Principles Of Political Economy

                                    By

                             William Roscher,

       Professor of Political Economy at the University of Leipzig,

             Corresponding Member of the Institute of France,

                     Privy Counsellor To His Majesty,

                           The King Of Saxony.

                From the Thirteenth (1877) German Edition.

            With Additional Chapters Furnished By The Author,

               For This First English And American Edition,

                   On Paper Money, International Trade,

                        And The Protective System;

                         And A Preliminary Essay

              On The Historical Method In Political Economy

                            (From the French)

                                    By

                               L. Wolowski

                         The Whole Translated By

                           John J. Lalor, A. M.

                                 Vol. I.

                                New York:

                             Henry Holt & Co.

                                   1878





CONTENTS


Translator’s Preface.
Author’s Preface. (1st Edition.)
From The Author’s Prefaces. (2d to 11th Edition.)
Preliminary Essay.
Introduction.
   Chapter I. Fundamental Ideas.
      Section I. Goods—Wants.
      Section II. Goods.—Economic Goods.
      Section III. Goods.—The Three Classes Of Goods.
      Section IV. Of Value.—Value In Use.
      Section V. Value.—Value In Exchange.
      Section VI. Value.—Alleged Contradiction Between Value In Use And
      Value In Exchange.
      Section VII. Resources Or Means (Vermögen).
      Section VIII. Valuation Of Resources.
      Section IX. Wealth.
      Section X. Wealth.—Signs Of National Wealth.
      Section XI. Of Economy (Husbandry).
      Section XII. Economy.—Grades Of Economy.
      Section XIII. Political Economy.—The Economic Organism.
      Section XIV. Origin Of A Nation’s Economy.
      Section XV. Diseases Of The Social Organism.
   Chapter II. Position Of Political Economy In The Circle Of Related
   Sciences.
      Section XVI. Political Or National Economy.
      Section XVII. Sciences Relating To National Life.—The Science Of
      Public Economy.—The Science Of Finance.
      Section XVIII. Sciences Relating To National Life.—Statistics.
      Section XIX. Private Economy—Cameralistic Science.
      Section XX. Private Economy. (Continued.)
      Section XXI. What Political Economy Treats Of.
   Chapter III. The Methods Of Political Economy.
      Section XXII. Former Methods.
      Section XXIII. The Idealistic Method.
      Section XXIV. The Idealistic Method. (Continued.)
      Section XXV. The Idealistic Method. (Continued.)
      Section XXVI. The Historical Method—The Anatomy And Physiology Of
      Public Economy.
      Section XXVII. Advantages Of The Historical Or Physiological Method.
      Section XXVIII. Advantages Of The Historical Method. (Continued.)
      Section XXIX. The Practical Character Of The Historical Method In
      Political Economy.
Book I. The Production Of Goods.
   Chapter I. Factors Of Production.
      Section XXX. Meaning Of Production.
      Section XXXI. The Factors Of Production.—External Nature.
      Section XXXII. External Nature.—The Sea.—Climate.
      Section XXXIII. External Nature.—Gifts Of Nature With Value In
      Exchange.
      Section XXXIV. External Nature. (Continued.)
      Section XXXV. External Nature.—Elements Of Agricultural
      Productiveness.
      Section XXXVI. External Nature.—Further Divisions Of Nature’s Gifts.
      Section XXXVII. External Nature.—The Geographical Character Of A
      Country.
      Section XXXVIII. Of Labor.—Divisions Of Labor.
      Section XXXIX. Labor.—Taste For Labor.—Piece-Wages.
      Section XL. Labor.—Labor-Power Of Individuals.
      Section XLI. Labor.—Effect Of The Esteem In Which It Is Held.
      Section XLII. Of Capital.—The Classes Of Goods Of Which A Nation’s
      Capital Is Made Up.
      Section XLIII. Capital.—Productive Capital.
      Section XLIV. Capital.—Fixed Capital, And Circulating Capital.
      Section XLV. Capital.—How It Originates.
   Chapter II. Co-Operation Of The Factors.
      Section XLVI. The Productive Coöperation Of The Three Factors.
      Section XLVII. Productive Co-Operation Of The Three Factors. The
      Three Great Periods Of A Nation’s Economy.
      Section XLVIII. Critical History Of The Idea Of Productiveness.
      Section XLIX. Critical History Of The Idea Of Productiveness.—The
      Doctrine Of The Physiocrates.
      Section L. The Same Subject Continued.
      Section LI. The Same Subject Continued.
      Section LII. Idea Of Productiveness.
      Section LIII. The Same Subject Continued.
      Section LIV. Importance Of A Due Proportion In The Different
      Branches Of Productiveness.
      Section LV. The Degree Of Productiveness.
   Chapter III. The Organization Of Labor.
      Section LVI. Development Of The Division Of Labor.
      Section LVII. Development Of The Division Of Labor.—Its Extent At
      Different Periods.
      Section LVIII. Advantages Of The Division Of Labor.
      Section LIX. Conditions Of The Division Of Labor.
      Section LX. Influence Of The Extent Of The Market On The Division Of
      Labor.
      Section LXI. The Division Of Labor—Means Of Increasing It.
      Section LXII. The Reverse, Or Dark Side Of The Division Of Labor.
      Section LXIII. Dark Side Of The Division Of Labor.—Its Gain And
      Loss.
      Section LXIV. The Co-Operation Of Labor.
      Section LXV. The Principle Of Stability, Or Of The Continuity Of
      Work.
      Section LXVI. Advantage Of Large Enterprises.
   Chapter IV. Freedom And Slavery.
      Section LXVII. The Origin Of Slavery.
      Section LXVIII. The Same Subject Continued.
      Section LXIX. Origin Of Slavery.—Want Of Freedom.
      Section LXX. Emancipation.
      Section LXXI. Disadvantages Of Slavery.
      Section LXXII. Effect Of An Advance In Civilization On Slavery.
      Section LXXIII. The Same Subject Continued.
      Section LXXIV. The Same Subject Continued.
      Section LXXV. The Same Subject Continued.
      Section LXXVI. (Appendix To Chapter IV.) The Domestic Servant
      System.
   Chapter V. Community Of Goods And Private Property. Capital—Property.
      Section LXXVII. Capital.—Importance Of Private Property.
      Section LXXVIII. Socialism And Communism.
      Section LXXIX. Socialism And Communism. (Continued.)
      Section LXXX. Socialism And Communism. (Continued.)
      Section LXXXI. Community Of Goods.
      Section LXXXII. The Organization Of Labor.
      Section LXXXIII. The Organization Of Labor. (Continued.)
      Section LXXXIV. The Organization Of Labor. (Continued.)
      Section LXXXV. The Right Of Inheritance.
      Section LXXXVI. Economic Utility Of The Right Of Inheritance.
      Section LXXXVII. Landed Property.
      Section LXXXVIII. Landed Property. (Continued.)
   Chapter VI. Credit.
      Section LXXXIX. Credit In General.
      Section XC. Credit—Effects Of Credit.
      Section XCI. Debtor Laws.
      Section XCII. History Of Credit Laws.
      Section XCIII. Means Of Promoting Credit.
      Section XCIV. Letters Of Respite (Specialmoratorien).
Book II. The Circulation Of Goods.
   Chapter I. Circulation In General.
      Section XCV. Meaning Of The Circulation Of Goods.
      Section XCVI. Rapidity Of Circulation.
      Section XCVII. Freedom Of Competition.
      Section XCVIII. How Goods Are Paid For.—The Rent For Goods.
      Section XCIX. Freedom Of Competition And International Trade.
   Chapter II. Prices
      Section C. Prices In General.
      Section CI. Effect Of The Struggle Of Opposing Interests On Price.
      Section CII. Demand.
      Section CIII. Demand.—Indispensable Goods.
      Section CIV. Influence Of Purchaser’s Solvability On Prices.
      Section CV. Supply.
      Section CVI. The Cost Of Production.
      Section CVII. Equilibrium Of Prices.
      Section CVIII. Effect Of A Rise Of Price Much Above Cost.
      Section CIX. Effect Of A Decline Of Price Below Cost.
      Chapter CX. Different Cost Of Production Of The Same Goods.
      Section CXI. Different Cost Of Production Of The Same Goods.
      (Continued.)
      Section CXII. Exceptions.
      Section CXIII. Exceptions. (Continued.)
      Section CXIV. Prices Fixed By Government.
      Section CXV. Influence Of Growing Civilization On Prices.
   Chapter III. Money In General.
      Section CXVI. Instrument Of Exchange. Measure Of Value. Barter.
      Section CXVII. Effect Of The Introduction Of Money.
      Section CXVIII. The Different Kinds Of Money.
      Section CXIX. The Metals As Money.
      Section CXX. Money—The Precious Metals.
      Section CXXI. Value In Use And Value In Exchange Of Money.
      Section CXXII. Value In Exchange Of Money.
      Section CXXIII. The Quantity Of Money A Nation Needs.
      Section CXXIV. The Quantity Of Money A Nation Needs. (Continued.)
      Section CXXV. Uniformity Of The Value In Exchange Of The Precious
      Metals.
      Section CXXVI. Uniformity Of The Value In Exchange Of The Precious
      Metals. (Continued.)
   Chapter IV. History Of Prices.
      Section CXXVII. Measure Of Prices,—Constant Measure.
      Section CXXVIII. Value In Exchange Estimated In Labor.
      Section CXXIX. The Precious Metals The Best Measure Of Prices.
      Section CXXX. History Of The Prices Of The Chief Wants Of Life.
      Section CXXXI. History Of The Prices Of The Chief Wants Of Life.
      (Continued.)
      Section CXXXII. History Of The Prices Of The Chief Wants Of Life.
      (Continued.)
      Section CXXXIII. History Of The Prices Of The Chief Wants Of Life.
      (Continued.)
      Section CXXXIV. History Of The Prices Of The Chief Wants Of Life.
      (Continued.)
      Section CXXXV. History Of The Values Of The Precious Metals.—In
      Antiquity And In The Middle Ages.
      Section CXXXVI. Effect On The Discovery Of American Mines Etc. On
      The Value Of The Precious Metals.
      Section CXXXVII. Revolution In Prices At The Beginning Of Modern
      History.
      Section CXXXVIII. Revolution In Prices.—Influence Of The
      Non-Monetary Use Of Gold And Silver.
      Section CXXXIX. History Of Prices.—Californian And Australian
      Discoveries.
      Section CXL. Revolution In Prices.—Its Influence On The National
      Resources.
      Section CXLI. Effect Of An Enhancement Of The Price Of The Precious
      Metals.
      Section CXLII. The Price Of Gold As Compared With That Of Silver.
      Section CXLIII. The Price Of Gold As Compared With That Of Silver.
      (Continued.)
   Appendix I. Paper Money.
      Section I. Paper Money And Money-Paper.
      Section II. Advantages And Disadvantages Of Paper Money.
      Section III. Kinds Of Redemption.
      Section IV. Compulsory Circulation.
      Section V. Resumption Of Specie Payments.
      Section VI. Paper Money—A Curse Or A Blessing?
Footnotes






DEDICATION.


TO

WILLIAM H. GAYLORD, ESQ.,

_COUNSELLOR AT LAW_,

OF CLEVELAND, OHIO,

TO WHOSE BROTHERLY CARE IT IS LARGELY DUE THAT I LIVED TO
TRANSLATE THEM,

THESE VOLUMES

ARE AFFECTIONATELY INSCRIBED.





TRANSLATOR’S PREFACE.


Our literature is rich enough in works on the principles of Political
Economy. So far as the translator is informed, however, it possesses none
in which the science is treated in accordance with the historical method.
We may therefore venture to express the hope that this translation will
fill a place hitherto unoccupied in the literatures of England and
America, and fill it all the more efficiently and acceptably, as Professor
ROSCHER is the founder and still the leader of the historical school of
Political Economy. Were this the only recommendation of our undertaking,
it would not be a useless one. But a glance at Professor ROSCHER’S book
will convince even the most hasty reader that its pages fascinate by their
interest and are rich in treasures of erudition which should not remain
inaccessible to the English student from being locked up in a foreign
tongue.

The present translation has received, throughout, the revision of the
author, and should any imperfections remain in the rendering of his
thought into English, the blame is certainly not his, for his revision has
been most minute.

The three appendices have been supplied by Professor ROSCHER expressly for
this edition. As they are intended to form a part of the work on the
Political Economy of Industry and Commerce, on which he is now engaged, he
authorizes their publication in English, only by the publishers of this
edition of his principles; and only for the purpose of being added to the
present translation. He desires especially that their appearance in their
present shape should not in any way interfere with any of his rights in
his forthcoming volume, and that they should not be translated into any
language nor translated back into German.

The essay of Mr. WOLOWSKI, on the historical method in Political Economy
constitutes no part of Professor ROSCHER’S book, and neither he nor its
author, but only the translator, is responsible for its appearance here.
In it the reader will find a short sketch of the life of Professor
ROSCHER, brought down to the date at which the essay was written. The
translator has little to add to that sketch, all the information he
possesses in addition to what it contains being embraced in the following
lines from a letter received by him from the author in answer to a request
that he would supply the biographical data not to be found in WOLOWSKI’S
essay: “You might perhaps say ... that I have repeatedly declined calls to
the Universities of Munich, Vienna and Berlin, but that I have never
regretted remaining in Leipzig.”

The acknowledgments of the translator are due, in the first place, to the
eminent author himself, for the revision of the plate-proof of the entire
work, and then to Professor WILLIAM F. ALLEN, of the University of
Wisconsin, for his interest in the progress of the enterprise, and for
many valuable suggestions; also to Professor W. G. SUMNER, of Yale
College, for some excellent hints as to the best translation of certain
words in the Appendix on Paper Money.





AUTHOR’S PREFACE. (1ST EDITION.)


My _System der Volkswirthschaft_ shall, _Deo volente_, be completed in
four parts. The second shall contain the national economy of agriculture
and the related branches of natural production; the third, the national
economy of industry and commerce; the fourth, of the economy of the state
and of the commune (_Gemeindehaushalt_). While the entire work shall
constitute one systematic whole, each part shall have its own appropriate
title, constitute an independent treatise, and be sold separately.

Of the peculiar method which I have followed in this work, and which will
produce still better fruits in the succeeding volumes, I have given a
sufficient explanation in §§ 26 ff., and all I desire now is to say a few
words on the relation the notes bear to the text. The careful reader will
soon be convinced that of the many citations in this work, not one has
been made from a vain desire of the display of erudition. Part of them
serves as the necessary proof of surprising facts adduced, but which are
little known. Another part of them is intended to incite the reader to the
study of certain questions nearly related to those treated in the text,
but which are still different from them. The object of the greater number
is to supply information concerning the history of economic principles. As
far as the sources at my command permitted, I have endeavored to point out
the first germs, the chief stages of development, the contrasts, and,
finally, what has been thus far attained in economic science. This
sometimes required some little victory over self, inasmuch as I was
conscious of having independently discovered certain facts, when I
afterwards found that some old and long-forgotten writer had made similar
observations. Thus, this work may serve both as a handbook and as a
history of the literature of Political Economy. Students of the science
know how little has thus far been done by writers in this direction. And
hence I shall be very grateful to those who labor in the same field, if
they will, either by writing to me personally, or through the medium of
the press, inform me when I have erred in ascribing a truth, or a
scientifically important error, to its earliest author.

I have already said in the title that this work is intended not for the
learned only, but for all educated men, for men of a serious turn of mind,
who desire truth and science for their own sake. Like that ancient
historian, whom I honor above all others as my teacher, I desire that my
work should be useful to those, ὅσοι βουλήσοντοι τῶν τε γενομένων τὸ σαφὲς
σκοπεῖν καὶ τῶν μελλόντων ποτὲ αὖθις κατὰ τὸ ἀνθρώπειον τοιούτων καὶ
παραπλησίων ἔσεσθαι. (_Thucydides_ I, 22.)

UNIVERSITY OF LEIPZIG,

_End of May, 1854._





FROM THE AUTHOR’S PREFACES. (2D TO 11TH EDITION.)


The preface to the second edition is dated October, 1856; that to the
third, April, 1858; that to the fourth, April, 1861; that to the fifth,
November, 1863; that to the sixth, November, 1865; that to the seventh,
November, 1868; that to the eighth, August, 1869; that to the ninth,
March, 1871; that to the tenth, May, 1873; that to the eleventh
(unaltered), December, 1873. Each successive edition, nearly, has been
announced as an improved and enlarged one; and the tenth edition contains
one hundred and fifty-six pages more than the first, although in places, a
large number of abbreviations had been made from previous editions. There
are many things in some of the previous editions which criticism induced
me, long since, to change. I have considered it my duty to the public, who
gave my work so warm and friendly a reception, to take into consideration,
in each successive edition, not only my own new investigations, but those
also of all others with which I became acquainted, and, whenever possible,
to correct statistical illustrations from the latest sources. I have
especially, in each following edition, enriched a number of paragraphs
with here and there historical, ethnographic and statistical features.
Plutarch is certainly right, spite of the fact that pedants may abuse him
for it, when he says, that trifling acts, a word and even a jest, are
often more important, as characterizing the life of a people or an age,
than great battles which cost the lives of tens of thousands of men.

I have changed the titles “Ricardo’s Law of Rent,” and “The Malthusian Law
of the Increase of Population,” which I formerly used, for others. But I
would not be misunderstood here. I hold it to be a duty of reverence in
the learned—as it has long been practiced in the case of the natural
sciences—in the sciences of the human mind to call the natural laws,
methods etc., in acquainting us with which, some one particular
investigator has won very distinguished merit, by the name of that
investigator. In the case of the law of rent, the application of this rule
would as unquestionably entitle Ricardo to this honor as it would Malthus
in that of the increase of population, spite of the fact that Ricardo may
not have succeeded in finding the best possible form of the abstraction,
and although Malthus even, in a one-sided reaction against a former still
greater one-sidedness, was not always able to steer clear of positive and
negative errors. Recent science has endeavored, and successfully, to
examine the facts which contradict the Ricardoan and Malthusian
formulations of the laws in question, and to extend the formulas
accordingly. I have myself contributed hereto to the extent of my ability.
But, in the interval, it is not hard to comprehend that, while this
process of elucidation is going on, most scholars, those especially
possessed more of a dogmatic than of a historical turn of mind, should
estimate these two leaders more in accordance with their few defects than
with the great merits of their discoveries. If, therefore, I now drop the
title “Malthusian law,” it is to guard hasty readers from the illusion
that §§ 242 seq. teach what the great crowd understand by Malthusianism;
when they might, perhaps, omit that portion entirely. For my own part, I
have no doubt that, when the process of elucidation above referred to
shall have been thoroughly finished, the future will accord both to
Ricardo and Malthus their full meed of honor as political economists and
discoverers of the first rank.(1)





PRELIMINARY ESSAY.


Preliminary Essay On The Application Of The Historical Method To The Study
                          Of Political Economy,

                             By M. Wolowski,

                    Member Of The Institute Of France.


    “_Nunquam bene percipiemus usu necessarium nisi et noverimus jus
    illud usu non necessarium. Nexum est et colligatum alterum alteri.
    Nulli sunt servi nobis, cur quæstiones de servis vexamus? Digna
    imperito vox._”—_Cuj._, vii, in titul. Dig. De Justitia et
    Jure.(2)


    “_Homo sum, humani nihil a me alienum puto._”—_Terence._(3)


    “_Ista præpotens, ac gloriosa philosophia._”—_Cicero_, De Or., I,
    43.(4)




I.


It is no foolish desire to make a vain display of citations, that induces
us, at the beginning of this essay, intended to point out the results of
the application of a new method to the study of Political Economy, to
invoke the authority of a poet and moralist, of a jurisconsult and of a
philosopher. The writer finds in the words just quoted the loftiest
expression of the thought which dictates these lines, viz.: that the
impartial researches of history, a profound feeling of man’s moral and
material wants, and the light of philosophy, should govern in the teaching
of a science, the object of which is to show us how those things which are
intended to satisfy our wants are produced and distributed among the
several classes or individuals of a nation; how they are exchanged one
against another, and how they are consumed.

The nineteenth century affords us something more than the admirable
spectacle of the rapid and fertile development of mechanical power and
natural forces. This is but one of the aspects, we might even say but one
of the results, of the general progress of the human mind. The renovation
of moral and intellectual studies has served as a starting point for the
application to facts of the conquests of thought. Science has preceded
art.

In the foremost rank of the studies just referred to is _philosophy_,
which initiates us into the knowledge of human nature, the basis of right,
and which translates its legitimate aspirations into a language which we
can understand; _history_, that _prophetess_ of the truth, as one of the
ancients called it, which places before us the faithful picture of times
past, not by simply putting together a skeleton of facts, but by following
the living progress of events and the organic development of institutions.
Such, at least, has been the work of those noble minds who have
consecrated their energies to the resuscitation of ages past, in their
true shape, and such is the service for which we are indebted to them for
the successful accomplishment of the reformation of historical studies,
which they attempted with such rare devotion and such marvelous sagacity.

This renovation of history has exerted the most fertile influence in the
region of philosophy, in that of law, and we believe that it will prove no
less useful in that of Political Economy. It has served to put us on our
guard against being easily misled by _a priori_ notions.

By exhibiting to us the results of the life and of the experience of
centuries, by teaching us by what steps the human mind has risen to its
present eminence, and what the education given it in the past has been, it
has enabled us to ascend from phenomena to the principles which preside
over them; from facts to the law; and it has substituted for arbitrary
assumptions and purely ideal systems, the slow but progressive work of the
genius of nations. Not that it turns a deaf ear to the exalted lessons of
philosophy, nor that it denies the _eternal relations resulting from the
nature of things_. Far from it. On the contrary, it supplies a solid basis
to intellectual investigations, and, so to speak, an answer for all the
moral sciences, to this saying of Rœderer: “Politics is a field which has
been traversed thus far only in a balloon; it is time to put foot on solid
ground.”

Neither does history, as thus understood, confine itself to mere
description; it also assumes the office of judge. While it pulls down much
that passion and inaccuracy have reared, and thus restores respect for the
past, it does not turn that past into a fetish. It looks it boldly in the
face and questions it, instead of prostrating itself before it and
worshipping it with downcast eyes. Thus, by plainly showing us the many
bonds which tie us to it, it escapes at once both the rashness of
impatience and the wearisomeness of routine.

