UNIVERSITY OF CALIFORNIA
AT LOS ANGELES
THE COMPLETE WORKS
OF HENRY GEORGE
THE SCIENCE OF
POLITICAL ECONOMY
BOOKS III TO V
NEW YORK: DOUBLEDAY
PAGE & COMPANY S 1904
Copyright, 1897, by
ANNIE C. GEORGB
BOOK in.
THE PEODUCTION OF WEALTH
CONTENTS OF BOOK III.
THE PRODUCTION OF WEALTH.
CHAPTER I.
THE MEANING OF PRODUCTION.
SHOWING THE MEANING AND PROPER USE OP PRODUCTION.
PAGE
Production a drawing forth of what before exists Its difference
from creation Production other than of wealth Includes
all stages of bringing to be Mistakes as to it . . . 323
CHAPTER H.
THE THREE MODES OF PRODUCTION.
SHOWING THE COMMON CHARACTER, YET DIFFERENT MODES
OF PRODUCTION.
Production involves change, brought about by conscious will
Its three modes : (1) adapting, (2) growing, (3) exchanging
This the natural order of these modes 327
CHAPTER HI.
POPULATION AND SUBSISTENCE.
SHOWING THAT THE THEORY OF A TENDENCY IN POPULATION TO
INCREASE FASTER THAN SUBSISTENCE HAS PREVIOUSLY BEEN
EXAMINED AND CONDEMNED.
The Halthusian theory Discussed in "Progress and Poverty' 7 . 333
317
318 CONTENTS OP BOOK HI.
CHAPTER IV.
THE ALLEGED LAW OF DIMINISHING RETURNS
IN AGRICULTURE.
SHOWING WHAT THIS ALLEGED LAW IS.
PAGE
John Stuart Mill quoted as to the importance, relations and
nature of this law The reductio ad absurdum by which it
is proved Contention that it is a misapprehension of the uni-
versal law of space 335
CHAPTER V.
OP SPACE AND TIME.
SHOWING THAT HUMAN REASON IS ONE, AND SO FAB AS IT
CAN GO MAT BE BELIED ON.
Purpose of this work Of metaphysics Danger of thinking of
words as things Space and time not conceptions of things,
but of relations of things They cannot, therefore, have
independent beginning or ending The verbal habit which
favors this idea How favored by poets and by religious
teachers How favored by philosophers Of Kant Of Scho-
penhauer Mysteries and antinomies that are really confusions
in the meaning of words Human reason and the eternal reason
Philosophers who are really word-jugglers .... 339
CHAPTER VI.
CONFUSION OP THE SPACIAL LAW WITH AGRI-
CULTURE.
SHOWING THE GENESIS OP THIS CONFUSION.
What space is The place to which man is confined Extension
a part of the concept, land Perception is by contrast Man's
first use of land is by the mode of adapting His second, and
for a long time most important, use is by growing The third,
on which civilization is now entering, is exchanging Political
economy began in the second, and growing still attracts most
attention The truth and error of the Physiocrats The suc-
cessors of Smith, while avoiding the error of the Physiocrats,
also ignored their truth ; and with their acceptance of the Mal-
thusian theory, and Ricardo's explanation of rent as relating
to agricultural land, they fell into, and have continued the
habit of treating land and rent as agricultural Difficulty of
the single tax in the United States 351
CONTENTS OP BOOK HI. 319
CHAPTER VII.
THE RELATION OP SPACE IN PRODUCTION.
SHOWING THAT SPACE HAS RELATION TO ALL MODES OP
PRODUCTION.
PAGE
Matter being material, space must have relation to all produc-
tion This relation readily seen in agriculture The concen-
tration of labor in agriculture tends up to a certain point to
increase and then to diminish production But it is a mis-
apprehension to attribute this law to agriculture or to the
mode of growing It holds in all modes and sub-divisions of
these modes Instances : of the production of brick, of the mere
storage of brick Man himself requires space The division of
labor as requiring space Intensive and extensive use of land 357
CHAPTER VHI.
THE RELATION OP TIME IN PRODUCTION.
SHOWING THAT ALL MODES OP PRODUCTION HAVE RELATION
TO TIME.
Difference between apprehensions of space and time, the one
objective, the other subjective Of spirits and of creation
All production requires time The concentration of labor in
time 365
CHAPTER IX.
COOPERATION ITS TWO WAYS.
SHOWING THE TWO WAYS OF COOPERATION.
Cob'peration is the union of individual powers in the attainment
of common ends Its ways and their apalogues: (1) the com-
bination of effort ; (2) the separation of effort Illustrations :
of building houses, of joint-stock companies, etc. Of sailing a
boat The principle shown in naval architecture The Erie
Canal The baking of bread Production requires conscious
thought The same principle in mental effort What is on
the one side separation is on the other concentration Extent
of concentration and specialization of work in modern civiliza-
tion The principle of the machine Beginning and increase
of division of labor Adam Smith's three heads A better
analysis 371
320 CONTENTS OF BOOK EL
CHAPTER X.
COOPERATION ITS TWO KINDS.
SHOWING THE TWO KINDS OF COSPERATION, AND HOW THE
POWER OF THE ONE GREATLY EXCEEDS THAT OF THE OTHER.
PAGE
The kind of cooperation which, as to method of union or how of
initiation, results from without and may be called directed
or conscious cooperation Another proceeding from within
which may be called spontaneous or unconscious cooperation
Types of the two kinds and their analogues Tacking of a
full-rigged ship and of a bird Intelligence that suffices for
the one impossible for the other The savage and the ship
Unconscious cooperation required in ship-building Conscious
cooperation will not suffice for the work of unconscious The
fatal defect of socialism The reason of this is that the power
of thought is spiritual and cannot be fused as can physical
force Of "man power "and "mind power" Illustration from
the optician Impossibility of socialism Society a Leviathan
greater than that of Hobbes 382
CHAPTER XI.
THE OFFICE OF EXCHANGE IN PRODUCTION.
SHOWING THAT IN MAN THE LACK OF INSTINCT IS SUPPLIED
BY THE HIGHER QUALITY OF REASON, WHICH LEADS TO EX-
CHANGE.
The cooperation of ants and bees is from within and not from
without ; from instinct and not from direction Man has little
instinct ; but the want supplied by reason Reason shows
itself in exchange This suffices for the unconscious coopera-
tion of the economic body or Greater Leviathan Of the three
modes of production, exchanging is the highest Mistake of
writers on political economy The motive of exchange . . 397
CHAPTER XIL
OFFICE OF COMPETITION IN PRODUCTION.
SHOWING THAT COMPETITION BRINGS TRADE, AND CONSE-
QUENTLY SERVICE, TO ITS JUST LEVEL.
" Competition is the life of trade," an old and true adage The
assumption that it is an evil springs from two causes <>ne
bad, the other good The bad cause at the root of protection-
ism Law of competition a natural law Competition neces-
sary to civilization 402
CONTENTS OP BOOK HI. 321
CHAPTER XHI.
PAGE
OP DEMAND AND SUPPLY IN PRODUCTION 404
CHAPTER XIV.
ORDER OF THE THREE FACTORS OF PRODUCTION.
SHOWING THE AGREEMENT OF ALL ECONOMISTS AS TO THE
NAMES AND ORDER OF THE FACTORS OF PRODUCTION.
Land and labor necessary elements in production Union of a
composite element, capital Reason for dwelling on this agree-
ment as to order 405
CHAPTER XV.
THE FIRST FACTOR OF PRODUCTION LAND.
SHOWING THAT LAND IS THE NATURAL OR PASSIVE FACTOR
IN ALL PRODUCTION.
The term land Landowners Labor the only active factor . 408
CHAPTER XVI.
THE SECOND FACTOR OF PRODUCTION LABOR.
SHOWING THAT LABOR IS THE HUMAN OR ACTIVE FACTOR
IN ALL PRODUCTION.
The term labor It is the only active factor in producing wealth,
and by nature spiritual 411
CHAPTER XVH.
THE THIRD FACTOR OF PRODUCTION CAPITAL.
SHOWING THAT CAPITAL IS NOT A PRIMARY FACTOR, BUT PROCEEDS
FROM LAND AND LABOR, AND IS A FORM OR USE OF WEALTH.
Capital is essentially labor raised to a higher power Where it
may, and where it must aid labor In itself it is helpless . 413
CHAPTER I.i
THE MEANING OF PRODUCTION.
SHOWING THE MEANING AND PROPER USE OF PRODUCTION.
Production a drawing forth of what before exists Its difference from
creation Production other than of wealth Includes all stages
of bringing to be Mistakes as to it.
THE word production comes from the Latin, pro, be-
fore, and ducere, to draw, and its literal meaning is
a drawing forth.
Production, as a term of political economy, means a
drawing forth by man ; a bringing into existence by the
power of man. It does not mean creation, the proper
sense of which is the bringing into . existence by a power
superior to that of man that power namely which to
escape negation our reason is compelled to postulate as
the final cause of all things.
A solar system, a world with all the substances and
powers therein contained, soil, water and air, chemical
affinities, vital forces, the invariable sequences which we
term natural laws, vegetables and animals in their species
as they exist irrespective of the modifying influence of
man, and man himself with his natural powers, needs and
impulses, we properly speak of as created. How precisely
1 No introduction or motto supplied for Book III. in MS. H. G., JR.
323
324 THE PRODUCTION OP WEALTH. Boole HI.
they came to be, and what and whence the originating
impulse, we cannot tell, and probably in the sphere to
which we are confined in this life can never know. All
we can say with certainty, is that they cannot have been
brought into existence by any power of man ; that they
existed before man was, and constitute the materials and
forces on which his existence depends and on which and
from which all his production is based. Since they cannot
have come from what we call matter alone ; nor from what
we call energy alone ; nor yet from any union of these two
elements alone, they must proceed primarily from that
originating element that in the largest analysis of the
world that reason enables us to make we distinguish from
matter and energy as spirit.
Nothing that is created can therefore in the politico-
economic sense be said to be produced. Man is not a
creator ; he has no power of originating things, of making
something out of nothing. He is a producer ; that is to
say a changer, who brings forth by altering what already
is. All his making of things, his causing things to be, is
a drawing forth, a modification in place or relation, and in
accordance with natural laws which he neither originated
nor altered, of what he finds already in existence. All his
production has as its substratum what he finds already in
the world ; what exists irrespective of him. This substra-
tum or nexus, the natural or passive factor, on which and
by which the human or active factor of production acts,
is in the terminology of political economy called land.
It is to be noted that when used as a term of political
economy the word " production " has in some respects a
narrower, and in some respects a wider, meaning than is
often, in common use properly enough, attached to it.
Since the production with which political economy pri-
marily deals is the production of wealth, the economic term
production refers to that. But it is important to bear in
Chap. L THE MEANING OF PRODUCTION. 325
mind that the production of wealth is not the only kind of
production.
I have alluded to this fact before in Chapter XVIII. of
Book II. Let me speak of it again.
I black my boots ; I shave my face ; I take a violin and
play on it, or expend effort in learning to do so ; I write a
poem j or observe the habits of bees ; or try to make an
hour pass more agreeably to a sick friend by reading to
him something which arouses and pleases his higher na-
ture. In such ways I am satisfying wants or gratifying
desires, cultivating powers or increasing knowledge, either
for myself or for others. But I am not producing wealth.
And so, those who in the cooperation of efforts in which
civilization consists devote themselves to such occupations
boot-blacks, barbers, musicians, teachers, investigators,
surgeons, nurses, poets, priests do not, strictly speaking,
take part in the production of wealth. Yet it may be mis-
leading to speak of them as non-producers, without care
as to what is really meant. Though not producers of
wealth, they are yet producers, and often producers of the
highest kind. They are producers of utilities and satisfac-
tions ; and as such are not only producers of that to which
wealth is but a means, but may indirectly aid in the pro-
duction of wealth itself.
On the other hand there is something we should note.
In common speech, the word production is frequently
used in a sense which distinguishes the first from the later
stages of wealth-getting ; and those engaged in the primary
extractive or formative processes are often styled pro-
ducers, as distinguished from transporters or exchangers.
This use of the word production may be convenient
where we wish to distinguish between separable functions,
but we must be careful not to import it into our habitual
use of the economic term. In the economic meaning of
the term production, the transporter or exchanger, or any
326 THE PRODUCTION OF WEALTH. Book III.
one engaged in any sub-division of those functions, is as
truly engaged in production as is the primary extractor
or maker. A newspaper-carrier or the keeper of a news-
stand would for instance in common speech be styled a
distributor. But in economic terminology he is not a dis-
tributor of wealth, but a producer of wealth. Although
his part in the process of producing the newspaper to the
final receiver comes last, not first, he is as much a producer
as the paper-maker or type-founder, the editor or com-
positor or press-man.
For the object of production is the satisfaction of
human desires, that is to say it is consumption ; and this
object is not made capable of attainment, that is to say,
production is not really complete, until wealth is brought
to the place where it is to be consumed and put at the dis-
posal of him whose desire it is to satisfy.
Thus, the production of wealth in political economy in-
cludes transportation and exchange. The distribution of
wealth, on the other hand, has in economic phraseology no
relation to transportation or exchange, but refers, as we
shall see when we come to treat of it, to the division of
the results of production.
This fact has been ignored by the great majority of
professed economists who with few exceptions treat of
exchange under the head of the distribution of wealth in-
stead of giving it its proper place under the head of the
production of wealth.
CHAPTER II.
THE THREE MODES OF PRODUCTION.
SHOWING THE COMMON CHARACTER, YET DIFFERENT MODES
OF PRODUCTION.
Production involves change, brought about by conscious will Its
three modes : (1) adapting, (2) growing, (3) exchanging This the
natural order of these modes.
ALL production results from human exertion upon ex-
j[\. ternal nature, and consists in the changing in place,
condition, form or combination of natural materials or
objects so as to fit them or more nearly fit them for the
satisfaction of human desires. In all production use is
made of natural forces or potencies, though in the first
place, the energy in the human frame is brought under the
direct control of the conscious human will.
But production takes place in different ways. If we
run over in mind as many examples as we can think of in
which the exertion of labor results in wealth either in
those primary or extractive stages of production in which
what before was not wealth is made to assume the charac-
ter of wealth ; or in the later or secondary stages, in which
an additional value or increment of wealth is attached to
what has already been given the character of wealth
we find that they fall into three categories or modes.
The first of these three modes of production, for both
reason and tradition unite in giving it priority, is that in
327
328 THE PKODUCTION OF WEALTH. Boole III.
which, in the changes he brings about in natural substances
and objects, man makes use only of those natural forces
and potencies which we may conceive of as existing or
manifesting themselves in a world as yet destitute of life ;
or perhaps it might afford a better illustration to say, in
a world from which the generative or reproductive prin-
ciple of life had just departed, or been by his condition
rendered unutilizable by man. These would include all
such natural forces and potencies as gravitation, heat,
light, electricity, cohesion, chemical attractions and repul-
sionsin short, all the natural forces and relations, that
are utilized in the production of wealth, below those
incident to the vital force of generation.
We can perhaps best imagine such a separation of natural
forces by picturing to ourselves a Robinson Crusoe thrown
upon a really desert island or bare sand key, in a ship
abundantly supplied with marine stores, tools and food so
dried or preserved as to be incapable of growth or repro-
duction. We might also, if we chose, imagine the ship to
contain a dog, a goat, or indeed any number of other ani-
mals, provided there was no pairing of the sexes. We
cannot, in truth, imagine even a bare sand key, in which
there should be no manifestation of the generative prin-
ciple, in insects and vegetables, if not in the lower forms
of fish and bird life, but we can readily imagine that our
Robinson might not understand, or might not find it con-
venient, to avail himself of such manifestations of the
reproductive principle. Yet without any use of the prin-
ciple by which things may be made to grow and increase,
such a man would still be able to produce wealth, since
by changing in place, form or combination what he found
already in existence in his island or in his ship, he could
fit them to the satisfaction of his desires. Thus he could
produce wealth just as De Foe's Robinson Crusoe, whose
solitary life so many of us have shared in imagination,
Chap. II. THE THREE MODES OF PRODUCTION. 329
produced wealth when he first landed, by bringing desir-
able things from the wrecked ship to the safety of the
shore before destructive gales came on, and by changing
the place and form of such of them as were fit for his
purpose, making himself a cabin, a boat, sails, nets, clothes,
and so on. In the same way, he could catch fish, kill or
snare birds, capture turtles, take eggs, and convert the
food-material at his disposal into more toothsome dishes.
Thus without growing or breeding anything he could get
by his labor a living, until death, or the savages, or an-
other ship came.
For this mode of production, which is mechanical in its
nature, and consists in the change in place, form, condition
or combination of what is already in existence, it seems to
me that the best term is " adapting."
This is the mode of production of the fisherman, the
hunter, the miner, the smelter, the refiner, the mechanic,
the manufacturer, the transporter ; and also of the butcher,
the horse-breaker or animal-trainer, who is not also a
breeder. We use it when we produce wealth by taking
coal from the vein and changing its place to the surface
of the earth; and again when we bring about a further
increment of wealth by carrying the coal to the place
where it is to be consumed in the satisfaction of human
desire. We use this mode of production when we convert
trees into lumber, or lumber into boards; when we con-
vert wheat into flour, or the juice of the cane or beet into
sugar; when we separate the metals from the combina-
tions in which they are found in the ores, and when we
unite them in new combinations that give us desirable
alloys, such as brass, type-metal, Babbitt metal, aluminum,
bronze, etc. ; or when by the various processes of separat-
ing and re-combining we produce the textile fabrics, and
convert them again into clothes, sails, bags, etc. ; or when
by bringing their various materials into suitable forms
330 THE PRODUCTION OF WEALTH. Book III.
and combinations, we construct tools, machines, ships or
houses. In fact, all that in the narrower sense we usually
call " making," or, if on a large scale, " manufacturing," is
brought about by the application of labor in this first mode
of production the mode of " adapting."
In the Northwest, however, they speak sometimes of
" manufacturing wheat ; " in the West of " making hogs,"
and in the South of "making cotton" (the fiber) or "making
tobacco" (the leaf). But in such local or special sense
the words manufacturing or making are used as equiva-
lent to producing. The sense is not the same, nor is
the suggested action in the same mode, as when we prop-
erly speak of flour as being manufactured, or of bacon,
cotton cloth or cigars being made. Wonderful machines
axe indeed constructed by man's power of adaptation. But
no extension of this power of adaptation will enable him
to construct a machine that will feed itself and produce
its kind. His power of adapting extended infinitely would
not enable him to manufacture a single wheat-grain that
would sprout, or to make a hog, a cotton-boll or a tobacco-
leaf. The tiniest of such things are as much above man's
power of adapting as is the "making" of a world or the
" manufacture " of a solar system.
There is, however, another or second mode of produc-
tion. In this man utilizes the vital or reproductive force
of nature to aid him in the producing of wealth. By ob-
taining vegetables, cuttings or seeds, and planting them ;
by capturing animals and breeding them, we are enabled
not merely to produce vegetables and animals in greater
quantity than Nature spontaneously offers them to our
taking, but, in many cases, to improve their quality of
adaptability to our uses. This second mode of production,
the mode in which we make use of the vital or generative
power of nature, we shall, I think, best distinguish from
the first, by calling it " growing." It is the mode of the
Chap. II. THE THEEE MODES OF PEODUCTION. 331
farmer, the stock-raiser, the florist, the bee-keeper, and to
some extent at least of the brewer and distiller.
And besides the first mode, which we have called " adapt-
ing," and the second mode, which we have called " grow-
ing," there is still a third mode in which, by men living in
civilization, wealth is produced. In the first mode we
make use of powers or qualities inherent in all material
things ; in the second we make use of powers or qualities
inherent in all living things, vegetable or animal. But
this third mode of production consists in the utilization of
a power or principle or tendency manifested only in man,
and belonging to him by virtue of his peculiar gift of
reason that of exchanging or trading.
That it is by and through his disposition and power to
exchange, in which man essentially differs from all other
animals that human advance goes on, I shall hereafter
show. Yet not merely is it through exchange that the
utilization in production of the highest powers both of the
human factor and the natural factor becomes possible, but
it seems to me that in itself exchange brings about a per-
ceptible increase in the sum of wealth, and that even if
we could ignore the manner in which it extends the power
of the other two modes of production, this constitutes it,
in itself, a third mode of production. In the Yankee story
of the two school-boys so cute at a trade that when locked
in a room they made money by swapping jack-knives,
there is the exaggeration of a truth. Each of the two
parties to an exchange aims to get, and as a rule does get,
something that is more valuable to him than what he
gives that is to say, that represents to him a greater
power of labor to satisfy desire. Thus there is in the
transaction an actual increase in the sum of wealth, an
actual production of wealth. A trading-vessel, for in-
stance, penetrating to the Arctic, exchanges fish-hooks,
harpoons, powder and guns, knives and mirrors, green
332 THE PRODUCTION OF WEALTH. BoolcIIL
spectacles and mosquito-nets for peltries. Each party to
the exchange gets in return for what costs it compara-
tively little labor what would cost it a great deal of labor
to get by either of the other modes of production. Each
gains by the act. Eliminating transportation, which be-
longs to the first mode of production, the joint wealth of
both parties, the sum of the wealth of the world, is by the
exchange itself increased.
This third mode of production let us call " exchanging."
It is the mode of the merchant or trader, of the store-
keeper, or as the English who still live in England call him,
the shopkeeper ; and of all accessories, including in large
measure transporters and their accessories.
We thus have as the three modes of production :
(1) ADAPTING;
(2) GROWING;
(3) EXCHANGING.
These modes seem to appear and to assume importance
in the development of human society much in the order
here given. They originate from the increase of the de-
sires of men with the increase of the means of satisfying
them under pressure of the fundamental law of political
economy, that men seek to satisfy their desires with the
least exertion. In the primitive stage of human life the
readiest way of satisfying desires is by adapting to human
use what is found in existence. In a later and more settled
stage it is discovered that certain desires can be more
easily and more fully satisfied by utilizing the principle of
growth and reproduction, as by cultivating vegetables and
breeding animals. And in a still later period of develop-
ment, it becomes obvious that certain desires can be better
and more easily satisfied by exchange, which brings out
the principle of cooperation more fully and powerfully
than it could obtain among unexchanging economic units.
CHAPTER III.
POPULATION AND SUBSISTENCE.
SHOWING THAT THE THEORY OP A TENDENCY IN POPULATION
TO INCREASE FASTER THAN SUBSISTENCE HAS PREVIOUSLY
BEEN EXAMINED AND CONDEMNED.
The Malthusian theory Discussed in "Progress and Poverty."
IN proceeding to consider the laws of the production of
wealth it would be expedient first to consider any nat-
ural law, if such there should be, which would limit the
operation of man in production. In the Malthusian theory
the scholastic political economy has held that there is a
law of nature that produces a tendency in population to
increase faster than subsistence. This, coming as it did,
in the formative period of the institution of the science,
was really the bulwark of the long-accepted political econ-
omy, which gave to the wealthy a comfortable theory for
putting upon the Originating Spirit the responsibility for
all the vice, crime and suffering, following from the unjust
actions of men, that constitute the black spot of our nine-
teenth-century civilization. Falling in with the current
doctrine that wages are determined by the ratio between
capital and labor, deriving support from the principle
brought prominently forward in current discussions of the
theory of rent, that past a certain point the application of
capital and labor to land yields a diminishing return, and
333
334 THE PRODUCTION OF WEALTH. Book III.
harmonizing with the theory of the development of species
by selection, it became of the utmost importance, and for
a long time imposed even upon well-disposed and fair-
minded men a weight of authority of which they could
not rid themselves. But in "Progress and Poverty" I
devoted to it an entire Book, consisting of four chapters.
In this, with what follows, I so disposed of the theory that
it is not necessary to go over the reasoning again, but can
refer to my previous work those who may wish to inquire
as to the nature, grounds and disproof of that theory.
As the space of that work did not allow me to go over
the whole scope of political economy, but only to cover its
more salient points, it will be well here to examine, what
I did not do thoroughly in that work, the doctrine of the
law of diminishing returns in agriculture. Since this doc-
trine has not yet to my knowledge been questioned, it
will be well to do this thoroughly.
CHAPTER IV.
THE ALLEGED LAW OF DIMINISHING RETURNS
IN AGRICULTURE.
SHOWING WHAT THIS ALLEGED LAW IS.
John Stuart Mill quoted as to the importance, relations and nature
of this law The reductio ad dbsurdum by which it is proved
Contention that it is a misapprehension of the universal law of
space.
BEFORE proceeding to the subject of cooperation it is
necessary to consider, if but to clear the way, what
is treated in standard economic works since the time of
Adam Smith as the most important law of production,
and indeed of political economy as a whole. This is what
is called " The Law of Diminishing Production," or more
fully and exactly, "The Law of Diminishing Returns in
Agriculture." Of it John Stuart Mill ("Principles of
Political Economy," Book I., Chapter XII., Sec. 2) says :
This general law of agricultural industry is the most important
proposition in Political Economy. Were the law different nearly all
the phenomena of the production and distribution of wealth would
be other than they are.
This view of the importance of " the law of diminishing
returns in agriculture" pervades the standard political
economies, and is held by the most recent scholastic writers,
such as Professor Walker of the United States and Pro-
335
336 THE PKODUCTION OF WEALTH. Eook III.
f essor Marshall of England, as by Mill and his predecessors.
It arises from the relation of this alleged law to current
apprehensions of the law of rent, and especially from the
support which it seems to give to the Malthusian doctrine
that population tends to outrun subsistence a support
to which the long acceptance of that doctrine is due.
Thus, as the necessary consequence of this "law of
diminishing returns in agriculture," John Stuart Mill in
Book I., Chapter XIII., Sec. 2, of his " Principles of Politi-
cal Economy," says :
In all countries which have passed beyond a rather early stage in
the progress of agriculture, every increase in the demand for food,
occasioned by increased population, -will always, unless there is a
simultaneous improvement in production, diminish the share which
on a fair division would fall to each individual. . . . From this,
results the important corollary, that the necessity of restraining
population is not, as many persons believe, peculiar to a condition
of great inequality of property. A greater number of people cannot,
in any given state of civilization be collectively so well provided for
as a smaller. The niggardliness of nature, not the injustice of
society, is the cause of the penalty attached to overpopulation. An
unjust distribution of wealth does not even aggravate the evil, but
at most causes it to be somewhat earlier felt. It is in vain to say,
that all mouths which the increase of mankind calls into existence
bring with them hands. The new mouths require as much food as
the old ones, and the hands do not produce as much.
As to the law itself, from which such tremendous conse-
quences are confidently deduced consequences which put
us to the mental confusion of denying the justice of the
Creator, and assuming that the Originating Spirit is so
poor a contriver as to be constantly doing what any mere
human host would be ashamed to be guilty of, bringing
more guests to his table than could be fed it is thus
stated by Mill :
After a certain and not very advanced stage in the progress of
agriculture ; as soon, in fact, as mankind have applied to cultivation
Chap. IV. OF DIMINISHING EETUENS. 337
with any energy, and have brought to it any tolerable tools ; from
that time it is the law of production from the land, that in any given
state of agricultural skill and knowledge, by increasing the labor, the
produce is not increased in equal degree ; doubling labor does not
increase the produce ; or to express the same thing in other words,
every increase of produce is obtained by a more than proportional
increase in the application of labor to the land.
This law of diminishing returns in agriculture it is
further explained applies also to mining, and in short to
all the primary or extractive industries, which give the
character of wealth to what was not before wealth, but
not to those secondary or subsequent industries which add
an additional increase of wealth to what was already
wealth. Thus since the law of diminishing productiveness
in agriculture does not apply to the secondary industries,
it is assumed that any increased application of labor (and
capital) in manufacturing for instance, would continue to
yield a proportionate and more than proportionate return.
And as conclusive and axiomatic proof of this law of di-
minishing productiveness in agriculture, it is said that
were it not for this peculiar law, and were it, on the con-
trary (as it is assumed it would be without it), the fact
that additional application of labor would result in a pro-
portionately increased production from the same land,
one single farm would suffice to raise all the agricultural
produce required to feed the whole population of England,
of the United States or any other country, or of course,
of the whole world, by mere increase in the application of
labor.
This proposition seems to have been generally accepted
by professional economists as a valid reductio ad dbsurdum,
and to have carried the same weight in the common
thought as has the similar proposition of the general
Malthusian doctrine that if increasing population did not
find increasing difficulty in getting subsistence, mankind
338 THE PRODUCTION OF WEALTH. Boolt III.
would in a little while be able only to find standing-room
on one another's heads.
But analysis will show that this logical structure, which
economic writers have deemed so strong and on which
they have so confidently built, rests upon an utter misap-
prehension ; that there is in truth no special law of dimin-
ishing productiveness applying to agriculture, or to the
extractive occupations, or to the use of natural agents,
which are the various ways which the later writers have
of sometimes stating what the earlier writers called the law
of diminishing productiveness in agriculture; and that
what has been misapprehended as a special law of dimin-
ishing returns in agriculture is in reality a general law,
applying as well to manufacturing and exchanging as to
agriculture, being in fact nothing less general than the
spacial law of all material existence and movement inor-
ganic as well as organic.
This will appear if we consider the relation of space to
production. But to do this thoroughly and at the same
time to clear the way for considerations which may prove
of importance in other parts of this work, I propose to .
begin by endeavoring to fix the meaning and nature of
space and time.
CHAPTER V.
OP SPACE AND TIME.
SHOWING THAT HUMAN REASON IS ONE, AND SO PAR AS IT
CAN GO MAY BE RELIED ON.
Purpose of this work Of metaphysics Danger of thinking of words
as things Space and time not conceptions of things but of rela-
tions of things They cannot, therefore, have independent begin-
ning or ending The verbal habit which favors this idea How
favored by poets and by religious teachers How favored by phi-
losophersOf Kant Of Schopenhauer Mysteries and antino-
mies that are really confusions in the meaning of words Human
reason and the eternal reason " Philosophers " who are really
word-jugglers.
MY purpose in this work is to explain the science of
political economy so clearly that it may be under-
stood by any one of common ability who will give to it
reasonable attention. I wish therefore to avoid, as far
as possible, everything that savors of metaphysics. For
metaphysics, which in its proper meaning is the science of
the relations recognized by human reason, has become in
the hands of those who have assumed to teach it, a syno-
nym for what cannot be understood, conveying to common
thought some vague notion of a realm beyond the bounds
of ordinary reason, into which common sense can venture'
only to shrink helpless and abashed.
Yet to trace to their root confusions involved in current
economic teachings and to clear the ground for a coherent
339
340 THE PRODUCTION OF WEALTH. Book III.
political economy, it is necessary to fix the real meaning
of two conceptions which belong to metaphysics, and which
are beset by confusions that have not only disturbed the
teaching of political economy, but of philosophy in the
higher sense. These conceptions are those of space and
time.
All material existence is in space and in time. Hence,
the production of wealth, which in all its modes consists in
the bringing about by human exertion of changes in the
place or relation of material things, so as to fit them for
the satisfaction of human desire, involves both space and
time.
This may seem like a truism a fact so self-evident as
not to need statement. But much disquisition has been
wasted and much confusion caused by the failure of econ-
omists to keep this in mind. Hence, to start from firm
foundations, we must see clearly what is really meant by
space and time. Here we come into the very heart of
metaphysics, at a point where the teachings of what passes
for the highest philosophy are most perplexed and per-
plexing.
In asking ourselves what we really mean by space and
time, we must have a care, for there is a danger that the
habitual use of words as instruments of thought may lead
to the error of treating what they express as objects of
thought, or things, when they really express not things,
but only the qualities or relations of things. This is one
of those sources of error which Bacon in his figurative
classification called Idols of the Forum. Though a word
is a thing, in the sense that its verbal form may be made
an object of thought, yet all words are not things in the
sense of representing to the mind what apart from mere
verbal form may be made an object of thought. To clothe
in a form of words which the eye and ear may distinguish
from other words, yet which in their meaning involve con-
Chap. V. OF SPACE AND TIME. 341
tradictions, is not to make a thing, which in itself, and
aside from that mere verbal form, can be thought of. To
give a name to a form of words implying contradictions
is to give name to what can be thought of only verbally,
and which in any deeper sense than that is a negation
that is to say, a no thing, or nothing.
Yet this is the trick of much that to-day passes for the
most profound philosophy, as it was the trick of Plato and
of much that he put into the mouth of Socrates. To try
it, make up a word signifying opposite qualities, such as
"lowhigh" or " squareround," or a phrase without think-
able meaning, such as a " fourth dimension of space." In
this it will b.e wisest to use a tongue which being foreign
to the vernacular is suggestive of learning. Latin or
Greek, has long been used for this purpose, but among
English-speaking people German will now do as well if not
better, and those who call themselves Theosophists have
taken Sanskrit or what they take to be Sanskrit very satis-
factorily. Now, if you have the external associations of
superior penetration, and will persist for a while in seem-
ing to treat your new word or phrase as if you were really
making it an object of deep thought, you will soon have
others persuading themselves to think that they also can
think of it, until finally, if it get the scholastic vogue, the
man frank enough to say that he can get no meaning from
it will be put down as an ignorant fellow whose education
has been neglected. This is really the same trick as stand-
ing on a street and gazing into the sky, as if you saw
something unusual there, until a crowd gathers to look
also. But it has made great reputations in philosophy.
Now, in truth, when we come to analyze our apprehen-
sions of space and time, we see that they are conceptions,
not of things in themselves existing, but of relations which
things in themselves existing may hold to each other-
space being a relation of extension or place between one
342 THE PEODUCTION OF WEALTH. Book III.
tiling and other things, such as far or near, hither or
thither ; and time being a relation of succession between
one thing and other things, such as before or after, now
and then. To think of space we must necessarily think
of two points in place, and to make the relation of exten-
sion between them intelligible to our minds, we must also
think of a third point which may serve as a measure of
this relation. To think of time we must necessarily think
of two points in appearance or disappearance, and to make
this relation of sequence between them intelligible to our
minds, we must also think of some third point which may
serve as a measure of this relation.
Since space and time are thus not existences, but ex-
pressions of the relation to each other of things thought
of as existing, we cannot conceive of their having begin-
ning or ending, of their creation or annihilation, as apart
from that of the things whose relation they express. Space
being a relation of extension between things in place, and
time a relation of succession between things in order of
appearance or duration, the two words properly express
relations which, like the relations of form and number
with which mathematics deals in its two branches of ge-
ometry and arithmetic, are expressive of actual relation
wherever the things they relate to have actual existence,
and of potential relation wherever the things they relate
to have merely potential existence. We cannot think of a
when or where in which a whole was not equal to the sum
of its parts, or will ever cease to be ; or in which the lines
and angles of a square were not, or can ever cease to be,
equal to each other; or in which the three angles of a
triangle were not, or can ever cease to be, equal to two
right angles. Nor yet can we think of a when or where
in which twice one did not make two, or can ever cease to
do so ; and twice two did not, or will ever cease to, make
four. In the same way it is utterly impossible for us to
Chap. V. OF SPACE AND TIME. 343
think of a when or where in which space and time could
begin or could end, as apart from the beginning or ending
of the things whose relations to each other they express.
To try to think of space and time without a presumption
of things whose relations to each other are thus expressed,
is to try to think of shadow without reference to substance.
It is to try to think of a no thing, or nothing a negation
of thought.
This is perfectly clear to us when we attach an article
to the noun and speak of " a space " or " the space," or of
" a time " or " the time," for in such speech the relation of
one thing or set of things to another thing or set of things
is expressed by some such preposition as " from," " before,"
" after " or " when." But when the noun is used without
the article, and men speak of space by itself and time by
itself without any word of particularization or preposition
of relation, the words have by the usage of our English
tongue the meaning of all space or space in general, or
all time or time in general. In this case the habit of re-
garding words as denoting things in themselves existing
is apt to lead us to forget that space and time are but
names for certain relations in which things stand to each
other, and to come to regard them as things which in them-
selves, and apart from the things whose relationship they
express, can become objects of thought. Thus, without
analyzing the process, we come to accept in our minds the
naked words as representing some sort of material exis-
tencesvaguely picturing space as a sort of atmosphere or
ether, in which all things swim, and time an ever-flowing
current which bears all things on.
From this mode of mental picturing we are apt to assume
that both space and time must have had beginning, before
which there was no space and no time ; and must have
limits, beyond which neither space nor time can be. But
when we try to think of this beginning or of these limits,
344 THE PEODUCTION OF WEALTH. Book III.
we think of something which for the moment we assume
to be the first or farthest of existing things. Yet no
matter how far we may carry this assumption, we at the
same moment see that it may be earned further still. To
think of anything as first, involves the possibility of think-
ing of something before that, to which our momentary
first would become second. To think of an utmost star
in the material universe, involves the possibility of think-
ing of another star yet further still.
Thus in the effort to grasp such material conceptions of
time and space they inevitably elude us. From trying to
think of what are only names for relations which things
have to each other as if they were things in themselves,
we come to a point not merely of confusion, but of nega-
tiona conflict of absolutely opposing ideas resembling
that brought about in the minds of the unwary by the
schoolmen's question as to what would happen did an
irresistible force meet an immovable body.
Now, this way of using the nouns space and time
without an article, as though they mean things in them-
selves existing, has been much favored by the poets, whose
use of words is necessarily metaphorical and loose. And
it has been much favored by the teachers of religion,
whose endeavor to embody spiritual truths tends to poet-
ical expression, and who have been prone in all ages to
make no distinction between the attribution to the higher
power of what transcends our knowledge and of what is
opposed to our reason assuming the repugnance of human
reason to accept the contradictions to which they give the
name of mysteries to be proofs of its weakness.
Thus the habit of trying to think of space and time as
things in themselves and not merely relations of things,
has been embedded in religious literature, and in our most
susceptible years we hear of beings who know not space
or time, and of whens and wheres in which space and time
Chap. V. OF SPACE AND TIME. 345
are not. And as the child recoils from the impossible at-
tempt to think of the unthinkable and strives in vain to
picture a when or where in which space and time have
not been, or shall cease to be, he is hushed into silence
by being told that he is impiously trying to measure with
the shallow plummet of human reason the infinite depths
of the Divine Mind.
But the disposition of the theologians to find an insolv-
able mystery in the contradiction that follows the attempt
to think of space and time not as relations but as inde-
pendent existences, has been followed or perhaps antici-
pated by philosophers who in the use of meaningless words,
as though to them they really conveyed coherent ideas,
have assumed what has passed for superior penetration.
They (or at least those of them who have looked down
upon the theologians with contempt) have not, it is true,
called the inevitable conflict in thought which arises when
we try mentally to treat of what is really a relation as
though it were in itself a thing, a divine mystery. But
they have recognized this conflict as something inherent,
not in confusion of words, but in the weakness of human
reason which human reason they themselves pretend to
go behind and instruct.
Kant, whose ponderous incomprehensibility is a striking
example of what (whether it was before him or because of
him) seems to have become a peculiarly German facility
for inventing words handy for philosophic juggling, dig-
nified this point of assumed necessary conflict by calling
it an " antinomy," which term suggesting in its derivation
the idea of a conflict of laws, was employed by him to
mean a self-contradiction or mutual destruction of una-
voidable conclusions of the human reason ; a what must
be thought of, yet cannot be thought of. Thus the word
antinomy in the scholastic philosophy that has followed
Kant takes the place of the word mystery in the theo-
346 THE PRODUCTION OF WEALTH. Book III.
logical philosophy, as covering the idea of a necessary
irreconcilability of human reason.
Kant, for instance, tells us that space and time are forms
of human sensibility, which, as well as I can understand
him, means that our mental nature imposes upon us the
wearing of something like colored glasses, so that when
we consider things they always seem to us to be in space
and in time ; but that this is merely their appearance to
us, and that " things in themselves," that is, things as they
really exist outside of our sensibility or apprehension of
them, or as they would be apprehended by " pure reason "
(i.e., some reason outside of human reason), are not in
space and time at all.
In a passage I have already quoted, the much more
readable Schopenhauer speaks of the destruction of the
capacity for thinking which results from the industrious
study of a logomachy made up by monstrous piecings to-
gether of words which abolish and contradict one another.
But of this very thing, Schopenhauer himself with all his
strength and brilliancy is a notable example. His indus-
trious study of Kant had evidently reduced him to that
state of mind of which he speaks, where " hollow phrases
count with it for thoughts." His whole philosophy is
based on Kant's "Critique of Pure Reason," which he
speaks of as "the most important phenomenon that has
appeared in philosophy for two thousand years," and a
thorough understanding of which he declares in the be-
ginning and over and over again to be absolutely neces-
sary to an understanding of his own works. Likening the
effect of Kant's writings on the mind to which they truly
speak to that of the operation for cataract on a blind man,
he adds :
The aim of my own work may be described by saying that I have
sought to put into the hands of those upon whom that operation has
been successfully performed a pair of spectacles suitable to eyes that
Chap. V. OF SPACE AND TIME. 347
have recovered their sight spectacles to whose use that operation is
the absolutely necessary condition.
And through these spectacles of " The Fourfold Root of
the Principle of Sufficient Reason " and the chief work to
which that is preliminary, " The World as Will and Idea,"
Schopenhauer introduces us into what seems to natural
reason like a sort of philosophic " Alice in Wonderland."
If I can understand a man who seems to have a peculiar
gift of lucid expression wherever it is applied to under-
standable things, and whose writings are illumined by
many acute observations and sagacious reflections, this
world in which I find myself and which from the outside
is so immense, so varied, so wonderful, is from the inside,
nothing but "I, myself "my idea, my presentment, my
will ; and space and time are only in my seeming, appear-
ances imposed upon me by the forms of my consciousness.
I behold, for instance, a kitten, which by and by becomes
a cat and has kittens of its own, and at the same time or
at different times and places I see or remember to have
seen many cats tom-cats, pussy-cats, kitty-cats, black,
white, gray, mottled and tortoise-shell cats, in different
stages of age, from little cats whose eyes are not yet opened
to decrepit cats that have lost their teeth. But in reality,
on the inside of things as it were, there is only one cat,
always existent without reference to time and space. This
eternal cat is the idea of a cat, or cat idea, which is reflected
in all sorts of guises in the kaleidoscopic facets of my ap-
prehension. And as with cats, so with all things else in
which this infinite and varied world presents itself to me
planets and suns, plants and trees, animals and men,
matter and forces, phenomena and laws. All that I see,
hear, touch, taste, smell or otherwise apprehend all is
mirage, presentment, delusion. It is all the baseless fab-
ric of a vision, the self-imposed apprehensions of the evil
dream, containing necessarily more pain than pleasure, in
348 THE PEODUCTION OF WEALTH. Book III.
which what we call life essentially consists ; yet which he
who suffers in it cannot escape by suicide, since that only
brings him into life again in other form and circumstance ;
but from which the truly wise man must seek relief by
starving himself to death without wanting to die ; or in
other words by conquering "the will to live," the only
road to the final goal of annihilation or Nirvana, to which
all life ultimately tends.
And this philosophy of negation, this nineteenth-cen-
tury Buddhism without the softening features of its Asiatic
prototype, that makes us but rats in an everlasting trap,
and substitutes for God an icy devil, is the outcome of
the impression made upon a powerful and brilliant but
morbid mind by "the industrious study of a logomachy
made up by monstrous piecings together of words which
abolish and contradict one another," that strives to turn
human reason as it were inside out and consider in the
light of what is dubbed " pure reason " the outside-in of
things.
The fact is, that this seemingly destructive conflict of
thought that theologians call a mystery and philosophers
call an antinomy and which there must be very many of
my readers who like myself can remember puzzling over
in childhood in questionings of what might be beyond the
limits of space and time, and what was before God was,
and what might be after space and time had ceased is not
reality a failure of reason, but a confusion in the mean-
ing of words. When we remember that by space and time
we do not really mean things having existence but certain
[ relations to each other of things that have existence, the
I mystery is solved and the antinomy disappears in the
perception of a verbal confusion a confusion of the same
kind as perplexes those who try to think at once of an
irresistible force and an immovable body, two terms which
being mutually exclusive cannot together exist.
Chap. V. OF SPACE AND TIME. 349
There is a riddle about what a boy said, sometimes given
among young people playing conundrums, which if not
heard before, is almost certain to make the whole party
" give it up," after trying all sorts of impossible answers,
since its true and only possible answer, " The boy lied," is
so obvious that they do not think of it.
We may be wise to distrust our knowledge ; and, unless
we have tested them, to distrust what we may call our
reasonings ; but never to distrust reason itself.
Even when we speak of lunacy or madness or similar
mental afflictions as the loss of reason, analysis I think
will show that it is not reason itself that is lost, but that
those powers of perception and recollection that belong to
the physical structure of the mind have become weakened
or broken or dislocated, so that the things with which the
reason deals are presented to it imperfectly or in wrong
place or relation.
In testing for glasses an optician will put on you lenses
through which you will see the flame of a candle above or
below or right or left of its true position, or as two where
there is only one. It is so with mental diseases.
