolvency, contracting marriage with a slave, the illegal breach of + a contract for service, flight, unconditional contract for service. + _Karamsin_, Russ. Gesch., II, 37. + + 399 At least seed and the means of subsistence until harvest time. + + 400 Cases of voluntary slavery to escape famine. _Papencordt_, + Geschichte der Vandalen, 186; _Victor_, Chron., V, 17; Tur., VII, + 45; Lex Bajuv, VI, 3; L. Fris, XI, I. According to the Edictum + Pistense (a., 864), c., 34, one could free himself again by paying + back the purchase money and 20 per cent. in addition. It frequently + happened that people spontaneously accepted the condition of a + vassal in order to enjoy the protection of a powerful personage. See + _Stueve_, Lasten des Grundeigenthums, p. 74. In 1812, a young + Himalayan offered himself to the traveler Moorcroft as a slave in + order to obtain food during the famine. _K. Ritter_, Erdkunde, III, + p. 999. The same fact occurred, but in greater proportions under + Joseph in Egypt. _Moses_, I, 47, 18 seq. + +_ 401 Caesar_, B.G., VI, 13. + +_ 402 Solon_ was the first to prohibit this commerce in Athens. + _Kindlinger_, in his Geschichte der deutschen Hoerigkeit, p. 621, + speaks of a child promised as a slave before its birth, by its + parents, as a species of farm-rent. (See the Edictum Pistense, in + _Baluz_, II, 192.) In Chili, the poorest country people who were not + entirely white, sold their children in the towns, where they grew up + with the families of their masters, and were then kept as servants + in a state of semi-serfdom. There is, it is true, no law governing + this condition of things. (_Poeppig_, Reise, I, 201 ff.) + +_ 403 Ritter_, XIII, 727. For instance, men in South America used for the + purpose of riding. _M. Chevalier_, Cours, I, 251; _Loewenstern_, Le + Mexique, Souvenirs d'un Voyageur (1843); and _Stephens_, Travels in + Yucatan (1841), show how, even yet, in Central America, although the + Indians are legally free, yet, by their senseless way of running + into debt, a number of legal relations, amounting virtually to + _glebae adscriptio_, arise. But compare, however, _Humboldt_, + Neuspanien, IV, 263. This condition of things has been produced in + Peru, also, by the payment of one or two years' wages in advance. + (_Poeppig_, Reise, II, 225.) + + 404 Thus _Forbonnais_, Elements du Commerce (1854) I, 364, says of trade + with savages: _il fait naitre dans ces nations le gout du superflu + et des commodites, qui multiplie le, echanges et leur donne le gout + du travail._ + + 405 In very uncivilized nations, among whom serfdom is not known, we + generally find the slavery of woman and the temporary bondage of the + son-in-law in order to secure the daughter in marriage. This is + still the case among the Laplanders. _Klemm_, Kulturgeschichte III, + p. 54. Slavery was unknown among the Greeks in the very earliest + times. _Herod._, VI, 263. _F. A. Wolf_, Darstell. der + Afterthumswissenschaft, III, doubts whether any great advance in the + higher development of the mind would have been possible without + slavery. + + 406 In Russia, where free peasants and serfs lived side by side, it has + been remarked that the latter were never so rich and never so poor + as the former. (_Kohl_, Reise durch Russland II, 8, 300.) The + Livonian peasants have become poorer since their emancipation. + (_Cancrin_, OEkonomie der menschlichen Gesellschaften, 41). Many of + the serfs refused to accept emancipation. (_Buesch_, Geldumlauf, + Einleitung, § 6.) And so _Martius_, Reise in Brasilien II, 552 ff., + assures us that the negro slaves in Brazil are as a rule a very + merry set. He is also of the opinion that they are better clothed, + lodged, fed and employed than in their own country. For the + remarkable official defense of North American slavery directed by + _Calhoun_, to Lord Aberdeen, see the Allg. Zeitung, 1844, No. 145. + In this document, we find a comparison instituted between the free + negroes of the north and the slaves of the south. In the north, + there was one deaf-mute, a case of blindness and of insanity in + every 96; in the south, in every 672; a pauper, invalid and prisoner + in every 6 at the north, in every 54 at the south. In Maine, 1/12th + of the negroes were afflicted by disease; in Florida, 1/1105th(?). + The fact that the slave population of the United States increased, + between 1840 and 1860, from 2,873,698 to 4,441,830, while the free + negro population of Jamaica, between 1833 and 1843, underwent a + frightful decrease, is to the same purport. However, too much must + not be inferred from all this, as the negroes in America are very + far from being the children of the soil. + + 407 The servants in the Odyssey who cared for hogs and cattle etc. were + certainly in a better condition in many respects than the peasants + of Attica, who were free, but buried in debt until the time of + Solon. Concerning the mildness of the treatment of slaves in very + early Roman times, see _Plutarch_, Coriol., 24, and _Cato_, I, 3, 20 + ff.; _Cato_, de Re rust, 5, 56 ff.; _Macrob._, Stat. I, 10 ff. On + the state of the serfs among the Germans, see _Grimm_, Deutsche + Rechtsalterthuemer, p. 339 ff.; among the ancient Scandinavians etc., + _Dahlman_, Geschichte von Daenemark, I, 163. See _Tacit._, Germ., 25. + + 408 Compare Landnamabok, I, 6. + + 409 The opinions of the ancients for and against slavery are found in + _Arist._ Polit. I, 2. See especially the beautiful passages in + _Philemon_: _Meineke_, Comicorum jr., 364, 410. _Aristotle_ even + thinks that there are cases in which master and slave might be + brought together by a mutual want, each of the other. The former + wants hands to execute the work of his brain; the latter a guiding + brain for his hands. Where the degree of dependence corresponds + exactly to the difference of ability, _Aristotle_, leaving its + abuses out of the question, declares slavery to be just. See, also, + Eth. Nicom., VIII, 11. Similarly the Pythagorean _Bryson_ in + _Stoboeus_, Florid. LXXXV, 15. But _Aristotle_ would hold up + emancipation to all slaves as a reward they might have in prospect. + Polit VII, 9, 9; OEcon. I, 5. It is characteristic of the many + testaments of philosophers, found in _Diogenes Laertius_, that they + contain declarations giving slaves their freedom. The Essenes and + Therapeutics condemned slavery under all circumstances. _Philo._, + Opp. II, pp. 458, 482, Opp. I. See _Seneca_, De Benef. III, 20. The + _jus naturale_ of the age of the Caesars recognized the freedom and + equality of man. Digest, XII, 664., L. 17, 32. The New Testament + does not reject it absolutely, but would sanctify it as well as all + other relations in life. Compare Luke, 17, 7; Eph. 6 5 ff.; Coloss. + 3, 22; Tit. 2, 9. More especially, I Timothy, VI, 1 ff. It was not + until the ninth century that the opinion that slavery was + anti-Christian because men were all made in the image of God, arose. + _Planck_, Geschichte der kirchlichen Gesellschaftsverfassung, II, + 350. Sachsenspiegel, III, 42. A writer as recent as _Pufendorf_ + explains slavery as arising from a free contract; _faciam, ut des._ + Jus naturae (1672) VI, 3. More recently _Linguet_, Theorie des Lois + civiles (1767), V, ch. 30, and _Hugo_, Naturrecht, § 186 ff. have + endeavored to prove that slaves are in a condition preferable to + that of poor free men. And so _Moeser_ Patriot Phantasien, II,. p. + 154, seq. Those who with _Thaer_ separate the element of production, + "labor" from that of "intelligence," justify slavery on the same + principle that Aristotle did, without knowing it. Per contra, see + _F. G. Schultze_, N. OEkonomie (1856), 418. + +_ 410 Turgot_, Sur la Formation etc., § 21. The universal empire of the + Romans demonstrated this. Then it was, for instance, that during the + wars of Lucullus, a slave cost only four drachmas. (_Appian._, Bell. + Mithr., 78.) _Sardi venales_: on account of the glutting of the + market with Sardinian slaves, made through the victory of Tib. + Gracchus, 177, before Christ. Many of the lesser wars of the Romans + can be looked upon only as slave-hunts. But the great wars also were + followed by uprisings of slaves on account of the many new slaves + which they made. Thus 198 in Latium, 196 in Etruria. (_Buecher_, + Aufstaende der unfreien Arbeiter von, 143-129, v. Chr., 1874.) During + the relatively peaceful periods which preceded many of the Roman + revolutions, pirates delivered over great masses of slaves. It + frequently happened that several thousand slaves were led to Delos + and sold in a single day. (_Strabo_, XIV, 668.) As emancipation was + a measure which people could not make up their minds to adopt, these + pirates satisfied a "want" for a time, and this partly explains the + otherwise incomprehensible forbearance of the state towards them. + +_ 411 Gregor. Turon._, III, 15. + +_ 412 Grimm_, D. Rechtsalterthuemer, 323. It is a strange fact that + prisoners of war were in several remarkable instances sold as slaves + in Italy during the fifteenth century. (_Sismondi_, Hist. des + Republiques italiennes, IX, p. 312 seq.; XI, p. 138 seq.) And even + in the sixteenth century, the pope allowed those of states opposed + to him to be treated in this way. _Sismondi, supra_, XI, 251; XIII, + 485. _Raynold_, Ann. eccl. 1506, § 25 ff. + + 413 This graduation of slave, serf and workman, has been carried out + especially by _Saint Simon_, Oeuvres, 328 ff. Even _Proudhon_ admits + that the condition of the lower classes is better now than formerly. + (Contradictions economiques, ch. X, 2.) Compare _M. Chevalier_, + Cours, I. Lecons 1 and 2, where he shows that our productive power + has increased during the last four or five centuries in the + production of iron in the proportion of 1 to from 25 to 30; in the + preparation of flour since the time of Homer in the proportion of + 1:144; in the production of cotton during the last 70 years in the + proportion of 1:320. _Aristotle_ predicted, long ago, that "when the + shuttle would move of itself, and plectra of themselves strike the + lyre, we should need no more slaves." Polit., 2, 5. Every step of + true progress brings us nearer the fulfillment of the prophecy. + + 414 The North American planters employed coarse tools rather than fine + ones, mules rather than horses, because their slaves took so little + care of them. + + 415 It can never obtain as much labor from the slave, as the fear of + losing his situation and of not being able to obtain another, will + from the free workman. (_Hume._) _Marlo_, Weltoekonomie, 1848, I, 2, + 38, grants this to be true only where all the forces of nature are + appropriated by occupation, and the number of workmen is greater + than the want of workmen. + + 416 Even in Brazil, only free men are, as a rule, employed as sugar + refiners, distillers, teamsters etc. (_Koster_, Travels in Brazil, + 1816, 362.) _Storch_, Russland unter Alexander I, Heft, 23, p. 255, + cites the opinion of an eminent Russian manufacturer, that it would + first be necessary to liberate the serf factory-hands. Masters have + generally given up employing their own serfs in manufactures, + allowed them to seek work for themselves, and only required them to + pay them a species of tax. When this plan was adopted, it was found + that they worked much better, (_v. Haxthausen_, Studien I, 61, 116.) + It was a consequence of slavery that, in antiquity, the very wealthy + purchased so little: _omnia domi nascuntur_! (_Petron._, 38.) + + 417 Thus _Homer_, Od. XVII, 322, in whose time even there were day + laborers, {~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER FINAL SIGMA~} or {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~}. (Od. IV, 644; X, 85; XI, 490; XIV, 102. + _Hesiod_, Opera, 602.) And _Varro_, De Re rust. I, 17, advises that + difficult labor should be performed rather by day laborers. _Coli + rura ab ergastulis pessimum est et quidquid agitur a desperantibus._ + _Plin._, H. N. XVIII, 7. _Omne genus agri tolerabilius sub liberis + colonis, quam sub villicis._ (_Columetta_, De Re rust I, 7.) It has + been estimated, that, in the West Indies, a negro slave performed + only one-third of the work performed by an Englishman in his own + country. (_B. Edwards_, History of the British West Indies, II, + 131.) During the one afternoon, in every week, in which the negroes + were allowed to work on their own account, they accomplished as much + as on other entire days. Edinburgh R. IV, 842. Compare _Bentham_, + Traite de Legislation I, 319. _Ch. Comte_, Traite de Legislation, + 1827, Livre V.; _Cairnes_, The Slave-Power, its Character, Career + and probable Designs, 1862; _Olmsted_, Journeys and Explorations in + the Cotton Kingdom, 1861. + + 418 While the older tyrants had prohibited idleness, Draco and Solon + even under pain of degradation (see places in _Buechsenschuetz_, + Besitz und Erwerb, 260). _Socrates_ called the {~GREEK SMALL LETTER ALPHA WITH DASIA AND OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER ALPHA~} the sister of + Freedom (Aelian, V.H.X, 14), and the {~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA WITH OXIA~} the most beautiful of all + professions. + +_ 419 B. Franklin_, Observations concerning the Peopling of New Countries + etc., 1751. + + 420 Monument erected to _Bernstorff_ by his peasants, 8, 15. The + _Zamoiski_ estates yielded, 17 years after emancipation, three times + as much as they did when serfdom prevailed. _Coxe_, Travels in + Poland, I, 22. The transformation of the serfs into hereditary + farmers cost _Count Bernstorff_ 100,000 thalers; but the revenue + derived from his lands increased in consequence, in twenty-four + years, from 3,000 to 27,000 thalers. An English mower can mow a + field two and three times as great as a Russian mower in a given + time. If the former receives daily wages equivalent to seventy + pounds of wheat, and the latter to only twelve, the Englishman's + labor is still the cheaper; for he turns out 100 pounds of hay while + the latter turns out only eight. _Jacob_, 43 seq. But the hiring out + of serfs in the large cities of Russia yielded less to their masters + than in the interior. _Storch_, Handbuch, II, 286. + +_ 421 Tucker_, Progress of the United States, 1843, pp. 111 ff. We need + not call attention to the inaccuracy of these figures, nor remark + how little serviceable for our present purpose an average obtained + from the density of population in different parts of Russia, where + such densities are themselves so very different, would be. + + 422 The Spartans seemed to have counted on an adult free man for twice + as much coarse food as a bondsman. (_Thucyd._, VI, 16.) + +_ 423 Stewart_, Principles, I, 7, in accordance with historical data, + says, that the peasantry in our days work for other people, because + they have wants which can be satisfied only in this way; because + "they are slaves of their own wants." The unquestionable superiority + of free to slave labor, in point of economy, has been dwelt upon + especially by _Turgot_, Sur la Formation et la Distribution, § 28, + and by _Adam Smith_, Wealth of Nations, I, 8, III, 2. But see _J. B. + Say_, Traite, I, ch. 19, and _Storch_, Handbuch, II, 184. When + _Hume_, Discourses, No. 11, Populousness of ancient Nations, + demonstrates the greater cost of slavery from the fact that the + master of slaves must either breed or buy them, he forgets that in + the case of free workmen he is obliged to provide also for the + support of the workman's children. Only, the slaveholder has, + indeed, to advance the whole at once. + +_ 424 Humboldt_, Cuba, I, 177. _Ashworth_, Tour in the U.S. Cuba and + Canada, 1861. The slaves in Louisiana were so overworked that they + lived, on an average, scarcely seven years. Edinburg Rev., LXXXIII, + 73. Even the Stoics were not agreed, whether it was right, in case + of shipwreck, to sacrifice a cheap slave in order to save a valuable + horse. (_Cicero_, de Off. III, 23.) Whether the self-interest of + masters is an inducement to the mild treatment of their slaves + depends on the price for which fresh slaves may be obtained. This is + a strong reason why a high degree of civilization, where there are + not counteracting influences, must make slavery less endurable. The + more valuable slaves are, the worse is their condition. In the + unfertile Bahamas, the price was L21; in Demarara, L86. In the + former place they were required to do little work and were well fed + and well clothed. Hence their numbers have increased there, while in + Demarara they have decreased. (Edinburgh Rev., XLVI, 496, 180.) + + 425 Proverb: _quot servi totidem hostes._ (_Macrob._, Sat. I, 11, 13.) + +_ 426 Jefferson_, Notes on Virginia, 212. The chastity of both parties + especially suffers. The _leno_ of ancient comedy was a slave trader! + Compare L. 27, Digest, V, 3. In the English negro colonies, it was + not unusual for the guests of the planters, even in the best + families, on retiring, to ask the accompanying servant for a girl, + with as little concern as they would in England for a light. (Negro + Slavery, or a Creed of ... that state of Society as it exists in the + United States and in the Colonies of the West Indies, London, 1823, + 53.) + + 427 Even the law of Upland forbade the sale of Christians. The children + of a slave and of a free person were born free. Emancipation was + considered a Christian act, to be performed for "the salvation of + one's soul." Voluntary slavery was prohibited in 1266, and Magnus + Erichson forbade slavery generally from the year 1335. See _Geijer_, + Geschichte von Schweden, pp. 157, 185, 273. _Estrup_, in _Falcks_ N. + Staatsburg Magazin, 1837, 179, ff. + + 428 L. Alam, 137, 1. L. Fris., 17, 5. Decree of 960 concerning the + abolition of the trade in Christian slaves between Germany, Italy + and the Byzantine Empire. _Tafel und Thomas_, Urkunden der + Staats-und Handelsgeschichte von Venedig, I, 18 ff. + +_ 429 Tacit_. Germ. 25. In the Legg. Walliae 206 (Wolton) we read: "_Hero + eadem potestas in servum suum ac in jumentum._" + + 430 The council of London in 1102 forbade men to be sold like beasts. + (Concil., ed. Venet. 1730, XII, 1100, No. 27.) _Guerard_, + Polyptiques d'Irminon, Prolegg., 220, describes a pedagogical model + emancipation by the Church of its own serfs. On the whole, the + church contributed more towards the emancipation of the serfs of + others than of its own. See ch. 39, C. XII, qu. 2; c. 3,4; De Rebus + eccl. + + 431 In Flanders since the end of the twelfth century. _Warnkoenig_, + Flandrische Staats und Rechtsgeschichte (I, 244). + + 432 In what relates to Germany, compare _Sugenheim_, Geschichte der + Aufhebung der Leibeigenschaft in Europa, 1861, p. 350 ff. The + destruction of the old manorial system (_Hofwesen_) in the fifteenth + and sixteenth centuries, was often unfavorable to bondmen and + favorable to serfs. _Maurer_, Gesch. der Frohnhoefe, II, 92. In + Poland, where all were originally equal land-owners, many sank + gradually through poverty to the condition of the so-called + _kinetes_, who, although personally free, were not very far removed + from slaves. Beginning with the thirteenth century, a great number + of immunities, after the model of those accorded in Germany, were + granted, by means of which they lost, for the most part, their + direct subjection to the emperor and the empire alone. This was soon + followed as a consequence by their personal oppression. (_Roepell_, + Geschichte von Polen, I, p. 308 seq., and p. 570 seq.) In Bohemia, + the old form of serfdom had so far disappeared in the fourteenth + century, that it might be said it was known only to history. But + during the reign of the weak king, Ladislaus II, a new species of + serfdom came into vogue, the result of the preponderance of the + aristocratic element. _Palacky_, Gesch. von Boehmen, II, p. 33 seq.; + III, 31 seq. Aristocratic Denmark, before the peasant war of + 1255-1258, subjected the free peasantry who had been leaseholders + for a term of years to unlimited socage duty. Waldemar III, reduced + to the same kind of service the land-owning peasantry, which + especially from the date of Margaret's reign, developed into a + species of _glebae adscriptio_. From the sixteenth century, when the + royal power almost disappeared, these public privileges were + abandoned to the nobility to such an extent that, in 1650, there + were scarcely 5,000 free peasants. _Dahlmann_, III, p. 73 seq. + However the severity of _traeldom_ made way in the fourteenth + century for the _vornedskap_ (modified bondage), a milder species of + vassalage. See _Kolderup Rosenvinge_, Grundriss der daenischen + Rechtsgeschichte, § 94. + + 433 The French expression _mainmorte_ comes originally from the + deprivation of the right of inheritance. In Beaumanoir's time, 1283, + it was customary, after a number of serfs had lived together for a + year and a day, for their chattels movable to become the common + property of the community. (_Warnkoenig_, Franzoesische + Rechtsgeschichte, II, 157.) + + 434 In France, Louis X. made it a fiscal speculation to sell serfs their + liberty in whole districts, even against their will. His edict, + Ordonnances, I, 583, recognizes that all men are by nature free, and + that France is not without reason called the land of the Franks etc. + Even in 1298, Philip IV. had exchanged the serfdom to the crown of + several provinces for a land duty. The last ruler of Dauphiny gave + all the serfs of the crown their liberty gratis, in 1394. + (_Sugenheim_, p. 130.) When the so-called _coutumes_ were written, + there were only nine provincees in which by local law serfdom was + permitted. The defeat of the _jacquerie_ injured the cause of + emancipation in France in the same way that the suppression of the + war of the peasants did in Germany. About 1779, _mainmorte_ was + abolished in all lands of the crown, and its proof made almost + impossible in all others. (_Warnkoenig_, II, 151 seq.) Yet it is said + that there were 150,000 _serfs de corps_ in France in 1789. + (_Cassagnac_, Causes de la Revolution, III, 11.) Koloman, who died + in 1114, forbade the slave trade in Hungary, and labored to raise + all Christian slaves to _conditionarii_ (renters). But the right of + migration was abolished in 1351. King Sigismund, and still more, + Matthias Corvinus, restored it, after the suppression of the war of + the peasants, but in 1514 it was again lost until 1586. Further + progress was arrested until the Urbarium of Maria Theresa. + + 435 In Italy, Frederick II. liberated all the serfs of the crown. + (Constitutt. Regni Sicil., 164.) A model instance of emancipation at + Bologna in 1256. The serfs of the state were simply set at liberty; + the freedom of those of private persons was purchased with the money + of the state, and a small corn-tithe laid on the emancipated as a + compensation for the expense incurred in their behalf. In the + future, there was not to be a bondman on Bologna territory. The + motives which led to this measure are a strange admixture of + Christianity and Democracy. (_Muzzi_, Annali di Bologna, 1840, I, + 479.) Italy, at the end of the fourteenth century, was entirely free + from Christian serfdom. (_Muratori_, Antt. Ital., I, 798.) In the + canton of Berne, Switzerland, slavery was gradually abolished, the + process commencing about the beginning of the fifteenth century. It + continued, however, in the case of ordinary masters until 1798. + _Sugenheim_, p. 530 seq. In England, Alfred the Great's efforts + towards the gradual abolition of slavery (_Wilkins_, Leges, 29) + remained without result. The steps taken by William I, towards a + much narrower end, however, seem to have been more successful. + (Leges Will. Conq., 225, 229; _Turner_, Hist. of England, I, 135.) + From the time of the Norman conquest, prisoners of war ceased to + recruit the ranks of slavery. Under Henry III and Edward I, socage + tenants became more and more frequent; but, before long, their + duties became less onerous, and might be discharged by others hired + for the purpose, instead of by themselves. The first remarkable + vestige of a class working for wages is met with in the law of 1351, + which may be considered an effort made by the nobility to oppose the + tendencies in favor of emancipation, which were a consequence of the + development of cities. (_Eden_, State of the Poor, I, 7, 12, 30, + 41,) _Infra_, § 175. Although the peasant war under Wat Tyler and + Straw, who wished to abolish servitude at a blow, failed of its + object, we find that there were a great many instances of + emancipation by individuals in the fourteenth and fifteenth + centuries when death or sickness overtook them, in which they + declared the moral unfitness of slavery. (_Wycliffe_: "When Adam + dalve and Eve span, who was then the gentleman?") Elizabeth + liberated the last serfs of the crown. Compare 12 Charles II, ch. + 24, 1660. Emancipation in the lowlands of Scotland was completed in + 1574. (_Tytler_, Hist. of Scotland, II, 260.) + + 436 Modern Emancipation Laws: in Prussia, 1719, 1807, 1819; Lausitz; + 1820, Westphalia; in Austria, 1781 (Bohemia and Moravia), 1782 + (other German countries and Galicia); 1785 (Hungaria); + Schleswig-Holstein, 1804, after many of the landed gentry had + voluntarily emancipated their own serfs; in Bavaria, in 1808; in the + kingdom of Westphalia, in 1808; in Hessen-Darmstadt, in 1811; in + Wuerttemberg, in 1817; in Baden, in 1783, 1820 in newly acquired + countries; in Mecklenburg, in 1820; in the kingdom of Saxony, in + 1832; in Hanover, in 1833. The law of 1702, abolishing serfdom in + Denmark, was evaded until 1788, and in part, even until 1800 by the + _Schollband_ (clod-bond) introduced in its stead. The only Christian + people in Europe, who, until recently, kept serfs, was the Russian. + The serfs of Russia, in 1834, numbered 22,000,000, i.e., about 40 + per cent. of the entire population. In the meantime, the law of + February 19, 1861, passed after four years of preparation, fixed the + date of emancipation at the beginning of the year 1863. Slavery has + been abolished in the United States since January 1, 1863; first of + all in all portions of the country engaged in rebellion. + + 437 There is a very interesting discussion in the Journ. des Economistes + for June 1863, of the question whether the owners of serfs are + entitled to compensation on their emancipation, by _Laboulaye_, + _Wolowski_, _Lavergne_, _Garnier_, _Simon_ and others. In the United + States it would have required $2,000,000,000 to fully compensate the + slave-holders for depriving them of their slaves. (Quart. R., Jan., + 1874, 142.) Compare my view, _Roscher_, Nationaloekonomi des + Ackerbaues, § 124. + + 438 Leave a new-born child to its "natural freedom" for twenty-four + hours, and it will in all probability be dead at the end of the + time! + + 439 Compare Edinburgh Review, LXXXIII, 64 ff., April, 1851, 333. + _Klein's_ Annalen XXV, 70, ff. Even in the fifth book of Moses, 15, + 13, ff., we see that experience had taken into consideration that a + freed serf without capital or landed property might very readily be + in a worse condition than he was before. In the United States, the + anticipation that the emancipated negroes might diminish in numbers + has not been realized. The census of 1870 showed a negro population + of 4,880,000, nearly ten per cent. more than in 1860. The increase + of the number of churches, schools and savings banks also bears + testimony to the prosperity of the negro. (_R. Somers_, The Southern + States since the War, 1871.) + +_ 440 J. S. Mill_, Principles, 10, ch. 7. + + 441 As to the Jews, see _Ewald_, Geschichte von Israel, I 2, p. 198. In + general, see _H. Wallon_, Hist, de l'Esclavage dans l'Antiquite, II, + 1847. + +_ 442 Thucyd._ IV, 27; _Xenoph._ De Re. rep. Art. I, 10 ff., _Aristoph._ + Nubes, 6; _Antiph._ De Caede Herod, 727. In the "Frogs" of + Aristophanes, the relation between the slave Xanthias and his master + is eloquent testimony to the good treatment he received. Slaves + enjoyed great freedom of speech. (_Demosth._ Phil. III, iii.) + Concerning masters accused of cruelty, see _Demosth._ Mid. 529, 7. + Athen. VI, 266. The slave who had been ill-treated might seek refuge + in a temple, after which his master was compelled to sell him. + (_Schol. Aristoph._ Equitt. 1309. _Plutarch_, Thes. 36.) + + 443 Slaves might purchase their own freedom with their _peculium_. See + Petit. Legg., Art. II, 179. There were many who lived entirely on + their own account, paying a certain duty or tax to their masters, + and who were well able to make savings. _R. F. Hermann_, + Privatalterthuemer, § 13, 9, 58, 11 ff. See the instance in _Plato_, + De Rep. VI, 495, where a slave who had grown wealthy asks the + daughter of his former master in marriage. Moreover, there was a + general indisposition to hold Greeks as slaves. (_Philostr._ Apoll. + VIII, 7, 12.) The case cited in _Demosth_. adv. Nicostr. 1249 ff., + is all the stronger on this account. + + 444 Under Cleomenes, many purchased their freedom with their own means. + _Plutarch_, Cleom. 23. At an earlier period, men like Lysandros, + Gylippos, Kallikratidos had belonged to a class composed of the + children of slaves brought up as citizens. + +_ 445 Cicero_, pro Muraena, IX, 22. + + 446 Think of the subterranean _ergastula_, the fettered door-keepers and + the gladiatorial exhibitions. + + 447 Even from the time of _Plautus_, the _servi honestiores_ were wont + to keep _vicarios_, or subordinate slaves. _Plaut._ Asin. I, 4, + _Seneca_ De Tranq. Anim. 8. Compare _Cicero_, Parad. V, 2. Of the + slaves of the state, the public scribes were sometimes found in + excellent circumstances. + + 448 The peculium was fully developed in the time of Plautus and Terence. + Compare _Terent._, Phorm. I, 1. It was customary to promise slaves + their freedom as soon as they had acquired a certain _peculium_. + (_Dionys. Hal._, Antt. Rom., IV, 24. _Tac._, Ann., XIV, 42.) Humane + masters permitted their slaves to dispose freely of their _peculium_ + by will. (_Plin._, Ep., VIII, 16.) There were many of the Romans who + gave their slaves a fixed salary, from which they could make + savings. (_Senec._, Epist., 80, 7.) Shepherds raised some sheep for + themselves alone. (_Plaut._, Asin., III, 1, 36; _Varro_, R. R., I, + 17, 7.) Premiums were offered for certain products (_Athen._, VI, + 274 d), and there were cases even in which businesses were farmed + out to slaves. (Corp. Inscr. Gr., No. 4,713 f.) The _servi publici_ + had the right to dispose of the half of what they owned, by will. + (_Ulpian_, XX, 16.) Contracts of loan were sometimes made between + master and slave. (_Plut._, Cato, I, 21, L., 49, § 2, Digest, XV, + 1.) + + 449 Compare _Tacit._, Ann., XIII, 26 seq. During the time from 356 to + 211 A.C., it seems that there were, on an average, 1,380 slaves + emancipated yearly. (_Dureau de la Malle_, Economie polit. des + Romains, I, 290 ff.) + + 450 Concerning the highly educated slaves of Atticus, of the like of + whom the Greeks had formerly few examples, see _Drumann_, Geschichte + Roms., V, 66. The high prices, 100,000, and even 200,000 sesterces, + paid for slaves, suppose a very high degree of education. + (_Martial_, I, 59; III, 62; XI, 70; _Seneca_, Ep., 27.) But even + _Cicero_ was ashamed of his affliction over the death of an + exceptionally clever slave. (Ad. Att., I, 12.) + + 451 At an earlier period, even the censor had punished cruel masters. + But most of what was done to prevent the arbitrary condemnation to + death of slaves, their castration etc., and to give them rights + against their masters for libidinous acts towards them, for cruelty + and insufficient support, or the furnishing them with bad food, was + done after the time of Hadrian. (Compare _Seneca_, de Benef., III, + 22; de Ira, III, 40, _Sueton._, Claud, 25, Dom., 7; _Spartian._, + Hadr., 18; _Gaius_, I, 53; L., 1, § 2, Digest, I, 6; L., 1, § 8, D., + I, 12; L., 1, § 2, D., XLVII, 8; L., 1; Cod., IX, 14; Contra, see + _Dio Cass_, I, V, 17.) However, the _vitae necisque potestas_ existed + in the time of Justinian. (_Zimmern_, Geschichte des roem., + Privatrechts, I, 2, 661 ff.) + +_ 452 Salvian_, De Gubern. Dei, V, 8. _Theod._, Cad. V, 4. _Eumenis_, + Paneg Coast. 8, 9. _Trebell_, Poll. Claud., 9. _Justin._ Cad., XI, + 26, 47. Compare _v. Savigny_, Ueber den romischen Colonat. Berliner + Akad., 1822-23. + + 453 The figures given in _Athen._, VI, 103, concerning the number of + bondmen in Greece are almost incredible. For Attica alone, the + estimates vary between 110,000 (_Letronne_, in the Mem. de + I'Academie des Inscr., 1822, 192, ff.) and 400,000 (_Athen._ 1. c.), + while the free men are estimated at from 130,000 to 150,000. In + Rome, during the time from the expulsion of the kings until the + destruction of Carthage, the number of the slaves remained about the + same. (_Blair_, State of Slavery among the Romans, 1833, 10, 15.) On + the other hand, _Dureau de la Malle_ is of opinion, that in 576 + B.C., the number of slaves was to the number of free men as 1 to 25, + and in 225 B.C. (including the metics), as 22 to 27. (Economie + polit. des Romains I 270 ff., 296.) Compare _Cato_, de Re. rust. I, + 3, IV, X, 1 XI; 1, XVII, XVIII, 1. In Germany, the number of + bondmen, from the eighth to the tenth century, was estimated to be + at least as great as that of free men. (_Grimm_, D. + Rechtsaltherthuemer, 334.) Among the Anglo Saxons, before the Norman + conquest, it was much higher, even three-fourths of the entire + population. (_Turner_, Hist. of the A. S., VIII, 9.) Compare on the + subject of this whole chapter my paper in the Archiv. der polit + OEkonomie, N. F., IV, 30 ff. + +_ 454 Kloentrupp_, Abhandlung der Lehre vom Zwangsdienste, 1801. + Frequently, the lord had only a right of preference in case the + children of the tenant desired to abandon the parental roof and take + service elsewhere. + + 455 In _Adam Smith's_ time, in England, the presumption was that a + servant had been hired for a year. (I, 2, 15 ed., Bas.) Frederick + the Great's ordinance of 1769, on this subject, forbade any one to + enter into service for a shorter time than this (II, § 1 ff.), while + the Saxon ordinance of 1835, on the same matter, allowed engagements + by the month, in cities. _Darjes_, Erste Gruende der + Cameralwissenschaften, 2d ed. (1768), p. 432, demands that servants + should always hire themselves for at least four or five years, and + that their masters should have, during the whole of this time, the + right to enforce the contract. In North America, however, service by + the month has become customary and general, and no notice of the + dissolution of the contract is, as a rule, required. (Deutsche + Vierteljahrsschrift, 1853, II, 191.) In Switzerland, contracts for + service by the week are frequently made even by country servants. + (_Boehmert_, Arbeiterverhh., II, 157.) + + 456 In the south of England, farm hands were used to change service only + at Michaelmas. The choice of such a date made farmers very dependent + on them, as it fell in harvest time. (_Marshall_, Rural Economy of + the Southern Countries, II, 233.) A similar complaint in Cleves. + (_Schwerz_, Rheinischwestphaelische Landw., 21 ff.) In Juelich, a half + year's notice was required, during which time the servant who had + received it, performed his work with disgust, and stirred up his + fellow servants against their master. (_Schwerz_, II, 87.) + + 457 The families of day laborers, to whom the owner of the land gives + the use of a house, small garden, a cow etc., constitute such a + transition; and also, workmen who are fed. In Brandenburg, in 1644, + only married persons or widowers with children were permitted to + work as day laborers. (_Mylius, C. C. March._, V, 1, 3, 11.) + +_ 458 Wakefield_, Swing Unmasked, or the Causes of rural Incendiarism, + 1831. + + 459 By means of the former, the number of independent small householders + was much increased in the country. Masters feel indisposed to hire + young men liable to be subjected to military duty, because they may + be called away at the moment their services are most needed. The + returning soldier, as a rule, feels above doing menial service. + (_Schwerz_, passim, I, 191 ff., 236.) On this account, servants' + wages in Cleves rose much higher than those of day laborers. (194.) + In Belgium, a farm hand cost, on an average, 400 francs a year; a + day laborer, counting 300 working days to the year, only 339 francs. + (_Horn_, Statist. Gemaelde, 175.) In the Palatinate, day laborers who + receive nothing but their wages cost their masters less than those + who receive only their food; and servants are the dearest of all. + (_Hanssen,_ Archiv der Politischen OEkonomie, N. F. X, 243.) If + servants were relatively more poorly paid in 1813 than day laborers + (_Lotz_, Revision, III, 147), it was because of the at least + temporary retrogression of civilization which every great war + causes. + +_ 460 Engel_, Preuss. Statist. Jahrb., II, 261. Services which contribute + to personal convenience are naturally committed much less frequently + to independent day laborers than those which aid in production + proper. Hence it is, that, as civilization advances, house-servants, + especially of the female sex, constitute an ever-increasing portion + of the total number of servants. In Prussia, in 1816, the number of + servants who ministered to personal comfort was only 4.19 per cent. + of the total number of servants engaged in industry; of female + servants, it was 13.4 per cent. In 1861, on the other hand, the + percentages were 8.4 and 37.2. In Great Britain, of the total number + of servants over 20 years of age, only 2 per cent. were engaged in + personal services. In 1841, they were 3-1/2 per cent. (_Meidinger_.) + In France, in 1851, 2.5 per cent. of the whole population were in + _domesticite_. (Stat. off.) + + 461 In England, now more especially, out of farm-hand day laborers: + Edinburgh Rev., April, 1862. + + 462 A chief element in the earlier "organization of labor." So, also, in + the Magdeburg Gesindeordnung (service-regulation) of 1789. + + 463 Saxon _Landesordnungen_ of 1482 and 1543. Cod. August. I, 3, 23. The + _Gesindeordnung_ (service regulation) of Frederick the Great, + threatened with the house of correction the receivers, and under + certain circumstances also the givers of wages higher than the fixed + rate of wages; but as a "matter of course," the payment of wages + less than this was permitted. (V, § 7) Great care was taken that + wages greater than the law allowed should not be evaded by the + payment of _arrha_ or payment in produce. The same law forbade the + deprivation of the servant of his right to determine the service by + making of loans to him on long time (II, § 7.) Even _v. Berg_, + Handbuch des deutschen Polizeirechts, calls it a duty of the public + authorities charged with the protection of property and of the + public security, to see to it that there be no lack of good + servants, and that the public (as if those who sell their services + were not a part of it) should not be made the victims of exorbitant + demands in the matter of servants' wages. _Jung_, more humane, + demands that the authorities shall protect, especially, the weaker + party. (Grundlehre der Staatswirthschaft, 1792, 700.) In Prussian + legislation, the Silesian rescript of March 13, 1809, is the + beginning of the new order of things. (_Rabe_, Samml. preuss. + Gesetze, X, 59 ff.) The _Obertribunal_, or high court, decided, in + 1874, that the bringing back of absconding servants by the police, + which the law concerning servants of 1810 provided for, should not + be allowed to occur any more. + + 464 Ordinance of the elector of Saxony of 1766, prohibiting the + inhabitants of cities to take an apprentice from among the + peasantry, unless he had served at least four years as a farm hand, + beginning with his fourteenth year. Similarly, in Prussia in 1781. + + 465 In Berlin, even before the "populationistischen" period: _Fidicin_, + Histor. diplom. Beitraege zur Gesch. der Stadt Berlin, I, 101. (From + the year 1397.) + + 466 I Peter, 2, 18 ff.; I Timoth., 6, 12; Ephes., 6, 5; Philem., 15 ff. + + 467 In the German colonies of Mennonites in Russia, every youth serves a + few years in the family of some other peasant. This is considered a + sort of school. Wages are of course very large, and the treatment + very mild. _v. Haxthausen_, Studien, II, 185. Southwestern Germany + where small landed proprietors are many, something very analogous to + this continues. (_v. d. Goltz_, loc. cit., 452.) + + 468 For a masterly exposition of the doctrine that the right of + prescription or limitation is related to the politico-economical + necessity of property, see _John Stuart Mill_, Principles, 3, II, + ch. 2, sec. 2. + +_ 469 Locke_, On Civil Government, II, §25-51; and so _L. Mendelssohn_, + Jerusalem (1783), 32; _Thiers_, Du Droit de la Propriete (1849). + + 470 Modern writers, in their attempt to find a philosophical basis for + the right of property, have taken two principal directions, the + first a juridical, the second a political one. The axiom, _res + nullius cedit primo occupanti_ (compare L. 3, Digest, XLI, 1), + explains only the smallest part of the relations of property, and + that only because of a very fortuitous circumstance. According to + _Hobbes_ (Leviathan, 24), property has its origin in the recognition + of it by the power of the state, by the _autorite publique_, the + _gouvernement_ (_Bossuet_, Politique tiree de l'Ecriture, Sainte, L. + 3, 4), or as _Montesquieu_ (Esprit des Lois XXVI., 15) more mildly + expresses it, in the laws. The application of this principle would, + on account of the extreme changeableness of the laws of every state, + lead to most extreme insecurity, and to a steady oscillation from + one Utopia to another, from one revolution to another, if it were + not, at the same time, recognized that each one had a just title to + the acquisitions he had made, not because the law, for the time + being existing, acknowledged the right, but because they were the + product of his labor and saving. The theory which bases the right of + property on contract cannot be objected to with as much reason. + Thus, _Hugo Grotius_, Jus Belli et Pacis, II, 2, who even justifies + the occupation of things without an owner, on the supposition of the + existence of an implied contract. It is very characteristic of the + English, that in their political language, the words "liberty" and + "property" are so frequently found in each other's company. In one + of his classic speeches made by Fox in 1784, he gives a definition + of liberty which begins with the words, "It consists in the safe and + sacred possession of a man's property" etc. The recent doctrine, not + unfrequently to be met with, that every man has a right to an amount + of property corresponding to his wants, may be used to sanction all + kinds of socialistic inferences. An entirely bewildered and + bewildering description is to be found in _Proudhon's_ Qu'est ce que + la Propriete, 1848, as the precursor of which _Brissot's_ Recherches + philosophiques sur le Droit de Propriete et le Vol, may be + considered. In medieval times, there are always a multitude of other + titles to property besides production and saving. The title which is + held in highest esteem for the time being is always because of this + very extreme vis-a-vis of all other titles, strengthened and made + general. + + 471 The word socialism brought into use by _L. Reybaud_ is as ambiguous + as the word communism is simple and intelligible. But most + socialists agree that actual "society" (which is indeed to be + distinguished from the state) is, together with its foundations, the + existing relations of property and the family, entirely wrong. A + radical reconstruction, they say, is needed to remove forever the + chief evil of this system, viz.: the glaring difference between the + rich and the poor, the educated and the uneducated. The difference + between the doctrines of the socialists and of Political Economy + does not, by any means, consist in this, that the former concerns + itself more with the welfare of the lower classes, or even that it + gives wider scope to economy in common. But socialism is, indeed, a + living or housekeeping in common (_Gemeinwirthschaft_), which goes + far beyond the feeling for the common interest (_Gemeinsinn_). Such + economy in common is always opposed to freedom, and, at its first + introduction, contrary to law. It can guarantee no compensation to + those who have suffered from violence or force, because it leads to + a thoughtless and wasteful exhaustion of the nation's resources, + inasmuch as it weakens the incentive to industry and frugality. + Political Economy, on the other hand, recommends an _expropriation_ + when the incentives to industry and frugality are thereby + strengthened; and the increased resources thus obtained serve it, as + full compensation to those whose property has been _expropriated_. + + 472 See _Roscher_, Betrachtungen ueber Socialismus und Communismus, + Berliner Zeitschrift fuer Geschichtwissenschaft, 1845, III, 422 ff. + +_ 473 Vivre en travaillant ou mourir en combattant_--the device on the + flags of the mutinous silk-weavers at Lyons, in 1832. + + 474 We are so assured by _Vauban_ (Dime Royale, 34 seq), of the later + years of the reign of Louis XIV, that nearly 1/10 of the French + people begged, that 5/10 could give no alms, because they were + themselves on the very brink of indigence; 3/10 were _fort malaises, + embarasses de dettes et de proces_; scarcely one per cent. could be + said to be _fort a leur aise_. How much better off is the present + Parisian workman! And yet, at that time, there was not the least + spread of communistic doctrines. It is indeed seldom that completely + down-trodden men react against their wretchedness with great energy. + + 475 "If my _caprice_ be the source of law, then my _enjoyment_ may be + the source of the division of the nation's resources." _Stahl_, + Rechtsphilosophie, II, 2, 72. + + 476 That the socialism of _Plato_, De Repub., V, was no mere fancy, is + proved by the polemic which _Aristophanes_ directs against it in his + Ecclesiazuses. See also _Aristot._, Polit., II, 2, Schn. In the + contemporary practice of the Greeks, with the increasing + democratization of the state, it became more and more usual for it + to bear the expense of the outlay for the means of subsistence of + the great crowd. (See _Plutarch_, Cimo, 10.) Every act of public + life was paid for. Citizens were paid for attending popular meetings + three oboli per day, while the pay of the soldiers was six, and that + of the sailors three. (_Thucyd._, III, 17; VII, 27; VIII, 45.) The + pay of the commonest day laborer was from three to four oboli per + day. _Aristophan._, Eccl., 310, and _Pollux_, VII, 29. The number of + magistrates was very large, in order that as many as possible might + participate in this species of remuneration. Thus, in Athens, when + it had only about 20,000 inhabitants, there were 6,000 judges. In + addition to all this, there were numberless feasts, plays, banquets + etc., which were offered to the people gratis. The wealthy who were + compelled to meet all the expense thus incurred, lived in such a + state of terror of the populace, that they considered their own + impoverishment as a species of deliverance. (_Xenoph._, Conviv., 4, + and _Lysias_, pro Bonis.) _Isocrates_ called it much more dangerous + to be rich than to commit a crime, since in the latter case one + might obtain a pardon or a mild punishment. (De Permut., p. 160.) + (_Lysias_, De Invalido, de sacra Olea, seq.) There is little + difference between this state of things and a semi-community of + goods. Only that, indeed, the great mass of the slaves were excluded + from enjoying them. The contrast which somewhat later distinguished + the Cynics from the Cyreno-Epicureans affords a striking analogy to + that which, in our own times, exists between the pure socialists and + the worshipers of mammon after the fashion of Doctor Ure. Concerning + the Utopia of _Iambulos_, see _Diodor._, II, 55 ff. + + 477 Our sources of information concerning the division of the Roman + republic into a moneyed oligarchy, and the proletariat are very + numerous. Compare _infra_, § 205. The speeches of the Gracchi (e.g. + _Plut._, T. Gracchus, 9), and still more the violent discourses of + Catiline's conspiracy (_Sallust_, Cat., 20, 23, 37-39), remind us + very forcibly of the shibboleths of modern socialism. We very + frequently meet with the expression of a longing desire to return to + the most uncivilized and hoary past, when there was no money and no + wealth--an aspiration which lies at the very foundation of communism. + Thus _Virgil_, Geo., I, 125, ff., _Tibull._ I, 3, 35, ff. _Propert._ + II, 13, III, 5, 11; _Seneca_, Epist., 90; _Senec._, Oct. II, + _Hippol._, II, 2; _Plin._, H. N. XXXII, 3. On the other hand, the + practice of supporting the populace at the expense of great + candidates or of the state, was developed to a very great extent. + The masses lived very largely by the sale of their right of suffrage + to the highest bidder. At the election of consuls in the year 54, + 500,000 thalers were offered to the century called on to vote first. + (_Cicero_, ad Quintum II, 15; ad. A.H. IV, 15.) Even _Cato_ had a + part in such bribery. (_Sueton._, Caes., 19.) In the social reform + of the younger Gracchus, besides the limitation of large + land-ownership, the principal points were the following: the sale of + wheat under the market price, but only to the inhabitants of Rome + itself; the construction of great highways in Italy; colonization at + the expense of the state, and the increase of soldiers' pay. + (_Ritsch_, Gracchen, 392 ff.) The socialistic plans of Rullus went + much further. Were his agrarian laws put in execution, he would have + confiscated very nearly the entire country in the interest of the + poor, and of their demagogues! (_Cicero_, De Lege agrar.) Rome twice + experienced a social revolution of the most frightful character, one + by which a great portion of all private goods fell into the hands of + the propertyless (soldiers), who knew nothing of how to turn it to + account or to invest it--under Sulla, and then under the later + Triumviri. (Compare _Appian_, Bell, civil., V, 5, 22.) Complaints + concerning the latter, in _Horat._, Epist., I, 2, 49; _Virgil_, + Buc., IX, 28; _Tibull._ I, 1, 19, IV, 1, 182; _Propert._, IV, 1, + 129. The elder Gracchus had promised compensation to the last + possessors. _Tabulae novae_ of Cinna, Catiline, Caelius, Dolebella. + Clodius introduced the distribution of wheat, which according to + Cicero pro Sext., 25, ate up almost one-fifth of the public + revenues. About 320,000 persons were, in this way, supported for a + long period of time (_Sueton._, Caes, 41, _Dio C._, XLIII, 21; L. + LV, 10), but only in such a manner as to keep them from starvation. + (_Sallust_, 268 ed. Bip.) To all this was soon added distributions + of salt, meal and oil, also free baths, numberless public plays, + colossal banqueting, payment of one year's rent etc. _Panem et + circenses!