The impartiality it inculcates is not indifference; and there is no danger
that the justice it metes out to past ages shall degenerate into a vain
scepticism or a convenient optimism.

The study of history, thus understood, has another advantage; it accustoms
us to those patient and disinterested investigations, to those lengthy
labors, the positive result of which at first escapes us for a time, only
to burst on our eyes, with so much more brilliancy, when rigorous research
has succeeded in discovering it. It frees us from the deadly constraint of
immediate utility.

There is nothing more fatal to science than the feverish impatience for
results which obtains only too much in our own days, and which induces
people to run after him who is in the greatest hurry, and which leads to
hasty conclusions.

“Research undertaken from a disinterested love of science,” says the
learned Hugo, one of the masters of the historical school of law in
Germany,(5) “that research which at first promises no other advantage but
truth and the culture of the mind, is precisely that which brings us the
richest rewards. Would we not be behind, in all the sciences, if we had
clung only to those principles, the utility of which in practice was
already known? Do we not, to-day, from many a discovery, reap advantages
of which its author never dreamed?”

Doubtless this tendency, unless restrained by other demands, is not exempt
from danger. We may be carried away by the attraction peculiar to these
noble studies, withdraw into antiquity and fall into a species of
historical mysticism which ends in the affirmation, that whatever has been
is true, absolutely, and which, instead of confining itself to the
explanation of transitory phenomena, invests them with all the dignity of
principles. We shall endeavor to avoid the peril pointed out by
Mallebranche. “Learned men study rather to acquire a chimerical greatness
in the imagination of other men, than to acquire greater breadth and
strength of mind themselves. They make their heads a kind of store-room,
into which they gather, without order or discrimination, everything which
has a look of erudition,—I mean to say everything which may seem rare or
extraordinary and excite the wonder of other people. They glory in getting
together, in this archæological museum, antiques with nothing that is rich
or solid about them, and the price of which depends on nothing but fancy,
chance or passion.”

A display of erudition may obscure the truth, and bury it under its
weight, instead of bringing it out into relief. By concentrating the mind
on the material vestiges of the past, it may withdraw it from the
intellectual movement of the present, and give us a race of scholars, of
great merit, doubtless, but who move about like strangers among their
contemporaries.

Without a sense for the practical, and without ideas of an elevated
nature, a person may, indeed, be a man of erudition—he cannot be a
historian. As the proverb says, the forest cannot be seen, for the trees.
That this noble study may bear its best and most useful fruit; that is,
that it should preserve us against ambitious _formulas_ and destructive
chimeras, we must pursue another way.

“The world,” says Montaigne, “is incapable of curing itself. It is so
impatient of what burthens it, that it thinks only of how it shall rid
itself of it, without inquiring at what price. A thousand examples show us
that it cures itself ordinarily at its own cost. The getting rid of the
present evil is not cure, unless there be a general amendment of
condition. Good does not immediately succeed evil. One evil, and a worse,
may follow another, like Cæsar’s assassins, who brought the republic to
such a pass, that they had reason to repent the meddling with it.” Such,
too frequently, is the lot of those who, abandoning themselves to their
imagination, and without consulting the past, mix together promises of
liberty and the despotism of Utopias which they would impose on nations
under pretext of enfranchising them. Despising the work of the ages, they
think they can build upon a soil shaken by destruction and crumbled, until
it may be likened to moving sand.

Contempt for the past is associated with a passion for reform. Men think
of destroying that which should only be transformed. They condemn
everything that has been, unconditionally, and launch out towards a new
future. The suffering which has been gone through irritates and troubles
the mind. The work of pulling down is so easy, it is supposed that the
work of building up is equally so. Hence systems rise, as if the world
were to begin anew. The pride of liberty and of human action becomes the
principle of science; and, like all new principles, it pretends to
exclusive and absolute dominion. Rationalism governs; abstract philosophy
ignores the traditions and the requirements of the life of nations; and
finds now in it, as in geometry, nothing but principles and deductions.
The memory of recent oppression causes us to act as Tarquin did, and to
level down the higher classes instead of elevating the inferior. Liberty
and equality then govern by their negative side, instead of exercising the
positive and beneficent influence they should have, to develop all forces
to their utmost, to ennoble the mind, to give more elasticity to the soul
and greater vigor to thought, to give birth to those varied forms and to
that moral energy, which should bring us nearer to final equality in the
bosom of God.(6)

We forget that no one is born _free_, and that every one ought to endeavor
to become so,


    Feindlich ist des Mannes Streben
    Mit zermalmender Gewalt
    Geht der Wilde durch des Leben
    Ohne Rast und Aufenthalt,

    —_Schiller_.


and make himself worthy of liberty, by the exercise of manly virtue!
Because the form has been changed, we believe that we have changed human
nature.

It is easy to understand, why, where these ideas prevail, the study of the
past should be neglected and despised. Efforts are made to avoid it. Why,
it is asked, revive memories of oppression and misery? The old world is
wrecked. It is annihilated. Peace to its ashes! Or else, after it has been
destroyed, it is sought for again; and, under pretext of eradicating the
evils existing in it, an attack is made on the eternal basis on which
human society rests, on the laws not made by man, and which it is not
given to man to change. The world becomes one vast laboratory, in which
the rashest experiments are multiplied in number, in which mankind is but
clay in the hands of the potter which every pretended “thinker” may mould
at will, by giving him the false appearances of independence and of an
emancipated being.

And, indeed, if the will of man be all-powerful, if states are to be
distinguished from one another only by their boundaries, if everything may
be changed like the scenery in a play by a flourish of the magic wand of a
system, if man may arbitrarily make the right, if nations can be put
through evolutions like a regiment of troops; what a field would the world
present for attempts at the realization of the wildest dreams, and what a
temptation would be offered to take possession, by main force, of the
government of human affairs, to destroy the rights of property and the
rights of capital, to gratify ardent longings without trouble, and provide
the much coveted means of enjoyment. The Titans have tried to scale the
heavens, and have fallen into the most degrading materialism. Purely
speculative dogmatism sinks into materialism.

All is changed, both men and things. Yet we hear the same old style of
declamation. There are those who wish to plough up the soil which the
harrow of the revolution went over yesterday; and they believe they are
marching in the way of progress. They do not see that they have mistaken
their age, and that the bold attempts of the past have now come to possess
a directly opposite meaning. Without stopping to inquire to what side the
new world inclines, they repeat the same words, and swear _in verba
magistri_, and go the road of destruction, believing themselves to be
creating the world anew!

Nothing is more natural than that these excesses should produce other
excesses, in a contrary direction. Moved by hatred or fear of
revolutionary absolutism, nations seek an asylum in governmental
absolutism, or they retrograde towards the middle ages, and consider the
mutual bond of protection and dependence of that period as the ideal and
the realization of true liberty. History is no longer the organic
development of social life, and man, like a soldier that thoughtlessly and
capriciously has gone beyond his place of supplies, is obliged to retrace
his steps. The reaction is clearly defined. The past is opposed to the
present, not as a lesson to be turned to advantage, but as a model which
must be hastily accepted; and men become revolutionary in a backward
direction.

However, history, rigorously studied, knows neither these complaisances
nor these weaknesses. It does not descend to the apotheosis of a past
which cannot return again. The real historical spirit consists in rightly
discerning what belongs to each epoch. Its object is, by no means, to call
back the dead to life, but to explain why and how they lived. In harmony
with a healthy philosophy, it assigns a limit to the vagaries of arbitrary
will, beyond which the latter cannot go. It unceasingly calls us back,
from the heights of abstraction, to positive facts and things.

In the creation of systems, only one thing was wont to be forgotten, men,
who were treated, in them, like so many ciphers; for intellectual
despotism has this in common with all despotic authority. History teaches
us that we can reach nothing great or lasting, but by addressing ourselves
to the soul. If the soul decays, there can be no longer great thoughts or
great actions. Society lives by the spirit which inhabits it. It may, for
an instant, submit to the empire of force, but, in the long run, it
hearkens only to the voice of justice. It was thus that the greatest
revolution which history records, that of Christianity, was accomplished.
It addressed itself only to the soul; but by changing the hearts of men,
it transformed society entirely.

The violent struggle between an imperious dogmatism and an unintelligent
and mistaken attempt at a retrogressive movement is resolved into a higher
view, which permits the union of conservatism and progress. Violent
attempts and rash endeavors made, threatened to bring contempt on the
noblest teachings of philosophy, and to make them repulsive to man; and,
on the other hand, a blind respect for the institutions consecrated by
history threatened to stifle all examination and all freedom of judgment.

But a healthier doctrine has permitted us to understand, that we are
continuing the work of preceding generations; that we are developing the
germs which they successively sowed; that we are perfecting that which
they had only sketched, and that we are letting drop that which has no
support in the social condition of man. Every thing is connected; each
thing is linked to every other; nothing is repeated. The hopes of sudden
and total renovation, based on absolute formulas, vanish before the touch
of this solid study. This shows us how firm and unshaken are those reforms
which have begun by taking hold of the minds of men, the precise spirit of
which had penetrated into the souls of whole nations before they had
manifested themselves in facts.

Law and Economy constitute a part of the life of nations in the same way
that language and customs do. The power of history in no way contradicts
the supremacy of reason.




II.


These two tendencies, the rationalistic and the historical, are everywhere
found face to face. They carry on an eternal warfare, which is renewed in
every age, under new names and new forms. Accomplished facts and
renovating thought divide the world between them. They at one time
moderate its speed, and at others, spur it on its way. But these two
forces, instead of compromising the destinies of humanity by their
opposing action, maintain and balance them, as the contrary impulses given
by the hand of the Great Architect has peopled the universe with worlds
which gravitate in space.

Victor Cousin, a very competent authority on the subject, has said that
the history of philosophy is the torch of philosophy itself. The
remarkable works which have enriched it in this direction are well known.
History, on its side, is enlightened by philosophy. Thus, it teaches us
not to despise facts, but at the same time not to be slaves to precedent.
It does equal justice to the incredulous and to the fanatic, to too supple
practitioners and to intractable theorizers.

We may doubtless say with Henri Klimrath, who, in connection with a few
others, had undertaken the work of the restoration of historical study in
its application to French law, that there is an absolute, true, beautiful,
good and just, the _ratio recta summi Jovis_,(7) the supreme reason
founded in the nature of things.(8) The eternal truths taught by
philosophy constitute the higher law, a law which dates not from the day
on which it was reduced to writing, but from the day of its birth; and it
was born with the divine intelligence itself. “_Qui non tum denique
incipit lex esse, cum scripta est, sed tum cum orta est. Orta autem simul
est cum mente divina._”(9) And Troplong rightly adds: “There are rules
anterior to all positive laws. I cannot grant that the action of
conscience and the idea of right are the work of the legislator. It is not
law that made the family, property, liberty, equality, the idea of good
and evil. It may, indeed, give organization to all these things, but in
doing so, it is only working on the foundation which nature has laid, and
it is perfect in proportion as it comes nearer to the eternal, immutable
laws which the Creator has engraved on our hearts. What changes is not the
eternal law, the revelation of which comes to man incessantly and by a
necessary action, but the form in which humanity clothes it, the
institutions which man builds on its immutable foundation.”(10)

We therefore believe in the law of nature, and regret that our opinion is
not shared by Mr. Roscher, at least that he does not explicitly enough
express his faith in it, nor apply it broadly enough in the beautiful work
which we are happy to render accessible to the French public.(11) We
believe in it in its philosophical sense, and not simply in the juridical
sense attached to it by Ulpian. “Let us not,” observes Portalis, “confound
the physical order of nature, common to all animated beings, with the
natural law which is peculiar to man. We call _natural law_, the
principles which govern man considered as a moral being, that is, as an
intelligent and free being, intended to live in the society of other
beings, intelligent and free like himself.”(12) Ulpian’s famous tripartite
division, of natural law, the law of nations, and the civil law, is proof,
from the meaning he attaches to them, either of a misunderstanding or of
the imperfect idea which the Stoics had conceived of the essence of
natural law. In vain Cujas exhausted all the resources of his noble
intellect to explain it.(13)

It is necessary to draw a distinction between physical law and the law
(_droit_) of intelligent beings. Doubtless the existence of men as well as
that of animals is limited by time. They both live and die; but the soul
escapes the necessities of material nature.

The moment there is question of _right_, intelligence governs, reason
comes into play, and the science of right and wrong is appealed to as a
guide. Hence the _natural_ law of the human species is not the physical
law which all creatures obey.

It was necessary for us to insist upon these principles. It was necessary
for us to show that there is a law independent of positive and local law,
a law which is not the expression of an arbitrary will, but an emanation
from the nature of things.(14)

Hence come the features in common which we meet with everywhere, and the
variable forms which develop law in harmony with the special conditions of
each civil society.

We must descend into the very depths of human nature to discover these
eternal and permanent laws; and if the mere effort of the mind should not
reach them directly, they might be discovered in the phenomena of the life
of nations. History affords us the counter-proof and confirmation of the
philosophical doctrine.

The development of society does not afford a mathematical expression of
these higher truths. It gives them a form which is unceasingly modified in
the written law. The person who discovers in them nothing but an absolute
rule, looks upon the changes as evidences of caprice and error. He alone
understands the revolutions of things who knows their cause and the
necessity which produces them.

Solon was right when he gave the Athenians not the most perfect laws, but
the best which they could bear.

It is not in the attempts contemporary with the infancy of society, or
nearly so, that we are to look for the complete realization of the
precepts of the natural law; for principles obey the rule laid down by
Aristotle. “The nature of each thing is precisely that which constitutes
its end; and when each being has attained its entire development, we say
that that is its own proper nature.”(15)

The ideas of natural law are purified in proportion as society grows
enlightened and free; but the truth appears only successively in the
phases it passes through. It allows us to grasp one aspect of itself after
another, but does not surrender itself entirely, at any one moment, to the
investigations of the historian or the jurisconsult.

History and philosophy interpenetrate and complement one another.




III.


The two schools, that of philosophy and that of history have met in our
day, in the field of law. Who is there that does not remember the great
and noble contest carried on, about the beginning of this century, between
two descendants of Frenchmen who had sought a refuge in Germany, and who
united in their own persons, and in so marvelous a manner, the different
aptitudes of the country they owed their origin to, and of the land that
gave them birth,—between Thibaut and Savigny?

It would be difficult to find a scientific question of a higher character,
debated by champions more worthy to throw light upon it.

The _Code Napoléon_ had appeared. It had, to use Rossi’s happy expression,
transferred into law the social revolution produced by the destruction of
privilege. It was the practical formula expressive of the conquests which
had been made.

The philosophy of the eighteenth century had previously inspired the
Prussian Code. And yet, it was on the question of codification that this
memorable controversy was carried on. The two principal combatants, while
manfully battling, the one against the other, continued to hold each other
in high esteem, and the profound study of law was developed in the midst
of the _melée_.

We cannot delay long on this subject, nor analyze the arguments advanced
by Thibaut(16) and Savigny.(17) What interests us at present is not so
much the question debated, as the intellectual movement to which it gave
birth. Savigny sustained the ancient law, Thibaut attacked it. Numerous
and distinguished jurisconsults ranged themselves on the one side and the
other. A new school grew up which, with the most brilliant success, made
law throw light on history and history on law.

The application of the historical method to the study of law was
productive of the most happy results.

Without acknowledging it to themselves, the chiefs of the contending
parties were each obeying a political impulse. Savigny was by his birth
and his tastes carried into the camp of conservatism; Thibaut, led by his
convictions, into the liberal ranks. Nevertheless, the natural elevation
of their genius preserved them from all exaggeration. The glorious
defender of tradition preserved a liberal spirit, and the ardent advocate
of reform desired no upheaval.

In what more nearly concerns the question with which we are now occupied,
Savigny—while he maintained that law was something contingent, human,
national; and while he brought out into relief the practical and exalted
character of its successive developments which introduced reform and
guarded against revolution—developments which, not confiding in the letter
of the written law, unceasingly feed the living and created law, that law
called in the energetic language of a great jurisconsult, a law _écrit es
coeurs des citoyens_—is far from denying the importance of a high and
healthy philosophy which directs man in the uninterrupted labor to which
he is called, in the sphere of jurisprudence.

Men can no more renounce law than language, the forms of which last they
have gradually modified in order to better translate their thoughts into
words. The legislator’s task is the successive elaboration of obligatory
provisions. He will sometimes oppose and sometimes second the natural
progress of law; but, in doing so, it will ever be necessary for him to
ascend to the nature of things, and grasp their relations, if he would not
go astray in practice, or lose himself among the successive and partial
changes to which the illustrious Berlin professor would confine the
legitimate ambition of legislative power. To go beyond this, in an age
like ours, seemed to him to be a work of destruction. However, far from
denying the influence of thought, and therefore of philosophy, acting
within its sphere, Savigny invokes its fertile aid.

Thibaut, on the other hand, with more confidence in the powers of the
spirit of modern times, did not believe a good codification to be
impossible. His starting point had been a cry for national independence.
He well knew how much veneration was due those institutions which were the
slow and progressive work of national genius, and what was the power they
possessed. He wished, therefore, to reform, not to abolish them. He well
understood that the greatness of the _Code Napoléon_ itself, and the
respect which it inspired were due to the fact that its roots ran deep
into the soil of the past, even while the modern idea it contained shone
like a bright light in the world of things. Hence, without contesting the
value of history, he refused to acknowledge its right to exclusive
reign.(18)

The life and activity prevailing in the study of law, and the brilliant
successes that study has recently achieved, are due, in great part, to the
illustrious representatives of the historical school. We may add, here,
that the French historical school, which has so worthily inherited the
spirit of Montesquieu, has not achieved less in this direction than the
older German school. It has reconciled the opposing but not mutually
hostile, tendencies of Savigny and Thibaut. It has conscientiously
scrutinized facts to show their concatenation, and to allow their meaning
and bearing to be clearly grasped. A French jurisconsult, who is at the
same time our highest authority in the natural law, opened the way by his
excellent essays on the necessity of reforming the historical studies
applicable to law; on the influence of the legists on French
civilization(19) etc.; and by his prefaces, equal in value to whole works,
on hypothecation, sales, loans, partnership, charter-parties etc. He may
truly be said to have renewed the ancient and prolific alliance of history
and law.

Instead of pursuing a pure abstraction, this historical school has
confined itself to the knowledge of the life of man and the evolution of
society. It has applied to law, with what success is well known, the
principle which has regenerated the social sciences, philosophy, letters,
history, Political Economy,—sciences which are, so to speak, different
provinces of one intellectual empire, which interpenetrate one another
without being confounded one with another, between which no jealous
barrier should be raised, and between which reciprocity of exchange should
be encouraged by the suppression of factitious duties, which have existed
only too long.




IV.


We need not dwell any longer on the character of the historical method as
applied to law, nor on the services it has already rendered. On this
point, there can be no two opinions. And, if any one wonders that we
should speak of it at all, in a work on Political Economy, we can only say
to him, that we have done so to call his attention to an instructive
precedent, and for the further reason that the same method is peculiarly
well adapted to the study of Political Economy. Its advantages are the
same here, its tendencies the same, and the same motives exist to induce
us to use it here. In describing the successive phases of the question in
the case of law, we have performed an important part of the task we had
imposed upon ourselves, of vindicating the employment of the historical
method, in the sphere of Political Economy.

The study of history is the best and most powerful antidote against social
romances and ideal fancies. François Beaudouin was right when he said:
“_Cæca sine historia jurisprudentia_;” and we are very sure that, without
history as an element in it, Political Economy runs a great risk of
walking blindfold.

The human mind has need of being able to know where it is at any moment,
surrounded, as it is, by so many roads, running in so many different
directions. It ought to account to itself for its progress, its deviations
from the right path, and for its mistakes.(20) History alone can throw any
light on questions which are not simply intellectual curiosities, but
which, rather, are most deeply concerned with the vital interests of
society. It confirms the noble teachings of philosophy, by showing how our
life is made up of one unchanging tissue of relations, and how man, even
if he may vary their colors, and change their design, cannot renew their
texture.

It teaches us to admire nothing, and to despise nothing, beyond measure.
It enlightens us concerning questions of a very complicated nature.
Witnessing the evolutions of humanity, following the development of social
facts and theories, we better discern principles, and grow wary in
relation to the alchemists of thought, who imagine that society may be
made to undergo a transformation between the rising and the setting of the
sun.

As there is a natural law, so, too, there are certain principles of
Political Economy which emanate from philosophy, and may be reduced to one
supreme principle; that of liberty and responsibility. The domain of
Political Economy is the _labor_ of generations. But we reject with all
our strength, the materialistic doctrine which, inexplicably confusing
matters, endeavors to assimilate ideas so distinct as intelligence and
things; and which would descend so low as to employ the dynamometer to
measure the creative force of man and its results, and which sees only
figures where there is a living soul.

Man is an intelligent being, served by organs,(21) by _personal_ organs,
with which the Creator has endowed him, by giving him a body provided with
marvellous aptitudes, by _external_ organs which he finds in nature
subjected to his power. Man was created in the image of God, say the
Scriptures, and these words contain a deep meaning. He alone, of all
terrestrial beings, possesses a spark of divine intelligence. He alone has
been called to pursue the magnificent work of creation, by giving a new
face to a world to which he cannot add so much as an atom.

_Labor_ is nothing but the action of spirit on itself and on matter.(22)
Hence its dignity and grandeur. Hence, also, the difficulties in the way
of economic studies; since, to consider them only as concerned with
questions of material production, is to forget that the products of
industry are made for man, not man for industrial products; to ignore the
close relationship between their fruitful investigations and the whole
circle of the moral sciences; to debase them and to mutilate them.