And that the powers with which the human reason must
work are limited and are subject to faults and failures,
our reason itself teaches us as soon as it begins to examine
what we find around us and to endeavor to look in upon
our own consciousness. But human reason is the only
reason that men can have, and to assume that in so far as
it can see clearly it does not see truly, is in the man who
does it not only to assume the possession of a superior to
human reason, but it is to deny the validity of all thought
and to reduce the mental world to chaos. As compared
with the eternal reason which is manifested in the relations
which we call laws of nature our human reason is clearly
shallow and narrow ; but that it is a perception and recog-
nition of this eternal reason is perhaps the deepest fact of
350 THE PRODUCTION OF WEALTH. Book III.
our certainty. Not as yet dreaming that this earth which
seems to our first perceptions to be so firmly fixed could
be in constant motion, men did not for a long time perceive
what a closer and wider use of reason now shows to be the
case, that the earth revolves around the sun, not the sun
around the earth, and spoke with literal meaning of sunrise
and sunset. But as to the phenomena of day and night,
and as to the proximate cause of these phenomena being
in the relations of sun and earth towards each other, they
were not deceived.
As for the philosophers since Kant or before him who
profess to treat space and time as mere conditions of human
perception, mental glasses, as it were, that compel us to
recognize relations that do not in truth exist, they are mere
jugglers with words, giving names such as " the absolute,"
" the unconditioned," " the unknowable " to what cannot be
thought of, and then proceeding to treat them as things,
and to reason with them and from them.
CHAPTER VI.
CONFUSION OF THE SPACIAL LAW WITH
AGRICULTURE.
SHOWING THE GENESIS OP THIS CONFUSION.
What space is The place to which man is confined Extension a
part of the concept "land" Perception is by contrast Man's
first use of land is by the mode of "adapting" His second, and
for a long time most important, use is by "growing" The third,
on which civilization is now entering, is "exchanging" Political
economy began in the second, and " growing " still attracts most
attention The truth and error of the Physiocrats The succes-
sors of Smith, while avoiding the error of the Physiocrats, also
ignored their truth ; and with their acceptance of the Malthusian
theory, and Kicardo's explanation of rent as relating to agricul-
tural land, they fell into, and have continued the habit of treating
land and rent as agricultural Difficulty of the single tax in the
United States.
THE laws of our physical being, to which I have already
called attention (Book I., Chapter II.), confine us
within narrow limits to that part of the superficies of our
sphere where the ocean of air enveloping it meets the solid
surface. We may venture temporarily a little below the
solid surface, in caves and vaults and shafts and tunnels ;
and a little 'above it, on trees, or towers, or in balloons or
aerial machines, if such be yet constructed; but with
these temporary aerial extensions of our habitat, which of
themselves require not only a preliminary but a recurring
use of the solid surface of the earth, it is to that solid
351
352 THE PEODUCTION^ OF WEALTH. BooTcIIL
surface that our material existence and material produc-
tion are confined. Physically we are air-breathing, light-
requiring land animals, who for our existence and all our
production require place on the dry surface of our globe.
And the fundamental perception of the concept land
whether in the wider use of the word as that term of
political economy signifying all that external nature offers
to the use of man, or in the narrower sense which the word
usually bears in common speech, where it signifies the
solid surface of the earth is that of extension ; that of
affording standing-place or room.
But a fundamental perception is not always a first per-
ception. Weight is a fundamental perception of air.
But we realize this only by the exertion of reason, and
long generations of men have lived, feeling the weight of
air on every part of their bodies during every second of
their lives from birth to death, without ever realizing that
air has weight. Perception is by contrast. What we
always perceive neither attracts attention nor excites
memory until brought into contrast with non-perception.
Even in the now short Atlantic trip the passenger be-
comes so accustomed to the constant throb of the engines
as not to notice it, but is aroused by the silence when it
stops. The visitor in a nail-mill is so deafened that speech
seems impossible ; but the men working there are said to
talk to each other without difficulty and to find conversa-
tion hard when they get again into the comparative silence
of the street. In later years, I have at times " supped with
Lucullus," without recalling what he gave me to eat,
whereas I remember to this day the ham and eggs of my
first breakfast on a canal-packet drawn by horses that
actually trotted; how sweet hard-tack, munched in the
middle watch while the sails slept in the trade-wind, has
tasted ; what a dish for a prince was sea-pie on the rare
Chap. VI. CONFUSION OF THE SPACIAL LAW. 353
occasions when a pig had been killed or a porpoise har-
pooned ; and how good was the plum-duff that came to the
forecastle only on Sundays and great holidays. I remember
as though it were an hour ago, that talking to myself
rather than to him, I said to a Yorkshire sailor on my first
voyage, " I wish I were home, to get a piece of pie." I
recall his expression and tone, for they shamed me, as he
quietly said, " Are you sure you would find a piece of pie
there?" Thoughtless as the French princess who asked
why the people who were crying for bread did not try
cake, "Home" was associated in my mind with pie of
some sort apple or peach or sweet potato or cranberry
or mince to be had for the taking, and I did not for the
moment realize that in many homes pie was as rare a
luxury as plums in our sea-duff.
Thus, while the fundamental quality of land is that of
furnishing to men place on which they may stand or move,
or rest things on, this is not the quality first noticed. As
settlers in a wooded country, where every foot of land
must be cleared for use, come to regard trees as a nuisance
to be got rid of, rather than as the source of value that
in the progress of civilization they afterwards become, so
in that rude stage of social development which we are
accustomed to think of as the primary condition of man-
kind, where the mode of expending labor in production
which most attracts attention is that we have called
" adapting," land would be esteemed rich or poor accord-
ing to its capacity of yielding to labor expended in this
first mode, the fruits of the chase.
In the next higher stage of social development, in which
that second mode of production, which we have called
"growing," begins to assume most importance in social
life, that quality of land which generally and strongly
attracts attention is that which makes it useful in agri-
354 THE PRODUCTION OF WEALTH. Book III.
culture, and land would be esteemed rich or poor accord-
ing to its capacity for yielding to labor expended in the
breeding of animals and raising of crops.
But in the still higher stage of social development which
what we now call the civilized world is entering, attention
begins to be largely given to the third mode of production,
which we have called " exchanging," and land comes to be
considered rich or poor according to its capacity of yield-
ing to labor expended in trading. This is already the case
in our great cities, where enormous value attaches to land,
not because of its capacity to provide wild animals to the
hunter, nor yet because of its capacity to yield rich crops
to the grower, but because of its proximity to centers of
exchange.
That the development of our modern economy began in
what was still mainly the second stage of social develop-
ment, when the use of land was usually regarded from the
agricultural point of view, is it seems to me, the explanation
of an otherwise curious way of thinking about land that
has pervaded economic literature since the time of the
Physiocrats, and that still continues to pervade the scho-
lastic political economy a way of thinking that leads
economic writers to treat land as though it were merely a
place or substance on which vegetables and grain may be
grown and cattle bred.
The followers of Quesnay saw that there is in the aggre-
gate production of wealth in civilization an unearned in-
crementan element which cannot be attributed to the
earnings of labor or capital and they gave to this incre-
ment of wealth, unearned so far as individuals are con-
cerned, the name of product net or surplus product. They
rightly traced this unearned or surplus product to land,
seeing that it constituted to the owners of land an income
or return which remained to them after all expenditure
of labor and investment of capital in production had been
Chap. VI. CONFUSION OF THE SPACIAL LAW. 355
paid for. But they fell into error in assuming that what
was indeed in their time and place the most striking and
prominent use of land in production, that of agriculture,
was its only use. And finding in agriculture, which falls
into that second mode of production I have denominated
" growing," the use of a power of nature, the germinative
principle, essentially different from the powers utilized in
that first mode of production I have denominated " adapt-
ing," they, without looking further, jumped to the con-
clusion that the unearned increment of wealth or surplus
net sprang from the utilization of this principle. Hence
they deemed agriculture the only productive occupation,
and insisted in spite of the absurdity of it that manufac-
tures and commerce added nothing to the sum of wealth
above what they took from it, and that the agriculturist
or cultivator was the only real producer.
This weakness in the thinking of the Physiocrats and
the erroneous terminology that it led them to use, finally
discredited their true apprehensions and noble teachings,
unpalatable as they necessarily were to the powerful
interests who seemingly profit by social injustice, until
the rise with the publication of " Progress and Poverty "
of the new Physiocrats, the modern Single Taxers as they
now call themselves and are being called.
But the economists who succeeded Adam Smith, while
they avoided the error into which the Physiocrats had
fallen, avoided as well the great truth of which this had
been an erroneous apprehension, and greedily accepting
the excuse which the Malthusian theory offered for putting
upon the laws of God the responsibility for the misery and
vice that flow from poverty, they fell into and have con-
tinued the habit of regarding land solely from the agri-
cultural point of view, thus converting what is really the
spacial law of all production into an alleged law of dimin-
ishing production in agriculture. Even Ricardo, who
366 THE PRODUCTION OF WEALTH. Book III.
truly though very narrowly explained the law of rent,
shows in all his arguments and illustrations an inability
to free himself from thinking of land as relating only to
agriculture, and of rent only as agricultural rent. And
although in England the relative importance of agriculture
has during all this century steadily and rapidly declined,
the habit of thinking of land as a place or substance for
agricultural operations is still kept up. Not merely is the
law of diminishing production in agriculture still taught
as a special law of nature in the latest works treated as
authoritative in colleges and universities, but in speaking
of land and of rent, most English writers will be found to
have really in mind agricultural land or agricultural rent.
What is true of England is true of the United States
except so far as the influence of the single tax has been
felt. But the greatest difficulty which the single tax prop-
aganda meets in the United States is the wide-spread
idea, sedulously fostered by those who should know better,
that non-agricultural workers have no interest in the land
question and that concentrating taxes on land values
means increasing the taxes of farmers. To fostering this
fallacy all the efforts of the accredited organs of education
are directed.
CHAPTER VII.
THE RELATION OF SPACE IN PRODUCTION.
SHOWING THAT SPACE HAS RELATION TO ALL
MODES OF PRODUCTION.
Matter being material, space must have relation to all production
This relation readily seen in agriculture The concentration of
labor in agriculture tends up to a certain point to increase and
then to diminish production But it is a misapprehension to attrib-
ute this law to agriculture or to the mode of "growing" It
holds in all modes and sub-divisions of these modes Instances :
of the production of brick, of the mere storage of brick Man
himself requires space The division of labor as requiring space
Intensive and extensive use of land.
PRODUCTION in political economy means the produc-
tion of wealth. Wealth, as we have seen, consists in
material substances so modified by human labor as to fit
them for the satisfaction of human desires. Space, there-
fore, which has relation to all matter, must have relation
to all production.
This relation of space to all production may be readily
seen in agriculture, which is included in that mode of
production we have called " growing." In this, the con-
centration of labor in space tends up to a certain point to
increase the productiveness of labor; but the point of
greatest productiveness attained, any further concentration
of labor would tend to decrease productiveness. Thus, if
a Robinson Crusoe, having a whole island on which to
357
358 THE PRODUCTION OF WEALTH. Book III.
expend his labor, were to plant potatoes, each cutting a
hundred yards apart from every other cutting, he would
necessarily waste so much labor in planting, cultivating
and gathering the crop that the return compared with his
exertion would be very small. He would get a much larger
return were he to concentrate his labor by planting his
potatoes closer; and this increase would continue as he
continued to exert his labor in lesser space, until his plants
became too crowded, and the growth of one would lessen
or prevent that of another. While if he continued the
experiment so far as to put all his cuttings in one spot he
would get no greater return than he might have had from
the planting of one, and perhaps no return at all.
This spacial law of production holds good of course in
labor exerted conjointly, as in labor exerted individually.
On a given area, the application of labor to the growth of
a crop or the breeding of animals may sometimes be
increased with advantage, the exertion of two men pro-
ducing more than twice as much as the exertion of one
man ; that of four men, more than twice as much as the
exertion of two ; and so on. But this increase of produc-
tion with increased application of labor to any given area
cannot go on indefinitely. A point is reached at which
the further application of labor in the given area, though
it may for a time result in a greater aggregate production,
yields a less proportionate production, and finally a point
is reached where the further application of labor ceases
even to increase the aggregate result.
It is misapprehended appreciation of this law in so far
as it applies to agricultural production, which has led to
the formulation and maintenance in economic teaching of
what is called " the law of diminishing productiveness in
agriculture." But the law is not peculiar to agriculture
nor to the second mode of production which I have called
" growing." It is true that this mode of production con-
Chap. VII. EELATION OF SPACE IN PEODUCTION. 359
sists in the utilization in aid of labor of the power of i .,
reproduction which characterizes life, and that living I
things in their growth and expansion require more space
than things destitute of life. The plants that we grow
require space below the surface of the ground in which to
expand their roots and drink in certain constituents, and
space above the surface in which to expand their leaves
and drink in air and light. And the animals that we breed
require space for their necessary movements. But though
the spacial requirements of living things may be relatively
greater than those of things not living, they are no less
absolute in the one case than in the other. ^That two | /
material things cannot exist in the same space is no more I
true of brutes than of beets, nor of beets than of bricks\ I
In every form or sub-division of its three modes tne
exertion of human labor in the production of wealth
requires space ; not merely standing or resting space, but >
moving space space for the movements of the human
body and its organs, space for the storage and changing
in place of materials and tools and products. This is as
true of the tailor, the carpenter, the machinist, the mer-
chant or the clerk, as of the farmer or stock-grower, or of
the fisherman or miner. One occupation may require
more elbow-room or tool-room or storage-room than
another, but they all alike require space, and so must come
to a point where any gain from concentrating labor in
space ceases, and further concentration results in a pro-
portionate lessening of product, and finally in an absolute
decline. The same law, first of increasing and then of
diminishing returns, from the concentration of labor in
space, which the first exponents of the doctrine of dimin-
ishing returns in agriculture say is peculiar to that occu-
pation, and its latter exponents say obtains in agriculture,
and in the extraction of limited natural agents, such as
coal, shows itself in all modes of production, and must
360 THE PKODUCTION OF WEALTH. Book III.
continue to do so, even did we discover some means of
producing wealth by solidifying atmospheric air or an all-
pervading ether, which some modern scientists suppose.
: For this alleged " law of diminishing returns in agricul-
/l ture " is nothing more nor less than the spacial law of
I material existence, the reversal or denial of which is abso-
jj lutely unthinkable.
To see this, let us take a form of production widely
differing from that of agriculture the production of brick.
Brick is usually made from clay, but can be made from other
inorganic substances, such as shale, coal-dust, marble-dust,
slag, etc., and no part of its production involves any use of
the principle of increase that characterizes life. Nor can
any of the substances used in brickmaking be considered
as limited natural substances or agents by any classification
that would not destroy the distinction by including the
whole earth itself as a limited natural agent. The produc-
tion of brick is clearly one of the forms of production
which those who uphold the doctrine of "diminishing
returns in agriculture," or in its extension to the doctrine
of " diminishing returns in the use of limited natural
agents," would consider a form of production that can be
continued indefinitely by the increased application of labor
without diminishing returns.
Yet we have only to think of it to see that what is called
the law of diminishing returns in agriculture applies to
the making of brick as fully as to the growing of beets.
A single man engaged in making a thousand bricks would
greatly waste labor if he were to diffuse his exertions over
a square mile or a square acre, digging and burning the
clay for one brick here, and for another some distance
apart. His exertion would yield a much larger return
if more closely concentrated in space. But there is a
point in this concentration in space where the increase
of exertion will begin to diminish its proportionate yield.
i. RELATION OF SPACE IN PRODUCTION. 361
In the same superficial area required for the production of
one brick, two bricks may be produced to advantage. But
this concentration of labor in space cannot be continued
indefinitely without diminishing the return and finally
bringing production to a stop. To get the clay for a
thousand bricks without use of more surface of the earth
than is required to get the clay for one brick, would involve,
even if it were possible at all, an enormous loss in the
productiveness of the labor. And so if an attempt were
made to put a thousand men to work in making brick on
an area in which two men might work with advantage,
the result would be not merely that the exertion of the
thousand men could not produce five hundred times as
much as the exertion of two men, but that it would produce
nothing at all. Men so crowded would prevent each other
from working.
Or let us take that part of the production of bricks that
of all parts requires least space that which consists merely
in the storage of bricks after they are made, so as to have
them in readiness when required.
Two bricks must occupy twice as much cubical space as
one brick. But if placed one on top of the other, the two
require for resting-place no more superficial area than the
one ; while, as it requires on the part of a man of ordinaiy
powers practically no more exertion to lay down or take
up two bricks on the same surface than to lay down or
take up one, there would be a greater gain in the produc-
tiveness of labor so applied to the storage of brick than if
applied to the storing of brick side by side on the surface
of the ground. But this economy in the storage of brick
could not be continued indefinitely. Though two bricks
may be rested one on top of the other without any more
use of superficial area than is required for the resting of
one brick, this is not true of a thousand bricks, nor even
of a hundred. Much less than a hundred bricks so placed
362 THE PRODUCTION OF WEALTH. Book III.
as to rest upon the superficies required for the resting of
one brick would become so unstable as to fall with the
slightest jar or breeze. Before ten or even half a dozen
bricks had been rested one on top of another it would
become evident that any further extension of the perpen-
dicular would require a further extension of base. And
even with such extension of base as would permit of per-
pendicular solidity, a point would finally be reached
where, even if the surface continued solid, the weight of
the upper bricks would crush the lower bricks to powder.
Thus it is no more possible indefinitely to store bricks on
a given area than on a given area indefinitely to grow
beets.
Up to a point, moreover, which is about waist-high for
an ordinary man, it requires less exertion to place or take
from place the last brick than the first brick, or in other
words, labor at this point is more productive. But this
point of greatest productiveness reached, the productive-
ness of labor begins to decline with the further application
of labor on the same area, until the point of no return or
non-productiveness is reached. The reaching of this point
of no return to the further application of labor in the
storing of bricks on a given area may be delayed by the
invention and use of such labor-saving devices as the
wheelbarrow and steam-engine, but it cannot be prevented.
There is a point in the application of labor to the storage
of bricks on any given area, whether a square foot or a
square mile, where the application of successive " doses of
labor" (to use the phrase of the writers who have most
elaborately dwelt on this assumed "law of diminishing
productiveness in agriculture") must cease to yield pro-
portionate returns, and finally where they must cease to
yield any return.
Thus the law of diminishing returns which has been
held as peculiar to agriculture is as fully shown in the
i. RELATION OF SPACE IN PRODUCTION. 363
mere storage of bricks as it is in the growing of crops or
the breeding of animals. It is quite as true that all the
bricks now needed in the three kingdoms could not be
stored on a single square yard, as it is that all the food
needed in the three kingdoms could not be grown on a
single acre. The point of greatest efficiency or maximum
productiveness in the application of labor to land exists in
all modes and all forms of production. It results in fact
from nothing more nor less than the universal law or
condition that all material existence, and consequently all
production of wealth, requires space.
Nor has the spacial requirement of production merely
regard to the material object of production ; it has regard
as well to the producer to labor itself. Man himself is
a material being requiring space for his existence even
when in the most passive condition, and still more space for
the movements necessary to the continuous maintenance
of life and the exertion of his powers in the production of
wealth. For an hour or two men may, as in listening to
a speech or looking at a spectacle, remain crowded together
in a space which gives them little more than standing-room.
But to bring a few more into such a crowd would mean
illness, death, panic. Nor in such narrow space as men
may for a while safely stand, could life be maintained for
twenty-four hours, still less any mode of producing wealth
be carried on.
The division of labor permits the concentration of work-
ers whose particular parts in production require compara-
tively little space, and by building houses one story above
another in our cities we economize superficial area in fur-
nishing dwelling and working places in much the same way
as by storing bricks one upon another. Improvements in
the manufacture of steel and in the utilization of steam and
electricity have much increased the height to which such
structures can be carried, and we already have in our
364 THE PEODUCTION OF WEALTH. Book III.
large American cities buildings of over twenty stories in
which production of some sort is carried on. But though
the requirement of superficial area may thus be pressed
back a little by making use of cubical area (and in the
tallest buildings of New York and Chicago rent is estimated
in cubic not in square feet) this is only possible to a slight
degree. The intensive use of land shown in the twenty-
story building is in fact made possible by the extensive
use of land brought about by improvements in transpor-
tation, and every one of these monstrous buildings erected
lessens the availability of adjoining land for similar
purposes.
CHAPTER VIII.
THE RELATION OF TIME IN PRODUCTION.
SHOWING THAT ALL MODES OP PRODUCTION HAVE
RELATION TO TIME.
Difference between apprehensions of space and time, the one objec-
tive, the other subjective Of spirits and of creation All pro-
duction requires time The concentration of labor in time.
AS space is the relation of things in extension, so time
JL\. is the relation of things in sequence.
But time, the relation of sequence, seems when we think
of it, to be, so to speak, wider than space, the relation of
extension. That is to say, space is a quality or affection
of what we call matter ; and while we conceive of imma-
terial things which having no extension have no relation
in space, we cannot conceive of even immaterial things as
having no relation in sequence.
Our apprehension of space is through our senses, the
direct impressions of which are uncertain and misleading,
but which we habitually verify and correct and give some
sort of exactness to, through other impressions of our
senses. Our first and simplest measure of space is in the
impression of relative distance produced through the sight,
or in the feeling of exertion required to move ourselves or
some other object from point to point, as by paces or
stone's throw or bow-shot; and these give way to more
365
366 THE PRODUCTION OF WEALTH. Boole III.
exact measurements, such as by lines, inches, feet, miles,
diameters of the earth or of the earth's orbit. Deprived
of the senses, which make us cognizant of matter, it is
impossible to see how we could have any impression or
idea of space.
Our impression of time, however, is not primarily
through our senses. Though we correct and verify and
give some exactness to it through them, there is a purely
subjective apprehension of time in our own mental impres-
sions or thoughts, which do not come all at once, but
proceed or succeed one another, having to each other a
relation of sequence. It is through this succession of
mental impressions that we are in the first place and directly
conscious of time. But while our direct consciousness of
space must vary widely, our direct impressions of time are
more variable still, since they depend upon the rapidity
and intensity of mental impressions. We may seem to
have lived through years in the intense activity of a vivid
dream, and to be utterly unconscious of the passage of
time in a sound sleep. And while we can conceive the
impression of space to be very different on the part of a
sloth and that of a greyhound, it may be that the brief
day of an animalcule may seem as long to it as does a
century of life to the larger elephant.
But the reason of man enables him to obtain more exact
measures of sequence from the uniformities of natural
phenomena, such as days or years, moons or seasons, and
from the regularity of mechanical movement as by sand-
glasses or dials, or by clocks or watches.
Time seems indeed to be necessary to and in some degree
coincident with all perceptions of space. But space does
not seem necessary to time. That is to say, we seem to be
able to imagine an immaterial being, or pure intelligence,
not limited by or having necessary consciousness of
relations of extension, and this is the way in which we
Chap.VIIL RELATION OF TIME IN PRODUCTION. 367
usually think of unembodied spirits, such, as angels or
devils; and of disembodied spirits, such as ghosts. But
we cannot really think thus of them with regard to relations
of sequence. We can indeed think of them as knowing
nothing and regarding nothing of our measures of time
of a day being to them as a thousand years, or a thousand
years as a day, for that these measures are only relative
we can see for ourselves. But we can also see that in the
realm of spirit there is and must be the same relation of
preceding and succeeding, of coming before and coming
after, as in the realm of matter ; and that this relation of
sequence or time is really clearer and closer to that in us
which we must think of as our immaterial part than is
that of extension or space to our physical parts.
We usually think of creation, the bringing into existence
by a power superior to and anterior to that of man, as
taking place at once as by the Divine fiat : " God said, Let
there be light : and there was light." But it would seem
on analysis, that in this way of thinking we are considering
rather the mental action which we conceive of as in itself
immaterial which our experience so far as it goes, and
our reason so far as it can reach, teach us must lie back
of all material expression than of the material expres-
sion itself. All speculations and theories of the origin
of the cosmos, all religions which are their popular ex-
pression, conceive of the appearance of material phenom-
ena as in order or sequence, and consequently in time.
Save in its childlike measurement of time by days, the
ancient Hebrew account of the genesis of the material
world recognizes this necessary order or sequence as
fully as do modern scientists, for whose almost as vague
measurements millenniums are too short. And so far as
we can see, thought itself is in sequence and requires time,
and its continued exertion brings about weariness. It, at
any rate, seems to me that if we consider the essential and
368 THE PRODUCTION OF WEALTH. Boole III,
not merely the crude expression of the Hebrew scripture
that in six days God created the heavens and the earth
and rested on the seventh, it may embody a deep truth
the truth that exertion, mental as physical, requires a
season of rest.
But, all such speculations aside, it is certain that all
production of wealth takes place in sequence and requires
time. The tree must be felled before it can be hewn or
sawed into lumber ; lumber must be seasoned before it can
be used in building or wrought into the manifold articles
made of wood. Ore must be taken from the vein before
it can be smelted into iron, or from that form turned into
steel or any of the manifold articles which by subsequent
processes are made from iron or steel. Seeds must be
planted before they can germinate; there must be a
considerable interval of time before the young shoots can
show themselves above the ground ; then a longer interval
before they can grow and ripen and produce after their
order ; grain must be harvested and ground before it can
be converted into meal or flour or changed by labor from
that form into other forms which gratify desire, all of
which, like fermenting and baking, require time. So, in
exchanging, time is required even for the concurrence
and expression of human wills which result in the agree-
ment to exchange, and still more time for the actual
transference of things which completes the exchange. In
short, time is a necessary element or condition in all
exertion of labor in production.
Now, from this necessary element or condition of all
production, time, there result consequences similar to those
which result from the necessary element or condition of
all production, space. That is to say, there is a law
governing and limiting the concentration of labor in time,
as there is a law governing and limiting the concentration
of labor in space. Thus there is in all forms of production
Chap.VlIL EELATION OF TIME IN PRODUCTION. 369
a point at which the concentration of labor in time gives
the largest proportionate result ; after which the further
concentration of labor in time tends to a diminution of
proportionate result, and finally to prevent result.
Thus there is a certain degree of concentration of labor
in time (intensity of exertion), by which the individual can
in any productive occupation accomplish on the whole the
largest result. But if a man work harder than this,
endeavoring to concentrate more exertion in a shorter
time, it will be to the relative and finally to the absolute
loss of productiveness a principle which gives its point
to the fable of the hare and the tortoise.
And so, if I go to a builder and say to him, " In what
time and at what price will you build me such and such a
house ? " he would, after thinking, name a time, and a price
based on it. This specification of time would be essential,
and would involve a certain concentration of labor in time
as the point of largest return or least cost. This I would
soon find if, not quarreling with the price, I ask him largely
to lessen the time. If I be a man like Beckford the author
of "Vathek," for whom Fonthill was built by relays of
workmen, who lighted up the night with huge fires a
man to whom cost is nothing and time everything, I might
get the builder somewhat to reduce the time in which he
would agree, under bond, to build the house ; but only by
greatly increasing the price, until finally a point would
be reached where he would not consent to build the house
in less time no matter at what price. He would say:
"Although I get bricks already made, and boards already
planed, and stairs and doors, and sashes and blinds, and
whatever else may be obtained from the mill, and no
matter how many men I put on and how much I disregard
economy, the building of a house requires time. Cellar
cannot be dug and foundations raised, and walls built and
floors laid, and roof put on, and partitioning and plastering,
370 THE PRODUCTION OF WEALTH. Book III.
and plumbing, and painting and papering be done all at
once, but only one after another, and at the cost of time
as well as labor. The thing is impossible."
And so, although the concentration of labor in agricul-
ture may with decreasing efficiency hasten beyond the
normal point the maturity of vegetables or fruit or even
of animals, yet the point of absolute non-productiveness
of further applications of labor is soon reached, and no
amount of human exertion applied in any way we have yet
discovered could bring wheat from the seed to the ear, or
the chick from the egg to the laying hen, in a week.
The importance in political economy of this principle
that all production of wealth requires time as well as labor
we shall see later on; but the principle that time is a
necessary element in all production we must take into
account from the very first.
CHAPTER IX.
COOPERATION-ITS TWO WAYS.
SHOWING THE TWO WAYS OP COOPERATION.
Cooperation is the union of individual powers in the attainment of
common ends Its ways and their analogues : (1) the combination
of effort; (2) the separation of effort Illustrations : of building
houses, of joint-stock companies, etc. Of sailing a boat The
principle shown in naval architecture The Erie Canal The bak-
ing of bread Production requires conscious thought The same
principle in mental effort What is on the one side separation is
on the other concentration Extent of concentration and speciali-
zation of work in modern civilization The principle of the ma-
chineBeginning and increase of division of labor Adam
Smith's three heads A better analysis.
/COOPERATION means joint action; the union of
V>/ efforts to a common end. In recent economic writings
the word has been so much used in a narrower sense that
its meaning in political economy is given in the latest
American dictionary (the Standard) as "a union of
laborers or small capitalists for the purpose of advanta-
geously manufacturing, buying and selling goods, and
of pursuing other modes of mutual benefit ; also, loosely,
profit-sharing."
This is a degradation of a word that ought not to be
acquiesced in, either in the interests of the English language
or in the interests of political economy, and at the risk of
being misunderstood by those who have become accus-
371
372 THE PRODUCTION OF WEALTH. Boole III.
tomed to associate it with trivial schemes of profit-sharing
or namby-pamby " reconciliations " of capital and labor, I
shall use it as an economic term in its full meaning-
understanding by cooperation that union of individual
powers in the attainment of common ends which, as already
said (Book I., Chapter V.), is the means whereby the
enormous increase of man's power that characterizes
civilization is secured.
All increase in the productive power of man over that
with which nature endows the individual comes from the
cooperation of individuals. But there are two ways in
which this cooperation may take place.
1. By the combination of effort. In this way, indi-
viduals may accomplish what exceeds the full power of the
individual.
2. By the separation of effort. In this way, the indi-
vidual may accomplish for more than one what does not
require the full power of the individual.
This first way of cooperation may be styled the com-
bination of labor, though perhaps the most distinctive term
that could be used for it would be, the multiplication of
labor, since the second way is well known by the term
Adam Smith adopted for it, " the division of labor."
The one, the combination of labor, is analogous to the
application in mechanics of that principle of the lever by
which larger masses are moved in shorter distance or
longer time, as in the crowbar. The other, the division of
labor, is analogous to the application of that principle of
the lever by which smaller masses are moved in longer
distance or shorter time, as in the oar.
To illustrate : The first way of cooperation, the com-
bination of labor, enables a number of men to remove a
rock or to raise a log that would be too heavy for them
separately. In this way men conjoin themselves, as it
were, into one stronger man.
Chap. IX. COOPERATION-ITS TWO WAYS. 373
Or to take an example so common in the early days of
American settlement that " log-rolling " has become a term
for legislative combination: Tom, Dick, Harry and Jim
are building near each other their rude houses in the
clearings. Each hews his own trees, but the logs are too
heavy for one man to get into place. So the four unite
their efforts, first rolling one man's logs into place and
then another's, until the logs of all f our having been placed,
the result is the same as if each had been enabled to
concentrate into one time the force he could exert in four
different times. Examples of the same principle in a
more elaborate state of society are to be found in the
formation of joint-stock companies the union of many
small capitals to accomplish works such as the building of
railroads, the construction of steamships, the erection of
factories, etc., which require greater capitals than are
possessed by one man.
But while great advantages result from the ability of
individuals, by the combination of labor, to concentrate
themselves as it were into one larger man, there are other
times and other things in which an individual could
accomplish more if he could divide himself, as it were,
into a number of smaller men.
Thus in sailing a boat, one man of extraordinary strength
would be equal to two men of half his strength only in
such exertions as rowing, hoisting the heavier sails, or the
like. In other things, two men of ordinary strength would
be able to do far more than the one man of double strength,
since where he would have to stop one thing to do another,
they could do both things at once. Thus while he would
have to anchor in order to rest, they could move on without
stopping, one sailing the boat while the other slept. There
was a King Alphonso of Castile, celebrated by Emerson,
who wished that men could be concentrated nine into one.
But the loss of available power that would thus result
374 THE PRODUCTION OF WEALTH. Boole III.
would soon be seen. How often now when beset by calls
or duties which require, not so much strength as time,
does the thought occur, " I wish I could divide myself into
half a dozen." What the division of labor does, is to permit
men, as it were, so to divide themselves, thus enormously
increasing their total effectiveness,
To illustrate from the example used before : While at
times Tom, Dick, Harry and Jim might each wish to move
logs, at other times they might each need to get something
from a village distant two* days' journey. To satisfy this
need individually would thus require two days' effort on
the part of each. But if Tom alone goes, performing the
errands for all, and the others each do half a day's work
for him, the result is that all get at the expense of half a
day's effort on the part of each what otherwise would have
required two days' effort.
It is in this manner that the second way of cooperation,
the separation of effort, or to continue the term adopted by
Adam Smith and sanctioned by long usage, the division of
labor, saves labor ; that is to say, permits the accomplish-
ment of equal results with less exertion, or of larger results
wi'th equal exertion. But out of this primary saving of
exertion arise other savings of exertion.
Let me illustrate from a domain outside of political
economy the general principle from which these gains
proceed. Nothing, perhaps, better shows the flexibility of
the human mind than naval architecture. Yet, from the
rude canoe to the monster ironclad, in all the endless
variety of form that men have given to vessels intended
to be propelled through the water, one principle always
obtains. We always make such vessels longer than they
are broad. Why is it that we do so ? It is that a vessel
moving through the water has two main points of resistance
to overcome (1) the displacement of the water at her bow,
the resistance to which is shown by the ripple or wave that
Cliap.IX. COOPERATION-ITS TWO WAYS. 375
arises there, and (2) the replacement of the water at her
stern, the resistance to which is shown by the suction or
wake or " dead water" that she drags after her. In addition
she must also overcome skin friction, shown, if one looks
over the side of a vessel moving in smooth water, by the
thin line of "dead water" or small ripples at her sides.
But this, area for area, is slight as compared with the
force required for displacement and replacement.
When the Erie Canal was first built its locks were
constructed to accommodate boats of a certain length.
The e"nlargement of these locks so as to admit boats of
double that length is now going on, but is not yet entirely
completed, so that to pass through the entire canal, boats
of the shorter length must still be used. Each of these
boats is usually pulled by two horses or mules. But
whoever passes over the railroads that parallel this great
waterway will notice that for much of the distance the
boats are now run in pairs, the bow of one boat being
fastened to the stern of its predecessor, and that instead
of four horses for the two boats only three are used.
What makes this economy possible is that the displacement
for the two boats is mainly borne by the first boat, and
the replacement for the two is mainly borne by the second
boat. As the additional force required to move two boats
instead of one is thus not much more than the additional
skin friction, three animals suffice instead of four. If the
boats were so constructed as to fit closely together the
economy would be still greater.
Now, what we do in building a vessel is virtually to
place one cross-section behind another cross-section so
that the whole may be moved with no more resistance of
displacement and replacement than would be required to
move any one cross-section. The principle is the same as
that which would prompt us if we had to carry two bodies
through a wall, to carry the second through the hole that
376 THE PRODUCTION OF WEALTH. Book III.
it would be necessary to make for the first, instead of
making another hole. In addition to this the increase of
length without increase of width which results virtually
from the placing of the cross-sections behind each other,
permits the graduation or sharpening of entrance and
egress, thus allowing displacement and replacement to be
effected in longer times or more gradually, and with les-
sened resistance ; although the fact that resisting surface
does not increase proportionately to increase in cubical
capacity, enables the large vessel to outstrip the small
vessel with the same proportionate expenditure of power,
even if built on the same lines.
Now these principles, or rather this principle, for at
bottom they are one, have their analogues in our making
of things. Just as ten thousand tons can be transported
in one vessel at much greater speed or with much less
expenditure of power than in ten thousand vessels of one
ton each, so can production be facilitated and economized
by doing together things of like kind that are to be done.
Take for instance the baking of bread. To bake a loaf
of bread requires the application of a certain amount of
heat for a certain time to a certain amount of dough. To
heat an oven to this point requires a certain expenditure
of fuel; to maintain it for this time a certain other
expenditure of fuel ; and a certain expenditure of fuel is
lost in the cooling of the oven after the bread is baked.
To bake one loaf of bread in an ordinary oven thus
requires a much greater relative expenditure of fuel than
is required to bake at one time as many loaves as the oven
will hold ; and a larger oven will bake more loaves with a
proportionately less expenditure of fuel than a smaller
one, since the loss of heat that escapes from the work of
baking is relatively less; and if one batch of bread is
succeeded by another batch without suffering the oven to
cool, another great relative saving is made. So that the
CUp.IX. COOPEEATION-ITS TWO WAYS. 377
concentration of the work of baking bread effects a great
saving of labor in the item of fuel alone. And it is so
with other items.
The saving thus made by the concentration of work
arises not only from physical laws but from mental laws
as well. All our doing or accomplishing of things, except
those that may be referred to instinct, require in the first
place the exertion of conscious thought. We see this in
the child as it learns to walk, to talk, to read and write.
We see this as adults when we begin to do things new to
us, as to speak a foreign tongue, to write shorthand, or
use a typewriter or a bicycle. But as we do the same
things again and again, the mental exertion becomes less
and less, until we come to do them automatically and
without consciously thinking of how we do them.
Now the result of what regarded from the standpoint
of the whole or industrial organism is the separation of
effort or division of labor in the production of wealth,
is that the individual does fewer things but does them
of tener. It is thus from the standpoint of the individual
the concentration of effort or of labor, and so from the
standpoint of the things to be done it involves a similar
concentration in place and time, thus securing the saving
of effort or increased efficiency of exertion which, to recur
to our illustration, comes from doing one thing behind
another and on a large instead of on a small scale.
Thus, when instead of each individual or each family
endeavoring to hunt, fish, obtain vegetables, build habita-
tions and make clothing or tools, for the satisfaction of
their own needs, some devote themselves to doing one
thing and some to doing another of the things required
for the satisfaction of the general needs, what is the
separation of function from the standpoint of the all or
industrial whole is the concentration of function in its
units, and special trades and vocations are developed.
378 THE PRODUCTION OF WEALTH. Book III.
And as the social organism grows by increase in numbers
or the widening of the circle of exchanges, or both, this
differentiation of function between its units tends con-
stantly to increase, augmenting the efficiency of the
productive powers of man to a degree to which we can
assign no limits, and of which the marvelous increase in
productive power which so strikingly characterizes our
modern civilization affords but a faint forecast.
In civilized society where the division of labor has been
carried to great lengths, we are so used to it that it is hard
to realize how much we owe to it, and how utterly different
our life would be without it. But as one tries to think to
what we should be reduced without division of labor, he
will see how large is the part it plays in the production of
wealth so large, indeed, that without it man as we know
him could not exist. Take for instance the providing of
clothing. If each one had to make his own clothing from
the raw material, he could get nothing better than leaves
or skins. Even with all the advantages which the division
of labor gives in the making of cloth, of needles, thread,
buttons, etc., let any one unused to it set himself to the
making of a garment. He will soon realize how hard it
is to make the first one ; how much easier and better the
second is made than the first, the third than the second,
and so on, until the process ceases to require thought and
becomes automatic. When by means of the division of
labor, the making of clothing is so far concentrated that
the clothing for some dozens or scores of men can be made
together, then individuals can devote themselves solely to
the making of clothes, with greatly increased economy.
As the concentration of clothes-making proceeds further,
and the making of clothes for hundreds, thousands, tens
of thousands, and even hundreds of thousands of indi-
viduals is by the development of the ready-made clothing
industry brought together, greater and greater economies
Chap. IX. COOPEKATION-ITS TWO WAYS. 379
become possible. Separate individuals devote themselves
to the making of particular garments, and then to the
making of particular parts or to particular processes.
Instead of one tailor cutting out a garment with a pair
of shears and then proceeding to make it in all its parts,
cutters who do nothing else cut out scores of garments at
once with great knives ; the operations of basting, lining,
buttonholing, etc., are performed by different people who
devote themselves to doing these things alone, and whose
work is aided by powerful machines, the use of which
becomes possible with the larger scale and greater
continuity of employment this concentration permits.
It is this concentration and specialization of work, with
the division of labor, that brings about the development of
labor-saving machinery of all kinds. The essential quality
of the machine is its adaptation for the doing of certain
special things. The human body considered as a machine
is of all machines that which is best adapted for the doing
of the greatest variety of things. But for doing only one
thing, for the increase of quantity at the expense of variety,
man is able to make machines which within a narrow
range are far superior to the tools nature gives him. And
the same principle governs the employment of forces other
than the force he can command in his muscles. The
utilization of winds and tides and currents and falling
streams, of steam and of electricity, and chemical attrac-
tions and repulsions, is dependent on this concentration.
Thus the division of labor involves and proceeds from
the concentration of effort for the satisfaction of desires.
It begins when there are two individuals who cooperate ;
it increases and becomes productive of greater and greater
economies with the increase of the number who thus
cooperate.
Adam Smith, who begins his " Wealth of Nations " by
considering how cooperation increases the productive
380 THE PRODUCTION OF WEALTH. Boole III.
powers of mankind, which he styles "the division of
labor," refers to the economy which it produces under
three heads :
1. The increased dexterity of workmen.
2. The saving of time by the greater continuity of
employment.
3. The economy effected by the use of machinery.
But on a larger and fuller survey we may perhaps best
analyze the advantages that result from the cooperation
of labor as follows :
A. The combination of labor permits a number of
individuals by direct union of their powers to accomplish
what severally would be impossible.
B. The division of labor, with the concentration and
cooperation it involves, permits the doing for many (or a
larger number) of what may with a less expenditure be
done by one (or by a smaller number) :
1. By the saving of time and effort, as in the preceding
illustration, where one man goes on a journey which to
accomplish severally four men would have to make.
2. By utilizing the differing powers of individuals, as
where those who excel in physical strength devote them-
selves to things requiring physical strength, while those
who are inferior in physical strength do the things which
require less physical strength, but for which they are
otherwise just as capable, thus producing the same net
results as would a bringing up of all to the highest level
of physical strength ; or where those who excel in other
qualities do the things for which such qualities are best
adapted, thus practically bringing up the level of the
accomplishment of all to that of the highest qualities of
each.
3. By increasing skill, consequent upon those who do a
larger amount of that same kind of work being able to
acquire facility in it.
Chap. IX. COOPERATION-ITS TWO WAYS. 381
4. By accumulating knowledge. The same tendency
which increases the incommunicable knowledge called
skill, also tends to increase the communicable knowledge
properly so called, which consists in a knowing of the
relations of things to other external things, and which
constitutes a possession of the economic body or Greater
Leviathan, transferable by writing or similar means.
5. By utilizing the advantages of doing things on a
large scale instead of on a small scale, and of doing them
successively instead of separately.
6. By utilizing the natural forces, and by the invention
and use of machines and of improved processes, for the
use of which the large scale of production gives advan-
tages.
CHAPTER X.
COOPERATION-ITS TWO KINDS.
SHOWING THE TWO KINDS OP COOPERATION, AND HOW THE
POWER OP THE ONE GREATLY EXCEEDS THAT OP THE
OTHER.
The kind of cooperation which, as to method of union or how of
initiation, results from without and may be called directed or con-
scious cooperation Another proceeding from within which may
be called spontaneous or unconscious cooperation Types of the
two kinds and their analogues Tacking of a full-rigged ship and
of a bird Intelligence that suffices for the one impossible for the
other The savage and the ship Unconscious cooperation re-
quired in ship-building Conscious cooperation will not suffice for
the work of unconscious The fatal defect of socialism The
reason of this is that the power of thought is spiritual and cannot
be fused as can physical force Of "man power" and "mind
power" Illustration from the optician Impossibility of social-
ismSociety a Leviathan greater than that of Hobbes.
WE have seen that there are two ways or modes in
which cooperation increases productive power. If
we ask how cooperation is itself brought about, we see
that there is in this also a distinction, and that cooperation
is of two essentially different kinds. The line of distinc-
tion as to what I have called the ways of cooperation, and
have in the last chapter considered, is as to the method of
action or how of accomplishment ; the line of distinction
as to what I shall call the kinds of cooperation, and am
382
Chap. X. COOPERATION-ITS TWO KINDS. 383
about in this chapter to consider, is as to the method of
union or how of initiative.
There is one kind of cooperation, proceeding as it were
from without, which results from the conscious direction
of a controlling will to a definite end. This we may call
directed or conscious cooperation. There is another kind
of cooperation, proceeding as it were from within, which
results from a correlation in the actions of independent
wills, each seeking but its own immediate purpose, and
careless, if not indeed ignorant, of the general result. This
we may call spontaneous or unconscious cooperation.
The movement of a great army is a good type of
cooperation of one kind. Here the actions of many
individuals are subordinated to and directed by one
conscious will, they becoming, as it were, its body and
executing its thought. The providing of a great city
with all the manifold things which are constantly needed
by its inhabitants is a good type of cooperation of the
other kind. This kind of cooperation is far wider, far
finer, far more strongly and delicately organized, than the
kind of cooperation involved in the movements of an
army, yet it is brought about not by subordination to the
direction of one conscious will, which knows the general
result at which it aims ; but by the correlation of actions
originating in many independent wills, each aiming at its
own small purpose without care for or thought of the
general result.