_ (Juvenal, X, 80 seq.) The mere distribution of money + under Augustus, in which from 200,000 to 320,000 men participated, + cost each time from 2,500,000 to 6,000,000 thalers. (Monum Ancyr., + 372 Wolf.) Extraordinary assistance was, by way of preference, + accorded to colonies of the poor. (_Sueton._, Caes, 42.) Concerning + this entire policy, see _Plin._, Paneg., 26 ff. Even in + Constantinople, at the time of its foundation, large distributions + of bread were made at the expense of Egypt, although there could + scarcely be any real pauperism in that new and flourishing city. + (_Theod._, Cod., XIII, 4, XIV 16; _Socrat._, II, 13.) I can only + allude to the plan proposed by the emperor Gallien by the + neo-platonist Plotin, to found a city in which the ideas of Plato's + republic should be carried out. (Porphyr., V, Plotin., 8.) + + 478 During the two centuries of which the Reformation constituted the + middle point, the transition from the peasant system of agriculture + to the large farming system of modern times bore very heavily on the + inferior classes. Such, too, was the operation of the fall in price + of the precious metals. (§ 140.) The suppression of the many + monasteries caused an increase in the wretchedness of the poor; and + the numerous poor-laws enacted in England, Spain etc., were not + sufficient to supply a remedy. The feeling of the people during this + period of tribulation found expression in the War of the Peasants, + in the sect of Anabaptists, in the many reformations and + counter-reformations, in the revolt of the Netherlands, in the + conflicts for the crown in France and England etc. In Italy, the + contrast existing between the moneyed oligarchy and the proletariat + had been developed several centuries, but from the middle of the + sixteenth century, it had become much more oppressive by reason of + the universal impoverishment of the country. For an account of the + pantheistic "Brethren and Sisters of the Free Spirit," with their + community of goods and of women, see _Ullmann_, Reformatoren vor der + Reformation, II, 18 ff. They were very numerous from the thirteenth + to the fifteenth century in Italy and France, as well as in Germany, + and lead us to the Adamites in the Hussite war. (_Aschbach_, + Geschichte K. Sigismunds, III, 109.) Earlier yet, we have the sect + of the Giovannali, who had their property and women in common, and + who, in 1355, had won the third of Corsica, but who were afterwards + suppressed by Genoa and the Church. (_Lebret_, Geschichte von + Italien, VI, 208 ff.) The coarse socialist, _John Balle_, bears + about the same relation to Wycliffe, that Muenzer and Bockholt did to + Luther. (_Walsingham_, Hist. Angliae in _Camden, Scriptt._, 275.) + Hans Boeheim of Wuerzburg, 1476, seems to be the direct precursor of + Muenzer. (_Ullmann_, I, 421 ff.) It was almost as usual in Luther's + time, as in 1848, or in our day, to hear of the deep demoralization + of trade--the _Fuggerei_ of the Germany of the time--and of the + universal system of fraud that prevailed. See the citations in + _Hagen_, Deutschland's Verhaeltnisse im Reform-Zeitalter, II, 313 ff. + Muenzer's fundamental principle: _Omnia simul communia!_ _Sebastian + Frank_, Chronica, Zeytbuch und Geschychtbibel etc., 1551, fol. VI, + 16, 27, 116, 194, 414, 433. John Bockholt's life presents us with a + striking contrast. While they were bringing his perfumed women, + sparkling with jewels, to his rose-covered bed, hung with curtains + of gold cloth, on which he was reclining, his subjects were a prey + to the horrors of famine, to such an extent that they were compelled + to salt the bodies of children who had died of starvation. How + frightful the end of this communistic benefactor of mankind! + Libertine community of goods and women. (_Calvin_, Instructio adv. + Libertinos, cap. 21.) English communists in the age of the + reformation. (_J. Story_, Comment. on the Constitution of the U.S., + I, 36.) Even under Cromwell, there were many Englishmen who believed + that farmers were no longer obliged to pay rent to land-owners. On + the sect of Levellers, see _Walker_, History of the Independency, + II, 152. Even in _Erasmus_, we find some sympathy with communism. + (Enchirid. milit. Christ, 80.) _Contra_, see _Melanchthon_, Prolegg. + in Cic. de Off., Corp. Reform, XVI, 549 ff. The most remarkable + systematic works of this period are _Thomas More's_, Utopia, 1516, + and _Campanella's_ Civitas, solis, 1620. _Thomas More_ bluntly says + that all existing governments are in fact only permanent + conspiracies of the rich to further their own interests under the + mask of the common good, and to despoil labor. The abolition of + money, which should be continued in use only to carry on foreign + war, would, he contends, remove all misery. There was no really + private property in his Utopia. There should be a rigid + superintendence of all work by the public authorities, whose duty it + should be to see to it, that no one should abandon agricultural + pursuits. All should eat at a common table and dress after the same + fashion. Internal commerce should give way to a mutual exchange of + gifts under the supervision of the state. _Campanella_, besides a + community of goods, recommends continually varying occupation, to + last not more than four hours daily; education in common, especially + by means of pictures, popular encyclopedias etc., all under the + supreme guidance of a despotism to be composed of the wise, some + secular and some spiritual, operating through the confessional. + Socialists nearly always succeed better in the critical part of + their works than in the positive. Compare _R. Mohl_, Geschichte und + Literatur der Staatswissenschaften, § 1, 165 ff. + + 479 Considering the aversion exhibited against private property by _J. + J. Rousseau_, and the unlimited power which he accords to the + majority for the time being in the state (Contrat Social, 1761, II, + ch. 4), it cannot be denied that his freedom and equality contain, + to say the least, germs of communism by no means insignificant. But, + he would, in the present state of civil society, have a feeling of + respect for the rights of property implanted in the mind of the + child very early, and even before the feeling of liberty is + developed. (Emile, 1762, Livre II.) About the same time _Morelly_ + published his Basiliade ou Naufrage des Iles flottantes, 1753, a + political romance in the interest of communism. See the same + author's Code de la Nature, 1755. _Mably_, in his two works, Doutes + proposes aux Economistes, 1768, and La Legislation ou Principes des + Lois, 1776, recommended the abolition of all inequality and a real + community of goods. The introduction of property seems to him, _une + faute qu'il etait presque impossible de faire_. Even _Beccaria_ + calls property a dreadful but perhaps a necessary right which has + left to the unfortunate nothing but a naked existence. (Dei Delitti + e delle Pene, 1765, cap. 22.) The French Reign of Terror came pretty + near carrying these ideas into effect. We need only refer to the + abolition of the census, the payments made to the workingmen who + attended the section meetings, two francs per diem, the enormous + extension of confiscation, requisitions and forced loans, the + revolution effected in the fortunes of individuals by the system of + issuing assignats, the maximum affixed to the price of all the + necessaries of life, the abolition of indirect taxes, and of what + remained of the economic institutions handed down from the middle + ages. According to _St. Just_: _l'opulence est une infamie; il ne + faut ni riches ni pauvres_. The Cahier des Pauvres demands, first of + all, that salaries "should no longer be estimated in accordance with + the murderous principles of unbridled luxury." See Forster's letter + dated November 15, 1793. (Saemmtl. Schriften, IX, 125.) On the + conspiracy of Baboeuf, who was executed in 1796, and who wanted to + see the completest equality and community of labor, of enjoyment and + education, the abolition of large cities etc., see _Buonarotti_, La + Conjuration de B., 1821. This book contributed powerfully towards + the revival of communistic ideas after the July revolution. Among + modern communists who are to be distinguished from the more ancient, + especially by the industrial coloring given to their theories, + _Cabet_, Voyage en Icarie, 1840, II, holds a very prominent place. + He declares the abolition of religion, of the family and of the + state, to be open questions, and desires to bring the practice of a + community of goods to a successful issue only through the peaceful + channel of conviction. + + Compare _Reybaud_, Etudes sur les Reformateurs contemporains ou + Socialistes modernes, 1840. _L. Stein_, Der Socialismus und + Communismus des heutigen Frankreich. See, also, the learned history + of socialistic systems in _Marlo's_ Weltoekonomie, I, 2, 435 ff.; and + in what concerns the most recent time, _R. Meyer_, Der + Emancipationskampf des vierten Standes, II, 1874, seq.; a book + which, in spite of its many defects, both doctrinal and + journalistic, is as rich in thought, and in the knowledge of the + subject it treats of, as it is permeated by a love of truth + regardless of consequences. Among the opponents of socialism and + communism, _Malthus_, On Population, B. III, ch. 3, and _B. + Hildebrand_, Die Nationaloekonomie der Gegenwart und Zukunft, vol. I, + 1848, hold a very distinguished place. _J. S. Mill_, Principles, II, + ch. 1, 3, calls attention to the fact that hitherto the principle of + free property has never been consistently carried out. The first + social arrangement of modern society was almost everywhere the + result of conquest and violence, large traces of which yet remain. + Things have always been made property which ought not to be + property. Governments have endeavored to intensify the darkness of + the dark side of property, and favored the concentration instead of + the diffusion of wealth etc. Hence, no one can claim that the social + wrongs, so-called, had their origin in property as such. _Schaeffle_, + Kapitalismus und Socialismus, 1870, has made a very note-worthy + effort to recognize whatever of truth there is in socialism, and to + combat its errors. + +_ 480 Saint Simon's_ reproach to the liberals, that their fundamental + principle was: _ote-toi de la, que je m'y mette_, is well known. + + 481 Compare _Malthus_, Additions to the Essay on Population, 1817, IV, + ch. 7. + + 482 The _travailleurs egalitaires_ wished to murder not only the king, + the court, and the ministry, but also the Liberals and all owners of + property. + + 483 As soon, indeed, as this true love disappears in the married state, + the community of goods even there degenerates only too easily into a + spoliation of the better party by the worse. + + 484 The community of goods of the first Christians at Jerusalem, so + frequently cited and extolled (_James_, I, 1), was only a community + of use, not of ownership (Acts IV, 32), and, throughout, a voluntary + act of love, not a duty (V. 4), least of all, a _right_ which the + poorer might assert. Spite of all this, that community of goods + produced a chronic state of poverty in the church of Jerusalem. + Hence, Paul had collections taken up for them on all sides, without, + however, anywhere establishing a similar institution. (Romans, 15, + 26; I. Corinth., 16, 1.) Compare _Mosheim_, De vera Natura + Communionis Bonorum in Ecclesia Hierosol., in his Dissertatt. ad + Histor. Eccles. pertinentes, II, 1 ff. As to whether _Barnabas_ + (Epist., 19) desired to say anything more, compare Epist. ad + Diognetum, 5. For a real recommendation of a community of goods, on + economic grounds, see _Joh. Chrysostom._, in Acta Apost., Hom. XI. + Also _Clemens Rom._ c. 2 C. 12, qu. 1. Community of goods among the + Essenes: _Philo._ Opp. II. 457 ff. _Joseph. Bell_, Jud., II. 8. + _Bellermann_, Geschichtliche Nachrichten ueber die Essener. (1821.) + In many monasteries, there has been and is a species of community of + goods. There was once a singular contest on this subject, carried on + between the Minorites and the Pope, in the time of Louis of Bavaria. + The Minorites claimed that property was a thing, so much to be + condemned, that even food, at the moment of eating it, did not + belong to the person using it. The Pope taught on the other hand, + that even Christ and the Apostles possessed property, part personal + and part in common. (_Raynaldi_, Ann. eccl., XV, 241, 285 ff.) + Community of goods of the Homiliates, later of the Brothers of + Common Life, after the manner of the monks, but of a much higher + kind. (_Ullmann_, Reformatoren v.d. Reform, II, 62 ff.) The first + settlers of New Haven, Connecticut, held their property in common. + Land was divided among families in proportion to the number of + persons in them, and of the number of cattle they had brought with + them; and all sales and purchases were made on account of the whole + community. And so in Massachusetts during the first seven years of + the colony's existence. (_Ebeling_, Geschichte und Erdbeschreib. der + Vereinigten Staaten, II, 391, I, 557.) _Herrnhut_ community of goods + in Pennsylvania, from 1742 to 1762, but which was done away with + when the number of colonists became too great. (_Ebeling_, IV, 717.) + Community of goods of the Shakers and Lutheran Rappers. + (_Buckingham_, Eastern States, II, 214, 427. _Prinz Neuwied_, Reise + in Nord Amerika, I, 136, ff.) Russian sects with community of goods. + (_v. Haxthausen_, I, 366, 407.) _Harless_, christliche Ethik § 501, + distinguishes very well between the "anti-christian" and "pseudo + christian" stand point, from which it is sought to establish the + doctrine of a community of goods. The Christian view of this subject + (compare Ephes., 4, 28, I; Thess., 4, 11, II, 3, 12; Matth., 6, 24; + Pet. 4, 10; Matth., 26, 7-11) is accused of hypocrisy by many + socialists. It is very easy, they say, when one is himself in + comfortable circumstances, to represent to the poor that their + poverty is a school for heaven, and to preach a contempt for riches + etc. They entirely forget, that the first promulgation of the Gospel + was made at a time when the worst kind of pauperism prevailed; and + that even the Master Himself, and the greater number of His Apostles + belonged to the lowest stratum of society. _Luke_, 9, 58. Many of + the Fathers of the Church, however, in their exhortations to + benevolence, used language in which modern Socialists have found a + rich mine which they have sedulously worked. (Compare + _Villegardelle_, Histoire des Idees sociales, 1846, 61 ff.) + + 485 Even _Aristotle_ says that what is common to many is a matter of + little concern to any one. (Polit., II, 1.) _Bastiat_ remarks: "We + compete to-day to see who works most and best. Under another regime, + we should emulate one another to see who should work least and + worst." (Harmonies Econ., ch. VIII.) When the first settlers of + Virginia, in 1611, gave up the system of common labor and of + joint-stock companies, as much work was performed in a day as + formerly in a week, or as much by three workmen as formerly by + thirty. (_Purchas_, Pilgrims, iv, 1866. _Bancroft_, History of the + United States, I, 161.) Even in New England, therefore among men + both steady and accustomed to labor, who for conscience sake had + sacrificed so much, a community of goods was accompanied + uninterruptedly by famine. A change for the better took place, for + the first time in 1623 with the introduction of the institution of + private property which was followed in 1624 by the right of + inheritance. (_Bancroft_, I, 340.) The military colonies of Algeria, + also, in which husbandry in common was carried on, begged, at the + end of a year, that the system should be abandoned, for the reason + that it was good for nothing but to generate idlers; and yet, these + colonists were all powerful men of about the same age, and + accustomed to order and service in common. They were, moreover, + assisted by the nation with pay and food. Compare _Bugeaud's_ + account: Revue des deux Mondes, June 1, 1848. "The French + associations (after 1848), whose object was labor in common, have + nearly all died out." _M. Chevalier_ in the Journal des Debats, Feb. + 3, 1851. In the United States, sixteen phalansteries of Fourierites, + founded between 1840 and 1846, had all collapsed in 1855. (_D. + Vierteljahrsschrift_, October, 1855, 205 ff.) + + 486 Even in New Harmony, the members considered the task which they had + to perform to obtain food, clothing and shelter, as villeinage in + the worst sense of the term. (_H. Bernhard v. Weimar_, Nordamerikan. + Reise, V, 134 ff.; 151, 310, ff.) It is very inconsistent in + socialists to continue the proprietorship and heirship of the state. + To be consistent they should give both these rights only to mankind + as a whole. Compare _Kiraly_, Ueber Socialismus und Comm., 1868, 35. + + 487 It would not be entirely fair to take a partisan view of the + _ateliers nationaux_ of 1848, and claim them as a practical + refutation of socialistic utopias, since no serious experiment was + made with them. Compare _E. Thomas_, Histoire des Ateliers nationaux + consideres sous le double Point de Vue politique et social, 1848. + + 488 Socialists generally overlook the fact, that the greater number of + enjoyments from which the poorer classes are excluded, by the right + of property, would not exist at all were it not for that very right. + (_Spittler_, Politik, 356 ff.) This remark may also be made of + _Hugo's_ ingenious objections. (Naturrecht, § 208 ff.) One of the + most effective pieces of socialistic declamation is that the lower + classes have a much shorter average of life than the upper. Hence + the institution of private property is charged with being a species + of spoliation of the poor of so many years of life, and the entire + "present society" condemned on that account. Here again it is not + borne in mind, that a few centuries ago the general average of life + was probably still smaller; and that it was precisely the growth and + development of "present society" that lengthened the days of the + poorer classes even, although it may have lengthened those of the + rich in a still greater proportion. See § 246. + + 489 But a community of goods would not, by a great deal, accomplish as + much as is generally supposed. In Prussia, for instance, in 1867, + only about three per cent. of the entire number of families in the + community had a yearly income of 1,000 thalers; only nine per cent. + had 500 thalers or more, and only 6,465 returned an income of more + than 4,000 thalers, while only 590 returned one of 16,000 thalers. + (Preuss. statist. Ztschr, 1868, 83. _Held_, Die Einkommensteuer, 197 + ff) How little, therefore, could the poor here gain by the + spoliation of the rich! Besides, the purely personal consumption of + the rich is, after all, not so great; and if all luxury were + abandoned, an innumerable number of men would lose their gains. + (Compare _Ad. Smith_, Wealth of Nations, I, ch. 11, 2.) It would be + to kill the hen that had hitherto laid the golden egg in order to + divide its flesh a little more equally. + +_ 490 Babeuf_ declared all arts and sciences to be evils. He would have + no one learn anything but Reading, Writing, Arithmetic, and a little + of the Geography of France; and have the strictest censorship + enforced to keep every one within these limits. Compare the able + criticism of _Proudhon_, Contradictions, ch. 12. + + 491 According to _Umpfenbach_, Nationaloekonomie, 201, where a community + of goods obtains, there can be but the alternative, viz.: whether + each person or each family shall receive just the same amount. (The + former would be more in harmony with principle, but what an + over-population would be the consequence!) Precisely so, too, if + each person were to come and take his own portion (anarchy!), or if + it were parcelled out to each by a board of distributors + (despotism!). + + 492 This expression came into vogue, principally, through _L. Blanc_, + Organization du Travail (1841), the leading ideas in which work are + the following: The suppression of competition by the establishment + of state industries; equality of remuneration for labor; equality + and legislative determination of the rate of interest; the choice of + superintendents by the workmen. With many modern socialists, the + shibboleth is not so much _liberte_ as _solidarite_. Besides, + _Fichte's_ Naturrecht (1796), and his geschlossener Handelsstaat, + are, without doubt, among the most remarkable works favoring an + "organization of labor." They aim at the destruction of the present + social system, which, at most, needs only to be reformed and + rejuvenated; and to galvanize the dead body into a new and different + life (Medea's magic cauldron!). Compare _Corvaja_, Bancocrazia o il + gran Libro sociale, 1840. + + 493 Cabet's Icarian colony in America numbered 298 adults and only 107 + children. Yet spite of this condition, so favorable to production, + it did but a very sorry business. Its government was very similar to + that of a house of correction or a penitentiary. Even in religious + matters, spite of all pretended toleration, those members who did + not agree with Cabet were described in the official weekly paper as + _des infames ou des aveugles_. (D. Vierteljahrsschrift, 1855, + October, 205 ff.) + + 494 An eastern sage says, that land possesses the ideal of legal + security through which a beautiful woman, decked with pearls, might + travel without danger. What would such a sage say of a European + country, in which even orphan children have their property not only + preserved to them, but find it increased from having been placed at + interest, as soon as they reach their majority? (_Barrow_.) + + 495 "The equality of communism is the worst species of inequality, + because it guarantees to one for two hours of poor labor as much as + it does to an other for four hours of good work." (_Bastiat_, + Harmonies economiques, ch. 8.) + +_ 496 Proudhon_, Qu'est-ce que la Propriete, 283, says, very justly, that + "a community of goods is the spoliation of the strong by the weak." + + 497 Called a negative community of goods, by _Zacchariae_, Vierzig Buecher + vom Staate, IV, 146, in contradistinction to the positive and + universal community of gain, as desired by the communists. + + 498 Community of goods and of women among the Ichthyophages on the Red + Sea, who lived in caves, went naked for the most part, plundered all + shipwrecked people, and never reached an advanced age. _Diodor._, + III, 15 ff. _Peripl._, Maris Erythr., 12. Concerning the Scythians, + see _Strabo_, VII, 300; the Spaniards, _Plutarch_, Marius, 6; the + Rhetians, _Dio Cass._ LIV, 22; the Triballi, _Isocr._, Panath., § + 237; the Kilici, _Sext._, Empir. Pyrrh. Hypot. III, 24. Community of + goods among the Caribs who performed all their work in common, and + had, at least in the case of males, a common table and common stores + with supplies. (_Petr. Martyr_, Dec. VII, 1. _Rochefort_, II, c. 16. + _B. Edwards_, History of the West Indies, I, 43 ff.) Among the + Kuskowimers of Russian America, all the able-bodied men of the tribe + live together. (_v. Wrangell_, Nachrichten, 129.) Among the + inhabitants of the Aleutian islands, at least in times of scarcity + of food, the produce of the fisheries is divided according to their + need. (_V. Wrangell_, 185.) The organization of labor is rigidly + enforced among the Otomacs, on the banks of the Orinoco, and they + are, nevertheless, more civilized than their neighbors. (_Depons_, + Voyage, I, 295.) A community of goods must, however, be considered + an advance, in the case of an isolated people; and it is an error to + look upon it as the most primitive condition, as does, for instance, + _Ambrosius_, De off. Minist. I, 28, and _Frederick II_, in the + preface to his general code. (Allgemein. Gesetzbuche, 1231.) The + hospitality of the inhabitants of the Friendly Islands borders on a + community of goods. (_Mariner_, Freundschaftsinseln, 75, 81. + _Klemm_, Kulturgeschichte, IV, 398.) Concerning the beginnings of + property among the Esquimaux, See _Klemm_, II, 294. + + 499 {~GREEK CAPITAL LETTER OMICRON~}{~GREEK SMALL LETTER UPSILON WITH PSILI~}{~GREEK SMALL LETTER KAPPA~} {~GREEK SMALL LETTER ALPHA WITH PSILI AND OXIA~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER XI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER ETA WITH DASIA AND PERISPOMENI~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ALPHA WITH VARIA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER NU~}, {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK KORONIS~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER XI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}. (_Didym._, + ad Odyss. II, 73, IX, 252.) + + 500 In Mexico, the Spaniards found land ownership among the most + distinguished of the natives, but only a species of possession in + common and common store houses among the peasantry. (_Robertson_, + History of America, § VII.) Hence, the agriculture of the country + was so unimportant that the little army of the _conquistadores_ + frequently produced a famine by their marches. + + 501 The Tcherkesses considered robbery honorable provided the robber was + not caught _in flagrante_. Compare _Koch_, Reise in den kaukasischen + Isthmus, I, 370 ff. _Bell_, Journal of a Residence in Circassia, I, + 181, II, 201. The organized robber bands of ancient Egypt, when it + was so highly civilized (_Diodor._, I, 80) may, on the other hand, + be accounted for by similar conditions actually existing in the + large cities of our own day. + + 502 What a frightful organization of labor we find in Sparta, combined + with a community of goods! Let us recall the exposing of children + authorized by law, the mode of education which must have cost the + life of all whose constitution was weak, the _cryptia_, the stern + hierarchy of age etc. _Plut._, Inst. Lac. 2, appreciates the bad + taste of the black broth at its true value. The Cretan community of + goods was based chiefly on the unnatural relation created by the + authorities known as paiderastia; and which was a very efficient + means to prevent over-population. (_Plat._, De Legg, I, 636. + _Arist._, Polit. II, 8.) + + 503 Remarkable reasons therefor in _Caesar_, Bell. Gall., VI, 22. + + 504 There are, especially in Russia, a multitude of such institutions + among the inhabitants of the country still. See _Roscher_, + Nationaloekonomik des Ackerbaues, § 71 ff. + + 505 In the Corpus Juris Canonici, that crown of medieval theology, + politics and jurisprudence, the ideal of a community of goods + occupies a place almost as prominent as in the works of modern + socialists. The only difference is, that in the former the + opposition to private property arises from a one-sided religiousness + and contempt of the world, while, in the latter, it arises generally + from irreligiousness and over-estimation of worldly goods. + + 506 This does not include the cost of the schools, churches and + benevolent institutions. + + 507 According to _Lassalle_, System der erworbenen Rechte, 1861, § 259, + history shows that law, as civilization advances, curtails more and + more the proprietary sphere of private individuals, inasmuch as it + tends more and more to place a greater number of objects outside the + circle of individual ownership. + + 508 Saint Simonism is a warning example of this tendency. Saint Simon + never lost an opportunity to give vent to his utter contempt for the + liberals, and for constitutional government--_ce batard du regime + feodal et du regime industriel_; and to counsel the crown, after the + example of Louis XI. to place itself at the head of the working + class, and in opposition to the middle class. (Oeuvres de _Saint + Simon_, ed. 1841, 44, 148, 209.) _Bazard_, Exposition, 76, demanded + that all antagonism between the temporal and spiritual powers, all + opposition for the sake of freedom, _mefiance organisee_ of + parliaments, and all competition, should cease. Even education he + would have bestowed according to _capacite_, which he would have + determined by the _chefs legitimes de la societe_ (280). To the + criminal court should be referred all cases of _delicts_, that is, + all inopportune acts, even in the scientific and artistic + departments. They should be tried after the manner of the "courts of + trade;" that is, in a summary way, without appeal, and by experts + (317 ff). All the relations of property should be determined by the + _decision arbitrale des chefs d'industrie_ (326). _Bazard_ + everywhere insists that the reign of genius and of self-sacrifice on + the one hand, and on the other of confidence and obedience, is the + only true policy (330). Saint Simonism was nearly related to + Bonapartism. + +_ 509 Schaeffle_, Nat. OEk., III, Aufl., I, 61. + + 510 If we remove in thought, all injurious elements from a community of + goods, and add to it all the incentives and restraints necessary to + be added, we shall have a state of things entirely similar to that + in a nation whose public and private affairs are carried on in + accordance with the principles of a healthy system of Political + Economy as understood to-day. (Edinburgh Review, January, 1851.) + + 511 How true freedom is accompanied by what _Bastiat_ calls "true Saint + Simonism and true communism," see _infra_, § 210. + + 512 The experiments of a community of goods, which have proved + successful in practice, were all based on the more or less complete + celibacy of the members of the societies. Compare _Hermann_, + Staatsw. Unters., II, Aufl., 45. + + 513 Thus _Proudhon_ (Contradictions, ch. 5) says that the many + socialists, who would construct their societies after the type of + the family, as the _molscule organique_, are all wrong. The family + has a "monarchical, patriarchal" character. In it, the principle of + authority is formed and preserved. On it, ancient and feudal society + was based; and "precisely against this old patriarchal constitution, + modern democracy protests and revolts." _Fourier_ calls marriage, + _un groupe essentiellement faux: faux par le nombre borne a deux, + par l'absence de liberte et par les dissidences du gont, qui + eclatent des le premier jour_. (Nouveau Monde, 57.) + + 514 On the Indians of North America, see _Schoolraft_, Information + respecting the Indian Tribes of the United States, II, 194; on the + South American _d'Orbigny_, Voyage, IV, 220, and passim, on the + South Sea Islanders, the Novara-Reise, II, 418; on the ancient + Albanians, _Strabo_, XI, 503. + + 515 The hereditary transmission of property to posterity has an obvious + tendency to make a man a good citizen. It ranges his passions on the + side of duty, and induces him to make himself profit the common + good, and it assures him that his reward shall not die with himself, + but that it shall be handed down to those to whom he is joined by + the dearest and most tender feelings. (See _Blackstone's_ + Commentaries, II, 11.) Without the right of inheritance, credit is + scarcely possible, since with the death of the debtor the only stay + of the creditor would cease. + + 516 Testamentary freedom (which obtained in places there about the + beginning of the eighteenth century) prevails completely in England + at present, contrary to the principle of the Roman law requiring an + obligatory portion (_la legitime_) to be left to the heirs, which is + still binding in France, but in a very much developed form. The + consequence is that last testaments are as frequent in England as + they are rare in France. There were, in Paris, in 1825, 7,649 + judicial, and only 1,081 testamentary partitions of property. + (_Monnier_.) In Great Britain, in 1838, the number of testamentary + alienations of property taxed stood to those in which there was no + will, in the proportion of 8:3; and the values of the alienated + property as 10:1. (_Porter_.) Among a people noted for their high + moral tone, testamentary freedom is a powerful means of + strengthening paternal authority on the one hand, and of keeping + alive, in the minds of parents, on the other, a sense of + responsibility for the future of their children. Compare + _Helferich_, Tuebinger Zeitschr., 1854, 143, ff. + +_ 517 Polyb._, XX, 6. Hence it was, that all (?) the wealth of Thebes, + when it was destroyed by Alexander the Great, was only 440 talents. + (Athen., IV, 148.) _Drumann_, Gesch. Roms. etc., VI, 333 ff. + _Cicero_, Phil., II, 16. _Hoeck_, Roem. Gesch., I, 2, 118. _Sueton._, + Octav., 66. An especially scandalous instance in _Petron._, 140. For + a masterly theory of legacy-hunting, see _Horat._, Sat., II, 5. + Compare _Lucian_, Dialogues of the Dead, 5-9. _Petronius_ speaks of + a _turba haeredipetarum_. (124.) + + 518 Even the revolutionary shibboleth, _paternite_, really means nothing + more than the equal right of inheritance of all, i.e., the abolition + of the right of inheritance! (_R. Meyer_.) The strongest attack, + from a scientific point of view, made on the right of inheritance in + more recent times, comes from Saint Simonism. The founder himself, + after a life rich in experience but poor in action, spent in the + search of much but in the finding of little, succeeded only in + arraying the industrial and proprietary classes against each other, + in declaring the poorest class to be the most important of all, and + in basing the new _religion of love_ on the emancipation of labor. + His disciples went further. In order to abolish all the privileges + of birth, _Bazard_, Exposition de la Doctrine de Saint Simon, 1831, + p. 172, ff., taught that it was not enough to distribute public + employments according to merit, and in the interest of the people + generally, but that the distribution of property should be made in + accordance with the same principle. The inequality of ownership + should correspond with the inequality of merit. Every one may, + during his life, keep what he had acquired himself, but give it to + the state at death. Thus would a reconciliation be effected between + the general interest and private interest; and the public revenue, + supplied in this way, might easily be employed in place of the + revenue raised by such taxation as weighs most heavily on the + inferior classes. _F. Huet_, also, Le Regne social du Christianisme, + 1853, III, 5, would have all private property, after the death of + the owner, fall _egalement a tous les jeunes travailleurs_. The + practical consequences of this system may now be seen in Turkey. + There, the principal military fiefs are held in this way. Hence it + is, that the Turkish owner of such a fief builds as little as + possible. When one of his walls threatens to fall, it is kept + standing by means of props. If it falls in fact, the only + consequence is that there are fewer rooms in the house, and the + owner settles beside the ruins. (_Denon_, I, p. 193.) In the Butan, + there exists a species of practical Saint Simonism. _Robinson_, + Descriptive Account of Assan, 1841. + + 519 It was chiefly fear of the consequences of the declamations of the + socialists and their declamation against "monopoly" that induced + _Bastiat_ to reduce all the value of landed property to that of the + capital employed in its manuring, improvement etc. (Harmonies, ch. + 9.) We may, however, unreservedly grant him that, as a rule, until + the time of its original possession by man, land had no _valeur_ + whatever (278). + +_ 520 Kant_ thinks the very contrary: Metaph. Anfangsgruende der + Rechtslehre, (Werke, IX, 72 ff). _Contra_, _Grotius_, J. B. et P., + II, 2. _Graswinkel_, in his Schriften fuer die Freiheit des Meeres, + 1652 ff., in _Laspeyres_, Geschichte der niederlaendischen N. OEk., + 12. _Hufeland_, Neue Grundlegung, I, 307. + + 521 "A district of Tartary of ten square miles, in which several hordes + pasture their flocks, may contain between 400 and 500 shepherds, who + find employment in this mode of production." In Brie, in France, on + the same area, 50,000 peasants who own no land, live and draw their + sole income from their labors in the fields (_J. B. Say_). + +_ 522 Schubert_, Reise durch Frankreich und Italien, I, 188. + + 523 "Without labor, the earth bestows nothing on man but a stopping + place. Hence, the reasons for private property do not extend so far + as to prove that the great land and water highways should not be + reserved as common property, and as a home to every man." + (_Zachariae_, vom Staate, VII, 43.) + + 524 This is the practice in Taway. _Ritter_, Erdkunde, V, 130. And so in + ancient Germany. _J. Grimm_, Rechtsalterthuemer, 92. Right of the + "dead fire" in Spain and Portugal during the middle ages. _S. Rosa + de Viterbo_: Elucidario das Palavras etc., I, 470. In many parts of + Persia, the land belongs to anyone who has provided it with water by + canals or wells. (_Fraser_, Journey in Chorasan, ch. 7.) Especially + after the Mongolian devastation about the beginning of the + fourteenth century, it was decreed that land which had remained + uncultivated for a long time should belong to the person who made it + productive. (_d'Ohsson_, Hist. des Mongols, IV, 418.) Similarly, in + the time of the ancient Persians (_Polyb._, X, 28, 3), the harvest + for the first five years belonged to the person who first irrigated + the land. On the upper Euphrates, likewise, the land is very often + neither sold nor leased. Anyone who will till it and pay one-tenth + of the produce to the bey may have it for nothing. (_Ritter_, X, + 669; compare VIII, 468; IX, 900.) So, too, among the Fulah and + Mandingo negroes, and even among the Tscherkessans. (_Klemm_, + Kulturgeschichte, III, 337 ff.) As the latest stages of development + so often present instances of a reversion to the earliest, we find + that Theodosius and Valentinian decreed that the _agri deserti_ + should, after two years' cultivation, belong to the possessor. L. 8, + Cod. Just., XI, 58. + + 525 Thus anyone may burn his own coat or throw it in the water; but no + one may set fire to his own house or drown his land by the + destruction of a dam. Even the non-user of a large area, in a + thickly populated region, would scarcely be permitted. The taking of + property by the state, at the present day in times of peace, is + confined almost exclusively to land. + + 526 Thus _P. v. Arnim_, in a work entitled "Ideen zu einer vollstaendigen + landwirthschaftlichen," Buchfuehrung, 1805, a treatise on + "agricultural book-keeping," considers the farmer as a state + official who should cultivate whatever he believed in conscience, or + what the state declared to be, most necessary. He suggests that the + state should subject all new purchasers of land to an examination to + ascertain whether they are rich and noble enough to act in this way. + + 527 Thus, for instance, _Herbert Spencer_, Social Statics, 1851, 114 + ff., and to some extent _Spinoza_, Tract. polit., VI, 2. There are + now in England several Land-Tenure-Reform-Associations, some of + which would "expropriate" all land and vest the title in the state. + The programme of the others embraces not only opposition to the + right of primogeniture, to family _fidei commissa_ and the assertion + of the right of freedom of trade in land, and of a more democratic + use of common lands, but also the appropriation by the state of the + increase in the rent of land which is caused by no labor of the + landlord, but solely by the increase of population and of the wealth + of the community or of the nation. _Newmarch_, on the other hand, + very correctly remarks, that since it is impossible to draw a line + of demarkation showing the increase of the value of land growing out + of the increase of population etc., the owner of land in making + improvements would never know whether he made them for himself or + for the state. (Statist. Journal, 1871, 488 ff.) Compare _Wolkoff_, + Sur la Rente fonciere, 1854, and _H. H. Gossen_, Entwickelung der + Gesetze des menschlichen Verkehrs (1854). + + 528 In Congo and on the gold coast of Guinea the land, in whole + villages, is tilled in common and the harvest distributed among the + families per capita. Wherever absolutism reigns, the prince is also + the owner of all the land. (_Klemm_, III, 337.) In China, where the + original tenure in common of the land by all was broken through in + the third century before Christ, all the land of the country now + belongs, strictly speaking, to the state; and the possessor of land + who permits it to go untilled is punished. (_Plath._ in the + phil.-hist. Sitzungsberichten der Muenchener Akad., 1873, 793 ff.) In + Corea, private property in land is unknown; arable land is divided + by the state according to the number in a family. (_Ritter_, IV, + 633.) The example, on the largest scale, of a country without + private property in land is the British East Indies. Compare the + paper by _Ch. Campbell_, in the Essays published by the Cobden Club; + System of Land Tenure in various Countries, 1870. + + 529 The legal and economic difference between property in land and + property in capital is well defined by _J. S. Mill_, Principles, II, + ch. 2, 6. "The reasons which form the justification, in an + economical point of view, of property in land, are only valid in so + far as the proprietor of the land is its improver. In no sound + theory of private property was it ever contemplated that the + proprietor of land should be merely a sinecurist quartered on it." + He here alludes specially to Ireland. The Fourierist, _Considerant_, + distinguishes accurately between the capital produced by labor and + saving, and the increase of the value of land caused by capital and + labor, and its original value. Only the first two elements can + justly be made property. But as, for prudential reasons, it is + necessary to grant individuals the right of private property in + land, those who are not such proprietors must, as a compensation for + the common property which they have lost, be guaranteed the right to + labor. (Theorie du Droit de Propriete et du Droit au Travail.) In + England, the opinion that the compulsory support of the poor was + introduced in compensation to them for the establishment of private + property in land has met with considerable favor. _Bishop Woodward_, + On the Expediency of a Regular Plan for the Maintenance of the Poor + in Ireland, 1775. Compare _Eden_, State of the Poor, I, 413. + However, the poor rates, in a country like England, are much more + than an equivalent of what its soil could produce without the + assistance of capital. + + 530 The principal classical work on this subject is _Nebenius_, Der + oeffentliche Credit, 1820, 2d ed., 1829. Previously, _Salmasius_, De + Modo Usurarum, 1639; and even _Demosthenes_, adv. Dionysiod, 1283. + Compare further _Schaeffle_, in the Deutsch. Vierteljahrsschrift, No. + 106, II, 289 ff. + + 531 Compulsory loans by the state, for instance, occupy an intermediate + position between taxes and credit-operations, properly so called. + + 532 Besides loans proper, all payments in advance, or delays made in the + payments of earnest-money, all leases and lettings, which + _Courcelle-Seneuil_ calls _un mediocre degre de credit_, insurances + and even all contracts for wages where the payment is delayed for a + long period of time, are species of credit. For a nice distinction + between leasing (_Pacht_) and letting (_Miethe_), see _Knies_, + Tuebinger Ztschr., 1860, 180 ff., and the Freiburger Univ. Programm., + 9. September, 1862. _D. Wakefield_, Essay upon Political Economy, + 1804, 35, distinguishes between "loan-credit" which is given to a + poor man in the hope of his paying it by means of his labor, and + "exchange-credit," or credit between property owners. + _Cieszkowski's_ definition: _le credit c'est la metamorphose des + capitaux stables et engages en capitaux circulants et degages_. (Du + Credit et de la Circulation, 2d ed., 1847.) According to _Knies_, + Tuebinger Ztschr., 1859, 568, every credit-operation is an exchange + or sale of services, one of which is to be performed in the present, + and the counter-service of the other party in the future. According + to _Macleod_, it is "a sale of debts." + + 533 Personal credit, of course, preponderates in commerce. Hence it is, + that in mercantile life, information concerning the personal status, + reputation etc. of his colleagues, plays so important a part with + the merchant. This information was made more accessible in England + by the Lloyd institution. On similar North American institutions, + see _Tellkampf_, Beitraege, I, 51. Credit given on security is a + modification, sometimes of personal and sometimes of real credit. + Compare, _infra_, the theory on bankers, brokers etc. + + 534 In despotisms, credit is almost entirely personal. _Montesquieu_ + Esprit des Lois, L.V., 15. In New York, says _M. Chevalier_, a + merchant with resources worth 200,000 francs, can do a business of + from 1,000,000 to 1,500,000 francs. In Paris, under similar + circumstances, the same man would find it difficult to be credited + to the extent of 500,000 francs. In Holland, two hundred years ago, + a person who hypothecated his property was obliged to pay a higher + rate of interest than in business (_Becher_, Polit. Discurs, 1763, + 699), while the stationary period, one hundred years ago, made + personal credit extremely difficult. In Zurich, it was encouraged by + the prohibition of loaning money out of the country. (_Buesch_, + Geldumlauf, III, 40.) + +_ 535 Schaeffle_, Nat. OEk., II, Aufl., 112. + +_ 536 Schaeffle_, according to the purpose which it is intended to + subserve, divides credit into production-credit (investment of loans + in immoveable property and in moveable property engaged in + industrial operations), consumption-credit and clearing-credit, or + loans made to pay respited purchase and earnest money, inheritances + etc. (Kapitalismus und Socialismus, 552.) + +_ 537 Pinto_, Traite de la Circulation et du Credit, 1771, considers + loans bearing interest as new portions of the resources of a country + (p. 161), and that government loans not made in excess of its powers + are _une alchymie realisee dont souvent eux memes qui l' operent n' + entendent pas tout le mystere_, (p. 338.) Similarly and earlier, _v. + Schroeder_, F. Schatz-und Rentkammer, 238 ff; _Melon_, Essai + politique sur le Commerce, 1734, ch. 6; next, _Hamilton_, Report to + the House of Representatives on the subject of Manufactures, Dec. 5, + 1791; _Von Struensee_, Abhandlungen, 1800, I, 259. See infra, § 210. + More recently, _St. Chamans_, Nouvel Essai sur la Richesses des + Nations, 1824, 83 ff. To some extent, even _Dietzel_, System der + Staatsanleihen, 1855, 200. This is a dangerous error, since to every + credit there is a set-off in the nature of a debit of an equal + amount; and the evidences of debt are nothing but claims on the + future revenue of the state. This was fully recognized by + _Cantillon_, 291 ff. One of the principal advocates of that view + among writers on Political Economy is the vivacious, acute and + practically not unskillful, but sophistically superficial _Macleod_. + (Elements of Political Economy, 1858, ch. 3, Dictionary, 1862, v. + Credit.) The creditor's assignable right of demand, he considers + immaterial capital. While bills of lading, warehouse receipts, dock + yard receipts etc., only represent goods, the bank note is new + goods. Even metallic money has only a credit-value, inasmuch as it + can be used only to effect exchanges. To the - of the creditor may + correspond a + of the debtor; but the latter is negative only in the + sense that we speak of negative electricity, a negative + thermometrical degree. When an estate is leased, the owner has, in + his demand for rent, a vendible _plus_; but the lessee no + corresponding _minus_. (Not so. To the same extent that the + proprietor has his future payments on the lease discounted, the + present sale-value of his estate is diminished; or if it is not + sold, the last party obtaining the discount has made his available + capital as much less by the advance as that of the lessor has been + increased.) The "discounting of the future," that is, the apparent + capitalization of hopes, so much in vogue at the present time, may + be a great spur to production as it may also be to baseless + extravagance. + + 538 Many theoreticians ascribe a direct creation of new capital to + credit, in so far as the capacity of the evidences of debt to + circulate as a medium of exchange effects a real saving, and permits + the former very costly and intrinsically valuable instruments of + exchange to be used in some other way. (§ 123.) Compare _Ricardo_, + Proposals for a secure and economical Currency (1817). _J. S. Mill_, + Principles, II, 174 and 36. _McCulloch_, Commercial Dictionary, art. + Credit. And so it was in the first four editions of this book of + mine. But here, too, there is, immediately, only a transfer of + already existing capital. The person, for instance, who accepts a + bank note for payment, loans a part of his capital to the bank; and + the advantage to the whole community of such credit-operations + consists chiefly in this: that so large a quantity of cash-capital + which lay idle in banks etc., may be used more productively. + + 539 When _Roesler_ says that credit is capital, the product of saving, + and very serviceable in further production (_Grands._, 300), he + confounds credit itself with the foundations of credit, which are, + indeed, in large part material or moral capital. + + 540 Compare Discourse on Trade, Coyn and Paper-Credit, London, 1697, 72 + ff. + + 541 Compare _Buron_, Guerre au Credit, 1868. _Schaeffle_, Tueb. Ztsch., + 1869, 296 ff. With a thorough understanding of its + politico-economical bearing, _O. Michaelis_, (Berliner V. Jahrsschr. + 1863, IV, 121,) says: The capital-value of my credit is not equal to + the nominal value of my evidences of indebtedness [notes etc.], but + to the capitalized amount of the extra surplus which I have obtained + in my business by means of credit, after deduction is made of the + costs and of the risk-premium. + + 542 We shall, in the books to follow this, inquire with great care, what + are the means best calculated to remedy this dangerous tendency. We + need only remark here, that it is to be found in a judicious + association of small capitalists, and also in the capitalization, so + to speak, of personal qualities. A well organized society of + work-men, without capital, may indeed obtain credit, as for + instance, the Schultze-Delitsch societies, the Russian + _artel-schnicks_ (market-aid societies) etc. prove. (_Fruehauf_, Die + russ. Artels in _Faucher's_ Vierteljahrsschrift, 1868, I, 106 ff.) + We may also mention the greater credit accorded to a land-owner the + moment he becomes a member of a land-loan association as compared + with what he could obtain before he had joined it. The popular + belief of the ancient Egyptians afforded them a very great + instrument of credit in the pledging of the remains of their + ancestors. (_Herodot._, II, 136.) + +_ 543 B. Hildebrand_ is of opinion that the Political Economy of the + future may be characterized as credit-economy, in the same way as + the Economy of the present may be called money-economy, and that of + the past as barter-economy of barter. (National OEkonomie der + Gegenwart und Zukunft, I, 276 ff.) _Hildebrand's_ view is correct in + so far as that, with every advance in civilization, credit comes to + have absolutely and relatively an ever increasing importance, + although in the middle ages, especially under feudal forms + (_Lehensformen_), there were numberless operations in credit. + Otherwise, however, _Hildebrand's_ three kinds of economy are, by no + means, cooerdinated. While barter and purchase through the + instrumentality of money, in every instance, entirely exclude each + other, it is impossible to imagine a credit-transaction of which the + promise of a barter-performance or of a money-performance does not + constitute the base. During a "money-economical + (_geldwirthschaftlichen_) period" [i.e., one during which money is + the medium of exchange, and not notes; and when barter does not + obtain.