From the moment that science concerns itself with man only, and the action
of the mind; from the moment that its end becomes not simply material
enjoyment, but moral elevation, the questions it discusses become indeed
more complex, but the answer, when found, is more prolific in results.
Wealth, then, is treated only as one of the forces of civilization. Other
interests than purely material ones occupy the first place. This
matter-of-fact philosophy which, according to Bacon’s precept, seeks to
improve the conditions of life, bears in mind, that the most fruitful
source of material development lies in intellectual development. It humbly
recognizes that it is not the first-born of the family, and draws new
strength from this avowal. From the moment that it is the mind which
_produces_ and which governs the world, intellectual and moral perfection
become the cause and effect of material progress. “But seek ye first the
kingdom of God and his righteousness, and all these things shall be added
unto you.”

The increase of production, then, appears an instrument of elevation in
the moral order.(23) It is energy of soul, intelligence and manly virtue
which constitute the chief source of the wealth of nations; which create
it, develop it, and preserve it. Wealth increases, declines, and
disappears with the increase, decline and disappearance of these noble
attributes of the soul.

Labor is the child of thought. Nothing happens in the external world which
was not first conceived in the mind. The hand is the servant of the
intellect; and its work is successful, beautiful or useful in proportion
to the activity and development of the intellect, and in proportion as the
just, the beautiful and the good exert their power over it.

Production is, therefore, not a material, but a spiritual, work. How,
then, can acts and their morality be separated? How not understand that
the market of labor has its own distinct laws, and that education, even
from a material stand-point, becomes the highest interest and the most
important duty of society, since on it depends the efficiency of labor?

From the time that, after a long series of years, the doctrine of
Christianity had permeated the law of the civilized world; from the time
that the teaching of Paul, that all men are children of one Father, took
form and body, and that the principle of the equality of all men before
their Maker, was supplemented by the doctrine and by the practice of that
equality before the laws, the thinking masses have endeavored to discover
the wherefore of their actions, and the why of their sufferings. They have
called the past to account, and inquired why they have obtained so limited
a share.

The people, therefore, think; and it is, therefore, a matter of importance
that they should think aright. It is of importance, that they should be
guarded against fallacious Utopian promises. Henceforth, there is no
security for the stability of the world but in the contentment of minds.
There is no rest for mankind, unless men will understand the conditions of
their destiny; unless, instead of running,


    “Toujours insatiable et jamais assouvis,”


after the intoxicating cup of material enjoyment—for wants not governed by
the intellect and the heart are infinite in number, and the gratification
of one gives birth to another—they submit to the law of sacrifice, and
give play to the noblest faculty with which the Creator has endowed us,
moral empire over self.

We shall meet on this road, hard of ascent, not only peace of soul, but
goods, more real and more numerous, than those with which the allurements
of error would dazzle our eyes. The greatest obstacles to be overcome are
not material ones, but moral difficulties. As Franklin says, in substance,
he that tells you you can succeed, in any way but by labor and economy, is
a quack.

But labor is more productive in proportion as it is more intelligent, as
hand and mind keep pace with each other, as good moral habits generate
order and voluntary discipline.

Economy is sacrifice, binding the present to the future, widening the
horizon of thought, inspiring foresight, lengthening the lever of human
activity, by providing it with new instruments.

Life ceases to be a worry about how the body shall be sustained, and the
material world becomes the shadow of the spiritual. The former is made to
serve the latter, and man’s free effort lifts him into a higher region of
thought, and into a larger field of action. The more mind there is put
into a piece of work, says Channing, the more it is worth.

We, men of to-day, are lookers-on at a marvelous spectacle. Steam furrows
the earth. Industry has taken an immense start. Mechanical force bends the
most rebellious materials. Chemistry, physics and the natural sciences are
discovering a new world. But whence all this? What is the principle of
this new life? We answer: intellectual and moral progress. Mind has grown;
the soul has been expanded. God has permitted man to be free, and
furnished him with the means to be so.

Thus man, as Mignet has said, becomes that mighty creature to whom God has
given the earth for the vast theater of his action, the universe as the
inexhaustible object of his knowledge, the forces of nature for the
growing service of his wants, by allowing him, by ever increasing
information, to obtain an ever increasing amount of well-being.

Man is free.—1789 put in action the sublime precept of the gospel. He
holds his destiny in his own hands. But the rights which he enjoys impose
new duties on him. If _equality_ be the sentiment which predominates in
our day, we should take care not to confound it with the leveling of
Communism. Nor is it externally to us, but within ourselves, that it
should be developed, by intellectual and moral culture.

History preserves the student from being led astray by a too servile
adherence to any system. It exposes the folly of the “social contract,”
and of the idyllic dreams of the advantages of savage life. It shows that
nature, instead of being prodigal of her treasures, distributes them with
a niggardly hand, and that it is necessary to conquer her by labor,
intelligence and patience before we can control her.

It shows us human liberty growing stronger every day, thanks to moral and
intellectual progress, supported by the two powerful props of property,
the complement of man, the material reflection of his spiritual power; and
capital, the fruit of abstinence, the symbol of moral power and the result
of enlightened activity.

History walks with a firm step, because it feels secure in a knowledge of
the laws of human nature, and in its experience of the successive
manifestations of social life. Instead of the vagueness of ideal
conceptions, it allows us to grasp and to appreciate what is real in life.
It does not confine itself to the study of man. It makes us acquainted
with _men_, whose wants extend and are ennobled in proportion to the
perfection of their faculties. The feelings and the intellect are
simultaneously developed in man. The savage is the most egotistical of
men.

Hence, we believe that Political Economy cannot dispense with the services
of morals and philosophy, of history and law; for these are branches of
one common trunk, through all of which the self-same sap circulates.




V.


The isolation of the theory of Political Economy is peculiar to our own
day. In more remote times, we find this study confounded with the other
moral sciences, of which it was an integral part. When the genius of Adam
Smith gave it a distinct character, he did not desire to separate it from
those branches of knowledge without which it could only remain a bleached
plant from the absence of the sunlight of ethics.

We must renounce the singular idea,(24) that thousands of years could pass
away without leaving any trace of what enlightened men had thought and
elaborated in the matter of Political Economy, among so many nations, and
that people should never have thought of cultivating this rich
intellectual domain, while in every other direction, it is easy for us to
ascend by a road already cleared up to the most remote antiquity.

It has already been acknowledged, that the _classic domain_, fertilized by
intellectual culture on a large scale and on a small one, was exceedingly
rich in valuable indications, although they do not present themselves
under the distinct form, which later affected the different branches of
public life.

As to the pretended _primitive simplicity_ of the middle ages, which it is
claimed, prevailed during that period, a species of economic vegetation,
those who maintain it forget the long series of communistic theories
which, at near intervals, found expression in many a bloody struggle, and
whose repression required the combined efforts of Church and State.

Doubtless, it is not in their modern forms that the elements of
politico-economical science are to be found, in the past. But when we
succeed in reuniting the scattered and broken parts; when we have made our
way into the customs, decrees, ordinances, capitularies, laws and
regulations of those times; when, so to speak, we come, unaware, upon the
life of nations, in the most ingenuous and confidential documents which
reflect it most faithfully because most simply, we may well be astonished
at the results obtained. Where we expected, perhaps, to find only
erudition, we reap a rich harvest of lessons which are all the more
valuable for being disinterested.

Legislative and administrative acts frequently develop real economic
doctrines. It is easy to discover in them the onward course of a theory
which plunges directly into practical applications.

What results might we not expect from these efforts, if the genius of
investigation and of divination, which has so elevated historical studies
in our day, should have an observing and penetrating eye in this
direction! How limited was the field on which Guérard erected the
scientific monument which he has left us in his _Polyptique d’Irminon_;
and how precious are the lessons he leaves us, since we have here to do,
not with the history of professed doctrines or unlooked-for events, but
with the historical development of economic society which shows us the
living march of principles.




VI.


Political Economy is not, as we have just said, a new science. It has been
a distinct science only a short time. Until the eighteenth century, it was
confounded with philosophy, morals, politics, law and history. But it does
not follow, that, because it has grown so in importance, as to deserve a
place of its own, its intimate relationship with the noble studies which
had until then absorbed it should cease. There is another consequence also
to be deduced from this. From the moment that Political Economy ceases to
be considered a new science, it finds a long series of ancestors behind
it, since it is compelled to investigate a past to which so many bonds
unite it. This duty may increase its difficulties, but, at the same time,
it singularly adds to the attractions of a study which, instead of
presenting us only with the arid deductions of dogmatism, comes to us with
all the freshness and all the color of life.

We may allow those who make Political Economy simply a piece of arithmetic
to ignore these retrospective studies and their importance; for
mathematics has little to do with history. But it is otherwise with the
life of nations. These would discover whence they come, in order to learn
whither they are tending.

They are not obeying a vain interest of curiosity, as J. B. Say supposed,
when, in sketching a short history of the progress of Political Economy,
he said: “However, every kind of history has a right to gratify
curiosity.” It is a thing to be regretted, that this eminent thinker could
thus ignore one of the essential elements of the science to which he
rendered such great and unquestioned services. A sense for the historical
was wanting in him. “The history of a science,” he writes,(25) “is not
like the narration of things that have happened. What would it profit us
to make a collection of absurd opinions, of decried doctrines which
deserved to be decried? It would be at once useless and fastidious to thus
exhume them in case we perfectly knew the public economy of social bodies.
It can be of little concern to us to learn what our predecessors have
dreamed about this subject, and to describe the long series of mistakes in
practice which have retarded man’s progress in the research after truth.
Error is a thing to be forgotten, not learned.” As if that which was once
to be found in time is not to-day to be found in space; as if there ever
was an institution that did not have its _raison d’ etre_ and had not
constituted a resting place in the search after a higher truth or of a
more intelligent and salutary application of an old one! There are a great
many actual systems and a great many present facts which can be understood
only by the help of history; and how frequently would not an acquaintance
with history serve to keep us from taking for marvelous inventions the
antiquated machinery of other ages, whose only advantage and only merit
are that they have remained unknown. How much of the pretended daring of
innovators has been old trumpery which the wisdom of the times had cast
off as rubbish. Besides, as Bacon has said: “Verumtamen sæpe necessarium
est, quod non est optimum.”




VII.


It is not the result of mere chance that the greatest economists have been
both historians and philosophers. We need only mention Adam Smith, Turgot,
Malthus, Sismondi, Droz, Rossi and Léon Faucher. It is too frequently
forgotten that the father of modern Political Economy, Adam Smith, looked
upon the science as only one part of the course of moral philosophy which
he taught at Glasgow, and which embraced four divisions:

1. _Universal theology._—The existence and attributes of God; principles
or faculties of the human mind, the basis of religion.

2. _Ethics._—Theory of the moral sentiments.

3. _Moral principles relating to justice._—In this, as we learn from one
of Adam Smith’s pupils in a sketch preserved by David Stewart, he followed
a plan which seems to have been suggested to him by Montesquieu. He
endeavored to trace the successive advances of jurisprudence from the most
barbarous times to the most polished. He carefully showed how the arts
which minister to subsistence, and to the accumulation of property, act on
laws and governments, and are productive of advances and changes in them
analogous to those they experience themselves.

In the first part of his course, as we learn from the same authority, he
examined the various political regulations not founded on the principle of
justice but in expediency, the object of which is to increase the wealth,
the power and the prosperity of the state. From this point of view, he
considered the political institutions relating to commerce, finance, the
ecclesiastical and military establishments. His lectures on the different
subjects constitute the substance of the work he afterwards published on
the wealth of nations. A pupil of Hutcheson, Adam Smith always applied the
experimental method, “which, instead of losing itself in magnificent and
hazardous speculations, attaches itself to certain and universal facts
discovered to us by our own consciousness, by language, literature,
history and society.”(26) Before taking the professorship of philosophy,
Adam Smith had taught belleslettres and rhetoric in Edinburgh, in 1748. He
had written a work on the origin and formation of languages; and it was
because he had profoundly studied the moral sciences that it was given to
him to inaugurate a new science and to become a great economist. Mr.
Cousin has laid great stress on Adam Smith’s taste and talent for history.
“Whatever the subject he treats, he turns his eyes backward over the road
traversed before himself, and he illuminates every object on his path by
the aid of the torch which reflection has placed in his hand. Thus, in
Political Economy, his principles not only prepare the future but renew
the past, and discover the reason, heretofore unknown, of ancient facts
which history had gathered together without understanding them. It is not
saying enough to remark that Adam Smith possessed a great variety of
historical information; we must add that he possessed the real historical
spirit.” Thanks to this eminent faculty of his, the Glasgow philosopher
acquired great influence over minds. In 1810, when the French empire had
reached the zenith of its greatness, Marwitz wrote: “There is a monarch as
powerful as Napoleon: Adam Smith.” We need not recall Turgot’s historical
researches.

Malthus’ chief title to distinction, his work on Population, is as much a
historical work as a politico-economical one; and it is not sufficiently
known that he was professor of history and Political Economy in the
college of the East India Company at Aylesbury.

We need say no more on this subject. The works of the other writers whom
we have mentioned are too well known to permit any one to think that they
excluded history and moral science from the study of Political Economy.
Hence the school which has risen up in Germany,(27) and which is
endeavoring to do for Political Economy what Savigny, Eichhorn, Schrader,
Mommsen, Rudorff, and so many other illustrious scholars have done for
jurisprudence, cannot be rightly accused of rashness. It has done nothing
but unfurl the noble banner borne by the most venerated masters of the
science.




VIII.


At the head of this school stands William Roscher, professor of Political
Economy at the University of Leipzig, whose excellent work, The Principles
of Political Economy, in which he follows _the historical method_, we have
just translated. William Roscher is (1857) scarcely forty years of age. He
was born at Hanover, October 21, 1817. His laborious and simple life is
that of a worthy representative of the science. “You ask me,” he wrote us
recently, “to give you some information concerning the incidents of my
life. I have, thank God, but very little to tell you. Lives whose history
it is interesting to relate are seldom happy lives.” He confined himself
to giving us a few dates which are, so to say, the landmarks of a career
full of usefulness. Roscher, from 1835 to 1839, studied jurisprudence and
philology at the universities of Göttingen and Berlin. The learned
teachers who exercised the greatest influence on his intellectual
development were the historians Gervinus and Ranke, the philologist K. O.
Müller and the Germanist Albrecht. It is easy to see that he went to a
good school, and that he profited by it. He was made doctor in 1838;
admitted in 1840 as _Privat-docent_ at Göttingen; appointed in 1843
professor extraordinary at the same university, and called in 1844 to fill
the chair of titular professor at Erlangen. Since 1848 he has acted in the
same capacity in the University of Leipzig, where he was for six years
member of the Poor Board, where he teaches also in the agricultural
college. His fame has grown rapidly. Many of the German universities have
emulated one another for the honor of possessing him, but he has not been
willing to leave Leipzig. His first remarkable work was his doctor’s
thesis: _De historicæ doctrinæ apud sophistas majores vestigiis_, written
in 1838. In 1842, he published his excellent work, which has since become
classical: “The Life, Labors and age of Thucydides.”(28) From that time,
important works, all bearing the stamp of varied and profound scientific
acquirements, and of an erudition remarkable for sagacity and elegance,
have followed one another without interruption. In 1843, he treated the
question of luxury(29) with a master hand, and laid the foundation of his
great work—only the first part of which has thus far appeared—at the same
time tracing on a large scale the programme of a course of Political
Economy according to the historical method.(30) In 1844, he published his
historical study on Socialism and Communism,(31) and in 1845 and 1846, his
ideas on the politics and the statistics of systems of agriculture. He is,
besides, author of an excellent work on the corn-trade;(32) of a
remarkable book on the colonial system;(33) of a sketch on the three forms
of the state;(34) of a memoir on the relations between Political Economy
and classical antiquity;(35) of a work of the greatest interest, on the
history of economic doctrines in England in the sixteenth and seventeenth
centuries—a work full of the most curious researches;(36) of a book on the
economic principle of forest economy,(37) and lastly, of the great work,
the first part of which we have translated, under the title of The
Principles of Political Economy, and which is to be completed by the
successive publication of three other volumes, on the Political Economy of
Agriculture, and the related branches of primitive production, the
Political Economy of Industry and Commerce, and one on the Political
Economy of the State and the Commune. This work, when completed, will be a
real cyclopedia of the science.(38)

Side by side with William Roscher, we must mention a young economist,
Knies, formerly professor at the University of Marburg, but whom political
persecution compelled to accept a secondary position at the gymnasium of
Schaffhausen, for a time, and who fills, to-day, in the University of
Freiburg, in Breisgau, a position more worthy of his great talent. We
hope, in a work which we intend to publish, on Political Economy in
Germany, to make the public acquainted with the works of this writer. They
deserve to attract the most serious attention. We know of few works which
equal his Political Economy, written on the historical method.(39) We
shall also have something to say of another economist, formerly professor
at Marburg, a victim, also, of the power of the elector of Hesse,
Hildebrand, now professor at the University of Zurich. His
National-Œkonomie(40) is a book replete with interest, and we have nowhere
met with a better criticism of Proudhon’s system, than in its pages. If
the new school had produced but these three men, it would still have left
its impress on the history of the science.

Other works, no less important, will claim our attention in the book to
which we have already devoted many years of labor. If we carry out our
intention, we shall review the works of a great many scholars, of great
merit, whose names only are, unfortunately, known outside of Germany. The
works of Rau, of Hermann, of Robert Mohl, of Hannsen, Helferich, Schütz,
Kosegarten, Wirth etc., are a rich mine, from which we hope to draw much
valuable information. Nor shall we neglect the original productions of J.
Moser, the Franklin of Germany, nor the quaint, but sometimes striking,
ideas of Adam Müller. Lastly, our learned friend, Professor Stein of
Vienna, will afford us an opportunity to show forth the merit of important
and extensive works, animated by the philosophic spirit. For the present,
we must confine ourselves to a view of the application of the historical
method to Political Economy.

There is a rather widespread prejudice existing against this order of
works, a souvenir of the struggle carried on formerly, between Thibaut and
Savigny, which inclines people to suppose that the historical school leans
towards the political doctrines of the past, and that it is hostile to the
liberal spirit of modern times. Nothing can be farther from the truth. The
names of Roscher, Knies and Hildebrand are sufficient to remove this
prejudice. Their works, inspired by an enlightened love for progress, do
not allow of such a misconstruction. The historical point of view does not
consist in the worship of the past, any more than in the depreciation of
the present. It does not view the succession of phenomena as a fluctuation
of events without unity or purpose. On the contrary, the historical method
harmonizes wonderfully well with the wants of genuine progress. The
changes accomplished bear testimony to the free and creative power of man,
acting within the limit permitted to it by the degrees of intelligence
reached, of the development of morals, and of individual liberty. The
philosophy of Political Economy, which is the result of this calm
teaching, free from the passions of party—for science acknowledges no
adherence to party—is like that of law, opposed to the, more or less,
ingenious or rash dreams, which build the world over again in thought. In
showing how, at all times, humanity has understood and applied the
principles which govern the production of wealth, it may say, with the
Roman jurisconsult: “Justitiam namque colimus ... æquum ab iniquo
separantes ... veram nisi fallor philosophiam, non simulatam affectantes.”
“The human mind,” says Rossi, “endeavoring to attain to a knowledge of
itself, estimating its strength, taking a method, and applying it with a
consciousness of its mode of procedure to the knowledge of all things;
such is philosophy. Without it, there is no science in any branch of human
knowledge.” Thus do we rise, with the aid of a critical mind, by careful
investigation and great sagacity, to the truths founded on observations
made.




IX.


There is another method, which, starting out from principles, evident of
themselves, develops science by way of conclusions drawn, after the manner
of the geometricians. The apparent severity and simplicity of this method
are very seductive, and very dangerous, when we have to deal not with
figures, but with men; when the varied, complex and delicate exigencies
which accumulate when human nature comes into play do not exactly square
with the formula; and, when instead of dealing with abstractions, we have
to tackle realities. One of our venerated teachers, the illustrious Rossi,
thought he might remove the difficulty by drawing a distinction between
_pure_ Political Economy and _applied_ Political Economy. It is not
without a certain amount of hesitation that we dare differ with so high an
authority; but confess we must, this distinction is far from satisfying
us. The doubt it has left in our mind has been the principal cause which
has inclined us to the historical method. “Rational Political Economy,”
says Rossi, “is the science which investigates the nature, the causes and
the movement of wealth, by basing itself on the general and constant facts
of human nature, and of the external world. In applied Political Economy,
the science is taken as the mean. Account is taken of external facts.
Nationality, time and place play an important part.”

Let us for a moment accept these definitions; what is the consequence?
That there are two sciences, the one of which, purely speculative, has
more to do with philosophy than with the permanent conflicts which agitate
the world; the other of which could not alone furnish us with rules in
practice, nor with a formulary for the measures to be taken in a given
case, since such a pretension would be both vain and ridiculous, but which
would inform the practical judgment of men charged with the solution of
the numberless difficult and complicated questions which come up every
day. If pure science refuses to interfere in the affairs of this world;
if, as the learned originator of the doctrine we are just now considering
gives us to understand, it would compromise the solution of questions by
the intoxication of logic, and the ambition of perfect system; if,
consequently, it is to be worshipped like a motionless and inactive
divinity, how could this platonic satisfaction suffice us? Would not the
opponents of economic doctrines be disposed to acknowledge all the
principles, provided the consequences to be drawn from them were left to
themselves; and would they not come to us, bristling with arguments drawn
from the circumstances of nationality, time and space, to refute the
possibility of applying pure science?


    On ne vaincra jamais les Romains que dans Rome.


This, therefore, is the ground we must explore. We must develop applied
Political Economy which takes cognizance of external circumstances. To do
this, no one will question that the best and most decisive of methods is
the historical, which concerns itself with time, space and nationality,
and which leads to proper reformation where reformation is wanted.

Moreover, principles will be no less firmly established by historical
induction than by dogmatic deduction, and, moreover, science will be
inseparable from art. We are not of those who deny principles, or who
challenge them. What we desire is, that they should not be worshiped as
fetiches, but that they should enter into the very life-blood of nations.

Further: the abstract deductions of pure science do not leave us without
disquietude, since they treat man much more like a material than like a
moral force. Under the vigorous procedure of speculative mathematics, man
becomes a constant quantity for all times and all countries, whereas he
is, in reality, a variable quantity. All the elements put in play are
ideal entities, the reverse of which we find in poetry, where


    Tout prend un corps, une ame, un esprit, un visage!


and where everything loses the character of life, and is transformed into
inanimate units. Man is something different from the sum of the services
he may be made to render, and from the sum of enjoyments which may be
procured for him. We must not run the risk of lowering him to the level of
a living tool; and from the moment that we are required to take his moral
destiny into account, what becomes of abstract calculation?