The one kind of cooperation seems to have its analogue
in those related movements of our body which we are able
consciously to direct. The other kind of cooperation
seems to have its analogue in the correlation of the
innumerable movements, of which we are unconscious,
that maintain the bodily frame motions which in their
complexity, delicacy and precision far transcend our
powers of conscious direction, yet by whose perfect
384 THE PRODUCTION OP WEALTH. Book III.
adjustment to each other and to the purpose of the whole
that cooperation of part and function that makes up the
human body and keeps it in life and vigor is brought
about and supported.
A beautiful instance of cooperation of the first kind is
furnished by the tacking of a square-rigged ship under
full sail. The noble vessel, bending gracefully to the
breeze, under her cloud of canvas, comes driving along,
cleaving white furrows at her bow and leaving a yeasty
wake at her stern. Suddenly her jibs fly free and her
spanker flattens, as she curves towards the wind; her
foreyards round in and their sails begin to shake, and at
length, as what were their weather braces are hauled
taut, to fill on the other side. The after sails that at first
held the wind as before, begin in their turn to spill; then
their yards are shifted, and they too take the wind on a
different side ; and with every sheet and tack in its new
place the vessel gathering again her deadened headway,
begins to drive the foam from her bow as she bends on the
other side to cut her way in a new direction. So har-
monious are her movements, so seemingly instinct with
life, that the savage who sees for the first time such a
vessel beating along the coast might take her for a great
bird, changing its direction with the movement of its
wings as do sea-gull and albatross.
And between ship and bird there are certain resem-
blances. Both are structures in which various parts are
combined into a related whole and distinct motions are
correlated in harmonious action. And in both movement
is produced by the varying angles at which flat surfaces
are by a mechanism of joints and ligaments exposed to
the impact of air. In a bird, however, the parts in their
motions obey instinctively and unconsciously the prompt-
ings of the conscious will. But in the ship the motions of
the parts are produced by the distinct action of a number
Chap. X. COOPEKATION-ITS TWO KINDS. 385
of conscious wills, ranging from one or two dozen in a
merchant vessel to several hundred in an old-fashioned
ship of war. Their cooperation is produced, not in-
stinctively and unconsciously, but by intelligent obedience
to the intelligent orders of one directing will, which
prescribes to every man his place and function, directing
when, how, and by whom, each motion shall be made.
The bird veers, because when it wills to veer, nerve and
tendon directly respond with the necessary motions. The
ship tacks because the separate wills that manage her
rudder and sails consciously obey the successive commands
which prescribe each of the necessary motions from the
first order, " Full for stays ! " to the last, " Belay all ! " A
series of intelligent directions, consciously obeyed by those
to whom they are addressed, bring about and correlate the
movements of the parts.
Nor could the manceuvers of a ship be carried on without
such intelligent direction. Any attempt to substitute
independent action, no matter how willing, for responsive
obedience to intelligent direction would be certain ere
long to result as in the traditional coasting schooner,
manned by two captain and mate where the captain
who was steering, irritated by some gratuitous advice of
the mate who was tending jib-sheets, yelled out to him,
" You run your end of this schooner and I'll run mine ! "
Whereupon there was a rattle of chain at the bow, and the
mate yelled back, " Captain, I've anchored my end of this
schooner ; you can run your end where you choose ! "
Now, much of the cooperation of man in producing
social effects is of the nature of that by which a ship is
sailed. It involves the delegation to individuals of the
power of arranging and directing what others shall do,
thus securing for the general action the advantages of
one managing and correlating intelligence. But while
cooperation of this kind is indispensable to producing
386 THE PRODUCTION OF WEALTH. Book IIL
certain results by conjoined action, it is helpless or all but
helpless to bring about certain other results involving a
longer series and more complicated and delicate actions
and adjustments.
To continue our illustration : The bird structurally is
a machine as the ship is a machine, which the conscious
will of the bird, controlling certain voluntary movements,
causes to rise or fall, to sweep in this direction or in that,
to be carried with the gale or to tack in its teeth, in short
to execute all the movements, sometimes swift and some-
times slow, but nearly always graceful, of which this bird
machine is capable. But the conscious will that controls
the voluntary motions of the bird ; the intelligence that is
the captain of this aerial craft, will not account for the
machine itself; for its consummate arrangements and
adjustments and adaptions. These not merely infinitely
transcend the intelligence of the bird, but of the highest
human intelligence. The union of lightness with strength,
of rigidity with flexibility, of grace with power ; the appro-
priateness of material, the connection and relation of parts,
the economies of space and energy and function, the
applications of what are to us the most complex and
recondite of physical laws, make the bird as a machine, as
far superior to the best and highest machines of man's
construction, as the paintings of the great master are to
the rude slate-drawings of the prattling child.
The bird is not a construction as man's machines are
constructions. It was not built, but grew. Its first
tangible form, as far as we can trace it, was a limy envelop
containing a substance called the yolk, swimming in a
sticky fluid, the white. Under certain conditions and
without external influence except that of gentle and
continued heat, the molecules of the contained substance
began, by some influence from within, and seemingly, of
themselves, to range themselves into cells, and cells to
Chap. X. C05PEEATION-ITS TWO KINDS. 387
form into tissue and bone, and turning in related order
into heart and lungs, backbone and head, stomach and
bowels, brain and nerve, wings and feet, skin and feathers,
until at length a tiny living thing pecked its way out,
leaving an empty shell, and with a little eating and sleeping,
a little hardening of gristle and lengthening of feathers,
the " it " of it, the new captain of the new air-ship, began
to try rudder and sails and paddles, until having " learned
the ropes," and got accustomed to the measurement of
distance and the " feel " of motion, it started off boldly to
skim and to soar, to get food and digest it, to live its life
and propagate its kind.
The veriest savages must at times ponder over the
mystery of the egg, as we civilized men at times ponder
over the mystery of common things for to them as to us
it would be an insoluble mystery. But it is the ship,
not the bird, that would most excite their wonder and
admiration, for the savage would see in the ship as soon
as he came close to it, not a thing that grew, but a thing
that was made a higher expression of the same power
which he himself exercises in his own rude constructions.
He would see in it, when he came to look closely, but a
vastly greater and better canoe, and would wonder and
admire as he who has begun to paint stands in wonder and
admiration before the picture of a master, which one who
knew nothing of the difficulties of the art would pass with
little notice. As the savage would understand the kind of
cooperation called into play in the managing of a vessel,
so would he attribute the building of the vessel to coopera-
tion of the same kind. Since a larger canoe than one man
can build may be built by the same man if he can unite
the exertions of others in cutting, rolling, hewing and
hollowing a great log, so would it seem to our savage that
it was in this way that the ship of civilization was built.
And the admiration which the ship would excite in him
388 THE PRODUCTION OF WEALTH. Book III.
would be an admiration of the men who sailed it ; whom
he would naturally take to be the men who built it, or at
least to be men who could build it. The superiority of
the ship to the ? rude canoes with which he was familiar he
would attribute to superiority of their personal qualities
their greater knowledge and skill and power. They
would indeed seem to him at first as very gods.
Yet the savage would be wrong. The superiority of the
ship does not indicate the superiority of individual men.
If driven ashore with the loss of their ship and all its
contents, these men would be more helpless than so many
of his own people, and would find it more difficult to make
even a canoe. Even if they had saved tools and stores, it
would be only after long toil that they could succeed in
building some rude, small craft unfitted for a long voyage
and rough weather, and not in any respect comparable with
their ship. For a modern ship is rather a growth than a
direct construction in that as between the kind of coopera-
tion required for its production and that which suffices for
that of a canoe, there is a difference which suggests some-
thing not altogether unlike the difference between a work
of nature and a work of man.
The cooperation required in the making of a large
canoe or in the sailing of a ship is exceedingly simple
as compared to that involved in the construction and
equipment of a well-found, first-class ship. The actual
putting together, according to the plans of the naval
architect, of the separate parts and materials which com-
pose such a ship, would require, after they had been
assembled, some directed cooperation. But if cooperation
of this kind could suffice for even putting the parts
together after they had been made and assembled, how
could it suffice for making those various parts from the
forms in which nature offers their material, and assembling
them in the place where they were to be put together?
Chap.X. COOPEKATION-ITS TWO KINDS. 389
Consider the timbers, the planks, the spars ; the iron and
steel of various kinds and forms ; the copper, the brass,
the bolts, screws, spikes, chains; the ropes, of steel and
hemp and cotton; the canvas of various textures; the
blocks and winches and windlasses ; the pumps, the boats,
the sextants, the chronometers, the spy-glasses and patent
logs, the barometers and thermometers, charts, nautical
almanacs, rockets and colored lights ; food, clothing, tools,
medicines and furniture, and all the various things, which
it would be tiresome fully to specify, that go to the con-
struction and furnishing of a first-class sailing-ship of
modern type, to say nothing of the still greater complexity
of the first-class steamer. Directed cooperation never did,
and I do not think in the nature of things it ever could,
make and assemble such a variety of products, involving
as many of them do the use of costly machinery and
consummate skill, and the existence of subsidiary products
and processes.
When a ship-builder receives an order for such a ship
as this he does not send men into the forest, some to cut
oak, others to cut yellow pine, others to cut white pine,
others to cut hickory and others still to cut ash and lig-
num- vitas ; he does not direct some to mine iron ore, and
others copper ore, and others lead ore, and others still to
dig the coal with which these ores are to be smelted, and
the fire-clay for the smelting- vessels ; some to plant hemp,
and some to plant cotton, and others to breed silkworms ;
some to make glass, others to kill beasts for their hides
and tallow, some to get pitch and rosin, oil, paint, paper,
felt and mercury. Nor does he attempt to direct the
manifold operations by which these raw materials are to
be brought into the required forms and combinations, and
assembled in the place where the ship is to be built. Such
a task would transcend the wisdom and power of a Solomon.
What he does is to avail himself of the resources of a high
390 THE PEODUCTION OF WEALTH. Boob III.
civilization, for without that he would be helpless, and to
make use for his purpose of the unconscious cooperation
by which without his direction, or any general direction,
the efforts of many men, working in many different places
and in occupations which cover almost the whole field of
a minutely diversified industry, each animated solely by
the effort to obtain the satisfaction of his personal desires
in what to him is the easiest way, have brought together
the materials and productions needed for the putting
together of such a ship.
He buys of various dealers in such things, knees, beams,
planking, spars, sails, cables, ropes, boats, lanterns, flags,
nautical instruments, pumps, stoves; and he probably
contracts for various parts of the work of putting together
the hull, such as calking, sheathing, painting, etc. ; of
making the sails and rigging the spars. And each of
these separate branches of collation and production will
be found on inquiry to reach out and ramify into other
branches having necessary relations with still other
branches. So far from any lifetime sufficing to acquire,
or any single brain being able to hold, the varied know-
ledge that goes to the building and equipping of a mod-
ern sailing-ship, already becoming antiquated by the still
more complex steamer, I doubt if the best-informed man
on such subjects, even though he took a twelvemonth to
study up, could give even the names of the various sepa-
rate divisions of labor involved.
A modern ship, like a modern railway, is a product
of modern civilization ; of that correlation of individual
efforts in which what we call civilization essentially con-
sists; of that unconscious cooperation which does not
come by personal direction, as it were from without, but
grows, as it were from within, by the relation of the
efforts of individuals, each seeking the satisfaction of
individual desires. A mere master of men, though he
Chap. X. COOPERATION-ITS TWO KINDS. 391
might command the services of millions, could not make
such a ship unless in a civilization prepared for it. A
Pharaoh that built pyramids, a Genghis Khan who raised
mounds of skulls, an Alexander, a Caesar, or even a
Henry VIII. could not do it.
The kind of cooperation which I have illustrated by
the tacking of a ship is a very simple matter. It could be
readily taught, the difficulties of language aside, to Malays,
or Somalis, or Hindus, or Chinamen, or to the men who
manned the Roman galleys or the viking ships. But that
kind of cooperation which is involved in the making of
such a ship is a much deeper and more complex matter.
It is beyond the power of conscious direction to order or
bring about. It can no more be advanced or improved
by any exertion of the power of directing the conscious
actions of men than the conscious will of the individual
can add a cubit to his stature. The only thing that
conscious direction can do to aid it is to let it alone ; to
give it freedom to grow, leaving men free to seek the
gratification of their own desires in the ways that to them
seem best. To attempt to apply that kind of cooperation
which requires direction from without to the work proper
for that kind of cooperation which requires direction from
within, is like asking the carpenter who can build a
chicken-house to build a chicken also.
This is the fatal defect of all forms of socialism the
reason of the fact, which all observation shows, that any
attempt to carry conscious regulation and direction beyond
the narrow sphere of social life in which it is necessary,
inevitably works injury, hindering even what it is intended
to help.
And the rationale of this great fact may, I think, at least
in some measure, be perceived when we consider that the
originating element in all production is thought or intel-
ligence, the spiritual not the material. This spiritual
392 THE PRODUCTION OF WEALTH. Book III.
element, this intelligence or thought power as it appears
in man, cannot be combined or fused as can material force.
Two men may pull or push twice as much as one man,
and the physical force of one hundred thousand men
properly brought to bear will one hundred thousand times
exceed the physical force of a single man. But intelligence
cannot be thus aggregated. Two men cannot see twice as
far as one man, nor a hundred thousand determine one
hundred thousand times as well. If it be true that " In a
multitude of counselors there is wisdom," it is only in the
sense that in a large comparison of views and opinions
eccentricities and aberrations are likely to be eliminated.
But in this elimination the qualities necessary for superior
judgment and prompt direction are also lost. No one ever
said, " In a multitude of generals there is victory." On
the contrary the adage is, " One poor general is better than
two good ones."
In the first kind of cooperation, as for example, when
ten men pull on the same rope in the same way in obedience
to the direction of one man, there is a utilization of the
physical force of ten at the direction of the mental force
of one. But there is at the same time a loss or rather
non-utilization of the mental force of ten. The result can
be no greater than if the ten men who are pulling were for
the time utterly devoid of intelligence mere automata.
And we can readily conceive of such extensions in the
applications of machinery to the utilization of natural
physical forces that the captain of a ship might by touching
an electrical keyboard, so give responsive motion to rudder,
sheets and braces, as to tack ship without a crew, which
would be a long approach in the mechanism of a ship to
the mechanism of a bird.
But in the kind of cooperation that I have called
spontaneous, where the direction comes from within, what
is utilized in production is not merely the sum of the
Chap. X. COOPERATION-ITS TWO KINDS. 393
physical power of the units, but the sum of their intelli-
gence. If I may be permitted to use for a moment the
term "man power" and symbol M as expressing the
physical force which one individual can exert, and the
term " mind power " and symbol M' as suggesting quanti-
tatively the individual power of intelligence or thought,
the best possible result of the exertion of one hundred
thousand men in cooperation of the first kind would be
100,000 man power x 1 mind power or 100,000 MM';
while of the same number of men employed in the second
kind of cooperation it would be 100,000 man power x
100,000 mind power or 10,000,000,000 MM'.
The illustration is clumsy, but it may serve to suggest
the enormous difference which we see developed in the
two kinds of cooperation, and which as it seems to me
arises at least in important part from the fact that while
in the second kind of cooperation the sum of intelligence
utilized is that of the whole of the cooperating units, in
the first kind of cooperation it is only that of a very small
part.
In other words it is only in independent action that the
full powers of the man may be utilized. The subordination
of one human will to another human will, while it may in
certain ways secure unity of action, must always where
intelligence is needed, involve loss of productive power.
This we see exemplified in slavery and where governments
have undertaken (as is the tendency of all government)
unduly to limit the freedom of the individual. But where
unity of effort, or rather combination of effort, can be
secured while leaving full freedom to the individual, the
whole of productive power may still be utilized and the
result be immeasurably greater.
The hardening of muscular tissue, which comes to us as
the years of our lives go by, has deprived the delicate
mechanism which once adequately moved the lenses of my
394 THE PRODUCTION OF WEALTH. BooTcIH.
eyes of what opticians call their power of accommodation,
so that to my natural sight printed pages that I once read
comfortably are now indistinguishably confused. By
piercing a small pinhole in a piece of cardboard and
holding it close to one of my eyes, while I shut the other,
I can cut off from my vision so many of the rays of light
that the few which reach my retina do not interfere with
each other, and I can thus see the same printed page for
a few moments distinctly. But this is by the sacrifice of
otherwise available rays of light. Now by means of a
properly ground pair of spectacles which deflect so as to
utilize for the eyes the interfering rays of light I can use
them all.
To attempt in social affairs to secure by cooperation of
the first kind that alignment of effort which by natural
law belongs to cooperation of the second kind, is like
attempting to secure by cardboard and pinholes the
definiteness of vision that can be far better secured by
spectacles. Such is the attempt of what is properly called
socialism.
Imagine an aggregation of men in which it was attempted
to secure by the external direction involved in socialistic
theories that division of labor which grows up naturally
in society where men are left free. For the intelligent
direction thus required an individual man or individual
men must be selected, for even if there be angels and
archangels in the world that is invisible to us, they are
not at our command.
Taking no note of the difficulties which universal ex-
perience shows always to attend the choice of the de-
positaries of power, and ignoring the inevitable tendency
to tyranny and oppression, of command over the actions
of others, simply consider, even if the very wisest and best
of men were selected for such purposes, the task that would
be put upon them in the ordering of the when, where, how
Chap.X. COOPERATION-ITS TWO KINDS. 395
and by whom that would be involved in the intelligent
direction and supervision of the almost infinitely complex
and constantly changing relations and adjustments in-
volved in such division of labor as goes on in a civilized
community. The task transcends the power of human
intelligence at its very highest. It is evidently as much
beyond the ability of conscious direction as the correlation
of the processes that maintain the human body in health
and vigor is beyond it.
Aristotle, Julius Caasar, Shakespeare, Newton, may be
fairly taken as examples of high-water mark in the powers
of the human mind. Could any of them, had the control
of the processes that maintain the individual organism
been relegated to his conscious intelligence, have kept life
in his body a single minute? Newton, so the tradition
runs, stopped his tobacco-bowl with his lady's finger.
What would have become of Newton's heart if the ordering
of its beats had been devolved on Newton's mind ?
This mind of ours, this conscious intelligence that
perceives, compares, judges and wills, wondrous and far-
reaching as are its powers, is like the eye that may look
to far-off suns and milky ways, but cannot see its own
mechanism. This body of ours in which our mind is
cased, this infinitely complex and delicate machine through
which that which feels and thinks becomes conscious of
the external world, and its will is transmuted into motion,
exists only by virtue of unconscious intelligence which
works while conscious intelligence rests ; which is on guard
while it sleeps ; which wills without its concurrence and
plans without its contriving, of which it has almost no
direct knowledge and over which it has almost no direct
control.
And so it is the spontaneous, unconscious cooperation
of individuals which, going on in the industrial body,
the Greater Leviathan than that of Hobbes, conjoins
396 THE PRODUCTION OF WEALTH. Boole III.
individual efforts in the production of wealth, to the
enormous increase in productive power, and distributes
the product among the units of which it is composed. It
is the nature and laws of such cooperation that it is the
primary province of political economy to ascertain.
CHAPTER XI.
THE OFFICE OF EXCHANGE IN PRODUCTION.
SHOWING THAT IN MAN THE LACK OF INSTINCT IS SUPPLIED
BY THE HIGHER QUALITY OP REASON, WHICH LEADS TO
EXCHANGE.
The cooperation of ants and bees is from within and not from with-
out ; from instinct and not from direction Man has little instinct ;
but the want supplied by reason Reason shows itself in exchange
This suffices for the unconscious cooperation of the economic body
or Greater Leviathan Of the three modes of production, "ex-
changing "is the highest Mistake of writers on political economy
The motive of exchange.
IT is a curious fact, having in it suggestions that it
would lead beyond our purpose to follow, that the living
things that come nearest to the social organization of man
are not those to whom we are structurally most allied, but
those belonging to a widely separated genus, that of insects.
The cooperation by which ants and bees build houses and
construct public works, procure and store food, make
provision for future needs, rear their young, meet the
assaults of enemies and confront general dangers, gives
to their social life a striking superficial likeness to that of
human societies, and brings them in this apparently far
closer to us than are animals to whom we are structurally
more akin.
397
398 THE PKODUCTION OF WEALTH. Book III.
The cooperation by which the social life of such insects
is carried on seems at first glance to be of the kind I have
called directed cooperation, in which correlation in the
efforts of individual units is brought about, as it were
from without, by such subordination of some of the units
to other units as secures conscious obedience in response
to intelligent direction. The republican monarchy of the
bees has its queen, its drones, its workers ; the ants range
themselves for march, for battle, or for work, in militant
or industrial armies.
Yet closer observation shows that this is more in seeming
than in fact, and that the great agency in the correlation
of effort which the insects show is something which
impresses the units not from without but from within
their own nature, the force or power or impulse that we
call instinct, which operating directly on the individual
unit, brings each, as it were, of its own volition, to its
proper place and function with relation to the whole, in
something of the same way in which the vital or germinative
force operates within the egg-shell to bring the separate
cells into relations that result in the living bird.
Now of this power or impulse that we call instinct
conscious man has little. While the involuntary and
unconscious functions of his bodily frame may be ordered
and maintained by it or something akin to it, and while
it may in the same way furnish the sub-stratum of what
we may call his mental frame, yet instinct, so strong in
the orders of life below him, seems with man to fade and
withdraw as the higher power of reason assumes control.
What of instinct he retains would not suffice even for such
social constructions as those of ants or bees or beavers.
But reason, which in him has superseded instinct, brings
a new and seemingly illimitable power of uniting and
correlating individual efforts, by enabling and disposing
him to exchange with his fellows. The act of exchange is
Chap. XL OFFICE OF EXCHANGE IN PRODUCTION. 399
that of deliberately parting with one thing for the purpose
and as a means of getting another thing. It is an act
that involves foresight, calculation, judgment qualities
in which reason differs from instinct.
All living things that we know of cooperate in some
kind and to some degree. So far as we can see, nothing
that lives can live in and for itself alone. But man is the
only one who cooperates by exchanging, and he may be
distinguished from all the numberless tribes that with him
tenant the earth as the exchanging animal. Of them all
he is the only one who seeks to obtain one thing by giving
another. A dog may prefer a big bone to a little bone,
and where it cannot hold on to both, may keep one in
preference to the other. But no dog or other animal will
deliberately and voluntarily give up one desirable thing
for another desirable thing. "When between two desired
things the question " Which ? " is put to it, its answer is
always the answer of the child, " Both," until it is forced
to leave the one in order to hold the other. No other
animal uses bait to attract its prey ; no other animal plants
edible seeds that it may gather the produce. No other
animal gives another what it itself would like to have in
order to receive in return what it likes better. But such
acts come naturally to man with his maturity, and are of
his distinguishing principle.
Exchange is the great agency by which what I have
called the spontaneous or unconscious cooperation of men
in the production of wealth is brought about, and economic
units are welded into that social organism which is the
Greater Leviathan. To this economic body, this Greater
Leviathan, into which it builds the economic units, it is
what the nerves or perhaps the ganglions are to the
individual body. Or, to make use of another illustration,
it is to our material desires and powers of satisfying them
what the switchboard of a telegraph or telephone or other
400 THE PRODUCTION OF WEALTH. Book III.
electric system is to that system, a means by which exer-
tion of one kind in one place may be transmuted into sat-
isfaction of another kind in another place, and thus the
efforts of individual units be conjoined and correlated so
as to yield satisfactions in most useful place and form, and
to an amount enormously exceeding what otherwise would
be possible.
Of the three modes of production which I have distin-
guished as adapting, growing and exchanging, the last is
that by which alone the higher applications of the modes
of adapting and growing are made available. Were it not
for exchange the cooperation of individuals in the produc-
tion of wealth could go no further than it might be carried
by the natural instincts that operate in the formation of
the family, or by that kind of cooperation in which indi-
vidual wills are made subordinate to another individual
will. These it is evident would not suffice for the lowest
stage of civilization. For not only does slavery itself,
which requires that the slaves shall be fed and clothed,
involve some sort of exchange, though a very inadequate
one, but the labor of slaves must be supplemented by
exchange to permit the slave-owner to enjoy any more
than the rudest satisfactions. It was only by exchanging
the produce of their labor that the American slave-owner
could provide himself with more than his slaves themselves
could obtain from his own plantation, and a slave-based
society in which there was no exchanging could hardly
carry the arts further than the construction of the rudest
huts and tools. When we speak of pyramids and canals
being constructed by enforced labor we are forgetting the
great amount of exchanging which was involved in such
work.
Many if not most of the writers on political economy
have treated exchange as a part of distribution. On the
contrary, it properly belongs to production. It is by
Chap. XI. OFFICE OF EXCHANGE IN PRODUCTION. 401
exchange and through exchange that man obtains and is
able to exert the power of cooperation which with the
advance of civilization so enormously increases his ability
to produce wealth.
The motive of exchange is the primary postulate of
political economy, the universal fact that men seek to
gratify their desires with the least exertion. This leads
men by a universal impulse to seek to gratify their desires
by exchange wherever they can thus obtain the gratification
of desire with less exertion than in any other way ; and
by virtue of the natural laws, both physical and mental,
explained in Chapter II. of this Book, this is from the very
origin of human society, and increasingly with its advance,
the easiest way of procuring the satisfaction of the greatest
number of desires.
And in addition to the laws already explained there is
another law or condition of nature related to man which
is taken advantage of to the enormous increase of pro-
ductive power in exchange. 1
1 A note, "Leave six pages," written in pencil, appears on the last page of this
chapter in the MS. The indications are that it was intended not for this, but for
the next succeeding chapter, which was left unfinished. H. G., JR.
CHAPTER XII.
OFFICE OF COMPETITION IN PRODUCTION.
SHOWING THAT COMPETITION BRINGS TRADE, AND CONSE-
QUENTLY SERVICE, TO ITS JUST LEVEL.
["Competition is the life of trade" an old and true adage The as-
sumption that it is an evil springs from two causes one bad, the
other good The bad cause at the root of protectionism Law of
competition a natural law Competition necessary to civilization.] 1
THAT " competition is the life of trade," is an old and
true adage. But in current thought and current
literature there is so much assumption that competition is
an evil that it is worth while to examine at some length
its cause and office in the production of wealth.
Much of this assumption that competition is an evil and
a wrong that should be restricted and indeed abolished in
the higher interests of society springs from the desire of
men unduly to profit at the expense of their fellows by
distorting natural laws of the distribution of wealth. This
is true of the form of socialism which was known in the
time of Adam Smith as the mercantile system or theory,
and which still exists with but little diminished strength
under the general name of protectionism. Much of it
again has a nobler origin, coming from a righteous in-
1 No summary of this chapter appears in the MS. The summary here presented
and inclosed by brackets is supplied for the reader's convenience. H. G., JB.
402
Chap. XII. OFFICE OF COMPETITION IN PRODUCTION. 403
dignation with the monstrous inequalities in the existing
distribution of wealth throughout the civilized world,
coupled with a mistaken assumption that these inequalities
are due to competition.
I do not propose here to treat either of protectionism or
socialism proper, my purpose being not that of controversy
or refutation, but merely that of discovering and explaining
the natural laws with which the science of political economy
is concerned. But the law of competition is one of these
natural laws, without an understanding of which we
cannot fully understand the economy or system by which
that Intelligence to which we must refer the origin and
existence of the world has provided that the advance of
mankind in civilization should be an advance towards the
general enjoyment of literally boundless wealth.
The competition of men with their fellows in the pro-
duction of wealth has its origin in the impulse to satisfy
desires with the least expenditure of exertion.
Competition is indeed the life of trade, in a deeper sense
than that it is a mere facilitator of trade. It is the life of
trade in the sense that its spirit or impulse is the spirit or
impulse of trade or exchange.
CHAPTER XIII.
OF DEMAND AND SUPPLY IN PRODUCTION. 1
1 No more than the title of this chapter was written. The reader will find the
subject of demand and supply in production treated in "Progress and Poverty"
and in " Social Problems." H. G., JB.
404
CHAPTER XIV.
ORDER OF THE THREE FACTORS OF PRODUC-
TION.
SHOWING THE AGREEMENT OF ALL ECONOMISTS AS TO THE
NAMES AND ORDER OF THE FACTORS OF PRODUCTION.
Land and labor necessary elements in production Union of a com-
posite element, capital Eeason for dwelling on this agreement as
to order.
ALL economists give the factors of production as
J\_ three land, labor and capital. And without ex-
ception that I know of, they name them in this order.
This, indeed, is the natural order; the order of their
appearance. The world, so far as political economy takes
cognizance of it, began with land. Reason tells us that
land, with all its powers and potentialities, including even
all vegetable and animal life, existed before man was, and
must have existed before he could be. But whether still
"formless and void," or already instinct with the lower
forms of life, so long as there was in the world only the
economic element land, production in the economic sense
could not be, and there was no wealth. When man
appeared, and the economic element labor was united to
the economic element land, production began, and its
product, wealth, resulted. At length (for in the myths
and poems in which mankind have expressed all the
wisest could tell of our far beginnings they have always
405
406 THE PRODUCTION OF WEALTH. Boole III.
loved to picture a golden age devoid of care), or more
probably almost immediately (for the very first of our
race must have possessed that reason which is the
distinguishing quality of man), the greater power that
could be gained by using wealth in aid of labor was seen,
and a third factor of production, capital, appeared.
But between this third factor and the two factors which
precede it, a difference in nature and importance is to be
noted. Land and labor are original and necessary factors.
They cannot be resolved into each other, and they are
indispensable to production, being necessary to production
in all its modes. But capital is not an original factor.
It is a compound or derivative factor, resulting from the
union of the two original factors, land and labor, and
being resolvable on final analysis into a form of the active
factor, labor. It is not indispensable to production,
being necessary, as before explained, not in all modes of
production, but only in some modes. Nevertheless, the
part that it bears in production is so separable, and the
convenience that is served by distinguishing it from
the original factors is so great, that it has been properly
recognized by the earliest and by all subsequent writers
in political economy as a separate factor ; and the three
elements by whose union wealth is produced in the civilized
state are given by the names and in the order of (1) land,
(2) labor, and (3) capital.
It may seem to the reader superfluous that I should lay
such stress upon the order of the three factors of production,
for it is not more self-evident that the mother must precede
the child than that land must precede labor, and that labor
must precede capital. But I dwell upon this question of
order because it is the key to confusions which have
brought the teaching of the science of political economy
to absurdity and stultification. Such of these writers as
have condescended to make any definitions of the terms
Chap. XIV. THREE FACTORS OF PRODUCTION. 407
they use have indeed in these definitions recognized the
natural order of the three factors of production. But
whoever will follow them will see that without seeming
conscious of it themselves they soon slip into a reversal of
this order, and, literally making the last first, proceed to
assume that capital is the prime factor in production. So-
cialism, which gives such undue prominence to capital and
yet is so completely at sea as to the real nature and func-
tions of capital has the root of its absurdities in the teach-
ings of the scholastic economists.
But the results of this confusion as to the nature and
order of the factors of production will be more fully treated
when we come to consider the distribution of wealth. All
that it is necessary to do here is to point out the true order
of the factors of production and to make clear what they
are. Let us proceed to consider them one by one.
CHAPTER XV.
THE FIRST FACTOR OF PRODUCTION-LAND.
SHOWING THAT LAND IS THE NATURAL OR PASSIVE FACTOR
IN AT.T, PRODUCTION.
The term "land" "Landowners" Labor the only active factor.
MAN produces by drawing from nature. Land, in
political economy, is the term for that from which
he draws for that which must exist before he himself can
exist. In other words, the term land in political economy
means the natural or passive element in production, and
includes the whole external world accessible to man, with
all its powers, qualities and products, except perhaps those
portions of it which are for the time included in man's
body or in his products, and which therefore temporarily
belong to the categories, man and wealth, passing again
in their re-absorption by nature into the category, land.
The original and ordinary meaning of the word, land,
is that of dry superficies of the earth as distinguished from
water or air. But man, as distinguished from the denizens
of the water or the air, is primarily a land animal. The
dry surface of the earth is his habitat, from which alone
he can venture upon or make use of any other element, or
obtain access to any other material thing or potency.
Thus, as a law term, land means not merely the dry
superficies of the earth, but all that is above and all that
408
Chap. XV. FIRST FACTOR OF PRODUCTION-LAND. 409
may be below it, from zenith to nadir. For the same
reason the word land receives like extension of meaning
when used as a term of political economy, and comprises
all having material form that man has received or can
receive from nature, that is to say, from God.
Thus the term "land" in political economy means the
natural or passive factor, on which and by or through
which labor produces, and can alone produce.
But that land is only a passive factor in production
must be carefully kept in mind. It is a thing, but not a
person, and though the tendency to personification leads
not merely in poetry but in common speech to the use of
phrases which attribute sentiment and action to land, it is
important to remember that when we speak of a smiling,
a sullen, or an angry landscape, of a generous or a niggard
land, of the earth giving or the earth receiving, or rewarding
or denying, or of nature tempting or forbidding, aiding or
preventing, we are merely using figures of speech more
forcibly or more gracefully to express our own feelings by
reflection from inanimate objects. In the production of
wealth land cannot act ; it can only be acted upon. Man
alone is the actor.
Nor is this principle changed or avoided when we use
the word land as expressive of the people who own land.
Landowners, as landowners, are as purely passive in
pro3u^on_as land itselT-They take no part in production
whatever. When Arthur Young spoke of the " magic of
property turning sands to gold" he was using a figure
of speech. What he meant to say was that the effect of
security in the enjoyment of the produce of labor on land
was to induce men to exert that labor with more assiduity
and intelligence, and thus to increase the produce. Land
cannot know whether men regard it as property or not,
nor does that fact in any degree affect its powers. Sand
is sand and gold is gold, and the rain falls and the sun
410 THE PRODUCTION OF WEALTH. Book III.
shines, as little affected by the moral considerations that
men recognize as the telegraph-wire is affected by the
meaning of the messages that pass through it, or as the
rock is affected by the twitter of the birds that fly over it.
I speak of this because although their definition of land
as a factor in production is precisely that which I have
given, there is to be found in the accepted treatises on
political economy a constant tendency to the assumption
that landowners, through their ownership of land, con-
tribute to production.
That the persons whom we call landowners may con-
tribute their labor or their capital to production is of
course true, but that they should contribute to production
as landowners, and by virtue of that ownership, is as
ridiculously impossible as that the belief of a lunatic in
his ownership of the moon should be the cause of her
brilliancy.
We could not if we would, and should not if we could,
utterly eschew metaphors; but in political economy we
must be always careful to hold them at their true meaning.
CHAPTER XVI.
THE SECOND FACTOR OF PRODUCTION LABOR.
SHOWING THAT LABOR IS THE HUMAN OR ACTIVE FACTOR
IN ALL PRODUCTION.
The term labor It is the only active factor in producing wealth,
and by nature spiritual.
ALL human actions, or at least all conscious human
XX actions, have their source in desire and their end or
aim in the satisfaction of desire. The intermediary action
by which desire secures its aim in satisfaction, is exertion.
The economic term for this exertion is labor. It is the
active, and from the human standpoint, the primary or
initiative, factor in all production that which being
applied to land brings about all the changes conducive to
the satisfaction of desire that it is possible for man to
make in the material world.
In political economy there is no other term for this
exertion than labor. That is to say, the term labor
includes all human exertion in the production of wealth,
whatever its mode. In common parlance we often speak
of brain labor and hand labor as though they were entirely
distinct kinds of exertion, and labor is often spoken of as
though it involved only muscular exertion. But in reality
any form of labor, that is to say, any form of human
exertion in the production of wealth above that which
111
412 THE PRODUCTION OF WEALTH. Book III.
cattle may be applied to doing, requires the human brain
as truly as the human hand, and would be impossible
without the exercise of mental faculties on the part of the
laborer.
Labor in fact is only physical in external form. In its
origin it is mental or on strict analysis spiritual. It is
indeed the point at which, or the means by which, the
spiritual element which is in man, the Ego, or essential,
begins to exert its control on matter and motion, and to
modify the material world to its desires.
As land is the natural or passive factor in all production,
so labor is the human or active factor. As such, it is the
initiatory factor. All production results from the action
of labor on land, and hence it is truly said that labor is
the producer of all wealth.
CHAPTER XVII.
THE THIRD FACTOR OF PRODUCTION CAPITAL.
SHOWING THAT CAPITAL IS NOT A PRIMARY FACTOR, BUT
PROCEEDS PROM LAND AND LABOR, ANT IS A FORM OR
USE OF WEALTH.
Capital is essentially labor raised to a higher power Where it may,
and where it must aid labor In itself it is helpless.
THE primary factors of production are labor and land,
and from their union all production comes. Their
concrete product is wealth, which is land modified by labor
so as to fit it or better fit it for the satisfaction of human
desires. What is usually distinguished as the third factor
of production, capital, is, as we have seen, a form or use
of wealth.
Capital, which is not in itself a distinguishable element,
but which it must always be kept in mind consists of wealth
applied to the aid of labor in further production, is not a
primary factor. There can be production without it, and
there must have been production without it, or it could
not in the first place have appeared. It is a secondary
and compound factor, coming after and resulting from the
union of labor and land in the production of wealth. It
is in essence labor raised by a second union with land to
a third or higher power. But it is to civilized life so
necessary and important as to be rightfully accorded in
413
414 THE PRODUCTION OF WEALTH. Boole III.
political economy the place of a third factor in production.
Without the use of capital man could raise himself but
little above the level of the animals.
I have already, in Chapter II. of this Book, generalized
the various modes of production into three, adapting,
growing and exchanging. Now in the first of these modes,
which I have called adapting, the changing of natural
products either in form or in place so as to fit them for
the satisfaction of human desires, capital may aid labor,
and in the higher forms of this mode must aid labor.
But it is not absolutely necessary, to the lower forms at
least. Some of the smaller and less powerful animals
might be taken and the natural fruits and vegetables
obtained, some rude shelter and clothing produced, and
even some rude forms of wealth adapted from the mineral
world, without the application of capital.
But in the second and third of these modes, those namely
of growing and exchanging, capital must aid labor, or is
indispensable. For there can be no cultivation of plants
or breeding of animals, unless vegetables or animals
previously brought into the category of wealth are devoted
not to the consumption that gives direct satisfaction to
desire, but to the production of more wealth ; and there
can be no exchanging of wealth until some wealth is
applied by its owners, not to consumption, but to exchange
for other wealth or for services.
It is to be observed that capital of itself can do nothing.
It is always a subsidiary, never an initiatory factor. The
initiatory factor is always labor. That is to say, in the
production of wealth labor always uses capital, is never
used by capital. This is not merely literally true, when
by the term capital we mean the thing capital. It is also
true when we personify the term and mean by it not the
thing capital, but the men who are possessed of capital.
The capitalist pure and simple, the man who merely controls
Chap. XVII. THE THIRD FACTOR CAPITAL. 415
capital, has in his hands the power of assisting labor to
produce. But purely as capitalist he cannot exercise that
power. It can be exercised only by labor. To utilize it
he must himself exercise at least some of the functions of
labor, or he must put his capital, on some terms, at the use
of those who do.
I speak of this because it is the habit, not only of
common speech but of many writers on political economy,
to speak as though capital were the initiatory factor in
production, and as if capital or capitalists employed labor j
whereas in fact, no matter what the form of the arrange-
ment for the use of capital, it is always labor that starts
production and is aided by capital; never capital that
starts production and is aided by labor.
It cannot be too clearly kept in mind that labor is the
only producer either of wealth or of capital. Appropriation
can produce nothing. Its sole power is that of affecting
distribution under penalty of preventing production. This
may put wealth or capital in the hands of the appropriator,
by taking it from others; but can never bring it into
existence.
BOOK TV.
THE DISTRIBUTION OF WEALTH
For " Mars is a tyrant," as Timotheus ex-
presses it ; but justice, according to Pindar,
"is the rightful sovereign of the world."
The things which Homer tells us kings
receive from Jove are not machines for
taking towns or ships with brazen beaks,
but law and justice; these they are to
guard and cultivate. And it is not the
most warlike, the most violent and san-
guinary, but the justest of princes, whom
he calls the disciple of Jupiter. Plutarch,
Demetrius.
CONTENTS OF BOOK IV.
THE DISTRIBUTION OF WEALTH.
PAGE
INTRODUCTION TO BOOK IV 421
CHAPTER I.
THE MEANING OF DISTRIBUTION.
SHOWING THE MEANING AND USES OP THE WORD DISTRIBUTION J
THE PLACE AND MEANING OP THE ECONOMIC TERM; AND THAT
IT IS CONCERNED ONLY WITH NATURAL LAWS.
Derivation and uses of the word Exchange, consumption and
taxation not proper divisions of political economy Need of a
consideration of distribution It is the continuation and end
of what begins in production, and thus the final division of
political economy The meaning usually assigned to distribu-
tion as an economic term, and its true meaning . . . 423
CHAPTER II.
THE NATURE OF DISTRIBUTION.
SHOWING THE FALLACY OP THE CONTENTION THAT DISTRIBUTION
IS A MATTER OP HUMAN LAW; THAT THE NATURAL LAWS OF
DISTRIBUTION ARE MANIFEST NOT ON WEALTH ALREADY PRO-
DUCED, BUT ON SUBSEQUENT PRODUCTION J AND THAT THEY ARE
MORAL LAWS.
John Stuart Mill's argument that distribution is a matter of hu-
man law Its evidence of the unscientific character of the
scholastic economy The fallacy it involves and the confusion
it shows Illustration from Bedouin and from civilized society
Natural laws of distribution do not act upon wealth already
produced, but on future production Reason of this Illustra-
tion of siphon and analogy of blood 430
419
420 CONTENTS OF BOOK IV.
CHAPTER Ed.
THE COMMON PERCEPTION OP NATURAL LAW IN
DISTRIBUTION.
SHOWING THE COMMON AND INERADICABLE PERCEPTION OF
NATURAL LAWS OF DISTRIBUTION. PAO
Mill's admission of natural law in his argument that distribution
is a matter of human law Sequence and consequence Human
will and the will manifest in nature Inflexibility of natural
laws of distribution Human will powerless to affect distribu-
tion This shown by attempts to affect distribution through
restriction of production Mill's confusion and his high char-
acter 440
CHAPTER IV.
THE REAL DIFFERENCE BETWEEN LAWS OF
PRODUCTION AND OF DISTRIBUTION.
SHOWING THAT DISTRIBUTION HAS REFERENCE TO ETHICS,
WHILE PRODUCTION HAS NOT.
The laws of production are physical laws ; the laws of distribu-
tion moral laws, concerned only with spirit This the reason
why the immutable character of the laws of distribution is more
quickly and clearly recognized 450
CHAPTER V.
OF PROPERTY.
SHOWING THAT PROPERTY DEPENDS UPON NATURAL LAW.
The law of distribution must be the law which determines owner-
ship John Stuart Mill recognizes this ; but extending his error,
treats property as a matter of human institution solely His
assertion quoted and examined His utilitarianism His
further contradictions 454
CHAPTER VI.
CAUSE OF CONFUSION AS TO PROPERTY.
SHOWING WHY AND HOW POLITICAL ECONOMISTS FELL INTO
SUCH CONFUSIONS WITH REGARD TO PROPERTY.
Mill blinded by the pre-assumption that land is property He all
but states later the true principle of property, but recovers by
substituting in place of the economic term " land," the word in
its colloquial use The different senses of the word illustrated
from the shore of New York harbor Mill attempts to justify
property in laud, but succeeds only in justifying property in
wealth 460
INTRODUCTION TO BOOK IV.
IN accordance with the earlier usage I have planned
the division of political economy for purposes of in-
vestigation into three grand divisions: I. The nature of
wealth. II. The laws of production. III. The laws of
distribution. Having passed through the first two grand
divisions, having seen the nature of wealth and the laws of
its production, we proceed now to the laws of distribution.
In the branch of political economy to which we now
turn lies the heart of all economic controversies. For all
disputes as to the nature of wealth and all disputes as to
the production of wealth will be found at last to have their
real ground in the distribution of wealth. Hence, this, as
we shall find, is the part of political economy most beset
with confusions. But if we move carefully, making sure
as we go of the meaning of the words we use, we shall
find no real difficulty.
CHAPTER I.
THE MEANING OF DISTRIBUTION.
SHOWING THE MEANING AND USES OF THE WORD DISTRIBU-
TION ; THE PLACE AND MEANING OF THE ECONOMIC TERM j
AND THAT IT IS CONCERNED ONLY WITH NATURAL LAWS.
Derivation and uses of the word Exchange, consumption and taxation
not proper divisions of political economy Need of a consideration
of distribution It is the continuation and end of what begins in
production, and thus the final division of political economy The
meaning usually assigned to distribution as an economic term, and
its true meaning.
FT1HE word distribution comes from the Latin, dis,
JL asunder, and tribuo, to give, or tribuere, to allot.