--_Translator_.] the service rendered by money as a medium of + exchange may, for the most part, be supplanted by credit. Money, as + a measure of value, still remains the substratum of credit itself. + (See _Knies_ in the Tuebinger Ztschr., 1860, 154 ff.; and in the + Freiburger Programm, 9 Sept., 1862, 19.) Earlier yet, _A. Wagner_, + Beitr. zur Lehre von den Banken, 1857 ff. Among the most practical + propositions of Saint Simonism is that of a _systeme general des + banques_, intended to administer all the goods of the nation, and to + loan them to individuals engaged, in production. (_Bazard_, 205 ff.) + + 544 It is destructive of credit to allow the debtor to await several + decrees or judgments before his liability is established; to allow + him, on easy terms, delays, reversals of judgment, the costs of the + case etc. The term within which a creditor might bring in his claim + before the meeting of creditors in the Amsterdam Boedel-chamber was + formerly thirty-three and a third years. (_Buesch_, Darst. der + Handlung, Zusatz, 82.) In the presidency of Bengal there were, in + 1819, 81,000 cases in arrears, and in 1829, 140,000. Westminister + Review, XIX, 142. + + 545 And yet _Melon_ is of opinion that the state should favor the debtor + as much as possible. (Essai politique sur le Commerce, ch. 12, 18.) + This was the view entertained on this subject by the older + practitioners. In Bengal, the _dhura_, a species of "judgment of + God," in which the party who could hold out longest against hunger + was declared the victor, was the only means to compel a debtor to + pay his debt. As a consequence, the Bengal peasant could not borrow + money at less than 60 per cent. per annum. Edinburgh Review, XXII, + 67. On the damages attending the credit-laws and credit-courts of + Russia, by which all foreign goods are rendered exceedingly dear, + see _v. Sternberg_, Bemerkungen ueber R., 100 ff. In a country in + which a great many powerful personages are above the laws, an + incorporated loaning bank may be an indispensable necessity. + (_Storch_, Handbuch, II, p. 23 ff.) In Naples, even as recently as + 1804, no debtor could be arrested during the last six months of the + queen's pregnancy. At a previous period, one might fail in business + there and escape all punishment by exposing the hindermost part of + himself in a nude state publicly before a column of the _Vicaria_. + (_Rehfues_, Gemaelde von Neapel, I, p. 203 seq., 222.) In Schwytz, + the rate of interest is so high, because the law allows the debtor + to pay his creditor, whether the latter will or not, in articles of + household furniture, clothes etc., estimated at a very high value. + (_Hermann_, Staatsw. Untersuchungen, 202.) It has now become quite + usual in the United States, on account of the many delays granted to + the debtor by "democratic" laws introduced there, instead of mere + mortgage, to give full warranty deeds when capital is loaned. By + this means, the creditor is in danger, when misfortune overtakes + him, to see himself compelled to let his property go at one-fourth + of its value. + + 546 See the Heliast oath in _Demosth._, adv. Timocr., 746. The Roman + system of credits in the time of Polybius was much better than the + Carthaginian. _Polyb._, VI, 56, XXXII, 13. + + 547 Sachsenspiegel, III, 39. _J. Grimm_, Deutsche Rechtsalterthuemer, 612 + ff. _Dahlmann_, Daenische Gesch., II, 245, 339. _Hermann_, Russ. + Gesch., III, 357. On slavery for debt among the Malays, see Ausland, + 1845, No. 157. + +_ 548 Beaujour_, Tableau du Commere en Grece, II, 176. + + 549 C. 2 X. De Pignor. An appropriate provision in a priestly + government. _Diodor._, I, 79. + + 550 Staying in a place by the debtor until the creditor is satisfied, + and other degrading stipulations, which, however, were prohibited by + the police regulations of the Empire in 1548, art. 17. + +_ 551 Marten's_ Ursprung des Wechselrechts, 1797. Statuta Mediol., 1480, + fol. 238 ff. The municipal law of Florence unconditionally + imprisoned the father or grandfather for the debt of the son, when + the latter engaged in industrial pursuits with their consent. (Stat. + Flor., I, 201.) In Bologna, the brothers of a bankrupt who had + constituted one household with him were held responsible for his + debts. (Statuti dell' Universita de Mercantati della Citta di B., + 1550, fol. 110.) The law of Geneva excluded from all positions of + honor the son who had left his father's debts unpaid. _Montesquieu_, + E. des Lois, XX, 16. The consequence was, that among the higher + classes not a creditor lost anything for centuries. (_K. L. v. + Haller_, Restauration der Staatswissenschaften, VI, 519.) Compare + the "Nurenberger Reformation" of 1479, fol. 61 and 68 of the edition + of 1564. + + 552 Compare the R. P. O. of 1548, art. 22. And so, by the Code de + Commerce, III, 4, I, even the simple bankrupt in contradistinction + to the fraudulent bankrupt is punished, and every person unable to + pay his debts is declared a _simple_ bankrupt, who, among other + things, has made excessive household expenses, or lost considerable + sums by play etc. Compare _Sully_, Memoires, Livre XXVI, who + declares it to be his most wholesome law, that fraudulent bankrupts + should, like thieves, be punished with death, and that all their + fraudulent assignments, gifts, etc., should be declared void. + Further, Ordonn. de Louis XIV., sur les Failletes, art. 11; _J. de + Wit_, Memoires, 77 ff; _v. den Heuvel_, Sur le Commerce de la + Hollande, 110 ff. Frederick William I., in 1715, threatened with the + galleys all light-headed bankrupts, and, in 1723, all those who, + knowing their insolvent condition, should effect further loans. + _Mylius_, Corp. Const. March. II, 2, 31, 40. For China, see _Davis_, + The Chinese, I, 247 ff. _Gr. Soden_, Nat. Oek., III, 231, demands + that, in case of doubt, the guilt of the bankrupt should always be + presumed. + + 553 In England only one-tenth of the number of bankrupts are considered + innocent. _Elliot_, Credit the Life of Commerce, 1845, 50 ff. + + 554 The _contrainte par corps_ of debtors was abolished in France in + 1792, but restored in 1797. Even _Turgot_ remarked that since + slavery had ceased there was no further fear (?) that the poor would + be oppressed by imprisonment for debt. (Sur le Pret d' argent, § + 31.) According to _Droz_, the question is not one of weighing + "freedom" against "miserable money," but the deprivation of a few of + that freedom and the non-fulfillment of obligations entered into, + that is against the destruction of public confidence. + + 555 A similar development among the Greeks: + + A. Rigorous slavery for debt, which Kypselos moderated at Corinth. + (_Pausan._, V. 17, 2), and Solon abolished in Athens. (_Plutarch_, + Sol., 15. _Demosth._, de fals. Legat., 412.) + + B. The reckless creation of debts as seen in Aristophanes; while + outside of Athens slavery for debt lasted yet a long time. + (_Hermann_, Griech. Privatalterth., § 57, 20.) In the time of + Demosthenes, the merchant in arrears in the payment of his debts was + cast into prison, and the bottomry-debtor who deprived his creditor + of his security might be punished with death, (_Demosth._ adv. + Pharm., 922, 958), and this although the _cessio honorum_ was + introduced. _Hermann_, § 70, 3. Compare _Xenoph._, Vectigg., 3, + _Demosth._ adv. Apat., 892; adv. Lacrit., and adv. Dionys. In + Corinth, the state superintended expenses made by parties. This was + part of its credit-policy. (_Athaenaeus_, VI, 227.) For a remarkable + Rhodian law relating to debts, see _Sext._ Emp., Hypot. I, 149. + + In Rome: + + A. The chief characteristic of the ancient law in this matter was + the eventual sale of the person of the debtor on the getting of the + loan (_nexum_); the power of the creditor to put the _addictus_ to + death or to sell him in foreign parts; finally, the _in partes + secanto_, in the concourse of creditors. Without these rigorous + provisions, the borrower might easily have evaded his debts, by the + emancipation of his son and turning over his property to him. + (_Niebuhr_, Rom. Gesch., II, 770 ff; _Savigny_ in the Abb. der + Berliner Acad., 1833. _Zimmern_, Gesch. des roem. Privatrechts, III, + 131 ff.) + + B. Later, we find nothing of the execution of the debtor, or of the + sale of his person; but he might be compelled to do slave labor for + his creditor without any protection against ill-treatment. Slavery + for debt was restricted by the Lex Poetelia. (_Niebuhr_, III, p. + 178; _Mommsen_, III, 494.) The Praetorian law introduced the custom + of putting the creditor in possession of the goods of the debtor, + with power of sale, which proceeding rendered the debtor infamous. + See several passages in _Walter._, Roem Rechtsgesch, 763 ff; + _Tertull._, Apol., 4; Tab. Herac. I, 115 ff. Later, Caesar's Lex + Julia permitted the honest debtor to escape imprisonment by the + assignment of his goods. + + C. The moneyed oligarchy which prevailed in Rome caused the adoption + of exceedingly severe measures against delinquent debtors. (_Plut._, + Lucull., 20. _Cic._, ad. Att. V. 21, VI.), although its members + themselves incurred debts in the most reckless manner. Caesar, in the + year A.C. 62, excluding his active (_activen_), owed debts to the + amount of 25,000,000 sesterces; M. Antonius, in the year 24, + 6,000,000; in the year 38, 40,000,000; Curio, 60,000,000; Milon, + 70,000,000. (_Mommsen_, Roemische Geschichte, III, 486.) Compare + _Gellius_, XX, 1, XV, 14. + + 556 Whenever a new shop-keeper, who sells goods on monthly credits, + settles in a district, the number of poor persons invariably + increases. (_McCulloch_, Commercial Dictionary.) The ruinous credit + given by the Jews to the Westphalian peasants begins with an account + for the goods which they have succeeded in pressing upon them, after + five or six years have elapsed. The Jew seldom sues accounts at law; + but he besieges the debtor and discovers where his last head of + cattle and his last little supply of provisions are to be found. As + he is willing to accept everything that has any value, sometimes in + payment of arrears, and sometimes in payment for some new piece of + trash, he is sure to obtain his dues in the end, but not until his + victim, who is sunk deeper and deeper in the abyss of debt by every + "accommodation," is entirely ruined. (_Schmerz_, Rheinish-Westphael. + L.W., 396 ff.) + + 557 In the lower and middle stages of civilization, we find a multitude + of laws by which minors, students etc., but especially land-owners + are limited to a minimum of credit, which, however, varies very much + with the person, and is subjected to a number of embarrassing forms, + the consent of a third person, for instance etc. (Compare Bayerische + L.O. von 1553, fol. 83.) Such laws, however, give as much room to + the play of dishonesty as they take away from that of want of + reflection. + + 558 On the municipal regulations (_Staedteordnungen_) of the 14th and + 15th centuries, which compelled Jewish creditors especially to have + their evidences of indebtedness redeemed within from every two to + five years, see _Stobbe_, Juden im Mittelalter, 129. Compare further + the Wuertemberg L. O. of 1515, Statut. Ferrar, ed. 1650, lib. II, + rub. 37, 289. According to the other provisions of the laws in North + America, some book accounts were required to be sued on within six + and others within seventeen years. (_Ebeling_, Gerchichte und + Erdberschreibung der v. Staaten, II, 247, 298.) The Prussian law of + March 31, 1838, provides a period of limitation of three years for + all ordinary commercial debts. A similar law was passed in the + Kingdom of Saxony, in 1846. In London, there has been found a great + number of hatters, tailors, boot and shoe dealers etc., whose books + showed credits of more than L4,000, most of them not to exceed over + L10. How much of all this must be lost entirely, and how that loss + must increase the sums paid for boots, shoes and hats by the prompt + payer! (_McCulloch_, v. Credit.) We find, even in Athens, that the + period of limitation was shortened in the interest of credit, and + that in the case of minors, it did not exceed five years. + (_Demosth._ adv. Nausim., 989.) Security for a debtor not over one + year. (_Demosth._, adv. Apatur., 901.) The prohibition of Zaleukos + to issue any evidences of debt whatever goes much farther. + (_Zenob._, Proverb. V, 4.) + + 559 Compare the report of the Dresden Handelskammer, 1864, 11. + +_ 560 A. Mayer_, in _Faucher's_ Vierteljahrsschrift, 1865, IV, 65. + + 561 We learn from the debates in the English parliament of February 9, + 1827, that, in two years and a half, there were, in London and its + environs, 70,000 cases of imprisonment for debt, the costs of which + were from L150,000 to L200,000. In 1831, there were in one debtors' + prison 1,120 prisoners, who owed on an average L2 3s. 2d. + (_McCulloch_, l. c.) There was, in 1792, a case of a woman who, for + a debt of L19, remained in prison 45 years, and others like it. (See + _Archenholtz_, Annalen, IX, 87 ff; X, 169 ff, XIII, 125.) In England + in 1844, arrest for sums less than L19 was prohibited. _Johnson_ had + already proposed a similar provision. (Idler, 1758, Nos. 22 and 38.) + Imprisonment for debt was abolished in France, England and Austria + in 1867; in the North German Confederation, on the 29th of May, + 1868, but arrest for security's sake was retained. _Sismondi_ finds + fault with nearly all laws in the premises, because they attack the + person of the debtor rather than his personal property, and his + personal, rather than his immovable, property. He would have all + this just the contrary of what it is. The first interferes with the + very source of wealth, the productive power of labor; the second + causes goods to be sold much below their value. Neither of these + evils attends the last. (_N. Principes_, I, 250.) + + 562 A law of the North German Confederation allows the pledging of + future wages, only in the case of public officers, and those holding + permanent places in the service of private parties, whose salaries + are over 400 thalers per annum. The original draft had excepted only + the things necessary to workmen and those directly depending on + them; while the law as passed makes the prohibition general. This + was undoubtedly done for the convenience of employers as well as of + courts; as for instance in the circuit of Dortmund, there were, in + one year, 10,000 cases in which wages were garnisheed. (Annalen des + N.D. Bundes und Zollvereins, 1869, 1071 ff.) But the recklessness of + those workmen whose wages are below the average, might have been + just as well guarded against without dragging those whose wages are + above the average down to their level, if a distinction had been + made between production-credit and consumption-credit, and the + latter had been limited by providing that no suit should be + instituted for supplies made to public houses, taverns etc. + + 563 In the second book of _Moses_, 22, 25 ff., and the fifth, 24, 6. A + very old Norman law provides that in actions for debt, execution + should not issue against effects of the debtor which are + indispensably necessary to him to maintain his position, such as the + horses of a count or the armor of a knight. (Dialog. de Scaccario.) + Magna Charta extended this provision so as to include the + agricultural implements and cattle of the peasantry. The moment + these laws, in consequence of a false principle of humanity, except + anything but what is absolutely necessary, they injure credit. Thus, + for instance, in Brazil, a law of 1758, providing that nothing + immediately employed in or directly necessary to the production of + sugar should be seized on execution, caused great injury to the + production of sugar. (_Koster_, Travels in B., 1816, 356 ff.) + + 564 § 2, Cod. De Prec. Imper. Off., I, 19. The diets of the Empire had + granted such letters in the fourteenth century. (_Wachsmuth_, Europ. + Sittengesch., IV, 690.) They were granted, as a rule, only with the + previous knowledge of the Emperor, by the police ordinances of the + Empire of 1548, art. 22. + + 565 So in Austria, Saxony, Brunswick, the electorates of Hesse and + Baden. In Prussia, they could be granted only after a juridical + decree to that effect; and an appeal to a superior court was allowed + to reverse or affirm it. Compare _Mittermaier_ in the Archiv. fuer + civilist. Praxis, XVI, and also _P. de la Court_, Aanwysing der + politike Gronden en Maximen van Holland etc., 1669, I, ch. 25. + Nuernberg obtained as a privilege, in 1495, that no _moratorium_ + should be valid as against its citizens. (_Roth_, Geschichte des + Nuernb. Handels, I, 86.) + + 566 Compare the discussions in the French National Assembly, in the + month of August, 1848. It is much less disadvantageous in times of + great commotion, when all business is brought to a stand still, to + extend the time in which bills of exchange etc. are payable. Such a + measure prevents a number of bankruptcies which the real balance of + debts due to one and owing by him does not render necessary. + + 567 In the persecution of the Jews in the middle ages, the so-called + _Brief-todten_ (letter-killing), or the destruction of titles, was + very common. In 1188, the French government released all crusaders + from the payment of interest on their debts, and granted them an + extension of three years' time to pay off the principal. + (_Sismondi_, Hist. des Francais, VI, 82.) Similar compulsory + measures were provided against the Jews and usurers in 1223 (Ibid, + VI, 539 ff.); and in 1299 (Ordonnances, I, 1331), on the formal + request of the nobility. (Ordonnances, II, 59.) Again, in 1594, + there was a release of one-third of the interest on all national and + private debts. (_Sismondi_, XXI, 318.) The general _moratorium_ of + the Milanese for a term of eight years, introduced in 1251, after + their war with France, was of an essentially different character. + (_Sismondi_, Geschichte der italienischen Republiken, III, 155.) The + same is true of the general _indult_ granted by Philip II. in + Belgium. (_Boxhorn_, Disquisitt. politicae, 241 ff.) + + 568 The abolition or release of debts, so frequent in ancient + revolutionary times, reminds us, in many ways, of the crises + precipitated in modern times by paper money and produced by the + state. The ancestors of Alcibiades and Hipponikos laid the + foundation of an immense fortune, in Solon's time, by purchasing + land in large quantities with money borrowed from several citizens, + a short time before the abolition of debts. (_Plutarch_, Sol., 15.) + + 569 Enormous consumption of wax in the churches of the middle ages. In + the cathedral of Wittenberg alone, a short time before the + Reformation, more than 35,000 pounds of wax candles etc. were burned + yearly. At the same time, honey was generally used instead of sugar. + How much more important, therefore, at that time must bee-culture + have been, considered from the point of view of circulation as + compared with what it is to-day. And so in Catholic countries, a + difference in the external manifestation of religion causes the + relative importance of the consumption of fish to increase and + decrease. In 1803 there was little demand in France for ivory + crucifixes, rosaries etc. In 1844, the demand for them and for + _prie-Dieu_ for the bed-room etc. was increased. (_Mohl_, + Gewerbwissenschafliche Reise, 101.) To engage successfully in the + sale of sugar in Persia, it is necessary to know that in that + country it is liked only in little hat-shaped lumps, which are used + only as semi-voluntary gifts; and that, in such case, custom fixes + the number of lumps. (_Steinhaus_, Russlands commercielle etc. + Verhh., 151.) In the Levant, workmen prefer bars of iron which are + small and of varied form because they find it difficult to + manipulate the large ones. The English bear this in mind much better + than the Russians. (_Steinhaus._) A merchant sending wood to + Southern France must be acquainted with the form of the staves used + in the manufacture of barrels there. Compare _Buesch_, Geldumlauf, + VI, 2, 2. + + 570 The circulation of goods compared to the circulation of the blood: + by _Mirabeau_, Philosophie Rurale, ch. 3. _Turgot_, Sur la Formation + etc. § 69. _Canard._, Principes, ch. 6. + +_ 571 Eiselen_, Volkswirthschaftslehre, 98 ff. If in ancient times + commerce played a much less important part than it does among the + moderns, it was, as _Montesquieu_ says, because the whole commercial + world was then more uniform in climate and the character of its + products than it is now. (Esprit des Lois, XXI, 4.) + + 572 Of the successive steps, sheaves, corn, flour, bread,--flour has the + greatest capacity for circulation. And, indeed, the last operation + of labor on a great many goods, because of their consequent more + narrowly specialized utility, is accompanied by a decrease in their + capacity for circulation. As an illustration, we may mention + ready-made clothing as compared with cloth. The capacity for + circulation of a commodity is very much advanced when the demand is + wont to increase with the supply, as is the case with gold and + silver, but not with learned books, optical instruments etc. Many + commodities have but little circulating capacity, because no one + desires to purchase them but at first hand. See _Menger_, + Grundsaetze, I, 245 ff. + +_ 573 Knies._, Die Eisenbahnen und ihre Wirkungen, 1853, 79. + + 574 Compare _Schmitthenner_, I, who calls attention and with reason to + the importance of loans on chattel mortgages. But _Berkeley_, + Querist, No. 265, remarks that a squire with a yearly income of + L1000 can, "upon an emergency," do less good or evil than a merchant + with L20,000 ready money. + + 575 A very important difference between Russia and England. + +_ 576 Storch_, Handbuch, I, 273 ff. There is also a useless circulation + which is not calculated to promote the division of labor, but to + employ idle time or idle capital, as in the case of games of hazard, + speculation in stocks, wheat etc. Even impoverishing consumption may + produce rapidity of circulation, as in Germany during the war years + 1812 and 1813. (_F. G. Schulze_, N. OEkonomie, 1856, 667.) Relying on + this fact, _Hume_ (1752) on Public Credit, Discourses, No. 8, argues + in favor of the old opinion, that all circulation is wholesome and + to be encouraged. _Boisguillebert_, Traite des Grains, I, 6, went so + far as to laud war because it accelerated the circulation of wealth. + On the necessity of a _circulation sans repos_, see ibid., II, 10. + In a similar way _Law_, Trade and Money, 1705, and _Dutos_, + Reflexions Politiques sur le Commerce, over-valued the circulation + of wealth as such. Concerning the Mercantile System, see § 116. + _Darjes_, Erste Gruende der Cameralwissenschaft, 1768, 531. And even + _Buesch_, Geldumlauf, I, 29, 32 ff., III, 96, who in other places + nearly always overlooks real production and sees only the + circulation of money caused thereby. Thus he calls the poor when + they are helped in money, and spend it, useful members of society! + (IV, 32, 39. Similarly, _v. Struensee_, Abhandlungen, 1800, I, 282 + ff., 400 ff.) + + 577 As, for instance, happened in France in 1577, when all commerce, and + in 1585 all industry, were declared to be _de droit domanial_. Louis + XIV. was of opinion that the king was absolute master of all private + property of priests and people. (Memoires histor. de Louis XIV., II, + 121.) Compare _Duclos_, Memoires, I, 14 ff. + + 578 Compare Theod. Cod., V, 9, 1; Just. Cod., X, 19, 8; XI, 47, 21, 23; + XI, 50, 51, 52, 55, 58. How full the really classic period of the + Roman jurists was of the idea of freedom of competition, we see in + _Paullus_: L. 22, § 3, Dig. XIX, 2. The provisions concerning _loesio + enormis_ appear first in the time of Diocletian. (Just. Cod., IV, + 44, 2.) + +_ 579 Benjamin Franklin_ says that the freer the form of government is, + the more the people show themselves in their true aspect. Ancient + Rome, with the early development of its rational disposition, soon + learned to favor freedom of commercial intercourse. Compare + _Mommsen_, Roemische Geschichte, I, passim. This was, certainly, an + element of its greatness, but also of the proletarian evils + developed in it an early date, and which were weighed down only by + the absolute growth of the state and the development of its economic + interests during centuries. + + 580 Nor must it be forgotten that competition raises prices as well as + lowers them. The expressions higher price and lower price denote + only different sides of the same relation. _M. Chevalier_ is of + opinion that our present breathless competition is characteristic + only of a period of transition prolific in new inventions, a + competition soon to be followed by peace. (Cours, II, 450 ff.) + + 581 {~GREEK CAPITAL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER ETA WITH VARIA~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~}: Hesiod., Opp., 10 ff. + + 582 "Whoever speaks of competition suppresses the existence of a common + aim," says _Proudhon_, although he adds, after _Bileam's_ way, that + to cure the evils of competition by competition, is as absurd as to + lead men to liberty by liberty, or to cultivate the mind by + cultivation of the mind. + + 583 Compare _Bastiat_, Harmonies economiques, ch. 10. + + 584 If all classes were protected against competition, no class would + derive any advantage from it, since a "universal privilege" is an + absurdity. If only certain classes or individuals are protected, it + is done at the cost of all others. + + 585 The question should not be formulated thus: "Caprice or rule?" but + "Rule of morals, or rule of law?" _Schmoller_ against _v. + Treitschke_ in _Hildebrand's_ Jahrbb. + + 586 Concerning the arguments by which the commercial restrictions of the + middle ages were defended, see below. They were, for the most part, + well founded for the age in which they were advanced. A judicious + education will often be compelled to provide limitations, but always + with the intention, by this means, of making possible a really + greater independence. Thus the current of commerce may be too weak + in a poor and thinly settled country in order that supply and demand + should always and everywhere meet and be satisfied. Under such + circumstances, their artificial concentration at certain points is + among the most efficient means of promoting the economy of the whole + people. The policy of freedom of commerce was recommended even in + the seventeenth century by _J. Child_, by _North_ and _Davenant. W. + Roscher_, Zur Geschichte der englisch. Volkswirthschaftslehre, 65 + ff., 85 ff., 113 ff., 142 ff. And earlier yet, in Holland, by + _Salmasius_, De Usurus, 1638, 583 and _de la Court_. Compare + Tuebinger Ztschr., 330 ff. Thus _Boisguillebert_ says: _Il n'y avait + qu'a laisser faire la nature et la liberte, qui est le + commissionaire de cette meme nature_. (Factum de la France, 1707, + ch. 5.) See, also, Dissertation sur la Nature des Richesses, ch. VI; + Detail de la France, 1697, II, ch. 13; Tr. des Grains, II, 8. For + the most part dictated by a reaction against Colbertism. + + See further, _Melon_, Essai Politique sur le Commerce, 1734, ch. 2. + _M. Decker_, Essay on the Causes of the Decline of Foreign Trade, + 1744, 31 ff, 106 ff. _J. Tucker_, Essay on the advantages and + disadvantages which respectively attend France and Great Britain + with regard to Trade, 1750. _Forbonnais_, Elemens du Commerce, 1754, + I, 63. _Genovesi_, c. I, 17, 3, is of opinion that at least in case + of doubt, commerce stood more in need of freedom than of protection. + _Verri_, in his Meditazioni, goes still farther. The Physiocrates, + with their _laissez aller_ and _laissez faire_ recommend competition + as the best means to increase the net income of a people. According + to _Dupont_, 147 ff, ed. Daire, the province of legislation is + confined to declaring the laws of nature. His motto is: _liberte and + propriete_. _Adam Smith_ asks that the state should do only three + things: insure protection against foreign states, the administration + of justice at home, the establishment and maintenance of certain + institutions of advantage to the whole community, but which private + interest could not establish for want of means to cover the expenses + attending them. (Wealth of Nations, V, ch. I, 2.) Hence he demands + (III, ch. 2) the abolition of all kinds of _fidei commissa_, of + royalty in mines (I, ch. 11, 2), of all corporate and exclusive + privileges, of all protective duties etc. (IV, ch. I ff), but + especially of the colonial policy hitherto in vogue. (IV, ch. 8.) + + The attacks of the Socialists on freedom of competition were begun + by _Fichte_, Geschlossener Handelsstaat, 126, in which it is called + a robber-system or system of spoliation. He would have the state + have more solicitude for human industry than if men were so many + swallows. See further, _Sismondi_, N. Principes, passim, who + everywhere demands the protection of the government for the weaker. + _Fourier_, N. Monde industriel, 396, who thinks that _le monopole + general_ is always a _preservatif contre le commerce_. _Bastiat_, + Harmonies economiques, ch. 10, has a very valuable refutation of + these follies. Recently, _Rodbertus_, Hildebrand's Jahrbuecher, 1865, + II, 272, is of opinion that "social individualism" has ever had in + history the task of dissolving decaying societies, as, for instance, + under the Caesars. + + 587 Whoever would sell to others must purchase of them. (_Child._, + Discourse of Trade, 358.) Similarly _Temple_, Works III, 19, and + _Becher_, Polit. Discurs, 1547. This view seems to have become the + national one first in Holland. Compare also _Quesnay_, 71 and + _Mirabeau_, Philosophie rurale, 1763, ch. 2. + + 588 We often hear it said: "nothing sells because there is no money." + But the real cause here is, in most instances, not a want of money, + but a want of other goods which might serve as a counter-value. In + bad times, for instance, there is many a weaver who would consider + himself fortunate, even if he could get no money for his cloth, to + obtain instead, meat, bread, wood, raw material etc. If money only + were wanting, that might easily be as favorable a symptom in + commerce, as when there are not enough shops, steamers etc., to + carry on the business of the country. Compare _North._, Discourses + upon Trade, 1691, 11 seq., but especially _J. B. Say's_ celebrated + theory of Markets, traite I, ch. XV. + + 589 See _Humboldt's_ observations as to how, in Spanish America, + agriculture in the vicinity of the mines increases and decreases + with the wealth of the latter. (N. Espagne, III, 11 ff.) See also + _Harrington_ (ob. 1677), On the Prerogative of a Popular Government, + I, ch. 11; _Cantillon_, Nature du Commerce, 16. And so _Stein._, + Lehrbuch, 122 seq., points out how great enterprises produce + especially for the consumption of the small householder without + capital, and how, therefore, the flourishing condition of the one + determines that of the other. + + 590 Those indeed who live by the spoliation of others, as robbers, + deceivers etc. are interested in the economic prosperity of the + latter only so long as their spoliation of them is not endangered. + Only to this extent can it be claimed with _Fr. List_ that the + nobility of the Middle Ages, in obeying the selfish calculation + which led to the oppression of the peasantry, engaged in as bad a + speculation as a manufacturer of our day would who should feed his + steam-engine with nothing but saw-dust or scraps of old paper. The + cities of the middle ages had a much more undoubted economic + interest in the emancipation of the peasantry as a class than the + nobles or the clergy. + + 591 Such exceptions there certainly are, even if it were not true "that + the most godly cannot rest in peace unless he is acceptable to his + ungodly neighbor." Nations that furnish the same products as we do + may, indeed, "spoil our market," just as at home the selfish + shoemaker may desire the prosperity of all wearers of shoes, that is + of all other industries, but not that of all other producers of + shoes. The view that long prevailed, that one man's gain was always + some other man's loss (_Th. Morus_, Utopia 79, ed. Colon. 1555; + _Baco._, Sermones fideles, cap. 15; _quid-quid alicubi adiicitur, + alibi detrahitur_; _M. Montaigne, Essais_ I, 21: _les prouficit de + l'un est le dommage de l'autre_) prevailed much longer in + international affairs where observation is much more difficult than + in national affairs; although even here, _P. de la Court_, Maximes + politiques, 1658, contrasts the economic interest of Holland with + that of the rest of the Netherlands and prefers it to theirs. Even + _Voltaire_ says: "The desire of the greatness of the Fatherland + includes the desire of evil to our neighbor. Evidently no country + can gain except what another loses." (Dict. philosophique, v. + Patrie.) Compare, however, the _peut-etre_ in his Histoire de la + Russie, I, 1, on the occasion of the English-Russian treaty of + commerce. Similarly, _Galiani_, Della Moneta, I, 1, IV, 1; _Verri_, + Opuscoli, 335, and recently _v. Cancrin_ who says that "in every-day + life, property is acquired only at some other person's expense." + (Weltreichthum, 1821, 119. Oekonomie der menschl. Gesellschaft, + 1845, 23.) The cosmopolitan view (_Xenoph._, Cyrop., III, 2, 17. + Hier., 10) which prevails in Adam Smith's school was introduced by + _Hume_, Essays, 1752, On the Jealousy of Trade. _Quesnay_, + Encyclopedie, v. Grains, 294, ed. Daire; _A. Smith_, Theory of moral + Sentiments, 1759, p. 6, sec. 2, ch. 2. _Pinto_, Lettre sur la + Jalousie de Commerce, 1771, and _J. Tucker_, Four Tracts on + commercial and political Subjects, 1776, 34 ff and 42 ff. "The + system of states exercises no influence whatever on the world's + commerce." (_Lotz_, Handbuch I, 11.) More recently, _R. Cobden_, in + his Russia, Edinb., 1836, among others argued, that the conquest of + Turkey by the Russians would be useful to England, because then more + (?) English products would probably be sold there. Russia would + become no stronger thereby, as conquests always injure the conqueror + more than they benefit him. The idea of European equilibrium is + therefore a chimera, because no state can be prevented from having + an internal growth, as great as may be. Thus, in the summer of 1853, + we heard the London Times sometimes preach that every cannon-shot + fired by the English at the Russians might kill an English debtor or + an English customer. The Venetians entertained a similar view at the + beginning of the fifteenth century. Compare _M. Sanudo_ in + _Muratori_, Scriptores, XXII, 950 ff. See above, § 12. + + Moreover, Malthus had recognized that there were natural rivalries + between nations which produced exceptions to Tucker's laws. + (Principles, Preface.) Similarly _Garve_, in Cicero's Pflichten + (1783), III, 146 ff. + +_ 592 B. Franklin_, Works, vol. III, 49. _Sismondi_ claims for all + civilized nations the right of interfering with the governments of + other nations with whom they have or might have commercial + relations, and of insisting that they shall have a good government + under which commerce may freely develop. (N. P. VII, ch. 4.) + + 593 As for instance when the _ami des hommes_ says that he felt towards + an Englishman or a German as he did towards a Frenchman with whom he + was not acquainted. _Mirabeau_, Philosophie rurale, ch. 6. + + 594 Thus, for instance, the Stoic, Zeno: _Plutarch._ De Alex, fort, 1, + 6. + + 595 Compare even _Lauderdale_, Inquiry, 274 ff. + + 596 How well, for instance, the English sustained Napoleon's continental + blockade, the evils produced by which were intensified by several + bad harvests. Its worst time did not, indeed, coincide with that of + the struggle with the United States. The ancient Athenians, during + their contest with Philip of Macedon, considered the question of the + supplies from the Bosphorus etc. as one of life and death. But this + can be looked upon only as a cogent proof of the small development + which their commercial talents had received at the time. How easily + might they not, according to our ideas, have obtained corn from + Sicily or Egypt. + + 597 According to the acute analysis of language made by _F. J. Neumann_, + Tuebinger Ztschr., 1872, 317 ff., the word "price" has reference to + an actual purchase or sale, while the expression "value in + exchange," generally called simply value, is based upon a valuation, + or intimates in a general way that an object possesses value; value + in exchange is, so to speak, the average of several + price-determinations. Price, according to _Schaeffle_, is the + external consequence of value in exchange, a means of representing + the latter. (N. OEk., III, Aufl., I, 218.) Only through the + difference between value in exchange (universal possibility) and + price (special reality) is the _laesio enormis_ of the jurists + possible. (_Schmitthenner_, Staatswissenschen, I, 416.) + + 598 By market price, _prix courant_, is meant the money-price of + commodities, determined by competition. + + 599 A problem very similar to that of the motion of bodies in space. + +_ 600 Lotz_, Handbuch, 50 ff., calls those commodities costly which are + obtained only at a high cost of production, and dear, those whose + price is above the cost of production. + + 601 Compare _Canard_, Principes d'Economie politique, ch. 3. Almost + simultaneously, _H. Thornton_, 1802, Paper-Credit of Great Britain. + + 602 See _Jackson's_ Account of Morocco, 284, for cases in which, in the + Sahara, when the burning winds of the desert had dried up the water + in the leathern bottles of the caravan, a drink of water cost from + $10 to $500. + + 603 The North American aborigines very frequently consent, in their + exchanges, to take any offer made to them by their equals, however + insufficient it may be, because they fear revenge. _Schoolcraft_, + Information etc., II, 178. As to the effects of cunning, the + Tungusi, when they get a glass of brandy from the Russians, grow + almost idiotic, and give away their goods at mock-prices in drink. + (_v. Wrangell_, Nachrichten, I, 233.) In the higher stages of + civilization, on the other hand, very distinguished people are, by + no means, privileged because of their position, in the struggle for + prices. In modern times, claims (_reclamen_) have taken the place of + greater physical or political power. Compare _E. Hermann_, Leitfaden + der Wirthschaftslehre 1870, 91 ff. + + 604 Thus _Galiani_ says, that before one of the two parties has + expressed his want to buy or to sell, the pans of the scales are in + equilibrium. The first that speaks breathes on one of them, and it + drops. (Dialogue sur le Commerce des Bleds, 1770, No. 6.) This has + been verified in a striking manner in California, where the most + valuable commodities were often purchased at auction at the lowest + prices, while when purchased from merchants and even the most + wretched shopkeepers, they were sold enormously dear. (_Gerstaecker_, + in the Allg. Zeitg., May, 1850.) Thus there were harvested in + France, in 1817, 48,000,000 hectolitres of wheat, valued at + 2,046,000,000 francs, in 1820, 44,500,000 hectolitres valued at + 895,000,000 francs. (_Cordier._) This vast difference in price + existed, because in 1817, the whole world was still trembling under + the impression made by the failure of the crops in 1816, while in + 1820, the feeling of comfort and security caused by the rich year + 1819, still prevailed. Low prices at forced sales under decree etc. + See below, § 5. That travelers are so frequently taken advantage of + in effecting changes of money is explainable partly by their urgent + wants, which are well known to the opposite party, and partly by + their supposed ignorance in the matter. And so, at auction sales, + out-bidding one another has something very seductive in it for + ignorant or hot-headed purchasers. + + 605 It was considered immoral by his contemporaries, when William the + Conqueror introduced the custom of farm-letting to the highest + bidder. (_A. Thierry_, Conquete de l'Angleterre, II, 116, ed. + Bruxelles.) It is repugnant to poetic and delicate minds to think + that everything has a price exactly fixed. (§ 2.) I need only refer + to the picture of Helen which Zeuxis exhibited for money, which act + of his was characterized, by his cotemporaries, as a species of + prostitution. _Val. Mac_, III, 7. _AElian_, V, 4, IV, 12. _Socrates_ + judgment on the payment of the sophists. _Xenoph._, Memor., I, 6, + 13. + + 606 Competition has only a negative influence on prices, inasmuch as it + modifies the extreme operation of the other grounds of their + determination. _Thornton_, Paper Credit. _Lotz_, Revision, 1811, I, + 74 ff, 241 ff. + + 607 The expression, "intensity of demand," in _Malthus_, Principles, ch. + 2, sec. 2. As early a writer as _Sir J. Stewart_ calls attention to + the difference between large and high and small and low demand. A + high demand will always raise the price, as when, for instance, two + wealthy virtuosi compete at an auction. _Paucorum furore pretiosa_, + as Seneca says. An English penny of the time of Henry VII, once + sold, on such an occasion, for L600. In 1868, at the Lafitte + auction, seven bottles of wine sold to Rothschild at 235 francs a + piece after the _Maison doree_ had offered 233. (N. freie Presse, + Dec. 17, 1868.) A great demand has frequently no result but to + increase the supply, and the price rises only in so far as the + demand is too sudden to permit a parallel growth of the supply. + (Principles, Book II, ch. 2, 10.) The present price of tea could not + remain unaffected, if ten different private merchants, competing one + with another, or the agent of a privileged commercial society, + should send orders to China for an equal quantity of tea. (_Verri_, + Meditazioni, IV, 8 ff.) + + 608 Immense weight laid on the _aequalitas permutationis_ (after + _Aristot._, Eth. Nicom., V. 7,) in the ethics and economics of the + scholastic middle ages, and in the time of the Reformation. Compare + _Melancthon_, in Corp. Ref., XVI, 495 ff, XXII, 230. + + 609 A very barbarous theory of price in _Xenoph._, De Vectigg., 4. The + ancients made little progress in this respect, although there are + not wanting ingenious observations on certain phenomena of prices. + (See _Aristot._, (?) Oecon. II; _Cicero_, De Off. III, 12 ff.) + _Mariana_, De Rege et Regis Institutione, 1598, III, explains price + as the relation of value to quantity. According to _Locke_, the + price of a thing is determined by the relation between "quantity" + and "vent": the increase or diminution of its useful qualities + influences it only so far as it alters that relation. + (Considerations on the Consequences of the Lowering of Interest etc, + 1691, Works II, 20 ff.) _Law_, on the contrary, says that the "vent" + can never be greater than the "quantity," but that the "demand" may + be. Wherefore, he proposes the formula: quantity in proportion to + the demand. (Trade and Commerce considered, 1705, ch. 1.) In chap. + 6, _Law_ distinguishes three elements in price: quality, quantity + and demand. The expression "quantity" is, certainly, very + unsatisfactory. How many examples does not _Tooke_ (Thoughts and + Details, on the high and low Prices of the last thirty Years, 1823, + part IV) give to illustrate how, when the supply was smallest, + prices were lowest and _vice versa_! It was so almost always after + the market was over-filled, when a great many speculators had lost + and no one dared to purchase anew. _Montanari_ (ob. 1687) furnishes + us with an excellent theory of prices. (Della Moneta, 64 ff., + Custodi.) And a still better one, _Sam. Pufendorf_, Jus Naturae et + Gentium, 1672, V. 1, who must be considered the best authority on + the laws of prices before _Stewart_. _Boisguillebert_, Traite des + Grains, II, 1, 10. _Galiani_, Della Moneta, I, 2, knows only the + factors _utilita_, and _rarita_, although in his exposition of the + latter, he discusses many points which would be called the cost of + production in our time. The wisdom of Providence has granted us the + most useful things in the greatest abundance to make them cheap. + _Stewart_, Principles II, 2, 4, rendered a great service to the + theory of prices, tracing back supply to the cost of production, + demand to want and ability to pay; and his deserves to be called the + immediate predecessor of _Hermann's_ remarkable theory. (_Hermann_, + Staatsw. Untersuchungen, 66 ff.) For a peculiar theory of prices, + see _Paganini_, Saggio sopra il giusto Pregio delle Cose, 189 ff. + _Neri_, Osservazioni, 1751, 127. _Gust. Menger_, Grundsaetze, I, 179 + ff., has made an interesting attempt to explain the formation of + prices in its simplest shape, in the supposition of a monopoly in + the seller, and by then going over to the subsequent modifications + introduced by the competition of many sellers. + + 610 "Instead of separating, in the same matter, the points of view of + the buyer and seller, we may distinguish the consideration of the + thing to be acquired and the thing to be given by one and the same + person." (_Rau._) The possessor of the more current commodity + appears especially as demanding, that of the less current as + offering or supplying, (_v. Mangoldt._) + + 611 This is for free goods=0, for monopolized goods=1/0. + + 612 The obvious fact that every price supposes a comparison of two + commodities, and that every buyer is, at the same time, a seller, + has been overlooked by only too many writers. And hence _Dutot's_ + opinion, that, as all men buy and few only sell, the state, in case + of doubt, should favor the buyer. (Reflexions sur le Commerce et les + Finances, 1738, 962, ed. Daire.) And so the often-mooted question + whether universal dearness or cheapness is more useful: the latter + advocated, for instance, by _Herbert_, Police generale des Grains, + 1755; _Verri_, Meditazioni, V; the former by _Boisguillebert_, + Traite des Grains, I, 7, II, 9; and by the Physiocrates. (_Quesnay_, + Maximes generales, Nr. 18 ff., I, Probleme Economique; also by _A. + Young_, Polit. Arithmetics, ch. 8.) The laity in Political Economy + understand by dearness only the general cheapness of the medium of + circulation or exchange, and _vice versa_. + + 613 Thus, even a poor man in Naples sometimes requires a glass of + ice-water. The introduction of the extensive use of snow into Sicily + improved the condition of the public health. (_Rehfues_, Gemaelde von + Neapel, I, 37 ff.) On the other hand, furs, in the far north, are + articles of prime necessity. Newspapers in a free country satisfy a + want much more urgent than in countries which are not free. And so, + _Senior_ says that shoes are "necessaries" to all Englishmen, since + without them, their health would suffer. To the lower classes of + Scotland they are "luxuries." Custom permits them to go barefoot + without hardship or degradation. For the middle classes of the same + country, they are "decencies." Shoes are worn there, not to protect + the feet but one's civil position. In Turkey, tobacco is a decency + and wine a luxury. The reverse is the case in England. (Outlines, 36 + ff.) + + 614 As to the relativity of the opposites of "temperance" and "excess," + every person should attend to the following points: a, not to exceed + one's income; b, to provide for one's self and one's family; c, to + lay by something for a rainy day; d, to place one's self in a + position to care for the poor; e, to indulge in no pleasure + injurious to body or mind; f, to give no bad example. (_Tucker_, Two + Sermons, 29 ff.) _Menger_, Grundsaetze, I, 92 ff., endeavors to + compare the value in use of different commodities from the point of + view, that the means of gratification of a less urgent want, when + the more urgent wants of the present are satisfied completely, + should be preferred to the means of over-gratifying the latter. + + 615 Thus the price of many dark articles of apparel rises in a moment of + unexpected universal mourning. A very remarkable case in Paris, at + the death of Henry II. (_Montanari_, Delia Moneta, 85, Custodi.) On + the other hand, a change of fashion may greatly depress the price of + many commodities. Such a change may take place even in the case of + precious stones; as, for instance, now in London, a perfect emerald + is most highly prized. (_King_, Precious Stones and Metals, 1871.) + The rise of many drugs in times of cholera, and of leeches, for + example, in Paris, 600 per cent. Rise of the price of powder, horses + etc. at the outbreak of a war, and of the price of iron caused by + extensive railroad building. In Circassia, a good shirt of mail was + formerly worth from 10 to 200 oxen: but since it was discovered not + to be a protection against cannon balls, its price fell 50 per cent. + (_Bell_, Journal of a Residence in Circassia, I, 403.) + + 616 On "connected" (_connexen_) goods, the use of one of which supposes + the use of the other, as, for instance, sugar and coffee, wood and + stone used in the construction of buildings, see _Schaeffle_, + Nat.-Oek, II. Aufl., 179. + + 617 Observed by _Necker_, Sur la Legislation et le Commerce des Grains, + 1776. Compare _Roscher_, Ueber Kornhandel und Theuerungspolitik, + 1853, 1 ff. In Athens, for instance, the _medimnos_ of wheat cost + ordinarily five drachmas, but during the siege by Sulla it rose to + 1000 drachmas. (_Demosth._ adv. Phorm., 918. _Plutarch_, Sulla, 13.) + Compare II. Kings, 6, 25, 7, 1. In Paris during the siege by Henry + IV. it rose to 5000 per cent. of the ordinary price. (_Lauderdale_, + Inquiry, 60 ff.) During the siege of Breisach, in 1638, a mouse was + finally worth 1 florin, the quarter of a dog, 7 florins, a quarter + of wheat, 80 thalers. (_Roese_, Leben H. Bernhards, M., 11, 269.) + Compare _Strabo_, V, 248 seq. + + 618 Wheat is still more indispensable than meat. Hence, in the ten + principal markets of Prussia, the price of rye rose much more from + 1811 to 1860 than the price of beef; the former between 0.32 and + 1.03 silver groschens and the latter between 2.32 and 4.94 silver + groschens. (Annalen der preussischen Landwirthschaft, 1869, No. 9.) + And so in the Rhine district, the wine harvests have undergone much + greater changes in price than the prices of must, although the years + differed very largely in the quality of the yield. Thus the crop of + 1830 was only 225, that of 1868, 10,845 pieces, and yet the minimum + price between 1831 and 1865 was only from 3 to 58 flr. per ome. + (_Engel_, Preuss. Statist., Ztschr., 1871, 168 ff.) + + 619 In England, the price of wheat has not unfrequently risen from 100 + to 200 per cent. when the harvest was from one-sixth to one-third + under the average, and when a supply from abroad had modified even + this condition of things. (_Tooke_, History of Prices, I, 10 ff.) + _Tooke_ is of opinion that in a country with poor-laws like those of + England, a deficit of one-third in the wheat crop, if there were no + stores remaining and no importation from abroad, would cause the + price of wheat to rise, 500, 600, and even 1000 per cent (p. 15.) + + 620 See _Davenant_, Political and Commercial Works, London, 1771, II, + 224. Tooke was somewhat acquainted with Davenant. According to this + law, a deficit in the harvest of 10 per cent. would raise the price + of corn 30 per cent.; one of 20 per cent. would raise the price of + corn 80 per cent.; one of 30 per cent. would raise the price of corn + 160 per cent.; one of 40 per cent. would raise the price of corn 280 + per cent.; one of 50 per cent. would raise the price of corn 450 per + cent. + + 621 In England, it is 38.8 per cent. of the supply that comes to the + market. (Quart. Review, XXXVI, 425.) In Belgium 40, and in Saxony at + least 50 per cent. (_Engel_, Jahrb. der Statistik etc. von Sachsen, + I, 276.) In Germany, the farmers consume on an average two-thirds + themselves. (_v. Viebahn_, Zoll.