X.


We have been wrong, says Rossi, in reproaching Quesnay for his famous
_laissez faire, laissez passer_, which is pure science. We, also, are of
opinion that the reproach was ill founded, for it proceeded from a wrong
conception of the principle itself. But it seems to us that, far from
condemning this doctrine in its serious application, the historical method
may serve to explain and to justify it. Employing less of rigidity and
dryness in form, it reaches consequences more in harmony with social life.
But it is not to be imagined that we do not meet in this way with many
ancient and glorious precedents. The great principles of industrial
liberty, as well as those of commercial liberty, originated in France.
Forbonnais was right when he said: “We may congratulate ourselves on being
able to find, in our old books and ancient ordinances, wherewith to
vindicate for ourselves the right to that light which we generally
supposed to have been revealed to the English and Dutch before us.” The
further Forbonnais carried his researches into our annals, the greater the
number of traces of opposition to the prejudices in favor of exclusion and
monopoly, so long made principles of administrative policy, did he
find.(41)

The famous axiom, _laissez faire_, and _laissez passer_, the subversive
tendencies of which people affect to condemn, was not invented by Quesnay.
He only gave a scientific bearing to what was the inspiration of a
merchant called Legendre. The latter, consulted by Colbert on the best
means of protecting commerce, dropped these words which have since become
so celebrated.

We must not lose sight of their real meaning, nor misunderstand the
intention which dictated them. What Quesnay said was this: “Let everything
alone which is injurious, neither to good morals, nor to liberty, nor to
property, nor to personal security. Allow everything to be sold which has
been produced without crime.” And he added: “Only freedom judges aright;
only competition never sells too dear, and always pays a reasonable and
legitimate price.” Far from being the absence of rule, liberty is the rule
itself. To _laisser faire_ the good is to prevent evil.(42)

There is need of institutions to complete the exercise of the independence
acquired by labor, and of laws to regulate that exercise. The _laisser
faire_ and _laisser passer_ of economists is, in no way, like the absolute
formula, which some have denounced and others sought to utilize, as
relieving authority of all care and all intervention.

To understand this maxim aright, we must go back to the oppressive regime
of ancient society. Quesnay’s formula was, first of all, a protest against
the restraints which hampered the free development of labor. But it did
not tend to abrogate the office of legislator, nor to deprive society or
the individual of the support of the public power which watches over the
fulfillment of our destiny.

It may have seemed convenient to find in the gravity of a
politico-economical principle, an excuse for the sweets of legislative and
administrative _far niente_, but it is generally conceded that the role of
authority has grown, rather than diminished, under the regime of the
liberty of labor. The task is, in our days, a hard one, both for
individuals and nations; for liberty dispenses its favors only to the
masculine virtues of a laborious and an enlightened people.

Liberty is not license. It refuses to bend under the yoke, but it submits
to rule. The mission of authority is not to constrain, but to counsel; not
to command, but to help accomplish; not to absorb individual activity, but
to develop it. It does not pretend to raise a convenient indifference on
the part of government, nor the indolent withdrawal of all protective
influence to the dignity of a principle. To say, on the other hand, that
the _laisser faire_ and _laisser passer_ of the economists means: Let
robbery alone; let fraud alone etc., is to amuse one’s self playing upon
words, and to argue in a manner unworthy of any serious answer. Under
pretext of painting a picture of economic doctrine, we are given its
caricature. Such has never been the system, to the elaboration of which
the purest hearts and noblest intellects have devoted themselves. A
negation does not constitute the science of Political Economy.

It is very convenient to inclose humanity within a circle of action, drawn
with rigorous precision, and to govern movements seen in advance. But such
artificial conceptions mutilate the activity of man. To guarantee man all
liberty, and prevent its abuse—such are the data of the problem. The work
is a great and difficult one. Far from yielding in point of elevation to
ideal systems, it is superior to them in extent and variety of
combinations. Those who ignore its bearing, yield, it may be, to a certain
indolence of intellect. Restrained within its natural limits, the famous
_laisser faire_ and _laisser passer_ of the Physiocrates deserves even
to-day our respect and our confidence. It ought to be preserved in the
grateful memory of men, side by side with the maxim which Quesnay
succeeded in having printed at Versailles, by the hand of Louis XV
himself: “Pauvres paysans, pauvre royaume; pauvre royaume, pauvre
souverain.”(43)




XI.


To return to the question of method. Rossi made use of an ingenious
example to explain his thought:(44) “Are,” he inquires, “these deductions
[of pure science] perfectly legitimate; are these consequences always
true? It is incontestably true that a projectile, discharged at a certain
angle, will describe a certain curve; this is a mathematical truth. It is
equally true, that the resistance offered to the projectile by the medium
through which it moves modifies the speculative result in practice, to
some extent; this is a truth of observation. Is the mathematical deduction
false? By no means; but it supposes a vacuum. I hasten to acknowledge it.
Speculative economy also neglects certain facts and leaves certain
resistances out of account.” Now, from the moment that we have to deal
with human interests, it is not possible to suppose a vacuum, to neglect
the most vulgar facts, and the most common instances of resistance, nor to
lose one’s self in abstraction. The correctives of applied Political
Economy either may not wipe out this original sin, or else they run great
danger of covering up the principles themselves. In ballistics, again, we
may measure the resistance which the medium in which we are obliged to
operate, makes the force of impulsion and the target both obey the same
law, and yield to the same process of calculation. But is it thus when you
touch upon man’s innermost and most sensitive part? Is there not danger
that the hypotheses may be deceitful, and that you may be accused of
toiling in a vacuum? We well know the solid reason that may be opposed to
sarcasm of this nature; but is it expedient to lay one’s self open to it?

Moreover, the consequences are not great enough to warrant us to expose
ourselves to the danger. The principles of pure science are very small in
number. They might even, be easily reduced to one, of which M. Cousin has
been the eloquent interpreter—human liberty. This liberty has no need of
Political Economy to shine with the luster of evidence; nothing can
prevail against it. We can prove that it is as fecund as it is
respectable; but if the science of wealth should endeavor to demonstrate
the contrary, the primordial bases of society, liberty, property and the
family would not be less sacred nor less necessary, for they are the right
of humanity. They could not be put aside, even under pretext of any
mechanism which would claim to produce more.(45) These sovereign
principles of economy flow from the moral law, and they have no reason to
dread the power of facts, for the prosperity of nations depends on the
respect with which they are surrounded and the guarantees by which they
are protected.

We have spoken of the moral law; and, indeed, in our opinion, it is
impossible to banish it from the domain of public economy. Any other point
of view seems to us too narrow. And when we see eminent men go astray in
the pursuit of an ideal which fails to take the human soul into account,
and which finds nothing but equations where there are feelings and ideas,
we cannot help thinking that they are unfaithful to the thought of the
founder of the science, Adam Smith. Man is not simply a piece of
machinery. He does not blindly submit to external impulse. Rather is he
himself, the greatest of impulses. But to govern things, he must first
learn to conquer himself. Personal interest is the powerful motive which
he obeys. Man does not live alone, in a state of isolation, in the world.
_Væ soli!_ He lives in society and profits by the relations which he forms
with other beings, intelligent like himself, and for whom he has a natural
feeling of sympathy.

The good that comes to them yields satisfaction to him, and the evil that
befalls them falls on him likewise. He cannot turn back entirely upon his
own personality. Besides his own interest, he feels and shares another
interest—the interest of all. Personal interest is perfectly legitimate.
The love of self cannot be condemned. The Savior himself has enjoined us
to love our neighbor as ourselves. To love him more than ourselves is a
very high and beautiful virtue. It is the self-abnegation which inspired
Christian heroes. But heroism is rare, and cannot be imposed, nor taken,
as a rule. Personal interest is a powerful stimulant, and the superior
harmony of social relations makes it contribute to the general good.

What must be condemned is a fatal deviation of this sentiment which
destroys its effect and narrows its actions. What we need to prevent is
the degeneration of personal interest into an egotism which parches,
instead of fertilizing, and which compromises the future by the exclusive
search after present advantage; for egotism is short-sighted. On the other
hand, the broader and more generous feeling which inclines us to
sympathize with our fellow beings in their sorrows, and to unite our
destiny to theirs; that is, the feeling of the general interest, has a
limit too.

It would be falsified if it absorbed the individual; if it destroyed the
most powerful motive-force by drying up the abundant source of activity;
if it attacked moral energy by enervating responsibility; if it extended
the circle of results obtained to such an extent that scarcely any one
should feel the rebound.

The evil produced by egotism, that sad travesty of personal interest,
appears under a form quite as formidable when the general interest takes
the form of communism. The coöperation of personal interest and of the
general interest is always necessary, both for individual profit and
social advantage. There is as much danger in annihilating the individual
as in exalting him. History furnishes us with memorable examples of this.
It does not allow us to go astray in the narrow ways of a peevish and
jealous personality, nor to lose ourselves in the vague labyrinth of a
chimerical and false communism. The latter would destroy what constitutes
the power and dignity of man. It would wipe out the most prominent
features of his noble nature, by destroying the support of energy and
activity and the food of moral force.




XII.


But, we are told, Political Economy is only the science of selfishness;
Adam Smith is the prophet of individualism; grow rich _per fas et nefas_
is its ultimate teaching. Such a judgment is evidence of much levity and
little enlightenment. How could the man who conceived the study of human
interests on so large a scale, the philosopher who acknowledged Hutcheson
as his master and gave his ideas a still more expansive character, be the
apostle of egotism; and how can the science which he founded be its
gospel? There is here an error of fact and a defect of appreciation.
Hutcheson had based moral philosophy on the feeling which, according to
him, engendered all the other virtues, on benevolence, which is
disinterested, busied with the welfare of others, with the public weal and
the general interest. Adam Smith went further, and sought to base it on a
still more energetic feeling, on sympathy.

The first sentence of his Theory of the Moral Sentiments, which is a full
resumé of his theory, is as follows: “How selfish soever man may be
supposed, there are evidently some principles in his nature which interest
him in the fortune of others, and render their happiness necessary to him,
though he derives nothing from it, except the pleasure of seeing it.” And
this is no empty declaration on his part. It is the thought which of all
in his book is nearest to his heart; and hence he energetically assails
those philosophers who look upon self-love and the refinements of
self-love as the universal cause of all our sentiments, and seek to
explain sympathy by self-love.

La Rochefoucauld, Mandeville and Helvetius never met with a more
determined or energetic adversary. Nowhere have the sweet and amiable
virtues, such as ingenuous condescension, indulgent humanity, and the
respectable and severe virtues, such as disinterestedness and self-control
which subject our movements to the requirements of the dignity of our
nature, been better understood or interpreted. Adam Smith is the
philosopher of sympathy.(46) His theory triumphs over the cowardly and
shameful egotism which concentrates the moral life of the individual in
himself, and separates it from the life of the human race of the _outré_
stoicism which refuses the aid of sentiment to reason.(47) According to
him, the law of private morals is sympathy; the law of natural
jurisprudence, justice; the law of the production of wealth, free labor.
But while he defended this principle with energy, he did not become guilty
of a real recantation by worshiping the idol he had just overthrown. He
would have been culpable of the strangest of all contradictions if he had
made the vice which he had just lacerated the very pivot of another part
of his teaching.

We regret that this essay, which has already very much exceeded the limits
we assigned it in the beginning, will not permit us to reproduce here
Knies’ beautiful demonstration, in which he so learnedly and eloquently
vindicates Adam Smith from this strange imputation, thereby placing
Political Economy on its true basis, the basis of morals, by removing in a
decisive way, all pretext of error and all means of subterfuge. This part
is one of the best features in his most excellent work on “Political
Economy, from the historical Point of View.” We shall return to this
matter.




XIII.


What is there that political economists have not been charged with? They
have been accused, above all, of a cold heartedness and cruelty, and the
sentence passed on them has been resumed in these words: “Political
Economy has no bowels!” Indeed, the representative of the science, who has
been most attacked and who has been held up as a picture of impassible
insensibility; on whom have been heaped the most bloody outrages, is
Malthus. Let us hear him. He tells us in his work on Political Economy,
that if a country had no other means to grow rich, except by seeking for
success in the struggle with other countries, at the cost of a reduction
of the wages of labor, he would unhesitatingly say: Away with such riches;
that it is much to be desired that the working classes should be well
remunerated, and this for a reason much more important than all the
considerations relating to wealth; that is, the happiness of the great
mass of society. And he goes on to say, that he knows nothing more
detestable than the idea of knowingly condemning the laboring classes to
cover themselves with rags, to lodge in wretched huts, to enable us to
sell a few more stuffs and calicoes to foreign countries. Certain it is,
that no defender, however determined, of the laboring classes, has said
anything stronger or more deeply felt. The reason is, that nothing was
more foreign to Malthus’ ideas than the systematic rigidity of
mathematical theories of wealth; that, a minister of the Gospel, he had
meditated on its high precepts. His whole doctrine is based on the moral
idea. “He was profoundly convinced that there are principles in Political
Economy which are true only in as far as they are restricted within
certain limits. He saw the principal difficulty of the science in the
frequent combination of complicated causes, in the action and reaction of
causes on one another, and in the necessity of setting limits or making
exceptions to a great number of important propositions.” Here we are ever
brought back to the undulating ground of living science, instead of having
to follow the rectilineal way traced out by the dead letter. We are always
driven back, whatever may be pretended to the contrary, to the realities
of which history alone possesses the secret. The idea of wealth cannot
absorb everything when there is question of judging and enlightening men.
To do this, it is necessary to know the various phases of social
housekeeping, what nations have thought of economic interests which have
never ceased to interest them greatly, what they have attempted and what
they have attained.

Hence, we must turn over the leaves of the book of the past, and study its
economic aspect, as we have studied its political and literary aspect. We
must follow living nations through their divers periods of development,
and fathom the causes of the destruction of those that are dead. When we
are dealing with the comparative study of the economic destinies of
nations, our investigations are limited to a small number of individual
nations—a further reason not to omit any, and above all, to scrutinize, as
an anatomist would with his scalpel, the principle of life of those which
are no more. We may, by accounting to ourselves for the immense variety of
phenomena which are brought to light by the _application_ of principles to
facts, and in which nothing is absolute or permanent, in which, on the
contrary, everything is relative and successive, acquire that sureness of
touch and correctness of vision which are among the most valuable
conquests of science.

It would be a mistake to suppose that theory simplifies practical
solutions. Far from providing us with a sort of formulary, it teaches us
to put our finger on a number of difficulties. It brings to the surface
the many aspects and fertile and varied considerations, the examination of
which is the mission of the real statesman and legislator. In this way,
the action of thought and the power of the moral idea are revealed with
most _éclat_. Man ceases to be an inert element, and manifests himself as
a sensible being, and the sublime thought of Pascal: “Humanity is like one
man who lives and learns always,” is verified by the result. The wish to
violently abdicate the past, it would be vain and rash to attempt to
realize. The lessons it transmits to us are as instructive as the picture
it unrolls before our eyes is attractive. We have no longer but to see and
hear, to be cured of the most generous impatience with what is, and to
retreat from the most perilous attempts.




XIV.


The unvarying testimony of ages affirms the continued and gradual
amelioration of man by individual energy and moral thought.(48) Want and
suffering have urged him forward. Foresight, labor, sacrifice and virtue
have in part redeemed him. No right has been lessened or usurped, and
every step in civilization has been a step in the way of freedom. Instead
of making the latter responsible for a material and moral wretchedness
which it is called upon to cure, we may prove, that, in proportion as real
liberty and legal guarantees increase, evil diminishes.

We do not desire to yield to a convenient optimism, and deny the
sufferings which weigh only too heavily on the world. We are far from
having reached the end assigned to our efforts; but let not the hope we
entertain of further progress blind us to that which has already been
accomplished. This latter shows us that we are on the right road, and that
we have not done unwisely in giving free rein to the human faculties.
Sudden changes are made only in theaters. In the real world, the march of
progress is slow and laborious. It may be accelerated by a happy hit; but
it would be vain to try to hurry it.

Man still suffers. No one desires to deny the evil, but only to estimate
its extent. Yet it cannot be gainsaid that its fatal empire is narrowing
instead of enlarging. Especially is it the progress accomplished in the
higher regions of intellect and of the feelings which here exerts its
beneficent influence. On our moral greatness depends our material power.
The elevation or debasement of character, the energy or debility of the
will—such is the first source of good or evil. The world, a Chalmers
rightly says, is so constituted that we should be materially happy if we
were morally good.

Industrial progress helps, we have said, towards moral perfection. It is
not the source of that perfection, but its instrument; for ignorance and
misery, its habitual attendants, are poor advisers. Political Economy
shows how the goods of this world are multiplied. It shows how modest
comfort may become more and more general, and thus an impetus be given to
all noble virtues without awakening a blind passion for riches. It teaches
moderation instead of exciting covetousness, nor does it come in conflict
with the sublime words of Saint Augustine: “The family of men, living by
faith, use the goods of the earth as strangers here, not to be captivated
by them or turned away by them from the goal to which they tend, which is
God, but to find in them a support which, far from aggravating, lightens
the burthen of this perishable body which weighs down the soul.”




XV.


Looked at from below, all things diverge. Looked at from above, all things
run into one another and combine with one another. It is one of the great
merits of the historical method, that it raises the point of observation
and gives the observer the support of tradition and good sense, that
master of life; that it prevents a divorce between different branches of
knowledge of the same order, which constitute but one intellectual family,
which there is no question of confounding, and which it would be dangerous
to isolate.

Aristotle, that universal genius, had discovered Political Economy, and it
was the historical method which revealed it to him. Be it added, that the
great philosopher had seen but one phase of the science, chrematistics,
and that his ideas here bear the impress of the age in which he lived.
Aristotle, however, distinguished this science from all others and from
domestic economy, which is so akin to it. Doubtless, he did not found the
modern study of Political Economy, but his powerful intellect gave him a
presentiment of it.

The honor of producing at once, Adam Smith, Quesnay and Turgot belongs to
the eighteenth century. It was in the course of philosophy at Glasgow that
this study found a definite place. The illustrious founder of the science
of Political Economy did not contemplate dissolving the ancient alliance
between it and the moral sciences, history, philosophy, jurisprudence,
belles-lettres—all of which he had explored and studied profoundly. Let
those whose ambition it is to walk, even at a distance, in the footsteps
of Adam Smith, not forget what was the cradle of the noble study to which
they have devoted their intellects.

L. WOLOWSKI.





INTRODUCTION.




                                Chapter I.


Fundamental Ideas.



                                Section I.


Goods—Wants.


The starting point, as well as the object-point of our science is Man.(49)

Every man has numberless wants, physical and intellectual.(50)(51) Wants
are either necessaries, decencies (_Anstandsbedürfnisse_) or luxuries. The
non-satisfaction of necessary wants causes disease or death; that of the
wants of decency endangers one’s social position.(52) The much greater
number, and the longer continuance of his wants are among the most
striking differences between man and the brute:(53) wants such as
clothing, fuel,(54) tools, and those resulting from his much longer period
of infancy; which last, together with other causes, has contributed so
largely to make marriage necessary and universal. While the lower animals
have no wants, but necessities, and while their aggregate-want, even in
the longest series of generations, admits of no qualitative increase, the
circle of man’s wants is susceptible of indefinite extension.(55) And,
indeed, every advance in culture made by man finds expression in an
increase in the number and in the keenness of his rational wants. No man
who distinguishes himself in anything, but feels spurred thereto by a
peculiar want; and this want is both the cause and the effect of the power
which is peculiar to him. No one but the poet feels the want of poetizing;
no one but the philosopher, of philosophizing. In every particular,
intellectual or physical, in which the man is in advance of the child, he
experiences new wants unknown to the child. Our education consists, for
the most part, in awakening wants and providing for their satisfaction.

Goods are anything which can be used, whether directly or indirectly, for
the satisfaction of any true(56) or legitimate human want,(57) and whose
utility, for this purpose, is recognized. Hence, the idea goods is an
essentially relative one. Every change in man’s wants, or knowledge, is
accompanied by a rapid, corresponding change, either in the limits of the
circle(58) of goods, or in their relative importance. Thus, the tobacco
plant has, probably, existed thousands of years. It became goods, however,
only from the time that man recognized its use for smoking, snuffing etc.,
and experienced the want of it for these purposes. In a similar way, the
limestone of the Solenhofen quarries has become _goods_, of considerable
importance, only since the invention of lithography; decaying bones, only
since that of bone-dust manure; caoutchouc since about 1825, and
gutta-percha, only since 1844. On the other hand, charms,(59) philters,
and even relics, since the decay of faith in their efficacy, have lost the
quality of goods. If the aggregate income of all mankind were, by some
sudden revolution, to be equally divided among all, diamonds, for
instance, would greatly decline in value, for the reason that it is
dependent, in great part, on the wants generated by vanity, or by the
desire of outshining others. Beer, tobacco etc., would rise in the scale
as goods, because the circle of those to whose wants they minister would
have been very greatly extended. On the whole, advancement in civilization
has uniformly the effect, of itself, to increase the quantity and number
of goods, the wants and knowledge of men being thereby increased. We
should reach the ideal here, if all men experienced only true or
legitimate wants, but these completely; if they could see their way,
clearly, to the satisfaction of them, and find the means of satisfying
them with just the amount of effort most conducive to their
physico-intellectual development.(60)



                               Section II.


Goods.—Economic Goods.