The common meaning of distribution differs from that
of division by including with the idea of a separation into
parts the idea of an apportionment or allotment of these
parts, and is that of a division into or a division among.
Thus the distribution of work, or duty, or function is
the assignment to each cooperator of a separate part in
securing an aggregate result ; the distribution of food, or
alms, or of a trust fund, involves the allotment of a proper
portion of the whole to each of the beneficiaries; the
distribution of gas, or water, or heat, or electricity, through
a building or city, means the causing of a flow to each
part of its proper quota ; the distribution of rocks, plants
or animals over the globe involves the idea of causes or
423
424 THE DISTRIBUTION OF WEALTH. Book IV.
laws which have brought them to the places where they
are found ; the distribution of weight or strain in a building
or structure involves the idea of a division of the aggregate
mass or pressure among the various parts ; distribution in
logic is the application of a term to all members of a class
taken separately, so that what is affirmed or denied of
the whole is not merely affirmed or denied of them all
collectively, but of each considered independently; the
distribution of things into categories, or species, or genera,
in the sciences is the cataloguing of them with reference
to their likeness or nTililrp.np.ss in certain respects of form,
origin or quality.
What is called the distribution of mail in a post-office is
the reverse, or complement, of what is called the collection
of mail. It consists of the separation into pouches or bags
according to the common destination of the mail matter
brought in for transmission, or of a similar separation of
the mail matter received for delivery.
What is called the distribution of type in a printing-office
is the reverse, or the complement, of what is called the
composition of type. In composition the printer places
into a "stick" the letters and spaces in the sequence
that forms words. One line composed and " justified " by
such changes in spacing as bring it to the exact " measure,"
he proceeds to compose another line. When his stick
contains as many lines as it will conveniently hold he
" empties " it on a " galley," from which this " matter " is
finally " imposed " in a " form." As many impressions as
are desired having been ma/ie from the " form " upon paper
(or upon a " matrix " if any process of stereotyping is used),
what until put to its destined use of printing was " live
matter " becomes in the terminology of the printing-office
"dead matter," and that the movable types may be used
again in composition the printer proceeds to distribute
them. If the matter has been thrown into "pi" by an
Chap. I. THE MEANING OF DISTRIBUTION. 425
accident which disarranges the order of the letters in
words, "distribution" is a very tedious operation, since
each letter has to be separately noted. But if not, the
compositor, now become distributor, takes in his left hand
so that he can read as much of the "dead matter" as he
can conveniently hold, and beginning at the right end of
the upper line lifts with the forefinger and thumb of his
right hand a word or words, reading with a quick glance
as he does so, and moving his hand over the case, releases
each letter or space or " quad " (blank) over its appropriate
box, from which they may be readily taken for renewed
composition.
This is the system of composing and distributing type
in use from the time of Gutenberg to the present day.
But printing-machines are now (1896) rapidly beginning
to supersede hand- work. In these, composition takes place
by touches on a keyboard, like that of a typewriter. In
the type-using machines the touch on a key brings the
letter into place, justification is made afterwards by hand,
and distribution is accomplished by revolving the type
around a cylinder where by nicks on its body it is carried
to its appropriate receptacle. In the type-casting machines,
each type is cast as the key is touched, and instead of being
distributed is re-melted. In the line-making machines, or
linotypes, the composition is of movable matrices, the line
is automatically justified by wedges which increase or
diminish the space between the words, and is cast on the
face of a " slug" by a jet of molten metal. In these there
is no distribution ; the slugs when no longer needed being
thrown into the melting-pot.
As has already been observed, the distribution of wealth
in political economy does not include transportation and
exchange, as most of the standard economic writers
assume. Nor yet is there any logical reason for treating
exchange as a separate department in political economy, as
426 THE DISTRIBUTION OP WEALTH. Book IV.
is done by those writers who define political economy as
the science which teaches of the laws which regulate the
production, distribution and exchange of wealth, or as
they sometimes phrase it, of the production, exchange and
distribution of wealth. Transportation and exchange are
properly included in production, being a part of the
process in which natural objects are by the exertion of
human labor better fitted to satisfy the desires of man.
Nor yet again is there any logical reason in the division
of the field of the science of political economy for following
that department which treats of the distribution of wealth
with other departments treating of the consumption of
wealth or of taxation, as is done by some of the minor and
more recent writers. Taxation is a matter of human law,
while the proper subject of science is natural law. Nor
does the science of political economy concern itself with
consumption. It is finished and done the purpose for
which production began is concluded when it reaches
distribution.
The need of a consideration of the distribution of wealth
in political economy comes from the cooperative character
of the production of wealth in civilization. In the rudest
state of humanity, where production is carried on by
isolated human units, the product of each unit would in
the act of production come into possession of that unit,
and there would be no distribution of wealth and no need
for considering it.* But in that higher state of humanity
where separate units, each moved to action by the motive
of satisfying its individual desires, cooperate to produc-
tion, there necessarily arises when the product has been
obtained, the question of its distribution.
Distribution is in fact a continuation of production the
latter part of the same process of which production is the
* Book!., Chapter L
Chap. I. THE MEANING OP DISTRIBUTION. 427
first part. For the desire which prompts to exertion in
production is the desire for satisfaction, and distribution
is the process by which what is brought into being by
production is carried to the point where it yields satisfaction
to desire which point is the end and aim of production.
In a logical division of the field of political economy,
that which relates to the distribution of wealth is the final
part. For the beginning of all the actions and movements
which political economy is called on to consider is in
human desire. And their end and aim is the satisfaction of
that desire. When this is reached political economy is
finished, and this is reached with the distribution of wealth.
With what becomes of wealth after it is distributed polit-
ical economy has nothing whatever to do. It can take
any further account of it only should it be reentered in
the field of political economy as capital, and then only as
an original and independent entry. What men choose to
do with the wealth that is distributed to them may be of
concern to them as individuals, or it may be of concern to
the society of which they are a part, but it is of no concern
to political economy. The branches of knowledge that
consider the ultimate disposition of wealth may be
instructive or useful. But they are not included in political
economy, which does not embrace all knowledge or any
knowledge, but has as a separate science a clear and well-
defined field of its own.
If, moved by a desire for potatoes, I dig, or plant, or
weed, or gather them, or as a member of the great
cooperative association, the body economic, in which
civilization consists, I saw or plane, or fish or hunt, or
play the fiddle, or preach sermons for the satisfaction of
other people who in return will give me potatoes or the
means of getting potatoes, the whole transaction originat-
ing in my desire for potatoes is finished when I get the
potatoes, or rather when they are put at my disposal at
428 THE DISTRIBUTION OF WEALTH. Boole IV.
the place contemplated in my desire. Whether I then
choose to boil, bake, roast or fry them, to throw them at
dogs or to feed them to hogs, to plant them as seed, or to
let them decay ; to trade them off for other food or other
satisfactions, or to transfer them to some one else as a
free gift or under promise that by and by he will give me
other potatoes or other satisfactions, is something outside
of and beyond the series of transactions which originating
in my desire for potatoes was ended and finished in my
getting potatoes.
As a term of political economy, distribution is usually
said to mean the division of the results of production
among the persons or classes of persons who have
contributed to production. But this as we shall see is
misleading, its real meaning being the division into
categories corresponding to the categories or factors of
production.
In entering on this branch of our inquiry, it will be
well to recall what, in Book I., I have dwelt upon at length,
and what is here particularly needful to keep in mind, that
the laws which it is the proper purpose of political economy
to discover are not human laws, but natural laws. From
this it follows that our inquiry into the laws of the
distribution of wealth is not an inquiry into the municipal
laws or human enactments which either here and now, or
in any other time and place, prescribe or have prescribed
how wealth shall be divided among men. "With them we
have no concern, unless it may be for purposes of illus-
tration. What we have to seek are those laws of the
distribution of wealth which belong to the natural order-
laws which are a part of that system or arrangement which
constitutes the social organism or body economic, as
distinguished from the body politic or state, the Greater
Leviathan that makes its appearance with civilization and
develops with its advance. These natural laws are in all
Chap. I. THE MEANING OF DISTEIBUTION. 429
times and places the same, and though they may be crossed
by human enactment, can never be annulled or swerved
by it.
It is more needful to call this to mind, because in what
have passed for systematic treatises on political economy
the fact that it is with natural laws, not human laws, that
the science of political economy is concerned, has in treat-
ing of the distribution of wealth been utterly ignored,
and even flatly denied.
CHAPTER H.
THE NATURE OF DISTRIBUTION.
SHOWING THE FALLACY OF THE CONTENTION THAT
DISTRIBUTION IS A MATTER OF HUMAN LAW; THAT
THE NATURAL LAWS OF DISTRIBUTION ARE MANIFEST
NOT ON WEALTH ALREADY PRODUCED, BUT ON SUBSE-
QUENT PRODUCTION ; AND THAT THEY ARE MORAL LAWS.
John Stuart Mill's argument that distribution is a matter of human
law Its evidence of the unscientific character of the scholastic
economy The fallacy it involves and the confusion it shows
Illustration from Bedouin and from civilized society Natural laws
of distribution do not act upon wealth already produced, but on
future production Reason of this Illustration of siphon and
analogy of blood.
MILL'S " Principles of Political Economy " is, I think,
even at the present day entitled to the rank of the
best and most systematic exposition of the scholastically
accepted political economy yet written, and as I wish to
present in their very strongest form the opinions that I
shall controvert, I quote from it the argument from which
it is assumed that the laws of distribution with which polit-
ical economy has to deal are human laws. Mill opens
with this argument the second grand division of his work,
Book II., entitled " Distribution," which follows his intro-
ductory and the thirteen chapters devoted to "Produc-
tion," and thus states the fundamental principle on which
he endeavors to conduct his whole inquiry into distribu-
430
Chap. II. THE NATURE OF DISTRIBUTION. 431
tion, the principle that distribution is a matter of human
institution solely :
The principles which have been set forth in the first part of this
treatise, are, in certain respects, strongly distinguished from those,
on the consideration of which we are now about to enter. The laws
and conditions of the production of wealth, partake of the character
of physical truths. There is nothing optional or arbitrary in them.
Whatever mankind produce, must be produced in the modes, and
under the conditions, imposed by the constitution of external things,
and by the inherent properties of their own bodily and mental struc-
ture. . . .
But it is not so with the Distribution of Wealth. That is a matter
of human institution solely. The things once there, mankind, indi-
vidually or collectively can do with them as they like. They can
place them at the disposal of whomsoever they please, and on what-
ever terms. Further, in the social state, in every state except total
solitude, any disposal whatever of them can only take place by the
consent of society, or rather of those who dispose of its active force.
Even what a person has produced by his individual toil, unaided by
any one, he cannot keep, unless by the permission of society. Not
only can society take it from him, but individuals could and would
take it from him, if society only remained passive ; if it did not either
interfere en masse, or employ and pay people for the purpose of pre-
venting him from being disturbed in the possession. The distribution
of wealth, therefore, depends on the laws and customs of society.
The rules by which it is determined, are what the opinions and feel-
ings of the ruling portion of the community make them, and are very
different in different ages and countries ; and might be still more
different, if mankind so chose.
The opinions and feelings of mankind, doubtless, are not a matter
of chance. They are consequences of the fundamental laws of human
nature, combined with the existing state of knowledge and experience,
and the existing condition of social institutions and intellectual and
moral culture. But the laws of the generation of human opinions
are not within our present subject. They are part of the general
theory of human progress, a far larger and more difficult subject of
inquiry than political economy. We have here to consider, not the
causes, but the consequences, of the rules according to which wealth
may be distributed. Those, at least, are as little arbitrary, and have
as much the character of physical laws, as the laws of production.
Human beings can control their own acts, but not the consequences
432 THE DISTRIBUTION OF WEALTH. Xoolc IK
of their acts either to themselves or to others. Society can subject
the distribution of wealth to whatever rules it thinks best ; but what
practical results will flow from the operation of those rules, must be
discovered, like any other physical or mental truths, by observation
and reasoning.
We proceed, then, to the consideration of the different modes of
distributing the produce of land and labor which have been adopted
in practice or may be conceived in theory.*
In all the dreary waste of economic treatises that I have
plodded through, this, by a man I greatly esteem, is the
best attempt that I know of to explain what is really meant
in political economy by laws of distribution. And it is no
small evidence of Mill's superiority to those who since the
time of Adam Smith had preceded him, and to those who
since his own time have followed him, in treatises which
bear the stamp of authority in our schools and colleges,
that he should feel it incumbent on him even to attempt
this explanation. But this attempt brings into clear relief
the unscientific character of what had passed and yet still
passes as expositions of the science of political economy.
In it we are deliberately told that the laws which it is the
object of political economy to discover, are, in the first
part of its inquiries, natural laws, but that in the later and
practically more important part of those inquiries, they
are human laws ! Political economy of this sort is as
incongruous as the image that troubled Nebuchadnezzar,
with its head of fine gold and its feet part of iron and part
of clay, for in the first part its subject-matter is natural
law, and in the last and practically more important, it is
human law.
Let us examine this argument carefully, for it is made
on behalf of the current political economy by a man who
from his twelfth year had been carefully trained in
systematic logic and who before he wrote this had won
* Book H., Chapter I., Sec. 1, "Principles of Political Economy."
Chap. II. THE NATURE OF DISTRIBUTION. 433
the highest reputation as a logician, by a great work on
systematic logic, that is repeated and accepted to this day
by professors of political economy in universities and
colleges that make systematic logic a part of their curri-
culum.
To make this examination is to see that the plausibility
of the argument comes from the leading proposition ' ' The
things once there, mankind individually or collectively can
do with them as they like." It is evidently this that in
the mind of Mill himself and in the minds of the professors
and students who have since gone over his " Principles of
Political Economy," has seemed to prove beyond perad-
venture that though the laws of production may be natural
laws, the laws of distribution are human laws. For in
itself this proposition is a self-evident truth. Nothing,
indeed, can be clearer than that "the things once there,
mankind individually or collectively can do with them as
they like "that is to say, wealth once produced, human
law may distribute it as human will may ordain.
Yet while this proposition that things once there mankind
can do with them as they like, is in itself irrefutable, the
argument in which it is introduced is an egregious instance
of the fallacy called by the logicians petitio prindpii, or
begging the question. The question that Mill is arguing
is whether what is called in political economy the distri-
bution of wealth is a matter of natural law or a matter of
human law, and what he does is to cite the fact that in
what is called in human law the distribution of wealth,
mankind can do as they like, and assume from that that
the distribution of wealth in the economic sense of the
term is a matter of human law "a matter of human
institution solely."
Such a fallacy could not have been proposed by Mill,
himself a trained logician, nor could it have passed current
with the trained logicians who since his time, leaving
434 THE DISTEIBUTION OF WEALTH. Book IV.
their logic behind them, have written treatises on political
economy, had it not been for the fact that in the scholastic
political economy the real nature of the distribution of
wealth has been slurred over and the question of what
natural laws may have to do with it utterly ignored. Let
us endeavor to settle this :
The original meaning of the word distribution is that of
a division into or among. Distribution is thus an action,
presupposing an exertion of will, and involving a power
of giving that will effect. Now as to things already there,
that is to say with wealth that has been already produced,
it is perfectly clear that their division or distribution
among men is determined entirely by human will backed
by human force. With such a distribution nature is not
concerned and in it she takes no part. Things already
there, wealth already produced, belong to nature only in
what logicians would call their accident, matter. But
while still subject to material laws, such as the law of
gravitation, who shall possess or enjoy them is a matter
purely of human will and force. Mankind can place them
at the disposal of whomsoever they please and on whatever
terms.
Thus, distribution in this sense, the distribution of things
already in existence, is indeed a matter solely of human
will and power. If I would know the law of distribution
in this sense of human law, I cannot look to political
economy, but where settled institutions have not grown
up or are discarded, must look to the will of the strongest.
Where in civilized society it is human institutions that
decide among whom wealth shall be divided, as for
instance in case of an insolvent, in case of the estate of
a deceased person, or in case of controverted ownership,
the municipal law governing such distribution is to be
found recorded in written or printed statutes, in the
decisions of judges or in traditions of common use and
Chap. II. THE NATURE OF DISTRIBUTION. 435
wont. It is in cases of dispute authoritatively expounded
by courts, and is carried into effect by sheriffs or constables
or other officials having at their back the coercive power
of the state, with its sanctions of seizure of property and
person, fine, imprisonment and death.
But from its very rudest expression, where what obtains
is
" The good old rule,
the simple plan,
That they should take who have the power,
And they should keep who can,"
to societies where the most elaborate machinery for declar-
ing and enforcing human laws of distribution exists, such
laws of distribution always are and always must be based
upon human will and human force.
How then can we talk of natural laws of distribution ?
Laws of nature are not written or printed, or carved on
pillars of stone or brass. They have no parliaments, or
legislatures, or congresses to enact them, no judges to
declare them, no constables to enforce them. What then
can we really mean by natural laws of the distribution of
wealth ? What is the mode or method by which without
human agency wealth may be said to be distributed by
natural law, and without human agency, among individuals
or classes of individuals ? Here is the difficulty that not
having been cleared up in economic works has given
plausibility to the assumption into which the scholastic
economy has fallen in assuming that the only laws of
distribution with which political economy can deal are not
natural laws at all, but only human laws an assumption
that must bring any science of political economy to an end
with production.
Laws of nature, as was explained in the first part of this
work (Book I., Chapter VIII.), are the names which we
give to the invariable uniformities of coexistence and
436 THE DISTRIBUTION OF WEALTH. Book IV.
sequence which, we find in external things, and which we
call laws of nature because our reason apprehends in them
the evidence of an originating will, preceding and superior
to human will. Let us call in the aid of that most potent
instrument of political economy, imaginative experiment,
to see if we do not find evidences of such laws of nature,
the only laws with which a true science of political economy
can deal, in the matter of the distribution of wealth :
A shifting of desert sands reveals to a roving tribe
wealth produced in a long dead civilization rings, coins,
bracelets, precious stones and delicately carved marbles.
The things are there. They have been produced. The
tribesmen individually or collectively can do with them as
they like can place them at the disposal of whomsoever
they please, and on whatever terms. Nature will not
interfere. The desert sand and desert sky, the winds that
sweep across it, the sun and moon and stars that look
down on it, the living things that prowl or crawl over it,
will make no remonstrance whatever the tribesmen may
choose to do with this wealth that is there that has
already centuries ago been produced.
But things freshly produced this day or this minute are
as truly here as things produced centuries ago. Why
should not mankind individually or collectively do with
them also as they like; place them at the disposal of
whomsoever they please and on whatever terms they
choose? They could do so with no more remonstrance
from the things themselves or from external nature than
would attend the rifling of Egyptian tombs by Bedouins.
Why should not civilized men rifle the products of farm or
mine or mill as soon as they appear ? Human law inter-
poses no objection to such collective action, for human
law is but an expression of collective human will, and
changes or ceases with the changes in that will. Natural
law, so far as it is comprehended in what we call physical
Chap. II. THE NATURE OP DISTRIBUTION. 437
law, interposes no objection the laws of matter and energy
in all their forms and combinations pay no heed whatever
to human ownership.
Yet it needs no economist to tell us that if in any country
the products of a living civilization were treated as the
Bedouins treat the products of a dead civilization, the
swift result would be fatal to that civilization would be
poverty, famine and death to the people individually and
collectively. This result would come utterly irrespective
of human law. It would make no difference whether the
appropriation of "things once there" without regard to
the will of the producer were in defiance of human law or
under the sanctions of human law ; the result would be
the same. The moment producers saw that what they
produced might be taken from them without their consent,
production would cease and starvation begin. Clearly
then, this inevitable result is not a consequence of human
law, but a consequence of natural law. Not a consequence
of the natural laws of matter and motion, but a consequence
of natural laws of a different kind laws no less immutable
than the natural laws of matter and motion.
For natural law is not all comprehended in what we call
physical law. Besides the laws of nature which relate to
matter and energy, there are also laws of nature that relate
to spirit, to thought and will. And should we treat the
present products of farm or mine or mill or factory as we
may treat the products of a dead civilization, we shall feel
the remonstrance of an immutable law of nature wherever
we come in conflict with the moral law. This is not to say
that any division of wealth that mankind individually or
collectively may choose to make will be interfered with or
prevented. Things once here, once in existence in the
present, are absolutely in the control of the men of the
present, and "they can place them at the disposal of
whomsoever they please and on whatever terms." Any
438 THE DISTRIBUTION OF WEALTH. Book IV.
remonstrance of the moral law of nature to their action
will not show itself in, or in relation to, these identical
things. But it will show itself in the future in checking
or preventing the production of such things. Things once
produced are then and there alreadj 7 in existence, and may
be distributed as mankind may will. But the things on
which the natural laws of distribution exert their control
are not things already produced, but things which are
being, or are yet to be, produced.
In other words, production in political economy is not
to be conceived of as something which goes on for a while
and then stops, when its product wealth has been brought
into being ; nor is it to be conceived of as something related
only to a production that is finished and done. Both
production and distribution are properly conceived of as
continuous, resembling not the drawing of water in a
bucket but the drawing of water through a pipe or better
still, in the conveyance of water over an elevation by
means of a bent pipe or siphon, of which the shorter arm
may stand for production and the longer for distribution.
It is in our power to tap this longer arm of the pipe at
any point below the highest, and take what water is already
there. But the moment we do so, the continuity of the
stream is at an end, and the water will cease to flow.
Production and distribution are in fact not separate
things, but two mentally distinguishable parts of one
thing the exertion of human labor in the satisfaction of
human desire. Though materially distinguishable, they are
as closely related as the two arms of the siphon. And as it
is the outflow of water at the longer end of the siphon that is
the cause of the inflow of water at the shorter end, so it is
that distribution is really the cause of production, not
production the cause of distribution. In the ordinary
course, things are not distributed because they have been
produced, but are produced in order that they may be
Chap. II. THE NATURE OF DISTRIBUTION. 439
distributed. Thus interference with the distribution of
wealth is interference with the production of wealth, and
shows its effect in lessened production.
To use again the analogy supplied by our material
frames. Blood stands in the same relation to the physical
body that wealth does to the social body, distributing
throughout all parts of the physical frame potentialities
akin to those which wealth carries through the social
frame. But though the organs that distribute this vital
current are different from the organs that produce it, their
relations are so intimate that seriously to interfere with
the distribution of the blood is necessarily to interfere
with its production. Should we say of the blood that
passes into the great pumping station, the heart, " It has
been produced ; it is here, and we may do with it as we
please ! " and acting on the word, divert it from its course
through the organs of distribution at once the great
pump ceases to beat and the organs that produce blood
lose their power and begin to decompose.
And as to pierce the heart and divert the blood that has
been produced from the natural course of its distribution
is to bring about the death of the physical organism most
swiftly and certainly, so to interfere with the natural laws
of the distribution of wealth is to bring about a like death
of the social organism. If we seek for the reason of ruined
cities and dead civilizations we shall find it in this.
CHAPTER III.
THE COMMON PERCEPTION OF NATURAL
LAW IN DISTRIBUTION.
SHOWING THE COMMON AND INERADICABLE PERCEPTION OF
NATURAL LAWS OF DISTRIBUTION.
Mill's admission of natural law in his argument that distribution
is a matter of human law Sequence and consequence Human
will and the will manifest in nature Inflexibility of natural laws
of distribution Human will powerless to affect distribution
This shown by attempts to affect distribution through restriction
of production Mill's confusion and his high character.
IT would seem impossible for a man of the logical
acumen and training of John Stuart Mill to accept
in deference to preconceived opinion, and to justify by such
a transparent fallacy, such an incongruous conclusion
as that while the laws of political economy relating to
production are natural laws, the laws relating to distribu-
tion are human laws, without at least a glance towards the
truth. And such a sidelong glance we find in the latter
part of the argument which in the last chapter was given
in full.
To bring this more clearly into view let me print it
again, supplying the elisions in brackets, and emphasizing
with italics words to which I would direct special attention :
We have here [in political economy] to consider, not the causes,
but the consequences, of the [human] rules according to which wealth
440
Chap. III. NATURAL LAW IN DISTRIBUTION. 441
may be distributed. Those [consequences], at least, are as little
arbitrary, and have as much the character of physical laws, as the
laws of production. Human beings can control their own acts, but
not the consequences of their acts either to themselves or to others.
Society can subject the distribution of wealth to whatever rules it
thinks best ; but -what practical results will flow from the operation of
those rules, must be discovered, like any other physical or mental
truths, by observation and reasoning.
Here we have, what would hardly be expected from the
author of " Mill's System of Logic," an example of that
improper use of the word consequence where sequence is
really meant, which I referred to in Chapter VIII. of
Book I.
To recall what was there said : A sequence is that which
follows. To say that one thing is a sequence of another
is to say that it has to its antecedent a relation of succession
or coming after, but is not necessarily to say that this
relation is invariable or causal. But a consequence is that
which follows/row. To say that one thing is a consequence
of another is really to say that it has to its antecedent not
merely a relation of succession, but of invariable succes-
sionthe relation namely of effect to cause.
Our disposition to prefer the stronger word leads in
common speech to the frequent use of consequence where
merely sequence is really meant, or to speak of a result as
the consequence of what we know can be only one of the
causal elements in bringing it about. If a boy break a
window-pane in throwing a stone at a cat, or a man is
drowned in going in to swim, we are apt to speak of the
one thing as a consequence of the other, though we know
that stones are constantly thrown at cats without break-
ing windows and that men go in to swim without being
drowned, and that the result in the particular case was not
due to the human action alone, but to the concurrence with
it of other causes, such as the force and direction of wind
or tide, the attraction of gravitation, etc. This tendency
442 THE DISTRIBUTION OP WEALTH. Boole IV.
to a loose use of the word consequence is of little or no
moment in common speech, where what is really meant is
well understood ; but it becomes a fatal source of confusion
in philosophical writing, where exactness is necessary, not
merely that the writer be understood by the reader, but
that he may really understand himself.
Now, what are the things which Mill here speaks of as
consequences of human rules according to which wealth
may be distributed : the things which (and not the causes
of the human rules) we have, he says, to consider in
political economy, and which he tells us have as much the
character of physical laws as the laws of production, and
"must be discovered, like any other physical or mental
truths, by observation and reasoning " ? They follow, and
are thus sequences of human action, or as Mill subsequently
speaks of them, " practical results," appearing as invariable
uniformities in the actual outcome of man's efforts to
regulate the distribution of wealth. But though sequences
they clearly are not con-sequences of human action. To
say that human beings can control their own acts but not
what follows from those acts would be to deny the laws of
causation. Since these invariable uniformities appearing
in the practical results or sequences of man's action cannot
be related as effects to man's action as cause, they are not
properly con-sequences of man's action, but con-sequences
of something independent of man's action.
The truth that Mill vaguely perceives and confusedly
states in these sentences is in direct contradiction of his
assertion that the distribution of wealth is a matter of
human institution solely. It is, that the distribution of
wealth is not a matter of human institution solely, and
does not depend upon the laws and customs of society
alone ; that though human beings may control their own
acts towards the distribution of wealth, and frame for
their action such laws as the ruling portion of the
Chap. III. NATURAL LAW IN DISTRIBUTION. 443
community may wish, yet the practical results will not
depend on this human action alone, but on that as
combined with and dominated by another more permanent
and powerful element a something independent of human
action that modifies the practical results of human action
towards the distribution of wealth, as gravitation modifies
the flight of a cannon ball.
Now these invariable sequences which come out in the
practical results of man's action, and which we know only
as effects, and cannot relate to man's action as cause, we
are compelled by the mental necessity which demands a
cause for every effect to refer to a causal antecedent in
the nature of things, which, as explained in Book I., we
call a law of nature. That is to say, invariable uniformities,
modifying the effects of all human action, such as Mill
confusedly recognizes in these sentences, are precisely
what, apprehending them as manifestations of a higher
than human will, we style laws of nature, or natural laws.
Mill's own definition of a law of nature (" System of
Logic," Book III., Chapter IV.) is a uniformity in the
course of nature, ascertained by what is regarded as a
sufficient induction, and reduced to its most simple
expression. Thus if observation and reasoning discover
in the actual phenomena or practical results of man's
action in the distribution of wealth uniformities which
swerve or destroy the effect of human action not in exact
conformity with them, these are the natural laws of
distribution as clearly as similar sequences or uniformities
which observation and reasoning discover in the phe-
nomena of production are the natural laws of production.
And what Mill is vaguely thinking of and confusedly
writing about are clearly the very natural laws of distri-
bution which he says do not exist.
In truth, the distribution of wealth is no more " a matter
of human institution solely" than is the production of
444 THE DISTRIBUTION OP WEALTH. Book IF.
wealth. That human beings can control their own acts is
true in one case as in the other, only in the same sense
and to the same degree. Our will is free. But human
will can only affect external nature by taking advantage
of natural laws, which in the very name we give them
carry the implication of a higher and more constant will.
A boy may throw a stone or an artilleryman fire a cannon
ball at the moon. If the result depended solely on the
human action, both ball and stone would reach the moon.
But the governance of natural law without conformity
to which even such action as throwing a stone or firing
a cannon ball cannot take place continuing to modify
results, brings both to the ground again, the one in a few
feet and the other in a few thousand feet.
And the natural laws which political economy discovers,
whether we call them laws of production or laws of
distribution, have the same proof, the same sanction and
the same constancy as the physical laws. Human laws
change, but the natural laws remain, the same yesterday,
to-day and to-morrow, world without end ; manifestations
to us of a will that though we cannot obtain direct know-
ledge of it through the senses, we can yet see never slumbers
nor sleeps and knows not change in jot or tittle.
If I can prove that this inflexibility to human effort is
characteristic of the laws of distribution that political
economy seeks to discover, I have proved finally and
conclusively that the laws of distribution are not human
laws, but natural laws. To do this it is only necessary
to appeal to facts of common knowledge.
Now the three great laws of distribution, as recognized
by all economists, though they are sometimes placed in
different order, are the law of wages, the law of interest
and the law of rent. Into these three elements or factors,
the entire result of production is by natural law distributed.
Now I do not of course mean to say that human law may
Chap. III. NATURAL LAW IN DISTRIBUTION. 445
not take from the part which under the natural law of
distribution might be enjoyed by one man or set of men
and give it to another, for as I have already said all
wealth or any wealth from the moment it is produced is
entirely at the disposition of human law, and mankind
can do with it as they please. What I mean to say is that
human law is utterly powerless directly to alter distribu-
tion, so that the laborer as laborer will get more wages or
less wages, the capitalist as capitalist more interest or less
interest, or the landowner as landowner more rent or less
rent, or in any way alter the conditions of distribution
fixed by natural law under existing industrial conditions.
This has been tried again and again by the strongest
governments, and is to some extent still being tried, but
always unavailingly.
In England, as in other countries, there have been at
various times attempts to regulate wages by law, sometimes
to decrease them and sometimes to increase them below
or above the level fixed at the time by natural law. But
it was found that in the one case no law could prevent the
laborer from asking and the employer from paying more
than this legal rate when the natural law, or as we usually
say the equation of demand and supply, made wages higher,
and that no law, even when backed by grants in aid of
wages, as was done in England during the beginning of
this century, could in the opposite case keep wages at a
higher rate. So it has proved with interest. There have
been numberless attempts to keep down interest, and the
State of New York retains to this day on her statute-book
a law limiting, though with considerable holes, the rate of
interest to six per cent. But such laws never have suc-
ceeded and do not now succeed in keeping interest below
the natural rate. Lenders receive and borrowers pay that
rate in the form of sales, premiums, discounts and bonuses,
where the law forbids them to do it openly. So, too, in
446 THE DISTRIBUTION OF WEALTH. Book IF.
the case of rent. The British Parliament has recently at-
tempted to reduce agricultural rent in certain cases in Ire-
land by instituting officials with power to fix " fair rents "
what should be paid by the tenant to the landlord. They
have in many cases cut down the income of certain of the
landlords, but they have not lessened rent. They have
merely divided what before went to the landlord between
him and the existing tenant, and a new tenant must pay,
part in rent to the landlord and part in tenant right to the
existing tenant, as much for the use of the land as it would
have commanded if this attempt to reduce rent had not
been made.
And so it has been with attempts of human law to fix
and regulate prices, which involve the same great laws of
distribution in combined forms. Human law is always
potent to do as mankind will with what has been produced,
but it cannot directly affect distribution. That it can
reach only through production.
Nothing indeed could be more inconsistent with common
perceptions than this notion into which the scholastic
economists have fallen, that the distribution of wealth is
less a matter of natural law than the production of wealth.
The fact is (the reason of the fact will be considered
hereafter) that the common perceptions of men recognize
the immutability of the natural laws of distribution more
quickly and more certainly than of the natural laws of
production. If we look over the legislation by which the
ruling portion of our communities have striven to affect
the distribution of wealth, we shall find that (as if conscious
of its hopelessness) they have seldom if ever tried directly
to affect the distribution of wealth ; but have tried to affect
distribution indirectly through production.
An English Elizabeth or James wishes to alter the
practical outcome of the distribution of wealth in favor
of an Essex or VUliers, and to accomplish this imposes
Chap. III. NATURAL LAW IN DISTRIBUTION. 447
restrictions upon the production of gold lace or playing
cards. A Russian Czar desires to alter the distribution of
wealth in favor of one of his boyars, and seeks that end
by making a tract of land the property of his favorite and
forbidding peasants to leave it, thus preventing them from
engaging in production except on his terms. Or, to come
nearer the present in time and place, a Carnegie or a
Wharton wishes to alter distribution in his favor so largely
that he may play at building libraries and endowing
schools of political economy ( ?) ; he seeks his end by getting
Congress to restrict the production of iron, steel or nickel,
by imposing a duty upon importation.
But it is not alone in the sentences I have reprinted
that Mill shows an undefined consciousness that the laws
of the distribution of wealth which it is the proper business
of political economy to discover are natural laws, not
human laws. Though he does not retract his statement
that " the distribution of wealth depends on the laws and
customs of society," and formally proceeds "to the con-
sideration of the different modes of distributing the produce
of land and labor which have been adopted in practice or
may be conceived in theory," yet we find him afterwards
(Book II., Chapter III., Sec. 1) speaking of laws according
to which " the produce distributes itself by the spontaneous
action of the interests of those concerned." If there be
laws according to which produce distributes itself, they
certainly cannot be human laws. King Canute, we are
told, once tried by edict to turn back the tide ; but who
has ever dreamed that produce, whether houses or metals
or wheat or hay, or even pigs or sheep, could by ukase or
irade, act of Parliament or resolution of Congress, be made
to distribute itself f
The truth is that in the long discussion of the distribution
of wealth, which in John Stuart Mill's "Principles of
Political Economy" succeeds to what I have quoted, he
448 THE DISTEIBUTION OF WEALTH. Book IV.
neither follows what he formally states, that distribution
is a matter of human institution solely, and depends on
the laws and customs of society ; nor yet does he follow
what he confusedly admits, that it is a matter of natural
law. Passing to a consideration of the origin of private
property in human law, and beginning with Communism
and Socialism, the Moravians, the Eappists, the followers
of Louis Blanc and Cabet, St. Simonism and Fourierism,
he rambles along, mixing what properly belongs to the sci-
ence of political economy with discussions of competition
and custom, slavery, peasant proprietors, metayers, cot-
tiers, the means of abolishing cottier tenancy and popular
remedies for low wages, without either clearly giving the
laws of distribution or saying what they are. And the
reader who wishes to discover what the ablest and most
systematic of scholastic economists takes to be the laws of
distribution of wealth must after going through this mass
of dissertation keep on through some forty chapters or
600 pages more, and finally fish them out for himself
only to find when he gets them or thinks that he gets
them, that they do not correlate with each other.
As I have said, I only speak of John Stuart Mill as the
best example of what has passed as the scientific exposi-
tion of political economy. The same absence of a really
scientific method that is to say the same want of order
and precision will be found in the treatment of distribu-
tion in all the treatises of the school of economists, now
called the Classical school, of which Mill may be deemed
the culmination. And it is to be found in even worse
degree in the so-called Historical and Austrian schools
which have within recent years succeeded the school of
Mill in all our great universities. They are indeed so far
behind the predecessors at whom they affect to sneer, that
they make no attempt even at order and precision. Who-
Chap. III. NATURAL LAW IN DISTRIBUTION. 449
ever would have an economic contrast suggested to him
like that of Hamlet's "Hyperion to a Satyr," let him
compare John Stuart Mill's "Principles of Political
Economy" with the most pretentious of recent "Prin-
ciples of Economics."
CHAPTER IV.
THE REAL DIFFERENCE BETWEEN LAWS OF
PRODUCTION AND OF DISTRIBUTION.
SHOWING THAT DISTRIBUTION HAS REFERENCE TO ETHICS,
WHILE PRODUCTION HAS NOT.
The laws of production are physical laws ; the laws of distribution
moral laws, concerned only with spirit This the reason why the
immutable character of the laws of distribution is more quickly
and clearly recognized,
"It TILL is clearly wrong in the distinction which he seeks
lYJL to draw between the production of wealth and the
distributiom of wealth with regard to the kind of laws
which it is the proper business of these departments of
political economy to discover.
But there is an important difference between them
which, although he has failed to distinguish it, probably
lies in vague way at the bottom of the notion that the laws
of production and the laws of distribution are different
kinds of laws. It is, that the branch of the science which
treats of the distribution of wealth is that in which the
relations of political economy to ethics are clearer and
closer than in that branch which treats of production.
In short, the distinction between the laws of production
and the laws of distribution is not, as is erroneously taught
in the scholastic political economy, that the one set of laws
450
Chap. IV, PHYSICAL LAWS AND MOEAL LAWS. 451
are natural laws, and the other human laws. Both sets
of laws are laws of nature. The real distinction is pointed
out in the last chapter, that the natural laws of production
are physical laws and the natural laws of distribution are
moral laws. And it is this that enables us to see in
political economy more clearly than in any other science,
that the government of the universe is a moral government,
having its foundation in justice. Or, to put this idea into
terms that fit it for the simplest comprehension, that the
Lord our God is a just God.
In considering the production of wealth we are con-
cerned with natural laws of which we can only ask what
is, without venturing to raise the question of what ought
to be. Even if we can imagine a world in which beings
like ourselves could maintain an existence and satisfy
their material desires in any other way than by the
application of labor to land under relations of uniform
sequence not substantially different from those invariable
sequences of matter and motion and life and being which
we denominate physical laws, we cannot venture to apply
to these physical laws, of which we can primarily say only
that they exist, any idea of ought. Even in matters as to
which we can imagine considerable differences between
the physical uniformities that we observe in this world
and those that might exist in a world in other respects
resembling this such for instance as might be brought
about by a change in the distance of our earth from the
sun, or in the inclination of its axis to the ecliptic, or in
the density of its atmospheric envelop; or even by a
change in such uniformities as seem to us to involve
exceptions to a more general uniformity, like that exception
to the general law of the contraction of water in cooling
which causes it at the freezing-point to expand there is
nothing that has any reference to right or justice, or that
arouses in us any perception of ought or duty.
462 THE DISTKIBUTION OF WEALTH. Book IV.
For the perception of right or justice, the recognition
of ought or duty, has no connection with or relation to two
of the three elements or categories into which we may by
analysis resolve the world as it is presented in conscious-
ness to our reasoning faculties. That is to say, right or
justice, ought or duty, do not and cannot have any relation
either to matter or to energy, but only to spirit. They
presuppose conscious will, and cannot be extended beyond
the limits in which we recognize or assume a will having
freedom to act.
Thus is it that in considering the nature of wealth or
the production of wealth we come into no direct and
necessary contact with the ethical idea, the idea of right
or justice. It is only when and as we endeavor to pierce
behind the invariable uniformities of matter and motion
to which we give the name of laws of nature and recognize
them in our thought as manifestations of an originating
or creative spirit, for which our common name is God, in
its dealing with other, and though inferior, essentially
spiritual beings, that the idea of right or justice can have
any place in that branch of political economy which deals
with the nature of wealth or the laws of its production.
But the moment we turn from a consideration of the
laws of the production of wealth to a consideration of the
laws of the distribution of wealth the idea of ought or
duty becomes primary. All consideration of distribution
involves the ethical principle ; is necessarily a considera-
tion of ought or duty a consideration in which the idea
of right or justice is from the very first involved. And
this idea cannot be truly conceived of as having limits or
being subject to change, for it is an idea or relation, like
the idea of a square or of a circle or of parallel lines, which
must be the same in any other world, no matter how far
separated in space or time, as in this world. It is not
without reason that in our colloquial use of the words we
Chap. IV. PHYSICAL LAWS AND MORAL LAWS. 453
speak of a just man as " a square man " or " a straight
man." As Montesquieu says :
Justice is a relation of congruity which really subsists between
two things. This relation is always the same, whatever being con-
siders it, whether it be God, or an angel, or lastly a man.
This I take to be the reason of the fact which in Chapter
II. of this Book was referred to that the immutable char-
acter of the laws of distribution is even more quickly and
clearly recognized than the immutable character of the
laws of production. Princes, politicians and legislatures
attempt to influence distribution, but they always try to do
it, not by aiming at distribution directly but by aiming at
distribution indirectly, through laws that directly affect
production.
CHAPTER V.
OF PROPERTY.
SHOWING THAT PROPERTY DEPENDS UPON NATURAL LAW.
The law of distribution must be the law which determines ownership
John Stuart Mill recognizes this ; but extending his error treats
property as a matter of human institution solely His assertion
quoted and examined His utilitarianism His further contra-
dictions.
SINCE the distribution of wealth is an assignment of
ownership, the laws of distribution must be the laws
which determine property in the things produced. Or to
put it in another way, the principle which gives ownership
must be the principle which determines the distribution
of wealth. Thus what we may speak of in political economy
as the law of property and the law of distribution are not
merely laws of the same kind, springing from the same
principle, but are in reality different expressions of the
same fundamental law. Hence, in considering the origin
and basis of property we come again to the question, is it
the law of nature or the laws of man that it is the office of
the science of political economy to discover ? To say that
the distribution of wealth is " a matter of human enactment
solely" is to say that property can have no other basis
than human law ; while to admit any basis of property in
laws of nature is to say that the distribution of wealth is
a matter of natural law.
454
Chap. V. OF PEOPEETY. 456
It is another evidence of the superiority of John Stuart
Mill in logical acumen that he seems to have been the
only one of the accredited economic writers who has
recognized this necessary relation between the laws of
distribution and the origin of property. From the intro-
ductory section of his Book " Distribution," the section I
have already quoted in full, he proceeds at once to a
consideration of the origin of property, and indeed the
first two chapters of the Book are entitled " Of Property."
But he is consistent in error. The same want of
discrimination that leads him to treat distribution as a
matter of human institution solely, leads him to treat
property as a matter of human institution solely. Hence,
his consideration of property does not, as it should, help
him to see the incongruity of the notion that while the
laws of production are natural laws the laws of distribution
are human laws; but gives to that error such seeming
plausibility as one error may give to another. Contra-
dictions and confusions are however as marked in his
discussion of property as in his discussion of distribution.
This is shown in the introductory paragraph of his
treatment of property, Book II., Chapter I., Sec. 2, which
is as follows.
Private property, as an institution, did not owe its origin to any of
those considerations of utility, which plead for the maintenance of it
when established. Enough is known of rude ages, both from history
and from analogous states of society in our own time, to show, that tri-
bunals (which always precede laws) were originally established, not
to determine rights, but to repress violence and terminate quarrels.
With this object chiefly in view, they naturally enough gave legal
effect to first occupancy, by treating as the aggressor the person who
first commenced violence, by turning, or attempting to turn, another
out of possession. The preservation of the peace, which was the
original object of civil government, was thus attained; while by
confirming, to those who already possessed it, even what was not the
fruit of personal exertion, a guarantee was incidentally given to them
and others that they would be protected in what was so.
456 THE DISTRIBUTION OF WEALTH. Book IV.
All this I deny. It is in fact blank contradiction. Let
the reader look over and consider it. In the first sentence
we are told that private property did not originate in
considerations of utility. In the second, that " tribunals
(which always precede laws) were originally established,
not to determine rights, but to repress violence and
terminate quarrels." In the third, that they did this by
treating as the aggressor the person who first commenced
violence. In the fourth, that the preservation of the peace
was the original object of such tribunals, and that by
securing possession where there was no right they
incidentally secured possession where there was right.
Thus, the first sentence asserts that private property
did not originate in considerations of utility, and the three
succeeding sentences that it did. For when all considera-
tion of right is eliminated what remains as a reason for
the preservation of the peace by the repression of violence
and the termination of quarrels, if not the consideration
of utility ? What Mill tells us, is that society originally
acted on the principle of the schoolmaster who says, " If I
find any fighting I will not stop to ask the right or wrong,
but will flog the boy who struck the first blow, for I cannot
have the school thrown into disorder." If this is not a
substitution of the principle of utility for the principle of
right, what is it? And to this contradiction of himself,
Mill adds that by confirming wrongful possession, society
incidentally guarantees rightful possession! something
in the nature of things as impossible as that two railway
trains should pass each other on a single track.