-v-Statist., II, 958.) With this + _Plato_, De Legg., VIII, agrees remarkably well. + + 622 On the difference in this respect between England, Germany and + northwestern Norway, see _Hermann_, p. 71. + + 623 Hence it not unfrequently happens that grain grows dear not from any + real want of it, but because it is generally supposed that such want + exists. For an explanation of why it is that wheat and similar + commodities have an almost invariable price, when the average is + taken of a long series of years, see _infra_ § 129. + + 624 Case in Naples in which after a poor harvest the price of corn + remained very low, because the oil-harvest had also failed, and the + poor could earn nothing in that industry in which they were largely + employed, and _vice versa_. (_Galliani_, Della Moneta, II, 2.) Thus + _Adam Smith_, Wealth of Nations, I, ch. 7, distinguishes between + "effectual" and "absolute" demand. Similarly _J. Steuart_, + Principles I, ch. 18. Care should be taken to distinguish in this + respect between desire and demand. + + 625 Thus, in the famine in Ireland in 1821, during which potatoes rose + to fabulous prices, but wheat scarcely at all, and had therefore to + be exported. + + 626 In _Tooke_, History of Prices (2d edition of the Thoughts and + Details etc.), we meet repeatedly with the assertion that when the + price of wheat rises, the price of colonial products and + manufactured articles sinks, and _vice versa_. Thus, in England, the + price of the evidences of national debt increases from two to three + per cent. in fruitful years above what it is after a bad harvest. + (_Lauderdale_, Inquiry, 93.) The British nation paid for the cotton + it needed for their own consumption in 1845 over L19,500,000; in + 1847 only L9,500,000. (_Banfield_, Organization of Industry, 162.) + + 627 Hence _J. B. Say_ has said that the disposable wealth of a people is + like a pyramid, with the scale of prices of the various commodities + inscribed on its side. The higher a commodity is in this scale of + prices, the smaller is the corresponding section of the pyramid. + Compare _Sir W. Temple_, Essay on the Origin and Nature of + Government, Works I, 23 ff. + + 628 This fact, in connection with the preceding, explains the well known + puzzle, why the remnant of a piece of goods is comparatively cheaper + than the whole piece, while a small share in the public debt is + dearer than a large one. (_Lauderdale_, ch. 1.) + + 629 Rhode Island was, it is said, bought from the Indians in 1638 for a + pair of spectacles. (_B. Franklin_, Political ... Pieces, 1707.) + According to _Chalmers_, it was bought for 50 threads of coral, 12 + hatchets and 12 overcoats. (Political Annals of the U. States.) + Compare _Ebeling_, II, 108. Holland cloths and opium were exchanged + for a long time at Sumatra for gold dust worth ten times their + value. (_Saalfeld_, Geschichte des holl. Kolonialwesens, I, 260.) + The Hudson Bay Company realized, it is said, at the beginning of + this century, in trading with the Indians, a profit of 2000 per + cent. (_Anderson_, Origin of Commerce, a. 1751.) When Altai was + discovered, the natives gave as many sable-skins for a Russian + kettle or boiler as could be crammed into it. With 10 rubles in iron + it was an easy easy matter to gain 500-660 rubles. _Storch_, Gemaelde + des russ., R., II, 16; _K. Ritter_, Erdkunde, II, 557. Similar cases + among the Germans: _Tacit._, Germ., 5. + + 630 A seller not actually engaged in the business of selling for a + livelihood, and who has not purchased or produced with the intention + of selling, is apt to consider instead of this the market price, + towards the determination of which those actually engaged in trade + have cooeperated. Somewhat inaccurately, the amount of the cost of + production is called by _Adam Smith_ and _Ricardo_, "natural price," + by _J. B. Say_, _prix naturel_, also _prix originaire_, because the + commodity at its first entrance into the world cost so much. + _Sismondi_ and _Storch_ call it _prix necessaire_, and _Lotz, + Kostenpreis. P. Cantillon_, Nature de Commerce, 33 ff., understands + by the _prix intrinsique_ of a commodity, the amount of land and + labor, taking the quality of both also into consideration, necessary + to its production. + + 631 The cheapest cotton thread is numbered from 60 to 80. The coarser is + dearer on account of the quantity of raw material in it, and the + finer because of the greater amount of labor in it. (_Babbage._) For + similar reasons, the Venetian chains cost per _braccio_, No. 0, the + finest, 60 francs; No. 1, 40 francs; Nos. 2 and 3, 20 francs; No. + 24, coarsest, 60 francs. (_Rau._) + + 632 If a person engaged in production has himself furnished certain of + the elements of production; if, for instance, he has worked with his + own hands, employed his own capital etc., he is wont to charge as + much for these as they would be worth, if he hired himself out or + loaned his capital. + + 633 The greater number of political economists consider the cost of + production only from the standpoint of the individual engaged in + production. Thus _Darjes_, Erste Gruende, 218 seq.; _Ad. Smith_, + Wealth of Nations, I, ch. 6. _J. B. Say_ calls even production an + exchange in which the productive services of natural forces, of + labor and of capital are parted with in order to obtain products. + The estimate put upon the value of these services is the cost of + production. For some interesting examples as to how the cost of + production, in this sense, is calculated, see _Hermann_, I ed., 136 + ff. + +_ 634 Jacob_ translated by _Say_, 1807, II, 450. _Hufeland_, N. + Grundelgung, I, 309. + + 635 Compare _L. Lauderdale_, Inquiry, 124, against the Physiocrates. + (_Riedel_, Nat.-Oekonomie, 1838, I, 68.) A country which possesses + advantages over other countries, in respect to the cost of + production of a commodity, can offer it in the market cheapest. + Where, for instance, with the employment of the same amount of + capital, a specially large quantity of wheat can be produced, + whether it be because of the unusual fertility of the soil, or + because of the _extensiveness_ of agriculture (farming over a large + area), wheat will, the demand being the same, be specially cheap, + whatever the proportion of the three branches of income may have + been. If relatively a great number of workmen have been employed in + its cultivation, each will receive smaller wages, and _vice versa_. + + 636 Copper and steel engraving affords an example of the different kinds + of wear of fixed capital, and the influence it may have on prices. + _Canard_, Principes, ch. IV, considers that one of the most + important elements in the cost of production is the length of time + that capital must "stagnate" for the sake of production. + + 637 On this risk depends, for instance, the high price of vanilla + (_Humboldt_, N. Espagne, IV, 10,), sparkling wines and articles of + fashion. + +_ 638 Mangoldt_, Lehre vom Unternehmergewinn, 1855, 81 ff. Compare _v. + Thuenen_, Der isolirte Staat, II, 1, 80 ff. + + 639 Wool and mutton, brandy and fattened cattle, calves and milk, honey + and wax, gas and coke, hens and eggs etc. + +_ 640 Adam Smith_ himself remarked that all artificial lowering of the + price of skins or wool must necessarily raise the price of the meat, + and _vice versa_. (Wealth of Nations, I, ch. 11, 3.) For a very + elaborate theory on this subject, see _J. S. Mill_, Principles, III, + ch. 16, § 1. Thus Australian wool did not rise as much in price as + the production of gold there might have led us to suppose, for the + reason that mutton rose to an exceedingly high price. + + 641 It is an important and correct remark of _Carey's_, that the price + of a commodity depends much more on the cost of producing its like + than on its own cost of production, which already belongs to the + past. + + 642 Compare _J. S. Mill_, III, ch. 3, § 1. A much too high price, caused + by speculation, or a much too low one, by depreciation, is regularly + followed by an ebb or flow just as much too great. (_Tooke_, History + of Prices, III, 55.) And _Law_, Trade and Money, 41, remarks that + the price of a commodity always tends to coincide with the "first + cost." This fact _Adam Smith_ expresses by saying that the cost of + production is the center about which the market price always + gravitates. (I, ch. 7.) But here there is still the error lurking, + that the producer's profit is a part of the cost of production. + Compare _Malthus_, Definitions, ch. 6. + + 643 The English view, one very characteristic of the people, is that the + equilibrium of prices depends on this, that all commodities should + have a value equal to that of the labor they have cost. (Compare + _Aristot._, Eth. Nicom., V, 5.) The same doctrine is to be found in + its germinal state in _Hobbes_, Leviathan, 24, 1651, and _Rice + Vaughan_, Discourse of Coin and Coinage, 1675. More exhaustively in + _Petty_, Treatise of Taxes and Contributions, 1679, 24, 31, 67. + (Compare _Locke_, Civil government, II, § 40 ff.; _B. Franklin_, + Inquiry into the Nature and Necessity of a paper Currency, 1729; + Works, ed. Sparks, vol. II.) _Adam Smith_ admits this to be true + only of the first beginnings of society, before the origin of + property in land and in capital. (Wealth of Nations, I, ch. 5.) Most + largely developed in _Ricardo_, Principles, ch. I, 4, 30. _Marx_, + Zur Kritik der polit. OEkonomie, 1859, 6, endeavors to improve on + this by calling all values in exchange "a determinate quantity of + thickly curdled working-time," meaning by work an averaged + _qualitaetslose_, social work of production. _Per contra_, compare + _Hufeland_, N. Grundlegung, I, 134, 156 ff.; and _Malthus_, + Principles, ch. 2, secs. 2, 3, who claims very earnestly that price + is not determined by the cost of production, but by the relation + existing between demand and supply, the cost of production + influencing it only to the extent that it influences this relation. + He calls attention to the poor-rates by which the cost of production + of labor is raised, but its wages decreased; also to the case of + bank notes etc. (_Tooke_, History of Prices, V, 49 ff; _J. S. Mill_, + Principles, III, ch. 16, 2.) For a very marked case of reaction + against Adam Smith and Ricardo, see _Macleod_, Elements, ch. 2, who, + however, is much too one-sided in considering only the amount + necessary to the purchaser, and his means. Even _Condillac_ had + said: _une chose n'a pas une valeur, parcequ'elle coute, mais elle + coute (du travail ou de l'argent), parcequ'elle a une valeur_. + (Commerce et Gouvernement, 16.) _Ricardo's_ doctrine is more tenable + than appears at first blush. We need only to interline his theory of + rent, admit that capital is accumulated labor, subtract all objects + constituting a natural monopoly, and not forget that the intrinsic + value of labor is one of the causes of the difference of price of + different sorts of labor. _Ricardo_ does justice to value in use + even _en passant_. A strange effort by _McCulloch_ to make labor the + cause of the non-use of capital. (Principles, III, ch. 6, 2.) + _McCulloch_ has not unfrequently exaggerated the half-truths of his + doctrines to such an extent as to produce unwittingly a _reductio ad + absurdum_. According to _Torrens_, before any separation of + capitalists from workmen, price depends entirely on the work done, + and afterwards on the capital expended, inasmuch as wages, rent etc. + are covered by the capital of the person who engages in the + enterprise. (Production of Wealth, ch. 1.) + +_ 644 Ce que l' on appelle cherete, c'est l' unique remede a la cherete._ + (_Dupont de Nemours._) Tenders of division in common, in England, + increase and decrease according to the higher or lower price of corn + during the preceding year. (_Tooke_, Thoughts and Details, III, 105 + ff.) The cotton famine after 1861 increased the price of flax-yarn + in a short time fifty per cent., although the raw material of flax + did not rise in price, but only because care was not taken to + increase the number of flax-spinners. (_Ausland_, I, 1865.) However, + there were in 1864, 490,000 flax-machine spindles in course of + erection. (Report of the Chemnitz Chamber of Commerce, 1864, 101.) + + 645 By the discovery, for instance, of new natural forces, the invention + of machines, improved division of labor, improved roads etc. In + France, in consequence of technic improvement, a quintal of + saltpeter fell from 100 to 9 francs. See a similar instance in + _Chaptal_, De l' Industrie francaise, II, 64, 70, 434. + +_ 646 Hermann_, Staatsw. Untersuchungen, 212. + + 647 The highest but unattainable ideal of such progress would consist in + this, that all products should be obtained without cost. If this + ideal were attainable, every one would be infinitely rich and all + wealth would be free, like the air and the sunshine. (Compare _J. B. + Say_, Traite, II, 2.) The complete victory of mankind over nature + would consist in that all men should be free and all the forces of + nature the slaves of man. (_Smitthenner._) _Carey_ intimates + something similar when he says that, with the advance of + civilization the tendency is for men to become more and more + valuable and commodities to have less of "value." + + 648 We might here speak of an aristocratic and democratic principle of + the determination of prices. The greater utility of the latter is + advocated in the Discourse of Trade, Coyn and Credit, London, 1697. + _Bacon_ has a good word to say for the maxim: "Light gains make + heavy purses; for light gains come thick, whereas great come now and + then." Similarly, _Gurnay_ in _Cliquot de Blervache_, Considerations + sur le Commerce etc., 1758, 48, 54. As to how Morrison, the + celebrated merchant, became rich by adhering to the principles: "to + sell cheap as well as to buy cheap," and "always tell the truth," + see _Chadwick_, in the Statistical Journal, 1862, 503. Compare the + related opinion of _Adam Smith's_ continuator in an ethical + direction, _Garve_, zu Cicero's Pflichten, III, 100. The contrary + principle, the cunning of the Judaeans, according to _Strabo_, XVII, + 800, was followed by the Dutch East India Company, when it, in 1652, + caused the greater number of the vegetable roots on the Moluccas to + be destroyed. _Saalfeld_, Geschichte des hollaendischen + Kolonialwesens, I, 272. Also, when great quantities of roots were + destroyed by burning in the East Indies. (_Huysers_ Beschryving der + Oostindischen Etablissmenten, 1789, 22.) For a clever argument + against such practice, see _de la Court_, Anwysing der heilsame + Gronden, 1663. The principle similar to that of the patent, + mentioned in the text, works at the same time democratically and + aristocratically, both words understood in their best sense. + + 649 This is true, first of all, in those industries which are intimately + connected with one another, or of those which are carried on with + scarcely any fixed capital; also in lower stages of civilization, + where the lights and shades caused by a highly developed division of + labor are not very intense. On the numerous difficulties overlooked + by Ricardo in every other case, see _Sismondi_, N. P., II, ch. 2. + The workman thereby loses his former skill, that is his principal + capital, and can certainly not wait until he has acquired other and + different skill. + + 650 When a lowering of prices is expected, demand is less than + consumption: "postponed demand;" whereas, an expectation that the + price will rise, produces "anticipated demand." _Tooke_, History of + Prices, II, 155. + + 651 Thus, for instance, if the workmen were exposed to starvation, or + were likely to take their departure; if great stores of raw material + were in danger of spoiling; if fixed capital of great value were + engaged in one industry and could not be easily transferred to + another. The first and third causes are frequently met with in + mining, and give rise to the mode of carrying on the operation known + as _Zubusgruben_, that is, a species of working mines upon shares. + In England, after the spring of 1862, cotton yarn was not so much + dearer than raw cotton, that the loss caused by the decline could be + made up. (_Ausland_, 24 Sept., 1862.) + + 652 Besides, in the time immediately following, the price lowered by too + great a supply, may produce a species of desperation among + producers, which would lead them, in the hope of covering their + losses, to increase the supply still more, until many of them were + ruined. Generally, when a time of high prices is followed by a time + of low prices, we find an interval during which sellers endeavor to + defend themselves against the decline, and during which, as a + consequence, scarcely any business is transacted, while high prices + are nominally continued. And so _vice versa_. _Tooke_, History of + Prices, II, 62. + + 653 Thus, for instance, when the change of fashion brought about the + disuse of long periwigs in every-day life, their price did not cease + to fall until they had entirely disappeared. But, if a person wishes + to have one made to-day for a masquerade, for the stage, etc., he + would pay as much for it as its former price. On the other hand, the + price of whalebone has never been again as high as it was in the + time when hooped petticoats were worn. + + 654 The great plague in the time of Edward III. caused during the first + year, on account of the decreased consumption, an extraordinary + cheapness of provisions. In the following year, however, they became + alarmingly dear, because there were few producers, especially among + the humble classes. A quarter of wheat cost in 1348, 4s. 2d.; in + 1349, 5s. 5d.; in 1350, 8s. 3d.; in 1351, 10s. 2d.; while in 1346 + and 1347, its average price was 6s. 8-7/8d. _Rogers_, History of + Agriculture and Prices, I, 232. + + 655 As for instance when new taxes or excises are imposed. Generally + when the cost of production has largely increased, purchasers do not + wait until a decrease of competition among sellers compels them to + exact higher prices, but meet them half way, especially when many + greatly desire the commodity, and the increase of the cost is only + small. (_Rau_, Handbuch, I, § 163.) + + 656 Under this rule fall, according to § 33, most products of industry + properly so called. "If we lose a market for a year, we generally + lose it for all time," said an experienced manufacturer before the + parliamentary hand-loom weavers' committee, 1840-42. Of course the + cost of transportation as far as the market must be estimated as + part of the cost of production. In consequence of this, as well as + of the difference of taxation duties etc., the superiority of one + producer to another may be more than overcome. In the case of + colonial commodities, which go into the interior of a country from + different sea-ports, the territory supplied from each port is + determined for the most part by these data. Thus, in Switzerland, + for instance, we find the districts supplied by Havre, Genoa and + Rotterdam; in Austria, the districts supplied by Hamburg and Triest + contiguous, but the boundary line subject to many changes. (_Rau_, + Lehrbuch, I, § 164.) It must be understood that we do not here speak + of abnormal expenses made by producers individually, whether in + consequence of want of skill or because of accident. + + 657 This is true especially of agricultural production, in which, as a + rule, beside the most fertile and most advantageously situated land, + the worse must be used. What _Whately_ calls "surplus-profit" + appears here in the form of rent, whereas, in other cases, it takes + the shape of unusually high wages, or profit on capital. This is + very beautifully and systematically developed by _Schaeffle_, N. OEk., + II; Aufl., 192 ff. According to _Senior_, Outlines, 15, the + price-relation of two commodities to each other depends not on the + quantities of them which come to market, but on the relative power + of the difficulties which stand in the way of an increase in these + quantities. If the same producers can pursue the cheaper mode of + production which does not suffice to supply the market, as well as + the dearer, we have, generally, a price which is the mean between + the two costs of production. The same is true in the case of + "smuggled" goods which ought to have paid duty. (_Hermann_, loc. + cit., 83, seq.) + + 658 To this section belong the secrets of production which may be taken + advantage of either _ad libitum_ or within certain limits. In + agriculture, advantages of production can seldom remain secret. + Compare, however, the case mentioned in _Garnier's_ translation of + _Adam Smith_, V, 119, and that of the orchards which yielded L1,000 + yearly for every 32 acres, and which were a result of the recent + introduction of the culture of the cherry in Kent, in the reign of + Henry VIII. (_Anderson_, Origin of Commerce, a, 1540.) There is + therefore, a certain odium attached by agricultural producers to + keeping secret a means of agricultural improvement. + + 659 Compare _Boisguillebert_, Traite des Grains, II, ch. 2. _John Stuart + Mill_ speaks of an equation: the price of a commodity in a given + market is always high enough to produce a demand corresponding to + the present supply, or to an expected supply. The price of such + commodities only which may not be increased to any desirable extent + depends on supply and demand. In the case of all others, on the + other hand, demand and supply depend on the price, and this on the + cost of production. Supply and demand always tend to an equilibrium + which is never really attained where the price is high enough to + cover the cost of production (?). (Principles, III, ch. 2, § 4; ch. + 3, § 2.) _Schaeffle's_ theory of prices is topped by the proposition + that all competing sellers and all competing buyers, after an + economic fashion, do not wish to sell below individual cost-value, + nor to rise above individual value in use, in purchasing. Hence, in + a throng of competition of supply the costliest productions step out + of the field of competition in a descending cost-value series; and + in a throng of competition of demand, the most wearied cravings in + an ascending value-in-use series; until the quantities offered in + supply and asked for cover each other without loss, and have placed + each other in quantitative equilibrium. (N. OEk. Aufl., I, 188 ff.; + compare 173, 185.) It is, however, to say the least, an instance of + baseless solicitude, when _Wade_, History of the middle and working + Classes, 214, says that one unemployed workman might depress the + aggregate wages of labor, almost _ad infinitum_. + +_ 660 Hufeland_, N. Grundlegung, I, 78; _Ricardo_, Principles, ch. 31. + +_ 661 Dunoyer_, Liberte du Travail, VIII, ch. 4; _Rau_, Lehrbuch, I, § + 158. + + 662 For a good classification of monopolies, see _Senior_, Outlines, 103 + ff. _Menger_, Grundsaetze, I, 195, shows that no monopolist can + arbitrarily determine the extent of the market for his + monopoly-product when the price is fixed, nor when the extent of the + market is known, the height of the price. Moreover, the price may + remain longer above than under the cost of production, for the + reason that it is easier to abandon a business than to begin one, + and that the fear of loss is more frequently an incentive to action + than the hope of gain. Hence the price of corn, when everything else + is very dear, is more apt to vary from the average price, than in + times when everything is very cheap. For instance, the Munich prices + from 1750 to 1800 show that its highest price was 147 per cent. + above, and its lowest 47 per cent. below the average of twenty + years. (_Rau_, Lehrbuch, § 162, 182.) + + 663 Chance plays a great part here. Thus, Murillo's Conception which + Marshal Soult had offered several times for 150,000 francs, but in + vain, was sold in May, 1852, for 586,000 francs. Paul Potter's young + bull at the Hague, which cost 625 florins in 1748, was valued before + the middle of the nineteenth century at 200,000 florins. + (_Dethmar._) + + 664 The purchaser resolves to do so because it would, in all + probability, cost him more to go to India or Brazil in search of + precious stones. Besides after the working of the Brazilian mines in + 1728, and again after the French Revolution, the price of diamonds + fell greatly; in the one case, from an increase of the supply, in + the other from a decrease of the demand. (_Ritter_, VI, 355, 365.) + + 665 Thus, the Champagne and Johannisberg grapes, when transplanted to + the Crimea, lost most of their native taste. On China's practical + monopoly of tea culture, and Ceylon's, especially in its + southwestern part, of cinnamon, at least so far as the peculiar + aroma is concerned, compare _Ritter_, Erdkunde, VI, 123 ff. The + small deer of Angora no sooner leave the little district of Asia + Minor to which they belong, than they are in danger of degenerating. + (Revue des deux Mondes, May 15, 1850.) Indian birds-nests cost no + more than 11 per cent. to gather, dry etc., of the market price. + (_Crawfurd_, East India Archipelago, III, 432 ff.; _Hogendorp_, Sur + l'Ile de Java, 201.) + + 666 Poor material for fuel, poor day-laborer work--dwellings, medical + attendance. (_Menger_, Grundsaetze, I, 116.) + + 667 Thus sea fish, oysters etc. were formerly much cheaper during the + summer than during the winter, at Ostend and Scheveningen, because + during winter they could be sent to a distance. At Billingsgate + market, in the mackerel season, fish cost per hundred 48 to 50 + shillings at 5 o'clock in the morning, 36 shillings at 10 o'clock, + and 24 shillings in the afternoon. (_H. Schulze_, Nat-OEkonomische + Bilder aus England, 1853, 241.) In the Rhine country, the price of + fruit does not vary so much as in Saxony, because it is customary + there to employ the surplus in the manufacture of cider, of + preserves etc., thus making it transportable and durable. + Frequently, after a very abundant crop of grapes or olives, + under-prices prevail, sometimes on account of a want of vessels, + cellar-room etc.; they must, therefore, be sold rapidly. + + 668 Compare _Adam Smith_, Wealth of Nations, I, ch. 7.; _Tooke_, History + of Prices, I, 97. Furs vary very much in price, sometimes 300 per + cent. in a year, because, in the case of this entirely natural + product, every thing depends on the stores of them, on the + temperature etc. (_McCulloch_, Commerc. Dict., s.v.) On the other + hand, the price of coffee usually varies only after periods of a + number of years, because new plantations produce only after a lapse + of years. (_Ibid._) Pigs vary much more than cattle in price, + because the former may be made ready for the slaughter house in + one-third of the time required for the latter. (_Thaer_, Rationelle + Landwirthschaft, IV, 374.) + + 669 Thus the rent of farms, where a numerous proletarian population will + live exclusively from agriculture, depends on scarcely anything but + the number of people and the extent of the land. (_J. S. Mill_, + Principles, III, ch. 2.) In retail trade, where personal want comes + in question, prices are much more subject to be modified by small + circumstances, than in wholesale trade, where both parties are only + intent on "doing business." (_J. S. Mill_, III, ch. 1, § 5. _Tooke_, + II, 72 f.) + + 670 Hucksters, butchers, dealers in corn, inn-keepers etc. A remarkable + case where Parisian dealers in hare-skins attempted to ruin the new + fashion in silk hats by distributing a great number of them among + the rabble, at mock-prices. (_Hermann_, 1st ed., 91.) The author + witnessed a similar but unsuccessful attempt in Berlin in 1838-39, + by the tailors against the so-called Macintosh coat. On the + conspiracy of the English dealers in second-hand goods against + auctions, see Athaeneum, Dec. 5, 1863. It is one of _McCulloch's_ + characteristic exaggerations, that he says that conspiracies to + raise the price of a commodity by artificial means, are broken just + as soon as they begin to obtain their object by the interest of the + individual members to profit by the advanced prices. (Edition of + _Adam Smith_, Edinb., 1863, p. 59.) + +_ 671 J. S. Mill_, Principles, II, ch. 4. + + 672 Monopolies universally prohibited: L. un. C. De Monopol. (IV, 59.) + Police-order of the Empire, 1548, tit. 18. + + 673 Privileges which the purchaser voluntarily accords to the seller are + wont to be useful to both parties. (_Hermann_, loc. cit. 155, 158.) + + 674 Besides, guilds, castes, corporations etc. may, when the vent + diminishes, produce under-prices as readily as they may + monopoly-prices when the vent is very good. (See _Adam Smith_, + Wealth of Nations, I, ch. 7.) + + 675 Thus, for instance, the traveler who wanted to cross a stream, would + find himself delivered over to the tender mercies of the ferry-man, + without protection of any kind against his demands. But repeated + impositions in the matter of prices would have for effect to bring a + point into disrepute as a place of crossing, and would induce the + public to seek another. Similarly in the case of hackney-coachmen + and carriers in large cities, and in that of innkeepers, at hotels + and postal termini etc. + + 676 Fixed prices by governmental authority were soonest attempted after + bad harvests, but, indeed, with a strange ignorance of the natural + grounds of the increase in price of bread-stuffs. Thus in the time + of Charlemagne. (Capitul. a, 805; _Baluz_, I, 423.) Similarly in the + case of other articles of universal necessity, when oppressively but + necessarily dear. (See § 175.) During the last centuries of the + middle ages, with their multitude of actual monopolies, and at the + beginning of the modern era, fixed prices became more and more + general. The earliest instance in the history of England of a fixed + price for bread was in 1202 (_v. Raumer_, Hohenstaufen, V, 372), and + in 1266, 51 Henry III. The earliest in Prussia was in 1393. + (_Voigt_, Geschichte von Preussen, II, 659.) Many instances of fixed + prices in the Rhine provinces of Austria in 1530. In _Mylius_, Corp. + Const. March, V, 2, 587 ff., we find an ordinance of 1653 fixing + prices in Berlin, and including 72 industries. There is a very + complicated system of fixed prices in the police ordinance of the + electorate of Saxony of 1612, and in the decree concerning the coin + of 1822. As to how, in Saxony in 1578, an attempt was made to + ascertain the cost of the production of shoes by shoemakers, see + _Joh. Falke_, Gesch. des Kurf. August in volkswirthschaft. + Beziehung, 1868, 252. There was an enormous extension of + governmental fixing of prices under Philip II.; one of the principal + causes why Castile was so far behind Aragon economically. + (_Townsend_, Journey through Spain, II, 221.) Sometimes these + measures were adopted to prevent distress-prices; as in Hochheim, in + favor of the vintners. (_Becher_, Polit. Discurs, II, 1652.) The + predilection especially of German authorities for the fixing of + prices by governmental power, in the sixteenth and seventeenth + centuries is very remarkable. Thus _Luther_, vom Kaufhandel und + Wucher, 1524; _Calvin_, Leben Calvins, by _Henry_, II, Beilage, 3, + 23; _Bornitz_, De Rerum Sufficientia, 1625, 246; _Seckendorff_, + Teutscher Fuerstenstaat, 5th ed., 1776, 210; _Becher_, II, 1823 ff.; + _Horneck_, Oesterrich ueber Alles, wenn es will, 1684, 123; _Leibniz + ed. Dutens_, VI, I, 250; _Thomasius_, Goettl. Rechtsgelahrtheit, + 1709, 209; even _Frederick_ the Great, _Mylius_, N. Corp. Const. + March, I, 190. Similarly, _Mariana_, De Rege et Regis Institutione, + III, c. 9. Compare, however, III, c. 8, and _Bacon_, Serm., 15; + Historia Henrici, 1037, 1040. On the other hand, _Child_, 1690, and + _North_, 1691, reprove all such measures. _Roscher_, Zur Geschichte + der englischen Volkswirthschaftslehre, 65, 90 f. Earlier yet, + _Salmasius_, who would allow the free _fori ratio_ to govern. (De + Usuris, 1638, 583.) For a very rigorous price-tariff in the old + Indian laws, by which, _inter alia_, the price of provisions was to + be fixed anew every fourteen days, see _Menu_, Laws, VIII, ch. 401 + ff. + + 677 Where trade is free, the _filet de boeuf_, for instance, is worth + four times as much as the flesh of the ox's neck or throat; but + prices fixed by a government can scarcely take cognizance of the + difference. How easily might not a fixed price for beer, for + instance, be evaded by diluting that beverage with water, or fixed + prices for inn-keepers by dealing out portions smaller in quantity + or of an inferior quality. Moreover, as early a writer as _De la + Court_, Polit. Discoursen, 1662, c. 4, remarks that the + establishment of fixed prices by governmental authority raises the + average price of all commodities rather than lowers it, for the + reason that the few who are sellers by trade can do more to + influence the authorities than the many buyers, whose interests are + divided among numberless different commodities. + +_ 678 Schaeffle_, Nat.-OEkonomie, II, 384 f. + +_ 679 Banfield_, Organization of Industry, 120. "Where the economic life + of a people is still undeveloped, and the production of one + enterprise is not from the first based on the estimated consumption + of another, the circulation of goods brings with it great profits + and great losses; whereas, profits and losses grow smaller, but at + the same time more uniform and regular, in proportion as the + circulation of goods increases in rapidity and regularity." + (_Stein_, Lehrbuch, 212.) + + 680 In Belgium, during the last forty years, the price of wheat has + become more constant every year, while the price of rye has become + more variable; for the reason that rye has gradually ceased to be an + article of popular consumption, and therefore to be an important + article in trade, and is consumed almost entirely and directly by + its producers. (_Horn_, Statist. Gemaelde von B., 1853, 185.) + _Rodbertus_ rightly conjectures that the price of wheat was much + more variable in ancient times than it is with us. (_Hildebrand's_ + Jahrb., 1870, I, 36.) That it was so may be inferred from the + surprisingly large family supplies which were laid in, as appears + from Digest, XXXIII, De Penu legato. + + 681 In Wuertemberg even officials etc. buy their own wine almost always + directly from the vintner. This causes prices there to be + exceedingly variable, frequently from hour to hour. (_v. Reden_, + Statist. Zeitschrift, Nov. 1847, 1008.) How greatly the mere + presence of a regular market has contributed to make prices more + constant, may be seen in the suburbs of Hamburg, where fish offered + for sale on the street are sold in the evening for one-third of the + price asked for them in the morning. Besides, purchases made with a + view to speculation may increase the variations of price, if the + speculation is unskillfully conducted, especially when a low rate of + interest, and of the profit of the person engaged in it, has + produced a blind race among the speculators. Here the price of a + commodity rises, not from any natural cause, but because it once + rose before, and _vice versa_. (_Senior_, Outlines, 17 ff.; + _Hermann_, 90 ff.) + + 682 That fixed prices suppose that men are engaged in the production of + the commodity in question, as their calling in life, see _Garve_, Zu + Cicero's Pflichten, III, 64 ff. Chess-like commerce of colporteurs, + and in caravans etc. Concerning the dreadful higgling of the + Bedouins, see _Wellsted_, Reise in Arabien, _Roediger's_ translation, + I, 147; and the still worse bantering in Cashmere, where the + merchant, in the first place, always denies that he possesses the + desired commodity, then begins to search for it, in order to + discover what value the purchaser puts upon it etc. (_K. Ritter_, + Erdkunde, III, 475.) On the practices in Indian fairs, see _Th. + Skinner_, Excursion in India, 1832, I, ch. 6; on the bazaars in + Asia, _Andree_, Globus XII, 7, 211. _Herberstein_ says of the + Russians in the sixteenth century: _mercantur fallacissime et + dolosissime nec paucis verbis ... mercatores nonnunquam non uno + tantum aut altera mense suspensos detinent, verum ad extremam + desperationem perducere solent_. Hence the great variations in + prices and commodities. (Rerum Moscov. Commentt., ed. Starczewski, + 39 f.) Similarly also, in 1674, according to _Kilburger_: Buesching's + Magazin, III, 249. But, on the contrary, it is said of the + Plescovers, educated by intercourse with the Hanse; _tanta + integritas ... in contractibus, ut uno tantum verbo res ipsas + indicarent omni verbositate in fraudem emptoris omissa_. + (_Herberstein_, 52.) In the England of the present day, the custom + of marking each piece of goods with its price is very general. + Concerning the rapidity and the paucity of words with which prices + are settled in that country, where business men do not even salute + their customers, nor customers the business man, see _C. G. Simon_, + Observations recueillies en Angleterre, 1835, I, 129 f. The Athenian + laws (?), that fixed prices should be asked, and that sellers should + not sit down that that they might sell more rapidly, points to + something similar. (_Athen._, VI, 226 f. _Plato_, De Legg., XI, 916 + f.) Athenian law prohibiting mendacity in the markets. (See + _Demosth._, Lept., 459.) + + 683 Thus the German book-trade has fixed prices. Many merchants never + make an offer to their educated customers who are wont to do so with + peasants etc.; because they are aware that the latter purchase only + after they have compelled the seller to come down greatly from his + first proposed price. Among the Quakers it has been a rule from the + beginning, never to ask more for their wares than they were + determined to accept. (_Hume_, History of England, ch. 62.) + +_ 684 Sir William Temple_, Observations upon the Netherlands, Works I, + 134, compares honor in trade to discipline in an army. Similarly, + _Law_, Trade and Money, 209 f. _Ferguson_, History of Civil Society, + III, 4. Where the seller is not obliged to make known the existence + of certain defects in his wares to the purchaser before sale, there + is always scope for fraud. Compare Digest De Edict. aedilit., XXI, + I. On the meaning of the German legal maxims: _Hand muss Hand + wahren_, and _Ein Wort, ein Mann_, see _Eisenhart_, Deutsches Recht + in Spruechwoertern, 311 f., 319 f. It is a principle in matters of + business, that the person who through malice or carelessness + recommends a man of whose probity there is already some doubt, + should bear the damage caused by his recommendation. (_Martens_, + Grundriss des Handelsrechtes, 24 ff.) Many attempts at dishonesty + are prevented by laws which in important contracts, especially in + sales of land etc., require the presence of witnesses, and this + particularly in the lower stages of civilization. (_Meier_ and + _Schoemann_, Attischer Process, 522; Roman, Emancipatio; _Grimm_, + Deutsche Rechtsalterthuemer, 608 f.), or even a public proclamation + before the assembled community, at least written documents invested + with all legal formalities as practiced among civilized peoples. On + Greek laws of this nature, see especially, _Theophrast._, in + _Stobaeus_, Sermon., XLIV, 22. Very remarkable in Sparta. _Schol. + Aristophan._, Aves, 1284. + + 685 Compare _Lotz_, Revision, I, 255 ff. In England the price of wheat + scarcely ever varied more than from 1 to 2. In Ireland the price of + potatoes varied from 1 to 6. (_McCulloch_, Comm. Dict., v. + Potatoes.) Compare _Engel_, Jahrbuch fuer Sachsen, I, 491 ff. The + custom of asking enormous prices with the expectation of being + beaten down, is usual in Italy and carried to a frightful extent, + and related to the bad custom prevalent there of begging a little + after-payment to every little gratuity or drink-money which has been + received. + +_ 686 Storch_, Handbuch, I, 311. _J. B. Say_, Traite I, ch. 16. As to how + commerce, when fully developed, is wont to be more moral than when + only half developed, see _Garve_, loc. cit., and Versuche IV, 149 + ff. How fortunate for the public economy of nations that the prices + of corn especially have been growing more steady all the time since + the middle ages. See _Roscher_, Ueber Kornhandel, 56, 61. + + 687 Trade by barter was very general in several states of the American + Union about the close of the eighteenth century. In Vermont, for + instance, it was usual for a doctor to exchange his medicines + against a horse, and for the printer to buy corn, butter etc. with a + newspaper. (_Ebeling_, Geschichte und Erdbeschreibung, II, 537.) In + Maryland, the Assembly fixed by law the relative proportions at + which tobacco, pork, corn and wheat should be exchanged the one + against the other. (_Ebeling_, V, 435 ff. _Douglas_, Summary of the + British Settlements in N. America, 1670, V, 2, 359.) Even as late as + 1815, children were wont to run the streets of Corrientes, crying: + "Salt for candles, tobacco for bread etc." It was commerce with + England that first led to trade by money in the United States. + (_Robertson_, Letters on South America, 1843, I, 52.) Similarly in + Rhokand until the end of the eighteenth century, where the cities, + as a consequence, presented the appearance of a fair the whole year + round. In the beginning of this century, the khan introduced the use + of copper money made from Persian cannons; and much later yet, there + were scarcely a million rubles in money to a million men. (_Ritter_, + Erdkunde, VII, 753.) _Basil Hall_ found the uncivilized inhabitants + of the Loo-Choo Islands ignorant of the use of money. (Voyage of + Discovery, 1818.) Concerning trade by barter in the Homeric age, see + the Iliad, VII, 472 ff. A supposed law of Lycurgus prohibited the + use of money in purchases, and allowed barter only. (_Justin._, III, + 2.) According to _Pausan._, III, 12, only barter existed in India + (?) in his time. + + 688 The person who has been used to paying for four pounds of meat with + twenty pounds of bread, and is asked to give twenty pounds of bread + in exchange for some other article, must of course have some unit of + measure in his mind to serve as a means of comparison between the + value of that article and that of four pounds of meat. In Denmark, + during the rule of the aristocracy, there were fixed prices + sanctioned by the tradition of long usage, in accordance with which + the prices of all commodities were estimated in relation to a ton of + barley or rye--a natural consequence, apparently, of the want of a + common measure to govern in the greater number of transactions. + _Bergsoe_, Archiv der Polit. OEk., IV, 314; _Graugan's_ Icelandic + Code contains a remarkable fixed price of this nature in the + supplement to the _Kaupa-Balkr_ or Commercial Code, I, p. 500. + Similarly among the ancient Persians. _Reynier_, Economie publique + des Perses, 308. + + 689 That is, (200x(200-1))/2. Compare _Rau_ in _Storch_, Handbuch, III, + 253. The "at least" has reference to the fact, that in barter, the + many different kinds of most commodities has to be borne in mind. + (_Knies_, Geld und Credit, I, 218.) + + 690 This transportation of values supposes an equality of values of the + money in two places, while the transportation of goods supposes + different values of the same kind of goods in both places. (_Knies_, + Geld und Credit, I, 218.) + + 691 While the words _pecunia_, _danaro_, _dinero_, and _argent_, are all + derived from unessential qualities, the German word for money, + _Geld_, corresponds with the essential quality of money, since it + denotes that which is of value everywhere (_gilt_). On the other + hand, _nummus_ and {~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~} from {~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~}, (_Boeckh._ Metrolog. Unters., + 310.), _moneta_ (the English, money), are from the temple of Juno + Moneta, in which the Roman coins were for a long time stamped. In + old German, the word for money, _Geld_, means everything that is + paid by any one. (_Grimm_, D. Rechtsalterth., 382.) The present + meaning of the word is to be met with in a very old document of + 1327. (_Arnold_, z. Geschichte des Eigenthums in den deutschen + Staedten, 89.) + + 692 The wrong definitions of money may be divided into two classes: + those which convey the idea that it is more than a commodity, and + those which imply that it is less. + + This was a point which was contested even among the Greeks. There + were many who claimed that wealth consisted exclusively in the + possession of much money; as we find, for instance, in the + pseudo-Platonic dialogue Eryxias; while others insisted that money + was something purely imaginary ({~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER FINAL SIGMA~}), and the creation, + exclusively, of human laws. (_Aristot._, Polit., I, 3, 16, Schn.) + {~GREEK CAPITAL LETTER NU~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~} {~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER BETA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ALPHA~}. (_Plato_, De Rep., II, 371.) + _Anacharsis_ compares money to counters. (_Plutarch_, De Profectt in + Virtute.) _Aristotle_, himself, subscribed to the second opinion, + although he saw clearly, that only useful and current things ({~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER NU~} + {~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER UPSILON WITH PSILI~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER EPSILON~}{~GREEK SMALL LETTER IOTA WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMICRON WITH VARIA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON WITH VARIA~} {~GREEK SMALL LETTER ZETA~}{~GREEK SMALL LETTER ETA WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~}) could be used as money. (Polit., I, 3, + 14 ff. Eth. Nicom., V, 5, 6, Rhet., II, 16.) _Xenophon_ ascribed + properties to money which no other commodity possessed; especially + when he said that it could never be too plentiful, and that its + price could never fall. (De Vectt. Ath., 4.) The finest ancient + explanation of the nature of money is that of the jurisconsult + _Paullus_, L. I.; Digest, XVIII, 1; and it well deserves the long + commentary devoted to it by _P. Neri_, Osservazioni etc., in + _Custodi_, P.A., VI, 324, ff. + + Among the moderns, _Melancthon._, Corp. Ref., XVI, 498, and _Seb. + Frank_, Chronik., 760, consider money as a mere symbol. On the other + hand, the over-estimation in which the precious metals were held by + the adherents of the Mercantile System was owing, without doubt, to + their very superior utility as money; for we very frequently find + that the adherents of that school insist that the precious metals + must circulate. (See § 9 and § 210.) _v. Schroeder_, Fuerstl. Schatz- + und Rentkammer, III f., considers new copper coins as an increase of + the national wealth, but not other copper which is merely a + commercial commodity. He frequently calls money, the _pendulum + commercii_, and expresses ideas concerning it as enthusiastic as + they are obscure (p. 86.) _Horneck_, in his Oesterreich ueber Alles + wenn es will, 1864, calls gold and silver "our best blood, the very + marrow of our strength," and "the two most indispensable universal + instruments of human activity and existence." (p. 188.) _Th. Mun_, + England's Treasure by forraign Trade, 1664, (ch. 2) considers + cash-money and resources as synonymous in every way. Only, he says + (ch. 4) that it is sometimes advisable to allow one's money to + remain in foreign countries, and to use bills of exchange, banks + etc., at home, as a substitute. _F. Gee_, Trade and Commerce of Gr. + Britain, edition of 1738, laments the "stiff-necked folly of those + who think money a commodity like any other." It is one of the most + common demands of the adherents of the Mercantile System that the + home mines of gold and silver should be worked at no matter what + sacrifice, since the money employed in working them continues to + remain in the country and the newly coined precious metal is clear + gain. Compare _Schroeder_, loc. cit. 109 ff., 181. _Horneck_, loc. + cit. 173. _Broggia_, Della Monete, 1743, cap. 33; _v. Fusti_, + Staatswirthschaft, 1755, I, 246: _Forbonnais_, Finances de France, + 1758, I, 148. _Ulloa_, Noticias Americanas, 1772, ch. 12. We seldom + meet with the correct view on this subject in the seventeenth + century. _Sully_, of whom Henry IV. said that he never found + anything to be possessed of beauty which cost double its real value, + had it at times. (Economies royales, LXXIII.) So had _v. + Seckendorff_, Teutscher Fuerstenstaat, 1655, 5th edition. + + It is in accordance with the usual course of human development that + the exaggerations of the Mercantile System led to a reaction + characterized by an exaggeration in the opposite direction. Even + _Davanzati_, Sulle Monete, 1588, traces the value of money back to + human convention and refuses to find it in nature. A natural calf, + he thinks, is _piu nobile_ than a golden one; although he elsewhere + expresses his admiration of the precious metals, calls them _cagioni + seconde della vita beata_, and lauds them because they procure us + _tutt'essi beni_ (20, 21, Cust.) _Montanari_ (ob., 1687) + demonstrates from the use of leather money etc., that the authority + of the state is the only power which gives money its character as + money. (Della Moneta, 35.) _Davenant_ (ob., 1714) carries his + inclination to call money "the servant of trade, measure of trade," + so far as to compare it to a ticket or counter. (Works, I, 355, + 444.) Strongly as _Law_, himself, opposes the convention theory + (Trade and Money, ch. I; Sur l' Usage des Monnaies, 1720, p. 1.), + his disciple _Dutot_, in his Reflexions polit. sur le Commerce et + les Finances, 1738, 905, ed. Daire, contrasts not only paper money + but also gold and silver as representative wealth, with real wealth. + _Berkeley_, Querist, 1735, teaches that the real notion of money is + not that of a "commodity, standard, measure, pledge, but [No. 23] + ticket or counter, entitling to power and fitted to record and + transfer such power." (441, 475.) Even if the names, _livre_, + shilling etc., remain, and the metal is dropped, every article may + still as well as before be counted and sold, industry promoted and + the course of commerce preserved. (p. 440.) According to + _Montesquieu_, Esprit des Lois, XXI, 22, gold and silver are a + _richesse de fiction ou de signe_. Compare Lettres persanes, II, 18. + _Benjamin Franklin_ also maintains that the value of gold, for + instance, is principally a credit-value. Remarks relative to the + American Paper-Money, 1765, Works, II, Sparks' edition. + _Forbonnais_, Finances de France, I, 86 f., calls money, simply a + means to put commodities, which alone have value originally, in + circulation. Hence it is, in itself, a matter of indifference + whether, for a given quantity of coin, a person gives one thaler, or + ten. In the Elements de Commerce, I, 11, II, 67 ff., he draws a + distinction between _richesses naturelles_ (raw material), + _artificielles_ (manufactured products), and _richesses_ de + convention (money.) _von Schloezer_, Aufangsgruende, 1805, 100, 138, + calls money something imagined; and _Th. Smith_, Essay on the Theory + of Money and Exchange, 1807, asserts, that true money is only an + ideal measure of value, of which coins in turn are only the + representatives. Compare, however, Edinb. Review, Oct., 1808. + _Oppenheim_, Die Natur des Geldes, 1855, grants that in the + beginnings of trade, money possessed the character of a commodity; + but says that as soon as the services of circulation of the + money-commodity prevailed over its services in consumption, it lost + all its importance for the latter purpose, and that all relations + dependent thereon ceased. At present, he claims money is only the + representative of commodities, but no commodity itself. See, on the + other hand, _Roscher's_ critical analysis in the Literarisches + Centralblatt, 1855, December. + + The true doctrine was advocated in a classic form by _Nicolaus + Oresmius_ (ob. 1382). See his Tractatus de Origine et Jure nec non + et Mutationibus Monetarum, newly edited by _Wolowski_: Paris, 1864. + See _Roscher's_ essay in the Comptes rendus of the Academie des + Sciences morales et politiques, vol. 62, 435 ff. Based on the latter + we have _Gabr. Biel_ (ob. 1495), De Monetarum Potestate simul et + Utilitate, 1542, and _G. Agricola_, De Re metallica, 1556, I, 4 ff. + This true doctrine was acclimated earliest in England and Holland, + and before the mercantile system invaded them. Compare _Hobbes_, + Leviathan, 24, in which the _concoctio bonorum_ is described by + means of money, and the full and clear chapter 12 of _Salmasius_, De + Usuris (1638), who, among other things, shows how Midas, who turned + everything into bread, died of