By economy (_Wirthschaft_=husbandry or housekeeping), we mean the
systematized activity of man, to satisfy his need (_Bedarf_=requisite) of
external goods.(61) This treatise is concerned only with economic goods
(ends or means of economy).(62) The greater the advance of civilization or
human culture, the less apt are men to pursue the satisfaction of their
wants, isolated from their fellows, or, in other words, to carry on their
economies or husbandries apart from one another. The more numerous the
wants of men, and the more different in kind their faculties are, the more
natural does exchange(63) become. Since all goods derive their character
as goods from the fact that they are destined to satisfy human wants, the
very possibility of exchange must greatly increase the possibility of
things to become goods. Think of the machinist, whose products are used
only by the astronomer, while the latter is never in a way to manufacture
them for himself. (_Hufeland._) Commerce is the series of combinations,
created by the interchange of services: “a living net of relations, which
wants and services are ever weaving and unweaving.” (_Hermann._) As a
rule, with an advance in civilization, there is an increase in the number
of goods, which become economic goods, and in the number of economic goods
which become commercial goods (objects or means promotive of
commerce).(64) But this is to be considered a real advancement only to the
extent that that which is obtained is superior to that which was possessed
before, in consequence of the specialization of callings or the greater
division of labor (§ 48 ff.). When a little street Arab exacts money from
a stranger for pointing out the way, we rightly censure him; but no one
would find it improper if he should first fit himself to play the part of
a guide, and then live by his calling.(65)



                               Section III.


Goods.—The Three Classes Of Goods.


All economic goods are divided into three classes:

A. _Persons or personal services._ It is entirely repugnant to the feeling
of humanity to regard a man’s person in its entirety as an instrument
intended to satisfy the wants of another.(66) Yet this happens wherever
slavery exists; in its coarsest form, in cannibalism. Among civilized
nations, we can speak, under this head, only of individual services or
capabilities of persons; or, indeed, of the aggregate of the services
rendered by them during a time determined at pleasure, or a short
time.(67)

B. _Things_, both moveable and immovable.(68)

C. _Relations_ to persons or things which may frequently be estimated just
as accurately as material goods. (The _res incorporales_ of the Roman
law.) I need only mention what is called good-will, which freely, and to
the advantage of customers themselves, but still with a limited amount of
certainty, attaches to certain localities, and for which tavern-keepers,
sometimes, as in theaters, dépôts and clubs, pay so enormous a rent.(69)
When a newspaper is sold, the purchaser frequently buys nothing but the
existing relations between his colaborers, subscribers etc. No small part
of the value of a good business firm consists in the confidence with which
it inspires all who deal with it, thus sparing them a world of care and
trouble.(70) A general may be of incalculable value to an army which he
has himself helped organize. In another, or in the service of a country
not his own, he might be entirely valueless, incapable of accomplishing
anything.(71) With the progress of civilization, as man becomes more
social, the number of valuable relations increases, while that of
legalized monopolies is wont to decrease. (_Schäffle._)(72)



                               Section IV.


Of Value.—Value In Use.


The economic value of goods is the importance they possess for the
purposes of man, considered as engaged in economy (housekeeping,
husbandry.(73))

Looked at from the point of view of the person who wishes to employ them
in his use directly, doubtless the oldest point of view, value appears
first as value in use; and here, according to the difference of subjective
purposes it is intended to subserve, we may speak of production value or
enjoyment-value; and of this last, in turn, as utilization-value, or
consumption-value. The value in use of goods, is greater in proportion as
the number of wants they are calculated to satisfy are more general and
more urgent, and in proportion as they are gratified by them more fully,
surely, durably, easily and pleasantly.(74) Hence, it is seldom possible
to find an accurate mathematical expression of the relation which exists
between the value in use of different goods.(75) Thus, it is possible to
estimate the nutritive power of different kinds of goods, the value of
wheat or of hay for instance, but not the goodness or quality of their
taste, of the attractiveness of their appearance, etc.

But, the more men become used to comparing the aggregate of human wants,
and the aggregate of the goods which minister to the satisfaction of these
wants, as if they were two great wholes, gradually shading each into the
other, the more does the value in use of the different kinds of goods
assume, for purposes of social rating or estimation, a fungible
character.(76) If a new kind of goods be produced or discovered, which
satisfies the same wants in a more complete manner than another, the
latter, although it has suffered no change, generally loses in the value
put upon it, especially if the new goods can be produced in any desired
quantity. An instance of this is the change effected in the value of the
dyers weed, woad, by the introduction of indigo.

Things present in quantities greater than the amount necessary to supply
the want they satisfy, preserve their full value in use, to the limit of
that want, after which they are simply an element of possible future
value, dependent on an increase of the want; but they have no value for
present use.(77)

The economic valuation of goods, however, is by no means exhausted, so far
as the isolated individual housekeeper is concerned, by the mere
establishing of its value in use. As the systematic effort of every
rational individual in his household management is directed towards the
obtaining, by a minimum of sacrifice of pleasure and energy, a maximum
satisfaction of his wants, even an Adam or a Crusoe is, in his economy,
compelled to estimate not only what the goods to be acquired accomplish
(value in use) but also what they will cost—cost-value. Even the most
indispensable kind of goods, for instance atmospheric air, is considered
to have no value, when it can be obtained in sufficient quantity, without
any sacrifice whatever.(78)



                                Section V.


Value.—Value In Exchange.


The value in exchange of goods, or the quality which makes them
exchangeable against other goods, is based on a combination of their value
in use with their cost-value, such as men in their intercourse with one
another will make.(79) Without value in use, value in exchange(80) is
unthinkable.

But there are many, and even indispensable goods which are not at all
susceptible of being exchanged; for instance, the light and heat of the
sun, the open sea etc.(81) Other goods, although capable of being
exchanged, have no value in exchange, because they exist in
superabundance, and may be obtained by everyone, without trouble and
without reward; for instance, drinking-water in most places, ice in
winter, and wood in the primeval forest.(82) Moreover, the idea of such
“free goods” is in great part relative. The water of a river may, for
drinking purposes, be “free” goods, and yet, for purposes of irrigation,
have great value in exchange. (_John Stuart Mill_).

But, goods, to obtain value in exchange, must, in addition to their value
in use, a value which must be recognized(83) by a certain number of
persons, at least, have the capacity of becoming the exclusive property of
some one individual, and therefore of being alienated or transferred; and
this alienation or transfer must be desired because of the difficulty to
become possessed of them in any other way.(84)



                               Section VI.


Value.—Alleged Contradiction Between Value In Use And Value In Exchange.


Recent, and especially socialistic,(85) writers have alluded to the great
“contradiction” between value in use and value in exchange. This
contradiction, however, vanishes when the above idea of economy, and the
two sides or aspects, which economic value presents, are kept steadily in
view. It is said, for instance, that a pound of gold has a much greater
value in exchange than a pound of iron; while the value in use of iron, is
incomparably greater than that of gold. I question this latter statement.
True it is, that the need of iron is much more universal and urgent than
the need of gold. On the other hand, a pound of gold yields satisfaction
to the want of that metal, much greater than is yielded by a pound of
iron, to the want of iron. We may speak of a contradiction between value
in use and value in exchange, at the farthest, only in case the existing
quantity of an article in trade, which can be done without, is not
estimated correspondingly lower than the whole existing supply of a thing
which is indispensable. But this is a case which cannot often occur. When,
for instance, wheat is very dear, as in years of scarcity, people prefer
to pay a very high price for it rather than to dispense, even in part,
with its use; and so of all the necessaries of life. As people progress in
economic culture, they become more expert in adapting the value in
exchange of related goods, not only to their cost-value, but also to their
value in use.(86)(87)

The lower the state of a nation’s economy, the more isolated men live from
one another, the greater is the prominence given by them to value in use,
as compared with value in exchange, a fact which makes a valuation of
resources, which shall be universally applicable, a more difficult
matter.(88)(89)(90)



                               Section VII.


Resources Or Means (Vermögen).


_Resources_, or _means_, in the sense in which we here use the term, are
the aggregate of economic goods owned by a physical or legal person, after
deduction is made of the person’s debts, and all valuable and rightful
claims have been added.(91) Hence, there are private resources,
corporative resources, municipal resources, etc., state resources,
national resources and the world’s resources. In estimating the resources
of a whole people, it is, of course, necessary to make deduction of the
debts due by the individual members of the nation to their fellow
countrymen.



                              Section VIII.


Valuation Of Resources.


It has often been made a question, whether the valuation of resources
should be based on the value in use, or the value in exchange of their
constituent parts.(92) The latter has, of course, no interest, except in
so far as we are concerned with the possibility of obtaining the control
of part of the resources, or means, of another, by the surrender of a part
of one’s own goods. In estimating the value of private resources, which
require to be made continually an object of trade, this point is, of
course, of the greatest importance. If certain of their component
elements, lands, for instance, belonging to a _fidei commissum_, are
incapable of entering immediately into the market, at least the revenue
they yield is measured by its value in exchange.

It is quite otherwise, even with the resources of a whole nation. Such
resources are, evidently, much more independent, and have much less need
of being exchanged against their equals, than private resources. The
foreign commerce, of the greatest and most advanced nations, has,
hitherto, been but a small quota of their internal commerce.(93) A
valuation, therefore, based on value in exchange, however interesting it
might be to enable us to determine how property is shared by the different
classes and persons that compose the nation, would afford but little
information concerning the absolute amount of the national wealth. This,
of course, applies in a much higher degree to the resources of the whole
world.

If, now, we were to estimate the resources of an entire people, or even of
the world, by summing up the value in exchange of their several component
parts, many very important elements would be left out of the account
entirely; as for instance, harbors, navigable streams, numberless
relations which have, indeed, no value in exchange whatever, but which are
of the highest importance, because promotive of the economy of the nation.
The same may be said of made roads of every description, the
politico-economical value of which may be much greater than the value in
exchange of their stock, than their cost of production etc. The increase
of the value in exchange of any of the branches of the resources of a
physical or legal person contributes towards really enriching the nation
or the world, only in case that the increased value in exchange is based
on an increased utility in quality or quantity. Should an earthquake
suddenly dry up a number of our springs, and thus give value in exchange
to the drinking water from the remaining ones, we should, indeed, witness
the introduction of a new object into the list of exchangeable goods; the
owners of springs would be able to command a larger portion of the
national resources, but at the expense of the rest of the population; and
the whole country would have become poorer in goods by the catastrophe.
Even the value in exchange of the national resources would not be
increased; for all other goods, which, hitherto, as compared with water,
had an unlimited capacity for exchange, would lose just as much of that
capacity as water had gained, as compared with them.(94) On the other
hand, if a new mineral spring should be discovered, the great value in use
of the water of which gave it value in exchange, the resources of the
nation would be really increased, not only in point of utility, but in
exchange value; for no other goods, formerly known, would, in consequence
of the discovery, lose in their exchange power.(95)



                               Section IX.


Wealth.


The possession of large and also of potentially lasting resources;
objectively, such resources themselves, we call wealth. But it must be
large in a two-fold sense; large as compared with the rational wants of
its possessor, and large, also, as compared with the resources of other
people, especially with the resources of those in the same condition of
life. To be called rich, it is not enough “to have a sufficiency,” (the
individual side); it is necessary to have more than others.(96) If all men
were possessed of a great deal, but all of an exactly equal amount, each
would be compelled, it may be conjectured, to be his own chimney-sweep,
his own scavenger and “boot-black.” And how could anyone, then, be
properly called wealthy? This is the social side of the idea of
wealth.(97) Hence, a person, with the same resources, might be very
wealthy in a provincial town, while, in the capital, he could enjoy only
moderate comfort.(98)



                                Section X.


Wealth.—Signs Of National Wealth.


We should have a very imperfect idea of the wealth of a people (§ 8) if we
should estimate it at the value in exchange of the sum(99)-total of the
component parts of the national resources. By the following signs,
however, an approximative notion of the value in use of the resources of a
nation may be obtained:

A. When, even the lower classes, who compose everywhere the greatest
portion of the people, are comfortable, in a condition worthy of human
beings. Thus, C. Dupin is surprised at the great quantities of meat,
butter, cheese and tea entered on the accounts of the poor-houses in
England, and the great care taken to have these of the best quality.(100)
A good symptom of such a state of things is a high average duration of
human life, especially when there is a relatively large number of births.
(§ 246.)

B. When a considerable outlay, devoted to the satisfaction of the more
refined wants, is voluntarily made, and by those only possessed of a
proper economic sense. Thus, in England, the various mission, bible, and
tract societies had, in 1841, an aggregate income of £630,000. The
expeditions in search of Franklin cost over a million pounds sterling. The
state outlay also belongs to this category, provided, that taxes are
collected and loans obtained, without any noticeable oppression. The sum
of 20,000,000 pounds sterling, voted, in 1833, by the British Parliament
for the abolition of slavery, is one of the happiest signs of the national
wealth of England.(101)

C. A large number of valuable buildings, and permanent improvements; for
instance, roads of every description, works for purposes of irrigation and
drainage. Thus, in London, from September, 1843, to September, 1845, there
were constructed squares and streets with an aggregate length of 11.1
geographical miles. The number of newly built houses in London, between
1843 and 1847, was nearly 27,000. And so, in England and Wales there are
492 geographical miles of navigable canals, while their navigable rivers
are estimated to have a length of only 449 miles. The number of miles of
railroad, in the British Empire, in 1865, was 2,897 geographical miles,
and they cost 459 million of pounds; in 1870, it was 3,270 geographical
miles, at an aggregate cost of 650 millions sterling.

D. The frequent occurrence of heavy commercial payments, which finds
expression especially in the magnitude and costliness of the most usual
medium of exchange. Thus, all payments are made in England in paper (for
sums of at least five pounds sterling) or in gold coin. Silver is used
only as small change, like copper in most other countries. (_Infra_, §
118, seq.)(102)

E. Frequent loans to foreign nations. Hence, Storch divides all countries
into borrowing or poor countries, loaning or rich countries, and
independent countries which hold a middle place between the two
former.(103)



                               Section XI.


Of Economy (Husbandry).


All normal economy(104) (husbandry) aims at securing a maximum of personal
advantage with a minimum of cost or outlay.(105) And there are always two
intellectual incentives at the foundation of this economy. There is,
first, self-interest, the positive manifestation of which is the effort to
acquire as much of the world’s goods as possible, and the negative
expression of which, the effort to lose as little of them as
possible—acquisitiveness—saving. Self-interest, losing its moral, and
assuming a guilty, character, degenerates into egotism; acquisitiveness,
into covetousness; and the disposition to save, into avarice—the
_solipsismus_ of Kant. The incentive to ameliorate one’s condition is
common to all men, no matter how varied the form or different the
intensity of its manifestation. It guides us all from the cradle to the
grave. It may be restricted within certain limits, but never entirely
extinguished. It is, in the domain of economy, what the instinct of
self-preservation is to our physical existence, a powerful principle of
creation, preservation and of renewed life (I. Thessal., 4, 11,
seq.).(106) Then there is the incentive of the demand of God’s voice
within us, the voice of conscience, whether we call it, in philosophic
outline “the adumbration of the ideas of equity, right, benevolence, of
perfection and inner freedom,” or, framing our lives in accordance with
them, the striving after the Kingdom of God.(107) It matters not, how much
the image of God may have been disfigured in most men, there is no one in
whom the longing for it has so far disappeared as to leave no trace
behind. This puts bounds to our self-interest, and transmutes it into an
earthly means to enable us to approximate to an eternal ideal.

As, in the structure of the world, the apparently opposing tendencies of
the centrifugal and centripetal forces produce the harmony of the spheres,
so, in the social life of man, self-interest and conscience produce in him
the feeling for the common good.(108) This sentiment of the common
interest is the foundation on which rise in successive gradation, the life
of the family, of the community, of the nation and of humanity, the last
of which should be coincident with the life of the Church. It, alone, can
realize the kingdom of heaven on earth. Through this sentiment alone can
religion be made active and moral. Only through it, can self-interest be
made really sure and always to the purpose. Even the most calculating mind
must acknowledge, that numberless institutions, relations etc., are useful
and even necessary to many individuals, which can be established or
maintained only from a sense of the general welfare, for the reason that
no one individual could make the sacrifice required to establish or
maintain them. And so, since commerce has wrought the interests of all men
into one great piece of net-work, the best means of obtaining wherewith to
satisfy our own wants is to help others satisfy theirs. Self-interest
causes every one to choose the course in life in which he shall meet with
the least competition and the most abundant patronage; in other words,
that which answers to the most pressing and least satisfied want of the
community. As a rule, the physician who cures the greatest number of
patients with the greatest skill, and the manufacturer who produces the
best goods cheapest, will grow to be the richest. It is, moreover, easy to
see that, according as the circle of common interests grows smaller, it
approximates to self-interest; and to “the Kingdom of God”(109) as it
grows larger. And yet, all these circles respectively condition one
another. Cosmopolitanism or church-zeal, without love of country;
patriotism, without fidelity to the community in which one lives, or love
of one’s family, are more than suspicious. The reverse is also true. This
is a chief connecting link between the great apparent opposites.(110)(111)



                               Section XII.


Economy.—Grades Of Economy.


Thanks to this feeling for the common weal, the eternal and destructive
war—the _bellum omnium contra omnes_—which an unscrupulous self-interest
would not fail to generate among men engaged in the isolated prosecution
of their own economic interests, ceases in the higher, well-ordered
organization(112) of society. On it are based the various forms of economy
in common: family-economy, corporation or association-economy, municipal
economy, and national economy.(113) And these forms of economy in common
are so essentially the condition and complement of individual economy,
that the latter, without them, could either not be maintained at all, or,
at least, only in the very lowest stage of civilization.

Although the higher science of Political Economy has, nearly always, been
conceived(114) as treating of the aggregate national activity of a people,
there have been many, recently, who consider Political Economy as no real
whole, but only as a mere abstraction. This is true, especially of many
unconditional free-trade theorizers, partly from a repugnance toward the
governmental guardianship of private businesses or economy. It is true,
also, of certain philosophers who consider the idea, “the people,” as
merely nominal.(115) There are, however, two things necessary to warrant
us to call a thing made up of a number of parts, one real whole: the parts
and the whole must have a reciprocal action upon one another, and the
whole, as such, must have a demonstrable action of its own. (_Drobisch._)
In this sense, “the people” is, unquestionably, a reality, and not alone
the individuals who constitute the “people.” Besides, it is truly said
that all husbandry or economy supposes a will (“systematized activity”
etc., _supra_, § 2). Such a will is ascribed to individuals, to legal
persons, to the state, but not, however, to “the people,” as a whole. But
this will need not be an entirely conscious one, as is plain from the case
of the less gifted and less cultured individuals engaged in household
economy. The systemization in the public economy of a people finds its
clearest expression in economic laws, and in the institutions of the
state. But it finds expression, also, without the intervention of the
state, in the laws established by use, and by the opinions of jurists or
courts, in community of speech, of customs and tastes etc.: things which
have an important economic meaning, which depend on the common nature of
the land, of race and history, and which influence the state, at least as
much as they are influenced by it.(116)(117)

The most that can be said, at present, so far as an economy of mankind, or
a world-economy, is concerned, is, that it may be shown that important
preparations have been made for it. We are approaching more nearly to it
by the ways of the more and more cosmopolitan character of science, the
increasing international coöperation of labor, the improvement in the
means of transportation, growing emigration, the greater love of peace,
and the greater toleration of nations etc.



                              Section XIII.


Political Economy.—The Economic Organism.


The idea conveyed by the word _organism_, is doubtless, one of the most
obscure of all ideas; and I am so far from desiring to explain(118) by
that idea, the meaning of public or national economy, that I would only
use the word _organism_ as the shortest and most familiar expression of a
number of problems, which it is the purpose of the following investigation
to solve.

There are two points, especially, of importance here. In the motion of any
machine, it is possible to distinguish with the utmost accuracy, between
the cause and the effect of the motion: the blowing of the wind, for
instance, is simply and purely, the cause of the friction of the
mill-stones in a wind-mill, and is not in the least influenced or
conditioned by the latter. But, in the public economy of every people,
patient thought soon shows the observer, that the most important
simultaneous events or phenomena mutually condition one another. Thus, a
flourishing state of agriculture is impossible without flourishing
industries; but, conversely, the prosperity of the latter supposes the
prosperity of the former, as a condition precedent. It is as in the human
body. The motions of respiration are produced by the action of the spinal
cord; and the spinal cord, in turn, continues to work only through the
blood, that is, by the help of respiration. In all cases like this, we are
forced, when accounting for phenomena, to move about in a circle, unless
we admit the existence of an organic life, of which every individual fact
is only the manifestation.(119)(120)

It is, also, undeniable, that human insight into the operation and utility
of a machine must always precede the existence of the machine itself. This
human insight is parent to the plan, and the plan, in turn, is parent to
the machine. The very reverse of this is true in the case of organisms,
those “divine machines” as Leibnitz called them. Men had digested food and
reproduced their kind, thousands of years before physiologists had
attained to a true theory of digestion or reproduction. I do not, indeed,
by any means, pretend, that the public economy of nations is governed by
natural necessity, in the same degree, as for instance, the human body. We
shall find, however, that the minute arbitrary variations usual here and
there in the course of its development, generally compensate for one
another, in accordance with the law of large numbers. Here, too, we find
harmonies, frequently of wonderful beauty, which existed long before any
one dreamt of them; innumerable _natural laws_,(121) whose operation does
not depend on their recognition by individuals, and, over which, only he
can obtain power who has learned to obey them. (_Bacon_)(122)(123)(124)
But it should never be lost sight of, that the natural laws governing the
public economy of a people, like those of the human mind, are
distinguished in one very essential point from those of the material
world. They have to do with free rational beings, who, because they are
thus free and rational, are responsible to God and their conscience, and
constitute in their aggregate a species capable of progress.



                               Section XIV.


Origin Of A Nation’s Economy.


The public economy of a people has its origin simultaneously with the
people. It is neither the invention of man nor the revelation of God. It
is the natural product of the faculties and propensities which make man
man.(125) Just as it may be shown, that the family which lives isolated
from all others, contains, in itself, the germs of all political
organization,(126) so may it be demonstrated, that every independent
household management contains the germs of all politico-economical
activity. The public economy of a nation grows with the nation. With the
nation, it blooms and ripens. Its season of blossoming and of maturity is
the period of its greatest strength, and, at the same time, of the most
perfect development of all its more important organs.(127) In respect to
it, the economic endeavors of any epoch may be said to be represented by
two great parties, the one progressive, the other, conservative. The
former would hasten the period of the nation’s richest and most varied
development, the latter postpone its departure as long as possible; and
hence it comes, that a people’s economic decline is sometimes taken for
progress, by the former class, and their progress for decline, by the
latter. As a rule, the union and equilibrium of these parties are wont to
be the greatest at the period of maturity, because, then, intelligence and
the spirit of sacrifice for the common good are most general.(128)

Finally, the public economy of a nation declines with the people.
(_Infra_, § 263 ff.)