The fact is that Mill in his consideration of property is
caught in the toils of that utilitarian philosophy which
seeks to make the principle of expediency take the place
of the principle of justice. Men can no more do this
consistently than they can live without breathing, and
Mill in his very attempt to base the institution of property
Chap. V. OF PROPERTY. 457
on human law is driven despite himself into recognizing
the moral law, and into talking of right and wrong, of
ought and ought not, of just and unjust. Now these are
terms which imply a natural law of morality. They can
have no meaning whatever if expediency be the basis of
property and human law its warrant.
The contradictions of this paragraph are shown through
the whole consideration of property it introduces. While
he strives to treat property as a matter of human institution
solely, yet over and over again we find Mill forced to
abandon this position and appeal to something superior
to human institution to right or justice.
Thus, in what follows the paragraph I have quoted, we
find statements utterly contradictory of the notion that
property has its origin in expediency and is determined
by human enactment.
In the very next section to that in which we are told that
the origin of property is not in justice but in expediency,
not in the desire to determine rights, but the desire to
repress violence, we are told (the italics being mine) :
The social arrangements of modern Europe commenced from a
distribution of property which was the result, not of just partition, or
acquisition by industry, but of conquest and violence : and notwith-
standing what industry has been doing for many centuries to modify
the work of force, the system still retains many and large traces of
its origin. The laws of property have never yet conformed to the
principles on which the justification of private property rests. They
have made property of things which never ought to be made property,
and absolute property where only a qualified property ought to exist.
Here we are told that, as a matter of fact, human laws
of property did not originate in the expediency of repressing
violence, but in violence itself ; that they have never con-
formed to what we can only understand as the natural law
of property, but have violated that natural law, by treating
as property things that under it are not property. For to
458 THE DISTRIBUTION OP WEALTH. Book IV.
say that a human law ought to be different from what the
legislature enacts is to say that there is a natural law by
which human laws are to be tested.
What indeed that natural law of property is by which
all human enactments are to be tested, Mill a little later
shows himself to be conscious of, for he says :
Private property, in every defense made of it, is supposed to mean
the guarantee to individuals of the fruits of their own labor and
abstinence.
And this basis of a natural right of property a right
which is unaffected by and independent of all human
enactments is still further on even more definitely and
clearly stated :
The institution of property, when limited to its essential elements,
consists in the recognition, in each person, of a right to the exclusive
disposal of what he or she have produced by their own exertions, or
received, either by gift or by fair agreement, without force or fraud,
from those who produced it. The foundation of the whole is, the
right of producers to what they themselves have produced.
The right of property includes, then, the freedom of acquiring
by contract. The right of each to what he has produced, implies a
right to what has been produced by others, if obtained by their free
consent.
After thus conceding everything to natural law, Mill
becomes concerned again for human law, and appeals to
the " categorical imperative " of Kant, the ought of moral
law, to give sanction under certain circumstances to
human law, declaring that :
Possession which has not been legally questioned within a moder-
ate number of years, ought to be, as by the laws of all nations it is,
a complete title.
Then, recognizing for a moment the incongruity of
making legal possession that is to say possession by
Chap. V. OF PEOPEETY. 459
virtue of human law equivalent to possession by virtue
of natural law, he continues :
It is scarcely needful to remark, that these reasons for not dis-
turbing acts of injustice of old date, cannot apply to unjust systems
or institutions ; since a bad law or usage is not one bad act, in the
remote past, but a perpetual repetition of bad acts, as long as the law
or usage lasts.
Now property, Mill himself has always spoken of as a
system or institution, which it certainly is. And he has
just before stated that the existing systems or institutions
of property have their source in violence and force, and
therefore are certainly in his own view unjust and bad.
Hence what he tells us here is in plain English that the
sanction of prescription cannot be pleaded in defense of
property condemned by the natural or moral law. This is
perfectly true, but it is in utter contradiction of the notion
that property is a matter of human law.
CHAPTER VI.
CAUSE OF CONFUSION AS TO PROPERTY.
SHOWING WHY AND HOW POLITICAL ECONOMISTS FELL INTO
SUCH CONFUSIONS WITH REGARD TO PROPERTY.
Mill blinded by the pre-assumption that land is property He all but
states later the true principle of property, but recovers by substi-
tuting in place of the economic term "land," the word in its col-
loquial use The different senses of the word illustrated from the
shore of New York harbor Mill attempts to justify property in
land, but succeeds only in justifying property in wealth.
E1T us pause a moment before we go further in our
examination of Mill's reasoning. What is it that so
perplexes this trained logician and honestly minded man,
involving him in such utter contradictions and confusions
when he endeavors to trace the basis of property ? It is
evidently the same thing that has prevented all the
scholastic economists, both those who preceded and those
who have succeeded him, from giving any clear and
consistent statement of the laws of distribution or of the
origin of property. This is a pre-assumption they cannot
bring themselves to abandon the pre-assumption that
land must be included in the category of property and a
place found in the laws of distribution for the income of
landowners. Since natural law can take no cognizance of
the ownership of land, they are driven in order to support
460
Chap. VL CAUSE OF CONFUSION AS TO PEOPEETY. 461
this pre-assumption to treat distribution and property as
matters of human institution solely.
Mill, who though befogged by his utilitarian philosophy
is in many respects the superior of all these writers, starts
on his investigation of distribution and property with the
same pre-assumption, or, to use our colloquial phrase,
with the same " string tied to his leg." He had been, as
they all have been from the really great Adam Smith to
the most recent purveyors of economic nonsense in Anglo-
German jargon accustomed to regard property in land
as the most certain, most permanent, most tangible, of all
property that which the lawyers call real property, and
which in common speech, where the unqualified word
" property " usually means landed property, is recognized
as the highest expression of ownership. And his logic was
not strong enough to permit him even at its call to lay
rude hands upon what to Englishmen of his class and
time was the most sacred of institutions what the very
Ark of the Covenant was to the pious Jew. He did indeed,
come so near questioning it as to excite the dismay of his
contemporaries who deemed him a radical of radicals for
utterances that squint towards the truth. But he always
draws back from uttering it.
The real basis of property, the real fundamental law of
distribution, is so clear that no one who attempts to reason
can utterly and consistently ignore it. It is the natural
law which gives the product to the producer. But this
cannot be made to cover property in land. Hence the
persistent effort to find the origin of property in human
law and its base in expediency. It is evident, even where
Mill speaks of property generally, as he has done in what
I have to this point commented on, that the real cause of
his contradictions and confusions is that he has always in
mind property in land. But the failure of the attempt to
bring this species of property under the only possible
462 THE DISTRIBUTION OF WEALTH. BoolcIV.
justification of property, the right of the producer to the
product, is even more painfully clear when he comes, as
he does in Chapter II., Sec. 3, specifically to treat of it.
He begins this by another admission of the truth utterly
inconsistent with the derivation of property from expedi-
ency; saying:
Nothing is implied in property but the right of each to his (or her)
own faculties.
And then after some long disquisitions on bequest and
inheritance which I will not comment on here lest it might
divert the reader from the main subject, he continues
again :
The essential principle of property being to assure to all persons
what they have produced by their labor and accumulated by their
abstinence, this principle cannot apply to what is not the produce of
labor, the raw material of the earth.
Abstinence is not a doing but a not doing, a refraining
from consuming. The essential principle of property
being to assure to all persons what they have produced by
their labor, this of course includes what having been pro-
duced by labor is afterwards accumulated by abstinence.
These words " and accumulated by their abstinence " are
superfluous, having no weight or place in the argument,
but their introduction is significant of the disposition to
assume that capital rather than labor is the active factor
in production.
But though a little superfluous in phrase, this statement
is true and clear. In the conflict going on in Mill's mind
the perception of a basis of property in natural law seems,
in the admission that the principle of property cannot apply
to land, to have finally conquered both the notion that its
basis is in human law and the pre-assumption from which
the notion comes.
Chap.VL CAUSE OF CONFUSION AS TO PROPERTY. 463
But this is hardly for a moment. In the next sentence,
not paragraph, and on the very same line in the printed
page, the pre-assumption that has confused him asserts its
power and Mill proceeds to argue that the principle of
property does apply to land. He does this by what is in
reality, though doubtless unconsciously to him, a juggle
with words. But as his argument is the stock argument
of the scholastic economists, I will quote it in full, distin-
guishing by italics the sentence already given :
Tfie essential principle of property being to assure to all persons what
they have produced by their labor and accumulated by their abstinence,
this principle cannot apply to what is not the produce of labor, the raw
material of the earth. If the land derived its productive power wholly
from nature, and not at all from industry, or if there were any means
of discriminating what is derived from each source, it not only would
not be necessary, but it would be the height of injustice, to let the
gift of nature be engrossed by individuals. The use of the land in
agriculture must indeed, for the time being, be of necessity exclusive ;
the same person who has plowed and sown must be permitted to
reap ; but the land might be occupied for one season only, as among
the ancient Germans ; or might be periodically redivided as popula-
tion increased : or the State might be the universal landlord, and the
cultivators tenants under it, either on lease or at will.
But though land is not the produce of industry, most of its valu-
able qualities are so. Labor is not only requisite for using, but
almost equally so for fashioning, the instrument. Considerable labor
is often required at the commencement, to clear the land for cultiva-
tion. In many cases, even when cleared, its productiveness is wholly
the effect of labor and art. The Bedford Level produced little or
nothing until artificially drained. The bogs of Ireland, until the
same thing is done to them, can produce little besides fuel. One of
the barrenest soils in the world, composed of the material of the
Goodwin Sands, the Pays de Waes in Flanders, has been so fertilized
by industry, as to have become one of the most productive in Europe.
Cultivation also requires buildings and fences, which are wholly the
produce of labor. The fruits of this industry cannot be reaped in a
short period. The labor and outlay are immediate, the benefit is
spread over many years, perhaps over all future time. A holder will
not incur this labor and outlay when strangers and not himself will
464 THE DISTRIBUTION OF WEALTH. Sook IV.
be benefited by it. If he undertakes such improvements, he must
have a sufficient period before him in which to profit by them ; and
he is in no way so sure of having always a sufficient period as when
his tenure is perpetual.
These are the reasons which form the justification in an economi-
cal point of view, of property in land.
This argument begins by asserting that the principle of
property cannot apply to land ; it ends by asserting that it
does. The language is loose, for Mill indulges in a practice
dangerous where exactness is important, the use of para-
phrases for economic terms, such as " raw material of the
earth" and "gift of nature" for land; "industry" for
labor, and "valuable qualities"* for useful qualities, or
productive powers. But carefully to consider these rea-
sons which are held to justify the unjustifiable, is to see
that their plausibility is brought about by the same way
that a juggler seems to change a watch into a turnip the
substitution of one thing for another thing while attention
is distracted. In this case the substitution is of one sense
of a word for another different sense of the same word.
The word land, as before explained, has two senses.
One of these is that of the dry and solid superficies of the
globe as distinguished from water or air, or that of the
cultivatable matter of the earth as distinguished from
rock or sand or ice or bog. In this sense we frequently
speak of "improved land" or "made land." The other,
the economic sense of the word, is that of the natural or
passive element in production, including the whole exter-
nal world, with all its powers, qualities and products, as
distinguished from the human or active element, labor,
and its sub-element, capital. In this sense we cannot
* Value in political economy should be restricted to value in
exchange, and the only sense in which land or other natural objects
or their qualities may be said to have value in themselves is that of
value in use. (See Book H., Chapter X.)
CUap.VL CAUSE OP CONFUSION AS TO PROPERTY. 465
speak of " improved land " or " made land." Such phrases
would involve contradiction in terms.
Now in the reasoning just quoted Mill slips from one to
the other of these two senses of the word land, not merely
in the same connection, but in the same sentence, and
even as between the noun and its pronoun without notice
to the reader and seemingly without consciousness on his
own part.
The first suggestion of this substitution comes in the
ifs of the second sentence. If, says Mill, land derived its
productive power wholly from nature and not at all from
labor, or if there were any means of discriminating what
is derived from each source, it would be the height of
injustice to let land be engrossed by individuals.
Why these ifsf Mill is here writing as a political
economist, in a work entitled "Principles of Political
Economy," and for the purpose in this particular place of
discovering whether there is any justification from an
economic point of view of property in land. Land, as a
term of political economy, means that element of productive
power derived from nature and not at all from labor. It
has and can have no other meaning. The first principle
of political economy is the distinction between the produc-
tive power derived wholly from nature, for which its term
is land, and the productive power derived from human
exertion, for which its term is labor. Where the reason
can find no "means of discriminating what is derived
from each source," political economy becomes impossible,
and to confuse this discrimination is to abandon political
economy.
This is precisely what Mill does, when he goes on in the
first sentence of the next paragraph to tell us that " though
land is not the produce of industry, most of its valuable
qualities are so." He is abandoning political economy
by dropping in the pronoun the sense in which he uses
466 THE DISTRIBUTION OF WEALTH. Book IV.
the word land in the noun, and falling with seeming
unconsciousness into the vague sense of common speech.
When he says that land is not the produce of industry he
uses the word in the economic sense. But when he says
that qualities of land are the produce of labor he is using
the word in that loose ordinary sense in which we speak
of "improved land" or "made land." For what single
quality of land in the economic sense of the word is the
produce of labor? Is it gravitation? Is it extension?
Is it cohesion? Is it chemical affinities or repulsions?
Is it the qualities shown in generation and germination
and growth ? Why, Mill himself in the first chapter of the
first book of his " Principles of Political Economy " declares
that the primary power of labor, that by which man can
alone act on the external world, consists in that power of
muscular contraction by means of which he can to some
slight extent move or arrest the motion of matter, adding :
Labor, then, in the physical world, is always and solely employed in
putting objects in motion; the properties of matter, the laws of
nature, do all the rest.
These properties of matter, these laws of nature which
when labor changes things in place do all the rest, are
qualities of land in the economic sense of the word land.
Mill does not mean that they are ever the produce of
industry? He cannot mean that. The fact is, that
abandoning the economic sense of the word land, he resorts
to that loose colloquial sense of the word in which we
speak of " improving land " or " making land." And it is
with illustrations of "improved land" and "made land"
that he goes on to show how the qualities of land are
products of labor.
Let me too do a little illustrating, for the confusions to
which Mill succumbed are in these closing years of the
Cliap.VL CAUSE OF CONFUSION AS TO PROPERTY. 467
century being crammed into the minds of young people
by a thousand " professors of political economy : "
I am writing these pages on the shore of Long Island,
where the Bay of New York contracts to what is called
the Narrows, nearly opposite the point where our legalized
robbers, the Custom-House officers, board incoming
steamers to ask strangers to take their first American
swear, and where if false oaths really colored the atmo-
sphere the air would be bluer than is the sky on this
gracious day. I turn from my writing-machine to the
window, and drink in, with a pleasure that never seems to
pall, the glorious panorama.
" What do you see ? " If in ordinary talk I were asked
this, I should of course say, "I see land and water and
sky, ships and houses and light clouds, and the sun,
drawing to its setting, over the low green hills of Staten
Island, and illuminating all."
But if the question refer to the terms of political economy,
I should say, " I see land and wealth." Land, which is the
natural factor of production; and wealth, which is the
natural factor so changed by the exertion of the human
factor, labor, as to fit it for the satisfaction of human de-
sires. For water and clouds, sky and sun, and the stars that
will appear when the sun is sunk, are, in the terminology
of political economy, as much land as is the dry surface of
the earth to which we narrow the meaning of the word in
ordinary talk. And the window through which I look;
the flowers in the garden ; the planted trees of the orchard ;
the cow that is browsing beneath them ; the Shore Road
under the window ; the vessels that lie at anchor near the
bank, and the little pier that juts out from it ; the trans-
Atlantic liner steaming through the channel ; the crowded
pleasure-steamers passing by ; the puffing tug with its line
of mud-scows ; the fort and dwellings on the opposite side
468 THE DISTRIBUTION OF WEALTH. Boole IV.
of the Narrows; the lighthouse that will soon begin to
cast its far-gleaming eye from Sandy Hook; the big
wooden elephant of Coney Island ; and the graceful sweep
of the Brooklyn Bridge, that may be discovered from a
little higher up; all alike fall into the economic term
wealth land modified by labor so as to afford satisfaction
to human desires. All in this panorama that was before
man came here, and would remain were he to go, belongs
to the economic category land; while all that has been
produced by labor belongs to the economic category wealth,
so long as it retains its quality of ministering to human
desire.
But on the hither shore, in view from the window, is a
little rectangular piece of dry surface, evidently reclaimed
from the line of water by filling in with rocks and earth.
What is that? In ordinary speech it is land, as distin-
guished from water, and I should intelligibly indicate its
origin by speaking of it as " made land." But in the
categories of political economy there is no place for such
a term as "made land." For the term land refers only
and exclusively to productive powers derived wholly from
nature and not at all from industry, and whatever is, and
in so far as it is, derived from land by the exertion of labor,
is wealth. This bit of dry surface raised above the level
of the water by filling in stones and soil, is, in the economic
category, not land, but wealth. It has land below it and
around it, and the material of which it is composed has
been drawn from land ; but in itself it is, in the proper
speech of political economy, wealth ; just as truly as the
ships I behold are not land but wealth, though they too
have land below them and around them and are composed
of materials drawn from land.
Now here is the evident confusion in Mill's thought,
which he has perplexed by dropping from the terminology
of political economy to tie language of ordinary speech.
Chap.VI. CAUSE OF CONFUSION AS TO PROPERTY. 469
The Bedford Level, which is land that has been drained ;
the cultivatable bog of Ireland, which is land that has had
a coating of soil put on it ; the improved farms he refers
to, which are land cleared or manured by labor, belong all
of them to the same economic category as the little piece
of " made land " visible from my window. In the qualities
that he is considering in them they are all of them in the
economic meaning not land at all, but wealth; not the
free gift of nature, but the toil-earned produce of labor.
In this, and so far as these qualities go, but no further-
that is, in so far as they are wealth, not land, they are
property ; not because human agency can add any qualities
to the natural factor, land; but because of the natural
law of property, which gives to the producer the ownership
of what his labor has produced.
Mill seems to think that he has shown the justification
of property in land, but the reasons he gives only justify
property in the produce of labor ; thus in his own case
adding a signal instance of the truth of what he has before
said that " in every defense made of it, property is supposed
to mean the guarantee to Individuals of the fruits of their
own labor."
BOOK V,
MONEY THE MEDIUM OF EXCHANGE AND
MEASURE OF VALUE
CONTENTS OF BOOK V.
MONEY-THE MEDIUM OF EXCHANGE AND
MEASURE OF VALUE.
nun
INTRODUCTION TO BOOK V. 477
CHAPTER I.
CONFUSIONS AS TO MONHY.
SHOWING THE DIVERGENCE IN COMMON THOUGHT AND AMONG
ECONOMISTS AS TO MONEY.
Present confusions as to money Their cause How to disen-
tangle them 479
CHAPTER n.
THE COMMON UNDERSTANDING OF MONEY.
SHOWING THAT THE COMMON USE OF MONEY IS TO BUY THINGS
WITH, AND THAT ITS ESSENTIAL CHARACTER IS NOT IN ITS MA-
TERIAL, BUT IN ITS USE.
The use of money to exchange for other things Buying and sell-
ing Illustration of the travelers Money not more valuable
than other things, but more readily exchangeable Exchanges
without money Checks, etc., not money Different money in
different countries But money not made by government fiat
Does not necessarily consist of gold and silver Or need intrin-
sic value Its essential quality and definition .... 482
473
474 CONTENTS OP BOOK V.
CHAPTER HI.
MEDIUM OF EXCHANGE AND MEASURE OF VALUE.
SHOWING HOW THE COMMON MEDIUM OF EXCHANGE BECOMES THE
COMMON MEASURE OF VALUE, AND WHY WE CANNOT FIND A COM-
MON MEASURE IN LABOR.
PAGE
Money is most exchanged Why not measure value by labor?
Smith's unsatisfactory answer The true answer Labor can
afford no common measure, and commodities are preferably
taken Survivals of common measures Difference in common
measures does not prevent exchange 495
CHAPTER IV.
THE OFFICE OF CREDIT IN EXCHANGES.
SHOWING THAT THE ADVANCE OF CIVILIZATION ECONOMIZES
THE USE OF MONEY.
Tendency to over-estimate the importance of money Credit
existed before the use of money began And it is now and
always has been the most important instrument of exchange
Illustration of shipwrecked men Adam Smith's error as to
barter Money's most important use to-day is as a measure of
value 504
CHAPTER V.
THE GENESIS OF MONEY.
SHOWING THAT THE LAW OF GRATIFYING DESIRES WITH THE
LEAST EXERTION PROMPTS THE USE FROM TIME TO TIME OF
THE MOST LABOR-SAVING MEDIUM AVAILABLE.
Money not an invention, but developed by civilization It grows
with the growth of exchanges Exchange first of general com-
modities Then of the more convenient commodities Then
of coin, whose commodity value comes to be forgotten Illus-
tration of the American trade dollar The lessening uses of
commodity money and extensions of credit money Two ele-
ments in exchange value of metal coin : intrinsic, or value of
the metal itself ; and seigniorage Meaning of seigniorage
Exchange value of paper money is seigniorage Use of money
is not for consumption, but exchange Proprietary articles as
mediums of exchange Mutilated coins When lessening metal
value in coins does not lessen circulating value The essential
CONTENTS OF BOOK V. 475
PAGE
being that both represent the same exertion This the reason
why paper money exchanges equally with metal money of like
denomination 512
CHAPTER VI.
THE TWO KINDS OF MONEY.
SHOWING THAT ONE ORIGINATES IN VALUE FROM PRODUC-
TION AND THE OTHER IN VALUE FROM OBLIGATION.
Money peculiarly the representative of value Two kinds of
money in the more highly civilized world Commodity money
and value from production Credit money and value from obli-
gation Of credit money Of commodity money Of intrinsic
value Gold coin the only intrinsic value money now in cir-
culation in the United States, England, France or Germany 526
INTRODUCTION TO BOOK V.
THIS Book is really in the nature of a supplement to
Book II., " The Nature of Wealth." In my first draft
of arrangement, a matter of much perplexity, the discussion
of money was to have followed the discussion of value,
with which it is so intimately connected ; or at least, to have
followed the discussion as to the definition of wealth. But
to have given to the subject of money in Book II. the
thorough treatment which present confusions seem to
require would not only have disproportionately expanded
that Book, but would have made needful the anticipation
of some of the conclusions more logically and conveniently
reached in Book III. and Book IV. I therefore finally
determined as the best arrangement for the reader of this
work to answer briefly in the last chapter of Book II. the
question as to the relation of money to wealth which the
conclusion of the discussion of the nature of wealth would
be certain to bring, and to defer a fuller discussion of the
subject of money until after the production and distribution
of wealth had both been treated. This point has now been
reached, and continuing as it were Chapter XXI. of
Book II., "The Nature of Wealth," I proceed to the
discussion of the medium of exchange and measure of
value.
CHAPTER I.
CONFUSIONS AS TO MONEY.
SHOWING THE DIVERGENCE IN COMMON THOUGHT AND AMONG
ECONOMISTS AS TO MONEY.
Present confusions as to money Their cause How to disentangle
them.
r I THERE is no social idea or instrument with which
J_ civilized men are more generally and personally
familiar than money. From early infancy to latest age
we all use it in thought and speech and daily trans-
actions, without practical difficulty in distinguishing what
is money from what is not money. Yet as to what it
really is and what it really does, there are both in common
thought on economic subjects and in the writings of
professed economists the widest divergences. This is
particularly obvious in the United States at the time I
write. For twenty years the money question has been
under wide discussion, and before that, has had similar
periods of wide discussion from the very foundation of
the American colonies, to say nothing of the discussion
that has gone on in Europe. Yet the attitude of Congress,
of the State legislatures, of the political parties, and the
press, shows that nothing like any clear conclusion as to
first principles has yet been arrived at. As for the vast
literature of the subject which has been put into print
within recent years any attempt to extract from it a
consensus of opinion as to the office and laws of money is
479
480 OP MONEY. Book V.
likely to result in the feeling expressed by an intelligent
man who recently made this attempt, that " The more one
reads the more he feels that any sure knowledge on the
question is beyond his comprehension."
The very latest American cyclopedia (Johnson's, 1896)
gives this definition: "Money is that kind of currency
which has an intrinsic value, and which thus if not used
as currency would still be wealth." Thus, there are some
who say that money really consists of the precious metals,
and that whatever may be locally or temporarily or par-
tially used as money can be so used only as a represen-
tative of these metals. They hold that the paper money
which now constitutes so large a part of the currency of
the civilized world derives its value from the promise,
expressed or implied, to redeem it in one or another of
these metals, and by way of assuring such redemption vast
quantities of these precious metals are kept idly in store
by governments and banks.
Of those who take this view, some hold that gold is the
only true and natural money, in the present stage of
civilization at least; while others hold that silver is as
much or even more entitled to that place, and that the
gravest evils result from its demonetization.
On the other hand there are those who say that what
makes a thing money is the edict or fiat of government
that it shall be treated and received as money.
And again, there are others still who contend that
whatever can be used in exchange to the avoidance of
barter is money, thus including in the meaning of the
term, notes, checks, drafts, etc., issued by private parties, as
fully as the coins or notes issued by governments or banks.
Much of the contradiction and confusion which exists
in popular thought proceeds from the pressure of personal
interests brought into the question by the relation of debtor
and creditor. But the confusions which prevail among
professed economists have a deeper source. They evidently
Chap. I. CONFUSIONS AS TO MONEY. 481
result from the confusions which prevail in economic
thought and teaching as to the nature of wealth and the
cause of value. Money is the common measure of value,
the common representative and exchanger of wealth.
Unless we have clear ideas of the meaning of value and the
nature of wealth, it is manifest therefore that we cannot
form clear ideas as to the nature and functions of money.
But since we have cleared up in the preceding chapters the
meaning of the terms value and wealth, we are now in
a position to proceed with an inquiry into the nature,
functions and laws of money. It is unnecessary to waste
time with any attempt to disentangle the maze of contra-
dictory statements of fact and confusions of opinion with
which the current literature of the subject is embarrassed.
The true course of all economic investigation is to observe
and trace the relation of those social phenomena that are
obvious now and to us. For economic laws must be as
invariable as physical laws, and as the chemist or astronomer
can safely proceed only from relations which he sees do here
and now exist to infer what has existed or will exist in an-
other time and place, so it is with the political economist.
Yet we find, if we consider them, that these divergences
in the definition of money spring rather from differences
of opinion as to what ought to be considered and treated
as money, than from differences as to what, as a matter
of fact, money actually is. The men who differ most
widely in defining money find no difficulty in agreeing as
to what is meant by money in daily transactions. Since
we cannot find a consensus of opinion among economists,
our best plan is to seek it among ordinary people. To
see what usually is meant by money we have only to note
the essential characteristics of that which we all agree in
treating as money in our practical affairs.
After we have seen what money really is, and what are
the functions it performs, we shall then be in a position to
determine what are the best forms of money.
CHAPTER II.
THE COMMON UNDERSTANDING OF MONEY.
SHOWING THAT THE COMMON USE OP MONEY IS TO BUY
THINGS WITH, AND THAT ITS ESSENTIAL CHARACTER IS
NOT IN ITS MATERIAL BUT IN ITS USE.
The use of money to exchange for other things Buying and selling
Illustration of the travelers Money not more valuable than
other things, but more readily exchangeable Exchanges without
money Checks, etc., not money Different money in different
countries But money not made by government fiat Does not
necessarily consist of gold and silver Or need intrinsic value-
Its essential quality and definition.
WHEN we are confused as to the true meaning of an
economic term, our best plan is to endeavor to
obtain a consensus of opinion as to what the thing really
is ; what function it really performs.
If I have agreed to pay money to another the common
understanding of what money is will not hold my agree-
ment fulfilled if I offer him wood, or bricks, or services, or
gold or silver bullion, even though, as closely as can be
estimated, these may be of equal value to the money
promised. My creditor might take such things in lieu of
what I had agreed to pay. But he would be more likely
to object, and his objection if fully expressed would
amount to this: "What you agreed to pay me was
money. With money I can buy anything that any one
has to sell, and pay any debt I owe. But what you offer
482
Chap. II. COMMON UNDERSTANDING OP MONEY. 483
me is not money. It is something I would be willing to
take if I happened to have any personal use for it. But
I have no personal use for it, and to get any one to give
me for it what I may want I must find some one who wants
this particular thing and make a trade with him. What
you propose would therefore put on me trouble, risk and
loss not contemplated in our agreement." And the justice
of this objection would be recognized by all fair men.
In this in the ease with which it may be passed from
hand to hand in canceling obligations or transferring
ownership lies the peculiar characteristic of money. It
is not the intrinsic nature of the thing, but the use to
which it is applied that gives its essential character to
money, and constitutes the distinction between it and
other things. Even children recognize this. I make
friends with a little one of four or five, and, showing it a
stick of candy, ask what that is for ? it will say, " That
is to eat." If I show a hat or a pair of shoes, it will say,
" That is to wear." If I show a toy, it will say, " That is
to play with." But if I show a piece of money, it will say,
even though to it as yet all money may be pennies, " That
is to buy things with."
Now, in this, the little child will give a definition of
money that, whatever may be our monetary theories, we
all practically recognize. The peculiar use of money
what as money "it is for" is that of buying other things.
What by virtue of this use is money, may or may not have
capability for any other use. That is not material. For
so long as a thing is reserved to the use of buying things
any use inconsistent with this use is excluded.
We might, for instance, apply sticks of candy to the use
of buying things. But the moment a stick of candy was
applied to the use of being eaten its use in buying things
would end. So, if a greenback be used to light a cigar,
or a gold coin converted to the use of filling teeth, or of
484 OF MONEY. Book V.
being beaten into gold-leaf, its use as money is destroyed.
Even where coins are used as ornaments, their use as
money is during that time prevented.
In short, the use of money, no matter of what it be
composed, is not directly to satisfy desire, but indirectly
to satisfy desire through exchange for other things. We do
not eat money nor drink money nor wear money. We pass
it. That is to say, we buy other things with it. We esteem
money and seek it, not for itself, but for what we may
obtain by parting with it, and for the purpose of thus
parting with it. This is true even where money is hoarded,
for the gratification which hoarding gives is the conscious-
ness of holding at command that with which we may
readily buy anything we may wish to have.
The little child I have supposed would probably not
know the meaning of the word exchange, which is that of
the voluntary transfer of desired things for desired things.
But it would know the thing, having become familiar with
it in the little exchanges that go on between children in
the giving of marbles for tops, of candy for toys, or in
transactions based on " I will do this for you, if you will
do that for me." But such exchanges it would probably
speak of as trades or swaps or promises, reserving the
words buying or selling to exchanges in which money is
used.
In this use of words the child would conform to a
practice that has become common among careful writers.
In the wider sense, buying and selling merely distinguish
between the giver and receiver in exchange ; and it is in
this wider sense that Adam Smith uses the words, and as
in poetry or poetical expression we continue to use them.
But both in ordinary usage and in political economy we
now more generally confine the words buying and selling
to exchanges in which money is given or promised, speaking
of an exchange in which money is not involved, as a barter
Chap. II. COMMON UNDERSTANDING OF MONEY. 485
or trade, or simply an exchange. It is where money is
one of the things exchanged that the transaction is called
a purchase and sale ; the party who gives money for an-
other thing being termed the buyer, and the party who gives
the other thing for the money being termed the seller.
In this usage, we habitually treat money as though it
were the more notable or more important side of exchanges
in which things not money are given for money that side
of exchange from which or towards which the initiative
impulse proceeds. And there is another usage which
points in the same direction. Among the masses of our
people at least, and I presume the same usage obtains in
all countries, good manners is held to require that where
money passes in a transaction of exchange, the receiver of
the money should by some such phrase as " Thank you,"
indicate a sense of benefit or obligation.
The reason of both these usages is, I think, to be found
in the fact that money is the thing in which gain or profit
is usually estimated ; the thing which can usually be most
readily and certainly exchanged for any other thing.
Thus whatever difficulty there may be in exchanging
particular commodities or services for other commodities
or services is generally most felt in exchanging them for
money. That exchange once made, any subsequent
exchange of the money for the things that are the ultimate
objects of desire is comparatively easy. It is this that
makes it seem to those who do not look closely, that what
is sought in exchange is money, and that he who gets
money in return for other things, is in a better position
than he who gets other things in return for money.
To see in what money really differs from other things
having exchangeable or purchasing power let us imagine
a number of men to undertake a journey through a
country where they have no personal acquaintance. Let
them for instance start from New York, in pleasant
486 OF MONEY. Boole V.
weather, to make a leisurely trip by the highroads for
one to two hundred miles. Let them for the defrayal of
the expenses of the journey provide themselves with
exchangeable things of different kinds. Imagine one to
have a valuable horse; another some staple commodity,
such as tobacco or tea ; another gold and silver bullion ;
another a check or bill of exchange, or a check-book ; and
a fifth to have current money. These things might have
value to the same amount, but at the first stop for rest
and refreshment the great difference between them as to
readiness of convertibility would be seen.
The only way the man with the horse could pay for the
slightest entertainment for man or beast, without selling
his horse for money, or bartering for things that might
be very inconvenient to carry, would be by trading him
for a less valuable horse. It is clear that he could not go
far in this way, for, to say nothing of the delays incident
to horse trades, he would, if he persisted in them under
pressure of his desire to go on, soon find himself reduced
to an animal that could hardly carry himself.
Though of all staple commodities, tobacco and tea are
probably those most readily divisible and easily carried,
the tourist who tried to pay his way with them would find
much difficulty. If not driven to sell his stock outright
for what money he could get, he would virtually have to
convert his pleasure excursion into a peddling trip ; and,
to say nothing of the danger he would run of being
arrested for infringement of Federal or local license laws,
would be put to much delay, loss and annoyance in finding
those willing to give the particular things he needed for
the particular things he had.
And while gold and silver are of all commodities those
which have the most uniform and staple value, yet the
man who had started with bullion would, after he had
left the city, hardly find any one who could tell their real
CAop. II. COMMON UNDERSTANDING OF MONEY. 487
value or was willing to take them in return for commod-
ities or service. To exchange them at all at anything like
a reasonable rate he would have to hunt up some village
jeweler who could test and weigh them, and who, though
he might offer to give him a clock or a trinket, or to repair
his watch in exchange, would hardly have the commodities
or service our traveler needed at his disposal. To get
what he wanted for what he had to give without recourse
to money he would be driven to all sorts of intermediate
exchanges.
As for the man with the check-book, or check or bill of
exchange, he would find himself the worst off of all. He
could make no more use of them where he was not known
than of so much blank paper, unless he found some one
who could testify to his good credit or who would go to
the expense of telegraphing to learn it. To repeat this at
every stopping-place, as would be necessary if his trip were
to be carried through as it had been begun, would be too
much for the patience and endurance of an ordinary man.
But the man with the money would find no difficulty
from first to last. Every one who had any commodity to
exchange or service to render would take his money gladly
and probably say " Thank you " on receiving it. He alone
could make the journey he set out to make, without delay
or annoyance or loss on the score of exchanges.
What we may conclude from this little imaginative
experiment is not that of all things money is the most
valuable thing. That, though many people have in a
vague way accepted it, would involve a fallacy of the
same kind that is involved in the assumption that a
pound of lead is heavier than a pound of feathers. What
we may safely conclude from our experiment is, that
of all exchangeable things money is the most readily ex-
changeable, and indeed that this ready exchangeability
is the essential characteristic of money.
488 OF MONEY. Book V.
Yet we have but to extend our illustration so as to
imagine our travelers taking with them beyond this country
that same money they had found so easily exchangeable
here, to see that money is not one substance, nor in all
times and places the same substance.
What is money in the United States is not money in
England. What is money in England is not money on the
Continent. What is money in one of the Continental
states may not be money in another, and so on. Although
in places in each country much resorted to by travelers
from another country, the money of the two countries
may circulate together, as American money with English
money in Bermuda; or Canadian money with American
money at Niagara Falls ; or Indian money, English money,
French money and Egyptian money at Port Said ; yet the
traveler who wishes to pass beyond such monetary borders
with what will readily exchange for the things he may
need must provide himself with the money of the country.
The money that has served him in the country he has left
becomes in a country using a different money a mere
commodity the moment he leaves the monetary border,
which he will find it advantageous to exchange with some
dealer in such commodities for money of the country.
Is money therefore a matter of mere governmental
regulation ? That is to say, can governmental statute or
fiat, as is to-day contended by many, prescribe what money
shall be used and at what rate it shall pass ?
It is unnecessary for those of us who lived in or visited
California between the years 1862 and 1879, to look further
than our own country and time to see that it cannot.
During those years, while the money of the rest of the
Union was a more or less depreciated paper, the money of
that State, and of the Pacific coast generally, was gold and
silver. The paper money of the general government was
used for the purchase of postage stamps, the payment of
Chap. II. COMMON UNDERSTANDING OF MONEY. 489
internal revenue dues, the satisfaction of judgments of the
Federal courts, and of those of the State courts where
there was no specific contract, and for remittances to the
East. But between man and man, and in ordinary trans-
actions, it passed only as a commodity.
If it be said that governmental power was not fully
exerted in this case ; that the United States government
dishonored its own currency in making bonds payable and
Custom-House dues receivable only in gold, and that the
California specific contract law virtually gave the recog-
nition of the State courts only to gold and silver, we may
turn to such examples as that of the Confederate currency ;
as that of the Continental currency ; as that afforded by
Colonial currencies prior to the Revolution ; as that of the
French assignats ; or to that comical episode in which the
caustic pen of Dean Swift, writing under an assumed name,
balked the whole power of the British government in its
effort to induce the Irish people to accept what was really
a better copper money than that they were using.
Government may largely affect the use of money, as it
may largely affect the use of language. It may enact
what money shall be paid out and received by government
officials, or recognized in the courts, as it may prescribe
in what language government documents shall be printed
or legislative or legal proceedings held, or scholars in the
public schools be taught. But it can no more prescribe
what shall be used as the common medium of exchange
between man and man in transactions that depend on
mutual consent than it can prescribe in what tongue
mothers shall teach their babes to lisp. In all the many
efforts that governments, limited or absolute, have made
to do this, the power of government has signally failed.
Shall we say then, as do many who point out this
impotency of mere government fiat, that the exchange
value of any money depends ultimately upon its intrinsic
490 OF MONEY. Book V.
value ; that the real money in the world, the only true and
natural money, is gold and silver, one or both for the
metal-moneyists differ as to this, being divided into two
opposing camps the monometallists and the bimetallists ?
This notion is even more widely opposed to facts than
is that of the flatists. Gold and silver have for the longest
time and over the widest area served, and yet do serve,
as material for money, and sometimes have served, and in
some places yet do serve, as money. This was the case,
to some extent, in the early days of the California diggings,
when every merchant or hotel-keeper or gambler or bar-
tender was provided with a bottle of acid and a pair of
scales, and men paid for goods or food or lodging or
drinks or losses out of buckskin bags in which they carried
gold dust or nuggets. This is to some extent still the case
in some parts of Asia, where, as was once the case in parts
of Europe, even gold and silver coin passes by weight.
But gold and silver are not the money of the world. The
traveler who should attempt to go round the world paying
his expenses with gold and silver bullion would meet the
same difficulty or something like the same difficulty that
he would meet in the country around New York. Nor
would he obviate that difficulty by taking instead of
bullion, gold and silver coin. Except in a few places, such
as Bermuda or the Hawaiian Islands, they too would
become commodities not easily exchangeable when he left
the United States.
The truth is that there is no universal money and never
yet has been, any more than there is or has been in times
of which we have knowledge a universal language.
As for intrinsic value, it is clear that our paper money,
which has no intrinsic value, performs every office of
money is in every sense as truly money as our coins,
which have intrinsic value ; and that even of our coins,
their circulating or money value has for the most part no
Chap. II. COMMON UNDEESTANDING OF MONEY. 491
more relation to intrinsic value than it has in the case of
our paper money. And this is the case to-day all over the
civilized world.
The fact is that neither the fiat of government nor the
action of individuals nor the character or intrinsic value
of the material used, nor anything else, can make money
or mar money, raise or lessen its circulating value, except
as it affects the disposition to receive it as a medium of
exchange.
In different times and places all sorts of things capable
of more or less easy transfer have been used as money.
Thus in San Francisco in the early days, when the sudden
outflow of gold from the mines brought a sudden demand
for money which there was no ready means of supplying,
bogus coins, known to be bogus, passed from hand to
hand as money ; and in New York at the beginning of the
Civil War, when there was a great scarcity of circulating
medium, owing to the withdrawal of gold and silver from
circulation, postage stamps, car tickets, bread tickets, and
even counterfeit notes, known to be counterfeit, passed
from hand to hand as money.
Shall we say then that they are right who contend that
a true definition of money must include everything that
can be used in exchange to the avoidance of barter 1
Clearly, we cannot say this, without ignoring a real and
very important distinction the distinction between money
and credit. For a little consideration will show that the
checks, drafts, negotiable notes and other transferable
orders and obligations which so largely economize the use
of money in the commercial world to-day, do so only when
accompanied by something else, which money itself does
not require. That something else is trust or credit. This
is the essential element of all devices and instruments for
dispensing with the medium ship of money without resort
to barter. It is only by virtue of it that they can take
492 OF MONEY. Book V.
the place of the money which in form they are promises
to pay.
When I give money for what I have bought, I pay my
debt. The transaction is complete. But I do not pay my
debt when I give a check for the amount. The transaction
is not complete. I merely give an order on some one else
to pay in my place. If he does not, I am still responsible
in morals and in law. As a matter of fact no one will
take a check of mine unless he trusts or credits me. And
though an honest face, good clothes and a manifest ex-
igency might enable me to pass a small check upon one
who did not know me, without the guarantee of some one
he did know, I could as readily, and perhaps more readily,
get him to trust me outright. So, I cannot, except to one
who knows me or to whom I am identified as a man of
good credit, pass the check of another or his note or draft
or bill of exchange in my favor, and without guaranteeing
it by indorsement. Even then I do not make a payment ;
I merely turn over with my own guarantee an order for
payment.
Thus there is a quality attaching to money, in common
apprehension, which clearly distinguishes it from all forms
of credit. It is, so far as the giver of the money is con-
cerned, a final closing of the transaction. The man who
gives a check or bill of exchange must guarantee its
payment, and is liable if it be not paid ; while the drawer
on the other hand retains the power at any time of stopping
payment before that has been actually made. Even the
man who gives a horse or other commodity in exchange
must, save as to certain things and with the observance of
certain requirements, guarantee title, and that it shall
possess certain qualities expressed or implied. But in the
passing of money the transaction is closed and finished,
and there can be no further question or recourse. For
Chap. II. COMMON UNDERSTANDING OF MONEY. 493
money is properly recognized by municipal law as the
common medium of exchange.
All such things as checks, drafts, notes, etc., though they
largely dispense with and greatly economize the use of
money, do so by utilizing credit. Credit as a facilitator
of exchange is older than money and perhaps is even now
more important than money, though it may be made into
money, as gold may be made into money. But though it
may be made into money, it is not in itself money, any
more than gold of itself is money, and cannot, without
confusion as to the nature and functions of money, be
included as money.
What then shall we say that money is ?
Evidently the essential quality of money is not in its
form or substance, but in its use.
Its use being not that of being consumed, but of being
continually exchanged, it participates in and facilitates
other exchanges as a medium or flux, serving upon a larger
scale the same purpose of keeping tally and facilitating
transfers as is served by the chips or counters often used
in games of chance.*
This use comes from a common or usual consent or
disposition to take it in exchange, not as representing
or promising anything else, but as completing the
exchange.
* It is most important that this purely representative character
of money should be thoroughly understood and constantly kept in
mind, for from the confusion resulting from the confounding of
money with wealth have flown the largest and most pernicious results.
It was the basis of that anti-social theory of international exchanges
which has cost European civilization such waste of labor and drain
of blood, formerly known as the mercantile system and which sur-
vives in the protectionism of to-day. And it is at the bottom of
those theories prevalent in the United States to-day which seek to
increase wealth by increasing money.
494 OF MONEY. Book V.
The only question any one asks himself in taking money
in exchange is whether he can, in the same way, pass it on
in exchange. If there is no doubt of that, he will take it ;
for the only use he has for money is to pass it on in
exchange. If he has doubt of that, he will take it only at
a discount proportioned to the doubt, or not take it at all.
What then makes anything money is the common con-
sent or disposition to accept it as the common medium
of exchange. If a thing has this essential quality in any
place and time, it is money in that place and time, no
matter what other quality it may lack. If a thing lacks
this essential quality in any place and time, it is not
money in that place and time, no matter what other qual-
ity it may have.
To define money :
Whatever in any time and place is used as the common
medium of exchange is money in that time and place.
There is no universal money. While the use of money
is almost as universal as the use of languages, and it
everywhere follows general laws as does the use of lan-
guages, yet as we find language differing in tune and
place, so do we find money differing. In fact, as we shall
see, money is in one of its functions a kind of language
the language of value.
CHAPTER III.
MEDIUM OF EXCHANGE AND MEASURE
OF VALUE.