thirst. _Petty_ shows very clearly + that national wealth does not consist exclusively nor mainly in + money. Every country, he says, needs a certain quantity of money to + carry on trade. It would be a waste to increase the former, the + latter remaining the same. But the precious metals, by reason of + their durability and universally recognized value, possess the + character of wealth in a higher degree than other commodities. + + On the whole, the use of money in a nation is like the use of fat in + the individual. (Quantulumcunque concerning Money, 1682.) Compare + _Roscher_, z. Geschichte der eng. Volkswirthschaftslehre, 80 f. + _Davanzati_ and _Hobbes_ had compared it to the blood, as has + recently _Schmitthenner_, Staatswissenschaften, 1839, I, 459. + _North_ calls money a commodity of which there may be an excess as + well as a want. (Discourse on Trade, preface and postscript.) + Compare _Locke_, Considerations on the Lowering of Interest, 1691, + Works II, 13 ff., 19. _Galiani_, 1750, Della Moneta, IV, holds a + very happy middle place between the alchymists and the philosophic + contemners of gold. See, further, _Quesnay, ed. Daire_, 64, 75 ff. + _Turgot_, Sur la Formation des Richesses, § 30 ff, had many clear + views on this subject. _Verri_, Meditazioni, 1771, II, 1, calls + money the universally current commodity. The expressions, measure of + value, pledge, representative of all commodities might be true also + of all other wares. It cannot, however, be denied that most modern + political economists have not borne sufficiently in mind the + peculiarities which distinguish money from all other commodities, as + is apparent from the doctrine of the balance of trade prevalent in + Hume's and Adam Smith's time. To this extent, therefore, the + semi-mercantilistic reaction instituted by _Ganilh_, Theorie de + l'Economie politique, 2822, II, 380 ff., 426; _St. Chamans_, N. + Essai sur la Richesse des Nations, 1824, ch. 3; and _Colton_, Public + Economy for the United States, 1849, 203 ff., who bring into relief + the difference between "money as the subject" and "money as the + instrument of trade," was not wholly unfounded. _Ad. Mueller_ + exaggerates a correct thought, and causes it to degenerate into a + species of mystic pleasantry, when he calls every individual in the + state and every commodity that possesses value, in exchange or a + social character, money. + + The highest object of the state is to develop this money-character + more and more. (Elemente der Staatskunst, II, 194, 199.) The + statesman, he says, should be money. (III, 206.) A very valuable + monograph on this subject is _M. Chevalier's_ De la Monnaie, 1850, + constituting the third volume of his Cours d'Economie polititique. + _Knies_, Geld und Credit, I, 1873, is here most thorough and acute, + especially in keeping separate, by well defined lines of + demarcation, the five different functions of money: measure of value + (by proper division into parts: price-measure), instrument of + exchange, means of transportation of values, and means of storing up + and preserving values. + +_ 693 Knies_ shows how the making of money legal tender by the state, + although of only secondary importance, is by no means an irrelevant + matter, since persons must then have it, even if they do not want it + for purposes of use or exchange, to discharge their liabilities + thereby etc., etc. (Tuebinger, Zetschrift, 1858, 272.) + + In all these cases, barter-economy (_Naturalwirthschaft_) meets with + greater and greater difficulties as civilization advances. How, for + instance, could 50 days annually of socage-service or labor be + redeemed by the achievement at one time of 1,000 days of + socage-service or labor? The rich man requires money principally as + a means of payment, the poor man as a medium of exchange. The + requirement or need of a people of media of payment is much more + susceptible of extension or contraction, than that of media of + exchange, made especially so by the intervention of claim-rights + instead of money. _(Knies_, loc. cit, 200 ff.) _Ravit_, Beitr. z. + Lehre vom Gelde, emphasizes this feature of money altogether too + much after the manner of a jurist. But he is entirely right in + adopting the exclusion of the _rei vindicatio_ against the honest + possessor as necessary to the completion of the idea of money. + +_ 694 Sismondi_, N.P., I, 131, very rightly remarks that this has made + practice as much easier as it has theory more difficult. + +_ 695 Law_, Trade and Money, 19. Hence, before the invention of money, + scarcely anything but the things most indispensable to existence + were produced. Were there no money, there would be very few + scholars, artists etc.; for the classes who produce most of the + things indispensable to existence make but few demands for them. + _Buesch_, Geldumlauf, I, 11 ff., 36, II, 54. + +_ 696 Turgot_, Formation et Distribution, § 48 ff. Commodities which + perish rapidly could be produced by persons devoting themselves to + their production as a business only after the invention of small + coin. (_Lueder_, N. OEk., 1820, 283.) + + 697 Compare _Knies_, Geld und Credit, I, 219. + + 698 Compare _Schmitthenner_, loc. cit., I, 457. One of the principal + advantages of money consists in this, that every producer can + discover what there is an over-supply or under-supply of in the + nation, by means of the relation of the price in money of his + products to the cost of producing them, estimated in money, (_v. + Thuenen_, Isolirte Staat, II, 2, 235.) + + 699 Hence it is that so many socialists attack money. _Th. More_ assures + us that with the simple abolition of money, vice and misery would, + for the most part, disappear of themselves. Hence in his Utopia, + criminals are bound in golden chains and the chamber-pots are made + of gold and silver in order to make these metals contemptible. (Ed. + 1555, ff., 197 ff.) Similar views among the over-cultured Romans. + (Compare §§ 79, 204.) _Auri sacra fames_. _Virgil_, AEneid, III, 56. + _Pliny_, too, would recall the days of trade by barter. (H. N., + XXXIII, 3.) Even in _Boisguillebert_, Factum de la France, ch. 4, we + find, together with many correct views on the nature of money, + passionate declamation against it because of its darker side. + _Argent criminel_. (Detail de la France, 7. Dissertation sur la + Nature des Richesses etc.) More recently this darker side has been + dwelt upon by _F. Moeser_, Patriot. Phant., I, 28; _Ortes_, Economia + nazionale, II, 17, and the would-be restorer of the middle ages, + _Ad. Mueller_. While the latter writer lauds the feudal system as a + "sublime fusion of person and thing" (Elemente I, 221), the present + system of wages, because it is a system of compensation, he blames, + and prefers the feudal for the opposite reason (?). "The only + _merit_ which the state recognizes in our day is one _of service_." + (III, 259.) _Kosegarten_, Geschichtliche systematische, Uebersicht + der N. Oek., 1856, 146 ff., is no friend to the economic system to + which money gives a distinctive character. _Per contra_, compare + _Bastiat_, Maudit Argent, 1849. + +_ 700 Mirabeau_, Philosophie rurale, 1763, ch. 2, adds as the third great + invention the _tableau economique_ of the Physiocrates. For a + comparison of money and language, see _Hamann_, Werke, II, 135 ff., + 509. _Hehn_, Kulturpflanzen und Hausthiere, finds it characteristic + of the race, that wine, writing with letters, and money, all owe + their origin to the monotheistic stem of the Semitic people. + + 701 Where every man becomes a merchant, and the society itself a + commercial society. _Ad. Smith_, Wealth of Nations, I, ch. 4. + + 702 Just as descriptive is the German word _billig_ (_equitable_) for + cheap. Here it is plain that language takes sides with the possessor + of money! + + 703 The contrast between barter-economy and money-economy is of great + and fundamental importance. It repeats itself with so much + regularity in the history of every highly developed nation, that + political economists gifted with perception for the historical, + could not possibly overlook it. Thus, _Aristotle_, for instance, + establishes with the utmost care and accuracy the difference between + {~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PSILI~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ETA WITH VARIA~} and {~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER ETA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER ETA WITH VARIA~}, that is, between natural economy and + artificial economy, corresponding to the difference between value in + use and value in exchange. (Polit., I, 3, Schn.) Similarly _D. + Hume_, who allows a period of luxury, culture, industry, of trade + and manufactures, of freedom and circulation of money, to be + preceded by one in which the feeling of wants is not awakened, in + which coarseness and idleness prevail, one in which agriculture is + alone pursued, and monetary economy and freedom decline, and trade + by barter obtains. (Discourses, passim, especially On Interest and + on Money.) A similar contrast we find frequently, and as one of his + fundamental thoughts, in _J. Steuart_. + + As to how the transition from barter-economy to monetary-economy is + generally effected, see _F. G. Hoffmann_, Lehre vom Gelde, 1838, 176 + ff. In the Tyrol, as late as 1820, the greater portion of purely + mechanical work, such as that of the smith, the carpenter, and the + washerwoman, were purely feudal duties. On the other hand, payment + in money was the rule, in the beginning of the fourteenth century. + (_F. Beidermann_, Technische Bildung in Oesterreich, 3.) Yet, for a + long time after, the functions of a measure of value were performed + by pieces of land, and those of an instrument of exchange by cattle + and natural products. (_Arnold, Gesch. des Eigenth_., 207.) In + France, money-economy, i.e., trade by money, had grown to importance + earlier. (_Nitsch_., Ministerialitaet und Buergerthum, im 11. und 12. + Jahr., 143.) Even in the time of Mary Stuart, the Scotch estimated + the rent of land in "cauldrons of victuals." (_Moryson_, Itinerary, + 1617, III, 155.) In ancient Italy, during the first three centuries + of Rome, there was, with the exception of the Greek colonies, only + trade by barter. _Mommsen_, Roemische Gesch., I, 293, shows that the + oldest ases were not money in the higher sense of the word, but + belonged rather to the stage of barter-economy. On the other hand, + we find in the time of the classic jurists, much as slavery had + limited the sphere of action of money, the principle: _pecuniae + nomine non solum numerata pecunia, sed omnes res, tam soli quam + mobiles, et tam corpora quam jura continentur_. (L. 222, Digest L. + 16; compare 4, 5, 178.) Similarly in _Cicero_, Top. 6. De Invent, + II, 21. De Legg, II, 19, 21; III, 3. Compare _Dionys. Hal._, N.R. + IV, 15. + + 704 Were money nothing but a measure of values in exchange, it should on + that account, if on no other, have value in exchange itself, as a + measure of length must necessarily have length itself. (We measure + time on a clock by means of the revolution of the hands on the + dial.) Again, value in exchange supposes value in use. The so-called + "money of account," such as the East Indian _lac de roupies_, the + Portuguese reis, and the earlier English _pound_ sterling are no + imaginary magnitudes, which would disappear with the figures of our + system of counting (see _Hufeland_, N. Grundlegung, II, 33, in reply + to _Struensee_, Abh., III, 501); but real coin-values which can not + be represented by only single pieces of coin, units of value for the + most part no longer recognized by the state, but which the people + still retain. See _M. Park's_ (Travels, 27) refutation of the fable + circulated by _Montesquieu_, Esprit des Lois, XXII, 8, that the + regular standard money of the Mandingo negroes was a mere imaginary + standard. _Hobbes_, Leviathan, 24, exhibits a very good knowledge of + this subject. + + 705 Compare _P. Neri_, Osservazioni, 1751, VI, 1. _Lord Liverpool_, + Treatise on the Coins of the Realm, 1805. The person who takes money + as such must always harbor the hope of being able to dispose of it + again as money. Hence, such an acceptance always supposes the + existence of a certain amount of commercial confidence. The savage + Goahiros, between Rio de la Hacha and Maracaibo, are too + "distrustful" to take anything in trade but commodities fit for the + most immediate use. (_Depons_, Voyage dans la Terrefirme, I, 314.) + Similarly in the twelfth century, the heathen Laplanders. (_Arndt_, + Liefl. Chronik, II, 3.) Commodities which barbarians can consume + immediately are objects of the first necessity, whereas more + civilized people, who are in a condition to undergo greater expense, + look more to the technic qualities of money, such as divisibility, + capacity for transportation and durability. _v. Scheel_ shows in a + very happy manner how, as commerce increases, money comes to be, as + it were, subjected to a process resembling that of distillation: + first mere increase of stores for use, next preponderating values in + exchange, lastly mere orders for the same possessing no independent + value. _Hildebrand's_ Jahrbb., 1866, I, 16. + + 706 The last circumstance continues to be one of great importance for a + long period of time in the frigid zones. Thus, the beaver-skin + continues still to be the unit of measure of trade in much of the + territory of the Hudson Bay Company. Three martens are estimated to + be equal in value to one beaver, one white fox to two beavers, one + black fox or a bear to four beavers, a rifle to fifteen beavers. + (Ausland, 1846, No. 21.) The Esthonian word, _raha_, money, means in + the related language of the Laplanders, fur. (_Krug_, Zur Muenzkunde + Russlands, 1805.) Concerning skin-money in the middle age of Russia, + see _Nestor_, _Schloezer's_ translation, III, 90. The old word + _kung_, money, means marten. By degrees it came to pass that instead + of whole skins, only two "snouts" were given or other pieces of + leather about a square inch in size, which were probably stamped by + the government and redeemed in whole skins at the government + magazines. Hence, there is here supposed a species of assignats, and + of disturbances of credit. The Mongolian conquerors would not + recognize them, and they therefore became suddenly valueless. In + Novgorod and Pskow, the system continued some time longer, for the + reason that these places had little trade with the Mongols. In the + rest of the kingdom it now became necessary to introduce silver + money, and in the north to return to real squirrel and beaver skins. + _Karamsin_, Russ. Gesch., I, 203, 385; I, 96, 191 f. Voyage de + Rubruquis, in _Bergeron_, Voyages I, 91. _Herberstein_, Rer. moscov. + Commentt, 58 ff. Even in 1610, a Russian military chest was captured + by the enemy, and in it were found 5450 silver rubles, and 7000 fur + rubles. (_Karamsin_, XI, 183.) + + 707 When the Danes progressed so far as to practice agriculture, they + used grain instead of cattle, in quantities corresponding to the + value of one cow or one sheep, for money, to the end that their idea + of a unit of measure might not become obscured. (_Ravit_, Beitraege, + 3.) + + 708 Homeric determination of prices in oxen. Iliad, II, 449; VI, 236; + XXI, 79; XXIII, 703 ff; Odyss., I, 431. Compare, however, II, VII, + 473 ff. In Draco's time, money-fines were imposed in cattle + (_Pollux_, IX, 60 ff.), and in Athens, before Solon's time, even the + metal coins were, for the most part, stamped with the figure of an + ox. _Plutarch_, Theseus, 25. _Boeckh_., Metr. Uuntersuch., 121 ff. + Among the most ancient Romans (_Cicero_, de Rep., II, 35) the + imposition of fines in property, the coins first stamped by Servius, + _boum oviumque effigie_ (_Plin._, H. N., XVIII, 3, _Cassiodor._, + Var., VII, 32), and the words _pecunia_, _peculium_, _peculatus_, + derived from _pecus_, point to something analogous. (_Varro_, De L. + L., V, 19; De Re rust., II, 1; _Cicero_, De Rep., II, 9; _Ovid_, + Fast., V, 281; _Plutarch_, Publicola, 11.) Old German fines in + cattle, in _Tacitus_, Germ., 12, 21; Lex Ripuar, 36, 11; Lex + Saxonum, 19. _Ulfilas_ translates {~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER GAMMA~}{~GREEK SMALL LETTER UPSILON WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER UPSILON WITH PERISPOMENI~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER IOTA~} (_Mark_, 14, 11), + _faihu giban_. Very old German documents, of the seventh and eighth + centuries, name horses as purchase-price. (_Grimm_, Deutsche + Rechtsalterth., 586 f.) Otho the Great imposed cattle-fines. + (_Widuk_ Corb., II, 6.) Similarly, in King Stephen's laws of Hungary + (_Wachsmuth_, Europaeische Sitturgesch., II), in the old Irish Brehon + laws (_Leland_; History of Ireland, 36 ff.), as well as in the + Scotch collection of laws, _Regiam Majestatem_, of 1330. (_Honard_, + II, 263 f, 537.) _Viva pecunia_ of the Anglo-Saxons in the laws of + William I. In ancient Sweden, all property was estimated in + _fae_=cattle (_Geijer_, Schw. Gesch., I, 100), just as now, in + Icelandic, _fe_=property. In Berne, the German _vieh_, cattle, is + used to express commodities. Among really nomadic races this is, of + course, still more the case. Thus the Kirghises use horses and sheep + as money, and wolf-skins and lamb-skins for small change. (_Pallas_, + Reise durch Russland, 1771, I, 390.) Among some of the Tartar + tribes, everything is stipulated for in cows. (_v. Haxthausen_, + Studien, II, 371.) Among the Persian nomads, sheep are used as + money; or when they are held in subjection in the cities, corn, + straw and wool. (_Ritter_, Erdkunde, VIII, 386.) Oxen in use as + money among the Tscherkessens. (_Klemm_, Kulturgeschichte, IX, 16.) + _W. B. Hermann_ doubts, however, whether cattle were ever used as a + medium of exchange. He thinks rather they were employed only as a + measure of price. (Muenchener Gel. Anz., 580.) + + 709 That of vanity which presents itself among some people sooner than + that of clothing. + + 710 In Genesis, 1, 24, gold appears only as a valuable ornament. Abraham + paid for his purchases in silver. + + 711 For this reason, zinc-money is just as natural with the Malays and + Chinese as iron-money with the Senegambians. (_Mungo Park_, Travels, + 27.) And so _Plutarch_, Lysand., 17, may be right when he calls iron + the earliest universal means of payment. In Sparta, too, where + industrious efforts were made to maintain the lower stage of + culture, this medium of payment was longest maintained. Compare, + however, _St. John_, The Hellenes, III, 260 ff. The first copper + coins were stamped a short time before Philip, father of Alexander + the Great. (_Eckhel_, Doctr. Numm, I, XXX ff.) On the other hand, + Italy, partly because it had mines of its own, and partly because of + its intercourse with Carthage (Cyprus), had become, at a very + distant period, so rich in copper that the circulation of copper, or + to speak more accurately, of bronze, was naturally introduced. + Compare _Niebuhr_, Roem. Gesch., I, 475 ff. (_Aes alienum, obaeratus, + aerarium, aestimare._) Copper was all the more adapted to this end the + more frequently it was found unmixed. It was generally used in + preference to iron because of the greater facility of working it. + (_Hesiod._, Opp., 150 f.; _Lucret._, V, 1285 f.) In modern nations + copper money seems to have been employed only after silver money. + Thus, it was not stamped in England before the time of James I. + (_Adam Smith_, I, ch. 5), nor in Sweden before 1625. (_Geijer_, + Schwed., Gesch., III, 56.) Money was struck from the metal of molten + bells during the French Revolution! + + 712 In Russia, between 1763 and 1788, there were 76 million rubles of + gold and silver coins struck, against 54 million of copper rubles. + (_Hermann_). On the other hand, in France, between 1727 and 1796, + there were struck only 40 million francs of copper, 10 million of + _billon_ or base coin, and 3967 million of gold and silver. + +_ 713 Michaelis_, De Pretiis Rerum apud veteres Hebraeos, 183. + +_ 714 Strabo_, VIII, 358. Hiero, tyrant of Syracuse, found it exceedingly + difficult to obtain gold. When the Spartans wished to make an + offering of gold at Delphi they were obliged to have recourse to + Croesus. (_Herodot._, I, 69; _Theopomp._, in _Athen_, VI, 231 ff.) + _Aristoph._, Ranae, 720, calls gold "new" in contradistinction to + the "old money," that is, silver. + +_ 715 Plin._, H. N., XXXIII, 13. Compare, however, _Dureau de la Malle_, + Economie polit. des Romans, I, 69, after _Varro_, apud Charisium, I, + 81. (_Putsch._) It is certain, however, that when Italy was + conquered, the Romans had introduced a circulating medium of silver, + and that it was the prevailing medium; but in the time of Caesar and + Augustus, a gold circulation was the prevalent one. Yet the state + treasure was deposited in gold during the period of silver + circulation, because gold was, without question, better adapted to + storing up and transportation. + +_ 716 Muratori_, Antiquitt., IV, Diss., 28. + + 717 Henry was obliged to issue an order to the mayor and sheriffs of + London, to get his gold into circulation; but he soon saw himself + compelled to desist from executing his design. Edward III. was able + only after a voluntary circulation of them had continued for a long + time, to prohibit any one's refusing the rose-nobles. (_L. + Liverpool_, loc. cit.) + + 718 German., 5. Still more striking is the example cited by _Herbelot_, + Bibliotheque Orientale (1697), 485. _Rubruquis_, Voyage, ch. 13. In + the time of Nadir-shah, the Kurds gave, without the slightest + hesitation, a pound of gold for a pound of silver or copper. + (_Ritter_, Erdkunde, VIII, 395.) + + 719 Recommended even by _Adam Smith_, ch. 5, and for Germany by _F. G. + Hoffmann_, Drei Aufsaetze ueber das Muenzwesen, 1832. In Egypt, also, + for a long time the wealthiest country of the middle ages, the + circulation of gold prevailed until the twelfth century. (_Macrisi_, + Historia Monetae Arab., cap. 3 ed., _Tychsen_.) Harun Alraschid's + income was estimated at about 7,500 cwt. of gold. (_Ritter_, + Erdkunde, X, 235.) Something similar related of the Carnatic, "the + land of ancient emporiums." _Ritter_, Erdkunde, V, 564, after + _Ferishta_. + + 720 The use of the _cauris_ (_Cypraea moneta_) in India this side and + beyond the Ganges, in upper Asia, and in southern Africa depends on + their employment for purposes of ornament, on their greater + uniformity, and on the rarity of copper which would otherwise be + better suited to purposes of change. In Calcutta, 1280 _cauris_ are + equivalent to about half a shilling. (_McCulloch._) Compare _K. + Ritter_, Africa, 149, 324, 422, 1038; Asien, I,964; II, 120; III, + 233, 739; IV, 53, 420; _Salin_, III, 62; _Botz_, in the Tuebinger + Ztschr. Similarly among the fishing population of Northwestern + America. (_Stein-Wappaeus_, Handbuch I, 352.) Salt as money on the + Chinese-Birman boundary (_Marco Polo_, 38), but especially in the + interior of Africa, where nature does not at all produce it, but + into which it is brought by caravans from the deserts, where salt is + found in great quantities. _M. Polo_, Travels, 305, found the + current price of a salt-tablet, two and a half feet long, one foot, + two inches broad, and two inches thick, to be equal to the value of + two pounds sterling among the Mandingos. In Abyssinia, the salt-bars + are generally six inches long, three inches broad, one and a half + inches thick, and they are bound with an iron ring to protect them + against fracture. Sixty of them are worth one thaler. (Ausland, + 1846, No. 35.) Slaves used as money: _Barth_, Reise, III, 338, 344. + Tea-blocks in upper Asia and Siberia; and they are given by the + Chinese to the Mongols as pay for troops. (_Ritter_, Asien, III, + 252,) In Keachta, a tea-block is equal in price to one paper ruble. + (Ausland, 1846, No. 20. _Timkowski_, Reise nach China, 143.) + Date-money in the Sivah oasis. (_Hornemann_, Reise, 21.) Also in the + Persian date-country, where, formerly, the lowest silver piece of + money was coined in the form of a date (_Ritter_, Asien, VIII, 752, + 819.) + + The ancient Mexicans used as money cocoa-nuts, in bags of 24,000 + pieces, cotton-stuffs, small pieces of copper, and gold dust in + quills. (_Humboldt_, N. Espagne, IV, 11.) Cocoa-beans are still used + as small change there. (Ibidem, IV, 10.) On the Amazon, wax-cakes + weighing one pound are used. (_Smyth_, Journey from Lima to Para, + 1836.) Among the ancient inhabitants of Ruegen, linen (_Helmold_, I, + 39); and still among the Icelanders, the so-called _Vadhmal_. During + the middle ages, 120 ells of _Vadhmal_ were equal in value to one + milch cow or six milch sheep, or two and a half ounces of silver. + (_Leo_ in _Raumer's_ histor. Taschenbuch, 1835, 515.) That the + ancient northern mode of valuation, by the _Vadhmal_ and in cows is + older than by the _mark_ is shown by _Wilda_, Gesch. des deutschen + Strafrechts, I, 331. The cod-fish money used by the Icelanders was, + on account of its great commercial importance as an article of + export, an advance upon the use of the _Vadhmal_. Among the Caffirs, + besides _cauris_, mats, javelins, glass corals, but particularly + brass rings, are used as money. From three to four hundred of these + rings are strung together, and two such strings are equal in value + to one cow. (_Klemm_, Kulturgeschichte, III, 308, 320 f.) Ivory used + as money in the neighborhood of the Portuguese colonies in Africa. + (_Martius_, Reise, II, 670.) In Logone, _Denham_ (1822) ff., had met + with pieces of iron as a medium of circulation; but on the other + hand, _Barth_ (1849), with small strips of cotton from 2 to 3 inches + in breadth, and shirts for larger sums. (A. R., III, 274, 297, 538.) + In colonies, money of this nature is continued for a long time. Thus + cod-fish used in Newfoundland, sugar in the English West Indies + (_Adam Smith_, I, ch. 4), tobacco in Maryland and Virginia. + (_Douglas_, V, 2, 389; _Ebeling_, V, 435 ff.) The last was related + to the inspection and storage of the tobacco intended for + exportation. Payment was made in orders on the stored and inspected + tobacco, even as late as the end of the eighteenth century. In 1618, + the forced circulation of tobacco was decreed in Virginia, and under + severe penalties. (_Gouge_, History of Paper-Money and Banking in + the United States, ch. 1.) + + 721 When the caravans no longer touched at the oasis Agades, gold and + silver money fell into disuse, and grain, stuffs etc. did service as + instruments of circulation. (_Barth_, Reisen und Endeckungen, I, + 144.) + +_ 722 Ad. Mueller_ says very pertinently, but in a very mystical vein, + that the precious metals combine in a very high degree and yet in a + very simple manner, the principal qualities in which man's greatness + finds expression: rarity, flexibility, uniformity, mobility, + durability and beauty. (Elemente, II, 266.) In another place, he + says, the highest ideal good is God, the highest material good, + gold! (III, 65.) The mysticism of gold was most highly developed + among the alchymists of the sixteenth and seventeenth centuries. + + 723 Iron beds are worked only when they contain at least 18 per cent. of + metal. Generally it is estimated that the furnace should yield 30 + per cent. In the copper mines of Mansfield, Norway, Agordo and + Venice, it goes as low as from one to three per cent. On the other + hand, silver mines which yield 0.17 per cent. of metal are + considered worth working. Lastly, gold is so rare that generally it + can be extracted only from time to time by the ordinary mining + processes. As a rule, men are content to gather it where nature has + charged itself with its refining. The extreme limit of the working + of gold appears, according to _Plattner_ and _Haussmann_, at Goslar, + to be reached when in 5,200,000 parts of mineral earth there is one + of gold. Spite of this, however, by reason of their great ductility, + the precious metals have been able to penetrate even into the + meanest huts in one form or another. It has been estimated that a + silver leaf may be attenuated by beating to a thickness of only + 0.00001 of an inch, and a gold leaf to 0.0000035 of an inch. An + ounce of gold spread on a silver thread may attain a length of + 13,000 English miles. (_McCulloch._) + + 724 How easily, for instance, could leather-money, such as was used by + the ancient Galls (_Cassiodor._, Varia, II, 32,) be increased to any + desired quantity, and thus its price brought down. + +_ 725 Engel_, at the usual tariff for land and railroad freight (10 and 5 + _pfennigs_ per mile and hundredths of a mile) estimates the + enhancement of the price of the following commodities, for one mile + of transportation of a custom-hundred-weight (_Zollcentner_) at the + following percentage of their average value: + + Gold, value 47610 German _Reichsthaler_ per cwt., 0.000007 by land, + 0.0000035 by railroad. + Silver, value 3000, 0.00111 by land, 0.00055 by railroad. + Cotton, value 45, 0.074 by land, 0.037 by railroad. + Tin, value 24, 0.1389 by land, 0.0694 by railroad. + Lead, value 8, 0.416 by land, 0.208 by railroad. + Iron, value 2.5, 1.333 by land, 0.666 by railroad. + Rye, value 2, 1.666 by land, 0.833 by railroad. + Potatoes, value 0.6, 5.555 by land, 2.777 by railroad. + Coal, value 0.12, 27.777 by land, 13.888 by railroad. + + Their great specific gravity, also, makes the precious metals easy + of transportation. Thus _Cazeau_ calculates that a given value of + gold is 17,222 times as easy to transport as the same value in + wheat. But as, where the weight is the same, the labor of + transportation is inversely as the volume, this number must be + multiplied by 26, and we therefore have 447,772 times. In the case + of silver, the relation to wheat is as 1:15,554. Concerning copper, + see _Storch_, Handbuch 1, 488. _Chevalier_, Cours, III, 17 ff. + + 726 This, at bottom, is also true, of the various kinds of copper; only, + here, complete refining is impracticable on account of the relation + between the cost of production and the product-price. + + 727 On the other hand, copper, and still more zinc, tin and lead lose + much of their value in the fire. Pearls may lose their entire value + by fire, and diamonds more than half of it. + +_ 728 Aqua-regia_, a mixture of nitric and muriatic acid, dissolves gold. + Chlorine and bromine attack it. It has been noticed to vaporize at a + very high temperature. A gold thread vaporizes when a strong + electric current is passed through it. A small ball of gold gives + off a great deal of vapor if placed between two carbon points and + subjected to the action of a powerful galvanic pile. (_K. F. + Naumann._) + + 729 Compare _Hatchett_, Experiments and Observations of the various + Alloys, On the specific Gravity and comparative Weight of Gold, + 1863. The French five-franc pieces wear away, on an average, in a + year, 0.00016; the English crown, 0.00018; the half crown, about + 0.00173; and the shilling, about 0.00456. (_L. Liverpool_, Treatise + on the Coins. 204; _M. Chevalier_, Cours, III, 128 ff.) The wear + from use of the south German gulden is 0.292 per 1,000. (_Rau_, in + the Archiv. N.F.X, 256.) According to _Jacob_, the average wear of + coin is 2.38 per 1,000. (Historical Inquiry into the Production and + Consumption of the Precious Metals, ch. 23.) + +_ 730 Adam Smith_, Wealth of Nations, I, ch. II, Digr. + +_ 731 Solera_, Sur les Valueurs, 1785, 271 ff.; _Custodi_. Half an ox, + for instance, is worth half the value of a whole one only for a few + well defined purposes. As to how much the value of the diamond + varies with the size etc., see _Dufrenoy_, Traite de Mineralogie, + II, 77 f. On the other hand, the separated parts of a piece of metal + are very readily reduced to a whole. + + 732 In the case of the ox, it is impossible to imagine a mark which + might not be eluded by its losing flesh. + + 733 The cost of coinage since 1849 has been 3/4 of 1 per cent. in the case + of silver, and in that of gold not quite 2 per 1,000. (_M. + Chevalier_, Cours, III, 110.) + + 734 Platinum possesses many of the properties necessary to an instrument + of exchange in as high a degree as gold and silver,--great value in + exchange, great specific gravity and great durability. On the other + hand, its pliability as to form is very small, and therefore the + cost of coining it would be high. The conversion of platinum coins + into utensils, and of utensils into coin, which would contribute to + the supply of money when needed, and to a diminution of that supply + when the demand decreased, would be much more difficult on this + account; and also because of the small degree of beauty possessed by + that metal, which renders it little adapted to purposes of luxury. + Under these circumstances, the rarity in nature of the metal is a + great drawback; for the discovery of a new mine would create a great + perturbation in prices. For this reason, the Russian platinum coins + have been generally very much undervalued since 1828 in the + commercial world, and the whole experiment was given up in 1845-46. + Compare _J. Schon_, National OEkonomie, 128 ff. Aluminum, discovered + by Woehler, and which can be prepared from argillaceous earth, is + capable of manipulation in a very high degree (_malleable et ductile + a peu pres sans limite, excessivement fusible_), almost as + indestructible as the precious metals, but easily distinguished from + silver by a fine bluish color, which has been compared to that of + tin; by its small specific gravity, from 2.5 to 2.67, and its ring + like that of iron. Hence it is very doubtful whether aluminum can be + made to play the part of a substitute for silver, and still more so + whether it can be used for coining. + +_ 735 Lingot, bullion_. In India, beyond the Ganges, and in China, bars + are very much used. (_Sycee._) In the latter country, besides these + bars, there is no coinage except that of a mixture of copper and + lead, for small change. (_Th. Smith_, An attempt to define some of + the first Principles of Political Economy, 31. _Timkowski_, Reise + nach China, III, 366.) Concerning Brazilian trade by bars, see _Spix + und Martius_, Reise, I, 346 f. They are stamped with the national + coat of arms, the sign of the mint, the number by which registered, + that of the year and of the degree of fineness. Concerning the + Persian bars, the _laries_, see _Noback_, Handbuch der Munzverrh., + III, Taf. 29. + + 736 Concerning the utility of the precious metals for purposes of money, + see _Pliny_, A.N. XXXIII, 3; _Oresmius_, De Mutatione Monetarum, ch. + 2; _Law_, Sur l' Usage des Monnaies, 683 f. _Daire_, where we read + that before the invention of money, silver had served all kinds of + useful purposes, but that now it served its most important purpose, + namely the making of the best material for money on many accounts. + Yet _Law's_ book, Money and Trade considered (1705) is based mainly + on the idea that pieces of land are much better adapted for purposes + of money than the precious metals (185)! _Galliani_, Della Moneta, + 1750, I, 3, 4, and _P. Neri_, Osservazioni, 1751 ff, Cust., have + very correct ideas on this subject. + +_ 737 North_, Discourses upon Trade, 16. The capacity of money to act as + a storer of wealth has been as much over-estimated by the so called + Mercantile System, as its capacity to transfer wealth has been by + the so called currency-school. + +_ 738 Adam Smith_ compares money to a large wheel, by means of which a + due share of the means of subsistence and of enjoyment is + distributed to each member of society. Elsewhere he compares its + utility to streets and roads. (Wealth of Nations, II, ch. 2.) + _Hume_, On Money, Pr., prefers to compare it to the oil with which + the wheels of circulation are greased. _Sismondi_ compares money to + porters. (N. Principes, II, ch. 2.) "Money is to commerce what + railways are to locomotion, a contrivance to diminish friction." + (_J. S. Mill._) According to _Schmitthenner_, 455, it bears the same + relation to other commodities that the written language of a + people's literature does to their dialects. + +_ 739 Law's_ views on money are, in part, excellent. Thus, for instance, + he says that the debasement of the coin from financial necessity is + as great a folly as it would be to try to enlarge a piece of goods + too small for the purpose for which it was intended, by diminishing + the length of the yard-stick. (Sur l'Usage des Monnaies, 697.) A + country entirely isolated from all others could get along as well + with one hundred pounds sterling as with a million. (Money and + Trade, p. 88.) Elsewhere, he confounds money and capital to such a + degree that he considers every increase of the amount of money in a + country as an enrichment of the people, a means to give employment + to the poor, to carry on manufactures etc. (Money and Trade, 23, 26 + ff., 168.) A given quantity of money is capable of giving employment + at most only to a certain number of men. (21.) A nation's power and + wealth depend on the population and its stores of goods, these on + commerce, and commerce in turn on the amount of money. (Pp. 110, + 220.) The advice given, in 1848, to the National Assembly of France, + but which it had the good sense to reject, to overflow all France + with the so-called _bons hypothecaires_, is akin to Law's practical + propositions. _M. Chevalier_, Cours, III, 8, rightly ridicules the + literal construction of the words: _l'argent est abondant_, when + merchants find it easy to obtain credit, and considers it as well + grounded as it would be to infer from the maxim: _l'argent est le + nerf de la guerre_, that rifles and bullets were made of silver. + +_ 740 Adam Smith_ was not entirely clear, in his own mind, on this point. + Thus inconsistently enough, he calls money unproductive--"dead + stock," for the reason that it leaves no material traces behind it + of the goods which it has transferred from one hand to another. (II, + ch. 2.) Is not the same true of trade itself? And yet Adam Smith + calls trade productive. His error is doubtless a remnant of the + Physiocratic doctrine, to which Smith still held. Compare _Quesnay_, + 94, ed. Daire. Even _Twiss_ says that money employed as money is + unproductive, but that, when employed as a commodity, it is + productive. (View of the Progress of Political Economy, since the + sixteenth Century, 1847.) Besides it is not a peculiarity of money + alone, that, after it has served the purposes of production, it + comes out of the product unaltered. The same is true of quicksilver + employed in amalgamation. (_Hermann_, 2nd edition, 302.) + +_ 741 Senior_, Three Lectures on the Value of Money, 1840, is, in so far, + not wrong when he says that the value in exchange of the precious + metals is still ultimately determined by the want of such + commodities as are luxuries. This last determines to what extent the + production shall be extended by the working of the poorest mines, + whereas the wants of circulation can be met as well by small as + large quantities of the metals. + + 742 The good or bad result of this production depends on many different + elements which may compensate on another. In California and + Australia gold is to be found in large quantities, and is easily + mined; but the workmen make large demands which the nature of the + country renders it difficult to meet. In the Harz mines, where the + cost is scarcely covered, (_Lehzen_, Hannover's Staatshaushalt, + 1853, I, 139), the shafts are sometimes 175-1/2 fathoms deep, but this + is made up for in a measure by the moderate demands of the workmen + and their skill in mining. Among the Mandingos, the auriferous + material is so rich that {~VULGAR FRACTION ONE THIRD~} per 1,000 of the weight of the sand is + washed out into pure gold in ten minutes (_M. Park_, Journal, 53 + ff., addenda, XIX), while in Europe, where the proportion is only + 1/100 per 1,000, mines are still considered worth working. But then, + what workmen there are there! In Peru, the burdensome height of the + mines above the level of the sea and the want of combustible + material more than counterbalance many favorable advantages, while + in Norway the cheapness of wood compensates for a great many + disadvantages. Another thing which contributes towards the + uniformity of the price of the precious metals is the circumstance + that the great amount of fixed capital required in the greater + number of mining enterprises, postpones for a long time the working + of good mines as well as the abandonment of poor ones. + + 743 Older writers have estimated the amount of money necessary in a + country at 1/5, 1/10 (_Petty_), 1/15, and even 1/30 of the yearly + income of a people (_Adam Smith_, II, ch. 2.) According to + _Cantillon_, Sur la Nature du Commerce, p. 73, it is from 1/6 to + 1/10 of the annual gross production of a nation. + +_ 744 Davanzati_, Lezione sulle Moneta, 1588, 32 ff., Cust., thinks that + all terrestrial things which serve to satisfy the wants of men are, + by virtue of agreement, equal in value to all the gold, silver and + copper; and that the parts comport themselves as the whole. The + price of a commodity is based on this, that men find in it as much + of their _beatitudine_ as is afforded them by a given quantum of + gold etc. Similarly, _Montanari_, who adds as a limitation the + quantity of money _spendibile in commercio_. (Della Moneta, 45, 64, + Cust.) The same opinion leads _Locke_ to the singular conclusion, + that, as there is now in the world, ten times as much silver as + there was previous to the discovery of America, each single piece of + silver, separately considered, and taken in relation to such + commodities as have not varied, is worth only one-tenth of what it + was then. _Locke_, here, starts out with the gross assumption, + shared even by _Ganilh_, Theorie, II, 386 ff., that in the case of + money the demand is always, relatively speaking, equally strong and + just as great as the supply, or as the amount in the market. (Works, + II, 23 ff.) Further, _Montesquieu_, Esprit des Lois, XXII, 7, 8. Per + contra, however, see _Montesquieu_, ibid. XXII, 5, 6, and _Hume_, On + Money and on the Balance of Commerce, Essays II, 1752. + + Hume knew perfectly well, that only circulating money and + circulating commodities operated on price, but failed to take the + rapidity of circulation into account. Similarly, _Forbonnais_, + Elements du Commerce, II, 212; even _Canard_, Principes, ch. 6; + _Fichte_, Geschloss. Handelstaat, 93 ff., and _Stein_, Lehrbuch, 58. + Contested by _Law_, Trade and Money considered, 140, a work directed + especially against the Mercantilistic essay, Britannia languens; + 1680, by _Melon_, Essai politique sur le Commerce, ch. 22; + _Genovesi_, Economia civile, 1764, II, 1, 15; _Steuart_, Principles, + II, ch. 28; _Verri_, Meditazioni, XVII, 3 ff.; _Buesch_, Gedlumlauf, + II, 40. The simple taking of an inventory of most private resources + which possess so much greater value in other commodities than in + money is enough to demonstrate the error of _Davanzati's_ doctrine. + Thus, in France, in Necker's time, the cash money in the kingdom was + estimated at 2,200,000,000 livres, and the average value of the + wheat crop alone at 1,000,000,000. _Necker_, Legislation et Commerce + des Grains, 1776, I, 215. Recently, _Michel Chevalier_, estimated + the amount of money in France at from 3-1/2 to 4 milliards, while the + official estimate of its immovable property alone was over 83 + milliards. + + 745 When money becomes dearer, less of it is of course needed; and when + cheaper, more, for the same purpose. + + 746 In contradistinction to presents, acts of spoliation, but especially + to barter. + + 747 The discoverer of this truth is supposed by many to be _Bandini_, + Discorso economico, 1737, 141 f., Cust. _Berkely_, however, in the + Querist, 1735, 477 f, writes: "A sixpence twice paid is as good as a + shilling once paid." Much earlier yet, in 1797, _Boisguillebert_, + Detail de la France, II, 19, had the germ of this doctrine, but he + confounds circulation with consumption. And _Locke_, Considerations, + II, 13 ff., presented it in 1691 with great clearness, although he + did not always remain true to his theory. Compare _Quesnay_, ed. + Daire, 64; _Cantillon_, 159 ff., 382. + + 748 If the number of annual exchanges effected by 1 dollar = u; the + total number of dollars in the store of money = m; the rapidity of + circulation, that is the number of exchanges effected on an average + by each dollar in a year, = s: then is u = m s, s = u/m, m = u/s. + + 749 Since good money is so easily stored away and preserved, no one is + in haste to get rid of it. _St. Chamans_, N. Essai sur la Richesse + des Nations, 122 ff. + + 750 Among the Kurds, all the money in their camps is used for + head-ornaments for their women. (_K. Ritter_, Erdkunde, X, 887.) + + 751 Thus, _Sir David North_, Discourse on Trade, 1691, Postscr. + +_ 752 Lotz_, Handbuch, 377, is of opinion that even in England L100,000 + employed in trade in land can scarcely effect exchanges to the + amount of L1,000,000 in a year. The same sum employed for the same + purpose in London, in stocks and in the trade in commodities, will + effect exchanges to the amount of L160,000,000. + +_ 753 Cernuschi_, Mecanique de l'Echange, 1865, 132 ff. + + 754 Thus _Petty_ (ob. 1687) is of opinion that England needed as much + money as 1/2 of all its ground-rents amounted to, as the 1/4 of all + house-rents, and 1/52 of all the wages of labor for a year; for the + reason that ground-rents are paid semi-annually, house-rents + quarterly, and wages weekly. (Several Essays, 179; Political Anatomy + of Ireland, 116.) _Locke_, on the other hand, assumes 1/50 of the + wages of labor, 1/4 of all the revenue of land owners, and 1/20 of the + amount cash money taken in in a year by merchants. Of these amounts, + there should be always, at least, one-half in ready money on hand, + if commerce would not be brought to a stand-still. If leases were to + be paid for on short terms, a great saving of money would be + possible. (Works, II, 13 ff.) _Pinto_, Traite du Credit et de la + Circulation, 34, calls special attention to the case of Tournay, in + which the commandant, during the siege of 1745, made 7,000 florins + serve him for seven weeks to pay the garrison; by borrowing that sum + anew every week from the inn-keepers etc.; which they, again, had + received from the soldiers. + + 755 If all were to commit their payments to the care of the same banker, + it would be possible to do with almost no money. But even now, if + 100 separate merchants were obliged to keep each 3,000 dollars in + their money-chests for unforseen contingencies, a banker might + accomplish the same for them with 50,000 dollars, because it is not + probable that the unforseen contingencies in question would occur to + all at the same time. + + 756 In the London Clearing-House, in 1839, L954,401,600 were paid by + means of the use of L66,275,600 as a circulating medium, for the + most part notes of the Bank of England. (_Tooke_, Inquiry into the + Currency Principle, 27.) From May, 1868, until May, 1869, + L7,068,078,000. (Statist. Journal, 1869, 229.) The New York Clearing + House, in 1867, effected payments to the amount of L5,735,031,900 + (Ibid., 1867, 577), and in 1868, $30,880,000,000. (_Hildebrand's_ + Jahrb., 1869, II, 168.) + + 757 This system began in the middle of the seventeenth century. (A + Discourse of Trade Coyn and Paper Credit, 64.) As early a writer as + _Sir J. Child_, N. Discourse on Trade, 46, says, that for some time, + every man who had from L50 to L100 in money, sent it to his banker, + and that since that time, all the money flowed towards London and + the country was deprived of it. (127 ff.) As a rule, the goldsmiths + were also bankers. One such smith had at the time of the Great Fire + of 1666, emitted L1,200,000 in notes. (A Discourse etc., 67.) The + Bank of England, as a money center, dates from 1694. The London + banks developed into intermediaries principally before the time of + the French Revolution. (_Thornton_, Paper-Credit of Great Britain, + 1802.) This remarkable institution had grown to vast dimensions even + in Thornton's time, although it has been much enlarged since 1825. + (_Tooke_, History of Prices, 152 f.) Similar conditions among almost + all highly civilized peoples. Thus in Greece, compare _Becker_, + Charicles, I, 294. Concerning a person who had 14 talents' worth of + resources, 26 minae, and therefore three per cent. in cash, see + Lysias, adv. Diog., 6. In Rome, compare _Polyb._, XXXII, 13. + _Cicero_, pro Font., I, 1. For Italian analogous cases, part of + which may be traced back as far as the twelfth century, see + _Lobero_, Memorie storiche della Banca de S. Georgio, 1832; or the + Dutch "cassiere" Richesse de Hollande, I, 376, ff. In France an ever + increasing centralization of the money-trade is to be noticed in + Paris (_M. Chevalier_, Cours., III, 418); and now of the money-trade + of Germany in Berlin. + + 758 Compare _Fullarton_, On the Regulation of Currencies, 1845. Among + the Dutch, the custom of using all commercial commodities as much as + possible, as a basis of the circulating medium, was much earlier + developed. (_Child_, Discourse on Trade, 65, 264 f.) In Great + Britain, the aggregate amount of bills of exchange put in + circulation was, in 1839, L528,000,000, which sum has been increased + annually at the rate of about L24,000,000. (_Tooke_, Inquiry into + the Currency Principle, 26.) Between 1828 and 1847, there circulated + at the same moment, on an average, L79,127,000 in bills of exchange + in England, and in Scotland, L17,380,000 (Athenaeum, 1850, No. 175), + and in Great Britain and Ireland, from L180,000,000 to L200,000,000. + (_Tooke_, History of Prices, VI, 588,) According to _Macleod_, the + bills of exchange and promissory notes together amounted to + L500,000,000; bills of exchange, bank-notes and bank-credits, to + over L600,000,000. (Elements, 12, 325.) _Macleod_ calls the currency + the sum total of all debts due by every individual in the country. + (Elements, 43.) + + 759 A case in England, in 1857, in which a house with L10,000 capital + failed with liabilities amounting to L900,000. (Report of the select + Committee on the Bank Act, 1858, XV.) Or where a speculator with + L1,200 made purchases on credit to the amount of L80,000, and then + failed with a deficit of L16,000. (_Fawcett_, Manual, 442 f.) + + 760 Remarked by as early a writer as _Davenant_, Works, IV, 106 ff. + Compare, however, II, 238. _Quesnay_, ed. Daire, 75 ff. _Lord King_, + Thoughts on the Effects of the Bank Restriction, 1804, 17 ff. + Exhaustively treated by _Chevalier_, Cours., III, 397 ff. He very + much laments the fact that the customs of France cause it to need + from 31/2 to 4 milliards of cash money, while England does a much + larger trade with 1,200 millions. (I, 207 ff.) In France, it is said + that the amount of money, in 1812, was 1,500,000,000 francs(?). + (_Peuchet_, Statistique elementaire, 473.) In Prussia, in 1805, it + was 90,000,000 thalers. (_Krug_, Betracht. ueber den + Nationalwohlstand des preuss. St., I, 244.) The annual amount of + production in the former country was, 7,036,000,000 francs; in the + latter it was estimated at 261,000,000 thalers, so that in Prussia + the relation of money to national income was, as 1:2.9; in France, + as 1:4.69. + + 761 It is scarcely possible to determine exactly the amount of money in + a country; for the reason that, outside of the suppositions of + bankers etc., there is no authority which can be safely relied on, + unless it be the reports concerning the coinage, and of the emission + of paper money. The information, no less necessary, to be derived + from the statistics of the importation and exportation of money, the + melting down of coin by gold smelters etc., can never be exactly + obtained. In England, at the end of the sixteenth century, the + circulating medium was estimated at L4,000,000 (_Hume_, History of + England, ch. 44, App.); under Charles II., at L6,000,000, when the + population was 6,000,000. (_Petty_, Several Essays, 179.) About + 1711, _Davenant_, New Dialogues, 11 ff., mentions L12,000,000 as the + amount; and _Anderson_, Origin of Commerce, a., 1659, L16,000,000 in + 1762. The circulation of gold, shortly before 1797, was estimated by + _Rose_ at, at least, L40,000,000; by Lord _Liverpool_, at + L30,000,000; by _Tooke_, at only L22,500,000. (History of Prices, V, + 130 ff.) _Moreau de Jonnes_, 1837, assumed L43,500,000 (Statistique, + I, 329), and _Helferich_ (Schwankungen der edlen Met., 1843, 147), + L45,000,000. _Sir Robert Peel_, estimated the amount in 1845 at + L59,000,000, to which was to be added an average of L28,000,000 in + bank notes, after deduction made of the metallic reserve. According + to _Jevons_, the amount of British money is now L80,000,000 in gold, + L14,000,000 in silver, L1,000,000 in copper; the sum total, + including bullion and bank notes, after the deduction of their + metallic representatives, L134,000,000. (Economist, December, 1868, + July, 1869.) In France, _Vauban_, Dime royale, 104 (Daire), + estimated the cash money at about 500,000,000 livres, over + 750,000,000 francs, with which _Voltaire_, Siecle de Louis, XIV, ch. + 30, agrees so far as the year 1683 is concerned. In 1730, + _Voltaire_, assumes the amount to be 1,200,000,000 of the coins of + that time. _Necker_, Administration des Finances, III, 66, estimated + it, in 1784, at 2,200,000,000 livres; _Mollien_, about 1806, at + 2,300,000,000. The valuations in Louis Philippe's time varied from + 2,400,000,000 to 2,500,000,000 (Chamber of Deputies, April, 13, + 1847), and 4,000,000,000. (_Blanqui._) The valuations of 1870 were, + according to _Wolowski_, 4 milliards; and to _Bonnet_, from 5 to 6 + milliards. Compare _Wolowski_, L'Or et l'Argent, 383 ff., Euquete, + 42. The German Zollverein is said to have had, at the beginning of + 1870 (_Soetbeer_) 480,000,000 or 520,000,000 thalers (_Weibezahn_) + cash money. + + In Wirtemberg, _Memminger_, 1840, estimated the resources of the + country at 1,600,000,000 guldens, of which 36,000,000 were cash; and + the yearly gross income at 179,000,000 guldens; so that the money + was 20 per cent. of the latter and 21/4 per cent. of the former. The + annual sales = 226,000,000. Therefore the coin currency must have + circulated on an average between six and seven times in a year. In + the electorate of Hesse, there were _per capita_ 4 thalers, 18 + sgrs., 9 hellers, metallic money, and 3 thalers, 9 sgrs., 4 hellers, + paper-money. (_B. Hildebrand_, Statist. Mitth., 1853, 185.) The + amount of money in Naples, in 1840, was estimated at 42,000,000 + ducats. (_Scialoja._) It has been estimated that, in 1830, Spain + possessed 1,725,000,000 francs. (_Barrego von Rottenkamp_, 330.) + +_ 762 Montanari_, Della Moneta, 52 ff. + +_ 763 David Hume's_ very influential essay on the balance of trade does + not give expression to this error, but he certainly was the occasion + of making a great many of his disciples advocate it. It is related + to the error mentioned in § 123. _Quesnay_, 101 (Daire) saw this + point in a much clearer light. So did _Graumann_, Gesammelte Briefe + vom Gelde (1762), 12 ff.; 73 ff. + + 764 This is seen, for instance, when paper money is issued, in times + when trade is thriving, and is withdrawn when this conjuncture + ceases. + + 765 Very well elaborated by _Fullarton_, On the Regulation of + Currencies, 71 ff., 139 ff. Compare, however, _Becaria_, Economica + publica, IV, 4, 27. When England on the occasion of the removal of + the bank restriction in 1821 and 1822, caused L9,520,759 and + L5,356,788 to be stamped, this powerful demand scarcely affected the + gold-agio in Paris. (_M. Chevalier_, Cours, III, 157.) And, on the + other hand, the system of assignats, developed during the first + French Revolution, on so large a scale, had no influence on the + price of silver in the rest of Europe. (_Lord King_, Thoughts on the + Bank Restriction, 1804.) And so, _Tooke_, History of Prices, I, 205, + describes a very large increase of the medium of circulation, after + which the prices of commodities remained unchanged, corn fell, + colonial products rose in price, both as they had done before, and + from causes inherent in the commodities themselves. During the first + years of the bank restriction, 1799-1801, grain rose very rapidly in + price, while all trans-Atlantic products sank. (_Tooke_, I, 232 ff.) + The unusually large importation of wheat from January 1, 1846, to + January 14, 1847, was paid in France by a decrease of the bank + metallic reserve (_encaisse_) to the extent of 172,000,000 francs. + (_M. Chevalier_, Cours, III, 470.) An experienced practitioner in + England is of opinion that an increase of bank notes to the amount + of about L5,000,000 would not raise prices nor increase the tendency + to speculation, but only enlarge the deposits of the bankers. But, + if on the other hand, L5,000,000, by any sudden contingency, were to + be put into the hands of the working classes, this money would, for + the most part, enter immediately into circulation; the price of + commodities would, therefore, rise and continue to rise until that + amount had come into closer fists, as it would after some time. + (_Tooke_, III, 156 ff., II, 323.) + + 766 This explains the high price of gold in Farther Asia, which was + formerly separated from America, the principal source of supply of + the precious metals, by a journey around the earth, the then usual + course of the world's trade. + + The precious metals are generally higher in country places than in + large cities, and in the interior than on the sea-coast. Since the + public highways etc. in Germany have been so much improved, the + difference in the value of money in upper and lower Germany has + almost disappeared. (_Rau_, in the Archiv der polit. Oek., III, + 338.) + + 767 Happy beginning of this doctrine in _Hume_, On the Balance of Trade. + Further, _Thornton_, The Paper Credit of Great Britain, ch. 11. + _Adam Smith_, on the other hand, claims that gold and silver, + because they are costly superfluities are uniformly paid most dearly + for, in the richest countries. (Wealth of Nations, I, ch. 11, 3: + Digr.) + + 768 Similarly in China, and even in Upper Egypt, the China, so to speak, + of antiquity! Compare _Herodot._, II, 112 ff; _Homer_, Od., IV, 354 + ff. The religion of the Egyptians prescribed to them a mode of life + which was scarcely practicable in foreign parts. They were + systematically inspired with a horror for everything foreign. They + had a strong antipathy for salt, fish and pilots. In Egyptian + mythology, Osiris represents the Nile, Typhon the desert and the + sea! (_Plutarch_, De Iside, 32.) + + 769 The other party, of course, makes a profit also. He is in a better + condition than if he wished to produce the desired commodity in his + own country. + + 770 The first clear germ of this doctrine, which is one of the most + important theoretical principles of international-trade politics, is + to be found in _David Hume_, On Interest; _Cantillon_, Nature du + Commerce, 226, 369 ff. _Ricardo_, Principles, ch. 7. "Gold and + silver having been chosen for the general medium of circulation, + they are, by the competition of commerce, distributed in such + proportions amongst the different countries of the world, as to + accommodate themselves to the natural traffic which would take place + if no such metals existed, and the trade between countries were + purely a trade of barter." _Rebenius_, Oeff. Credit, I, 29 ff. Still + further developed, especially by _John Stuart Mill_, Elements, 1821, + III, 4, 13 f.; _Torrens_, The Budget, 1844. _John Stuart Mill_, + Essays on some unsettled Principles of Political Economy, 1844, No. + 1, and Principles, III, ch. 19, § 3, 5th ed.: "The opening of a new + branch of export trade from England; an increase in the foreign + demand for English products, either by the natural course of events + or by the abrogation of duties; a check to the demand in England for + foreign commodities, by the laying on of import duties in England, + or of export duties elsewhere; these and all other events of similar + tendency, should make the imports of England, bullion and other + things taken together, no longer an equivalent for the exports; and + the countries which take her exports would be obliged to offer their + commodities, and bullion among the rest, on cheaper terms, in order + to re-establish the equation of demand; and thus England would + obtain money cheaper, and would acquire a generally higher range of + prices." + + Obscurely surmised by _Beccaria_, E.P., 3, 18, and even by + _Galiani_, Della Moneta, II, 2. _Senior's_ admirable work, Three + Lectures on the Cost of Obtaining Money, 1830, follows up the + thought that every country obtains indigenous and foreign products + at a cost which grows smaller in the same proportion as the + productiveness of its people's labor is large. This would, + certainly, explain why it is that perhaps one hundred English days' + work in cotton manufactures will exchange against as much silver as + is produced by two hundred days' work in Mexican mines and + foundries. This would not, by any means, produce a lowering of the + price of the precious metals relatively to other English + commodities, but the influence would be felt equally by all the + products of English national industry. + + 771 To be found in germ in _Cantillon_, Nature du Commerce, 1755, 249 + ff. 307. _Buesch_, Geldumlauf, 14. _Kaufmann_, Untersuchungen, I, 75 + ff. Many of the doctrines of the so-called Mercantile System, of + which I shall treat in my projected work on the Political Economy of + Commerce, have given expression to this truth in an inexact and + exaggerated way; but they were not entirely erroneous, as is + supposed by the adherents of Hume and Smith. However, _J. S. Mill_, + Principles II, ch. 19, § 2, does not fully admit the degree of the + cheapness of money in England usually assumed. According to him it + is wants of luxury (luxury-wants) become such through habit, that + produce "the dearness of living in England." + +_ 772 Petty_ considers the search for a measure which could be applied + both to land and labor as one of the principal problems of Political + Economy. (Political Anatomy of Ireland, 62 ff.) _Sir J. Steuart_, + Principles, III, ch. I, took the matter very easy by considering the + so-called "coin of account," for instance, "bank-money," as an + invariable value-magnitude. Compare _Jacob_, Grundsaetze der National + OEkonomie, II, 441 ff. _Cazaux_, Economie politique et privee, 1825, + 16 ff., has a not uninteresting study on this subject; but he goes, + throughout his argument, on the assumption that the rate of interest + is the price of money! If the rate of interest in two countries = I + and i, the prices of the same commodity = P and p, the true + thing-values, V and v; then we have v: V:: i p: I P! + +_ 773 Law_, Trade and Money, 181. Before him, and quite correctly, + _Montanari_, Della Moneta, I, p. 84 ff., compares the means employed + of measuring one commodity by another, to the means used to estimate + time in terms of space, as when it is measured by the revolutions of + the hands of a clock, and again, space in terms of time. + + 774 The solvability or capacity to pay of buyers cannot be taken into + consideration here, because it is synonymous with the amount of + counter-values which are to be measured. + +_ 775 Adam Smith_, Wealth of Nations, I, ch. 5. Similarly _Luther_, vom + Kaufhandel: Werke, ed. _Walch_, X, 1098 f. _B. Franklin_ considered + the labor employed in the production of wheat as the best measure of + prices. (Letter to Ld. Kames: Works, ed. _Sparks_, VII.) As Adam + Smith, so also _Sismondi_, Richesse commerciale, I, 371 f.; _Kraus_, + Staatswirthschaft, I, 84,; v. _Schloezer_, Anfangsgruende, I, 41. Also + _Malthus_, in the second and succeeding editions of his Principles, + ch. I, 6, and Definitions, ch. 8, 9. The Measure of Value, 1823. + _Zachariae_, Vierzig Buecher, VII, 53 f., maintains that, at least + within the limits of every separate nation, the average labor-power + of one man is invariable. Assuming this principle, therefore, to be + true, the means of subsistence necessary to support a laborer for + one work-day constitutes, indirectly, a measure of prices. _Tooke_, + History of Prices, I, 56, says that the amount of a day's wages is + always a better measure of the price of the precious metals than the + price of wheat. Even in 1750, _Galiani_, Della Moneta, II, 2, had + denied the impossibility of an entirely invariable measure of price + in this world of change, but he considered man himself the least + variable of measures, and in a country where slavery prevailed, + slaves. He thought that the _macuta_ of the negroes were a part of + the average price of slaves. Practically, Adam Smith's proposed + measure was used in the French constitution of 1791, in as much as + it provided that participation in primary assemblies should depend + on the participant's paying an annual tax equal to the wages of + three days' work, and eligibility as an _electeur_, on the + possession of an income equal in value to the wages paid for two + hundred days' day-labor. _Owen_ endeavored to base the value of the + paper money in circulation in his Utopian commonwealth, not on any + metal of a certain weight or stamp, but on hours of labor as the + unit. (_Reybaud_, Reformateurs Contemporains, I, 255.) + + 776 The wretched condition, until within a short time since, of the + Irish working class, is well known; how they dwelt in mud cabins + without windows, board-floors or chimneys etc., in the same + apartment with their pigs; how they lived almost exclusively on + potatoes, and went about in rags. These same Irish, _coelum, non + animum mutantes_, received in North America for the coarsest kind of + labor, 50 to 75 cents wages, besides wheat bread and meat three + times a day, coffee and sugar twice a day, butter once, and seven or + eight glasses of whisky or brandy. (_M. Chevalier_, Lettres sur + l'Amerique du Nord, I, 159.) + + 777 Thus in Mauritius, the immigration of the coolies has produced a + decrease of negro wages, but an increase of negro industry. In the + Barbadoes, the negroes are more industrious and their wages lower + than in Jamaica. The wages of good workmen, as for instance during + the commercial crisis in Manchester, often sink, while the wages of + bad workmen rise; as, for example, in a village through which a + railroad is made to pass. Compare _Lauderdale_ Inquiry, ch. 1; + _Sartorius_, Abhandlungen, 1806, I, 16 ff.; _Lotz_, Revision, I, 99 + ff.; _M. Chevalier_, Cours, III, 88 f. + + 778 Besides the passages cited in § 107, compare also _Harris_, On Money + and Coins, II, 1757 f.; _Jacob_ also preceded _Ricardo_. See the + German translation of _Say_, II, 435, 507. + + 779 The introduction of the words "the socially necessary time of labor" + into the formulae does not make the measure any more practical for + political economists or for socialists. + +_ 780 Cantillon_, who reduces all the cost of production to land and + labor, considers the "at par" between these two to be this: that the + labor of the meanest slave corresponds to the quantity of land which + the owner is obliged to employ for his support, and the support of + the slave and of the children who are to take his place. (Nature du + Commerce, 42.) The Physiocrates thought that the internal (_innere_) + value of two commodities stood in the same relation to each other as + the area of land directly or indirectly necessary to their + production. _Schlettwein_, Grundfeste der Staaten, 1792, 230. + + 781 The so-called _Sachwerth_ (thing-value, real-value) of _Hermann_, + St. Untersuchungen, 101 ff. Thus _Poulett Scrope_ recommended a + "tabular standard," to be officially established and renewed from + time to time, to serve as an anchor to those persons who wished + permanently to fix their money in such a manner as to make it + exchangeable for an equal value in _things_. (Principles of + Political Economy, 1833, 406.) Something of this kind was tried for + 50 commodities, between 1833 and 1837, by _Porter_, Progress of the + Nation, 1st ed., II, 236 ff., then for 40 commodities by _Jevons_ in + the Statistical Journal, 1865. Of course, all commodities of a given + price are not equally important in this respect. Thus, for instance, + a fluctuation in the price of diamonds would have no effect on the + thing-value or real-value of a day's wages, but it certainly would + on the thing-value of a princely income. There are some excellent + remarks on this very important subject in _Lowe's_ work, On the + Actual Condition of England, chs. 8 and 9. The controversy carried + on between _Jevons_, A serious Fall in the Value of Gold, and its + social Effects, 1863; Statist. Journal, 1865; and _Laspeyres_, + _Hildebrand's_ Jahrb., 1864, 81 ff.; 1871, I, 296 ff; in which the + former recommends the geometric mean of the relative prices of + separate commodities at different points of time, in order to + calculate the average relative price: and the latter, as usual, the + arithmetical mean, is very thoroughly reviewed and criticised by + _Drobisch_, who shows that neither of these methods is sufficient, + but that the quantity of every separate commodity must also be taken + into account, for which he furnishes practical formulae. (Math. phys. + Berichte der _K._ Saechs. Gesellsch., 1871, I, 143 ff, 416 ff.) It is + certain that a fixed income in money could maintain its real value + or thing-value (_Sachwerth_) just as little if the cwt. of bread + rose by as many dollars as the cwt. of pepper had fallen; as if the + increasing price of bread depended on a decreasing price of pepper. + +_ 782 Senior_, Outlines, 187. In addition to this, we may draw from the + thing-value of a day's wages a right conclusion as to the economic + condition of the majority of the people; and assuming the customary + division of the national wealth, also as to the degree, to which the + people have subjected the forces of nature to their service. + +_ 783 Ricardo_, ch. 22, refuted, indeed, only the view that an increase + in the wages of labor produced by the higher prices of corn, would + necessarily make all goods or products of labor, correspondingly + dearer. + + 784 Compare § 103. In Paris, in 1817, the _setier_ of wheat cost March + 5, 551/2 francs; April 2, 57 fr.; April 23, 60 fr.; May 14, 63 fr.; + May 21, 66 fr.; May 28, 75 fr.; June 4, 82 fr.; June 11, 92 fr. + (_Tooke_, History of Prices, II, 17.) + +_ 785 Locke_, 98. When _Condillac_ asserts that wheat is the best measure + of prices, he adds, when free trade in wheat obtains. (Commerce et + Gouvernement, 1, 23.) _Fichte_, on the other hand, while advocating + the despotic guidance of all trade by the state, would employ wheat + as the fundamental measure of prices. (Geschl. Handelstaat, 47 ff.) + That grain does not afford a good measure of prices in very highly + cultivated nations nor in barbaric ones, see _Hermann_, II, Aufl., + 451. + + 786 The average price must be based on the prices of a great many years, + since crops vary not only from year to year in price, but from + decade to decade. See _Roscher_, Nationaloekonomik des Ackerbaues, § + 152, and _Roscher_, Kornhandel und Theuerungspolitik, 47 ff. Great + wars are wont to disturb agriculture in such a manner that the price + of corn is very much increased by them. Hence, it is not + unfrequently possible to use the prices of grain as a species of + barometer to determine the real pressure of a war upon the economic + life of a people. Judging by this standard, England suffered much + less from the War of the Roses in the fifteenth century, than from + the civil wars in the seventeenth; and less than France from the + religious wars of the sixteenth. The war year 1631-2, in which + Gustavus Adolphus and the emperors had to spare the country, must + have been far less oppressive for Saxony than the later Swedish + campaigns. _Roscher_, in the Tuebinger Zeitschrift, 1857, 471. + + 787 Most countries go through these successive periods in their corn + trade: in the first, exportation preponderates; in the second, there + is an equilibrium; in the third, importation preponderates. (_M. + Chevalier_, III, 74 ff.) Compare _Tacit._, Ann., XII, 43. Omitting + the two dearest and the two cheapest years, the Prussian provinces + were circumstanced as follows: + + In The Whole Kingdom, the price of Rye, 1816 to 1837, was 40. + silver groschens. The population per square mile, 2,776 + In Prussia, 32.2 silver groschens, and 1,827 + In Posen, 34.3 silver groschens, and 2,180 + In Brandeburg, Pomerania, 38.4 silver groschens, and 2,093 + In Saxony, 40.3 silver groschens, and 2,366 + In Silesia, 38.0 silver groschens, and 3,612 + In Westphalia, 47.7 silver groschens, and 3,600 + In Rhine Province, 49.4 silver groschens, and 5,078 + + _Rau_, Lehrbuch, I, § 183. As to when it may be assumed that the + price of corn has remained unchanged, see _Hermann_, loc. cit., 125 + ff. + +_ 788 Petty_ recommended the average daily food necessarily required by + one man as the measure of price, estimated on the basis of the + cheapest means of subsistence. (Polit. Anatomy of Ireland, 62 ff.) + _Thaer_ used as such a measure the smallest day's wages; as he + supposed, expressed in rye, that is, 1/9 of the Prussian _scheffel_. + Similarly, _Malthus_, in his first edition, and _Buquoy_, Theorie + der Nationalwirthschaft, 240. But this is simply to substitute for + wheat an arbitrarily determined quantity and quality of the same as + a measure of prices. For practical experiments of this kind, made by + the depreciation of paper money during the French Revolution, see + _M. Chevalier_, Cours, III, 98; and Constitution de 1795, V, 68, VI, + 173. _Count Soden_, Nat. OEk., II, 338 f., demands that all taxes, + salaries of state officials etc., should be regulated in accordance + with the price of corn. This same view has been suggested recently + in many German States. + + 789 Recognized generally by _Locke_, Considerations 24. Further, + _Galliani_, Della Moneta, II, 2; _Adam Smith_, I, ch. 5. _Schaeffle_, + N. OEk., II, Aufl., 127, maintains that a constant measure of price, + such as would enable a person to stipulate for a salary for instance + that would be always of the same value, is impossible. Similarly, + _Hildebrand's_ Jahrb., 1871, 315 ff. + + 790 Compare _J. Tucker_, Four Tracts on political and commercial + Subjects, 28 ff., who maintains that it is a rule, almost without + exception, that "operose or complicated manufactures" are cheapest + in rich countries; "raw materials," in poor ones. Thus, for + instance, corn (?), garden products in the former; cattle, wool, + milk, skins, flesh-meat, in the latter. Ships and movable property + are cheaper in the former, whereas wood may be said to be almost the + free product of nature here. See especially _Adam Smith_, Wealth of + Nations, ch. 11, Digr. + +_ 791 Senior_, Outlines 119 f., makes the following calculation: Of the + 15d. which a loaf of bread costs in England, 10d. goes to buy the + wheat, the other 5d. to the miller, baker etc. If now, we suppose, + that in consequence of an increased demand, and therefore of + increased production under more unfavorable circumstances, the price + of wheat should rise to 20d., the cost of production would possibly, + because of an improved division of labor, come down to 3-3/4d., and + hence the price of the loaf of bread would be increased to 23-3/4d. It + is quite the reverse in the case of lace, because here a piece of + raw material worth only 2 shillings may, by reason of the labor + expended on it, become worth as much as L105. If the consumption of + lace should increase so that the value of the raw material rose to 4 + shillings, the simultaneous decrease of the cost of manufacture to + the extent of one-quarter of the aggregate price, would leave the + price of the manufactured article L78, 19s. + + 792 When, for instance, the inhabitants of the Baltic coasts, by way of + preference, kept up their relations with the Hanseatic cities, the + Dutch and English, that is with the most important industrial and + commercial nations in their own sphere, they in all this pursued + only their own interest. As to how this intercourse between "old" + and "new" countries is susceptible of the very highest development, + see _Torrens_, The Budget: On Commercial and Colonial Policy, 1844, + and earlier, _Wakefield_, England and America, II, 1823. + + 793 The clearing up of primeval forests, the cultivation of natural + meadows, etc. + + 794 In Hungary, during the sixteenth century, the choicest venison was + consumed by plebeians and nobles alike. _Herberstein_, Rer. Moscov. + Comm., 97. In Russia, even the lowest classes not unfrequently + partake of roast hare and duck etc. _Kohl_, Reise in Russland, II, + 386. Still, in St. Petersburg, wild-fowl game rose between the time + of Peter the Great and Alexander I. 600 per cent. in price. + (_Storch_, Handbuch, I, 368.) In Pittsburg, in 1807, mutton, beef + and veal cost from 4 to 6 cents a pound, and game only from 3 to 4-1/2 + cents a pound. (_Melish_, Travels through the United States, II, + 57.) The more the game laws are enforced, the longer does the low + price of game continue, especially when it is not easy for the poor + to procure them. The moderns have seldom thought of raising game + artificially; among the Romans, artificial raising was confined to + the hare and fieldfare. (_Varro_, R.R., III, 12 ff.; _Columella_, + R.R., VIII, 10.) Hence, the enormous prices paid for game, of which + _Pliny_, H. N. X., 43, relates an example from the time of the + emperors. On the other hand, Polybius assures us that, in his time, + game was to be had as good as gratis in Lusitania. XXXIV, 8, 7. + + 795 In Buenos Ayres, in the nineteenth century, beggars on horseback + were to be seen. (_Robertson_, Letters on South America, II, 294.) + In Krasnojarsk, in 1770, 1-1/2 rubles was the price of an ox, 1 ruble + of a cow, from 2 to 3 of a horse, from O.3 to O.5 of a sheep; O.15 + of a deer. (_Pallas_, Sibirische Reise, III, 5, II 12.) According to + the Tables of Prices in _Sir F. M. Eden_, State of the Poor, Append. + I, and _Rogers_, History of Agriculture and Prices (1866), I, 245, + 361, the following prices obtained in England; + + (On an average.) + + in 1125-26, one ox, 1 shilling; one quarter of wheat, 20 shillings; + in 1260-1400, one ox, 13 shillings 1-1/4d; one quarter of wheat, 5 + shillings 10-3/4d; + in 1406, one ox, 9-1/2 shillings; one quarter of wheat, 4-1/2 + shillings; + in 1463, one ox, 10-20 shillings; one quarter of wheat, 1-{~VULGAR FRACTION TWO THIRDS~}-4-{~VULGAR FRACTION TWO THIRDS~} + shillings. + + Compare _Hume_, History of England, a. 1327. Under Henry VIII. veal, + beef, mutton and pork were food for the poor in England, and cost on + an average 1-1/2d per pound; while wheat cost from 7 to 8 shillings a + quarter. (24 Henry VII, c. 3. _Price_, Observations, II, 148 f.) The + same appears from the "reasonable prices" which Charles I, in 1663, + had established by sworn juries viz.: that the different kinds of + meat were much cheaper comparatively than corn in our days. + _(Rymer_, Foedera, XIX, 511. _Anderson_, Origin of Commerce, a. + 1633.) In many places in the highlands of Scotland, in the middle of + the seventeenth century, one pound of oat-bread cost as much or more + than one pound of the best meat. The union of Scotland with more + highly civilized England soon changed the relation, so that in _Adam + Smith's_ time, good meat, in nearly all parts of Great Britain was + worth from 2 to 4 times as much as the same weight of wheat bread. + (Wealth of Nations, I, ch. 11, 1.) The Thomas Hospital in London + paid, on an average, for good beef per stone weight: + + 1701-1710: 1s. 7.9d. + 1764-1773: 1s. 3.7d. + 1794-1803: 1s. 5.d. + 1804-1821: 1s. 10.9d. + 1822-1842: 1s. 1.5d. + + (_Porter_, Progress of the Nation, III, 112.) Among the most certain + proofs of the high degree of economic civilization attained in upper + Italy about the close of the medieval times is the fact, that the + price of cattle, compared with that of wheat in the thirteenth and + fourteenth centuries, varies very little from what it is to-day. + (_Cibrario_, Economia politica del medio Evo, III, 335-383.) Compare + _Rau_, Lehrbuch I, § 185. In Athens, the cost of a _medimnos_ of + wheat was as great as that of a sheep in Solon's time. In the age of + Demosthenes, it cost only half as much. (_Boeckh_, Staatshaushalt der + Athener, I, 107, 132.) It is obvious, however, that the price of + meat compared with that of corn, was lowered by the great extension + of the artificial cultivation of meadows; for, when the former has + reached its maximum, it becomes a great spur to the promotion of the + latter. Thus, in England, the price of meat, at the beginning of the + sixteenth century, was on an average, higher than in _Adam Smith's_ + time. (loc. cit.) To the same cause is to be ascribed the state of + things in Prussia mentioned by _v. Podewils_, Wirth + schaftserfahrungen, II, 15. + + As a common basis for such calculations, the following may be + accepted. It is plain that meadows, pasturages and forage-fields + must yield as much in meat, as corn-fields of the same dimensions of + equal goodness, and situated as favorably, in corn. According to + _Block_, a Prussian acre (_Morgen_) of the best quality, used as a + meadow, produces a hay-value equal to 1,000 pounds, a clover-value + equal to 2,420; as a vegetable field, a beet or potato-value equal + to 6,050-6,930 pounds, _v. Lengerke's_ estimate is that 110 pounds + of cattle-fodder expressed in terms of hay, produces on an average + 40 pounds of milk, and from 3-1/2 to 4 pounds of meat. This would, at + most, give 36, 88 and 220-252 pounds of meat. The yield of wheat, + _v. Lengerke_ estimates, on the best soil, and on an average, at 14 + Prussian _scheffels_ (at 80 pounds, i.e. 1,120 pounds) yearly per + acre (_Morgen_). The three periods in the history of the prices of + cattle were clearly recognized by _Thaer_, Landw. Gewerblehre, 1815, + 100. + + 796 It is a very characteristic fact, in relation to the river + fisheries, that the fable that servants formerly stipulated not to + eat salmon except twice a week is to be found in so many places. + Thus on the Elbe and the Rhine. Compare _Thaarup_, Daenische + Statistik, I, 112. In Scotland, about the end of the seventeenth + century, the story in places ran, that it was five times a week. + (_Walter Scott_, Old Mortality, ch. 8.) In England, fish seems to + have been a tid-bit among the poorer classes in the fourteenth + century. (_Rogers_, I, 606.) It was dearer especially during Lent. + (Statist. Journ., 1861, 544 ff.) The artificial production of + sea-fish seems to have been tried only by the ancient Romans. On the + whole, _Adam Smith's_ law that a ten-fold demand can, as a rule, be + met only by a greater than ten-fold labor, applies here. (I, 370, + ed. Basil.) But this relation is obscured to a certain extent, from + the fact that the source of the production of sea-fish, the ocean, + which may be claimed at any time by occupation, is, practically, + boundless. Here, therefore, the improvements made in nautical + science, and the progress of geographical knowledge, may yet for a + long time compensate for the exhaustion of the nearer seas, and even + more than counterbalance it. + + 797 Among a great many nations in a low stage of civilization, + agriculture consists in the burning down of the forest. In 1594, the + Lauenfoerder forest produced 1,110 thalers' worth of food for hogs, + and wood to the amount of 44 thalers. (_v. Berg_, + Staatsforstwirthsch., 213.) The Harzgerode woods, at the ducal line + of Anhalt-Bernburg, were estimated at 6,000 thalers. A hundred years + later, they brought in yearly 70,000 thalers, although, in the + meantime, very little progress was made in the science of + cultivating them, (_v. Justi_, Staatswirthschaft, II, 211.) We may + form a notion of the relativity of the idea of the dearness of wood + from the fact that in Bavaria, for instance, in 1840, there was a + great deal of complaint, that in the district of Isark the price + rose from 6 to 9 florins; in the districts of Regen and the lower + Maine, from 11 to 14 florins to from 15 to 18; in the Rhine + district, from 20 to 26 florins per cord (_Klafter_). (_Rau_, + Lehrbuch, III, § 150, a.) Besides, the price of wood in the forest + rises, with an advance in civilization, much more rapidly than it + does in the market; in which last, labor and capital play a greater + part. (_Rau_, I, § 385.) + + 798 Plan for the artificial production of pearl oysters. (Novara-Reise, + I, 303.) Ostriches seem now to be ceasing to be objects of mere + occupation, and to be becoming objects of breeding. (Ausland, 1869, + § 13.) + + 799 Thus Wolff's experiments made at Moeckern have shown that in the case + of sheep fed with hay, the wool becomes much heavier and the flesh + leaner than those of sheep fed with a more concentrated food. While + it is estimated in England, at the present time, that the wool of + South-Down sheep is worth scarcely one-tenth what their flesh is + (_Jacob_, On Corn Trade, 166), mutton, from the year 1260 to 1400, + was, on an average, worth 17 pence; and this even at a time when + prices were gradually rising; but the wool of one animal (1 lb., 7-3/4 + ounces), 5-1/4 pence. (_Rogers_, I, 362, 395.) Even under Anglo-Saxon + kings the fleece was worth 40 per cent. of the value of the whole + sheep, (_David Hume_.) And so _W. Macann_, Two Thousand Miles Ride + through the Argentine Provinces, 1853, I, 151, says that in the + interior of Buenos Ayres, he purchased 8,000 sheep at 18 pence a + dozen, and after a march of 200 English miles, sold the skins for + sixty pence a dozen. In Goya, formerly, a live horse cost 3 pence, + its skin on the coast 12 pence; and the slaughtering of the beast + cost 3 pence, the removal and cleaning of the skin 3 pence; and 3 + pence were paid for transportation. (_Robertson_.) + + In Ireland, in 1763, it not unfrequently happened that the skin and + tallow of an ox cost as much in a commercial city as the whole ox + had cost in the nearest market town. (_Temple_, Works III, 13.) In + England, from 1260 to 1400, the average price of a whole cow was 9s. + 9d.; of the hide 1s. 8d., and cows were cheapest in the first + decade, i.e., 6s. 2d., and the hides dearer than they were generally + afterwards, i.e., by from 1-9-1/4d. (_Rogers_, I, 361, 451.) In + Saxony, according to _Engel_ (1853), the average price of horned + cattle was about 46 thalers; of their hide, 4 thalers and 21 silver + groschens. Russia exported, 1842-1847, 72,636,166 silver rubles + worth of tallow, 1,832,137 silver rubles worth of horse hair, + 10,811,735 worth of bristles (_Borsten_), 7,387,140 of uncured + skins, 36,159,452 of sheep's wool, but flesh-meat only to the amount + of 370,362 rubles, and entire animals to the value of 6,853,241 + rubles. (_P. Storch_, Der Bauernstand Russlands, 289 ff.) Tallow is + there ten times dearer than the same volume of wheat. (_Steinhaus_, + Russlands industrielle und commercielle Verhaeltnisse, 294 ff.); + while in Saxony, according to _Engel_ (1821), a pound of wheat cost + on an average 7.8 _pfennigs_, and a pound of tallow 30 _p._ However, + Russia's recent progress in civilization has had for effect: that + the exportation of tallow (1833 = 4-1/2 million _puds_; 1869 = 2-1/4 + mill.) has greatly fallen off; while that of butter and live stock + has increased. (_v. Lengefeld_, R. im 19. Jahrh., 220 ff.) + + In England, during the fourteenth century, a pound of meat cost, on + an average, 1/4d.; of lard, from 1-1/2 to 2. (_Rogers_, I, 411.) On the + other hand, from 1848 to 1856, the average January price of beef + from America was 110 shillings; of tallow from St. Petersburg, 48s. + 11d. per cwt. (_Newmarch_.) And so, in the time of _Pallas_, the + Cossacks chased the deer of their steppes only for the sake of its + skin and horns. (_Pallas_, Reise, III, 524.) While the Greeks got + horn from Macedonia and Thrace (_Herodot._, VII, 156), it is a + striking proof of high civilization that at Athens (?), about the + time of the hundredth Olympiad, an ox-hide was worth only 3 + drachmas, and the whole ox 77 drachmas. (_Boeckh_, Staatshaushalt, I, + 105 ff.) + + As the ox is primarily serviceable as an object of food and an + instrument of labor, and the sheep on the other hand, only an + instrument to produce wool, it is easy to understand why, with the + further advance of civilization, the price of oxen rises + comparatively much more than the price of sheep. In Athens, during + the time of Solon, an ox was equal in value to five sheep. + (_Plutarch_, Solon, 23.) So also in countries with a low + civilization in the time of Polybius. (_Polyb._, XXXIV, 8; _Gell._, + XI, 1.) Why the same was the case in Rome at the beginning of the + Republic? (_Plut._, Popl., 11). In England the proportion between + the price of an ox and that of a sheep was, + + in 927 as 6:1 (_Henry_.) + in 1125 as 3:1 + in 1182 as 6.3:1 + in 1197 as 9:1 + in 1229 as 8:1 (_Eden_.) + in 1260-1492 (av.) as 9.2:1 (_Rog._) + in 1497 as 10:1 + in 1500 as 11.6:1 + in 1511 as 8:1 + in 1528 as 10:1 + in 1529 as 12.8:1 + in 1531 as 9.4:1 + in 1551 as 10.6:1 + in 1597 as 8.2:1 (_Eden_.) + + At present the proportion may be from 10 to 20:1. In Saxony, it is + as 48 thalers to 5.27. (_Engel_.) + + 800 About 1793, Russia exported 10,000 rubles worth of fish, 452,000 of + sturgeon bladders, 188,000 of caviar. (_Storch_, Russland, II, 184.) + But this had undergone a great change even in 1850. At present, + there are 64 per cent. of sturgeon bladders, 27 of caviar, and 7 of + whole fish. (_Steinhaus_, Russland's industrielle und commercielle + Verhaeltnisse, 102, 368.) Yet the Astrakan fishermen still throw the + greater number of the sturgeon they catch back into the water. + (_Pallas_, Reise im sued. Russland, I, 189; _Steinhaus_, 99.) Salt + fish are adapted for transportation to a distance not only because + they can be preserved, but also because they may be caught and + prepared on the great highway of the water. Athens got from the + Black Sea besides wood, tar, wool, hides, cordage, honey, wax and + slaves, also salt fish. (_Wolf_, z. Demosth. Leptin., 252; _Bockh_, + Staatshaush. I, 51.) The latter from Sardinia, Egypt and Spain. + (_Pollux_, VI, 48.) + + 801 The principal countries that produce potash are Russia and North + America. It is estimated that a cwt. of potash requires, on an + average, 480 cwt. of wood. (_Pfeil_, Grundsaetze der Forstwirthsch. + in Bezug. auf National-Oekon. etc., I, 128.) From 1800 to 1840, wood + for fuel in Wuertemberg trebled its price; for building material the + price increased 1.6 times. (Deutsche Vierteljahrsschrift, 1847, No. + 4, 104.) + + 802 Whereas barbarous nations take little trouble to turn the milk from + their cows to account (_Roscher_, Ideen z. Politik und Statistik der + Ackerbausysteme, Archiv. der politische OEkonomie, neue Folge, III, + 202), _Reuning_, in 1844, calculated that the milk from all the cows + in Saxony amounts to a value of 10,000,000 thalers, their meat to + over 2,000,000, and the labor performed by them in various ways to + 3,000,000. In Silesia, in the last decade of the eighteenth century, + a quart of milk was estimated to be worth 2 _pfennigs_ (Festschrift + der deutschen Landwirthschaftsversammlung, 1869, 343), whereas as + now it is sold almost everywhere for 12 _pfennigs_. (_Schmoller_.) + In the rather high state of civilization which Saxony had reached at + the end of the sixteenth century, when game was already dear, and + the prices of other meat were almost as high as in 1800, a _sheffel_ + of rye was worth 44 measures (_Mass._) of milk, and recently 82-{~VULGAR FRACTION TWO THIRDS~} + measures. (_Schmoller_, Tuebinger Ztschr., 1871. 336 ff.) + + 803 The principal cheese-producing countries and cities are Holland, + Limburg, Switzerland, Gloucester, Chester, Ayrshire etc. Compare + _Roscher_, loc. cit., 195 ff. + + 804 In England, in the year 1000, a cow was worth only as much as two + sheep. (_Anderson_, Origin of Commerce, a., 979.) The best butter + was worth only 1d. per pound in 1550, while pork was worth 1-1/8, + veal and mutton, 1-1/2, and beef, 2-1/4d. The price of butter was + exceedingly variable in the sixteenth century. (_Eden_.) + + 805 During the middle ages, pork constituted the most usual animal food + even of the best classes. (_Buesching_, Ritterzeit und Ritterwesen, + I, 164.) Immense importance attached to pork by the _Lex Salica_. + (Tit., II, XIV; Emendatt. Caroli Magni, II, 1 ff.) The archbishop of + Cologne used every day 24 large and 8 medium-sized hogs, and four + more on the three great festivals. The abbot of Corvey used daily + five fat and one lean hog, besides two young ones. (_Kindlingen_, + Muensterische Beitr., Urkunden, 147, 126.) In 1345, at the court of + Dauphiny, there were used annually for 30 persons, 30 salt and 52 + fresh hogs; whereas, in modern Paris, with 800,000 inhabitants, only + 32,000 hogs are consumed yearly. (_Roquefort_, De la Vie privee des + Fr., I, 310 f.) Compare herewith the place occupied by the + swine-herds in the Odyssey in Greece's age of chivalry. In England, + in the time of William I., woods were taxed according to the number + of hogs they might feed. At present, there is an enormous production + of hogs in Servia, which, in many places, constitutes the only + source of ready money to the agricultural population. + + And about the end of the eighteenth century, it is said that Servia + received from Austria alone 1,300,000 florins yearly for hogs. + (_Ranke_, Serb. Revolution, 95.) In 1864, Servia's total exports + amounted to 62,500,000 piasters, of which 28,162,260 were for hogs, + 7,043,000 for wool, 7,662,000 for the skins of sheep and deer, + 5,732,000 for cattle, 1,222,400 for tallow. (_Kanitz_, Serbien, 598 + ff.) Great production of hogs also in the Moldau and in Wallachia, + in the United States and Mexico, where, instead of butter, only lard + and suet are used; also in Lombardy, the Prussian Rhine province, + Belgium, the English milk-producing districts, Gloucester, Wilt, + Dumfries, Galloway and the districts where agricultural proletarians + abound--Ireland and Yorkshire. It is a consequence of the same law + that, among the South Sea Islanders, the hog was the principal + domestic animal, as it still is among the Chinese. Similarly in the + whole of Asia, beyond the Ganges (_Ritter_, Erdkunde, IV, 938, + 1101); in semi-barbarous upper Italy in the time of _Polybios_ (II, + 15); in Gall itself, in the time of Augustus. (_Strabo_, IV, 192, + 197.) The America of the ancient Greeks, Sicily, exported hogs, + mainly, in the time of Hermippos. (_Athen._, I, 27.) And even among + the Romans, the consumption of pork was much greater than the + consumption of beef. (_Marquard-Becker_, Handbuch, V, 2, 39.) + + 806 In the cities of Prussia subject to a tax for the privilege of + maintaining slaughter houses, a pound of beef cost on an average, in + 1846, from 2 silver groschens, 5 _pfennigs_, to 3 s. gr. 4 pf.; + pork, from 3 s. gr. 2 pf. to 4 s. gr. 4 pf. (_Dieterici._) In + Moscow, also, the latter is dearer at present. Before the time of + Peter the Great, it was cheaper. (_Storch_, Handbuch I, 364.) It was + a sign of high civilization, too, that in Florence, in the fifteenth + century, veal cost, on an average, 2-1/2 soldi; mutton, 2-{~VULGAR FRACTION ONE THIRD~} soldi; but + pork, 4 soldi. (_Pagnini_, Saggio sopra il giusto Pregio delle Cose, + 325 f., Cust.) It is especially the lower middle class who ask for + fat meats. The very fat English sheep are taken not to London, but + into the manufacturing districts. (_Lauderdale_, Inquiry, 322 f.) As + to whether the relatively high price of pork, and the fact that in + the later times of Rome, the wild boar was the most fashionable + dish, compare _Becker_, Gallus, II, 186. + + 807 The production of fowl is similar in this, that they are frequently + fed from remains of consumption; only their production is not + adapted to uncivilized countries, because it is difficult to protect + them there. In Texas, it is said, it costs more to raise ten + chickens than to bring up ten children. (_Kennedy_, Czarnkowski's + translation, 1846, 115.) The independent breeding of fowl is + advisable only where there are a great many rich consumers; for the + reason that they are naturally a delicacy. Enormous production of + pigeons in Cambridge, Huntington etc. (_McCulloch_, Statistical + Account, I, 189.) In Paris the consumption of pork and fowl has + gained somewhat since the Revolution. (_M'Chevalier_, Cours. I, + 113.) + + 808 According to _Schuckburg_, Philosophical Transactions of 1798, and + _Kraus_, Vermischte Schriften, I, tab. I, the prices of the + following species of animals rose in England between 1550 and 1795: + horses, 904 per cent.; oxen, 896 per cent.; sheep, 876 per cent.; + cows, 2050 per cent.; hogs, 1964 per cent.; geese, 300 per cent.; + butter rose from 5d. per pound to 11-1/2d.; beer from 1d. per gallon + to 2-3/4d.; agricultural day wages from 1/2s. to 1s. 5-1/4d.; wheat 326 + per cent. Compare, however, Edinburg Review, III, 246 ff. In Germany + also, cows and hogs have increased much more in price than horses + and sheep. (Tuebinger Ztschr., 1871, 342.) _Dutot_, Reflexions, 946 + ff., ed. Daire, says that the value of the precious metals in France + decreased in value between the times of Louis XII. and Louis XV. in + the ratio of 3-79/91:1. On the other hand, the prices of different + commodities rise in very different degrees: + + Fat sheep, from 7 sous to 10 livres. + Lean sheep, from 5 sous to 5 livres 10 sous. + Hogs, from 10 sous to 25-35 livres. + Capons, from 1 sou to 12 sous. + Hens, from 1-1/2 sous to 6 sous. + Pigeons, from 1-1/2 sous to 3 sous. + Deer, from 1-1/2 sous to 15 sous. + + 809 Thus, in Thuringia, the average price in silver of corn from the + sixteenth century until the period 1848-61 increased in the ratio of + from 1 to 3-4; the price of the different kinds of animals, on the + other hand, from 1 to 5-10. (_Knies_, in _Hildebrand's_ Jahrbb., + 1863, 78.) The price of the different kinds of corn as compared with + one another may, however, be modified by many different + circumstances. Thus the Capitulare Saxoniae of 797, c., II, estimated + the prices of rye, barley and oats to be to one another as 30:30:15; + while the Magdeburg Chamber of 1804 estimated them to be as 17:14:8. + In the kingdom of Saxony, in 1841-9, the average prices of wheat, + rye, barley and oats stood to one another in the ratio of + 144:100:75:47 (_Engel_); while, in the middle ages, wheat, rye and + oats were as 9:6:3 (_Gersdorf_, Cod. Depl. Sax., II, p. XXXIV); + under Prince August, corn, barley and oats were as 24:22:12. + Assuming the price of rye to be equal to 100, the cost was: + + At Brussels, in the 16th century, wheat 126.7, barley 80, oats 50 + At Brussels, in the 17th century, wheat 138.8, barley 82.9, oats + 51.9 + At Brussels, in the 18th century, wheat 147, barley 86.7, oats 55.2 + At Brussels, 1815-1844, wheat 156 + At Brussels, 1841-1850, wheat 153, barley 82.7, oats 51 + At Berlin, 1789-1818, wheat 135, barley 74.8, oats 54 + At Berlin, 1819-1832, wheat 143.5, barley 74.9, oats 52 + + (_Rau_, Lehrbuch, I, § 183.) To understand this, it is necessary to + bear in mind the relatively great increase of wheat bread, beer made + of barley, and horses, as objects of luxury. The unusually low price + of oats in North America, as compared with the price of wheat, is + dependent on the facility of exporting the latter. In Florence, in + the fifteenth century, the price of wheat was 22-{~VULGAR FRACTION TWO THIRDS~}, of rye, 12, of + barley, 8 _soldi_. (_Pagnini_, Sopra il giusto Pregio delle Cose, + 325.) + + 810 The English so called custom-house prices (_Zollhauspreise_) + correspond to the market prices of 1696. If these are assumed = 100, + the price + + Of steel and iron was, in 1826, 83, in 1831, 56 + Of coal was, in 1826, 47, in 1831, 45 + + Between 1835 and 1850, Scotch iron had already become cheaper by + one-half (_Meidinger_, 387), and coal in London by one-third + (_Porter_). + +_ 811 Rogers_, History of Agriculture, I, 67. + + 812 In England, in 1172, an ox cost 2 shillings; in 1175, green cloth + cost per ell, 2-10/12 shillings; red cloth, 5-1/2 shillings. (_Eden._) + In the western states of North America, the farmer gives two pounds + of coarse wool for one pound of woolen yarn; he sends 4 bushels of + wheat to the miller for the flour of three bushels (Ausland, 1843, + No. 68), while in Ravenna, in the thirteenth century, the miller's + fee was 1/10 (_von Raumer_, Hohenstaufen II, 437); according to the + fixed prices in _Fantazzi_, (Monumen. Ravennet.); in Germany, during + the last centuries of the middle ages, 1/8 (_J. Grimm_, Weisthuemer, + III, 8); at the end of the sixteenth century from 1/8 to 1/5 + (_Coler_, Oeconomia, II, 3); in modern Germany, generally 1/16 of + the raw material, and in the steppes of southern Russia, when the + wind is still, in summer, even the half. (Mitth. der freien oekonom. + Gesellsch. zu Petersburg, 1853, 85.) In Guiana, in 1806, a very + ordinary saddle and bridle could not be had under 10-1/2 guineas. + (_Pinckard_, Notes on the West Indies, III, 1806.) _Count Goertz_ was + obliged to pay 2 dollars, in Demarara, for the cleansing of a rifle, + and another person for the oiling of a carriage, 5 dollars. (Reise + um die Welt, 1864, 327.) A lady's dress in Mobile costs four times + as much as in London or Paris. (_Ch. Lyell_, Second Visit to the + United States, II, 70.) In Athens, articles of clothing, even for + the poorer classes, were never as cheap as they are in civilized + countries to-day. (Compare _Plutarch_, De Tranquill. Anim., 10.) + + 813 In Upper Italy, between 1261 and 1400, a lady's chemise and the + making of it cost 14.77 lire; Rheims linen, 7.04; ordinary mourning + cloth, O.45; black cloth from Moriana, 2.83; cloth from Mecheln, + 43.83; from Ypres, 47.04; scarlet cloth, 80.44 per ell. (_Cibrario_, + 1. 