                               Section XV.


Diseases Of The Social Organism.


If the public economy of a people be an organism, we must expect to find
that the perturbations, which affect it, present some analogies to the
diseases of the body physical. We may, therefore, hope to learn much that
may be of use in practice, from the tried methods of medicine.(129) In the
diseases of the body economic, it is necessary to distinguish accurately,
between the nature of the disease and its external symptoms, although it
may be necessary to combat the latter directly, and not merely with a view
to alleviation. Following the example of the physician, we should
particularly direct our attention to the curative method which nature
itself would pursue, were art not to intervene. “The curative power of
nature is no peculiar power; it is the result of a series of happy
adjustments, by means of which the morbid perturbation itself sets in
motion the springs which may either destroy the evil or paralyze its
action. It is, in fact, nothing but the original power which formed the
body and preserves its life in contact with the external causes of
perturbation and the internal disorder provoked by these causes.”
(_Ruete._)




                               Chapter II.


Position Of Political Economy In The Circle Of Related Sciences.



                               Section XVI.


Political Or National Economy.


By the science of national,(130) or Political Economy, we understand the
science which has to do with the laws of the development of the economy of
a nation, or with its economic national life. (Philosophy of the history
of Political Economy, according to von Mangoldt.) Like all the political
sciences, or sciences of _national life_, it is concerned, on the one
hand, with the consideration of the individual man, and on the other, it
extends its investigations to the whole of human kind.(131)

National life, like all life, is a whole, the various phenomena of which
are most intimately connected with one another. Hence it is, that to
understand one side of it scientifically, it is necessary to know all its
sides. But, especially, is it necessary to fix one’s attention on the
following seven: language, religion, art, science, law, the state and
economy.(132) Without language, all higher mental activity is unthinkable;
without religion, all else would lose its firmest foundation and highest
aim. Through art, alone, do all these sides attain to beauty; through
science, alone, to clearness. Law arises, the moment conflicts of will
become inevitable and an adjustment is desired. The state has to do with
them, in so far as they have any external force or validity. Indeed, there
is no human relation, not even the highest and the sweetest, but has its
economic interests. It is, therefore, natural, that each of the sciences
which relate to these various regions of human life should, in part,
presuppose all others, and, in part, serve as a basis for them.(133)

But in the midst of this universal relationship, it is easy to see that
law, the state and economy constitute a family, as it were apart and more
closely connected. (The social sciences, in the narrower sense of the
expression.)

They are confined almost exclusively to what Schleiermacher has called
“effective action” (_wirksame Handeln_), while art and science belong
almost entirely to the “action of representation” (_darstellenden
Handeln_); and religion and language combine both kinds. Law, the state,
and economy too, have their roots so deep in the physical and intellectual
imperfection of man, that we can scarcely imagine their continuance beyond
his life on earth (Gospel of Matthew, 22, 30). But within these limits,
their several provinces and the subjects with which they are concerned are
almost coincident. They only consider these from different points of view:
the science of politics from that of sovereignty; the science of Political
Economy from that of the satisfaction of the requirement of external goods
by the people; the science of law from that of the prevention or the
peaceable adjustment of conflicts of will. As every economic act,
consciously or unconsciously, supposes forms of law, so, by far the
greater number of the laws relating to rights, and the greater number of
judgments in the matter of rights, contain an economic element. In
numberless cases, the science of law gives us only the external _how_; the
deeper _why_ is revealed to us by the science of Political
Economy.(134)(135) And, as to the state, who, for instance, can appreciate
the political significance of a nobility, without understanding the
economic character of rent, and of the possession of large landed estates?
Who can politically appreciate the inferior classes of society, unless
initiated into a knowledge of the laws that govern wages and population?
It were much easier to cultivate psychology without physiology! “The state
is society protected by force” (_Herbart_). There are two bases to all
material power:(136) wealth and warlike ability (χρήματα—ναυτικά,
according to Thucydides); and how much the latter has need of the former
is well expressed by the familiar saying of Montecuccoli: “Money is not
only the first, but the second and third condition of war.”(137)

Frederick the Great calls finance the pulse of the state, and Richelieu,
the point of support which Archimedes was in search of, to move the world.
In all modern nations, the history of the debates on the raising of
revenue and of the passing of budgets is, at the same time, the history of
parliamentary life; and most great revolutions, the Reformation of the
sixteenth century not excepted, if not caused have been promoted, by
financial embarrassment.



                              Section XVII.


Sciences Relating To National Life.—The Science Of Public Economy.—The
Science Of Finance.


If, by the public economy of a nation, we understand economic legislation
and the governmental guidance or direction of the economy of private
persons,(138) the science of public economy becomes, so far as its form is
concerned, a branch of political science, while as to its matter, its
subject is almost coincident with that of Political Economy. Hence it is,
that so many writers use the terms public economy, or the economy of the
state (_Staatswirthschaft_), and National Economy (_Volkswirthschaft_), as
synonymous.(139) The hypothesis, in accordance with which, this science
should discard all consideration of the state, or should refuse to
presuppose its formation,(140) would lead us into an ideal region,
difficult to define, probably entirely impossible, and inaccessible to
experience.

Just as clear, is the close connection between politics and Political
Economy, in the case of the science of finance, or of the science of
governmental house-keeping, otherwise the administration of public
affairs. The latter, evidently, so far as its end is concerned, belongs to
politics, but so far as the means to that end are concerned, to National
Economy. As the physiologist cannot understand the action of the human
body, without understanding that of the head; so we would not be able to
grasp the organic whole of national economy, if we were to leave the
state, the greatest economy of all, the one which uninterruptedly and
irresistibly acts on all others, out of consideration.(141)

By the term _police_, we mean the state power whose office it is, without
mediation, to prevent all disturbances of external order among the
people.(142) It may extend its action into all the domains of national
life mentioned above, whenever external order is there threatened, or
calls for protection; but its action is important especially in the
domains of law and economy. The science of the _police power_, therefore,
of all those doctrines resulting from investigation into national life,
takes up only one phase of each of them; and the phases of doctrine thus
taken up, it combines into a whole, for practical ends. Its relation to
those sciences is like that of surgery to the medical sciences, or like
the science of legal procedure to the science of law.



                              Section XVIII.


Sciences Relating To National Life.—Statistics.


Statistics we call the picture or representation of social life at given
periods of time, and especially at the present time, drawn on a scale in
accordance with the laws of development discovered by means of the
theoretical sciences above named; as it were, a section through the
stream. (_Schlözer_ calls them: history standing still.)(143) Statistics,
as thus defined, are as far removed from saying too much as from saying
too little. To give a complete tableau of their object, statistics should,
of course, take in the life of a people, in all its aspects. But they
should look upon such facts only as their own property, the meaning of
which they are able to understand; that is, such only as can be ranged
under known laws of development. Unintelligible facts are collected only
in the hope of penetrating into their meaning in the future, by comparing
them with one another. In the meantime, they are to the statistician only
what unfinished experiments are to the investigator of nature.

The view is daily gaining ground, that statistics should be
occupied—without, however, confining themselves to them—with present
facts, with “facts affecting society and the state, which are susceptible
of being expressed in figures.”(144) The more deceptive the immediate
observation of an individual, isolated fact is, in cases where a great
number of simultaneous or scattered individual isolated facts of national
life should be observed, the more important it is to discover proper
numerical relations, by noting all the like acts or experiences of men,
the time and place in question, and the relation of the aggregate of these
phenomena, to the sum-total of the population, or to the sum-total of
corresponding phenomena in other places. When this is done, and the facts
are completely enumerated and correctly recorded, there is no danger of
subjective error. And this species of “political and social measuring,” as
Hildebrand calls it, may be applied, not only to quantities, but to all
qualities accessible to the observation of the senses; since the
individual or isolated qualities of the things enumerated, may be again
made objects of enumeration. Without doubt, this mode of numerical
procedure is the most perfect for all those divisions of statistics in
which it can be followed; and hence, it should be our endeavor to make the
numerical side of statistics as comprehensive as possible. But, one side
of a science is not a science itself. As there is no natural science
proper called microscopy, embracing all the observations made by means of
the microscope, so care should be taken not to deduce the principle of a
science from the chief instrument it employs. There will always be many
and important facts in national life which can not be subjected to
numerical calculation, although they may be established with the usual
amount of historical certainty. Were statistics to be limited, in the
manner mentioned above, they would remain a collection of fragments, and
instead of being a science, properly so-called, become a method.(145)

Besides, it is evident, that, of statistics in general, economic
statistics constitute a chief part, and precisely the part most accessible
to numerical treatment. As these economic statistics need to be always
directed by the light of Political Economy, they also furnish it with rich
materials for the continuation of its structure, and for the strengthening
of such foundations as it already has. They, are, moreover, the
indispensable condition of the application of economic theorems to
practice.



                               Section XIX.


Private Economy—Cameralistic Science.


The meaning of the term cameralistic science (_Cameralwissenschaft_) can
be explained only by the history of the cameralistic system.(146) From the
end of the middle ages, we find, in most German countries, an institution
called the Council (_Kammer_) whose province it was to administer the
public domain, and to watch over regal rights. At first, a mere
governmental commission, it was not long before it developed into an
independent board. This change had taken place in Burgundy as early as the
year 1409. It was in that country that the emperor Maximilian became
acquainted with the institution; and by the erection of the aulic councils
at Innspruck and Vienna (1498 and 1501), he gave the principal impulse to
the imitation of it in Germany. As, at that time, the division of labor
was very little developed, and personal and collegial authority all the
more developed in consequence, it is easy to conceive that a great part of
all the new and rapidly increasing business of police administration was
confided to these councils. They were charged especially with what is
known to-day as economic police (_Wirthschaftspolizei_) and an important
part of the administration of justice, in its lower departments, was
turned over to their subordinates. The most eminent men who wrote, in the
seventeenth century, on cameralistic matters, laid great stress on the
point, that it was the duty of the aulic councils to entertain not only
fiscal questions, but that it was within their province also, to determine
questions of economic police.(147) The interest of absolute princes must
have greatly favored these cameralistic institutions, for they were in
their hands docile tools, which escaped the annoying intervention of the
states of their realms.

By degrees, the knowledge necessary to these council officials, and which
found no place in the lectures on law, were formed into a special body of
doctrine. After such men as Morhof and Thomasius had prepared the
way,(148) Frederick William I., himself a clever cameralist, and author of
the masterly financial system of Prussia, took the important step of
founding, at Halle and Frankfurt on the Oder, special chairs of economy
and cameralistic science; which, considering the time, were very ably
filled by Gasser and Dithmar. (1727.) There was thus formed in the German
universities a distinct school of cameralists, which, through Jung, Rössig
and Schmalz, reached to the nineteenth century. The term cameralistic
science, the creature of chance, was used, it must be said, with very
various limits to its meaning.(149)

However, Political Economy in Germany developed out of the science of law
and the cameralistic sciences, while in England and Italy it had its
origin chiefly in the study of questions of finance and foreign commerce.



                               Section XX.


Private Economy. (Continued.)


If we abstract from cameralistic science as it was understood in the last
century, what it has in common with all economy,(150) and therefore with
public economy, next that which belongs to the aggregate of governmental
economy, there remains only a number of rules, such as those which govern
the principal branches of private business, and which indicate how they
are to be carried on with the greatest advantage to those who engage in
them. Such are forest and rural economy, mining science, technology,
including architecture, and all that concerns founderies, and commercial
science. Now that the expression cameralistic science is altogether
obsolete, the aggregate of these might be designated by the name private
economy. Obviously, we should have here, neither a simple nor pure
science, but only a compilation of natural-philosophical and economic
lemmas. Thus, in agriculture, for instance, a knowledge of the different
kinds of soil, of the tillage of land, of the different plants and animals
etc., belongs to the domain of natural science; while all that relates to
the cost of production, the employment of capital, the wages of labor, the
exchange of products, net product and the price of land, are purely
politico-economical. The political economists also require a knowledge of
the natural side of the cameralistic sciences. Such a knowledge is
indispensable to every detailed and living theory, and especially to the
application of economic science to practice. The great difference lies in
this, that the cameralist interests himself in the production of material
goods for their own sake, while the political economist regards them only
in their relations to national life.(151)

It would seem, moreover, that political economists, especially in Germany,
have attached too much importance to putting formal bounds to their
special science. Why not rather follow the example of the students of
nature who care little whether this or that discovery belongs to physics
or chemistry, to astronomy or mathematics, provided, only, very many and
important discoveries are made?(152)



                               Section XXI.


What Political Economy Treats Of.


Political Economy treats chiefly of the material interests of nations. It
inquires how the various wants of the people of a country, especially
those of food, clothing, fuel, shelter, of the sexual instinct etc., may
be satisfied; how the satisfaction of these wants influences the aggregate
national life, and how in turn, they are influenced by the national life.
(Gospel of Matth., 4, 4.) This alone suffices to enable us to estimate the
importance of the science. The relation of virtue to wealth is likened by
Bacon to that of an army to its baggage. In Xenophon’s opinion, wealth is
really useful only to him who knows how to make a good use of it. From an
economic point of view, the happiest man is he who has accumulated most,
honorably, and used it best.(153) That, even in a material sense, the
intellect of a people is their most important element, is evident from the
example of the Chinese, who were so long acquainted with printing, powder,
and the mariner’s compass, without, by their means, attaining to
intelligent public opinion, forming a good army, or coming to an
understanding of the art of navigation, to any great extent.

The undervaluing of economic matters, for which ages of inferior
cultivation, our own middle ages for instance, are now praised and now
blamed, was really a rare exception even during these ages.(154) Other
kinds of acquisition and enjoyment then occupied the foreground; but there
never was a time, when gain and enjoyment in general were not favorite
objects of pursuit, and held in high esteem. The physical wants of
uncultured men cry out much louder than intellectual ones. (§ 2, 14.)(155)
On the other hand, in over-cultivated ages, when decay begins, an
over-estimation of material things is wont to become general.(156) The
mere servants of mammon, whether as political economists or as private
individuals, may see their depravity faithfully reflected in communism as
in a mirror. We should not overlook the fact that it is with whole nations
as with the individual man who amasses his own fortune. He reaches the
culminating point of his wealth generally after he has passed the prime of
life. The most flourishing period of a nation’s existence is wont just to
precede its decay, and to introduce it.(157) Hence, here nothing could be
more untrue, as Macchiavelli has remarked, than the general opinion that
money is the sinew of war.(158)




                               Chapter III.


The Methods Of Political Economy.



                              Section XXII.


Former Methods.


The methods(159) which would apply to any science of national life,
principles borrowed from any other science, are now generally looked upon
as obsolete. This is true, especially, of the theological method which
prevailed, almost exclusively during the middle ages,(160) and of the
juridical method of the seventeenth century.

It would be much more in harmony with the intellectual tendencies of the
time, to adopt a mathematical mode of treatment in Political Economy,
involving, as such a mode of treatment does, not the matter of the
science, but only a formal principle. That which is general in Political
Economy has, it must be acknowledged, much that is analogous to the
mathematical sciences. Like the latter, it swarms with abstractions.(161)
Just as there are, strictly speaking, no mathematical lines or points in
nature, and no mathematical lever, there is nowhere such a thing as
production or rent, entirely pure and simple. The mathematical laws of
motion operate in a hypothetical vacuum, and, where applied, are subjected
to important modifications, in consequence of atmospheric resistance.
Something similar is true of most of the laws of our science; as, for
instance, those in accordance with which the price of commodities is fixed
by the buyer and seller. It also, always supposes the parties to the
contract to be guided only by a sense of their own best interest, and not
to be influenced by secondary considerations. It is not, therefore, to be
wondered at, that many authors have endeavored to clothe the laws of
Political Economy in algebraic formulæ.(162) And, indeed, wherever
magnitudes and the relations of magnitudes to one another are treated of,
it must be possible to subject them to calculation. Herbart has shown that
this is so in the case of psychology;(163) and all the sciences which
treat of national life, especially our own, are psychological.(164) But
the advantages of the mathematical mode of expression diminish as the
facts to which it is applied become more complicated. This is true even in
the ordinary psychology of the individual. How much more, therefore, in
the portraying of national life! Here the algebraic formulæ would soon
become so complicated, as to make all further progress in the operation
next to impossible.(165) Their employment, especially in a science whose
sphere it is, at present, to increase the number of the facts observed, to
make them the object of exhaustive investigation, and vary the
combinations into which they may be made to enter, is a matter of great
difficulty, if not entirely impossible.(166) For, most assuredly, as our
science has to do with men, it must take them and treat them as they
actually are, moved at once by very different and non-economic motives,
belonging to an entirely definite people, state, age etc. The abstraction
according to which all men are by nature the same, different only in
consequence of a difference of education, position in life etc., all
equally well equipped, skillful and free in the matter of economic
production and consumption, is one which, as Ricardo and von Thünen have
shown, must pass as an indispensable stage in the preparatory labors of
political economists. It would be especially well, when an economic fact
is produced by the cooperation of many different factors, for the
investigator to mentally isolate the factor of which, for the time being,
he wishes to examine the peculiar nature. All other factors should, for a
time, be considered as not operating, and as unchangeable, and then the
question asked, What would be the effect of a change in the factor to be
examined, whether the change be occasioned by enlarging or diminishing it?
But it never should be lost sight of, that such a one is only an
abstraction after all, for which, not only in the transition to practice,
but even in finished theory, we must turn to the infinite variety of real
life.(167)

There are two important inquiries in all sciences whose subject matter is
national or social life: 1. What _is_? (What has been? How did it become
so? etc.) 2. What _should be_? The greater number of political economists
have confounded these questions one with the other, but not all to the
same extent.(168)

When a careful distinction is made between them, the contrast between the
(realistic) physiological or historical, and the idealistic methods is
brought out.(169)



                              Section XXIII.


The Idealistic Method.


Any one who has read a goodly number of idealistic works treating of
public economy (the state, law etc.) cannot have failed to be struck by
the enormous differences, and even contradictions, as to what theorizers
have considered desirable and necessary. There is scarcely an important
point which the highest authorities may not be cited for or against. We
must not close our eyes to this fact. “The giddiness that comes from
contemplating the depths of knowledge is the beginning of philosophy, as
the god Thaumas was, according to the fable, the father of Iris.”
(_Plato._) In a precisely similar manner, the student of public economy
(politics, the philosophy of law etc.) must familiarize himself with the
variations that have taken place in what men, at different periods of
history, have required of the state and public economy, until he is lost
in wonder at the contemplation.



                              Section XXIII.


The Idealistic Method. (Continued.)


It is impossible to fail to notice at once that those ideal descriptions
which have enjoyed great fame and exerted great influence, depart very
little from the real conditions of the public economy (of the state, law
etc.) surrounding their authors.(170) This is not mere chance. The power
of great theorizers, as, indeed, of all great men, lies, as a rule, in
this, that they satisfy the want of their own time to an unusual extent;
and it is the peculiar task of theorizers to give expression to this want
with scientific clearness, and to justify it with scientific depth. But
the real wants of a people will, in the long run, be satisfied in
life,(171) so far as this is possible to the moral imperfection of man. We
should at least be on our guard when we hear it said that whole nations
have been forced into an “unnatural” course by priests, tyrants and
cavilers. For, to leave human freedom and divine Providence out of
consideration entirely, how is such a thing possible? The supposed tyrants
are generally part and parcel of the people themselves; all their
resources are derived from the people. They must have been new
Archimedeses standing outside of their own world. (Compare, however,
_infra_, § 263.)

It is true, that if the result of the growth of generations be to
gradually produce a different people, these different men may require
different institutions. Then a struggle arises between the old and those
of the younger generation; the former wish to retain what has been tested
by time, the latter to seek for the satisfaction of their new wants by new
means. As the sea always oscillates between the flowing and ebbing of the
tides, so the life of nations, between periods of repose and of crisis:
periods of repose, when existing forms answer to the real substance of
things, and of crisis, when the changed substance or contents seeks to
build up a new form for itself. Such crises are called _reforms_ when they
are effected in a peaceful way, and in accordance with positive law. When
accomplished in violation of law, they are called revolutions.(172)

That every revolution, it matters not how great the need of the change
produced by it, is as such an enormous evil, a serious, and sometimes,
fatal disease of the body politic, is self-evident. The injury to morals
which the spectacle of victorious wrong almost always produces can be
healed, as a rule, only in the following generation. Where law has been
once trampled on, the “right of the stronger” will prevail; and the
stronger is, to some extent, the most unscrupulous and reckless in the
choice of the means to be employed. Hence, the well-known fact, that in
revolutionary times the worst so frequently remain the victors. The
counter-revolution which is wont to follow on the heels of revolution, and
with a corresponding violence, is a compensation only to the most
shortsighted. It allows the disease, the familiarizing of the people with
the infringement of law, to continue, until the hitherto sound parts are
attacked. Hence, a people should, if they would have it go well with them,
in the changes in the form of things which they make, take as their model
Time, whose reforms are the surest and most irresistible, but, at the same
time, as Bacon says, so gradual that they cannot be seen or observed at
any one moment. It is true, that, as all that is great is difficult, so
also is the carrying out of uninterrupted reform. Its carrying out,
indeed, supposes two things: a constitution so wisely planned as to keep
the doors open both to the disappearing institutions of the past and to
the coming institutions of the future; and, among all classes of the
people, a moral control of themselves, so absolute that, no matter what
the inconvenience, or how great the sacrifice, legal ways shall alone be
used. In this manner, two of the greatest and apparently most
contradictory wants of every legal or moral person, the want of
uninterrupted continuity and that of free development, may be satisfied.



                               Section XXV.


The Idealistic Method. (Continued.)