SHOWING HOW THE COMMON MEDIUM OP EXCHANGE BECOMES
THE COMMON MEASURE OF VALUE, AND WHY WE CANNOT
FIND A COMMON MEASURE IN LABOR.
Money is most exchanged Why not measure value by labor?
Smith's unsatisfactory answer The true answer Labor can
afford no common measure, and commodities are preferably taken
Survivals of common measures Difference in common measures
does not prevent exchange.
I HAVE in the last chapter defined money as whatever
is at any time and place used as the common medium
of exchange. This is indeed the primary quality of money.
But proceeding from this use as a common medium of
exchange, money has another and closely conjoined use
that of serving as a common measure of value.
The reason of this is that the use of money as a common
medium of exchange, which causes it to be esteemed for
exchange and not for consumption, makes it of all
exchangeable things that which in civilized societies is
often and most commonly exchanged. A given portion
of wood or coal, for instance, may be used by the producer
and thus not be exchanged at all ; or it may be exchanged
once or perhaps even half a dozen times between cutting or
mining and its reaching in the hands of the consumer the
ultimate end for which it was produced, the combustion
495
496 OF MONEY. Book V.
that supplies heat. So it is with potatoes or wheat or corn.
The majority of horses are probably not exchanged at
all during their working days, and it would be a much
exchanged horse who should have six owners during his
life. Cotton and wool and hemp and silk may pass from
one to half a dozen exchanges before they assume the form
of cloth or rope, and in that form may pass through from
two to half a dozen more exchanges before reaching the
consumer. And so with lumber or iron or most of the
forms of paper, meat or leather. Not only is the ultimate
purpose of the exchanges of such things destructive
consumption, but they are mainly composed of things
which if not soon consumed will wear out or decay.
Money, on the other hand, is not produced for the
purpose of being consumed, but for the purpose of being
exchanged. This, not consumption, is its use. And we
always seek for its substance materials least subject to
wear and decay, while it is usually carefully guarded by
whoever for the moment may be in its possession. And
further while an article of money may frequently pass
through more hands in a single day than ordinary articles
of wealth are likely to pass through during the whole period
of their existence, the use of money in thought and speech
as a symbol of value brings it to the constant notice of
those who do not often tangibly use it. Thus it is that
the value of the money which is the common medium of
exchange in any community becomes to the people of that
community better known than the value of anything else,
and hence is most readily and constantly chosen to compare
the value of other things.
But here may arise a question, which I wish thoroughly
to answer : If, as explained in Book II., value is in itself
a relation to labor, why can we not find not merely a
common measure of value, but an exact and final measure
of value in labor itself ?
Chap. III. FUNCTIONS OP MONEY. 497
This is a question that perplexes a great many of the
monetary theories that have been broached in the United
States without finding scholastic recognition, and it is
raised but not satisfactorily answered by Adam Smith.
In a passage previously quoted in full* Adam Smith
says : " But though labor be the real measure of the ex-
changeable value of all commodities, it is not that by which
their value is commonly estimated." And then goes on to
explain the reason of this.
But in the attempt to explain this fact Adam Smith falls
into confusion through the slipperiness of his terms and
misses the true reason. While he says in effect that the
time of exertion will not measure the quality of exertion,
he yet, almost in the same breath, uses time as the measure
of exertion, saying that " every commodity is ... more
frequently exchanged for and thereby compared with other
commodities than with labor," that "it is more natural
therefore to estimate its exchangeable value by the quantity
of some other commodity than by that of the labor which
it can purchase," and that " the greater part of the people
too understand better what is meant by the quantity of a
particular commodity than by a quantity of labor," thus
ignoring what he had just shown, that it is the labor (in
the sense of exertion) that their possession will save which
determines the value of all commodities. His attempted
explanation of the fact that the real measure of value is
not the common measure of value, amounts to nothing
more than that it is more usual to measure value by
commodities than by labor. This is no explanation of the
fact; it is merely a statement of the fact. We cannot
explain a custom or habit by saying that it is natural or
showing that it is usual. The very thing to be explained
is why it seems natural and has become usual.
* Page 231.
498 OP MONEY. Book V.
Yet in the light of our previous investigation the reason
why the real measure of value cannot serve as a common
measure of value is clear. It lies in the human constitution.
We become conscious of exertion through the " toil and
trouble " it involves the feeling of effort and at length of
irksomeness and repugnance that attends its continuance.
Now feeling is an affection or condition of the individual
perception or Ego, which can find objective manifestation
only through action. Even the mother can know the
feelings of the babe only through its actions. If she can
tell that it is hungry or sleepy or in pain, or is satisfied
and happy, it is only in this way.
As we have seen, labor in the sense of exertion, is the
true, ultimate and universal measure of value; what
anything will bring in exchange being always based upon
an estimate of the toil and trouble attendant upon the
exertion which the possession of that thing will save.
But this is an estimate which, though each may make it
for himself, he cannot convey to another directly, since the
feeling of weariness or repugnance, the dislike of "toil
and trouble," which constituting the resistance to, is the
measure of, exertion, can, in our normal condition at least,
be conveyed to, or expressed by one to another only
through the senses.
We make such estimates continually in our own minds,
for memory which registers the experience of the individual
permits us to compare the exertion it has required to do
or procure one thing with what it has required to do or
procure another thing. But to express to another person
my idea of the amount of exertion required to do or procure
a particular thing there must be something that will serve
us as a mutual measure of the resistance to exertion, that
is to say the " toil and trouble " that exertion involves.
Thus, to convey to one ignorant of swimming some idea
of the exertion it requires, I must compare it with some
Chap. III. FUNCTIONS OF MONEY. 499
exertion with which we are both familiar, such as walking.
Or, if a stranger wishes to know of me what exertion he
will have to make to walk to a certain point, I will tell
him, if I know it, the distance, and give some idea of the
character of the road, for he will have some idea of the
exertion required to walk a given distance on an ordinary
road. If he be a Frenchman accustomed to meters and
kilometers, which neither of us can translate into feet and
miles, I will still be able to convey to him my idea by
saying, so many minutes' or hours' walk, for all men have
some idea of the exertion required to walk for a certain
time. If we could find no common nomenclature of time,
I could still give him some idea by pointing to the dial of
my watch or to the sun, or by finding from whence he had
come, and making him understand that the distance he
had yet to go was longer or shorter, and the road harder
or easier. But there must be some point of mutual
knowledge which will furnish us with a common measure,
for me to make myself intelligible to him at all.
So reversely, a common experience of required exertion
will, in the absence of a more exact measure, give some
idea of distance or area, as
A bowshot from her bower eaves,
He rode between the barley sheaves,
or,
They gave him of the corn-land
That was of public right,
As much as two strong oxen
Could plow from morn to night.
Now while exertion is always the real measure of value,
to which all common measures of value must refer, yet to
get a common measure of value, which will enable us to
express from one to another both quantity and quality
(duration and intensity) of exertion, we must take some
500 OP MONEY. Boole F.
result of exertion, just as to find a common measure of
heat, light, expansive force or gravitation we must take
some tangible manifestation of those forms of energy. It
is because commodities, being the results of exertion, are
tangible manifestations of exertion that they are generally
and naturally used as common measures of value.
Even where exertion is expressed in time, there is always
at least an implied reference to accomplishment or results.
Where I hire a man to work for me by the day or week
or month in occupations which show tangible result, as in
.digging or draining, in plowing or harvesting, in felling
trees or chopping wood, it is always with a certain idea of
the tangible result to be achieved, or in other words, of
the intensity as well as of the duration of the exertion.
If I find no result, I say that no work has been done ; and
if I find that the results are not such as should have come
from a reasonable or customary intensity of exertion with
a reasonable or customary knowledge or skill, I say that
what I really agreed to pay for has not been accorded me.
And disinterested men would support me.
On going ashore in San Francisco, a shipmate of mine,
who could not tell a scythe from a marlinspike, hired out
to a farmer in haying-time for $5 a day. At his first
stroke with the scythe he ran it so deep in the ground
that he nearly broke it in getting it out. Though he
indignantly denounced such antiquated tools as out of
fashion, declaring that he was used to " the patent scythes
that turn up at the end," he did not really feel wronged
that the farmer would not pay him a cent, as he knew that
the agreement for day's labor was really an agreement
for so much mowing.
In fact, the form of measuring exertion by time, at
bottom, involves its measurement by result.
This we find to be true even where there is no definite
result. If I hire a boatman or cabman to take me to a
Chap. III. FUNCTIONS OF MONEY. 501
certain point, the distance, being known, affords a close
idea of the exertion required, and it is the fairest, and to
both parties usually the most agreeable way, that the
stipulation shall be for that result, or as the cabmen in
Europe say " by course ? " which is a definite payment for
a definite result. But even were I to take a boat or a cab
without fixed idea of where I want to go, and agree to pay
by the hour, there is an implied understanding as to the
intensity of the exertion for which I am to pay. Either
boatman or cabman would feel that he was not keeping
his agreement fairly, and I would certainly feel so, were
he, for the purpose of " putting in time," to row or drive
at a snail's pace.
So strong is the disposition to take tangible results as
the measure of exertion that even where quality is of more
importance than quantity, as in literary work, the formal
measurement is even in our best magazines and newspapers
by the page or column, differences in quality, real or
expected, being recognized partly in the readiness with
which an article is accepted, and partly in a greater price
per page or per column.
In short, while exertion, including both quantity and
intensity, is always the true and final measure of value, it
is only through the manifestations of exertion that any
common measure of value can be had. Thus commodities
being tangible expressions of exertion become the readiest
common measures of value, and have since the beginning
of human society been so used.
While any commodity, or for that matter any definite
service, may be used as a common measure of value to the
extent to which it is recognized as embodying or express-
ing a certain amount of exertion and thus having a def-
inite, though not necessarily a fixed value, the tendency
is always to use for this purpose the commodity whose
value is most generally and easily recognized. And since
602 OF MONEY. Book V.
the commodity which is used as the common medium of
exchanges becomes in that use the commodity which is
oftenest exchanged and whose value is most generally and
easily recognized, whatever serves as the common medium
of exchange tends in that to become the common measure
of value, in terms of which the values of other things are
expressed and compared. In societies which have reached
a certain stage of civilization this is always money. Hence
we may define money with regard to its functions as that
which in any time and place serves as the common medium
of exchange and the common measure of value.
It must be remembered, however, that of these two
functions, use as the common medium of exchange is
primary. That is to say, use as the common medium of
exchange brings about use as the common measure of
value, and not the reverse. But these two uses do not
always exactly correspond.
Thus, in New York and its neighborhood one may still
hear of shillings or York shillings (12J cents) as a measure
of small values. There is no such coin, this use of an
ideal shilling being a survival from Colonial times. So,
in Philadelphia one may hear of fips and levies ; in New
Orleans of picayunes and in San Francisco of bits, sur-
vivals of the Spanish coinage ; and in the far Northwest of
" skins," a purely ideal measure of value surviving from
the time when the Hudson Bay Company bartered with
the Indians for furs. During, and for some time after, the
civil war two different common measures of value were in
co-temporaneous use in the United States paper money
and gold. But since the resumption of specie payments,
though paper money still constitutes the more largely used
medium of exchange, gold alone has in this country
become the common measure of value. And though gold,
silver and paper are all largely, and generally co-tempora-
neously, used throughout the civilized world to-day as
Chap. III. FUNCTIONS OF MONEY. 503
supplying the common medium of exchange, the great
monetary division is between the countries which use gold
as the common measure of value and the countries which
use silver.
But it is still evident, as Adam Smith said, that labor
(in the sense of exertion) is "the real measure of the
exchangeable value of all commodities," "the only
universal as well as the only accurate measure of value, or
the only standard by which we can compare the values of
all commodities in all times and in all places." For it is
still true, as he said, that "the real price of everything,
what everything really costs to the man who wants to
acquire it, is the toil and trouble of acquiring it. What
everything is really worth to the man who has acquired it,
and who wants to dispose of it or exchange it for something
else, is the toil and trouble which it can save to himself,
and which it can impose upon other people."
Since labor is thus the real and universal measure of
value, whatever any country may use as the common
measure of value can impose little difficulty upon the
exchanges of its people with the people of other countries
using other common measures of value. Nor yet would
any change within a country from one common measure
of value to another common measure of value bring more
than slight disturbance were it not for the effect upon
credits or obligations. In this lies the main source of
the controversies and confusions with which the " money
question " is now beset.
Before going further it would therefore be well, at least
so far as pertains to the idea of money, to examine the
relations of credit to exchange.
CHAPTER IV.
THE OFFICE OF CREDIT IN EXCHANGES.
[SHOWING THAT THE ADVANCE OF CIVILIZATION ECONOMIZES
THE USE OF MONEY.
Tendency to over-estimate the importance of money Credit existed
before the use of money began, and it is now and always has been
the most important instrument of exchange Illustration of ship-
wrecked men Adam Smith's error as to barter Money's most
important use to-day is as a measure of value.] :
I HAVE sought to explain the common understanding
of money and the part that it plays in exchanges by
supposing a number of travelers. I did so because it is in
such small and immediate exchanges as a traveler must
make among strangers that the peculiar usefulness of
money is most clearly felt. I did not mean to assume that
the difficulties of barter in all places and times are so great
as those that in the vicinity of New York at the close of
the Nineteenth Century would attend the effort of a traveler
to supply his personal needs by that means of exchange.
On the contrary there are even now parts of the world
where a traveler might find a properly selected stock of
commodities more readily and advantageously exchange-
able than money itself, and the difficulties of barter have
certainly increased not merely with the greater use of
money, but with such modern appliances as post-offices,
i Heading not complete in MS. See Prefatory Note. H. G., JB.
504
Chap. IV. OFFICE OF CREDIT IN EXCHANGES. 505
steamboats, railways, telegraphs and telephones, and with
the greater concentration of population and exchanges
that result from them. Even in our own civilization barter
must have been a more efficient means of exchange in the
times that preceded the great industrial development of
the Nineteenth Century than it is now because people were
more generally accustomed to it. The old traveling
merchants and even the old foreign merchants, who sent
their ships over the maritime world, were largely barterers,
and the stated fairs of which we have now only faint
survivals, but which formed so important a part in the
industrial life of our ancestors, gave place and occasion for
the meeting of those who wished to make a direct exchange
of commodities for commodities or services for services
that are wanting now.
The effect of the general adoption of the more elaborate
and on a large scale more efficient methods of an advanced
civilization is always to relegate to forgetfulness the
simpler methods previously in use. We have become
within a few years so accustomed to the electric telegraph
that we are apt to think that without it men would be
reduced in carrying messages to the means of transporta-
tion by land or water, and to forget that telegraphs were
in use before electric telegraphing was dreamed of. The
convenience of the lucifer match has made its use so
universal, that most of us if thrown on our own resources
without matches, would find it a most serious difficulty to
light a pipe or make a fire. A hunting party of civilized
men, if deprived by accident of their ammunition, might
starve to death before they could kill game even where it
was abundant. Yet at the beginning of this century lucifer
matches were unknown, and men killed game before fire-
arms were invented.
And so it is with money. Its use is so general in our
high civilization and its importance so great that we are
506 OF MONEY. Book V.
apt to over-estimate that importance and to forget that
men lived and advanced before money was developed, and
both to underrate the efficiency of the means of exchange
other than that of money, and the amount of exchanging
that even now goes on without any more use of money
than that of a counter or denominator of values.
It is not only that the simplest form of exchange, the
transfer of things desired in themselves for things desired
in themselves, still to some extent continues; but the
advance of civilization which in an early stage develops
the use of money as a medium of exchange begins in later
stages to develop means for dispensing with or much
economizing this use of money. The exchanges between
different countries are still carried on without the use of
money, and so in great measure are domestic exchanges,
even in the same locality. Not merely in the rural districts
and in small transactions is there much exchanging with-
out actual transfer of money, but in the greatest cities, the
largest transactions, habitually spoken of and thought of
as though they involved the transfer of money, really take
place without it. The richer people in fact use compara-
tively little money, even in personal transactions, and I
fancy that a man of good credit who kept a bank-account
might, if he tried to, live from year's end to year's end,
even in a great city like New York (and with less effort in
a smaller place), without a penny of actual money passing
through his hands. His income, if not received in small
amounts, he would get in checks or similar transfers. His
larger expenses he could of course pay for in checks, and
even such things as newspapers, tickets for street-car lines
or railways, or admission to theaters, postage-stamps, etc.,
he could with a little effort get in the same way.
Now all this economizing in the use of money, which
we are accustomed to think of as, and indeed in some of
its forms really is, the latest development of a civilization
Chap. IV. OFFICE OF CREDIT IN EXCHANGES. 607
that for immemorial ages has been accustomed to the use
of money, is really in essence a return to something that
must have been in use for the facilitating of exchanges
before money was developed among men. That something
is what we call trust or credit. Credit is to-day and in our
highest civilization the most important instrument of
exchange ; and that it must have been from the very first
appearance of man on this globe the most important
instrument of exchange, any one can see, if he will only
discard the assumption that invalidates so much of our
recent philosophy and philosophic history the assump-
tion that the progress of civilization is a change in man
himself and allow even prehistoric man the same reason-
ing faculties that all we know of man in historic times
shows to belong to him as man.
Imagine a number of totally shipwrecked men swimming
ashore in their buffs to an uninhabited island in a climate
genial enough to enable them to support life. What would
be their first exchanges ? Would they not be based upon
the various forms of the proposition, "I will do or get
this for you, if you will do or get that for me ? " Now, no
matter where or how they got into this world, this must
have been the position of the first men when they got here,
and all that we can reason from with any certainty goes
to show that these first men must have been essentially
the same kind of men as we ourselves.
If there is any difference in priority between them,
credit must, in the nature of things, have preceded barter
as an instrument of exchange, and must at least from the
very first have assisted barter. What more natural than
that the man who had killed a deer, or made a large catch
of fish, should be willing to give now while he had abun-
dance in return for a promise expressed or implied that
his neighbor when similarly fortunate would in the same
way remember him ? The organization of credit into more
508 OF MONEY. Boole V.
elaborate and finer forms goes on with the development
of civilization, but credit must have begun to aid exchanges
with the very beginnings of human society, and it is in
the backwoods and new settlements rather than in the
great cities that we will to-day find its direct forms playing
relatively the most important part in exchanges.
In explaining the origin and use of money, Adam Smith
much overrated the difficulties of barter, and in this he
has been followed by nearly all the writers who have
succeeded him. Of the condition before the use of the
metals as money he says (Book I., Chapter IV. of the
" Wealth of Nations ") :
One man, we shall suppose, has more of a certain commodity than
he himself has occasion for, while another has less. The former
consequently would be glad to dispose of, and the latter to purchase,
a part of this superfluity. But, if this latter should chance to have
nothing that the former stands in need of, no exchange can be made
betiveen them. The butcher has more meat in his shop than he him-
self can consume, and the brewer and the baker would each of them
be willing to purchase a part of it. But they have nothing to offer
in exchange, except the different productions of their respective
trades, and the butcher is already provided with all the bread and
beer which he has immediate occasion for. No exchange can, in this
case, be made between them. He cannot be their merchant, nor they
his customers ; and they are all of them thus mutually less service-
able to one another. . . .
. . . The man who wanted to buy salt, for example, and had noth-
ing but cattle to give in exchange for it, must have been obliged to buy
salt to the value of a whole ox, or a whole sheep, at a time. He could
seldom buy less than this, because what he was to give for it could
seldom be divided without loss ; and if he had a mind to buy more,
he must, for the same reasons, have been obliged to buy double or
triple the quantity, the value, to wit, of two or three oxen, or of two
or three sheep. If, on the contrary, instead of sheep or oxen, he had
metals to give in exchange for it, he could easily proportion the
quantity of the metal to the precise quantity of the commodity which
he had immediate occasion for.
Though this explanation of the difficulties attending
barter has been paraphrased by writer after writer since
Chap.ir. OFFICE OF CREDIT IN EXCHANGES. 609
Adam Smith, it is an exaggeration so gross as to be
ridiculous. The differentiation of such trades as that of
the butcher, brewer and baker, the fact that men habitually
devote their labor to the production of more of certain
commodities than they themselves can consume, implies a
division of labor that could not possibly take place were
exchange impossible under the circumstances that Adam
Smith assumes. And it is evident that such circumstances
would impose no insuperable difficulty to exchange even
though a true money had not yet come into use. The
butcher, with meat that he wanted to dispose of, would
not have refused the exchange offered by the brewer and
baker because he himself was already provided with all
the bread and beer that he had immediate occasion for.
On the contrary, he would say, " I have no immediate use
for bread and beer because I am already supplied, but I
will give you the meat you want on your promise to give
me its equivalent in bread and beer when I call for them."
Nor need he necessarily wait for his own supply of bread
and beer to be exhausted before calling on the baker and
brewer for the fulfilment of their promises, for since man's
wants are not satisfied with meat, bread and beer alone,
he might want from the tailor a coat, from the grazier a
bullock, from the carpenter a house ; and since they could
not take from him at once full payment in such a
perishable commodity as meat, he could help out his part
of the exchange by telling the baker and brewer to give
to them the bread and beer they had promised him.
That is to say, it is not necessary to an exchange that
both sides of it shall be effected at once or with the same
person. One part or side of the full exchange may be
effected at once, and the effecting of the other part or side
may be deferred to a future time and transferred to
another person or persons by means of trust or credit.
And by this simple and natural device, and without the
intervention of money, salt could be exchanged for less
510 OF MONEY. Boole V.
quantities of beef or mutton than are likely to spoil before
a single family could consume them. The truth is that
the difficulties of incidence which Adam Smith speaks of
here as if they were inseparable from barter are always
avoided by the use of trust where trust is possible. It is
only where there are no other exchanges going on and it
is not probable that the parties concerned will come into
contact directly or indirectly again, as in a desert or at
sea, that owing to want of incidence no exchange can be
made between them.*
It is really in exchange between those who are unknown
to each other and do not expect to meet each other again
that money performs its most indispensable office (as
illustrated in Book V., Chapter II.). The use of money, by
which the traveler can easily carry with him the means of
supplying his needs, has greatly facilitated traveling ; yet
in the bill of exchange, the letter of credit, Cook's coupons,
and the book of certified checks, which are so largely
displacing money for the use of travelers, we come back
again to the use of trust.
Trust or credit is indeed the first of all the instrumen-
talities that facilitate exchange. Its use antedates not
merely the use of any true money, but must have been
* But even here there is often something of the nature of exchange,
although it may lack the element of certainty. When a boy, passing
through a street in Philadelphia during a sudden rain, I met a gen-
tleman standing in a doorway and proffered him the shelter of my
umbrella, going a little out of my way to take him to his destination.
As we parted he said, " You and I are not likely to meet again, as I
am a stranger here ; but one good turn deserves another, and I will
try to return your service to me by doing such a service for some one
else, telling him to pass it along." Possibly that little kindly service,
which I would have forgotten but for the impression his words made,
maybe "passing along" still. Both good and evil pass on as waves
pass on. Yet I cannot but think that in the long run, good outlives
evil. For as to the normal constitution of the human mind, evil must
bring the wider and more permanent pain, the impulse to its per-
petuation must meet the greater friction.
Chap. IV. OFFICE OF CEEDIT IN EXCHANGES. 611
coeval with the first appearance of man. Truth, love, sym-
pathy are of human nature. It is not only that without
them man could never have emerged from the savage state,
but that without them he could not have maintained him-
self even in a savage state. If brought on earth without
them, he would inevitably have been exterminated by his
animal neighbors or have exterminated himself.
Men do not have to be taught to trust each other, except
where they have been deceived, and it is more often in our
one-sided civilization, where laws for the collection of
debts have weakened the moral sanction which public
opinion naturally gives to honesty, and a deep social
injustice brings about a monstrous inequality in the
distribution of wealth, and not among primitive peoples,
that the bond is of tenest required to back the simple word.
So natural is it for men to trust each other that even the
most distrustful must constantly trust others.
And trust or credit is not merely the first of the agencies
of exchange in the sense of priority ; it yet is, as it always
has been, the first in importance. In spite of our extensive
use of money in effecting exchanges, what is accomplished
by it is small as compared with what is accomplished by
credit. In international exchanges money is not used at
all, while the great volume of domestic exchange is in
every civilized country carried on by the giving and
cancelation of credits. As a matter of fact the most
important use of money to-day is not as a medium of
exchange, though that is its primary use. It is that of a
common measure of value, its secondary use. Not only
this, but with the advance in civilization the tendency is
to make use of credit as money ; to coin, as it were, trust
into currency, and thus to bring into use a medium of
exchange better adapted in many circumstances to easy
transfer than metallic money. The paper money so largely
in use in all civilized countries as a common medium of
exchange is in reality a coinage of credit or trust.
CHAPTER V.
THE GENESIS OF MONEY.
[SHOWING THAT THE LAW OP GRATIFYING DESIRES WITH
THE LEAST EXERTION PROMPTS THE USE FROM TIME TO
TIME OF THE MOST LABOR-SAVING MEDIUM AVAILABLE.
Money not an invention, but developed by civilization It grows with
the growth of exchanges Exchange first of general commodities
Then of the more convenient commodities Then of coin, whose
commodity value comes to be forgotten Illustration of the Ameri-
can trade dollar The lessening uses of commodity money and
extensions of credit money Two elements in exchange value of
metal coin : intrinsic, or value of the metal itself, and seigniorage
Meaning of seigniorage Exchange value of paper money is seign-
iorageUse of money not for consumption, but exchange Propri-
etary articles as mediums of exchange Mutilated coins Debased
coinage When lessening metal value in coins does not lessen
circulating value This the reason why paper money exchanges
equally with metal money of like denomination.] 1
MONEY is not an invention, but rather a natural
growth or development, arising in the progress
of civilization from common perceptions and common
needs. The same fundamental law of human nature which
prompts to exchange, the law by which we seek to satisfy
our desires with the least exertion, prompts us with the
growth of exchanges to adopt as a medium for them the
most labor-saving instruments available.
i The part of chapter heading within brackets not in MS. H.G., JB.
512
Chap. V. THE GENESIS OF MONEY. 613
All exchange is of services or commodities. But as
commodities are in reality concrete services they afford
from the first the readiest media of exchange, performing
that office and serving as measures of value not only for
other commodities but for direct services.
But commodities (under which name we include all
movable products of labor, which, as such, have value so
long as they retain the capacity of ministering to desire)
greatly differ in their availability as media of exchange.
Those best fitted for that use are those which are least
perishable, which can be most easily passed from hand to
hand and moved from place 'to place ; which are most
uniform in their articles and most homogeneous in their
structure, so that they may be estimated with most cer-
tainty and divided and reunited with the least waste, and
whose value is from their general use best known and
most quickly recognized.
In proportion as these qualities are united in one com-
modity there is a natural tendency to its use as a medium
for the exchange of other things, and this use tends again
to the wider knowledge and quicker recognition of its value.
In primitive societies, or in the outposts of civilization
where better means were not readily obtainable, skins,
shells, salt, beads, tobacco, tea, blankets, and many other
of the less perishable and more portable commodities, have
in an imperfect way and to a limited extent been used as
common media of exchange and common measures of value,
thus becoming the money of the time and place.* But
* Adam Smith and most of the subsequent writers have included
cattle in the list of things that have in rude times served this func-
tion. Smith says, Book I., Chapter IV., "Wealth of Nations" :
" In the rude ages of society, cattle are said to have been the common
instrument of commerce ; and, although they must have been a most
inconvenient one, yet in old times we find things were frequently
valued according to the number of cattle which had been given in
514 OF MONEY. Boole V.
the metals, and particularly the precious metals, so well
fill all the requirements of a medium of exchange, that
wherever they have become well known mankind have
applied them to this use. At first they were doubtless
weighed, and perhaps tested, with every passage from
hand to hand ; but as their use for purposes of exchange
became more common, the same desire to economize labor
which leads the baker to give his bread the form and shape
of loaves or rolls, and the tobacconist or tea-dealer to put
up his commodities into uniform packages, must soon have
led to the running of the metals used as media of exchange
into pieces of definite weight and purity, so that they may
be passed from hand to hand without the trouble of
weighing and testing them. To make these pieces of
circular form, since that is the most convenient and the
least subject to abrasion in handling, and to afford evidence
that they yet retained their original substance by stamping
their sides and edges, are obvious devices that seem to have
exchange for them. The armor of Diomede, says Homer, cost only
nine oxen ; but that of Glaucus cost an hundred oxen."
Although I have hitherto accepted this statement, closer consid-
eration now convinces me that the inconvenience attaching to such
a use of cattle never could have permitted them to take the place of
money. As for the authority of Homer, the state of the arts assumed
in the Iliad would imply the use of metal money, and the Marquis
Gainier has contended that the oxen spoken of were really coins.
But this supposition is not the only alternative to supposing that the
allusions in Homer's poems are to be taken as indicating that cattle
were in use as the common medium of exchange and common mea-
sure of value. In ordinary speech, and especially in poetry, which
eschews the exactness of monetary terms, such things as cattle, lands,
slaves, have always been used to convey a vague but striking idea of
wealth or value ; and it seems far more reasonable so to understand
the references of ancient writers than to take them as proof that
commodities so inconvenient to divide, preserve and transfer as cat-
tle ever passed from the position of an article of exchange to that of
its common medium and measure.
Chap. V. THE GENESIS OP MONEY. 616
been adopted wherever sufficient skill in the arts had been
attained and the metals were in this way used. And thus
by a natural development in use, a commodity peculiarly
adapted to the purpose becomes, in the shape of coined
money, the commodity which serves as a medium of
exchange and measure of value for all commodities and
services, and which has been in use among peoples of the
most advanced civilization for long ages and still remains
in use, though not in exclusive use, to our day.
But while the first purpose of coinage is, we may safely
assume, to save the trouble of weighing and testing the
commodity which has become a common medium of
exchange, the general use of these coins as giving evidence
of weight and purity must gradually have the effect of
transferring the quality of ready exchangeability from the
commodity to the coin. The habit of weighing and testing
passes away ; even the amount of the commodity embodied
in the coin is, by the great majority of those who use it,
forgotten or not heeded ; and the shape, size, color and
devices of the coin become the things that give it circula-
tion. An American Eagle, or ten-dollar piece, contains so
many grains of gold of a certain fineness, and exchanges
at the value of the gold. But not one in ten thousand of
those who use this coin, and who know its value in rela-
tion to other things that they are in the habit of buying
and selling, know how many grains of gold it contains.
A man with a ten-dollar gold piece will find no difficulty
in the United States in fairly exchanging it for anything
he may happen to want, but he would find much difficulty
in fairly exchanging the same quantity of gold in the
shape of dust or of an ingot, anywhere except at a mint
or with a bullion dealer.
A curious evidence of this tendency to accept the sign
rather than the substance is given in the history of the
American trade dollar. For many years much of the ex-
516 OF MONEY. Book V.
port of silver to China has been in the shape of Mexican
dollars, the stamp of which has become known there as
evidencing a certain weight of silver. Thinking that it
might take the place in China of the Mexican coin the
American government in 1874 coined what was called a
trade dollar. It was a better finished and handsomer coin
than the Mexican dollar, and contained a greater weight of
silver. But the Chinese preferred a coin whose look they
had become familiar with, to one that was new to them,
even though the latter was of greater intrinsic value. The
attempt was a failure, and after an instructive domestic
experience, which it is not worth while to speak of here,
the coinage of the trade dollar was stopped.
Now this transfer of ready exchangeability from the
commodity to the coin, with the accompanying relegation
of the commodity itself to the same position in exchange
held by other commodities, which takes place as a result
of the use of coin money, is a matter of great importance,
leading ultimately to a complete change in the nature of
the money used.
In the coinage of the precious metals the use of com-
modities as a medium of exchange seems to have reached
its highest form. But the very same qualities which of
all commodities best fit the precious metals for this use,
attach or may attach in still higher degree to something
which, having no material form, may be passed from person
to person or place to place without inconvenience from
bulk or weight, or danger of injury from accident, abrasion
or decay. This something is credit or obligation. And
as the advance of civilization goes on, the same tendency
to seek the gratification of desire with the least exertion,
which with a certain advance of civilization leads to the
development of commodity money, leads with its further
advance to the utilization of credit as money.
Movement in this direction may be distinguished along
three lines: 1 The admixture in coinage of obligation
Chap. V. THE GENESIS OF MONEY. 617
value with production value. 2 The use of obligation
or credit as representing an economizing commodity
money. 3 The use of pure credit money.
We are here considering only money. Not only is credit
a facilitator of exchange before money of any kind is
developed, but the same social progress which shows itself
in the development of money also shows itself in the
extension of credit. If the use of money supersedes the
use of credit in some exchanges, it is only where the use
of credit is difficult and inconvenient ; and in facilitating
exchanges over wider areas than the use of the primitive
forms of credit would have been equal to, it also increases
that mutual knowledge and mutual desire to exchange
that are necessary to the extension of credit. Although the
primary and local function of money is that of affording
a common medium of exchange, its secondary function of
affording a common measure of values soon becomes of
greater importance, and the extension of credits in our
modern civilization is far more striking and important
than the extensions in the use of money as a medium of
exchange. Though the use of any particular money as a
medium of exchange is still local, the money of any one
country circulating only to a very limited extent in other
countries, yet the development of credits has been such
that the exchange of commodities to the ends of the earth
and among peoples using different moneys as mediums of
exchange, is conducted by means of it. But what we are
considering now is not this development of commercial
credits, but the way in which the use of commodity money
passes into the use of credit money ; or in other words, the
way in which the coinage of production value into a
convenient medium of exchange passes into the coinage
of obligation values.
The demand for any metal in exchange is at first, like
the demand for other things in exchange, a demand for
consumption; and its value or rate of exchange, is
518 OF MONEY. Book V.
determined by the cost of producing it in merchantable
form. As one or another of the metals began to come
into use as a medium of exchange, the largest demand for
it would doubtless for some time still be for consumption,
and any change in the form of the metal made to fit it for
this new use would at first entail little or no greater cost
than that of the ordinarily merchantable form. Thus the
value of the metal used as money would at first be no
greater than that of the same metal intended for consump-
tion. But when coinage fairly began, something more of
labor would be required to produce the stamped and
finished coin than to produce the mere ingot of merchant-
able shape.
Hence there are, or may be, two elements in the
exchange value of metal coin (1) the intrinsic value, or
value of the metal itself, which is governed by the cost of
producing it in merchantable form; and (2) the cost of
changing it from that form into the form of finished coin.
This second element, the charge for coinage, is called
seigniorage, from the idea that the coining of money has
from the earliest times been deemed a function of the
sovereign the seignior or lord as representative of
organized society or the state.
There are two different ways in which it has been
customary to pay for turning a merchantable material
into a finished product. Thus : From time immemorial
until the present when machinery has begun to revolu-
tionize industrial methods, it was the custom for the man
who wanted a suit of clothes to buy the material, take it
to a tailor, and pay him for the work of making it into a
suit. The tailor was not presumed to keep any of the cloth,
and if he did so it was called "cabbage." During the
same time it was, on the contrary, the universal custom for
the miller to get his pay by keeping a part of the material
brought him for conversion. The farmer or purchaser
Chap. V. THE GENESIS OF MONEY. 519
brought his grain to the mill, receiving back less than its
equivalent in meal, the difference being the toll that the
miller retained for the service of grinding. The manu-
facturer who is now succeeding both the old tailor and
the old miller buys the material and sells the finished
product.
Now the conversion of metal into coin seems always to
have been paid for in the same way as the conversion of
grain into meal or flour, by a toll or deduction in the
return. This toll or seigniorage may be less or more than
the actual cost of coinage. It is what the lord or state,
who has the sole privilege of coinage, chooses to take for
it; the difference between the rate at which metal is
received or bought at the mint and the rate at which it is
returned or issued in coin.
Had the coinage of metal into money been left to the
free competition of individual enterprise, the charge for
this conversion would have tended to the lowest point at
which coin could be produced in sufficient quantities to
supply the demand. But so far as we can see this has
never been the case. The primary object of coinage being
the certification of weight and fineness, that is obviously
best assured by the stamp of the highest and most widely
known authority, that of the sovereign or state. Where
coinage is thus monopolized in the hands of the sovereign,
the element of seigniorage in the value of coin may be
eliminated altogether by the agreement or practice of the
sovereign to return in coin the full amount of metal
brought to his mints, as is to-day the case in some countries
with some metals ; or it may be extended so as to become
the most important of the two* elements in the value of
coin by the refusal of the sovereign to coin on other terms
and the exclusion or refusal of other coinage. Indeed,
by the selection of some very cheap commodity for the
material of coinage, it may become practically the only
520 OF MONEY. Boole V.
element of value. For, as Ricardo pointed out, the whole
exchange value of paper money may be considered as a
charge for seigniorage.
The reason of this fact that, the issuance of money being
a monopoly, the element of intrinsic value may be partially
or entirely eliminated without loss of usefulness, is to be
found in the peculiar use of money. The use of other
commodities is in consumption. The use of money is in
exchange. Thus the intrinsic character of money is of no
moment to hi who receives it to circulate again. The
only question that he is concerned with is as to the
readiness of others to receive it from him when he wants
in his turn to pass it on. And this readiness where coined
money comes into use as the common medium of exchange
is associated with coinage, which becomes the badge or
stamp of circulation.
There are to-day certain commodities having a large
and wide-spread sale in neatly put up packages under pro-
prietary names, such as Pears' Soap, Colman's Mustard,
Royal Baking Powder, and so on. The reputation as to
quantity and quality of contents which has been secured
for the packages bearing such a trade-mark gives their
manufacturers proprietary profits often very considerable
that are analogous to seigniorage. For a short time and
to a small extent these profits might be increased by
decreasing the quality of the goods. Those who bought
them to sell again would at first be unconscious of the
difference and would buy as before. But as soon as they
reached the hands of purchasers for consumption, the
difference would be detected and the demand would
decline, for the demand of those who buy such things to
sell again springs from the demand of those who buy for
consumption.
But (and the expedients resorted to in times of sudden
and acute monetary scarcity may suggest this) let us
CJtap. V. THE GENESIS OF MONEY. 521
imagine some such proprietary packed article to pass into
use as the medium of exchange. The increased demand
caused by the new and wider use would enable the owners
of the trade-mark, by restricting supply of which they
would have exclusive control, to carry up the value of the
article so far above that of the contained commodity that
it would pass out of use for consumption. Yet so long as
the demand for it as a medium of exchange continued, it
would have use for that purpose, and the owners of the
trade-mark could not merely keep up the price, but could
with impunity reduce the quantity and quality of the
contents of their packages to almost any extent. For
since every acceptance of a thing in exchange is in reality
a purchase of it, and every transfer of it in payment of
an obligation or in return for any other thing is in reality
a sale, the entire demand for an article used only as a
medium of exchange would be with a view to subsequent
sale would be a demand of merchants or traders, who are
not concerned with the intrinsic qualities of what they buy
to sell again, but only with its salability.
In the illustration I have used, the possibility of les-
sening the quality or quantity of the packages without
lessening their value as a medium of exchange, is depend-
ent on their having passed out of use for consumption
and the demand for them being entirely the demand
for use in exchange. For, so long as any part of the
demand was a demand for consumption, the lessening of
commodity value would, by checking the total demand,
operate at once to reduce value not merely of that part
used for consumption, but that part used for exchange.
Now the first coined money being commodity money,
the demand for it would be for a long time, in part at least,
a demand for consumption. In the simpler stage of the
arts, coin would be much more frequently than now beaten
or melted into plate, adornments, ornaments, etc. And
522 OF MONEY. BooTt V.
more important still perhaps, it would continue to be used
as a commodity in the exchange with other countries.
It is probable that the coinage of the more important
sovereigns had a far wider area of diffusion when inter-
national commerce was much less than it is now. For,
although the area of commerce was more limited than
now, there was proportionately more of the area without
any coinage of its own, and the development of credit as
a medium of international exchanges, the use of coin in
them as a conveniently portable commodity, was probably
relatively greater than now.
Now, the demand for coin sent abroad, as American
gold sent to England, like the demand for coin for use in
the arts, is a demand for use in consumption and would
quickly show itself in a lessening of aggregate demand
and consequently of value, upon a reduction of the com-
modity value of coin, no matter how strictly the workmen
of the mints were sworn to secrecy, as was the device of
sovereigns who contemplated deteriorating their coinage.
But still more important is the fact that in order to
keep up the value of coin while diminishing its intrinsic
value it is necessary that the supply be strictly limited.
But the sovereigns, whether princes or republics, who
have resorted to the expedient of debasing their coinage
have generally done so for the purpose of turning the
same amount of metal into more coin, rather than that of
keeping the same amount of coin in circulation with the
use of less metal, or have been unable to resist the temp-
tation to do this when they found opportunity.
That the circulating value of money need not necessarily
depend on its intrinsic value, must have been clear to
discerning men as soon as the habitual use of coined
money had made its signs and emblems the accepted
tokens of value, so that it passed from hand to hand
without testing and usually without weighing. The fact
Chap. V. THE GENESIS OF MONEY. 523
that coins that had lost something of their intrinsic value
by abrasion continued to pass current, must have made
clipping and filling and sweating, early devices of the
cunning, which raised figures and milled edges would not
prevent, unless supplemented by such mercantile stipulation
or legislative enactment as secured common agreement not
to accept such coins. This of itself would show that the
circulating value of a coin did not as a matter of fact
depend upon the value of the material it contained.
Thus to the ministers and advisers of the sovereigns,
who seem everywhere to have assumed from the first
exclusive privilege of coining, it must have seemed an
easy and safe economy to reduce the cost of the coin by
substituting for its material some part of cheaper metal.
Hence came those numerous and repeated reductions in
the value of coins which are a marked feature in all
monetary history ; which have reduced the English pound
sterling to but a fraction of its original equivalence to a
pound troy, and in other countries have brought about a
still greater difference.
So far as the principal and most important coinage is
concerned, these attempts have from time to time ended
in disaster, and in the final reunion of circulating value
with commodity value, either by the rejection and with-
drawal of the debased coin and a recoinage, or more
frequently by the lowering of the circulating value to the
level of the commodity value.
This, however, is not a necessary result of a debase-
ment of coinage, as is so often assumed. A less valuable
metal may be substituted in a coin for a more valuable
metal without lessening the circulating value, provided
and this is the essential condition it continues to
be as hard for those who use the coin in exchanges to
get the one as it was to get the other ; or in other words
that it continues to represent the same exertion.
524 OF MONEY. Book V.
For all exchange is really the exchange of labor, and
the rate at which all things tend to exchange for all other
things is determined by the relative difficulty of obtaining
them. That a ten pound note of the Bank of England,
having practically no intrinsic value, will exchange for
ten gold sovereigns, having an intrinsic value of that
amount of gold that a five dollar note of the government
of the United States, having no intrinsic value ; five silver
dollars, having an intrinsic value of something like two
dollars and a half; and a five dollar piece, having an
intrinsic value of five dollars, will exchange in this country
for each other or for the same amount of commodities or
services of any kind, is because the difficulty of getting
these things, the quantity and quality of exertion ordinarily
required to obtain them, is precisely the same. Should it
become in the slightest degree harder to get one of these
things than the others, this will show itself in a change of
the rate at which they exchange. In this case we say that
the one commands a premium or that the others bear a
discount.
The difficulty of procurement which brings to the same
value the gold coin, silver coin and notes spoken of, so
that they will exchange for each other or for equal quan-
tities of other things, is, though of the same intensity, of
different kinds. In the gold coin, it is the difficulty of
mining, refining and transporting the metal (for neither in
Great Britain nor in the United States does the govern-
ment make any charge or exact any seigniorage for the
coinage of gold). In the silver coin, it is partly the difficulty
of obtaining the metal and partly the difficulty imposed
by the only terms on which the government will coin silver
dollars or in other words, by the seigniorage it demands.
In the notes, it is the difficulty imposed by the restrictions
on the issuance of such notes or, as it may be considered,
all seigniorage. What in short, gives to the paper notes
or coins of small intrinsic value the same exchange value
Chap. V. THE GENESIS OP MONEY. 525
as the gold coin, is that the government concerned, which
has the monopoly of coinage in its respective country, will
not issue one of them on any less terms than it does the
other, thus making them all to the individual equally hard
to get.
What has everywhere caused the failure of the innumer-
able attempts to reduce the intrinsic value of the principal
and important coin, without reducing its circulating value,
is not the impossibility of the task, but the fact that the
sovereigns who have attempted it did not, and perhaps
could not, observe the necessary condition of success, the
strict limitation of supply. But the purpose of the
sovereigns, whether princes or republics, in debasing
coinage has been, or under pressure of the temptation has
become, not an attempt to make a less value in metal
serve for the same quantity of coin, but to issue a greater
quantity of coin on the same value in metal. Thus instead
of restricting the supply of coin to the point where the
demand for its use as a medium of exchange would keep
up its exchange value irrespective of the lessening in its
intrinsic value, they proceeded at once to increase supply
on a falling demand, and met the inevitable depreciation
of circulating value by fresh increase of supply, so that
no matter how much the intrinsic value of the coin was
reduced, its circulating value followed.