1.) On the other hand, to-day, in the Leipzig market, the + difference in price of the dearest and of the cheapest cloth will + scarcely surpass the ratio 18:1. Even _Scaruffi_, Sulle Moneta, + 1679, 163, Cust, remarks that hemp-linen and similar coarse articles + had increased much more in price than brocades; but he ascribes this + circumstance to the disordered state of the coinage. It is much + better accounted for by _Adam Smith_, Wealth of Nations, I, 386, ed. + Basil. + + 814 Before the plague in the fourteenth century, the cwt. of lead was + worth 10-1/2d.; of iron, 4s. 1d. (_Rogers_, I. 599.) On the other + hand, between 1848 and 1856, the average January price of bar-iron + was L7, 11s.; of lead, over L20. (_Newmarch._) + + 815 Thus, in England, the price: + + Of glass was, in 1826, 387; in 1831, 369 per cent. + Of leather was, in 1826, 285; in 1831, 123 per cent. + Of silk goods was, in 1826, 158; in 1831, 249 per cent. + + of the price of the same articles in 1796. (_Rau._) Of 29 chemical + products of the Parisian manufacture, the wages of labor is on an + average only 7.4 per cent. of the selling price; and, in some cases, + only from 1 to 2 per cent. (_Chabrol_, Richerches Statistiques sur + la Ville de Paris, 1821; _Hermann_, Staatsw. Untersuch., 137.) In + Buschtiehrad, between 1670 and 1870, barley rose from 1 to 4.8; hops + to 6.52; fire wood to 6.14; the excise to 6.54; but beer only to + 2.81; although wages increased ten fold. (_Inama Sternegg_, Gesch. + der Preise im oesterreich. Ausstellungsbericht von 1873, 43.) + + 816 A silk cloak lined with fur cost in the time of Charlemagne, 400 + scheffels of rye, one not so lined 200. (_Hullmann_, + Finanzgeschichte, 212 ff.) In Florence in the fifteenth century, one + pound of sugar was equal in value to 15 pounds of mutton. + (_Pagnini_, 326.) In Turin, in the fourteenth century, 1 pound of + pepper was equal in value to 28 pounds of salt. (_Cibrario_, III, + 359, 362.) As late as the middle of the fifteenth century, the court + of Duke William of Saxony paid for one pound of sugar 1 thaler and 8 + groschens, while ducal fees paid to servants and workmen seldom + exceeded 2 gr. Hence, even at a princely meal, often scarcely 1/2 a + pound was consumed. (_Buesching_, Ritterzeit, I, 137 f.) + + 817 Charlemagne's capitularies suppose a merchant's profits to be from + 100 to 200 per cent. (a. 809, c. 34.) And even in our own day, + merchants in the markets of Cabul are frequently not satisfied with + a profit of from 300 to 400 per cent. (_K. Ritter_, Erdkunde, VII, + 244), and the caravans which leave Maroc for the Soudan are wont, in + exchange for commodities amounting in price to 1,000,000 piasters, + to return with a supply of other commodities worth 10,000,000. + (_Stein-Wappaeus_, Handbuch, Africa, 33.) According to _Buesch_, + Geldumlauf, II, 10, the price of East Indian products in Hamburg was + some 70 per cent. higher than at home, while _Pliny_, H. N. IV, 26, + speaks of a price one hundred times (?) as high; and its spices, at + the time of Portuguese dominion, were sold at a profit of at least + 600 per cent., in Europe. (_Crawfurd_, History, VII, 360; _Ritter_, + Erdkunde, V, 872.) + + 818 When Humboldt found a missionary near Cumana who paid 7 piasters for + a cow, and was obliged to pay 17 piasters for blood-letting, rather + unskilfully performed, he found an illustration of one of the + peculiarities of colonial life--to have all the wants of higher + stages of civilization but not the means of satisfying them. + (Relation historique, I, 374.) + + 819 Enormous payments made to distinguished virtuosi, actors, sophists + and hetares at the time in question, also to Appelles, Aristides + etc., for works of art. (_Plin._, XXXIV, 19, 2, XXXV, 36, 19.) The + actor Aesopus (see § 233, note 6) had a fortune worth 20,000,000 + sesterces, while Pompey, for instance, had 70,000,000. Roscius + received from the state for every day he played, 286 thalers, and + earned 43,000 a year. (_Mommsen_, Roemische Geschichte, III, 483, + 547.) Compare _Cicero_, pro Roscio Comoedo, 10, and _Plin._, H. N. + IX, 59, X, 72. The zither-player, Amoebaeos, received one talent for + each appearance. (_Athen._ XIV, 623.) According to _Pliny_, H. N. + XXIX, 5, the Roman _principes_ gave the most distinguished doctors + yearly 250,000 sesterces, and even more as an honorarium. At the end + of the eighteenth century, the greatest Parisian actors received + from 4,000 to 5,000 francs per annum. Now 100,000 is considered a + moderate income for one. (Journ. des Economistes, May, 1854, 279.) + It is said that Frederick Hase earned $30,000 in America in ten + weeks. (Leipz. Tagebb., 15 Jan., 1871.) _Steuart_, Principles, II, + ch. 30. _Adam Smith_ frequently represents it as a rule, that + superfluous goods like gold and silver, are dearest among the + richest nations, necessary goods among the poorer, and _vice versa_. + But the supply has much more to do with the permanent price of a + commodity than the demand for it has. And the principle above + mentioned applies only in so far as the supply is here an unlimited + and there a limited one. Hence, the comparison of silver with + painters' and sculptors' works is not an apposite one--in the case of + these there is a natural monopoly, while the former, on account of + its durability and capacity for transportation, may, on the + contrary, be increased almost at pleasure. + + 820 Besides _Boeckh._, Staatshaushalt der Athener, 1817, Book I, compare + _Arbuthnot_, Tables of ancient Coins, Weights and Measures, 2d ed., + 1754, _Reitmeyer_, Ueber den Bergbau der Alten, 1785, and Michaelis, + De Pretiis Rerum apud veteros Hebraeos, in the Comment. Societ. + Gottingensis, vol. III. The principal sources of information among + the ancients are _Diodor._, V; _Strabo_, III, V; _Plin._, H. N., + XXXIII. + + 821 The money revenue of the Persian king, to the amount of 14,560 + talents yearly, was transformed into bars and thus deposited in the + treasury. _Herodot._, III, 95 f. Even the little vassal prince + Pythios of Celaenae had a treasure of 2,000 talents of silver and + 4,000,000 pieces of gold. (Ibid, VII, 26 f.) On the money stores of + private persons, see _Plin._, H. N., XXXIII, 47. + + 822 An ox was worth, in Solon's time, 5 drachmas; in 410 B.C., 51 dr.; + 374 B.C., 771/4 dr.; a medimnos of wheat in Solon's time, 1 dr., about + 390, 3 dr., under Alexander the Great, on an average, 5 dr. + (_Boeckh._, I, 102, f.) The usual amount of ransom paid for a + prisoner of war, in Kleomenes' time, was 2 minae (_Herodot._, V, 77, + VI, 79); under Dionys., I, 300 m. (_Aristot._, Oeconom, II, 21); + under Philip of Macedon, from 300 to 400 m. (_Demosth._, De fals. + Legat., 394); under Demetrios Poliorketes, 1,000 for a free man, 5 + for a slave. (_Diod._, XX, 84.) + + 823 This booty for Susa alone amounted to from 40,000 to 50,000 talents; + for Persepolis, to 120,000; for Pasargadae, to 600. _Curtius_, V, 2, + 6; _Strabo_, XV, 731; _Justin_, XI, 14; _Arrian_, III, 16; _Diod._, + XVII, 66, 71; _Plutarch_, Alex., 36. + +_ 824 Oros._, VI, 19; _Dio, C._, LI, 21; _Suet._, Aug., 41. Decline of + the value of money under Constantine the Great, when the precious + objects of the heathen temples were coined. (Monitio ad Theod., Aug. + de inbidenda Largitate, _Thes._, Antt. Renn., XI, 1415; _Taylor_, ad + Warm. Sandvic, 38.) + + 825 Compare I Kings, 10, 14, 27 ff.; I Chron., 22, 2 ff.; II Chron., 9, + 15 f., 12, 10 ff. On Ophir: _K. Ritter_, Erdkunde, XIV, 407 f.; on + the wonders of the discovery of Spain: _Herodot._, IV, 152. + _Aristot._, De Mirab., 146; Diodor, V, 35 ff. On the other hand, of + Greece, _Athen._ VI, 19 ff. + + 826 Compare _Plin._, H. N., XIV, 1. Yet the value of money in the time + of the Caesars seems to have stood much higher than it is now, as is + proved, for instance, by the endowments by Trajan (16 sesterces per + month for boys, and 12 sesterces per month for girls), as the + _alimenta_ furnished them according to Digest XXXIV, 1, embraced + their entire support. Compare the excellent essay on this subject by + _Rodbertus_, in _Hildebrand's_ Jahrbb., 1870, I. + + 827 The conquest of the Avares seems to have temporarily produced a + considerable cheapness of the precious metals. (_Guerard_, + Polyptiques, I, 141.) Increase of the value of money in Scandinavia, + during the later part of the middle ages. (_Wilda_, Gesch. des + deutschen Strafrechts, I, 323 ff.) + + 828 In England, from 1279 to 1509, there were coined on an average only + 6,8681/2 pounds sterling; from 1603 to 1830, on the other hand, + 819,415 pounds sterling. The average in the time of George IV., per + annum, was 4,262,652 (_Jacob_, ch. IV.) An evidence of the + uncertainty of the history of prices in the middle ages is, that + _Jacob_, ch. 12, infers, from the price of corn, that the price of + silver remained rather stationary from 1120 to 1550, while _Adam + Smith_, I, ch. 11, 3, infers from the same fact, a remarkable rise + in the price of silver from 1350 to 1570. Concerning the latter, see + _Leber_, Fortune privee au moyen Age, 16 f. _Tooke-Newmarch_, + History of Prices, VI, 391; whereas _Rogers_, Statist. Journ., 1861, + 544 ff., finds that in England, between 1300 and 1532, there was no + change whatever in the price of silver. According to _Soetbeer_, + Forschungen zur deutschen Geschichte, VI, 94, wheat and rye were, as + compared with silver, worth during the Carolingian period, about + one-fourth of its value, between 1750 and 1850. _Hegel_, Shassburger + Chroniken, II, 1012, ascribes to gold over 21/2 times as great a + purchasing power in the 13th and 14th centuries as in the 19th + century; and to silver, a purchasing power about three times as + great. + + 829 The silver ores of Peru and Mexico yield, on an average, only from 2 + to 3 per 1,000 of metal; those of Potosi, at present, scarcely 1 per + 1,000; those of Mexico, according to _Humboldt_, on an average, from + 3 to 4 ounces per cwt.; so that many of the European ores are + decidedly richer. While the veins of the Saxon mine, Himmelsfuerst, + have a breadth of only from 0.2 to 0.3 meters; the Veta-Madre of + Guanaxuato, is in few parts less than 8, and it is sometimes even 50 + meters broad; and the Veta-Grade of Zacatecas is from 5 to 10 meters + in breadth. In Pasco there are veins of silver ore which have 114 + and even 123 meters. _Tschudi_, Reise in Peru, K., 12; _Chevalier_, + Cours, III, 184 ff., 241 ff. According to _Humboldt_, Essai sur la + Nouvelle Espagne, III, p. 413, eleven times as many miners are + needed at Himmelsfuerst as at Valenciana to obtain the same quantity + of silver. + + 830 Thus, for instance, the celebrated ransom-money of Athahualpa (even + according to _Garcilaso de la Vega_) amounted to only 5,000,000 + thalers, while the French King John, after the battle of Poitiers, + in 1356, had to pay 41,000,000 francs for his ransom. (_Leber_, + Fortune privee au moyen Age, 121 ff.) + + 831 Compare _M. Chevalier_, III, 190 ff. Discovery of the quicksilver + mines of Guancavelica, 1567. + + 832 The yield of Potosi amounted from 1545 to 1638, to 395,619,000 + pesos. (_Ulloa_, Viage, II, I, 13.) Up to the present time, the + aggregate yield there has been estimated at from 6,000 to 7,000 + million francs. + + 833 On the worse grounded assumptions of former writers, see _Humboldt_, + N. Espagne, IV, 237. + + 834 There was really introduced into Spain, about 1525, not much over + 2,000,000 francs annually; and after 1550, six times as much. (_L. + Ranke_, Fuersten und Voelker, I, 347 ff.) Compare _Humboldt_, Ueber + die Schwankungen der Goldproduction, in the Vierteljahrsschrift, + 1838, IV, 18. + + 835 On the Brazilian exports of gold in the 18th century, see _Schaefer_, + Gesch. von portugal, V, 192 ff. + + 836 According to _Humboldt_, N.E., IV, 218, the amount up to the + beginning of this century was 17,000 kilogrammes of gold and 800,000 + kilogrammes of silver. + + 837 Thus, for instance, Mexico, during this period yielded, on an + average, 65,000,000 francs, instead of the former amount of from + 130,000,000 to 140,000,000. In Carro de Potosi, there were, in 1826, + of the former 132 pool-works only 12 in operation. Compare _Adams_, + The Actual State of the Mexican Mines, 1822. _Jacob_ assumes that + about 1830, the quantity of money in Europe and America was 1/6th + less than in 1809. (Ch. 28.) + + 838 Of this, 1,800 kilogrammes of gold from the United States. + +_ 839 Fischer_, Geschichte des deutschen Handels, 2d ed., II, 616 ff., + 673 ff. But the Schwaz mines, in the Tyrol, are said to have + produced, until 1523, 55,000 marks annually; the Freiberg silver + mine, from 1542 to 1616, 16,000 marks annually. Compare _von + Langen_, Kurfuerst Moritz, II, 56. + + 840 The Russian gold ores, quite insignificant before the year 1814, + have made very great progress since 1840. Their aggregate yield, + between 1814 and 1861, not taking into account the amount embezzled, + amounted to 37,000 _puds_, the _pud_ being equal to 16.3 + kilogrammes. The best year, 1847, gave a yield of 1,757 _puds_; + 1852-1861, an average of 1,556 _puds_; 1861 alone, 1,442 _puds_, of + which 1,041 came from the private Siberian gold-sand washings. + (_Walcker_, in Faucher's Vierleljahrsschrift, 1869, II, 115.) + + 841 Spanish silver production yielded, in 1845, over 184,000 marks; in + 1850, over 291,000. (_Willkomm_, Halbinsel der Pyranaeen, 1855, 537.) + + 842 Annales des Mines, X, 831 ff. + + 843 Of this amount, there came to Europe, not including Russia, 150,000 + kilogrammes of silver, 2,650 kilogrammes of gold; to Russia, 24,000 + kilogrammes of silver and 30,000 kilogrammes of gold (embracing the + quantities probably withdrawn without the knowledge of the custom's + authorities); to the rest of Asia, 100,000 kil. of gold; to Africa, + 4,000. (_M. Chevalier._) + + 844 According to _Humboldt's_ assumption before the time of Columbus, + Europe had a circulation of 170,000,000 piasters; about 1600, of + 600,000,000; about 1700, of 1,400,000,000; in 1809, of about + 1,824,000,000. Up to 1803, there was produced in America, 9,915,000 + marks (Spanish) of gold, and 512,700,000 of silver. (N.E., 245.) + _Gallatin_ estimates that, before Columbus, there were 1,600,000,000 + francs; in 1830, in Europe and America, from 22,000,000,000 to + 27,000,000,000 francs. (Considerations on the Currency and Banking + System of the United States, 1831.) According to _M. Chevalier_, + 1850, all the silver which America produced had a volume of only + 11,657 cubic meters; and all the gold of only 151 cubic meters. The + latter, therefore, would not even fill the half of a French + gentleman's _salon_. + + 845 All the more in favor with governments because they affect + principally foreign consumers. Thus, the Spanish government at first + imposed a tax of 50 per cent. of the gross yield of the raw + material, on the purchaser of silver; since 1503, under Orando, of + 33-{~VULGAR FRACTION ONE THIRD~} per cent.; and later yet, of 20 per cent. This last tax was + therefore in full force under Cortes. This tax was reduced in + Mexico, in 1725, and in Peru in 1736, to 10 per cent., and later, in + the case of gold, to 3 per cent. Heavy taxation of Russian gold ore + (35 per cent. of the raw material), by virtue of the ukase of April + 14, 1849. Compare _M. Chevalier_, III, 274. + +_ 846 Cantillon_, Nature du Commerce, 215, 236, shows very clearly how + the increase of the price of commodities was produced, in the first + instance, by the increased consumption of the possessors of gold, + and how it, therefore, first affected those commodities which they + especially desired. + + 847 This is the opinion of _Adam Smith_. Similarly of _David Hume_, On + Money. According to _Letronne_, Considerations sur l'Evaluation des + Monnaies Grecques et romaines, 119, and _Boeckh_, Staatshaushalt, I, + 88, the average value of wheat in relation to silver was, in Athens, + 400 B.C., as 1:3146; in Rome, 50 B.C., as 1:2681; in France, shortly + before 1520 after Christ, as 1:4320; in the nineteenth century it is + as 1:1050. _Th. Smith_, De Republ. Anglorum, I, assumes that the + price of silver, from the age of chivalry to 1625, decreased in the + ratio of 120:40. The Spaniard, _Moncado_ (1619), says as 6:1. + (_Jacob_, ch. 19.) _Jacob_, himself, in comparison with his own + time, as 7:1 (ch. 15.) Much more moderate is _Newmarch_ in _Tooke's_ + History of Prices, VI, 345 ff., who assumes an increase in the + prices of commodities of about 200 per cent. The estimated value of + tithe-wine (_Zehntwein_) about doubled in lower Austria, during the + sixteenth century. (_Oberleitner_, Finanzlage N. Oesterreichs im 16 + Jahrhundert, 36.) According to the important researches of + _Mantellier_, Memoires de la Societe Archeologique de l'Orleanais, + vol. 1, 103 ff.; extract of _Lespeyres_ in _Hildebrand's_ Jahrb., + 1865, I, 1, the purchasing power of silver as compared with the + average value of twenty-seven commodities, assuming it to have been + 1 from 1750 to 1850, was, from 1350 to 1450, 2.9; from 1450 to 1550, + 2.8; from 1550 to 1650, 1.5; from 1650 to 1750, 2.1. According to + _Rogers_, the prices of corn in relation to silver were from 1596 to + 1636, at most 2.3 times as high as from 1260 to 1400; from 1637 to + 1700, 2.6 times; from 1701 to 1764, 2.1 times; from 1726 to 1820, + 3.2 times. (_Rogers_, I, 180.) + + 848 In Germany, the rise in prices was first observed in the price of + foreign groceries, which partly rose 400 per cent. Popular opinion + looked for the cause in the evil disposition of the large commercial + houses. In order to facilitate the competition of the smaller houses + with the larger, the Reichstag, in 1522, prohibited all companies + with a capital of more than 50,000 florins; and, in 1524, the royal + treasury wished to bring suit against the violators of this law. But + the cities contrived to avert the blow. (_L. Ranke_, Geschichte der + Reformation, II, 42 ff., 134 ff.) In Spain, the government, + especially between 1550 and 1560, endeavored to oppose the growing + dearness of goods of all kinds, by prohibiting the exportation of + the most important commodities, and by putting obstacles in the way + of retail trade. The lower classes in England ascribed the rise to + the suppression of the monasteries (_Percy_, Reliques of ancient + Poetry, II, 296), while Henry VIII. endeavored to improve the + condition of things by laws against luxury, the governmental + establishment of fixed prices, the expulsion of foreign merchants + etc. (21 Henry VIII.) The first writer who seems to have clearly + seen the true cause of the changes in price was _Bodinus_, Response + aux Paradoxes de Mr. de Malestroit touchant l'Encherissement de + toutes Choses et des Monnaies (1568). This work was translated into + Latin by _H. Conring_, 1671; and done over in the work: Discours sur + les Causes de l'extreme Cherte, qui est aujourd'hui en France + (1574). Next, we have the English author _W. S._, A Compendious or + briefe Examination of certayne ordinary Complaints of divers of our + Countrymen of these our Days, London, 1581. In _Befold's_ Vitae et + Mortis Consideratio politica, 1623, 13 f., we have a right + explanation of the _caritas sine inopia_ which is to be considered + as the common property of his time. + + 849 Similarly _Quesnay_, 77, Daire. _Sir J. Stewart_, Principes, ch. 3. + _Kraus_, Vermischte Schriften, II, 131 ff. _Hermann_, Staatsw. + Unters., 127. _Helferich_, Von den periodischen Schwankungen im + Werth der edlen Metalle, 1843, 70 f. + + 850 According to _Cibrario_, a hectolitre of wheat was worth, in Turin, + from 1289 to 1379, on an average, 905 gr. of fine silver; that is, + about three times as much as in Paris before the discovery of + America, and as much as in Paris from 1546 to 1556. In Turin, from + 1825 to 1835, it was worth about 1702 gr. In the fifteenth century + even, the foreign embassadors complain of the enormous cost of + living there. So, for instance, _Raumer's_ histor. Taschenbuch, + 1833, 162. Compare also, _Carli_, Del Valore della Proporzione dei + Metalli monetati con i Generi in Italia prima delle Scoperte dell' + Indie, 1760, in which he, indeed, exaggerates the matter, and seeks + to prove his views by the coarsest sophistry. + + 851 The chief result of _Helferich's_ excellent researches. + (_Helferich_, loc. cit.) The general opinion, indeed, is that this + _statu quo_ of the value of the precious metals was interrupted + about the middle of the eighteenth century by another decline, and + that the latter yielded to a subsequent rise in 1815 and afterwards. + Thus _David Hume_, History of England, ch. 44, App. 31, ch. 49, App. + A. _Young_, Political Arithmetics, ch. 6. More recently, _Rau_, + Lehrbuch, I, § 176. _M. Chevalier_, Cours, III, 320 ff. One of the + principal advocates of the opinion that every increase made in the + medium of circulation produces a corresponding depreciation is + _Nebenius_, Deutsche Vierteljahrsschrift (1841). In England a + quarter of wheat was worth, on an average, 38s. 8/9d., from 1595 to + 1685. On a similar stability of corn prices in Belgium, see + _Schwerz_, Belgische Landwirthschaft, III, 37. According to Suckburg + (l.c.), the value in exchange of money from 1640 to 1700 declined + 32-2/9 per cent.; from 1700 to 1760, 43 per cent.; from 1760 to + 1806, 84 per cent. + + 852 From 1637 to 1700 the price of corn in England averaged 51 + shillings; from 1701 to 1764 only 401/2 shillings. + + 853 Thus, the dearness of wheat in Germany, during the first thirty + years after the Thirty Years' War was caused, in large part, by the + depopulation produced by the War. + + 854 In Germany, also, the cause of the enhanced dearness of so many + goods during the Thirty Years' War is to be sought for in the goods + themselves. + + 855 Since 1815, most Birmingham and Sheffield wares have fallen from 50 + to 70 or 80 per cent. in price--at least from 20 to 30. (_McCulloch_, + Statist. Account, I, 705.) The Quarterly Review, May, 1830, speaks + even of an average decline of prices of English commodities in + general, of 50 per cent. + + 856 Excellently carried out in _Tooke_, History of Prices, III, 1838. + That the world's market is not so very readily affected by an + increase of the medium of circulation, is established by this fact, + among others, that the immense exportation of French metallic money + in consequence of the issue of paper money between 1716 and 1720, + and again in 1790 and the following years, is coincident with very + low prices of wheat in the neighboring countries. (_Helferich_, loc. + cit., 139, 190 ff.) And yet, in the former case, the amount was + 400,000,000 francs, and in the latter, at least 1,000,000. + +_ 857 Jacob_ estimates this part at only 2-1/2 per cent., _McCulloch_, at + 20, _Lowe_ at 25, _Necker_ and _Helferich_ at 50, _Humboldt_ at 66-{~VULGAR FRACTION TWO THIRDS~} + of the whole quantity worked. It certainly is, in our day, on + account of the ever growing aggregate supply, greater than hitherto; + but it is very different in different countries. _Nebenius_, + Deutsche Vierteljahrsschrift, 1851, 56 seq., estimates the aggregate + consumption of new gold and silver for industrial purposes at 14-1/2 + piasters yearly, and in addition to this seven millions of old gold + and silver (_Bruchgold und Bruchsilber_). The annual wear and tear + of previously existing articles of gold and silver, it is estimated, + amounts to 4,420,000 piasters (1/420); the annual increase of their + aggregate amounts in Europe to 6,000,000 piasters (1-1/2 per cent., + corresponding to the increase of population), and 4,200,000 + (one-fifth of the entire consumption), is employed, as he claims, in + gilding, plating etc. The last item is probably much increased by + galvanic silver-plating, the invention of photography etc. + +_ 858 Jacob_ embraces in the amount of metal employed in industrial + purposes, in the sixteenth and seventeenth centuries, 1/5 of the + amount which, after deducting the loss in Asiastic trade, was added + to the gold and silver stores of Europe; i.e., in the seventeenth + century, about 2,500,000 piasters yearly; in the eighteenth century, + {~VULGAR FRACTION TWO THIRDS~} (!); that is, annually, 15,000,000 piasters; in 1830, in England, + L2,457,221; in France, 120,000; Switzerland, 350,000; in the rest of + Europe, 1,605,490; in North America, about 300,000; altogether, + L5,900,000. _Humboldt's_ estimate is 21,000,000 piasters; + _McCulloch's_, L6,050,000. According to the records of the Paris + _Monnaie_, the amount of silver ware in France increased seven fold + between 1709 and 1759. (_Humboldt_.) In England, between 1807 and + 1814, 8,290,000 ounces of silver were stamped for manufacturing + purposes, from 1830 to 1837, only 7,387,000; in 1851, 924,000. + _McCulloch_ estimates the annual consumption of silver, in + Birmingham alone, for plating purposes, at 150,000 ounces; in + Sheffield, at 500,000; and the gold consumption in the pottery + districts at L650 per week. Birmingham consumed (1831) for gilding + purposes, L1,000 gold yearly. (_Whately._) It now employs weekly + 3,000 ounces of gold and 6,000 ounces of silver in the manufacture + of gold and silver ware, besides the quantity intended for gilding + and silver-washing purposes. (Quart. Rev., April, 1866, 381.) The + jewelers of New York manufacture yearly 3,000,000 of dollars worth + of gold and silver ware, mostly new material. (Economist, April 16, + 1853.) There were in Vienna, in 1781, only 167 workers in gold and + silver; in 1840, 229; in 1847, 539. (_Baumgartner_, in the Wiener + Akademie, May 3, 1857.) _Jacob_ estimates the aggregate mass of gold + and silver ware, in plate, instruments etc., in Europe and America, + to be 1-1/4 as great as that of the ready money; and in England alone + to be twice as great (ch. 28); while _Tengoborski_ thinks that at + the beginning of the nineteenth century, the coin constituted {~VULGAR FRACTION TWO THIRDS~} of + the entire amount of the precious metals. Sometimes a movement in + the opposite direction takes place, as, for instance, in those + revolutions in which the silver of the church was confiscated; in + the unfortunate wars of Louis XIV., etc. _Nebenius_, loc. cit., 17, + mentions a South German silversmith who melted down in the years + succeeding 1802, monastery silver to the amount of 11,000,000 + guldens. + + 859 On the wear and tear of coin, see § 120, and _Hermann_, in the + Archiv. der politischen Oek., I, 1841. Compare also, _Faust_, + Concilia pro Aerario, 1641, 263 ff. This wear and tear is so great + that _M. Chevalier_ supposes that it alone would suffice to reduce + an amount of money under Constantine the Great of 5,000 millions to + 300 millions, in the time of Philip IV. (ob. 1314.) Cours, II, 322. + How great a number of coins, especially of the smaller + denominations, are entirely lost is evident from the fact, that at + the time of the demonetization of the 15-sous and 30-sous pieces of + 1791-92, amounting to 25,000,000, only 16,000,000 were presented for + redemption. Of the 10-centime pieces stamped with an N, amounting to + 3,286,932 francs, there were only 2,000,000 left when they were + withdrawn from circulation, and this although individuals had added + to the coinage. (_M. Chevalier_, III, 321.) The total loss caused on + this score, _McCulloch_ estimates at 1 per cent. per annum, and + _Helferich_, at 3/4 per cent. The greater the aggregate stock of gold + and silver, the greater the absolute amount of wear and tear. If, + therefore, there were annually an equal influx of mineral products + to the markets, the pressure of this increase of supply from that + cause alone would take the shape of a converging series of prices. + (_Tooke_, History of Prices, II, 151 ff.) + + 860 The British East India Company exported gold and silver on an + average per annum from: + + 1711-1720, L434,000 + 1721-1730, 532,000 + 1731-1740, 487,000 + 1741-1750, 631,000 + 1751-1760, 571,000 + 1761-1770, 152,000 + 1771-1780, 43,000 + 1781-1790, 393,000 + 1791-1800, 352,000 + 1801-1807, 852,000 + + _Milburn_, Oriental Commerce, 1813, 419. According to _M. + Chevalier_, Introduction aux Rapports de l'Exposition de 1867, the + trade of Europe and North America, with India, China, Japan and the + Australian islands, amounted in 1800, to only 410 million francs, in + 1866, to 4,024 million. Yet, for a time, the largely increased + exportation of English manufactures to East India and of East Indian + opium to China, had changed the relation so that the exportation of + the precious metals from South Asia, by a great deal, more than + counterbalanced the imports. On the other hand, between 1853 and + 1856 240,000,000 thalers were shipped to India and China from + England and the Mediterranean harbors; in 1863 and 1864, even as + much as 300 millions, to be, for the most part, buried there. + Moreover, the immense quantity of cash money--often as much as from + 12 to 15 million in pounds sterling--in the state treasury, and + silver ornaments (§§ 44, 123) customary in India, demand a + considerable yearly supply to make up for wear. _Newmarch_ speaks of + 400 million pounds sterling which can be maintained in its condition + hitherto by a yearly increase of 1 per cent. (History of Prices, VI, + 723.) From 1865 to 1869, English steamships carried gold and silver + to the East in the following quantities, yearly: 93.9, 66.3, 24.6, + 70.2 and 60.4 million thalers, in addition to which almost as much + came directly from California. Statist. Journ., 1871, 122 seq. + +_ 861 Tooke-Newmarch_, History of Prices, VI, 147 ff., estimates the + aggregate stock of gold at the end of 1848 at L5,600,000; in 1856, + at L172,000,000 more. According to _Lavasseur_, the amount of silver + in the East increased, between 1848 and 1857, from 22 to 24 + milliards of francs; and the amount of gold from 9-1/2 to 15-1/2 + milliards. (Annuarie d'Economie politique, 1858, 632.) The total + amount of gold and silver in the civilized world, _Wolowski_ + estimated at from 55 to 60 milliards of francs, in 1870. (L'Or et + l'Argent, Enquete, 19.) Compare _Mason_, The Gold Regions of + California from the Official Reports, 1848. _Tengoborski_, Sur les + Gites auriferes de la Californie et de l'Australie, 1853. + Goldfield's Statistics issued from the Mining Department in + Victoria, 1862. _W. R. Blake_, The Production of the precious + Metals, or statist. Notice of the principal Gold and Silver + producing Regions of the World (New York, 1869). + +_ 862 Soetbeer's_ Denkschrift betr. die deutsche Muenzeinigung Mai, 1869, + and earlier yet, in _Faucher's_ Vierteljahrsschrift, 1865, II. + According to _M. Chevalier_, all the mines of the world, a short + time previous to 1865, produced 284,000 kilogrammes of gold, and + 190,000 kilogrammes of silver in a year: a total of 373,000 thalers + (Journal des Economistes, June, 1866), while, in 1848, the total + amount of gold coinage in the world was estimated at 560,000,000; + Great Britain, France, North America and Sidney had, since that time + and up to 1871, added to this L597,780,000. The additions have been + made in decreasing quantities: thus, 1857-59, 37.2 millions + annually; 1869-71, 16.99 millions annually. (Statist. Journ., 1872, + 376 ff.) The estimates as to how much a gold-digger might make in a + day have been variously estimated. Thus, _Larkin_ estimates it from + $25 to $50; _Mason_, at $10; _Folson_, at $25 to $40; _Butler King_, + at $16, reckoning one ounce at $16. All these estimates seem to give + an altogether too high average. In Australia, according to _Khull_, + Colonial Review, June, 1853, a digger can produce only one ounce + daily, or less than 4 thalers. According to _W. Stamer_, + Recollections of a Life of Adventure, II, 1866, a gold-washer in + Victoria earned in 1858, on an average, L250 per year; in 1865, only + L70; while day labor was worth 15 shillings. Hence, great hopes have + to be built on the lottery-nature of gold-washing. On the Rhine, a + gold-washer is satisfied with {~VULGAR FRACTION TWO THIRDS~} of a gramme of gold, that is worth + from 13 to 18 silver groschens. (_Daubree_, Comptes rendus de l' + Academie des Sciences, XXII, 639.) It should be borne in mind, + however, that the Rhine-lander devotes to gold-washing only the + leisure time which his avocation as a fisherman leaves him, while + the gold-washer in the new world, as a rule, devotes his whole time + to it; and that his labors are interrupted by the long rainy season, + attacks of fever etc. To this must be added the great difference of + the average prices of the means of subsistence and the difference of + all social conditions. + + 863 Compare, for instance, on the early productiveness of the Brazilian + gold districts which soon ceased: _Spix und Martius_, Reise nach + Brasilien, I, 262 f., 350. _Gardner_, Travels in the Interior of + Brazil, 1846. On Hispaniola, see _Benzoni_, N. Mundo, I, 61, and + _Peschel_, Gesch. der Entdeckungen, 304, 556. Hitherto, gold had + been obtained by the usual mining process, only in very few places. + As a rule, it has been found in alluvial land not far from the + surface. Compare _Ansted_, The Gold-Seekers' Manual, 1849. These + circumstances have made the production of gold important from the + first; and they still make it comparatively easy, while it causes + little demand for capital but for great skill. As soon, therefore, + as the greater part of the country washed for gold has been worked, + which does not require a long time, the whole is abandoned, while in + the production of silver the great amount of capital fixed in pits, + shafts, kilns etc. ties the parties engaged in the enterprise to the + spot, and necessitates the continuation of the enterprise. In recent + times, however, Australia and California have developed the mining + and machine production of gold to a surprising extent. According to + _Laur_, La Production des Metaux precieux en Californie, 1862, 33, + and the Journal des Economistes, Nov. 1862, Californian gold-quartz + produced, in 1851, on an average, 635 francs per ton; in 1860, only + from 80 to 85 francs; but the gold-washing methods have become + cheaper in the ratio of 2,500:1. However, the production of the + precious metals seems even now to be decreasing. According to the + Statist. Journal, 1866, 99, it amounted on an average to: + + in 1849-51, gold L23.9 million, silver L15.5 million. + in 1852-56, gold 38.7 million, silver 16.1 million. + in 1857-59, gold 36.5 million, silver 17.1 million. + in 1860-63, gold 33.5 million, silver 18.2 million. + in 1864-68, gold 30.0 million, silver 19.5 million. + + The number of gold-diggers in Victoria steadily decreased from + 125,764 in 1857, to 63,053 in 1867. + + 864 One of the chief difficulties in the way of the production of gold + is the loss by embezzlement, which is estimated at an average of 20 + per cent. Small companies of men working on their own account would + be less exposed to temptation, and the Anglo-Saxon races and the + North Americans are very well adapted thereto. (_M. Chevalier_, III, + 261.) + + 865 Gold is in a certain sense one of the most widespread of metals, + although it is found anywhere only in small quantities; so that on + the Rhine, for instance, it takes from 17 to 22 millions of gold + grains to make a kilogramme. An extraordinary large number of places + owe their civilization to gold-seekers. Compare _Tacitus_, Agr., 12. + I select the following "finds" from _Ritter's_ Erdkunde. The + Shangallas (I, 249); still more the terrace of Fazoglu itself (I, + 253, compare _Bruce_, Travels, V, 316, VI, 255, 342), in Monomotapa + (I, 140); in Manica, west from Sofala (I, 145), especially since the + suppression of the slave trade (I, 305, 471); in Mandigo land (I, + 360, 372); on the road from Gambia to Timbuctoo (I, 457); on Lake + Mangara (I, 493); between Timbuctoo and Finnin (I, 445); in Nubia + (I, 667, seq.); unused silver and quicksilver mines on the lower + Bagradas (I, 493); gold wealth at Malacca, _aurea chersonesus_ (V, 6 + f., 27); Tonkin, Lao and Ava (III, 926, 1, 216, IV, I, 213); Assam + (IV, 294); smaller Thibet (III, 657); Kashmere (III, 1,155); on + upper Setledsch (III, 654 ff., 668); in the mountainous sources of + the Indus (III, 508, 529, 593, 608); on the Cabool (VII, 23); in + Peshaver (VII, 223); Badakschan (VII, 795); rich silver mines + abandoned for want of wood near Herat (VIII, 243); in Armenia (X, + 273). It is said that in southern China there are great treasures of + the precious metals, the removal of which has been opposed thus far. + (IV, 756.) Arabia's richness in gold mines, spoken of by _Diodor._, + II, 50, III, 45, and _Agatharch_, De Mare rubro, 60, is of doubtful + existence, as no traces of them are to be found in the country + to-day. On the other hand, on both shores of the Pacific Ocean, the + portions of the earth richest in volcanoes seem to possess almost + everywhere quantities of gold equal to those of California and + Victoria. (Edinburgh Review, Jan., 1863, 82 ff.) What an amount of + treasure can be obtained at times from old and long since forgotten + "finds" is proved by the Altai (that is gold mountain), which even + the old Tschudi had rummaged (_K. Ritter_, II); and where Herodotus' + (III, 16) love of truth, so frequently called in question, has + recently been so brilliantly vindicated. Compare _v. + Ungern-Sternberg_, Gesch. des Goldes, 1835. _A. Erman_, Ueber die + geographische Verbreitung des Goldes, 1835. According to + _Murchison_, Siberia, ch. 17, gold is to be found only "in + crystalline and paleozoic rocks, or in the drift from these rocks, + which is a tertiary accumulation of the pliocene age;" and that it + is found most abundantly "in quartz-ore, vein-stones and traverse + altered Silurian slates, chiefly lower Silurian, frequently near + their junction with eruptive rocks." + + 866 Compare _Humboldt_, N. Espagne, IV, 147 ff.; _St. Clair Duport_, + Essai sur la Production des Metaux precieux en Mexique, 1843; _M. + Chevalier_, Cours., III, 483 ff. + + 867 The cost of a kilogramme of silver, expressed in terms of silver + itself, up to the moment that it is shipped, is estimated by + _Duport_ as follows: salt and _magistral_, 61 grammes; quicksilver, + 112 grammes; stamping it, 171 grammes; transformation of the ore, 72 + grammes; rent and superintendence, 38; duties etc., 145; smelting, + transportation and shipping, 35. There remains as profit for mining + it, 336 grammes. As to how the production of American silver + increases and runs parallel with the cheapness of quicksilver, see + _Humboldt_, N. Espagne, IV, 91 ff. + +_ 868 Wolowski_ calculates that the absolutely much smaller yearly + increment to the amount of the precious metals in the sixteenth + century, frequently 1/12, now constitutes only 1/50 of the greater + existing amount. (L'Or et l'Argent Enquete, 50.) + + 869 In the United States the stock of cash money in 1820 was estimated + at 5.1 thalers per capita; in 1849, at 8.6 thalers; in 1854, on the + other hand, at 13 thalers. + + 870 The weight of the mass of gold introduced into Europe annually stood + to that of silver in the ratio of 1:60-65 in the seventeenth + century; in the first half of the eighteenth century, in that of + 1:30; in the second half, in that of 1:40; and yet the variations in + price were not in the least parallel. According to _Soetbeer_ + (Beitraege und Materialien zur Beurtheilung von Geld und Bankfragen, + 1855, 102 seq.), the average silver-course (_silbercurs_) of gold + had, 1852-54, sunk only 2.05 per cent., as compared with that of + 1800-40. And yet the value of the annual production of gold stood to + the annual production of silver, in the beginning of the nineteenth + century, as 29 to 71; in 1846, as 47 to 53; in 1848-56, as 3 to 1. + + 871 While the public, even since 1850, think they have noticed a + depreciation in the value of money, there are a great many learned + political economists who are by no means prepared to grant it. The + principal advocates of this opinion are _Tooke_, and _Newmarch_, in + vol. VI. of the History of Prices (1857). Also _Lavergne_, in the + Journal des Economistes. And really the enhanced dearness of many + kinds of goods up to 1857, might have been accounted for by causes + affecting the goods themselves: diminished supply by reason of bad + harvests, commercial gluts etc.; increased demand by capitalization + on a gigantic scale, speculation, but especially by the elevation of + the lower classes etc. + + The London wholesale prices were on the 1st day of January, 1869, + nearly all lower by 10 per cent. than on the 1st day of July, 1857. + Only indigo, cotton and meat had risen. (_Hildebrand's_ Jahrb., + 1870, I, 328.) In many instances the enhanced dearness is entirely + local, by reason of the greater facilities for transportation in + places where prices were already higher. But as new truths are very + easily exaggerated by their discoverers, much of Tooke's view + concerning these events depends upon a polemic carried too far + against the theory of the balance of trade which was customary in + the so-called currency school. Compare, in opposition to Tooke, + _Lavasseur_, in the Journal des Economistes, March, 1838, and _M. + Chevalier_, La Baisse probable de l'Or, 1858. _Lavasseur_, from the + difference between the official and real custom-house prices in + France, calculates that raw materials in 1856 were on the average 63 + per cent., and in 1858, 20 per cent. higher than in 1826; and that + manufactured articles were in 1856, just as high, and in 1858, 6 per + cent. lower than in 1856. An average made of all commodities showed, + in 1856, an enhancement of 30 per cent, and in 1858 of 9 per cent. + (_Hildebrand's_ Jahrb., 1864, II, 118.) + + In the Hamburg market in 1847-65, 87 articles declined in price, 183 + rose in price, and 24 remained about stationary. (Amtl. Statistik + von 1887, 18 ff.) _Jevons_ assumes a general rise in the price of + commodities between 1849 and 1869 of about 18 per cent. (Economist, + May 8, 1869.) He makes this estimate from the average March prices + of 50 of the principal articles. Assuming the average March price of + 1849=100, we have, according to him, for the following years, + respectively: 101, 103, 101, 116, 130, 125, 129, 132, 118, 120, 124, + 123, 124, 123, 122, 121, 128, 118, 120, 119. Previous years showed: + 1789=133; 1799=202; 1809=245; 1819=175; 1829=124; 1839=144. (Compare + supra, § 129, note 1.) The budget of a Swiss teacher's family + consisting of five persons has become dearer since 1840 ff., their + consumption remaining the same and of only the simplest articles, by + 72.5 per cent. (Boehmert, Arbeiterervhaeltnisse etc., I, 302 ff., + 355.) That, however, the depreciation is under-estimated most + precisely in England and over-estimated in Germany, _Knies_ very + well accounts for by the price-leveling effects of the more modern + means of communication. (Tuebinger Zeitschr., 1858, 280 ff.) + + 872 Compare _Leibnitz_, on the consequences which would follow the + realization of the dreams of the alchemists. It would be a great + misfortune, since then a pocket would no longer suffice for the + transportation of money, and people would have to use wheel-barrows + as they do now in Sweden. (Opera ed. Dutens, V, 199, 401.) + +_ 873 Beccaria_ considers it equitable that the debtor should always pay + the original value of the metal. (E.P., IV, 2, 17.) _Galiani_, on + the other hand, would not permit individuals, even when the state + arbitrarily causes a diminution in the real value of money, to + maintain the real value of the coinage in their contracts. (Della + Moneta, V. 3.) + + 874 It is precisely this class which first comes to an understanding of + the essential nature of the change effected. + + 875 Thus the English lessees, who in the sixteenth century had leases + for a long term of years, saw themselves rise in the social scale in + consequence of the revolutions in price--a fact of importance in the + political struggles of the seventeenth century. Compare _Sir F. M. + Eden_, State of the Poor, I, 119 ff. + + 876 Too much stress is laid upon this by _Tooke-Newmarch_, who, on that + account, considers almost every increase of the precious metals as a + blessing. As a matter of fact, the population of Australia, of the + United Kingdom, and of the United States, increased, between 1848 + and 1871, 44.5 per cent.; the production of coal and of railroads in + England, between 1856 and 1869, by about 60.6 per cent.; the English + production of woolen goods, linen and cotton and yarn, between 1848 + and 1870, by from 110 to 335 per cent. (Statist. Journal, 1872, 376 + ff.) + +_ 877 Luther's_ complaint concerning the poor condition of the clergy. + See _Schmoller_, in the Tuebinger Ztschr., 1860. This very clearly + shows how much surer for the crown domains are than a civil list, + and donations of land to a church than payments in money. Law of + Elizabeth, 18 Eliz., that, in the case of university property, {~VULGAR FRACTION TWO THIRDS~} of + the lease rent should be paid in metal and {~VULGAR FRACTION ONE THIRD~} in corn. In _Adam + Smith's_ time, this latter third was worth as much again as the + other two. (I, ch. 5.) + + 878 In the sixteenth century, this class was of small importance in most + countries; in our times, their ruin would cause general disturbance. + The wiser class of capitalists would, indeed, find means to exchange + their credits for more certain values, or make it a condition that + they should receive in the end a large sum. + + 879 Thus, for instance, the son of a deceased land owner who retains the + lands as his own acquits himself towards his brothers who have + entered the military or civil service of their country by paying + them a certain sum periodically. If a revolution were really + impending, the owners of land would soon emulate one another to + improve their estates by borrowing capital, if for no other reason, + to turn the depreciation of the medium of circulation to their own + advantage. In the sixteenth century, the indebtedness of land owners + was relatively unimportant. + + 880 It appears from _Roger's_ Tables, Statist. Journal, 1861, 551 ff., + that, between 1583 and 1620, a time during which the population of + England increased neither in wealth nor in numbers, there was a + considerable increase in the price of nearly all English + commodities. Thus, for instance, wheat was, from 1591 to 1600, 468 + per cent., and from 1611 to 1620, even 495 per cent. higher than + from 1530 to 1533. The Saxon laborer earned, in 1599, in corn, only + half as much as in 1455. (Tuebinger Ztschr., 1871, 354.) + + 881 When labor is indispensable to employers, it may happen that a small + decline in the supply may largely raise the price. Wages, in almost + all branches of labor, rose between 1851 and 1856, by about from 15 + to 20 per cent. + + 882 This, also, was of little significance in the sixteenth century, but + how important now! + + 883 Income taxes, _ad valorem_ duties and tithes rise and fall in their + nominal amount as the price of the medium of circulation falls and + rises. + + 884 Thus, for instance, the victory of the English Parliament over the + unlimited power of the crown, in the first half of the seventeenth + century, was very much promoted by the fact that the crown, in spite + of all its economy, was always in financial straits in consequence + of the depreciation of money. (Power of the purse, power of the + sword!) However, any force kept steadily in action is a two-edged + sword. While under favorable circumstances, it may be thereby + developed, under unfavorable circumstances it may be thereby + exhausted. How great a number of representative assemblies, during + the revolutions in prices in the sixteenth and seventeenth + centuries, allowed their energies to grow dormant! + + 885 Most of the above points are very well discussed in the work _W. + S._, cited above, § 137. + + 886 As no one then doubted: Compare _W. Raleigh_, The Discovery of + Guiana, Pref. I refer to Philip of Macedon. + + 887 Compare _Roscher_, Kolonien, Kolonialpolitik und Auswanderung, 1856, + 145 ff. + + 888 Something similar might have been observed in England in 1819 etc., + at the restoration of a depreciated paper currency. Among nations in + a comparatively low stage of civilization, a variation in the medium + of circulation is of less importance than among more highly + civilized nations, because trade in money, and still more, credit, + are relatively speaking undeveloped. + +_ 889 Fawcett_ greatly exaggerates when he says that with an increase of + population and wealth, an increase of money is as much a want as + hunger. (Manual, 370.) + +_ 890 Galiani_, Dellab Moneta, III, 1. At the time of the Lex Salica, + 10:1. After the Edictum Pistense of Charles II., ch. 24 (_Pertz_, + Mon. Germ., III, 488), 12:1. At the time of the Sachsenspiegel (III, + 45), again, 10:1. Under Saint Louis, King of France, 12.5:1. + (_Leblanc_, Traite historique des Monnaies de la France, ch. 1, 2.) + In Poland, 1356, 12:1. (_Muratori_, Dissertt. Medii Aevi, II, 28.) + In England, 1262, 9.6; 1272 = 12.5; 1345 = 13.7:1. (_Rogers_, 1, 593 + ff.) Under Henry VI., and in 1494 = 12:1. (_Anderson_, Origin of + Commerce, a. 1422, 1494.) In Denmark, under the former Kings of the + Union = 8:1. (_Dahlmann_, Daenische Geschichte, III, 52.) And so + throughout almost the whole of Scandinavia's medieval period, as for + instance in the Graugans. (_Wilda_, Gesch. des deutschen + Strafrechts, I, 329.) In Italy, 1579 = 12:1. (_Scaruffi_, Sopra le + Moneta, 1582.) In Holland, 1589 = 11.6:1. _Bodinus_, De Republ., + 1584, II, 3, maintains 12:1 as the general ratio; but the Apostolic + Chamber adopted the ratio of 12.8:1. In Germany, according to the + instances cited by _A. Riese_, 1522 = 10:1. The monetary laws of + Germany give it in 1524 = 11-{~VULGAR FRACTION ONE THIRD~}:1, in 1551 = 11:1, 1559 = 11-3/7:1; + _Budelius_, De Monetis, 1591 = 11-1/4:1. At the beginning of the + seventeenth century the relation in Spain was = 13.3; in Germany = + 12.16; in Flanders = 13.22; in England = 13.5:1. (_Forbonnais_, + Finances de la France, I, 52.) About 1641, in Flanders, it was 12.5; + in France, 13.5; in Spain, 14.1. Immediately after Colbert's death + it was, in Genoa, 15.03; in Milan = 14.75:1. (_Montanari_, Della + Moneta, 80.) While in the seventeenth century gold rose, it sank in + the eighteenth, on account of the Brazilian gold washings and the + many bank notes in circulation, which were for the most part of a + large denomination. (_Steuart_, Principles, III, ch. 13.) Still it + was in Amsterdam in 1751 = 14.5:1. + + 891 In Hamburg, the relation of the price of gold to that of silver + bars, varied, between 1816 and 1852, from between 15.11-16.2 to 1 + (_Soetbeer_); in London, from 1816 to 1837, between 15.80 and 14.97 + to 1. + + 892 In Asia, it is generally lower than in Europe--for centuries mostly = + 10:1. But in Birmah it is = 17:1, mostly on account of the extent to + which indulgence in luxury is carried there. (_Crawfurd_, Embassy, + 433. _Ritter_, Erdkunde, V, 244, 266.) Concerning China, see _M. + Chevalier_, Cours, III, 359. In Africa, gold is low as compared with + silver, in proportion to the distance from the civilized world. + Thus, an ounce of gold in Shenaar cost 12 piastres; in Suakim, 20; + in Djidda, 22. (_Ritter_, Erdkunde, I, 538.) In Timbuctoo, Mungo + Park found the relation of gold to silver to be as 1-1/2:1. Compare + Marco Polo, II, 39 seq. + + 893 In antiquity, a similar course is to be observed. According to + Manu's Indian laws, VIII, 134 seq., = 2-1/2:1; in the East, for a long + time, = 10:1; under Darius Hystaspis, = 13:1. (_Herodot._, 111, 95.) + In Greece, in the time of Lysias, = 10:1 (_Lysias_, pro bonis + Arist., Conon); according to _Plato,_ = 12:1 (_Hipparch._, 231); + according to _Demosthenes_, adv. Phorm., 214, = 14:1 (_Boeckh_, + Staatst., I, 43); Menander's estimate, = 10:1, probably because + Alexander's victory had made gold cheaper. (_Pollux_, IX, 76.) Among + the Romans, about 189 B.C., = 10:1 (_Livy_, XXXVIII, 11); somewhat + later, = 11.9:1 (_Mommsen_, in the histor. phil. Berichten der K. + Saechs. Gesellschaft, 1851, 184 ff.); in the fourth century after + Christ, = 14:1. (_Theod._, Cod. VIII, 4, 27.) We sometimes find + sudden variations. Thus, according to _Polyb._, XXXIV, 10, gold, in + Italy, sank about {~VULGAR FRACTION ONE THIRD~} in consequence of the opening of the mines at + Aquilea. It sank to the proportion of 9:1 when Caesar spent the + contents of the Roman treasure, which consisted of gold. (_Surton._, + Caes., 54.) The ratio of 17:1, during Hannibal's wars, was a species + of National bankruptcy. See _Plin._, H. N., XXXIII, B. + + 894 After the February revolution, the gold-agio, as compared with + silver, rose from 10-17 to 70 per 1,000. (_M. Chevalier_ Cours, III, + 346.) On the other hand, since the discovery of America, gold, as + compared with commodities, has declined much less than silver. + Compare _Hermann_, Ueber den gegenwaertigen Zustand des Muenzwesens, + in _Rau's_ Archiv., I, 151 ff. According to _Lord Liverpool_, + Treatise on the Coins of the Realm, the value of gold coin in the + London market, as compared with bank notes, varied in 40 years, + almost 51/2 per cent. + + 895 In recent times, it has become possible to extract from ancient + silver coins a small quantity of gold, and with some advantage. + European industry produced in this way about 1,600 kilogrammes of + gold per annum. One half of this amount is obtained in France and + the rest in Hamburg, Amsterdam, Brussels and St. Petersburg. + (_Michel Chevalier_, Cours, III, 302.) + +_ 896 Senior_, On the Value of Money, 77 ff. It is certain that a simple + variation in prices would not induce people to have gold table + services, or