It is doubtless true that all economic laws, and all economic institutions
are made for the people, not the people for such laws and institutions.
Their mutability is, therefore, by no means such an evil as mankind should
endeavor to remove, but is wholesome and laudable, so far as it runs
parallel with the transformation of the people, and the changes which
their wants have undergone.(173) Hence, there is no reason why the most
various ideal systems should contradict one another. Any one of them may
be right, but, of course, only for one people and one age. In this case,
the only error would be, if they should claim to be universally
applicable. There can no more be an economic ideal adapted to the various
wants of every people, than a garment which should fit every individual.
The leading-strings of children and the staff of age would be great
annoyances to the man. “Reason becomes nonsense and beneficence a
torment.” Hence, whoever would elaborate the ideal of the best public
economy—and the greater number of political economists have really wished
to do this—should, if he would be perfectly true, and at the same time
practical, place in juxta position as many different ideals as there are
different types of people.(174) He would, moreover, have to revise his
work every few years; for, in proportion as a people change, and new wants
originate, the economic ideal suitable to them must change also. But it is
impossible to accomplish this on so large a scale. Besides, to appreciate
the present thus instantaneously, and to perfectly feel the pulse of time
thus uninterruptedly, requires a species of talent different from what
even the most distinguished scientists are wont to possess; talents of an
entirely practical nature, such as become a great minister of the interior
or of finance. And it is an acknowledged fact, that even the cleverest of
such practicioners, as the younger Pitt said of himself, generally feel
their way instinctively, and do not see it with the clearness necessary to
indicate it to others.



                              Section XXVI.


The Historical Method—The Anatomy And Physiology Of Public Economy.


We refuse entirely to lend ourselves in theory to the construction of such
ideal systems. Our aim is simply to describe man’s economic nature and
economic wants, to investigate the laws and the character of the
institutions which are adapted to the satisfaction of these wants, and the
greater or less amount of success by which they have been attended.(175)
Our task is, therefore, so to speak, the anatomy and physiology of social
or national economy!

These are matters to be found within the domain of reality, susceptible of
demonstration or refutation by the ordinary operations of science;
entirely true or entirely false, and, therefore, in the former case, not
liable to become obsolete. We proceed after the manner of the investigator
of nature. We, too, have our dissecting knife and microscope, and we have
an advantage over the student of nature in this, that the self-observation
of the body is exceedingly limited, while that of mind is almost
unlimited. There are other respects, however, in which he has the
advantage over us. When he wishes to study a given species, he may make a
hundred or a thousand experiments, and use a hundred or a thousand
individuals for his purpose. Hence, he can easily control each separate
observation, and distinguish the exception from the rule. But, how many
nations are there which we can make use of for purposes of comparison?
Their very fewness makes it all the more imperative to compare them all.
Doubtless, comparison cannot supply the place of observation; but
observation may be thus rendered more thorough, many-sided, and richer in
the number of its points of view. Interested alike in the differences and
resemblances, we must first form our rules from the latter, consider the
former as the exceptions, and then endeavor to explain them. (_Infra_, §
266).



                              Section XXVII.


Advantages Of The Historical Or Physiological Method.


The thorough application of this method will do away with a great number
of controversies on important questions.(176) Men are as far removed from
being devils as from being angels. We meet with few who are only guided by
ideal motives, but with few, also, who hearken only to the voice of
egotism, and care for nothing but themselves. It may, therefore, be
assumed, that any view current on certain tangible interests which concern
man very nearly, and which has been shared by great parties and even by
whole peoples for generations, is not based only on ignorance or a
perverse love of wrong. The error consists more frequently in applying
measures wholesome and even absolutely necessary under certain
circumstances, to circumstances entirely different. And here, a thorough
insight into the conditions of the measure suffices to compose the
differences between the two parties. Once the natural laws of Political
Economy are sufficiently known and recognized, all that is needed, in any
given instance, is more exact and reliable statistics of the fact
involved, to reconcile all party controversies on questions of the
politics of public economy, so far, at least, as these controversies arise
from a difference of opinion. It may be that science may never attain to
this, in consequence of the new problems which are ever arising and
demanding a solution. It may be, too, that in the greater number of party
controversies, the opposed purposes of the parties play a more important
part even than the opposed views. Be this as it may, it is necessary,
especially in an age as deeply agitated as our own, when every good
citizen is in duty bound to ally himself to party, that every honest
party-man should seek to secure, amid the ocean of ephemeral opinions, a
firm island of scientific truth, as universally recognized as truth as are
the principles of mathematical physics by physicians of the most various
schools.



                             Section XXVIII.


Advantages Of The Historical Method. (Continued.)


Another characteristic feature of the historical method is that it does
away with the feeling of self-sufficiency, and the braggadocio which cause
most men to ridicule what they do not understand, and the higher to look
down with contempt on lower civilizations. Whoever is acquainted with the
laws of the development of the plant, cannot fail to see in the seed the
germ of its growth, and in its flower, the herald of decay. If there were
inhabitants of the moon, and one of them should visit our earth, and find
children and grown people side by side, while ignorant of the laws of
human development, would he not look upon the most beautiful child as a
mere monster, with an enormous head, with arms and legs of stunted growth,
useless genitals, and destitute of reason? The folly of such a judgment
would be obvious to every one; and yet we meet with thousands like it on
the state and the public economy of nations when in lower stages of
civilization, and this, even among the most distinguished writers.(177)

We may, indeed, make a critical comparison of different forms, each of
which answers perfectly to its object or contents; but such a comparison
can possess historical objectivity, only when it is based on a correct
view of the peculiar course of development followed by the people in
question.

The forms of the period of maturity may be considered the most perfect;
earlier forms as the immature, and the later as those of the age of
decline.(178) But it is a matter of the greatest difficulty, accurately to
determine the culminating point of a people’s civilization. The old man
believes, as a rule, that the times are growing worse, because he is no
longer in a way to utilize them; the young man, as a rule, that they are
growing better, because he hopes to turn them to account. It is, however,
always a purely empirical question; and in the solution of it, the
observer’s eye may acquire a singular acuteness by the comparative study
of as many nations as possible, especially of those which have already
passed away.(179)

Could anyone contemplate the history of mankind as a a whole, of which the
histories of individual nations are but the parts, the successive steps in
the evolution of humanity would of course afford him a similar objective
rule for all these points in which whole peoples permanently differ from
one another.(180)



                              Section XXIX.


The Practical Character Of The Historical Method In Political Economy.


Before I close, I must refer to a possible objection which may be made to
historical or physiological Political Economy: that it may indeed be
taught, but that it cannot be a practical science. If it be assumed that
those principles only are practical, which may be applied immediately by
every reader, in practice, this work must disclaim all pretensions to that
title. I doubt very much if, in this sense, there is a single science
susceptible of a practical exposition.(181) Genuine practitioners, who
know life with its thousands of relations by experience, will be the first
to grant that such a collection of prescriptions, when the question is the
knowledge and guidance of men, would be misleading and dangerous in
proportion as such prescriptions were positive and apodictic, that is
non-practical and doctrinarian.

Our endeavor has been, not to write a practical book, but to train our
readers to be practical. To this end, we have sought to describe the laws
of nature which man cannot control, but, at most, only utilize. We call
the attention of the reader to the different points of view, from which
every economic fact must be observed, to do justice to every claim. We
would like to accustom the reader, when he is examining the most
insignificant politico-economical fact, never to lose sight of the whole,
not only of public economy but of national life. We are very strongly of
the opinion, that only he can form a correct judgment and defend his views
against all objections, on such questions as to where, how and when
certain liens and charges, monopolies, privileges, services etc., should
be abolished, who fully understands why they were once imposed or
introduced. Especially, do we not desire to impress a certain number of
rules of action on those who have confided themselves to our guidance,
after having first demonstrated their excellence. Our highest ambition is
to put our readers in a way to discover such rules of direction for
themselves, after they have conscientiously weighed all the facts,
untrammeled by any earthly authority whatever.(182)(183)





                                 Book I.


THE PRODUCTION OF GOODS.




                                Chapter I.


Factors Of Production.



                               Section XXX.


Meaning Of Production.


To create new matter is more than it is given to man to do. Hence, by the
term production, in its widest sense, we mean simply the bringing forth of
new goods—the discovery of new utilities, the change or transformation of
already existing goods into new utilities,(184) the creation of means for
the satisfaction of human wants, out of the aggregate of matter originally
present in the world. (_Producere!_) We confine ourselves, however, in
this to economic goods, as defined in § 2. In a secondary and more limited
sense, production is an increase of resources, in so far as the goods
produced satisfy a greater human want, than those employed in the
production itself.(185)(186)(187)

It would, however, be an error to suppose, that the creation of certain
utilities for the producer himself, or for others, constitutes the only
end of economic production. The more perfect economic production becomes,
the greater grows the pleasure the producer feels in his products, which
pleasure is at once the effect and the cause of his success. Hence,
production is to a great extent its own end. That this is so in the case
of artists is well known. “If you want only progeny from her, a mortal can
beget them as well. Let him who rejoices in the goddess, not seek in her
the woman,” says Schiller. There is not a really clever workman but has
something artistic in his mode of production. And even the meanest
productive activity, provided it is neither over-driven nor misdirected,
must of itself exert a good influence on the physical and moral
development or preservation of the producer. An idle brain is the devil’s
workshop.(188)



                              Section XXXI.


The Factors Of Production.—External Nature.(189)


The division of natural forces which formerly obtained, into organic,
chemical and mechanical, is of no great importance in Political Economy.
The tendency is more and more to resolve organic forces partly into
chemical and partly into mechanical. Between mechanical and chemical
forces, again, the boundary is not fixed, heat being always capable of
producing motion, and motion always of producing heat. Hence, it is all
the more important for us to find a division of the economic gifts
(matter, forces(190) and relations) of external nature, into such as are
capable of acquiring exchange value, and such as are not. (See § 5.)

A. Those gifts of nature which, because they cannot be appropriated by any
one, or which at least are inexhaustible as compared with the wants of
man, and therefore never have a direct value in exchange, belong either to
the class of _free_ goods, in the fullest sense of the word, as, for
instance, sunlight and the atmosphere (_supra_, § 5);(191) or they
constitute, by reason of their peculiar and intransmissible connection
with the whole country, an essential element of the national resources.



                              Section XXXII.


External Nature.—The Sea.—Climate.


To the last category belongs, for instance, the sea, the only natural
boundary of a country, which from a military point of view, constitutes a
protection to it, without, at the same time, disturbing peaceful traffic.
(_Riedel._) Here, also belong ocean currents, especially when uniformly
supported by regular winds,(192) the ebb and flow of the tides, which
constitute a piece of commercial machinery of the very greatest
importance, particularly when they affect the waters of rivers to a great
distance.(193) In this age, when the love of travel is so great and so
universal, what prices are paid in many places by strangers for the beauty
of a landscape, to its owner.

Special mention should be here made of climate, and of its heat or
moisture. The lines called isothermal, that is, lines of equal annual
heat, are, therefore, of greatest importance to public economy, because
the “zones of production” depend mainly on them.(194) However, we are
concerned here, not only with the average temperature of the whole year,
but especially with the distribution of heat among the several parts of
the day and the different seasons of the year, and the maximum summer heat
and winter cold (the isothermal and iso-cheimenal lines). Coast lands are
wont to have a milder winter and a cooler summer than continental ones
with an equal average yearly heat. This produces a great difference in
vegetation, because there are a great many plants which can endure the
winter’s cold very well, but require a hot summer; and _vice versa_.(195)
Were it not for this fact, in connection with the winter-sleep of plants,
a large portion of the north would be entirely uninhabitable. Besides, the
temperature of a place does not depend exclusively on its latitude, or on
its height above the sea-level.(196) The humidity of the climate is, as a
rule, great in proportion to the quantity of water in its neighborhood,
and to the height of its temperature; although, for instance, in Europe,
the number of rainy days increases, the further we advance towards the
north.(197) Although the distance of a place from the equator and its
height above the level of the sea have, in many respects, a similar effect
(vertical, horizontal isothermal lines and zones of production),
mountainous regions are uniformly distinguished by a greater degree of
humidity, which makes them better adapted for pasturage and
forest-culture. But the flora of a locality, being the resultant of all
its conditions, affords us a much better criterion of the value of the
climate for economic purposes, than the most accurate thermometric
observations. Other things being equal, the productive force of nature
operates, doubtless, with most energy, in warm climates. The more remote a
country is from the equator, the more is its fertility confined to its
lowest parts.(198) Greater heat will, as a rule, ripen the same product
sooner, and thus permit the same land to be used several times in the same
year.(199) Each individual harvest, as a rule, is more abundant,(200) and
the products better in many respects. The fruit, for instance, and wine,
contain more sugar,(201) and oleaginous plants contain more oil. Lastly,
since nature in warm countries is so much more generous, it may be
utilized by man with less regard for consequences. There is less need of
extensive woods, of large winter supplies, especially for animals;(202)
fewer buildings are demanded, and there is also less demand for human and
brute labor, since the work of plowing, sowing etc., extends over a
greater portion of the year.(203) It is true, on the other hand, that also
the destructive force of nature is greater in warmer than in colder
countries. (§ 209.)(204)



                             Section XXXIII.


External Nature.—Gifts Of Nature With Value In Exchange.


B. Those gifts of external nature which may become objects of private
property, and at the same time possess sufficient relative scarcity to
give them value in exchange, are either movable, and exhaustible in a
given place, or firmly connected with the land. The first category
embraces, for instance, such wild animals and plants as serve some useful
purpose, minerals, above all, fossil combustible matter(205)—the “black
diamonds,” coal, of which, with its canals, Franklin said that it had made
England what it is. The economical effect of their moveable character is
best seen, when the use made of an ordinary stratum of coal is compared
with that of a protracted subterranean fire in a coal mine.(206) The
latter can be directly useful only to those in its immediate vicinity.
Every lower layer of the burning coal would be less useful. An increase of
its actual power by accumulation in time or place is scarcely possible. In
all these respects, the movable coal is incomparably better adapted to the
satisfaction of man’s wants. It may be said that the capacity of heat for
drying, distilling, melting and hardening purposes, of imparting rapid
motion to heavy objects by the production of confined steam, is, at least,
a thousand times as great when a thousand bushels of coal are consumed as
when one is consumed. In most cases even the concentration of a large
quantity of coal will increase, the result not only absolutely, but
relatively.(207)(208)



                              Section XXXIV.


External Nature. (Continued.)


The materials, forces and relations or conditions of external nature,
immovably connected with parts of the land, even when in themselves
exhaustless, either allow only of a definite amount of economic
utilization, as, for instance, the mechanical force of a given waterfall,
which can drive only a definite number of mills of a definite size;(209)
or their increased utilization is accompanied by difficulties which
increase with still greater rapidity. This last is the case, especially in
the employment of land for agricultural purposes. It is, according to
Senior, one of the four fundamental axioms of Political Economy, that
additional labor, spent on a given quantity of land, produces, as a rule,
a relatively smaller yield; assuming, of course, that the art of
agriculture remains the same. It is not possible to determine either
generally, or in particular cases, the precise point at which agriculture
should stop, to prevent relatively smaller returns from increased
expenditure of labor and capital. Improvements in the art of agriculture
may remove it a great distance. But, that there is such a point admits of
no doubt. No one will believe that an acre of land can be made to produce
a quantity of the means of subsistence sufficient to support all Europe,
no matter what the amount of seed used, or of manure etc. employed.(210)
This is most apparent in forest-economy, where the absolute increase of
the so-called wood-capital becomes, after a certain time, smaller from
year to year.(211)



                              Section XXXV.


External Nature.—Elements Of Agricultural Productiveness.


In treating of the agricultural productiveness of a piece of land, it is
necessary to distinguish three things,—its bearing-capacity, its capacity
for cultivation, and its direct capacity to afford food to plants.(212)
Plants grow by drawing a part of the elements which enter into their
composition from the atmosphere, and a part from the earth through the
agencies of sunlight and of water. While the air, the sun’s heat, and in
most parts of the world, water, are free and inexhaustible goods, the
earth’s supply of food for plants must be considered as analogous, so far
as its exhaustibility and capacity to be appropriated are concerned, to
the beds of coal and of ore etc. which occur in mining districts. This is
certainly true, with a few important differences, however, as for
instance, that, as a rule, it is impossible, except through the
cultivation of plants, to obtain from the earth the stores of plant food
which it contains;(213) and that it is possible to husbandry to replace
the portion of these stores taken from the earth by the harvest, through
the agency of manures.(214)

Incomparably more important in the economic valuation of a piece of land
is its capacity for cultivation, because this depends much less on the
good or bad quality of the husbandman’s art. I mean here the so-called
physical constitution of the vegetable soil; its water-holding power, its
consistency (light or heavy soil) on which the difficulty of working it
depends; its ability to dry, in a shorter or longer time, and its
accompanying diminution in volume; its ability to draw moisture from the
atmosphere and to absorb the various kinds of gases; its heat-absorbing
and heat-containing power (hot, warm and cold soils).(215) Much depends
here on the depth of the vegetable soil and on the constitution of the
sub-soil, which, for instance, when it is very permeable, improves a very
moist soil, but in the form of meadow iron-ore (_Wiesenerz_), works great
injury. The vertical form of the land is also a very important element in
estimating the natural fertility of the soil. In mountainous districts,
the quantity of land which can be used (and with what labor!) is wont to
be relatively smaller than in low lands. Hence it is, that the former
become too small for their inhabitants; who, therefore, swarm over the
plains lying before them either as settlers or conquerors.(216) In the
eastern hemisphere, the northern slopes of mountain regions are most
unfavorably situated, although the southern slopes are frequently
subjected to more trying and more sudden variations of thawing and
freezing weather.(217)

But all these more special qualities of the soil must be distinguished
from their general basis, the bearing or carrying capacity which land
possesses as a mere superficies, and which the most naked rock (Malta!),
and the bed of a flowing stream (the floating gardens of China!) possess
to some extent, since there is a possibility of establishing a
plant-feeding surface on them. This bearing capacity, which in most
instances is given only by nature, and which can be added to only to a
very limited extent and at great outlay, is wont, when the population is
very dense, to acquire considerable exchange value in the
vicinity.(218)(219)



                              Section XXXVI.


External Nature.—Further Divisions Of Nature’s Gifts.


The gifts of nature, we further divide into those which can be directly
enjoyed and those which are of use only indirectly, by facilitating
production. (Natural means of enjoyment,—means of acquisition.)(220) An
extreme superfluity of the former is as disastrous to civilization as a
too great scarcity of them. How simple the economy of a tropical country!
A banana field will support twenty-five times as many men as a wheat field
(_K. Ritter_); and with infinitely less labor; for all that is needed is
to cut the stems with their ripened fruit, to loosen the earth a little
and very superficially, when new stems shoot up.(221) At the base of the
mountains of Mexico, a father needs labor only two days in the week to
support his family. Hence, nothing so much excites the wonder of the
traveler there as the diminutiveness of the cultivated ground surrounding
each Indian hut.(222) But in these earthly paradises, where, as Byron
said, even bread is gathered like fruit, the powers of man slumber as
certainly as they grow torpid in polar deserts.(223) The sentence: “In the
sweat of thy brow shalt thou eat bread,” has been a blessing to mankind.
Athens was not only the literary and political, but also the economic
capital of Greece; and yet Attica was one of the most sterile countries in
the world.(224) Unfortunate Messina, on the other hand, was the most
fertile province of Greece. In modern times, no countries of equal extent
have produced as many great captains, statesmen, savants and artists as
Holland, whose securest portions are as unfertile as those which are
fertile are threatened by the sea. On the other hand, how lately and
imperfectly has the so-called black-earth of southern Russia fallen under
the influence of civilization!(225)



                             Section XXXVII.


External Nature.—The Geographical Character Of A Country.


The geographical character of a country is, as a rule,(226) most
intimately connected, not only with its flora and fauna, but also with the
character of its people. One of the crowning glories of the progress of
modern science is, that it has recognized anew the power of this wonderful
organism, and that it has made geography an explanatory medium between
nature and history. The conditions most favorable to the development of
civilization are found in a well developed country which slopes gradually
through a series of intermediate terraces from a mountain summit to a
plain; especially when they are connected with one another by a good
system of streams; since here the opposite peculiarities of the
populations of the highlands and coast-lands(227) tend to produce a
nationality both one and varied. Where the transitions are too abrupt, as
for instance, in New Holland, they easily impede inter-communication; and,
still more, where the several parts of the country are of very great
extent; as, for example, the desert of North Africa, the plateau of South
Africa or that of Central Asia. Europe is favored above all other parts of
the world by the happy combination of mountain and plain.(228) We might
pursue the parallel existing between the soil and the character of a
people into the minutest details, and discover, even in the difference
between Spanish, French, German and Hungarian wines, a reflection of the
different characters of the people.(229)

But whence is this? Can it be that dead nature has thus irresistibly
affected the living mind? We do not need to give a materialistic answer to
the question.(230) Almost every people has migrated at some period of its
existence. Urged on by their peculiar tastes and tendencies, they settled
in the places most in harmony with their character. A higher hand was over
them; one which, we should unreservedly trust, placed them in such
external circumstances as were most favorable to the development of all
their faculties.

But the influences of man on nature are no less notable than those of
nature upon man. The greater number of domestic animals and plants which
Europe possesses to-day, it has been obliged to introduce from other parts
of the globe.(231) In the interior of Gaul, the vine rarely ripened, at
the time of Christ.(232) On the other hand, Mesopotamia, formerly one of
the gardens of the world, is now covered with dried-up canals, filled a
little below the surface with heaps of brick and broken vases, the remains
and other vestiges of a once dense population. Its former rich alluvial
soil, now almost calcined, produces at present scarcely anything except a
few saline plants, mimosas etc.(233) The higher the civilization of a
people, the less does it depend on the nature of the country.



                             Section XXXVIII.


Of Labor.—Divisions Of Labor.


Man’s capacity for most economic labor is so closely connected with the
exquisite articulation of the human hand, that Buffon could say without
exaggeration that reason and the hand made man man.(234) But it is true of
economic labor, as of all other labor, that it is more efficient in
proportion as mind predominates over matter.

The best division of economic labor is the following:(235)

A. Discoveries and inventions.(236)

B. Occupation of the spontaneous gifts of nature, as, for instance, of
wild plants, wild animals, and of minerals.(237) Where this is the only
kind of economic labor, man is necessarily dependent on nature in a high
degree.