[Principle same as that which caused depreciation in French
assignat, Continental money, etc.] *
It is this fall of circulating value with the fall of intrinsic
value where it is not kept up by restriction of supply that
has through succeeding depreciations reduced the English
pound sterling to but a fraction of its original equivalence
to a pound troy, and in other countries has brought about
a still greater difference.
* Note in MS. indicating illustration to be developed by author. H. G., JK.
CHAPTER VI.
THE TWO KINDS OF MONEY.
[SHOWING THAT ONE ORIGINATES IN VALUE PROM PRODUC-
TION, THE OTHER IN VALUE FROM OBLIGATION.
Money peculiarly the representative of value Two kinds of money
in the more highly civilized world Commodity money and value
from production Credit money and value from obligation Of
credit money Of commodity money Of intrinsic value Gold
coin the only intrinsic value money now in circulation in the
United States, England, France or Germany.] l
WHILE value is always one and the same power, that
of commanding labor in exchange, there are as we
have seen, with reference to its sources, two different
kinds of value that which proceeds from production and
that which proceeds from obligation. Now money is pecu-
liarly the representative of value the common medium or
flux through which things are exchanged with reference
to their value, and the common measure of value. And
corresponding to and proceeding from this distinction
between the two kinds of value, there are, we find, two
kinds of money in use in the more highly civilized world
to-day the one, which we may call commodity money,
originating in the value proceeding from production ; and
the other, which we may call credit money, originating in
the value proceeding from obligation.
This distinction has of course no relation to differences
of denomination, such as those between English pounds,
1 Merely the title in this heading appears in MS. H. G., JB.
526
Chap.VL THE TWO KINDS OF MONEY. 627
French francs and American dollars. These are but
differences of nomenclature. Nor yet does it coincide
with differences in the material used as money, as for
instance that between metal money and paper money.
For while all paper money is credit money, all metal
money is not commodity money. What I understand by
commodity money is money which exchanges at its value
as a commodity, that is to say, which passes current at no
more than its " intrinsic value," or value of the material
of which it is composed. Credit money is money which
exchanges at a greater value than that of the material of
which it is composed. In the one case the whole value for
which the money exchanges is the value it would have as
a commodity. In the other case the value for which the
money exchanges is greater than its commodity value, and
hence some part at least of its exchange value as money is
given to it by credit or trust.
For instance, a man who exchanges ten dollars' worth
of wheat for a coin containing ten dollars' worth of gold
makes in reality a barter. He exchanges one commodity
for an equal value of another commodity, crediting or
trusting nobody, but having in the coin he has received a
commodity which, irrespective of its use as money, has an
equal value to that he gave. But the man who exchanges
ten dollars' worth of wheat for a ten-dollar note receives
for a commodity worth ten dollars what, as a commodity,
has only the value of a bit of paper, a value practically
infinitesimal. "What renders him willing to take it as an
equivalent of the wheat is the faith or credit or trust that
he can in turn exchange it as money at the same valuation.
If he drops the coin into the sea, he loses value to the
extent of ten dollars, and the sum of wealth is lessened by
that amount. If he burns the paper note, he suffers loss,
to the value of ten dollars, but he alone ; the sum of wealth
is only infinitesimally lessened. Paper money is in truth
528 OF MONEY. Book V.
of the same nature as the check or order of an individual
or corporation except (and in this lies the difference that
makes it money) that it has a wider and readier credit.
The value of the coin of full intrinsic value, like the value
of the wheat, is a value that comes from production. But
the value of the paper money is, like the value of the check
or order, a value from obligation.
The first money in use was doubtless a commodity
money, and there are some countries where it is still the
principal money, and places perhaps where it is the only
money. But in the more highly civilized countries it has
been very largely superseded by credit money. In the
United States, for instance, the only commodity or intrinsic
value money now in circulation is the gold coinage of the
United States. Our silver dollars have an intrinsic or
commodity value of only some fifty cents, and the value
of our subsidiary coinage is still less. That they circulate
in the United States at the same value as gold shows that
their exchange value has no reference to their intrinsic
value. They are in reality as much credit money as is the
greenback or treasury note, the difference being that the
stamp, which evidences their credit and thus secures their
circulation, is impressed not on paper, but on a metallic
material. The substitution of what is now the cheapest
of metals, steel, or the utter elimination of intrinsic value,
would not in the slightest lessen their circulating value.
What is true of the United States in this respect is also
true of England, of France, of Germany, and of all the
nations that have adopted gold as the common measure of
value. Their only commodity money is certain gold coins ;
their other coins being token or credit money. In the
countries that have retained silver as the common measure
of value the standard coin is generally commodity money,
but the subsidiary coins, having less intrinsic value, are in
reality credit money.
INDEX.
Adapting, its place in produc-
tion, 327-330, 332, 353-354, 358,
400, 414.
Agriculture, alleged law of di-
minishing returns in, 174, 335-
338, and the Malthusian the-
ory, 336, 337-338 ; confusion of
the spacial law with, 351-356;
relation of space to, 357, 358.
Analysis, definition of, 29.
Animals, how distinguished from
man, 11-18, 19, 29, 36, 51, 53,
56, 59, 77, 82, 85, 287, 291-292,
397-399; how they resemble
man, 13-14, 85, 291 ; and in-
stinct, 15-18,291-292,397-398;
cooperate, 397-399.
Antinomy, 345-346, 348.
Aristotle, final cause, 50 ; defini-
tion of wealth, 132.
Austrian school, displaced the
classical school, 124, 208-209,
215, 252 ; value, 218, 252 ; mar-
ginal utilities, 218, 237; ab-
sence of scientific method in,
448-449.
Bacon, Francis, inductive logic,
96-97; right reasoning, 139;
Idols of the Forum, 340.
Bain, definition of wealth, 123.
Baird, Henry Carey, deduction
and induction, 93.
Beckford, "Vathek" and Font-
hill, 369.
Biddle, Clement C., validity of
property, 184.
Bisset, Andrew, natural rights,
194.
Bohm-Bawerk, Eugen V., does
not define wealth, 124; teach-
ings of, 208-209.
Bo wen, definition of wealth,
122.
" Britannica, Encyclopaedia," old
political economy dead, 205-
206.
Buckle, on civilization, 25 ; im-
portance of Smith's "Wealth
of Nations," 89; selfishness in
political economy, 89-90.
Bull, Irish, from what its humor
comes, 274.
Cairnes, J. E., does not define
wealth, 124; prediction as to
political economy, 179-181.
Capital, confusions as to, 120-
121, 176-177; meaning fixed in
"Progress and Poverty," 211,
270-271, 298-300; wealth that
is called, 293-300; all, is
wealth, 294-295, 296; but all
wealth not, 294-295, 296 ; paper
money not, 299n.; other things
not, 296-297 ; definition of, 293-
294, 296, 299, 413; the third
factor in production, 406, 413-
415 ; when it may aid labor,
414; it does not use labor, but
is used by labor, 414-415.
Carey, Henry C., induction and
deduction, 93-94 ; protection-
ism, 196.
529
530
INDEX.
Carlyle, Thomas, repugnance to
"dismal science," 88 ; German
thought in England, 196.
Catallactics, substitute for po-
litical economy, 128-129.
Cause, reason the power of trac-
ing its relations, 29-30, 33, 45-
46; power that apprehension
of its relations gives, 33-38;
relative meaning of, 46-47;
ultimate or sufficient reason,
48-49 ; Aristotle on final.
50 ; doctrine of final, 50 ; will
or spirit the only explanation
of first or final, 51-54, 56-57,
79, and called God, 54, 57, 79;
Mill's confusion, 440-443.
Chalmers, Dr., does not define
wealth, 124; of natural rights,
186-187.
' ' Chambers' Encyclopedia, "
death of old political econ-
omy, 206-207.
Christ, Kingdom of Heaven re-
vealed to babes, 139-140 ; why
He sympathized with the poor,
306-307. See Jesus.
Christianity, made to soothe the
rich, 174.
Civilization, extensions of man's
powers in, 19-23, 29-43, 91 ; rise
of, to what due, 20-22 ; what it
means, 24-28, 37-38 ; vagueness
as to what it is, 24-25, Guizot,
25, Buckle, 25 ; its relation to
the state or body politic, 25-28 ;
to the body economic or Greater
Leviathan, 27-28, 118, 399-400,
428 ; origin and genesis of, 29-
38 ; the germ of, 33-34 ; used as a
relative term, 37 ; justice, high-
est aspect of, 35 ; how it devel-
ops, 39-43 ; as to history of, 37 ;
extent of cooperation in mod-
ern, 20-22, 27, 36-38, 39-40, 43,
325, 378-379, 426; machinery
in, 379 ; exchange at root of,
399-401 ; cause of death of, 439;
makes no changes in man as
man, 507.
Clark, definition of wealth, 123.
Classical school, 208.
Commodity, as a term for an arti-
cle of wealth, 282.
Compensation, Mill on, 137-138;
Dove, 192-193; Spencer, 192-
193.
Competition, in determining
value, 251, 253; office of, in
production, 402-403 ; the life of
trade, 402, 403 ; regarded as an
evil, 402; its origin, 403; a
natural law, 403.
Confucius, meaning of recipro-
city, 306.
Consequence, meaning of, 45-46 ;
invariable sequence, 46, 55-56,
80, 435-436, 437 ; of laws of na-
ture, 44-57, 80, 435-436, 437,
440-443 ; Mill's improper use of
word, 440-443.
Consumption, not concerned with
distribution, 426.
Cooperation, gives rise to civiliza-
tion, 20-22, 27, 36-38, 39-40, 43 ;
meaning in current political
economy, 371, and its true mean-
ing, 372 ; the two ways, 371-381 ;
of combination of effort, 372-
373, 380; of division or sep-
aration of effort, 372-381; of
machinery, 379; extent of, in
modern civilization, 325, 378-
379, 426 ; Smith on division of
labor, 182, 372, 374; his three
heads, 380; a better analysis,
380-381 ; its two kinds, 382-396 ;
of directed or conscious, 383-
385, 391-393 ; of spontaneous or
unconscious, 385-396 ; depen-
dent on exchange, 332, 378, 399,
401 ; intelligence that suffices
for one impossible for the other,
385, 394-395 ; conscious, will not
suffice for the work of the un-
conscious, 393-395 ; this the
fatal defect of socialism, 391-
396 ; the spiritual element in
production, 391, cannot be
combined, 392 ; man power and
mind power, 392-393; the
Greater Leviathan, 22-23, 27-
28, 36, 118, 395-396, 399-400,
428 ; all living things engage in,
INDEX.
531
399, bees and ants from in-
stinct, 397-399, man from rea-
son, 398-399.
Copernicus, astronomy before,
138 ; his prudence, 168.
Corn-laws, significance of agita-
tion and repeal of, 175-176.
Creation of the world, and time,
367-368.
Credit, its office in exchanges.
491-493, 504-511, 517, 526-528 ;
paper money a coinage of,
511.
Davis, Noah K., inductive and
deductive logic, 98-99.
Debt, cannot be wealth, 137, 277-
278 ; value from obligation, 262;
slavery, 262 ; not capital, 296.
Deduction, as used in political
economy, 92-100.
Desire, man's reason in the satis-
faction of, 17-18; cooperation
or the Greater Leviathan in the
satisfaction of, 22-23, 27, 36, 70,
379 ; reason behind, 31-32 ; ex-
change springs from, 37, 512 ;
causal relations, 50-51 ; the
prompter of man's actions, 76,
81-82, 247, 285, 326, 411, and
satisfaction of, the end and
aim, 81-82, 83, 285, 326, 411;
distribution in the satisfaction
of, 427-428 ; man could not ex-
ist without, 83; philosophies
teaching extinction of, 83;
working and stealing in the
satisfaction of, 71-73; funda-
mental law of political econ-
omy, 76-77, 80, 91, 99, 254, 268,
332; width and importance of
the field of political economy,
81-85, 303, 324-325; many kinds
of, 82-83, 85, 247; subjective
and objective, material and im-
material, 83-85 ; and value, 213-
221, 245, 249, 252-256, 260, 261,
268 ; nature and measurement
of, 246-247; wealth and the
satisfaction of, 279-280, 285-
292, 340, 357; capital and the
satisfaction of, 293-297; three
modes in production of satis-
fying, 332; origin of competi-
tion and, 403 ; genesis of money
and, 512-525.
Dickens, Charles, repugnance to
the "dismal science," 88.
Diminishing returns, alleged
law of, 174, 335-338; the real
law of, 340, 355-356, 357-364,
368.
Distribution, current confusion as
to laws of, 177, 460-461; the
laws of, and their correlation
treated in "Progress and Pov-
erty," 202 ; of value from obli-
gation, 272; includes neither
transportation nor exchange,
326, 400, 425-426, nor taxation,
426, nor consumption, 426 ; der-
ivation and uses of the word,
423-429 ; original meaning, 434 ;
nature of, 430-439 ; a continua-
tion of production, 426-427,
438-439 ; deals with future pro-
duction, 438-439, and affected
through production, 446-447,
453; laws of, belong to the nat-
ural order, 428 ; not concerned
with human laws, 432, but so
taught by classical school, 430-
435 ; Mill's confusion, 430-435,
440-443, 447-449, 455-459; com-
mon perception of this, 440-449 ;
concerned with natural laws,
435-439, 450-451, 454-459 ; rela-
tion to the moral law, 437-438,
451-453 ; of the death of civili-
zation, 439 ; human will power-
less to affect, 443-447 ; the great
laws of, 444; real difference
from the law of production,
450-453; of property, 454-459;
causes of confusions as to prop-
erty, 460-469.
Dollar, trade, the American, 515-
516.
Dove. Patrick Edward, on natural
rights, 189-194; compensation,
192-193.
Oupont de Nemours, suggested
Physiocrats' name, 145. See
Physiocrats.
532
INDEX.
Economic, as used for politico-
economic, 66 ; the unit, 69.
Economic body, how evolved and
developed, 20-23, 35-37, 118,
395-396, 428 ; gives rise to and
takes name from body politic,
25-28 ; growth of knowledge an
aspect of, 39-40, 41-43; how
political economy relates to,
68-73.
Economics, substituted for po-
litical economy, 128-130 ; what
it teaches, 207.
Economists, the French. See
Physiocrats.
Ego, what it is, 47, 69 ; its depen-
dence on matter, 84-85 ; desire
a quality of the, 246 ; detennina-
tion of value and the, 252.
Elements. See Factor.
Elizabeth, Queen, and monopo-
lies, 278.
Energy, what it is in philosophy,
9; its correlative elements or
factors, 9-10 ; man but passing
manifestation of, 13-14; its
place in the world, 77, 80.
Evil, outlived by good, 510w.
Evolution, profound truth of, 85.
Exchange, how reason impels to,
35-37 ; not a separate depart-
ment in political economy, 425-
426 ; law of diminishing returns
in production and, 338 ; coop-
eration and, 332, 378, 399, 401 ;
none of the animals but man,
397-399; and the Greater Le-
viathan, 35-36, 399-400 ; at the
root of civilization, 399-401 ;
even slavery involves it, 400;
motive of the primary postu-
late of political economy, 401 ;
money the common medium of,
495-503; all, is really the ex-
change of services or com-
modities, 513-524.
Exchangeability, comes from
value, 235-249.
Exchanges, credit in, 491-493,
504-511, 517, 526-528.
Exchanging, its place in produc-
tion, 325-326, 331-332, 354, 397-
401, 414, 426; highest of the
three forms of production, 400;
not a part of distribution, 400,
425-426.
Exertion, fundamental law of po-
litical economy and, 86-91, 99,
254, 268, 332 ; positive and nega-
tive, 245-249 ; desire prompts,
246 ; value a relation to, 228-
234, 242, 244-249, 253-256, 257-
269, 275, 497-501, 503 ; manifes-
tations of, become the common
measures of value, 501-503;
wealth a result of human, 285,
287-288; but all human, not
wealth, 285-287 ; essential idea
of wealth, 292, 293 ; higher pow-
ers of, 295-296, 369; all that
political economy includes, 301-
303 ; spacial law and, 360, 363,
365-366 ; time and, 368-370 ; co-
operation and, 374 ; competition
and, 403; economic term for, is
labor, 411 ; fundamental law of
human nature, 512; value of
paper money and, 524.
Experiment, imaginative, as a
method in political economy,
29-30, 100 ; use of, 240-241, 248-
249, 436-437, 485-487, 507.
Factor, meaning of term, 9;
the three, of the world, 9-10,
47, 77, 80; the two original
factors of political economy,
77, 413 ; the two necessary in
production, 279, 413 ; the three
in general production, 405-407,
444 ; land, the natural or pas-
sive, 77, 408-410; labor, the
human or active, 77, 80, 411- '
412; capital, the compound,
413-415.
Fallacies, how made to pass as
truths, 134-136.
Fawcett, definition of wealth, 122.
Franchises, their value from ob-
ligation, 262-263 ; permanence
of this value, 310-312 ; not real
wealth, 277-278.
Free trade, advocated by Physio-
crats, 152-153, 165, and by
INDEX.
533
Adam Smith, 164, 165; weak-
ness in Smith's teaching of,
182-183: sought by American
Peace Commissioners, 195-196.
Gainier, Marquis, oxen used as
money in Homer, 513.-514.
Garrison, William Lloyd, change
of public opinion towards,
142.
German, confused political econ-
omy, 195-196, 197-199, 208-209,
283-284, 345, 461; socialism,
197-199 ; trick of verbal contra-
diction, 341.
God, and final cause, 47, 50, 52,
54 ; the teological argument,
50; distinct from nature, 54,
55 ; how the reason posits it,
10, 79, 403; the Most-Merciful,
31 ; the All-Maker, 409 ; is just,
451-452 ; manifestations of, 435-
436, 443-444 ; Adam's curse, 91 ;
made responsible for social ills,
174, 333, 336, 355; Kant and
Schopenhauer's substitute, 348.
Godoonof, Boris, and serfdom,
278.
Good, it outlives evil, 510n.
Goods, as used in political econ-
omy, 282-283; the Austrian
school, 283-284.
Gournay. See Physiocrats.
Growing, its place in production,
330-331, 353-354, 358, 400, 414;
relation of space to, 357-364.
Guizot, vagueness in describing
civilization, 25.
Hawaiian Islands, Christian mis-
sionaries, 297.
Hegel, characterized by Schopen-
hauer, 208-209.
Hern, Professor, the name plu-
tology for political economy,
128-129.
Historical school, its style, 206 ;
absence of scientific method,
448-449.
Hobbes's Leviathan, 22, 25-26, 27 ;
relation to Greater Leviathan,
22-23, 27-28, 395-396.
Homer, oxen used as money,
Horace, endurance of his odes,
310.
Hyndman, H. M., Spence on
natural rights, 185.
Hypothesis, as a method in po-
litical economy. See Experi-
ment, Imaginative.
Imaginative experiment. See
Experiment.
Immortality, man's belief in, 34.
See Resurrection.
Impot unique, origin and mean-
ing, 150-151 ; the single tax,
150-151.
Increment, unearned, its mean-
ing, 150 ; Mill on, 150, 195 ; and
the Physiocrats, 355.
Induction, as used in political
economy, 92-100.
Ingram, John Kells, old political
economy dead, 120w., 205-206.
Instinct, small development of, in
man, 16, 397-398 ; large devel-
opment in animals, 15-18, 291-
292, 397-398 ; reason and, 36-37,
291-292, 397-399.
Interest, Smith not clear as to,
183; law of, and the correla-
tion with the laws of rent and
wages, treated in "Progress
and Poverty," 202 ; one of the
three great laws of distribution,
444 ; futile attempts to regulate,
445.
Interests, special, study of polit-
ical economy affected by,
xxxiii.-xxxv., 132-142, 154, 167-
168, 169, 171-176, 182-184, 207,
273-274, 333, 447, 461. See
Privilege, Special.
Intrinsic. See Value.
James, E. J., on induction and
deduction, 97-98 ; Smith's place
in political economy, 169; old
political economy dead, 205-207.
Jefferson, Thomas, why the rich
were against Jesus, 132.
Jesus, Jefferson on why the rich.
634
INDEX.
were against Him, 132. See
Christ.
Jevons, definition of wealth, 122 ;
confusion as to, 196-197 ; value
from marginal utilities, 218.
" Johnson's Encyclopedia," old
political economy dead, 206-
207 ; definition of money, 480.
Jones, definition of wealth, 12] .
Justice, highest aspect of civiliza-
tion, 35 ; the government of the
universe has its foundation in,
451 ; not concerned with pro-
duction, 451-452, but governs
distribution, 452 ; at the bottom
of property, 456-459; Montes-
quieu on, 453.
Kant, space and time and antin-
omy, 345-346, 348, 350; and
Schopenhauer, 346-348 ; his
categorical imperative, 458.
Knowledge, man's earliest, of his
habitat, 11 ; what it is and how
it grows, 39-43 ; springs from
cooperation, 20, 39; the incom-
municable knowing called skill,
40-41, 59 ; the communicable
knowing called, 41-43 ; that
properly called science, 58-64.
Labor, value of, 240; various
senses of, 243 ; when land value
is a robbery of, 256 ; in relation
to space, 357-364; relation to
time, 368-370 ; combination and
division of, 371-381 ; Smith on
division of, 182, 372, 374, 380;
impossibility of division of,
under socialism, 394-395 ; one
of the two factors necessary in
production, 279, 413 ; one of the
three factors in general produc-
tion, 405-406, 411-412, 413-414 ;
its order, 406-407; capital is
stored, 279, 296, 413 ; when cap-
ital may aid, 414 ; capital used
by, 414-415 ; the essential prin-
ciple of property, 461-462 ; why,
though the real measure of
value, it cannot serve as the
common measure, 495-503; all
exchange is really exchange of,
524.
"Laissez faire, laissez alter," 153.
Lalor, John J., definition of polit-
ical economy, 61-63 ; definition
of wealth, 122.
Lalor's Cyclopedia, induction and
deduction, 97-98; Adam Smith,
169.
Land, basis of monopoly of, 137,
and Mill's condemnation, 137;
the term as used in political
economy, 352, 408-409, 464 ; na-
ture of its value, 240 ; value of,
and desire, 255-256; when its
value is a consequence of civi-
lization and within the natural
order, 256, and when destruc-
tive of civilization and a rob-
bery of labor, 256; value of
obligation, 265-266, and not
wealth, 265-266, 277-278, 297,
nor capital, 297; can have no
moral sanctions as property,
265, and rightfully belongs to
the community, 265 ; perma-
nence of its value, 310-312;
man's dependence on, 351-352 ;
extension the fundamental per-
ception of the concept, 352, this
confused and limited, 78, 353-
356 ; intensive use of, made pos-
sible by extensive use of, 364;
first or passive factor in pro-
duction, 77, 405-406, 408-410,
412-413 ; importance of observ-
ing order of, 406-407 ; capital
springs from union of labor and,
406,413; erroneously included in
thecategory of private property,
460-461 ; called by lawyers real
property, 461 ; Smith's view of.
461 ; Mill's attempts to defend
private property in, 462 ; con-
fused meanings, 463-466; dif-
ferent meanings of, 466-468 ;
Mill succeeds only in justify-
ing property in the produce of
labor, 469; of "improved" and
"made," 463-469.
Landowners, their influence on
political economy, 170-175, 182-
INDEX.
535
184; Smith avoids antagonizing,
182; true beneficiaries of pro-
tectionism, 175-176; invalidity
of their right to land values,
277-278 ; compensation to, Mill,
137-138, Spencer, 192-193,
Dove, 192-193 ; cannot contrib-
ute to production, 409-410;
their income and the laws of
distribution, 460-461.
Language, how it grows in copi-
ousness, flexibility and beauty,
274.
Laughlin, definition of wealth,
123.
Laveleye,De, definition of wealth,
122.
Law, science deals with natural,
not human, 58-60; the funda-
mental, of political economy,
86-91, 99, 254, 268, 332 ; natural,
not human, the subject of po-
litical economy, 61-64, 76-77,
426,428-429 ; natural law always
the same, 428-429, 435-436; of
nature, what it is, 435-436, 443,
452; Mill's definition, 443; the
will behind it, 435-436; common
Serception of natural, in distri-
ution, 440-449, Mill's admis-
sion, 440-441, 443; sequence,
consequence and natural, 44-
57, 440-443 ; human law con-
fused with natural, in distri-
bution, 440-441, 443, 448-449;
inflexibility of, in distribution,
443-444.
Lawyers, and real property, 461.
Leverson, M. R., definition of
wealth, 122.
Leviathan, Hobbes's, 22, 25-26,
27; the Greater, 22-23, 27-28,
35-36, 118, 395-396, 399-400,
428.
Logic. See Eeason.
Macdonald, D. C., Ogilvie on
natural rights, 185-186.
Machinery, in civilization, 379.
Macleod, H. D., definition of
wealth, 122 ; objects to Smith's
definition, 146; his confusion,
196-197; definition of econom-
ics, 129 ; account of the Physio-
crats' views, 155-158.
Macvane, definition of wealth,
123.
Maecenas, his name in Horace's
odes, 310.
Mai thus, definition of wealth,
121; objects to Smith's defini-
tion, 146.
Malthusian theory, 173-174, 183,
333-334; alleged law of dimin-
ishing returns in agriculture
and, 335, 336, 337-338.
Man, his place and powers, 11-18,
351-352 ; how extended in civ-
ilization, 19-23, 29-43, 91; his
earliest knowledge of his habi-
tat, 11, and how it grows, 11-14 ;
his physical nature, 13-18; his
resemblance to other animals,
13-14, 85, 291, and distinction
from them, 11-18, 19, 29, 36,
51, 53, 56, 59, 77, 82, 85, 287,
291-292, 397-399 ; but a passing
manifestation of matter and
energy, 13-14 ; his spiritual na-
ture, 14-18, 29, 37-38, 84-85,
287, 307 ; the social animal, 21 ;
the artificial, in the body politic
called Leviathan, 22, 25-26,
27, the still greater, in the
body economic called the
Greater Leviathan, 22-23, 27,
36, 118, 395-396, 399, 428; his
belief in immortality, 34; res-
urrection from the dead, 312 ;
distinction of the civilized, from
the savage, 39-43; as compre-
hended in and as apart from
nature, 47-48, 84-85; his laws
distinct from political econ-
omy, 58-61; his actions
prompted by desire, 18, 81-82,
the satisfaction of which is the
fundamental law of political
economy, 86-91, 99, 254, 268,
332 ; he could not exist without
desire, 83; his subjective and
objective, material and imma-
terial desires, 83-85 ; in the
hierarchy of life, 85; a pro-
636
INDEX.
ducer, not a creator, 324; his
dependence on land, 77, 351-
352 ; subject to the spacial law,
363-364 ; his full powers to be
utilized only in independent
action, 392396; his conscious
and unconscious intelligence,
395; the exchanging animal,
39S-39&; the natural order re-
quires equality with his fel-
lows, 256; civilization makes
no change in him as man, 507 ;
trust or credit coeval with his
first appearance, 510-511.
Marginal utilities. See Utilities.
Mark Twain, Esquimau story,
305.
Marshall, Alfred, definition of
wealth, 125-126; and classifica-
tion of goods, 283-284; teach-
ings of Austrian school, 208-
209; alleged law of diminish-
ing returns in agriculture, 336.
Marx, Karl, does not define
wealth, 124; his teachings, 197.
Mason, Alfred B., definition of
political economy, 61-63; defi-
nition of wealth, 122.
Mathematics, and political econ-
omy, 128., 129-130.
Matter, what it is in philosophy,
9 ; one of the three elements or
factors of the world, 9, 77 ; its
correlative elements, 9-10 ; man
but a passing manifestation of,
13-14, 47 ; incases man's spirit
or soul, 47, 84-85 ; necessity of
man's freedom of access to, 79,
351-352.
McCulloch, definition of wealth,
121; objects to Smith's, 146.
Memory, subconscious, store-
house of that knowledge called
skill, 40-41, 377.
Menger, teachings of Austrian
school, 208-209.
Mercantile system. See Protec-
tionism.
Metaphysics, proper meaning of,
339 ; effect on political econ-
omy of confusions in, 340, and
on the higher philosophy, 340 ;
of space and time, 339-350;
dr-' ger of thinking of words as
things, 340-341 ; words as used
by Plato and the Theosophists,
341 ; space and time not con-
ceptions of things, but of rela-
tions of things, 341-343, and
cannot have independent be-
ginning or ending, 343-344;
space and time as used by
poets and religious teachers,
344, and by philosophers, 344-
345, 350; Kant, 345-346, 350;
Schopenhauer, 346-348, 350;
mysteries and antinomies, 348-
349 ; human reason and eternal
reason, 349-350; "the abso-
lute," "the unconditioned,"
" the unknowable," 350.
Michelet.consecrated absurdities,
140.
Mill, John Stuart, implication of
God in term " Law of Nature,"
55 ; definition of wealth, 122 ; na-
ture of wealth, 137-138 ; delu-
sions, 133-134, 137 ; his intellec-
tual honesty, 137, 460 ; careful
education and abilities, 432-433,
455, 461 ; condemnation of land
monopoly, 137-138; compensa-
tion, 137-138; unearned incre-
ment, 150, 195 ; course of devel-
opment of political economy,
176; his early influence on
Henry George, 201 ; value, 215-
219, 223 ; alleged law of dimin-
ishing returns in agriculture,
335-337; contention that laws
of distribution are human laws,
430-435, 440^43, 455, 459, and
that produce distributes itself,
447-448; utilitarianism, 455-
459, 461 ; confusion as to prop-
erty, 462-469; confounds the
different meanings of land, 463-
466.
Mirabeau. See Physiocrats.
Money, confusion from using it as
a common measure of value,
226-227 ; how it gets its power
as a medium of exchange, 266-
267; confusion as to the word
INDEX.
637
has strengthened protection-
ism, 280-281, 493w.; when capi-
tal and when not, 298-299 ; when
wealth and when not, 299n., 313-
314; definition of, in "John-
son's Encyclopedia," 480 ; true
definition of, 494, 495; confu-
sion as to, 479-481 ; due largely
to pressure of personal inter-
ests, 480, but among economists
to confusion as to wealth and
value, 480-481 ; the medium of
exchange and measure of value,
481, 495-503 ; common use of the
word, 275-276 ; common under-
standing of, 482-494 ; use of, to
exchange for other things, 482-
484; Smith's sense of buying
and selling, 484 ; present mean-
ing of, as distinguished from
barter, trade or exchange, 484-
485 ; not more valuable than
other things, but more readily
exchangeable, 485^487, 495-496 ;
exchangeability its essential
characteristic, 487, 491-494 ;
exchanges without, 485-487 ;
checks not, 487 ; different coun-
tries have different, 488; not
made by governmental fiat, 488-
490, 491; does not necessarily
consist of gold or silver, 489-
490, 491, or need intrinsic value,
489-491 ; no universal, 490-494 ;
its primary and secondary qual-
ities, 495 ; tendency to overesti-
mate its importance, 504-506;
credit used before, 506, 510-511 ;
most important use of money
to-day, 511 ; the representative
of value, 526; genesis of, 512-
525 ; not an invention, but a de-
velopment of civilization, 512 ;
grows with growth of ex-
changes, 512; cattle used as,
513n.-514w./ first purpose of
coinage of, 513-515 ; American
trade dollar, 515-516; lessen-
ing uses of commodity and ex-
tensions of credit, 516-517;
two elements in exchange value
of metal, 518; intrinsic value
in, 518-528 ; seigniorage in, 518-
519; Eicardo on paper, 520;
may be useful though intrinsic
value be eliminated, 520, 523-
525; debasement immediately
felt in first coined, or commod-
ity, 520-523; the two kinds of,
526-528.
Monopoly, land, based on force
and fraud, 137; condemnation
of, by Mill, 137-138 ; increase
in value of, not to common in-
terest, 268-269; value of, not
wealth, 277-278.
Montchretien, Antoine de, first
used term political economy,
67.
Montesquieu, on justice, 453.
Mortgages, not wealth, 277; not
capital, 296.
Mystery, theologians' reference to
space and time, 344-346, 348.
Natural opportunities, not wealth,
277-278.
Natural order, natural laws be-
long to the, 60 ; Physiocrats and
the, 149-159, 164 ; single tax in
the, 145, 159, 165-166, 167;
equality of men intent of, 256 ;
laws of distribution and the,
428.
Natural rights. See Rights.
Nature, how manifested in the
universe, man and the animals,
11-18, 51-54; term law of, how
derived, 46-54 ; word law as
applied to, 54-55 ; meaning of
term law of, 55-57, and Mill's
definition, 443; sequence, con-
sequence and laws of, 44-57,
435-436, 437, 440-443; Mill's
confusion of human laws with
laws of, 440-443; laws of, and
political economy, 58-61, 76-77 ;
its essential distinction from
God, 54 ; implication of God in
word, 55-57 ; man's action sub-
ject to laws of, 80 ; the passive
factor or element in political
economy, 77; interpreted by
man's reason by assuming rea-
538
INDEX.
son in, 75 ; fundamental law of
political economy a law of,
87-88.
Needs, how distinguished from
other human desires, 82-83, 247 ;
order of, 85.
Newcomb, definition of wealth,
123.
Newton, anecdote of, 395.
Nicholson, J. Shield, does not de-
fine wealth, 126-127.
Nirvana, in the philosophy of
negation, 347-348.
Obligation, value from, what it is,
257-269, 309; source of, 271, 272;
it does not increase wealth, 272,
and has to do only with distri-
bution, 272; permanence of,
309-312.
Ogilvie, William, natural rights,
185-186.
"Our Land and Land Policy,"
philosophy of the natural order,
163-164 ; when and how written,
201.
Palgrave, R. H. Inglis, " Diction-
ary of Political Economy," 206.
Perception, and non-perception,
352-353.
Perry, A. L., dispenses with the
term wealth, 124-125, 130.
Philosophy, meaning of term, 9;
how the teaching of, is warped,
138-139; that teaching of the
extinction of desire, 83, 347-
348 ; that concerned with grati-
fying material needs, 85; that
of the natural order taught by
the Physiocrats, 149-159, 164;
that of the natural order known
as the single tax, 145, 159, 165-
166, 167; that of the natural
order in " Our Land and Land
Policy," 163-164; that of the
natural order and Smith, 164:
Christ's, and a true political
economy, 304-307.
Physiocrats, their use of the term
" political economy," 67 ; origin
and meaning of their name,
145n.; who they were and what
they held, 148-159; cause of
their confusion, 151-152, 354-
355 ; real free traders, 152-153,
165; originated term "Laissez
faire, laissez oiler," 153 ; ante-
dated and surpassed Ricardo,
154-155; explanation of their
rent doctrine, 154-155 ; their
views explained in ''Progress
and Poverty," 154-155; Mac-
leod's account of their views,
155-158 ; their day of hope and
fall, 159, 168-169; overthrown
by a special interest, 154; as
single taxers, 145, 153, 159, 165-
166, 168 ; as described by Adam
Smith, 67, 145 ; his relations
with them, 160-169, 171, 173;
intended dedication to Quesnay,
161-162 ; resemblance of views,
162-165, and differences, 165-
169; men who followed, 186-
199; value, 220; land not
wealth, 265-266; definition of
wealth, 270-271.
Plato, world of ideas, 79 ; trick of
verbal contradiction, 340-341.
Playfair, William, apology for
Smith's radicalism, 173.
Plutology, as a substitute for
political economy, 128-129.
Political economy, its practical
importance, xxxi.-xxxiv., 81-85,
280 ; how it must be studied,
xxxi.-xxxix., 76, 481 ; purpose
of, xxxi.-xxxii., 117; definition
of, 3, 67, 104, 115, 127,301, 304, by
Mason and Lalor, 61-62 ; mean-
ing, units and scope of, 65-73,
276 ; origin of term, 65-67 ; con-
cerned with natural, not human
laws, 58-64, 76-77, 426, 428-429,
and these laws invariable, 481 ;
province of, 67-68, 303; ele-
ments of, 74-80 ; its three grand
divisions, 421; can go no further
than distribution, 428-429 ; fun-
damental law of, 86-91, 99, 254,
268, 332 ; primary postulate of,
90-91, 99, 401, 512 ; central prin-
ciple of, 150 ; methods of, 29-30,
INDEX.
539
92-100; as science and as art,
101-104; body politic and,
xxxiv., 67-68, 73, 428; body
economic and, 68-73; institu-
tions of learning and, xxxii.-
xxxv., 3, 61-64, 92, 113, 119-130,
135, 140, 174-175, 176, 180-181,
183, 203-209, 233-234, 273, 281,
355 ; theology and, xxxiv. ; not
properly a moral or ethical sci-
ence, 72-73 ; selfishness and,
88-91, 99; riches and poverty
in, 304-307; confusions in its
current teachings, xxxii.-xxxv.,
61-64, 75, 78, 88, 101-104, 115,
117-130, 131-142, 176-177, 180-
181, 183, 196-197, 203, 210-211,
212, 213-222, 226-234, 235-240,
243-245, 247, 252, 273, 326, 333,
334, 339-340, 371, 400-401, 406-
407, 415, 429, 430-439, 440-443,
448-449, 450-451, 459, 460-469 ;
the "dismal science," 88, 151,
174-175; study of, affected by
special interests, xxxiii.-xxxv.,
130-142, 167-168, 169, 171-176,
182-184, 207, 273-274, 333, 447,
461 ; as to history of, 115, 120w.,
131-142, 169, 170-181, 182-199,
200-209, 271 ; Physiocrats first
developers of, 148-150 ; Smith's
influence on, 170-181, 182;
breakdown of Smith's, 176-
181 ; German influence on, 195-
196, 197-199, 208-209, 283-284,
345, 461; Austrian school of,
124, 208-209, 215, 218 252 ; Say's
hopes for, 130, 177-178, 180;
Cairnes's predictions, 179-181 ;
why it considers only wealth
and not all satisfactions, 301-
303 ; its object-noun, 127, 181,
301 ; wealth in, and in individual
economy, 118-119, 276; mean-
ing of wealth in, 270-284, 293,
296, 340, 357 ; meaning of value
in, 224-225; statistics and,120w.,
181; mathematics and, 128n.,
129-130 ; metaphysics and, 339-
340 ; catallactics and plutology
as substitutes for, 128-129;
economics and, 128-130 ; turned
against protectionism by Smith,
182 ; afterwards made to favor
protectionism, 195-196 ; conflict
of socialism with a real, 198,
403; historical school of, 206,
448; classical school of, 208,
448; death of old, 120w., 205-
206 ; Christ's philosophy and a
true, 306-307 ; places of trans-
portation and exchange in, 325-
326, 400-401, 425-426; proper
meaning of word land in, 352,
408-409, and of production, 323-
326, 357, and of cooperation,
372, and of labor, 411-412, and
of distribution, 428; not con-
cerned with consumption, 426,
nor taxation, 426; absence of
scientific method in current,
448.
Poor, cannot be under a true po-
litical economy, 304-307; why
Christ sympathized with the,
306-307.
Population, theory of. See Mal-
thusian Theory.
Possessions, unjust, 304-307.
Poverty, Smith's silence on cause
of, 183 ; cannot exist under a
true political economy, 304-307.
Price, current teachings as to,
227; Adam Smith on, 229, 503;
treated as an economic term,
229 w.; attempts to regulate, 446.
Privilege, special, and value from
obligation, 262-267, does not
increase the sum of wealth,
277-278; not capital, 296-297.
See Interests, Special.
Production, began with man, 35-
36 ; based on natural law, 461 ;
meaning of, 323-326, 327, 357 ;
what it involves, 327; differ-
ence from creation, 323-324;
other than of wealth, 302-303,
324-325 ; alleged law of dimin-
ishing returns in agriculture,
174, 335-338; spacial law re-
lates to all, 340, 355-356, 357-
364, 368 ; all modes of, require
time, 340, 365-370; cost of, a
measure of value, 253-254;
540
INDEX.
value from, 257-269, 271, 272,
and in what it consists, 308,
and its permanence, 309-312;
place of cooperation in, 332,
426, and its meaning, 371 ; the
two ways in which cooperation
increases, 371-381; the two
kinds of cooperation in, 382-
396; thought the originating
element in, 391, and cannot be
fused, 391-392; directed coop-
eration utilizes the sum of
men's physical powers in, 392,
but unconscious cooperation
utilizes the sum of their intel-
lects as well, 392-393; man's
full powers to be utilized in,
only in independent action,
393-396 ; how slavery checks,
393; the Greater Leviathan
and, 395^-396 ; transportation
included in, 326, 426 ; exchange
also, 299, 326, 426, mistakes
as to this, 326, 400-401; the
three modes, 327-332, 359, 400,
414 ; adapting in, 327-330, 332,
353-354, 358 ; growing in, 330-
331, 353-354, 357-358 ; exchang-
ing in, 331-332, 354; office
of exchange in, 397 - 401 ;
office of competition in, 402-
403 ; names and order of the
three factors of, 405-407, 444;
land the first factor in, 77, 279,
408-410 ; labor the second fac-
tor in, 77, 80, 279, 411-412;
capital the third factor in, 413-
415 ; appropriation has no place
in, 415 ; how related to dis-
tribution, 426-427, 437-439; dis-
tribution affected through, 446-
447, 453; division into three
elements of, 444; real differ-
ence between laws of distribu-
tion and, 450-453.
Produit net, meaning and signifi-
cance of, 150-151.
" Progress and Poverty," and the
landowner's prophecy, 170-171 ;
and validity of property, 184,
240; Spencer's "Social Stat-
ics," 189; brief history of, 200-
201, 203 ; what it contains, 201-
202 ; effect on scholastic politi-
cal economy, 203-209; fixed
meaning of wealth and capital,
211, 270-271, 298-300; another
method of determining mean-
ing of wealth, 271-272; the
Malthusian theory and, 334;
rise of the single taxers and,
355, 356.
Property, its validity in the old
political economy, 184 ; first
really questioned in "Progress
and Poverty," 184 ; in land
without moral sanction, 265;
efforts of special interests to
prevent question of, 273-274 ;
laws of distribution determine
ownership of, 454 ; based on
natural law, 454-459, 460-461;
Mill's recognition and error,
454-459 ; causes of confusion as
to, 460-469 ; pre-assumption
that land is, 460-461 ; essential
principle of, 461-462; where
Mill is wrong, 462-469.
Protectionism, genesis of, 134 ;
Smith's attack on, 171-172, 175,
182; repeal of English corn-
laws, 176, the contest revealing
true beneficiaries of, 175-176;
merchants and manufacturers
not ultimate beneficiaries of,
175-176; selfishness and, 196;
a form of socialism, 197 ; effect
of, on political economy in
Germany, 195, and in the
United States, 179, 196, 207;
strengthened by confusion as
to money, 280-281, 493w,; value
from obligation and, 263, 264-
265, not to common interest,
268-269 ; competition and, 402-
403.
Psychological school. See Aus-
trian School.
Pun, what it implies, 274.
Quesnay, Francois, leader of the
Physiocrats, 145; who he was
and what he taught, 148-159;
Smith's relations with, 160-
INDEX.
541
162; resemblance of George's
views, 163; agriculture the
only productive occupation,
354-355.
Quincey, Thomas De, value,
215-216.
Rae, definition of wealth, 121.
Reason, distinguishes man from
the animals, 14-18, 29, 31-37,
51, 56, 77-78, 85, 397-399 ; welds
men into the social organism
or economic body, 19-24, 399;
essential qualities of, 29-30, 33,
45-46; it impels to exchange,
35-37 ; its process of operation,
29-30, 47-48, 92-100; the Ego
and, 47; impels man to seek
causal relations, 56-57, 79 ; how
it apprehends the world, 77,
85 ; how it interprets nature,
75 ; how it posits God, 79, 403 ;
instinct and, 36-37, 291-292,
397-399 ; metaphysics, 339 ;
mysteries, 344-346, 348 ; antino-
mies, 345-346, 348; pure, 346;
Hegel and Schopenhauer, 208-
209 ; Kant and Schopenhauer,
346-348, 350; the human, one
and to be relied on, 349-350;
lunacy and madness do not
affect, 349 ; human and eternal,
344-350.
Reasoning, the three methods
used in political economy, 92-
100 ; power of special interests
to pervert, 135-136; Bacon on
the right way of, 139.
Reciprocity, exalted meaning
given by Confucius, 306.
Rent, the central principle of
political economy, 150 ; produit
net, 150; unearned increment,
150; proposition of the imp6t
unique or single tax, 150-151;
Ricardo's formulation of the
law, 154, Physiocrats antici-
pated and surpassed him, 150-
151, 154-155 ; law of, treated in
"Progress and Poverty," 202;
Smith's theory of, 173-174, he
was not clear as to, 183; theory
of, and diminishing returns in
agriculture, 333-334 ; related to
agriculture in current teaching,
356 ; one of the three laws of
distribution, 444 ; futile at-
tempts to regulate, 445-446.
Resurrection, relation of value
from obligation, 309-312.