architectural ornaments of silver. + +_ 897 Rau_, Lehrbuch, 6th ed., I, § 277 c. In Rau's opinion (loc. cit.) + we may, in the course of the next decades, expect a decline of the + price of gold of about 76 per cent., and of only 10 percent. of the + price of silver (because of the low prices of quicksilver.) But here + he seems to overlook entirely what influence a change of standard in + important commercial districts would have. + + 898 Compare the works already mentioned. _Fleetwood_, Chronicon + preciosum, or an Account of English Gold and Silver Money, the Price + of Corn and other Commodities etc., for Six Hundred Years last past, + 1707; _Dupre de Saint Maur_, Essai sur les Monnaies ou Reflexions + sur les Rapports entre les Denrees et l'Argent, 1746; _Unger_, + Ordnung der Fruchtpreise, 1752; _Paucton_, Metrologie ou Traite des + Mesures etc., des anciens Peuples et les modernes, 1780; the + appendix to _Macpherson's_ Annals of Commerce, 1805; the tables in + _Garnier's_ translation of Adam Smith, vol. II, 1822; _A. Young_, + Inquiry into the progressive Value of Money in England, as marked by + the Price of Agricultural Products, 1812; _W. F. Lloyd_, Prices of + Corn in Oxford, in the Beginning of the fourteenth Century, and also + from 1583 to the present Time, 1830; _Helferich_, in the Tueb. + Zeitschrift, 1858, 471 ff. There are some very interesting notes on + the history of prices during the Merovingian and Carolingian periods + in _Guerard_, Polyptiques, I, 141 ff. + + 899 Thus, for instance, the bonds (and their coupons) of states, cities, + great corporations, certificates of stock, mortgages, bills of + exchange, checks. + + 900 A Prussian regulation of 1765 (_Goldschmidt_, Handbuch des + Handelsrechts, I, 550), calls money-paper (_Effecten_), instruments + of trade in which a value or a _valuta_ is designated. + +_ 901 Garnier_, French translation of Adam Smith, II, 143 ff., + distinguishes between coin-paper and promise-paper: the latter is + never found in circulation at the same time with the capital which + it represents. _Say_ says that, for instance, evidences of state + indebtedness, state bonds, call for money if they would circulate, + but they seldom act as money in circulation. (Traite, III, ch. 2.) + _Sismondi_ very well determines the difference in his Richesse + Commerciale, I, 160. _Rau_, Lehrbuch, I, § 293, requires of all good + paper money: a., that its mere transfer, even without any proof of + its rightful acquisition, should suffice to vest the property in it + in the receiver; b., that the power emitting it should enjoy + universal confidence or be able to compel universal recognition; c., + that its redemption should not be fixed for any definite point of + time. + + 902 That it is not possible to keep paper money from declining in value, + by the payment of interest, the people of North America learned from + more than one experiment during the eighteenth century. (_Benjamin + Franklin_, Remarks and Facts relative to the Paper Money of America, + 1765.) The same phenomenon was observed in the case of the Spanish + _vales_, which were created during the North American war in + consequence of the absence of the silver fleet. (_Bour-going_, + Tableau de l' Espagne, II, 38 ff. _Humboldt_, N. Espagne, II, 808.) + When the Portuguese _apolices_ (since 1797) still bore six per cent. + they depreciated in value; and when the payment of the interest was + suddenly stopped, the rate of exchange did not become any lower. + (_Balbi_, Esai statist. sur le Portugal, I, 323.) In Austria, in + September, 1820, the bank notes which bore no interest were at a + premium as compared with the imperial treasury notes, which did bear + interest of 1 per cent., although the credit of both kinds of paper + had ultimately the same foundation, namely, Austrian state-credit. + + 903 The attempt to make paper money pay interest suggests (as the Saint + Simonists recommend it should, with much ado; _Enfantin_, Ser les + Banques, d' Escompte in the Producteur, 1826), that awkward sword, + invented by Count Wilhelm von Bueckeburg, to the blade of which a + pistol is affixed! Shortly before each term for the payment of + interest, the circulation of such paper money would be arrested. If + the rate of discount should sink below the rate of interest such + notes bore, they would be sought after eagerly and disappear in + quantities, and, not be ever seen again until the rate of discount + had risen to a high figure, when they would be suddenly presented + for redemption. Such interest-bearing paper money, therefore, would + be a serious element to aggravate the fluctuations of the + money-market between good and bad times. When interest-bearing paper + money pays interest at the rate usual in the country, it is hoarded + by misers, (_v. Struensee_. Abhandlungen, III, 387.) Compare + _Forbonnais_, Principes economiques, p. 234, ed. Guill., whereas _v. + Prittwitz_, Kunst reich zu werden (1840, 359), takes delight in + elaborating the idea of an interest-bearing paper money. + + 904 Of jurists, see _Thoel_, Handelsrecht, I, § 51, and the authorities + for and against in _Goldschmidt_, Handelsrecht, II, Kap. 4, 1, 2. + The compulsory circulation of paper money is an essential element + only in reference to the person that issues it. Of political + economists, especially _A. Wagner_ in _Bluntschli's_ + Staatswoerterbuch, Art. Papiergeld, Band, VII, who, however, is very + soon compelled to oppose to paper money "proper," another kind not + "proper." _Adam Smith_ unhesitatingly accounts bank notes also + paper-money. (W. of N., II, ch. 2, p. 28, Bas.) _Huskisson_ + understands by "paper-money" only the irredeemable paper-money of + the state, while bank notes should be considered as "paper + currency." (The Question concerning the Depreciation of our + Currency, 1810.) + +_ 905 Seyd_, Muenz, Waehrungs- und Bankfragen in Deutschland, 50 ff., + distinguishes four classes of paper-money: 1st class, paper-money + covered by cash; 2d class, bank notes covered after the manner of + banks; 3d class, state paper-money; 4th class, such paper money as + the notes of the Southern Confederacy after its defeat. + + 906 Even _Plato_, De Legg., V, 742, was acquainted with money after the + Spartan type, intended only for internal trade: {~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER SIGMA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER ALPHA~} {~GREEK SMALL LETTER EPSILON WITH PSILI~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER CHI~}{~GREEK SMALL LETTER OMEGA WITH OXIA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}, + {~GREEK SMALL LETTER ALPHA~}{~GREEK SMALL LETTER UPSILON WITH PSILI~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER EPSILON WITH VARIA~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER EPSILON WITH PSILI AND OXIA~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~} {~GREEK SMALL LETTER TAU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA WITH PERISPOMENI~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER EPSILON WITH VARIA~} {~GREEK SMALL LETTER ALPHA WITH PSILI AND OXIA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER LAMDA~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER NU~}{~GREEK SMALL LETTER THETA~}{~GREEK SMALL LETTER RHO~}{~GREEK SMALL LETTER OMEGA WITH OXIA~}{~GREEK SMALL LETTER PI~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER FINAL SIGMA~} {~GREEK SMALL LETTER ALPHA WITH PSILI~}{~GREEK SMALL LETTER DELTA~}{~GREEK SMALL LETTER OMICRON WITH OXIA~}{~GREEK SMALL LETTER KAPPA~}{~GREEK SMALL LETTER IOTA~}{~GREEK SMALL LETTER MU~}{~GREEK SMALL LETTER OMICRON~}{~GREEK SMALL LETTER NU~}. Besides the + state kept for foreign trade a supply of the universal Hellenic + money, of which in case of need, private individuals could acquire + what portion they needed by exchange. When Dionysius I. issued tin + instead of silver money, all the Syracusans, although they noticed + the forgery, acted in their intercourse with one another as if they + considered the coins genuine. (_Aristot._, OEcon., II, 21, _Pollux_, + IX, 79.) Timotheos behaved more honorably when, pressed by the + dearth of money, he gave his troops copper coin tokens, which passed + for the time being for their full value in the camp; but which were + later to be redeemed at their full value in silver. (_Aristot._, OEc. + II, 22.) Compare _Polyaen_, Strateg., IV, 10, 2. The iron money which + the Klazomenians exchanged with the rich for silver, which bore + interest, but which the rich were forced to take, had a longer + duration; the silver was used to pay foreign state creditors, the + iron money circulated for the time being in the city, and was + gradually redeemed. (_Aristot._, loc. cit, II, 17.) + + We are still more forcibly reminded of paper money by the + Carthaginian leather money, where any object whatever of the size of + a coin was shut up in a leather envelope with the state seal, and + then circulated as if it were the coin it purported to be. _Mieris_, + Beschryving der Munstn, 1726, explains the saga of Dido's ox-skin by + means of this leather money. Certain it is, however, that the + surprise with which the sophistical dialogue, Eryxias, mentions the + matter, is a proof how foreign it was to the Greeks. Concerning the + Roman plated denarii which were stamped with the silver coins, but + which were also accepted by the state treasury, see _Mommsen_, R. + G., I, 405. + + 907 In the middle ages, leather money was issued as a promise of future + payment: by the doge of Venice in the wars of 1122 and 1126 + (_Montanari_, Della Moneta, 34); by King John, of England, during + the struggle of the barons (_Camden_); Emp. Frederick II. at the + siege of Faventia (_Malespini_, Hist. Fior., 130, _Villani_, Hist. + Fior., VI, 21); by Louis IX. during his captivity (_v. Raumer_ + Hohenstaufen, V, 461), John of France, 1360 (_Anderson_, Origin of + Commerce). On the Frankfurt lead marks which were afterwards + redeemed by the _Rechnerei_: _Kirchner_, I, 541. Lavallette's copper + tokens during the siege of Malta had the inscription: _non aes sed + fides_. The paper money which was issued during the siege of Leyden, + the inhabitants afterwards would rather preserve than have redeemed, + _ad perpetuam liberationis divinae memoriam_. (_Bornitii_, De Nummis, + 1605, I, 15. Distress coins, _melacs_, during the siege of Landau + and of the Hungarian _Ragoczy_, _Marpurger_, Beschreibung der + Banquen, 213. _Krones_, Zur Geschichte Ungarns im Zeitalter R's, + 1870.) + + 908 The Chinese have had various kinds of paper-money in their country + since the 7th century after Christ. Sometimes they called them + "flying coins, convenient coins," and sometimes _coupons_, _bons_, + _conventions_ (_Klaproth_, Memoires relatives a l'Asie, I, 375 ff.), + against which the caravans, as soon as they had passed the limits + were obliged to exchange their silver (_Pegolotti_, Pratica della + Mercatura in Della decima etc., III, 3). These had compulsory + circulation in China. The great Mongolian khans here became + acquainted with paper-money. (_M. Polo_, II, 21.) Thus, especially + in Persia, where refusal to accept such money and the imitation of + it was punished with death (1340). Compare _Ferishta_, ed. _Briggs_, + I, 414 ff. _d'Ohsson_, Hist. des Mongols, IV, 101 ff.; II, 487. Even + here there occurred cases of state bankruptcy and finally + withdrawals of the depreciated paper. (_Klaproth_, loc. cit.) In + Japan, according to _Oliphant_, Narrative of L. Elgin's Mission to + China and Sapan (1859), all foreign coins were required to be + exchanged against paper-money at the offices of the state bankers. + + 909 Adam Smith mentions North American paper money of the amount of 1 + shilling, and Yorkshire bank notes of the amount of 1-1/2 shillings. + Sweden had, until 1828, notes of 28 _pfennigs_. + + 910 Hence in Sweden, with its copper standard of long duration, the + system of banks of issue was developed very early. The + transport-notes (_Transportzettel_) (to be found in that country as + far back as 1661) of the Stockholm bank are considered the oldest + bank notes. Compare, however, _Palgrave_, in the Statist. Journal, + 1873. When, in 1768, Catherine II. introduced paper money into + Russia, the people gladly paid 1/4 per cent. exchange to the state + treasury for it. (_Brueckner_, in _Hildebrand's_ Jahrbuecher, 1863, + 49.) According to _Cancrin_, Oconomie der menschl. Gesellschaft, + 116, private individuals in from four to five months exchanged 40 + millions of silver roubles for paper. And thus, in 1780, Berlin bank + notes stood a few per cent. above par, and the notes of the S. + Carlos-Bank, in 1788, from 1 to 1-1/2 per cent. (_Rau_, Archiv., II, + 161.) + + 911 When at times in which paper money is looked upon with diffidence, + peasants and others bury their metallic money, this advantage of + course is lost. On the other hand, the exportation of precious metal + money, caused by the emission of paper money, must not be considered + a necessary evil, but rather as the condition precedent which in + most cases makes the above advantages of the paper money possible + for the first time. Compare _Ad. Wagner_, Die russische + Papierwaehrung (1868), 22, 24, 33. _Ricardo_, Proposals for an + economical and sure Currency, 1816, estimated that England, after + the abolition of the bank restriction, needed twenty million pounds + sterling. The interest on this amount of capital inclusive of wear + and tear etc., should be estimated at at least ten percent.; that is + for the whole kingdom at at least from two and one-half to three + millions a year. On this _Ricardo_ founded his proposal to base the + bank notes on gold bars. In its time, the essay: Guineas an + unnecessary and expensive Incumbrance on Commerce, or the Impolity + of repealing the Bank-Restriction Bill considered (London, 1802), + met with great approval. + +_ 912 Adam Smith_ calls attention to the analogous case in which a + manufacturer replaces a costly machine by a cheap one, sells the + former and employs the difference between the old one and the new in + enlarging his business. (W. of N., II, ch. 2.) When, indeed, all + nations have introduced the use of paper money, the greater portion + of the advantages which the one nation was able to obtain by its + means cease, and the only ultimate result is a depreciation of the + value of money and of the precious metals. Formerly the advantage + reaped by the single nation that emitted paper money was greater + than its share in the depreciation. (_Wolowski_, Enquete de 1865, + 108.) + + 913 When E. Seyd calls bank notes more costly than metallic money, + because the former in England require an outlay for administration + of 1-1/2 per cent. per annum, while the wear and tear of metallic + money amounts to 1 per cent. only in 20 years (Statist. Journal, + 1872, 511), he overlooks the loss in interest and the costs of + coinage in the latter case. + + 914 Related to this is the fact that in France, during the + assignat-crisis, the large bills of 10,000 francs were harder to get + rid of than the small ones. (_A. Schmidt's_ Pariser Zustaende, III, + 22.) + + 915 The numbering of paper money. A state which should neglect this + would not only reserve to itself the possibility of an unlimited + increase, but would surrender all control of its officials charged + with the emission of the paper money. _Law_, Trade and Money, 162, + advises that a large money reward should be paid to any one who + should show the existence of a higher number than allowed by law, or + of a duplicate number. And indeed, as comptroller-in-chief, he + caused the _prevot des marchands_ to be removed, because charged + with the duty of burning the paper withdrawn from circulation, he + (the _prevot_) noticed that the same number reappeared several + times. + + 916 If a traveler wished to pay his inn-keeper in the note of a bank + entirely unknown in the place, the latter would certainly refuse it. + If, on the other hand, the traveler were to offer him a silver coin, + the stamp and inscription of which were not familiar, still it would + be taken at the value of the metal it contained, after deduction + made of the costs of testing it, re-coining it, and compensation for + the trouble caused. Ignored by _Berkeley_, who, indeed, considered + metallic money nothing but "counters" or tickets (Querist, No. 23, + 26, 441, 475), and who ascribes important advantages to paper + money,--which by "stamp" and "signature" is made as costly as gold + (440)--over metallic money (226). + + 917 Any person who has witnessed a tax-execution, or sale of property + for the non-payment of taxes (_Stuerexecution_) will admit that a + tax receipt is at least as real goods as an umbrella or a glass + window that protects one from the storm. _Michaelis_ considers the + amount of running payments to the state for duties, taxes etc., as + the only right basis for full-value paper money. (Berliner + Vierteljahrsschrift, 1863, III.) Better yet when _Hoefken_ advises + that only as much paper money should be issued as amounted to the + average balance (_Bestand_) in the national treasury. The tax-basis + is defended with great warmth by _L. Stein_. Louis XIV., in 1704 + issued paper money bearing 7 per cent. interest, the acceptance of + which by all the royal officers of the treasury was prohibited! + (_Dutot_, Reflexions, 863, Daire.) _Law_, Trade and Money (1705) + ascribes to parcels of land the greatest constancy of value, because + they cannot be replaced, because they can be neither increased nor + decreased, and because they help to produce all other goods (p. + 170). While silver cannot but depreciate, they have a prospect but + to rise (188). Hence _Law_ recommended notes based on parcels of + land as the best money. (163, 191, 195.) Similarly, _Benjamin + Franklin_, Modest Inquiry into the Nature and Necessity of a Paper + Currency: and the Paper Money of Pennsylvania, New York and New + Jersey was actually based on parcels of land, and was to be + extinguished by the enfeoffed owners, and the interest paid by them. + (_Ebeling_, Gesch. und Erdbeschreib, von N. Amerika, III, 621, IV, + 649.) + +_ 918 F. Renonard de Ste Croix_, Voyage aux Indes orientales (1810), I, + 32, describes a species of paper money based on parcels of land + which had lost 40 per cent. of its nominal value, although the + holders of them were invested with the fief at only one-half their + value. The French _mandats territoriaux_ of 1796, declined in five + months to 5 per cent. of their nominal value, although they + contained the provision that the holders might, without public sale + (_Auction_), have a certain amount of the national estates allotted + to them in exchange for the _mandats_. The assignats were still more + defective after their redemption (at the _Caisse de + l'extraordinaire_), which was at first intended, and their drawing + of interest were not fulfilled. Leaving the tax-basis out of + consideration, the notes might, at the sale of the national estates, + be brought in as means of payment: a thing which would not have been + inoperative, provided the amount of the paper money had been + strictly limited to the price of the pieces of land estimated in + money. On the 1st of April, 1790, 400,000,000 francs in assignats + were issued, and in September, 800,000,000 more, both together about + equal to the secularized property of the church. (_Ad. Schmidt_, + Pariser Zustaende, II, 97.) But as afterwards all proportion between + these two magnitudes ceased, or rather as up to January 1, 1793, + 3,626,000,000 assignats were issued; up to September, 1794, over + 8,800,000,000; up to September, 1795, 19,700,000,000; and finally up + to September, 1796, 45,578,000,000 francs, of which perhaps + 6,500,000 were either burned or demonetized, the price of the + national estates on lands must naturally have risen as vastly as the + assignats declined. + + 919 The paper money issued by Colbert's successor, Chamillard, soon lost + on account of its too great amount, 25 per cent. of its value, spite + of the fact that it bore interest, and that 1/4 of all payments to + private persons had to be made in it. (_Forbonnais_, Recherches et + Considerations, II, 182.) When the people of the United States, in + 1775, issued paper money, it did not decline in value up to the end + of 1776, so long as the amount did not exceed $20,000,000, as it was + considered a matter of honor to take it at par. Afterwards, when the + amount issued continued to increase, not even the law that a refusal + to accept it, or insisting on taking it below par, should be + punished with the loss of the commodity, and that the guilty party + should be declared a national enemy, could keep it from declining in + value; so that in May, 1871, a dollar in specie was worth $200.5 in + paper. Compare _Franklin_, Works, ed. Sparks, II, 421, VIII, 328, + 505. + + France, during the Reign of Terror, on the 2d day of April 1793, + threatened the claiming of a discount in the taking of assignats + with six years' confinement in chains, and on the 1st day of August, + on Couthon's motion, with twenty years' confinement. In addition to + this, maximum prices for the principal necessities of life were + fixed and the exceeding of them was punished by severe penalties; + and in France, and still more in the neighboring conquered + countries, there were many persons who preferred to take assignats + instead of payment rather than permit themselves to be robbed by + requisitions. And yet on the 4th of June, 1796, one franc in specie + exchanged for 800 francs assignats. Compare _Buesch_, Geldumlauf, III + (§ 58 ff., _d'Ivernois_, Etat. des Finances Francaise, 1796). + + 920 The Prussian treasury notes of 1806, by virtue of a decree published + in 1807, were to be taken by all at a rate of exchange to be + officially published from time to time. Between December 1, 1807, + and February 28, 1809, the highest "normal course of exchange" was + 71, and the lowest 27 per cent. In January, 1815, a refusal to take + them at par, except in certain cases, was threatened with from 500 + to 1,000 thalers of a money-fine or from 6 to 12 months' + imprisonment. But indeed, in December, 1812, of 8,000,000 thalers, + there were only 731,625 still circulating. Compare § 7 of the decree + of the 19th of January, 1813. In April, 1815, it was ordered that + the half of all taxes should be paid in such notes, or that if not, + 8-1/2 per cent, should be added as a penalty. This penalty, reduced in + 1827 to 1 silver groschen, was not formally abolished even in 1870, + although it had long fallen into disuetude. There was a run of the + owners of the notes in 1830, for redemption, and again in 1841 and + 1848; in 1848 to the extent of at most 40,000 thalers in one day, + and altogether not over 100,000 thalers. (_Bergius_, in the Tuebinger + Zeitschr., 1870, 226 ff.) About 1846, it was estimated that scarcely + 1/250 a year of Prussian paper money was presented for redemption, + while {~VULGAR FRACTION ONE THIRD~} of the state receipts came in in the shape of paper money. + (_Rau_, Archiv., V, 125, 207.) The Saxon treasury notes never lost + over 2 per cent., although the state treasury redeemed them up to + 1804 only at an _agio_ of 9 _pfennigs_ per thaler, and afterwards of + 1 _pfennig_. + + 921 Those entitled to make money claims are either compelled to accept + the paper money at its nominal value or only at its current value + for the time being. In the latter instance, the unjust compulsion is + much smaller, but at the same time the whole expedient is much less + productive to the state; and hence the former is the more usual. It + was provided in Austria on the 22d of May and the 2d of June, 1848, + that the former should be the rule, and that the latter should + govern in cases in which gold or foreign silver had been stipulated + for. (_Hoefken_, Oesterreichs Finanzprobleme, p. 53.) On the 7th of + February, 1856, it was permitted to contract by express promise for + loans in the metallic currency of the country, both for the interest + and the repayment of the principal. Hence a species of + parallel-currency. If it be made entirely impossible for private + individuals to protect themselves against the compulsory circulation + of paper money, the more prudent are forced to send their capital + into foreign countries, which operates very disadvantageously to + poor countries especially. (_Wagner_, Tuebing. Zeitschr., 1863, 441.) + + 922 Thus, for instance, the Frederick coins, and for a time the French + assignats were helped by the popular enthusiasm, while Gustavus + III., of Sweden, could give little value to his paper. (_v. + Struensee_, Abh., III, 577.) In France, in 1796, 2,400,000,000 + _mandats_ were issued instead of all the outstanding assignats; that + is, as many as there were assignats at the close of the year 1792. + And yet the latter were then only 25 per cent. below par; the + former, before one month had elapsed, 80, and in nine months, almost + 98 per cent. below par. (_St Chamans_, Nouvelle Essai sur la + Richesse des Nations, p. 150. _A. Schmidt_, Parisier Zustaende, III, + 121 ff.) In Austria, in 1811, the volume of paper money was + contracted, but in a manner so violent and destructive of credit + that its rate of exchange did not rise in consequence. (Tub. + Zeitschr., 1763, 1874.) After 1848, also, the rate of exchange of + Austrian paper money was much more perceptibly influenced by the + variations in the political state of affairs than by the changes in + its volume. (Tub. Zeitschr., 1856, 129.) In the summer and winter of + 1866, about 650,000,000 paper rubles circulated, with scarcely any + increase or decrease; and yet the ratio of exchange was, during a + part of the summer, 66, and in winter, 84 per cent. of the silver + value of the ruble. (_Wagner_, Russ. Papierwaehrung, 74.) Instances + in which the increase in the price of commodities began to be more + general only after the volume of paper money had decreased; in + Austria, in 1851 and 1866; in Russia, in 1857 (loc. cit). + + 923 Then precious metal money becomes a commodity of which great stores + may be collected in the country itself, at the banks, but chiefly + for foreign trade. It is said that Austrian business men in 1860 and + the following years invested "hoards" to the amount of several + hundred million florins in exchange on metallic-currency countries. + (Tueb. Zeitschr., 422.) Good paper money will never drive out the + whole supply of cash money out of a country, because a good portion + must always be kept for purposes of redemption; depreciated paper + money operates much farther in this direction. Even the exportation + of small change may become a profitable speculation as soon as the + amount of depreciation of paper money exceeds the seigniorage. Then + usually small change of a worse kind is stamped, as, for instance, + in Austria, copper instead of silver; and in 1860, 12 millions + florins of paper small change. Here the exportation of the better + money is not a consequence, but the motive to the manufacturing of + the worse. + + 924 During the assignat-period it could happen that a land owner, after + the term for which he had farmed out his land, might be compelled to + surrender it to the farmers, for the reason that the taxes, + requisitions, etc., paid by the farmers, amounted to more than the + farm rent. In the case of the former, the calculation was based on + the recent depreciated value of the assignats; in the case of the + latter, on the higher value the assignats had at the moment that the + contract was concluded. (_Buesch_, Geldumlauf, III, 62.) A writer in + the Revue des deux Mondes, April 15, 1865, thinks that one reason + why the American civil war was so popular in the northwest was + because the paper money issued during the rebellion made it easy for + that part of the country to pay off the mortgage-debts which had + burthened it since 1848. Even of the two law catastrophes, _Duclos_, + in his memoirs, remarks that they produced a great admixture of + those who had been formerly separated by differences of class and + wiped out the previous ideas of decorum, fitness, etc. + + 925 During the time that the clipping of the coin was practiced, it is + scarcely possible to show that money was debased below 11 per cent. + of what its value should have been. See, on the other hand, § 3. In + Austria, in 1810, a person had to give 1,200 florins in paper money + for 100 florins in silver. (Tueb. Zeitschr., 1861, 593.) In North + America, in 1781, it took $280 in paper to purchase $1 in silver. + (_Ebeling_, Gesch. und Erdbeschreib., von N.A., 1856, III, 580; IV, + 440; V, 437.) During the American civil war, the paper money of the + Southern States declined to 1/2 (December, 1863) and even to 1/35 + (October, 1864) of its nominal value. Compare _Hock_, Finanzen der + V. Staaten, 514 ff. Observed even by _Storch_, Handbuch, _Rau's_ + translation, III, 141 ff. (See, on the other hand, _C. King_, + Thoughts, p. 113.) In Paris in July, 1795, the greater number of + commodities estimated in assignats were worth as much as if the rate + of exchange of the latter was 6-14 per cent. of their nominal value, + while it actually amounted to only 3-1/2 per cent. + + 926 Where an _agio_ of exchange of metallic money as compared with paper + is prohibited, the decline of the latter will manifest itself not + only in foreign rates of exchange, but also in the price of bars of + the precious metals. + + 927 The changes of the agio or premium depend mainly on the supply and + demand of the precious metals, that is, on the extent and intensity + of the business transactions which have to be made in these metals + themselves. (_Wagner,_ Russ. Papierw., 87.) Hence, for short periods + of time, it may be said in a paper currency country, that business + transactions based on cash money have a great element of variation + in them. (_Wagner_ in _Bluntschli's_ Staats-woerterbuch, III, 971.) + The purchase and lease-hold prices of fixed capital, of houses, for + instance, rise much less because most people look upon the distress + as transitory, and of short duration. (_A. Walker_, Sc. of W., 133.) + In Austria in 1859, the rise of the agio of exchange of silver from + par to 40 per cent., and its subsequent fall within 7 months to 20 + per cent., left the price of coin almost entirely unaffected. (_A. + Wagner_, Goett. Anz., 1860, 114.) That country people in general + suffer more from a bad paper currency than the towns people and + inhabitants of cities, see _Bonamy Price_, Currency and Banking, + 175, seq. In the northern states of the American union, in 1864, 12 + home kinds of commodities had risen 148 per cent., 7 foreign kinds + of commodities, 164 per cent., and 7 which could be obtained only + from the southern states, 353 per cent. (_v. Hock_, 186 seq.) As too + great issues of paper money are so frequently made on account of + war, it is comparatively easy to understand why it is that articles + for which war creates a demand should rise in price very soon and + very high; while the very opposite happens in times of + taxation-distress, in the case of a great many articles of luxury, + which can readily be dispensed with. _Buesch_ remarks (Werke, VII, + 91), that retail dealers frequently raise their prices in order not + to be obliged to pay out so many small coins as change for the paper + dollar. + + 928 Compare _Hufeland_, N. Grundlegung, II, 241. Self-seeking + undertakers (_Unternehmer_ = men of enterprise) have, on this + account, both in Austria and Russia (_Wagner_, Russ. P.W., 105), but + more so in North America (_v. Hock_, 556 ff.), opposed measures + intended to restore values (_Valuta_), on the ground that they were + anti-national. Even _Sperausky_ experienced this in 1809, when he + published very correct ideas on paper money, while in the "fairy" + times of Catherine II., no one even thought that state paper money + is a state debt. (_Bernhardi_, Russ. Geschichte, II, 2, 636.) One of + the principal representatives of this course is _H. C. Carey_, Our + Resources (1866), and in the New York Herald, 1865. On the other + hand, _Faucher_ rightly calls the more active exportation of + countries, with a bad paper currency, an exportation of barbarous + nations, the commerce of misery, to which any price paid in metal or + in any higher-standing product of civilization is acceptable. + (Vierteljahrsschrift, 1868, IV, 167.) The nation in the aggregate + loses in international trade for the simple reason that its foreign + creditors will accept its paper money at most at its current rate of + exchange against specie, while foreign debtors force it upon the + nation at its nominal value. + + 929 The different provinces also of a large empire may have very + different degrees of depreciation of the same paper money. Thus, in + the interior of Russia its rate of exchange against specie had for a + long time not declined beyond 50 per cent. of its nominal value; + while the foreign rate of exchange supposed a decline to 33-{~VULGAR FRACTION ONE THIRD~} per + cent. (_Cancrin_, Weltreichthum, 68.) + + 930 An enhancement of duties, taxes (_Abgaben_) etc., will seldom be + able to progress in the same measure as the paper money sinks; in + any case, a law would be necessary to effect this, which, however, + comes always later than the decline. (_Sismondi_, Du Papier Monnaie, + 27.) + +_ 931 Wagner_, Russische Papierwaehrung, 142, estimates that the Crimean + war depreciated the average current rate of exchange of Russian + paper money by 11.1 per cent., the Italian war of 1859 by 14.5 per + cent., the German war of 1866 by 19.4 per cent., spite of the fact + that Russia did not participate directly in the last two wars. + + 932 The more than forty-five milliards French assignats, estimated at + their rates current, really produced to the state only about six + milliards. (_Gentz_, Histor. Journ., 1800, II, 317, after + _Lecoulteux_.) + + 933 Very well explained by _H. Thornton_, Paper Credit of Great Britain, + ch. 10. As to how, in Austria, the paper-money crisis contributed to + bring the rigid national resources into a molten state, and to shake + off the national inertia by the feeling of insecurity, see _Buquoy_, + Theorie d. Wirthschaft, 1816, 347 ff. _Schaeffle_, System, 3 aufl., + 254 seq., thinks that if Austria should first adjust its values, and + then, in case of another war, have recourse to a second + depreciation, the disastrous disturbances of its national economy + consequent herein would be produced twice instead of once, and not + without reason. + + 934 The Prussian treasury-bills stood, in June, 1809, at 36 per cent. of + their nominal value; June, 1810, 84-1/2 per cent.; January, 1812, + 13-1/2; December, 1812, 44-1/2; June, 1813, 26-1/2; July, 1813, 24-1/2; + December 31, 1813, 49-1/2; January, 1815, 88; January 5, 1816, 99 per + cent. Austrian paper money expressed in terms of metallic money, + amounted, on an average, between 1849 and 1855, to 292,000,000 + florins: but at certain moments, it fluctuated from 231,000,000 to + 337,000,000. (Tuebing. Zeitschr., 1856, 124.) The agio of silver + fluctuated during the _Bancozettel_ (bank-billets, a species of + Austrian paper money) period from one day to another on Change 40 + and even 100 per cent.: thus, on the news of Napoleon's entry into + Paris, between the 25th of March and the 4th of April, from 330 to + 440; on the receipt of the news of the result of the battle of + Waterloo, in three days, from 458 to 412; after Napoleon's + abdication, from 412 to 320. (_Gentz_, Werke, V, 62.) _Huskisson_ + rightly calls a depreciated paper currency a much worse thing than + clipped coin: the clipping of the coin is, so to speak, one great + blow after which people can again calculate with certainty; but bad + paper money is one continual fluctuation. + + 935 "The only difference here is that it is not left to individuals to + say whether they will join in the game or not." (_Helferich._) + + 936 During the later assignat-period every house was full of + commodities, every pocket of samples; every "exquisite" and every + lady was a merchant, because no one had any further confidence in + the money. People had retrograded to the barbarous condition of + trade by barter. (_Goncourt_, Histoire de la Societe francaise + pendant le Directoire, 1854.) The French constitution of 1795 fixed + the salaries of members of the Directory at the value of 50,000 + _myriogrammes_ of wheat (art. 173, 68). In Delaware, while the + depreciation of paper money lasted, farm rent was usually required + to be paid in produce. (_Ebeling_, V, 37.) + + 937 "Of all contrivances for cheating mankind, none has been more + effectual than that which deludes them with paper money." (_D. + Webster._) The American Secretary of the Treasury, _McCulloch_, + says, in the report of December 7, 1868, of the legal tender notes: + "there can be no doubt that these acts have tended to blunt and + deaden the public conscience, and they are chargeable in no small + degree with the demoralization which so generally prevails." + _Niebuhr_ attributes the decline of old Spanish honesty which was + formerly so much relied on in all great money centers, principally + to the _vales_. (Nichtphilol. Nachlass, 489.) + + 938 This calls to our mind the impersonal mass-crimes to which our own + times so frightfully incline, when many a man who would recoil in + horror from an ordinary act of pocket-picking or from manslaughter + with intent to commit larceny, robs thousands in cold blood by means + of a swindling enterprise, or, for the sake of a fraudulent + insurance, destroys the lives of a whole ship's crew. + + 939 Saxon loans of two million thalers treasury notes (_Kassenbillets_), + August, 1813, which were then to bear interest in silver and to be + paid in silver. The purchase of the precious metals, or loans made + by the state in foreign countries, with the intention of redeeming + paper money, effect the same end at a much greater cost. (_Peschel_, + D. Vierteljahrsschrift, 1858, III, 254.) If the currency consists of + bank notes endowed by the state with compulsory circulation and an + irredeemable character, such a metallic loan made in order to + reimburse the bank for a loan to the state in depreciated notes is a + gift made to the bank without reason; and the metallic money brought + into the country flows back into foreign parts when the bank + restriction is removed, because it, together with the appreciated + notes, creates a too abundant circulation. + + 940 Although in England the suspension of the redemption of notes had + lasted from 1797 to 1819, depreciation of notes during the greater + part of this time either did not occur at all (Summer of 1797 to + 1799, 1802 ff.) or was very small; and even during the last five war + years, it did not amount to much over 30 per cent. About 1817, the + notes of themselves again rose to par, and had lost but little + during the following years, in consequence of the great loans of the + continental powers in the English market. Under such circumstances, + the repeated promise of the state to make the notes redeemable at + their full nominal value was certainly a cogent reason for the + Peel's Act of 1819. In favor hereof are especially _Tooke_, Hist. of + Prices, II, p. 60 ff., and _J. S. Mill_, Principles, III, ch. 13. + Opposed to it, the so-called Birmingham-Atwood school and also _Lord + Ashburton_, in his statement before the Agricultural Committee, + 1836. But according to _Rob. Muschet_, Tables, exhibiting the Gain + and Loss to the Bondholders arising from the Fluctuations in the + Value of the Currency (1826), the state creditors, on the whole, + lost more by the depreciation of the notes than they gained by their + subsequent rise. _Ad. Wagner_ also is decidedly in favor of the + course A. + + 941 This has occurred not unfrequently in the case of the paper money of + subdued revolt: thus, for instance, the Hungarian of 1849; in the + case of the Southern Confederacy. But the assignats, too, came to + this end, although, according to _Buesch_ (Werke IX, 526), the + intentions of the country at first were good; and in Austria, in + 1810, many prophecies looking in this direction were made. (Per + contra _Rehberg_, Saemmtl. Schriften. IV, 334.) Not very differently + did it fare with the Swedish coin-tokens (_Muenzzeichen_) of Charles + XII, which were altered 7 times between 1715 and 1718; and where + besides, the tokens called in in a much too short space of time were + transformed into small change coins 1/32 their value hitherto. + (_Brueckner_ in _Hildebrand's_ Jahrb. 1864, I, 161, ff.) + + 942 Thus it was, for instance, in Austria, in 1811 and 1820, at 1/5 and + 2/5 of the nominal value, in 1799 in the United States, in 1813 in + Denmark with the currency notes (_Courantzettel_), in 1816 in Norway + with the royal bank dollar notes, in Sweden in 1814 with the bank + notes (_Bancozetteln_) at 37-1/2 per cent., in 1839 in Russia with the + _bankassignationen_, at 2/7 of their nominal value. Of theoretical + writers this course is recommended among others by _Jacob_, + Staatsfinanzwissenschaft, § 980 ff.; _Nebenius_, OEff. Credit, 2 + Aufl., ff.; Deutsche Vierteljahrsschrift, 1841, I, 65; _Rau_, + Lehrbuch, III, § 528; _Helferich_, Tueb. Ztschr., 1856, 435 ff. + According to _v. Rotteck_, Lehrbuch, IV 402, it may be assumed that + paper money is spread among the people of a country in proportion to + their resources: which is also the hypothesis on which all direct + taxation is based. Hence the gradual depreciation of paper money + operates like the imposition of a tax and the _reduction of value_ + (_Deralvirung_) is, so to speak, only the release of the same. + Besides _Gentz_ (Werke by Schlezier, IV, 58) shows from the example + of Austria in 1811, that in the case of the taking up of a + depreciated paper currency it makes a better impression to give 100 + florins in specie for 1,000 florins in paper, than 200 florins in a + new kind of paper. The holders of the old paper money have now lost + confidence in all paper currency. Of similar import is the immediate + abolition of the compulsory circulation of paper money at its + nominal value (_Prince Smith_ in _Faucher's_ Vierteljahrsschrift, + VII, 126 ff.), and the introduction of compulsory circulation in + accordance with the day's quotations of the actual value of the + paper as compared with specie. (_Strache_, Die Valuta in OEsterreich, + 1861; _per contra_, _Ad. Wagner_, Tueb. Zeitschr., 1861, 606 ff.) + + 943 Such measures as were adopted in Austria, in 1811, where a + "redemption and extinction deputation," independent of the + government was established and sworn to prevent a further increase + of paper money, are not sufficient of themselves alone. + + 944 The Code Civil (art. 1895) makes the nominal value entirely + conclusive; so, also, the Prussian Landrecht (I, § 790): which is to + proclaim the omnipotence and infallibility of the state power in the + most ingenuous or else in the most brutal manner. The power given by + _Puchta_ to metallic value (Pandecten, VII, aufl., § 38) is + applicable neither to paper money nor to small coin; and it ignores + entirely that stamped coins and currency money are something + different from mere metallic commodities and even from metallic + bars. The Austrian civil law (_buergerliche Gesetzbuch_) decides in + favor of the current value (986 seq.): a view which most modern + jurists since _Savigny_ (Obligationenrecht, I, 404; earlier yet, + _Hufeland_, Ueber die rechtliche Natur des Geldschulden, 180) + entertain. But they even fail to recognize that the depreciation, + for instance, of paper money as compared with specie and general + decrease of purchasing power are identical only in the case of such + paper money or reduced coins which have no compulsory circulation. + (_A. Wagner_, Tueb. Ztschr., 1863, 478 ff.) + + 945 Let us suppose that at the moment the state could perform its duty + to its servants only to the extent of one half. If it should frankly + admit this, pay one-half in good money and remain in debt for the + other half, it might subsequently, in better times, make good to + them or to their heirs what it had now refused; and thus private + credit, from the disturbance of which the state can only suffer, + suffer no diminution. Both are quite different when the state + disguises its insolvency under the mask of apparent full payment in + paper money which has lost 50 per cent. of its nominal value. In + opposition to the myth that the assignats saved France, see + _Levasseur_, in the Acad. des Sc. m. et. p. + + 946 It not unfrequently happens that a nation's paper money has been + directly or indirectly affected by an unfriendly state. Thus for + instance, England, in 1794, tolerated an assignat manufactory at + Lambeth, while Frenchmen imitated English bank notes. (_Archenholz_, + Aenalen XI, 429.) Napoleon in 1812 issued forged Russian bank notes. + (_Cancrin_, OEconomie der menschl. Gesellschaft, 136. _Niebuhr_, + Gesch. der Revolution, II, 314.) When Maria Theresa first wished to + introduce paper money, Bolza, her minister of finance, in his urgent + appeal to her to desist from adopting such a measure, foretold the + subsequent bankruptcy etc. (_Mailath_, Oesterr. Gesch., V., 83.) + _Adam Smith_ compares gold and silver circulation to a highway + which, indeed, produces nothing directly. Paper money is an advance + similar to that which would be produced by the construction of a + machine adapted to the carriage of persons and goods through the + air, and which permit the highways hitherto used to be turned into + meadows, arable land etc. _Ad. Smith_ very strongly emphasizes the + insecurity of these "Daedalian wings" as compared with the "solid + ground of gold and silver," especially in the transitory misfortune + produced by war. (W. of N., II, p. 78, Bas.) _David Hume_ says of + all paper media of exchange, that they share all the harmfulness of + an increase of specie money, enhancement of the price of + commodities, aggravation of the obstacles to exportation; but that + they do not share in the useful properties of specie money. + (Discourses, On Money and on the Balance of Trade.) The younger + _Mirabeau_ kept Necker from pursuing his plan to issue paper money + with the words: _du papier monnaie c'est la peste circulante!_ + Inconsistent as Napoleon was in his bank policy (compare _Horn_, + Bankfreiheit, 304), he always rejected paper money. As in 1805 he + wrote to the minister of justice: _je ne veut pas de papier + monnaie_: so, in opposition to the minister of the interior, he in + 1810 compared it to the plague: _le plus grandfleau des nations_. + (Acad. des Sciences m. et p., 1864, II, 212.) _Sismondi_, too, + compares paper money to the paper cannons of the Chinese, which + render a cheap service until the hour of danger comes. (N. + Principles, II, 107.) Of the banks he says: _les avantages + aussi-legers les dangers aussi graves_. (Eludes, II. 421). + _Cancrin_, OEkonomie der menschl. Gesellschaft, 1845, 152 ff., says + he thinks that possibly it might have been well never to have + established banks, but that yet the craving for the new is + preponderately good, it brings inventions and improvements with it. + Even _Tooke_ considers the insecurity of paper money a disadvantage + which more than counterbalances its cheapness. (Considerations on + the State of the Currency, 1829, 85.) On the doubts of _Jefferson_ + and _Gallatin_, see _Wolowski_, Enquete, 170, seq. _Webster_ called + paper money "the most effectual of inventions to fertilize the rich + man's field by the sweat of the poor man's brow." _Tout papier + monnaie par lui meme est un mensonage._ (_M. Chevalier_, Cours, III, + 428.) _M. Niebuhr_ calls banks a poison which should be used with + moderation. (Bankrevolution und Bankreform, 1846, 37.) Compare the + writers named in § 2. + +_ 947 Avec la liberte un peuple n'a jamais de mauvaises monnaies_ (_F. + Lenormant_): entirely so, provided _liberte_ be translated "true and + insured freedom." + + 948 Law's giddy projects under the regents of Orleans and the assignats + of the first republic; Austria, Russia and the United States; the + Danish absolute monarchy, and Sweden, both under Charles XII., and + its oligarchical times. The history of Rhode Island paper money is + peculiarly scandalous. All debts had to be paid within two years, or + to be held invalid, and juries were dispensed with in such cases. + (_Ebeling_, Gesch. und Erdbeschreib. von N. America, II, 173 ff.) + +_ 949 Ad. Mueller_ compares "cosmopolitan" metallic money to a universal + language: paper money ties one to the country, as people do not like + to travel in foreign parts when they understand only their native + language. As paper money compels subjects to take an interest in the + state, a state like Austria would act very foolishly if it should + begin its reorganization by enhancing its depreciated values + (_Valuta_). (Elemente der Staatskunst, 180, III, 171; II, 339 ff.) + Even in 1830, he found fault with the Austrian loan for the payment + of the paper money. (Briefwechsel mit Gentz, 321 seq.) He lauded + paper money because he claimed it led a country back to the barter + And service-economy of the middle ages. (Verm. Schriften, I, 59 ff.) + Similarly, _Gentz_, in his later writings. Compare _Roscher_, + Gesch., der N. OEk., in Deutschland, II, 762. + + 950 Who, for instance, would lay by a paper dollar in the savings bank + for his godchild? In this respect, too, oriental countries have + preserved much of the medieval. Concerning the aversion of the + Egyptians of our day for all paper money, see _Stephan_, AEgypten, + 250 seq. This is all the more surprising since during several months + after the harvest, there are from 4,000,000 to 8,000,000 piasters in + specie sent every day from Alexandria by post to private individuals + in the provinces. In addition to this there is the immense + difference in the French, English and Austrian coins circulating in + the country, and which have very different rates in the different + provinces. It is still worse in Arabia. (_v. Maltzan_, Reise, I, + 27.) + + 951 Compare _v. Schlozer_, Anfangsgruende, I, 140 ff. _M. Niebuhr_ (Rau's + Archiv. N.F. II, 125) finds paper money best adapted to countries + without any exchange-trade, but which at the same time require a + species of money easily computed and easy of transportation + (Russia); countries whose national economy has an extraordinarily + rapid growth (the United States); and in unusually solid countries + (Scotland). + +_ 952 List_, Nat. System der politischen OEk., I, 394. A private + individual of small means who should go on his travels without money + would be subject to all sorts of annoyances; a king or a Rothschild, + just as soon as he was recognized as such, would find credit + everywhere. Thus, English businessmen have outstanding claims in all + parts of the world, which might without any great difficulty be + called in in the precious metals. The more the division of labor is + developed, the better may the condition of a nation's whole economy + be seen reflected in the course of its banking system and its + exportation and importation. + + + + + +***END OF THE PROJECT GUTENBERG EBOOK PRINCIPLES OF POLITICAL ECONOMY*** + + + +CREDITS + + +January 4, 2009 + + Project Gutenberg TEI edition 1 + Produced by Frank van Drogen, David King, and the Online + Distributed Proofreading Team at <http://www.pgdp.net/>. + + + +A WORD FROM PROJECT GUTENBERG + + +This file should be named 27698.txt or 27698.zip. + +This and all associated files of various formats will be found in: + + + http://www.gutenberg.org/dirs/2/7/6/9/27698/ + + +Updated editions will replace the previous one -- the old editions will be +renamed. + +Creating the works from public domain print editions means that no one +owns a United States copyright in these works, so the Foundation (and +you!) can copy and distribute it in the United States without permission +and without paying copyright royalties. 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