Ricardo, does not define wealth,
124 ; rent doctrine and the
Physiocrats, 154-155 ; law of
rent, 183 ; corrects Smith as to
rent, 173-174; restriction of
meaning of word land, 255-256 ;
of paper money and seignior-
age, 520.
Rich, Christianity made to soothe
the, 174; cannot be any, under
a true political economy, 304-
307; Christ's philosophy, 306-
307.
Right, no business of political
economy to explain difference
between wrong and, 73. See
Justice.
Rights, natural, the Physiocrats,
149-159; Smith, 164-165, 172;
" Our Land and Land Policy,"
201; "Progress and Poverty,"
201-203; Spence, 185; Ogilvie,
185-186; Chalmers, 186-187;
Wakefield, 187-188; Spencer,
188-189, 191-193; Dove, 189-
194 ; Bisset, 194.
Rogers, Thorold, does not define
wealth, 124.
Ruskin, John, repugnance to
"dismal science," 88; defini-
tion of wealth, 123-124.
Satisfactions, of desires and, 81-
85, 301-303, 324-325; wealth
cannot be reduced to, 289. See
Desire.
Say, Jean Baptiste, definition of
wealth, 121 ; hopes for political
economy, 130, 177-178, 180.
Schopenhauer, of extinction of
desire, 83; Hegel, 208-209;
Kant, 346-348; the world as
will and idea, 347-348, 350.
Science, the knowledge properly
542
INDEX.
called, 58-64 ; meaning of word,
58-59; deals with natural, not
human laws, 59-64, 426.
Selfishness, its place in the cur-
rent and in the true political
economy, 88-91, 99; and pro-
tectionism, 196.
Senior, definition of wealth, 121-
122.
Sequence, meaning of, 45 ; invari-
able or consequence, 45-46, 55-
56, 80, 435-436 ; of laws of na-
ture, 44-57, 80, 435^36, 437,
440-443; in the realm of spirit,
366-367; Mill confuses it with
consequence, 440-443.
Service, two ways of satisfying
human desire, 72-73 ; confusion
with the word labor, 244 ; wealth
essentially a stored and trans-
ferable, 289-292 ; direct and in-
direct, 290; natural or normal
line in the possession or enjoy-
ment of, 306 ; barter and, 505.
Shadwell, definition of wealth,
122.
Shakespeare, boast of his lasting
verse, 309-310.
Skill, the incommunicable know-
ledge called, 40-11, 43, 59.
Slavery, effect of, on defining
wealth, 131-133; effect on
thought, 141-142; value of ob-
ligation and, 258-259, 263 ; debt
is, 262; economic wealth and,
277-278; capital and, 296-297;
production cheeked by, 393;
exchange and, 400.
Smart, William, teachings of the
Austrian school, 208-209.
Smith, Adam, meaning of term
" political economy," 66-67 ; im-
portance of his " Wealth of
Nations," 89; the deductive
method, 92; nature of term
wealth, 120, 143-147, 164-165,
229-230, 279-280, where he was
confused, 183, 210, 271, 279 ; cat-
tle used as money, 513w.-514n.;
not clear as to capital, wages,
or rent, 183; value in use
and value in exchange, 213-
225 ; did not confine wealth to
money or the precious metals,
279 ; exchange value a relation
to exertion, 228-234, 267-268;
price, 229, 503 ; confusion as to
causes of value, 259-260, 265;
the measure of value, 497,
503 ; error in regarding land as
property, 461 ; error as to diffi-
culty of barter, 508-510; de-
scription of Physiocrats, 67,
145, relations with them, 160-
169, 171, 173, resemblance of
views, 162-165, independence
of them, 165-169, as evidenced
by "Moral Sentiments," 162;
intended dedication of "Wealth
of Nations" to Quesnay, 161-
162; his work on the "Wealth
of Nations," 160-161; Ihigald
Stewart and, 161-162, 172 ; ad-
vocated the natural order, 164 ;
a free trader, 164, 165, but
failed to appreciate the single
tax, 165-166, 167-168; his pru-
dence as an individual and a
philosopher, 167-169, 182; did
not venture to show cause of
poverty, 183; James on his
place in political economy, 169,
and Ingram's view, 205-206 ; his
influence on the science, 170-
181, 182; addressed the cul-
tured, 170 ; backed by the
landed interest, 171-175, 182,
yet suspected of radicalism,
171-173 ; against protectionism,
164, 165, 171-172, 175, 182;
weakness of his free-trade
views, 182-183 ; mistaken as to
cause of rent, 173-174; theory
of wages, 167, 174, 233 ; division
of labor, 182, 372, 374, 380 ; the
theory of population, 174;
breakdown of his political
economy, 176-181, 200-209 ; il-
logical teachings of, 182-183;
selfishness in political econ-
omy, 89-90 ; his greatness, 461.
Socialism, its proposals, 197-199 ;
Karl Marx's teachings, 197;
trade-unionism, 197, 199; pro-
INDEX.
543
tectionism, 197, 402; conflict
with true political economy,
198, 403; without religion and
philosophy, 198; against com-
petition, 402-403 ; that in Peru,
198 ; its great defect, 391 ; the
originating element in produc-
tion is men's thought, 391,
which cannot be combined or
fused, 391-392; directed co-
operation utilizes the sum of
men's physical powers, 392,
but independent action utilizes
the sum of their intellects as
well, 392-393; effect of subor-
dination seen in slavery, 393;
why socialism is impossible,
393-396.
"Social Statics," and natural
rights, 188-189, 191-193.
Socrates, Plato's trick of verbal
contradiction, 340-341.
Soul. See Spirit.
Space, and metaphysics, 340-348 ;
and theology, 344-346, 348;
what it is in political economy,
351-352; confusion of the law
of, with agriculture, 174, 351-
356, whereas it relates to all
production, 355, 357-364; defi-
nition of, 365 ; apprehension of
it objective and different from
that of time, 365-367.
Species, development of, 333-334.
Spence, Thomas, on natural
rights, 185.
Spencer, Herbert, of dogs, 33w.;
natural rights, 188-189, 191-
193; his recantation, 189; and
" Progress and Poverty," 189 ;
and "A Perplexed Philoso-
pher," 189 ; gives postulates of
the single tax, 192; a free
trader, 192; his doctrines com-
pared with Dove's, 191-193;
compensation, 192-193.
Spirit, what it is in philosophy,
9; its correlative elements, 9-
10 ; priority of, 10 ; its place in
the world, 77, 79, 452 ; its place in
civilization, 35, 37-38 ; in man,
10,47-48,309 ; God the creative,
10, 54, 55. 56-57, 79, 174, 452;
Plato and the world of ideas,
79; when it may have know-
ledge of spirit, 84 : dependent
on matter, 84-85, 367 ; good and
evil in it, not in external things,
91 ; value of obligation and, 309-
312 ; the originating element in
production, 323-324, 391-392;
sequence or time in the realm
of, 366-367; laws of nature that
relate to, 437-438; justice can
relate only to, 451-452.
Statistics, and political economy,
120., 181.
Stewart, Dugald, Adam Smith,
161-162, 172.
Subsistence, man's power of in-
creasing his, 17-18.
Synthesis, its meaning, 29.
Tariff. See Protectionism.
Tax, single, the Physiocrats and
the, 145, 153, 159, 165-166, 168;
meaning of, 150-151; impdt
unique, 150-151; and the nat-
ural order, 145, 159, 165-166,
167; Herbert Spencer on pos-
tulates of, 192; rise of the
movement for the, 355 ; chief
difficulty of propaganda in the
United States, 356.
Taxation, not concerned with po-
litical economy, 426; what is
meant by single tax, 151.
Taxes, artificial values from them
not to common interest, 268-
269.
Teleological argument, 50.
Theology, relation to current po-
litical economy, xxxiv. ; space
and time as mysteries in, 344-
346, 348.
Theosophy, the trick of verbal
contradiction, 341.
Thompson, Robert Ellis, old po-
litical economy dead, 207.
Time, and metaphysics, 340-348 ;
and theology, 344-346, 348 ; defi-
nition of, 365 ; apprehension of,
subjective and different from
space, 366; relation to spirits
544
INDEX.
and to creation, 366, 368 ; all pro-
duction requires, 368-370 ; con-
centration of labor in, 369-370.
Tools, their origin, 36.
Torrens, definition of wealth, 121.
Trade, at the base of civilization,
35-37.
Trade-unionism, and socialism,
197, 199.
Transportation, included in pro-
duction, 326, 426 ; not concerned
with distribution, 326, 425.
Turgot, on the art of darkening
things to the mind, 63-64. See
Physiocrats.
Ulpian, definition of wealth, 132.
Utilitarianism, how it befogged
Mill, 455-459, 461.
Utilities, marginal, value as de-
rived from, 218, 237.
Value, confusions as to meaning
of, 115, 210-211, 214-225, 226-
234; Karl Marx and, 197; in
use and in exchange, 212-
225 ; original meaning of word,
213, as used by Smith, 213-214,
Mill's objection, 214-216, and
his confusion, 217-225; real
meaning of, 226-234, 249, 250-
254, 264, 467; not a relation
of proportion, 226-228, 236,
267, but a relation to exer-
tion, 228-234, 235-249, 253-254,
267-269; does not come from
exchangeability but the re-
verse, 236, 247-248; causal re-
lationship to exchangeability,
247; competition in determin-
ing, 251, 253; the two sources
of, 249, 257-269, 270-284, 526;
increase of wealth not involved
by, 257-269 ; that from produc-
tion is wealth, 270-284; that
from obligation relates alone
to distribution, 272, and is no
part of wealth, 276-278, 314,
but outlasts that from produc-
tion, 308-312 ; the denominator
of, 250-256: land and, 240, 255-
256, 265-266 ; slavery and, 258-
259, 263; not a relation to an
intrinsic quality, but to hu-
man desire, 251-252, 513, this
idea of, at bottom of the Aus-
trian school, 218, 252; but
measure of, must be objec-
tive, 252-253; labor the final
measure, 226-234, 249, 250-254,
267, but money the common
measure, and why labor cannot
be, 495-503; money the repre-
sentative of, 526; competition
and, 253-254; confusions in,
from use of money, 266-267 ;
utility and desirability and,
214-221 ; marginal utilities and,
218, 237 ; special interests and,
273-274.
Value, intrinsic, what it is, 221-
222; not necessary to money,
489-490, 491 ; as an element in
money, 518-528.
Vested rights. See Interests,
Special.
Vethake, definition of wealth, 122.
Wages, Smith's truth and error,
167, 174, 233; law of, and
"Progress and Poverty," 202;
origin and nature of, 233 ; cur-
rent doctrine of, 333 ; value of
labor, 240; one of the three
great laws of distribution, 444 ;
futile attempt to regulate, 445.
Wakefield, Edward Gibbon, per-
version of natural rights, 187-
188.
Walker, Francis A., looseness as
a statistician, 120. / definition
of wealth, 123, 278n.; alleged
law of diminishing returns in
agriculture, 335.
Wants, how distinguished from
other human desires, 82-83, 247 ;
order of, 85.
War, increased values attending it
not to general interest, 268-269.
Wealth, primary term of political
economy, 117 ; its object-noun,
127, 181, 301 ; origin of the eco-
nomic term, 118; common mean-
ing of the word, 117-119, 140;
INDEX.
545
danger of using it in this mean-
ing, 280-284 ; confusions as to
its economic meaning, 115, 117-
130, 176-177, 181, 210 ; Whately
on one of its ambiguities, 141 ;
definition of, by economic
writers since Smith, 121-127,
278w./ failure of the scholastic
economists, 203-204, one of the
latest scholastic conceptions of,
127, real difficulty that besets
their formulation of a true def-
inition, xxxiii.-xxxv., 131-142,
167-169, 273-274; Aristotle's
definition, 132 ; Ulpian's defini-
tion, 132; ineffectual gropings
towards a determination of ,182-
197; Smith's meaning of, 120,
143-147, 164-165, 229-230, 279-
280, yet he is not altogether
clear, 183, 210, 271, 279; Physi-
ocrats' clear understanding of,
149, 158, 164-165; different
method from that used in
" Progress and Poverty" in fix-
ing meaning, 270-272 ; the true
meaning in political economy,
270-284; proper definition of,
270-271, 272, 276, 279, 287-288,
293, 296, 340, 357 ; what is meant
by increase of, 278-279; genesis
of, 285-292 ; though it proceeds
from exertion, all exertion does
not result in, 285-287, nor yet
can the idea be reduced to that
of satisfaction, 289 ; its essen-
tial character, 288, 289-292, 295,
301; why political economy
does not consider all satisfac-
tions, but only wealth, 301-303 ;
" actual " and " relative," 282 ;
it comes solely from produc-
tion, 272, which is' checked by
slavery, 393, and increased by
cooperation, 399-401 ; econo-
mists agree that all, has value,
210 ; its value comes from pro-
duction, 272; the value from
obligation relates only to the
distribution of, 272 ; its produc-
tion involves space and time,
340, 357-370; money con-
founded with, 493.; that which
is called capital, 293-300; all
capital is, 294-295, 296 ; not con-
sidered after distribution, 427-
428 ; no single word in English
to express the idea of an arti-
cle of, 282; use of the word
commodity, 282 ; and of good,
282-284 ; desire for, is legitimate
in political economy, 304 ; moral
confusions as to, 304-307 ; per-
manence of, 308-312; labor
the only producer of, 415 ; why
generally regarded as sordid
and mean, 305-307; that part
called capital, 293-300, 413;
land not, 257-269, 277-278;
other spurious wealth, 137, 257-
269, 276-282, 296-297, 299., 313-
314; some money is, some is
not, 299w., 313-314.
"Wealth of Nations," its impor-
tance as a book, 89; comparison
with "Progress and Poverty,"
120.; what it accomplished,
170-173 ; its illogical character,
182-183.
Whately, Archbishop, catallactic-
as substitute name for political
economy, 128-129 ; ambiguities
of the word wealth, 141.
Wieser, teachings of Austrian
school, 208-209.
Will, included in the element of
the world called spirit, 9-10, 77,
88; in man, 10, 47, 309; causal
relations, 48-51; that behind
nature's laws superior to that in
man, 51-57, 59-60, 80, 444; place
of human, in political economy,
76, 79-80 ; good and evil not in
external things, but in, 91;
original meaning of distribution
and, 434-437; natural laws of
distribution and, 437-438 ; right
or justice, ought or duty and, 452.
World, the three factors or ele-
ments of, 9-10, 47, 77, 80; its
origin, 10, 79, 367, 403.
Wrong, no business of political
economy to explain difference
between right and, 73.
"MOSES":
A LECTURE.
PBEFATORY NOTE.
IN May, 1878, while he was employed in writing " Prog-
ress and Poverty," my father received an invitation
to open a course of lectures before the Young Men's
Hebrew Association of San Francisco. He chose for his
subject Moses, and early in June delivered the following
address. Afterwards under another title he offered it
as an essay to an English periodical; but its author
being an unknown man from a remote part of the world,
the essay was rejected. It was also offered to one of the
larger American magazines and was refused. When
later the fame of " Progress and Poverty " made desira-
ble anything from its author's pen, my father refused to
allow the essay to appear in any periodical.
Early in 1884, when on his first lecturing tour through
Great Britain, he delivered it in Kinnaird Hall, Dundee,
before the congregation of Kev. David Macrae, and from
that time on it became his favorite Sunday lecture, being
read from many pulpits in Great Britain, Australia,
Canada and the United States.
In later years it has also in tract form been extensively
circulated in this country and abroad.
H. G., JR.
NEW YORK, March 23, 1898.
"MOSES."
THERE is in modern thought a tendency to look upon
the prominent characters of history as resultants
rather than as initiatory forces. As in an earlier stage
the irresistible disposition is to personification, so now it
is to reverse this process, and to resolve into myths
mighty figures long enshrined by tradition.
Yet, if we try to trace to their sources movements
whose perpetuated impulses eddy and play in the cur-
rents of our times, we at last reach the individual. It is
true that "institutions make men," but it is also true
that " in the beginnings men make institutions."
In a well-known passage Macaulay has described the
impression made upon the imagination by the antiquity
of that church, which, surviving dynasties and empires,
carries the mind back to a time when the smoke of sacri-
fice rose from the Pantheon and camelopard and tiger
bounded in the Flavian amphitheater. But there still
exist among us observances transmitted in unbroken
succession from father to son that go back to a yet
more remote past. Each recurring year brings a day on
which, in every land, there are men who, gathering about
them their families, and attired as if for a journey, eat
with solemnity a hurried meal. Before the walls of
Rome were traced, before Homer sang, this feast was
5
6 "MOSES": A LECTURE.
kept, and the event to which it points was even then
centuries old.
That event signals the entrance upon the historic stage
of a people on many accounts remarkable a people who,
though they never founded a great empire nor built a
great metropolis, have exercised upon a large portion of
mankind an influence wide-spread, potent and continu-
ous; a people who have for nearly two thousand years
been without country or organized nationality, yet have
preserved their identity and faith through all vicissi-
tudes of time and fortune who have been overthrown,
crushed, scattered 5 who have been ground, as it were, to
very dust, and flung to the four winds of heaven; yet
who, though thrones have fallen, and empires have
perished, and creeds have changed, and living tongues
have become dead, still exist with a vitality seemingly
unimpaired a people who unite the strangest contradic-
tions; whose annals now blaze with glory, now sound
the depths of shame and woe.
The advent of such a people marks an epoch in the
history of the world. But it is not of that advent so
much as of the central and colossal figure around which
its traditions cluster that I propose to speak.
Three great religions place the leader of the Exodus
upon the highest plane they allot to man. To Christen-
dom and to Islam, as well as to Judaism, Moses is the
mouthpiece and lawgiver of the Most High ; the medium,
clothed with supernatural powers, through which the
Divine Will has spoken. Yet this very exaltation, by
raising him above comparison, may prevent the real
grandeur of the man from being seen. It is amid his
brethren that Saul stands taller and fairer.
On the other hand, the latest school of Biblical criti-
cism asserts that the books and legislation attributed to
Moses are really the product of an age subsequent to
"MOSES": A LECTURE. 7
that of the prophets. Yet to this Moses, looming vague
and dim, of whom they can tell us almost nothing, they,
too, attribute the beginning of that growth which flowed
after centuries in the humanities of Jewish law, and in
the sublime conception of one God, universal and eternal,
the Almighty Father ; and again, higher still and fairer
rose that guiding star of spiritual light which rested over
the stable of Bethlehem in Judea.
But whether wont to look on Moses in this way or in
that, it may be sometimes worth our while to take the
point of view in which all shades of belief or disbelief
may find common ground, and accepting the main fea-
tures of Hebrew record and tradition, consider them in
the light of history as we know it, and of human nature
as it shows itself to-day. Here is a case in which sacred
history may be treated as we treat profane history, with-
out any shock to religious feeling. Nor can the keenest
criticism resolve Moses into a myth. The fact of the
Exodus presupposes such a leader.
To lead into freedom a people long crushed by
tyranny; to discipline and order such a mighty host;
to harden them into fighting men, before whom warlike
tribes quailed and walled cities went down; to repress
discontent and jealousy and mutiny; to combat reac-
tions and reversions; to turn the quick, fierce flame of
enthusiasm to the service of a steady purpose, require
some towering character a character blending in high-
est expression the qualities of politician, patriot, philoso-
pher and statesman.
Such a character in rough but strong outline the tradi-
tion shows us the union of the wisdom of the Egyptians
with the unselfish devotion of the meekest of men. From
first to last, in every glimpse we get, this character is
consistent with itself, and with the mighty work which
is its monument. It is the character of a great mind,
8 "MOSES": A LECTURE.
hemmed in by conditions and limitations, and working
with such forces and materials as were at hand accom-
plishing, yet failing. Behind grand deed, a grander
thought. Behind high performance, the still nobler
ideal.
Egypt was the mold of the Hebrew nation the matrix,
so to speak, in which a single family, or, at most, a small
tribe, grew to a people as numerous as the American
people at the time of the Declaration of Independence.
For four centuries, according to the Hebrew tradition
that is to say, for a period longer than America has
been known to Europe, this growing people, coming a
patriarchal family from a roving, pastoral life, had been
placed under the dominance of a highly developed and
ancient civilization a civilization whose fixity is symbo-
lized by monuments that rival in endurance the everlast-
ing hills a civilization so ancient that the Pyramids, as
we now know, were hoary with centuries ere Abraham
looked upon them.
No matter how clearly the descendants of the kinsmen
who came into Egypt at the invitation of the boy-slave
become prime minister, maintained the distinction of
race, and the traditions of a freer life, they must have
been powerfully affected by such a civilization ; and just
as the Hebrews of to-day are Polish in Poland, German
in Germany, and American in the United States, so, but
far more clearly and strongly, the Hebrews of the Exodus
must have been essentially Egyptians.
It is not remarkable, therefore, that the ancient
Hebrew institutions show in so many points the influ-
ence of Egyptian ideas and customs. What is remark-
able is the dissimilarity. To the unreflecting nothing
may seem more natural than that a people, in turning
their backs upon a land where they had been long
oppressed, should discard its ideas and institutions. But
"MOSES": A LECTURE. 9
the student of history, the observer of politics, knows
that nothing is more unnatural. Habits of thought are
even more tyrannous than habits of the body. They
make for the masses of men a mental atmosphere out of
which they can no more rise than out of the physical
atmosphere. A people long used to despotism may rebel
against a tyrant ; they may break his statutes and repeal
his laws, cover with odium that which he loved and
honor that which he hated; but they will hasten to set
up another tyrant in his place. A people used to super-
stition may embrace a purer faith, but it will be only
to degrade it to their old ideas. A people used to perse-
cution may flee from it, but only to persecute in their
turn when they get power.
For "institutions make men." And when amid a
people used to institutions of one kind, we see suddenly
arise institutions of an opposite kind, we know that
behind them must be that active, that initiative force
the men who in the beginnings make institutions.
This is what occurs in the Exodus. The striking
differences between Egyptian and Hebrew polity are not
of form but of essence. The tendency of the one is to
subordination and oppression; of the other, to individ-
ual freedom. Strangest of recorded births! from out
the strongest and most splendid despotism of antiquity
comes the freest republic. From between the paws of the
rock-hewn Sphinx rises the genius of human liberty, and
the trumpets of the Exodus throb with the defiant procla-
mation of the rights of man.
Consider what Egypt was. The very grandeur of her
monuments, that after the lapse, not of centuries but of
millenniums, seem to say to us, as the Egyptian priests
said to the boastful Greeks, " Ye are children ! " testify
to the enslavement of the people are the enduring wit-
nesses of a social organization that rested on the masses
10 "MOSES": A LECTURE.
an immovable weight. That narrow Nile valley, the
cradle of the arts and sciences, the scene, perhaps, of
the greatest triumphs of the human mind, is also the
scene of its most abject enslavement. In the long cen-
turies of its splendor, its lord, secure in the possession of
irresistible temporal power, and securer still in the awful
sanctions of a mystical religion, was as a god on earth,
to cover whose poor carcass with a tomb befitting his
state hundreds of thousands toiled away their lives. For
the classes who came next to him were all the sensuous
delights of a most luxurious civilization, and high intel-
lectual pleasures which the mysteries of the temple hid
from vulgar profanation. But for the millions who con-
stituted the base of the social pyramid there was but the
lash to stimulate their toil, and the worship of beasts to
satisfy the yearnings of the soul. From time immemo-
rial to the present day the lot of the Egyptian peasant
has been to work and to starve that those above him
might live daintily. He has never rebelled. The spirit for
that was long ago crushed out of him by institutions which
make him what he is. He knows but to suffer and to die.
Imagine what opportune circumstances we may, yet to
organize and to carry on a movement resulting in the
release of a great people from such a soul-subduing
tyranny, backed by an army of half a million highly
trained soldiers, requires a leadership of most command-
ing and consummate genius. But this task, surpassingly
great though it is, is not the measure of the greatness of
the leader of the Exodus. It is not in the deliverance
from Egypt, it is in the constructive statesmanship that
laid the foundations of the Hebrew commonwealth that
the superlative grandeur of that leadership looms up.
As we cannot imagine the Exodus without the great
leader, neither can we account for the Hebrew polity
without the great statesman. Not merely intellectually
"MOSES": A LECTUEE. 11
great, but morally great a statesman aglow with the
unselfish patriotism that refuses to grasp a scepter or
found a dynasty. *
The lessons of modern history, the manifestations of
human nature that we behold around us, would teach us
to see in the essential divergence of the Hebrew polity
from that of Egypt the impress of a master mind, even
if Hebrew tradition had not testified both to the influ-
ence of such a mind, and to the constant disposition of
accustomed ideas to reassert themselves in the minds of
the people. Over and over again the murmurings break
out ; no sooner is the back of Moses turned than the cry,
" These be thy gods, O Israel ! " announces the setting
up of the Egyptian calf; while the strength of the mo-
narchical principle shows itself in the inauguration of a
king as quickly as the far-reaching influence of the great
leader is somewhat spent.
It matters not when or by whom were compiled the
books popularly attributed to Moses ; it matters not how
much of the code there given may be the survivals of
more ancient usage or the amplifications of a later age ;
its great features bear the stamp of a mind far in
advance of people and time, of a mind that beneath
effects sought for causes, of a mind that drifted not with
the tide of events but aimed at a definite purpose.
The outlines that the record gives us of the character
of Moses the brief relations that wherever the Hebrew
Scriptures are read have hung the chambers of the
imagination with vivid pictures are in every way con-
sistent with this idea. What we know of the life illus-
trates what we know of the work. What we know of
the work illumines the life. It was not an empire such
as had reached full development in Egypt, or existed in
rudimentary patriarchal form in the tribes around, that
Moses aimed to found. Nor was it a republic where the
12 "MOSES": A LECTURE.
freedom of the citizen rested on the servitude of the
helot, and the individual was sacrificed to the state. It
was a commonwealth based upon the individual a com-
monwealth whose ideal it was that every man should sit
under his own vine and fig-tree, with none to vex him or
make him afraid a commonwealth in which none should
be condemned to ceaseless toil; in which for even the
bond-slave there should be hope ; in which for even the
beast of burden there should be rest a commonwealth
in which, in the absence of deep poverty, the manly
virtues that spring from personal independence should
harden into a national character a commonwealth in
which the family affections might knit their tendrils
around each member, binding with links stronger than
steel the various parts into the living whole.
It is not the protection of property, but the protection
of humanity, that is the aim of the Mosaic code. Its
sanctions are not directed to securing the strong in
heaping up wealth so much as to preventing the weak
from being crowded to the wall. At every point it inter-
poses its barriers to the selfish greed that, if left
unchecked, will surely differentiate men into landlord
and serf, capitalist and workman, millionaire and tramp,
ruler and ruled. Its Sabbath day and Sabbath year
secure, even to the lowliest, rest and leisure. With the
blast of the jubilee trumpets the slave goes free, the debt
that cannot be paid is canceled, and a redivision of the
land secures again to the poorest his fair share in the
bounty of the common Creator. The reaper must leave
something for the gleaner; even the ox cannot be
muzzled as he treadeth out the corn. Everywhere, in
everything, the dominant idea is that of our homely
phrase "Live and let live!"
And the religion with which this civil policy is so
closely intertwined exhibits kindred features from the
"MOSES": A LECTURE. 13
idea of the brotherhood of man springs the idea of the
fatherhood of God. Though the forms may resemble
those of Egypt, the spirit is that which Egypt had lost.
Though an hereditary priesthood is retained, the law in
its fullness is announced to all the people. Though the
Egyptian rite of circumcision is preserved, and Egyptian
symbols reappear in all the externals of worship, the
tendency to take the type for the reality is sternly
repressed. It is only when we think of the bulls and
the hawks, of the deified cats and sacred ichneumons of
Egypt, that we realize the full meaning of the command :
" Thou shalt not make to thyself any graven image ! "
And if we seek beneath form and symbol and com-
mand, the thought of which they are but the expression,
we find that the great distinctive feature of the Hebrew
religion, that which separates it by such a wide gulf
from the religions amid which it grew up, is its utilita-
rianism, its recognition of divine law in human life. It
asserts, not a God whose domain is confined to the far-off
beginning or the vague future, who is over and above
and beyond men, but a God who in his inexorable laws
is here now ; a God of the living as well as of the dead ;
a God whose immutable decrees will, in this life, give
happiness to the people that heed them and bring misery
upon the people that forget them. Amid the forms of
splendid degradation in which a once noble religion had
in Egypt sunk to petrification, amid a social order in
which the divine justice seemed to sleep, I AM was the
truth that dawned upon Moses. And in his desert con-
templation of nature's flux and reflux, the death that
bounds her life, the life she brings from death, always
consuming yet never consumed I AM was the message
that fell upon his inner ear.
The absence in the Mosaic books of any reference to a
future life is only intelligible by the prominence into
14 "MOSES": A LECTURE.
which this truth is brought. Nothing could have been
more familiar to the Hebrews of the Exodus than the
doctrine of immortality. The continued existence of the
soul, the, judgment after death, the rewards and punish-
ments of the future state, were the constant subjects of
Egyptian thought and art. But a truth may be hidden
or thrown into the background by the intensity with
which another truth is grasped. And the doctrine of
immortality, springing as it does from the very depths of
human nature, ministering to aspirations which become
stronger and stronger as intellectual life rises to higher
planes and the life of the affections becomes more
intense, may yet become so incrusted with degrading
superstitions, may be turned by craft and selfishness
into such a potent instrument for enslavement, and so
used to justify crimes at which every natural instinct
revolts, that to the earnest spirit of the social reformer
it may seem like an agency of oppression to enchain the
intellect and prevent true progress ; a lying device with
which the cunning fetter the credulous.
The belief in the immortality of the soul must have
existed in strong forms among the masses of the Hebrew
people. But the truth that Moses brought so promi-
nently forward, the truth his gaze was concentrated upon,
is a truth that has often been thrust aside by the doc-
trine of immortality, and that may perhaps, at times,
react on it in the same way. This is the truth that the
actions of men bear fruit in this world, that though on
the petty scale of individual life wickedness may seem to
go unpunished, and wrong to be rewarded, there is yet a
Nemesis that with tireless feet and pitiless arm follows
every national crime, and smites the children for the
father's transgression; the truth that each individual
must act upon and be acted upon by the society of which
he is a part, that all must in some degree suffer for the
"MOSES": A LECTURE. 16
sin of each, and the life of each be dominated by the
conditions imposed by all. It is the intense appreciation
of this truth that gives the Mosaic institutions so practi-
cal and utilitarian a character. Their genius, if I may so
speak, leaves the abstract speculations where thought so
easily loses and wastes itself, or finds expression only in
symbols that become finally but the basis of superstition,
in order that it may concentrate attention upon the laws
which determine the happiness or misery of men upon
this earth. Its lessons have never tended to the essential
selfishness of asceticism, which is so prominent a feature
in Brahmanism and Buddhism, and from which Chris-
tianity and Islamism have not been exempt. Its injunc-
tion has never been, " Leave the world to itself that you
may save your own soul," but rather, " Do your duty in
the world that you may be happier and the world be
better." It has disdained no sanitary regulation that
might secure the health of the body. Its promise has
been of peace and plenty and length of days, of stalwart
sons and comely daughters.
It may be that the feeling of Moses in regard to a
future life was that expressed in the language of the
Stoic : " It is the business of Jupiter, not mine ;" or it
may be that it partook of the same revulsion that shows
itself in modern times, when a spirit essentially religious
has been turned against the forms and expressions of
religion, because these forms and expressions have been
made the props and bulwarks of tyranny, and even the
name and teachings of the Carpenter's Son perverted
into supports of social injustice used to guard the pomp
of Caesar and justify the greed of Dives.
Yet, however such feelings influenced Moses, I cannot
think that such a soul as his, living such a life as his
feeling the exaltation of great thoughts, feeling the
burden of great cares, feeling the bitterness of great
16 "MOSES": A LECTURE.
disappointments did not stretch forward to the hope
beyond ; did not rest and strengthen and ground itself in
the confident belief that the death of the body is but the
emancipation of the mind; did not feel the assurance
that there is a power in the universe upon which it
might confidently rely, through wreck of matter and
crash of worlds. Yet the great concern of Moses was
with the duty that lay plainly before him ; the effort to
lay the foundation of a social state in which deep
poverty and degrading want should be unknown where
men released from the meaner struggles that waste
human energy should have opportunity for intellectual
and moral development.
Here stands out the greatness of the man. What was
the wisdom and stretch of the forethought which in the
desert sought to guard in advance against the dangers of
a settled state, let the present speak.
In the full blaze of the nineteenth century, when every
child in our schools may know of common truths things
of which the Egyptian sages never dreamed; when the
earth has been mapped and the stars have been weighed ;
when steam and electricity have been pressed into our
service, and science is wrestling from nature secret after
secret it is but natural to look back upon the wisdom
of three thousand years ago as the man looks back upon
the learning of the child.
And yet, for all this wonderful increase in knowledge,
for all this enormous gain of productive power, where is
the country in the civilized world in which to-day there
is not want and suffering where the masses are not con-
demned to toil that gives no leisure, and all classes are
not pursued by a greed of gain that makes life an ignoble
struggle to get and to keep? Three thousand years of
advance, and still the moan goes up : " They have made
our lives bitter with hard bondage, in mortar and in
" MOSES ": A LECTURE. 17
brick, and in all manner of service!" Three thousand
years of advance ! and the piteous voices of little children
are in the moan.
Standing as I stand, where modern ideas have had full-
est, freest development ; in the newest great city of the
newest great nation ; by the side of that ultimate sea, where
ends the westward march of the race that has circled the
globe, and farther west meets farthest east, the cool shades
and sweet waters whose promise has so long lured us on
seem dissolving into mocking mirage.
Over ocean wastes far wider than the Syrian desert we
have sought our promised land no narrow strip between
the mountains and the sea, but a wide and virgin conti-
nent. Here, in greater freedom, with vaster knowledge
and fuller experience, we are building up a nation that
leads the van of modern progress.
And yet while we prate of the rights of man there are
already among us thousands and thousands who find it
difficult to assert the first of natural rights the right to
earn an honest living ; thousands who from time to time
must accept of degrading charity or starve.
We boast of equality before the law, yet notoriously
Justice is deaf to the call of him who has not gold, and
blind to the sin of him who has.
We pride ourselves upon our common schools, yet after
our boys and girls are educated we vainly ask, "What
shall we do with them ? " And under the shadow of our
colleges, children are growing up in vice and crime, be-
cause from their homes poverty has driven all refining
influence.
We pin our faith to universal suffrage, yet with all
power in the hands of the people, the control of public
affairs is passing into the hands of a class of professional
politicians, and our governments are becoming but a
means for the robbery of the people.
18 "MOSES": A LECTURE.
We have prohibited hereditary distinctions, we have
forbidden titles of nobility; yet there is growing up
among us an aristocracy of wealth as powerful and as
merciless as ever held sway.
We progress and we progress; we girdle continents
with iron roads and knit cities together with the mesh of
telegraph-wires; each day brings some new invention;
each year marks a fresh advance the power of produc-
tion increased, and the avenues of exchange cleared and
broadened. Yet the complaint of " hard times " is louder
and louder, and everywhere are men harassed by care,
and haunted by the fear of want. With swift, steady
strides and prodigious leaps, the power of human hands
to satisfy human wants advances and advances, is multi-
plied and multiplied. Yet the struggle for mere exis-
tence is more and more intense, and human labor is
becoming the cheapest of commodities. Beside glutted
warehouses human beings grow faint with hunger and
shiver with cold; under the shadow of churches festers
the vice that is born of want.
Trace to its root the cause that is thus producing want
in the midst of plenty, ignorance in the midst of intelli-
gence, aristocracy in democracy, weakness in strength
that is giving to our civilization a one-sided and unstable
development, and you will find it something which this
Hebrew statesman three thousand years ago perceived
and guarded against. Moses saw that the real cause of
the enslavement of the masses of Egypt was what has
everywhere produced enslavement, the possession by a
class of the land upon which and from which the whole
people must live. He saw that to permit in land the
same unqualified private ownership that by natural right
attaches to the* things produced by labor, would be
inevitably to separate the people into the very rich and
the very poor, inevitably to enslave labor to make the
"MOSES": A LECTURE. 19
few the masters of the many, no matter what the political
forms, to bring vice and degradation, no matter what the
religion.
And with the foresight of the philosophic statesman
who legislates not for the need of a day, but for all the
future, he sought, in ways suited to his times and con-
ditions, to guard against this error. Everywhere in
the Mosaic institutions is the land treated as the gift of the
Creator to his common creatures, which no one has the
right to monopolize. Everywhere it is, not your estate,
or your property, not the land which you bought, or
the land which you conquered, but " the land which the
Lord thy God giveth thee" "the land which the Lord
lendeth thee." And by practical legislation, by regula-
tions to which he gave the highest sanctions, he tried to
guard against the wrong that converted ancient civiliza-
tions to despotisms the wrong that in after centuries
ate out the heart of Rome, that produced the embruting
serfdom of Poland and the gaunt misery of Ireland, the
wrong that is already filling American cities with idle
men, and our virgin States with tramps. He not only
provided for the fair division of the land among the
people, and for making it fallow and common every
seventh year, but by the institution of the jubilee he
provided for a redistribution of the land every fifty years,
and made monopoly impossible.
I do not say that these institutions were, for their ulti-
mate purpose, the very best that might even then have
been devised, for Moses had to work, as all great con-
structive statesmen have to work, with the tools that
came to his hand, and upon materials as he found them.
Still less do I mean to say that forms suitable for that
time and people are suitable for every time and people.
I ask, not veneration of the form, but recognition of the
spirit.
20 "MOSES": A LECTURE.
Yet how common it is to venerate the form and to
deny the spirit! There are many who believe that the
Mosaic institutions were literally dictated by the
Almighty, yet who would denounce as irreligious and
"communistic" any application of their spirit to the
present day. And yet to-day how much we owe to these
institutions ! This very day the only thing that stands
between our working-classes and ceaseless toil is one of
these Mosaic institutions. Nothing in political economy
is better settled than that under conditions which now
prevail the working-classes would get no more for
seven days' labor than they now get for six, and would
find it as difficult to reduce their working-hours as
now.
Let the mistake of those who think that man was
made for the Sabbath, rather than the Sabbath for man,
be what it may; that there is one day in the week
that the working-man may call his own, one day in the
week on which hammer is silent and loom stands idle,
is due, through Christianity, to Judaism to the code
promulgated in the Sinaitic wilderness. And who that
considers the waste of productive forces can doubt that
modern society would be not merely happier but richer,
had we received as well as the Sabbath day the grand
idea of the Sabbath year, or adapting its spirit to our
changed conditions, secured in another way an equiva-
lent reduction of working-hours?
It is in these characteristics of the Mosaic institutions
that, as in the fragments of a Colossus, we may read the
greatness of the mind whose impress they bear of a
mind in advance of its surroundings, in advance of its
age; of one of those star souls that dwindle not with
distance, but, glowing with the radiance of essential
truth, hold their light while institutions and languages
and creeds change and pass.
"MOSES": A LECTUEE. 21
That the thought was greater than the permanent
expression it found, who can doubt ? Yet from that day
to this that expression has been in the world a living
power.
From the free spirit of the Mosaic law sprang the
intensity of family life that amid all dispersions and
persecutions has preserved the individuality of the
Hebrew race ; that love of independence that under the
most adverse circumstances has characterized the Jew;
that burning patriotism that flamed up in the Maccabees
and bared the breasts of Jewish peasants to the serried
steel of Grecian phalanx and the resistless onset of
Roman legion ; that stubborn courage that in exile and
in torture held the Jew to his faith. It kindled that fire
that has made the strains of Hebrew seers and poets
phrase for us the highest exaltations of thought; that
intellectual vigor that has over and over again made the
dry staff bud and blossom. And passing outward from
one narrow race it has exerted its power wherever the
influence of the Hebrew Scriptures has been felt. It has
toppled thrones and cast down hierarchies. It strength-
ened the Scottish Covenanter in the hour of trial, and the
Puritan amid the snows of a strange land. It charged
with the Ironsides at Naseby; it stood behind the low
redoubt on Bunker Hill.
But it is in example as in deed that such lives are
helpful. It is thus that they dignify human nature, and
glorify human effort, and bring to those who struggle
hope and trust. The life of Moses, like the institutions
of Moses, is a protest against that blasphemous doctrine,
current now as it was three thousand years ago that
blasphemous doctrine preached ofttimes even from Chris-
tian pulpits that the want and suffering of the masses
of mankind flow from a mysterious dispensation of Provi-
dence, which we may lament, but can neither quarrel
22 "MOSES": A LECTURE.
with nor alter. Let him who hugs that doctrine to
himself, him to whom it seems that the squalor and bru-
tishness with which the very centers of our civilization
abound are not his affair, turn to the example of that
life. For to him who will look, yet burns the bush ; and
to him who will hear, again comes the voice: "The
people suffer; who will lead them forth?"
Adopted into the immediate family of the supreme
monarch and earthly god; standing almost at the apex
of the social pyramid which had for its base those toiling
millions ; priest and prince in a land where prince and
priest might revel in all delights everything that life
could offer to gratify the senses or engage the intellect
was open to him.
What to him the wail of them who beneath the fierce
sun toiled under the whips of relentless masters ? Heard
from granite colonnade or beneath cool linen awning, it
was mellowed by distance to monotonous music. Why
should he question the Sphinx of Fate, or quarrel with
destinies the high gods had decreed? So had it always
been, for ages and ages ; so must it ever be. The beetle
rends the insect, and the hawk preys on the beetle ; order
on order, life rises from death and carnage, and higher
pleasures from lower agonies. Shall the man be better
than nature? Soothing and restful flows the Nile,
though underneath its placid surface finny tribes wage
cruel war, and the stronger eat the weaker. Shall the
gazer who would read the secrets of the stars turn
because under his feet a worm may writhe ?
Theirs to make bricks without straw ; his a high place
in the glorious procession that with gorgeous banners
and glittering emblems, with clash of music and solemn
chant, winds its shining way to dedicate the immortal
edifice their toil has reared. Theirs the leek and the
garlic; his to sit at the sumptuous feast. Why should
"MOSES": A LECTURE. 23
he dwell on the irksomeness of bondage, he for whom the
chariots waited, who might at will bestride the swift
coursers of the Delta, or be borne on the bosom of the
river with oars that beat time to songs? Did he long
for the excitement of action ? there was the desert hunt,
with steeds fleeter than the antelope and lions trained
like dogs. Did he crave rest and ease ? there was for
him the soft swell of languorous music and the wreathed
movements of dancing-girls. Did he feel the stir of
intellectual life? in the arcana of the temples he was
free to the lore of ages ; an initiate in the select society
where were discussed the most engrossing problems; a
sharer in that intellectual pride that centuries after com-
pared Greek philosophy to the babblings of children.
It was no sudden ebullition of passion that caused
Moses to turn his back on all this, and to bring the
strength and knowledge acquired in a dominant caste to
the lifelong service of the oppressed. The forgetfulness
of self manifested in the smiting of the Egyptian shines
through the whole life. In institutions that molded the
character of a people, in institutions that to this day
make easier the lot of toiling millions, we may read the
stately purpose.
Through all that tradition has given us of that life
runs the same grand passion the unselfish desire to
make humanity better, happier, nobler. And the death
is worthy of the life. Subordinating to the good of his
people the natural disposition to found a dynasty, which
in his case would have been so easy, he discards the
claims of blood and calls to his place of leader the fittest
man. Coming from a land where the rites of sepulture
were regarded as all-important, and the preservation of
the body after death was the passion of life; among a
people who were even then carrying the remains of their
great ancestor, Joseph, to rest with his fathers, he yet
24 "MOSES": A LECTURE.
conquered the last natural yearning and withdrew from
the sight and sympathy of men to die alone and unat-
tended, lest the idolatrous feeling, always ready to break
forth, should in death accord him the superstitious
reverence he had refused in life.
"No man knoweth of his sepulcher unto this day."
But while the despoiled tombs of the Pharaohs mock the
vanity that reared them, the name of the Hebrew who,
revolting from their tyranny, strove for the elevation of
his fellow-men, is yet a beacon-light to the world.
Leader and servant of men ! Lawgiver and bene-
factor! Toiler toward the promised land seen only by
the eye of faith ! Type of the high souls who in every
age have given to earth its heroes and its martyrs, whose
deeds are the precious possession of the race, whose
memories are its sacred heritage! With whom among
the founders of empire shall we compare him ?
To dispute about the inspiration of such a man were
to dispute about words. From the depths of the unseen
such characters must draw their strength ; from fountains
that flow only from the pure in heart must come their
wisdom. Of something more real than matter ; of some-
thing higher than the stars ; of a light that will endure
when suns are dead and dark ; of a purpose of which the
physical universe is but a passing phase, such lives tell.
AT LOS ANGELES
University of California
SOUTHERN REGIONAL LIBRARY FACILITY
405 Hilgard Avenue, Los Angeles, CA 90024-1388
Return this material to the library
from which it was borrowed.
3 1158 00315 6113
,.i? . U i RN REGIONAL LIBRARY FACILITY
A 000219143 5