C. The production of raw materials; that is, a direction given to nature
in order to the production of raw materials, by stock-raising,
agriculture, forest-culture etc., but not by mining.

D. The transformation (_Verarbeitung_) of raw material by means of
manufactories, factories, the trades etc.

E. The distribution of stores of goods among those who are to use them
directly, whether from people to people or from place to place
(wholesale), or among the individuals of the same place (retail).(238) To
this class also belong leasing, renting, loaning, etc.

F. Services, in the more limited sense of the term, which embraces
personal as well as incorporeal goods; as, for instance, the labors of the
doctor, teacher; virtuoso, of the statesman, judge, and of preachers,
whose office it is, by way of eminence, to produce and preserve the
immaterial wealth, known as the State and the Church.(239)

The order followed in the above classification is that in which the
different classes of labor are wont to be historically developed.



                              Section XXXIX.


Labor.—Taste For Labor.—Piece-Wages.


Man’s taste for labor is conditioned especially by the extent to which,
and the security with which, he may hope to enjoy the fruit of his labor
himself. Hence it is that, as a rule, the slave (§ 71, ff.) and socager
work least willingly, the day laborer with less industry than the
piece-worker,(240) who is at the same time more satisfied with himself,
and gives most satisfaction to his master,(241) since he acquires more
both for himself and for his master. The superiority of piece-paid labor
is greater in proportion as the workman calculates his own advantage. It
is, therefore, smallest in the case of ingenuous uneducated workmen, and
in that of the really conscientious.(242) The fear of seeing one’s
condition grow worse, through want of industry, exerts an influence
precisely similar to the hope of improving it. In both respects, free
competition (§ 97) must be considered one of the principal means of
furthering the taste for labor.(243)

Among the causes which have contributed to make England the first country
in the world, viewed from a politico-economical stand-point, English
writers on Political Economy have pointed out as one of the principal, the
prevalence there of piece-wages.(244) Payment by the piece should, of
course, be practiced, only in cases in which the work may be broken up
into a series of isolated tasks, and is completed by such a series. Hence,
it is not applicable where a great many different things are required of
the same workman; nor in relations in which continuity, as, for instance,
of the inclination or disposition of the workman is the chief thing.(245)
The further the division of labor is carried in our day, the greater the
part money plays in our social economy, and the more lasting relations are
dissolved, the more general becomes piece-work, which, with all its
material advantages, has, speaking morally, its dark side.
(_Atomism!_)(246) In a great many branches of manufactures it has been
relinquished because the excellence of his work suffered from the
workman’s haste, and because he could not be properly controlled.(247) It
is rather the quantity than the quality of work which increases with
piece-work, and where the quality of the work is what is desired, this
system has not the same field. And where it obtains, as, for instance, in
the case of ordinary type-setters, resort is had to payment by the day for
compositors engaged on mathematical treatises, fac-similes, inscriptions
etc. On the side of the workman, it is generally only the idle and awkward
who oppose piece-work on principle. It is a subject of regret that the
best and most industrious workmen are carried away by it to an extent
detrimental to their health.(248) However, many of the deficiencies of the
piece-wage principle may be removed by agreements made with whole groups
of workmen; provided, always, that the groups are not too large to prevent
the mutual knowledge and surveillance of their members.(249) The quantity
of work is greatest, its quality best, and the material(250) employed used
most sparingly, when the workman works on his own account, or has a share
in the profits. This last is proper only in those branches of the business
the success of which depends on the quality of the work. To compel the
workman to share in the profits alone will not do, because he is generally
too poor to run any risk or to do long without his earnings. The system of
paying “commissions,” therefore, is to be recommended all the more
strongly, since it is a combination of fixed wages with a share in the
profits. This system is very prevalent in North America, where a great
deal has to be confided to the workmen. It is practiced, also, in the
whale fisheries, and on the Greek ships in the Levant engaged in coasting,
where much more depends on the care of the sailors than on the ability of
the captain.(251) It presupposes good workmen, equal almost to their
master in education,(252) for instance, in the case of overseers of labor;
since every better inducement to the taste for labor which is not only
juster but more complicative, is not only a condition but also the effect
of higher culture. But if the economy of a people is ripe for share-wages,
and masters begin to introduce them in earnest in individual cases, the
work produced will be improved to such a degree that it can not be long
before all others will be necessitated to follow them.(253)

If,  however, workmen are to enjoy the fruit of their industry, it is
necessary, first of all, that public order should be secure. Even the most
industrious become discouraged where despotism or anarchy prevails. On the
other hand, even the greatest security is no sufficient incentive to a
nation of fatalists.(254)



                               Section XL.


Labor.—Labor-Power Of Individuals.


The average labor-power of individuals varies very much in different
nations.(255) The reason of this is, in part, doubtless a difference in
natural endowments. Thus, for instance, no people surpass the English and
Anglo-American in energy, none the German in intelligence in work or the
French in taste. Where we can assume that the same meaning is attached to
the expression, “military capacity,” by the different recruiting bureaus,
important conclusions as to the physical labor-power of different
localities may be drawn from the ratio existing between the number of
those fit for military service and those who are legally liable to
military duty.(256)

But these conclusions are greatly modified by the state of civilization
and that of society. Where the laboring classes are despised and paid in a
manner unworthy of human beings, the badness of their work will be in
keeping with the estimation in which it is held. The reverse of this,
also, is usually true under different circumstances. (§ 173.) Thus, it has
been noticed in France, that native workmen, provided with as substantial
food as English workmen, are scarcely inferior to the the latter in the
technic value of their labor.(257) A Mecklenburg day laborer eats almost
twice as much as a Thuringian workman, but then he accomplishes almost
twice as much. Hence, employers gain in the long run by paying their
workmen well. As civilization advances, the same number of workmen become,
not only more industrious and more capable, but the same quantity and
quality of labor becomes, as a rule, cheaper.(258)

The moral culture of a people exerts the greatest influence here. In every
private undertaking, a great part of the expense attending it, and in
every state, a great part of the expense of its police system, and of its
system of administering justice, is occasioned only by the dishonesty of
men. If all this expense could be dispensed with, and full confidence
placed in individuals, it would be possible to devote much more time and
energy to positively useful labor.(259) In estimating the labor-power of
different nations or different periods of time, the division of population
according to age is also of importance. As a rule, the labor-power of
males is greatest from the age of twenty-five to the age of forty-five.
The more numerous, therefore, the class of the population between these
ages is, the more favorably, other things being equal, is it situated as
regards labor.(260)(261) But, as a rule, the relative number of full-grown
people is greatest in highly civilized nations. (§ 248.)(262)



                               Section XLI.


Labor.—Effect Of The Esteem In Which It Is Held.


As civilization advances, labor becomes more honorable. All barbarous
nations despise it as slavish. _Pigrum et iners videtur sudore adquirere
quod possis sanguine parare_: has been the motto of all medieval times. In
heathen Iceland, the owner of a piece of land might be deprived of it by
an adversary who could overpower him in single combat. This mode of
acquisition was considered more honorable than purchase. It was Thor’s own
form of investiture. The ideas of the Romans on rightful acquisition may
be inferred from the word _mancipium_ (manu capere).(263) Pure
Christianity, on the other hand, preached the honorableness of labor from
the first (Thess. 4, 11; II. Thess. 3, 8 seq.; Eph. 4, 28). And so in the
time of the Reformation,(264) when Christendom was returning to its
primitive purity.

In keeping with this is the fact, that the most cultivated nations, and
the same may be said of individuals, value time most highly. “Time is
money.” (_Benjamin Franklin._) An English proverb calls time the stuff of
which life is made.(265) While in negro nations, individuals do not even
know their own age; while in Russia, there are very few clocks to strike
the hours, even in the towers of churches, in England, a watch is
considered an indispensable article of apparel, even for very young people
and for some of the lower orders of society.(266) Railroads operate in
this respect as a kind of national clock. The introduction of machinery
and the more minute division of labor, make punctuality a necessity. While
South Americans and West Indians are frightfully careless in their every
movement, a carelessness which betrays itself even in their drawling
speech,(267) the life of a New Englander has been compared to the rush of
a locomotive. In the markets of Central Asia, nothing strikes the European
with so much surprise as the little value put upon time by the merchants
of India and Bucharia, who are fully satisfied when, after endless
waiting, they succeed in obtaining a somewhat higher price for their
wares.(268)



                              Section XLII.


Of Capital.—The Classes Of Goods Of Which A Nation’s Capital Is Made Up.


Capital(269) we call every product laid by for purposes of further
production. (§ 220).(270)

Hence, the capital of a nation consists especially of the following
classes of goods:

A. _Soil-improvements_, for instance, drainage and irrigation works,
dikes, hedges etc., which are, indeed, sometimes so far part of the land
itself that it is difficult to distinguish them from it.(271) To this
class belong all permanent plantations.

B. _Buildings_, which embrace workshops and storehouses as well as
dwellings; also artificial roads of all kinds.

C. _Tools, machines and utensils_ of every description;(272) the latter
especially for personal service, and for the preservation and
transportation of other goods. A machine is distinguished from a tool in
that the moving power of the former is not communicated to it immediately
by the human body, which only directs it; while the latter serves as a
species of equipment, or as a better substitute for some member of man’s
body.(273) To be of advantage, these three kinds of capital must save more
labor or fatigue than it has cost to produce them. Tools are, however,
older than machines. The aborigines of Australia used only a lance and a
club in hunting; the somewhat more civilized American Indians, the bow and
arrow; Europeans use firearms: in all of which a gradual progress is
observable. Of the blind forces which communicate motion to machines,
water was the first used, then the wind, and last of all, steam.(274)

D. _Useful and laboring animals_, in so far as they are raised, fed and
developed by human care.

E. _Materials for transformation_ (_Verwandlungsstoffe_): either the
principal material which constitutes the essential substance of a new
product, the yarn of the weaver for instance, the raw wool, silk or cotton
of the spinner; or the secondary material which, indeed, enters into the
work, but only for purposes of ornamentation, as gold-leaf, lac, colors
etc.

F. _Auxiliary substances_, which are consumed in production, but do not
constitute a visible part of the raw product,(275) as coal in a smithy,
powder in the chase or in mining, muriatic acid, in the preparation of
gelatin, chlorine in bleaching etc.

G. _Means of subsistence_ for the producers, which are advanced to them
until production is complete.

H. _Commercial stock_, which the merchant keeps always on hand to meet the
wants of his customers.

I. _Money_ as the principal tool in every trade that is made.

K. There is also what may be called _incorporeal capital_ (quasi-capital
according to _Schmitthenner_), which is as much the result of production
as any other capital, and is used in production, but which, for the most
part, is not exhausted by use. There are species of this kind of capital
which may be transferred, as for instance, the good will of a
well-established firm. Others are as inseparably connected with human
capacity for labor as soil-improvements with a piece of land; e.g., the
greater dexterity acquired by a workman through scientific study, or the
greater confidence he has acquired by long trial.(276) The state itself is
the most important incorporeal capital of every nation, since it is
clearly indispensable, at least indirectly, to economic production.(277)

The greater portion of the national capital is in a state of constant
transformation. It is being continually destroyed and reproduced. But from
the stand-point of private economy, as well as from that of the whole
people, we say that capital is preserved, increased or diminished
according as its value is preserved, increased or diminished.(278)
_Pretium succedit in locum roi et res in locum pretii._ “The greater part
in value of the wealth now existing in England, has been produced by human
hands within the last twelve months. A very small proportion indeed of
that large aggregate was in existence ten years ago; of the present
productive capital of the country, scarcely any part except farm-houses
and a few ships and machines; and even these would not, in most cases,
have survived so long, if fresh labor had not been employed within that
period in putting them into repair.... Capital is kept in existence from
age to age like population, not by preservation, but by reproduction.”
(_J. S. Mill_.)



                              Section XLIII.


Capital.—Productive Capital.


Capital, according to the employment that can be given it, may be divided
into such as affects the production of material goods, and such as affects
personal goods or useful relations. The former, under the name of
productive capital, is, in recent politico-economical literature, usually
opposed to capital in use.(279) Evidently any one of the two kinds of
capital mentioned above, may be used for both purposes.(280) Indeed, the
two classes are, in many respects, coincident. Thus, a livery-stable
carriage or a circulating library is productive capital to its proprietor,
and capital in use(281) (_Gebrauchskapital_) to the nation in general;
although the circulating library from which an Arkwright obtains technic
information, or the livery-stable vehicle which carries a Borsig to his
counting-room, has certainly been used in the production of material
goods. Almost all capital in use may be converted into productive capital,
and hence, the former might be called quiescent capital, and the latter
working capital.(282) One of the principal differences between productive
capital and capital in use is, that the former, even when most judiciously
employed, does not so immediately replace itself, as the latter, by its
returns.(283) On the other hand, the real dividing line between capital in
use, and objects consumed which are not capital, is, and it is in complete
harmony with our definition of capital, that the latter are subject not
only to a more speedy destruction and one which is always contemplated,
while in the case of the former, its destruction is only the unintended
reverse-side of its use.

Among a highly civilized people, a great amount of capital in use, as
compared with the productive capital of the country, may be considered a
sure sign of great wealth. When this is the case, the people, without
losing the desire of further acquisition, think that they have enough to
richly enjoy the present. I need only call to mind the munificence
displayed by the middle classes in England, in their silver plate and
other domestic utensils. But the people of Russia, and Mexico also, can
make no mean display of silverware.(284) Here luxury is only a symptom of
the disinclination or inability of the inhabitants of the country to use
their capital in the production of wealth. How much richer would Spain be
to-day, if it had employed the idle capital spent in the ornamentation of
its churches in constructing roads and canals!(285) Most nations in a low
state of civilization suffer from the absence of legal guarantees. Each
one is compelled to turn his property into a shape in which it can be most
easily transferred from one place to another and hidden. This is the
principal reason why the Orientals possess, relatively speaking, so many
precious stones and so much of the precious metals. The same cause
accounts for the simplicity of their dwellings.(286) On the other hand,
productive capital is to be found in the greatest proportion among
civilized nations which are making very rapid strides towards wealth, the
people of the United States, for instance.



                              Section XLIV.


Capital.—Fixed Capital, And Circulating Capital.


Capital, according as it is employed, is divided into fixed capital and
circulating capital. Fixed capital may be used many times in production by
its owner; circulating capital only once. The value of the latter kind of
capital passes wholly into the value of the new product. In the case of
the former kind of capital, only the value of its use passes into the new
product. (_Hermann._) Hence, the farmer’s beasts of burthen belong to his
fixed capital; their food, and his cattle intended for the slaughter, to
his circulating capital. In a manufactory of machines, a boiler intended
for sale is circulating capital; while a similar one, held in reserve for
the machines used in production, is fixed capital. Ricardo attributes a
somewhat different meaning to these two terms: he calls fixed capital that
which is slowly consumed, and circulating, that which disappears
rapidly.(287) Fixed capital is, indeed, produced and preserved by
circulating capital; but it is, for the most part, transformed again into
circulating capital.(288) Besides, it is only by means of the latter, that
the former can be productively employed.(289) The relative importance of
fixed and circulating capital to a country depends upon whether the
country is an advanced or only an advancing one. A people with very much
and very fixed capital are indeed very rich; but run the risk of offering
many vulnerable points to an aggressive enemy, and of thus turning the
easily jeopardized mammon into an idol. To make a passing sacrifice of the
country that the people and the state may be saved, as did the Scythians
against Darius, the Athenians against Xerxes, and the Russians against
Napoleon, becomes difficult, in proportion as the nation has become richer
in fixed capital.(290) But, as the destination of the latter is changed
with much greater difficulty than that of circulating capital, highly
cultivated nations would find it very hard to satisfy new wants, if they
could not always appropriate the results of additional savings to the
production of new fixed capital.



                               Section XLV.


Capital.—How It Originates.


Capital is mainly the result of saving which withdraws new products from
the immediate enjoyment-consumption of their possessor, and preserves
them, or at least their value, to serve as the basis of a lasting
use.(291) As capital represents the solidarity of the economic past,
present and future, it, as a rule, reaches back into the past and forward
into the future, through a period of time longer in proportion as its
amount and efficiency are greater.(292) Those producers, too, whose
products perish rapidly may, also, effect savings by exchanging their
products and capitalizing their counter-value. Thus, the actor, whose
playing leaves after it nothing but a memory, may use the wheat received
by him from a farmer who came to listen to him, in the employment of an
iron-worker, and invest the product permanently in a railroad. The
transformation may be effected by means of money, bonds etc., but it is
none the less real on that account. Order, foresight and self-restraint
are the intellectual conditions precedent of saving and capital. The
childish and hail-fellow-well-met disposition which cares only for the
present is inimical to it. True, the desire of saving can be developed
only where there are legal guarantees to ownership;(293) guarantees which
are both the conditions precedent and the effect of all economic
civilization.(294) The Indians, Esquimaux etc., had to be taught for the
first time by the missionaries and merchants—and it was with the greatest
difficulty it was done—to save their booty, and spare the natural sources
of their acquisition. Originally, they were, in the heat and excitement of
their wild hunting and fishing, wont to destroy on the spot what they
could not enjoy in the moment.(295) In the lowest stages of civilization,
the first saving of capital of any importance is effected frequently
through robbery or in the way of slavery.(296) In both cases, it is the
stronger who compel the weaker to consume less than they produce. See
_infra_, § 68. Where civilization is at its highest, the inclination to
save, as a rule, is very marked.(297) It begins to decline where a people
are themselves declining in civilization, and especially where legal
guarantees have lost their force.

But capital may be increased even without personal sacrifice; as for
instance, by mere occupation, as of certain goods, not hitherto recognized
as such. Thus, also, by the establishment of valuable relations, the
advantages of which either become the common good of all; or which,
because at the exclusive command of one individual, obtain value in
exchange. The progress of civilization itself may increase the value of
existing capital. Thus, for instance, a house, considered as capital, may
double in value if a frequented street be opened in its neighborhood. To
this category belong all improvements in the arts which enable existing
capital to achieve more than it could before. The invention of the compass
increased the value of the capital employed in the merchant marine to an
extent that cannot be calculated.(298) The increase of capital effected by
saving soon finds a limit unless such limit is widened by the progress of
civilization.(299)(300)




                               Chapter II.


Co-Operation Of The Factors.



                              Section XLVI.


The Productive Coöperation Of The Three Factors.


All economic production generally demands the coöperation of the three
factors: external nature, labor and capital. But with the political
economist, labor is the principal thing; and not merely because all
capital presupposes labor, nor because every combination of the three
factors is an act of labor; but, in general, because “the human mind’s
idea of means and ends makes all goods goods for the first time.”
(_Hufeland._)

Leaving the free forces of nature, surrounded by which we live and work,
out of consideration, and also the fact that all raw material is due to
nature, land is the indispensable foundation of all economy. But how
little can unassisted nature do to satisfy human wants! How much less to
produce goods possessed of value in exchange! A virgin forest, for
instance, sold in its natural state, has, indeed, value in exchange, but
only because it is taken into account that it can be cleared, and that
there are means of transportation already existing.(301) The greater part
of the forces of nature are latent to nomads and nations of hunters. When
labor develops, they are set free to assist it.(302) It is very seldom
that any thing can be produced without capital. Even the poorest gatherer
of wild berries needs a basket and must be clothed.(303) Were there no
capital, every individual would have to begin at the very beginning every
moment. Life would be possible only in a tropical climate. No man, since
the days of Adam, has been able to labor, except on the condition that a
considerable advance of capital had been made upon him. There is not a
nail in all England, says Senior, which cannot directly or indirectly
directly be traced back to savings made before the Norman conquest.(304)



                              Section XLVII.


Productive Co-Operation Of The Three Factors. The Three Great Periods Of A
Nation’s Economy.


The relation of the three factors to one another is necessarily very
different in different branches of production. For instance, in the case
of cattle-raising on a prairie, labor does very little, land almost
everything. Hence an extensive, thinly populated country is best adapted
to this species of production. But where land is scarce, as in wealthy and
populous cities, human activity should be directed into those branches of
industry which need capital and labor, as manufactures and the trades. (§
198.)(305)

Looked at from this point of view, the history of the development of the
public economy of every people may be divided into three great periods. In
the earliest period, nature is the element that predominates everywhere.
The woods, waters and meadows afford food almost spontaneously to a scanty
population. This is the Saturnian or golden age of which the sagas tell.
Wealth, properly speaking, does not exist here, and those who do not
possess a piece of land run the risk of becoming completely dependent on,
or even the slave of a land owner. In the second period, that through
which all modern nations have passed since the later part of the middle
ages, the element, labor, acquires an ever increasing importance. Labor
favors the origin and development of cities as well as exclusive rights,
the rights of boroughs and guilds by means of which labor is, so to speak,
capitalized. A middle class is formed intermediate between the serfs and
the owners of the soil. In the third period, capital, if we may so speak,
gives tone to everything. The value of land is vastly increased by the
expenditure of capital on it, and in manufactures, machine labor
preponderates over the labor of the human hand.(306) The national wealth
undergoes a daily increase; and it is the “capitalism” which first gives
an independent existence to the economic activity of man; just in the same
way that law is, as it were, emancipated from land-ownership, from the
church and the family only in the constitutional state
(_Rechtsstaat_).(307) But, during this period, the middle class with its
moderate ease and solid culture may decrease in numbers, and colossal
wealth be confronted with the most abject misery.(308) Although these
three periods may be shown to exist in the history of all highly civilized
countries, the nations of antiquity, relatively speaking, never advanced
far beyond the second, even in their palmiest days. A great part of that
which is accomplished among us by means of capital and of machines, the
Greeks and Romans performed by the labor of slaves. Leaving Christianity
out of the question, nearly all the minor differences between the public
economy of the ancients and that of the moderns may be reduced to this
fundamental distinction.(309)(310)



                             Section XLVIII.


Critical History Of The Idea Of Productiveness.


In this chapter, the dogma-historical (_dogmengeschichtliche_) part is of
the utmost importance, because it treats of the connection between the
deepest fundamental notions and the principal branches of practical life.
It is clear that every political economist must construct his exposition
of productiveness on his prior notions of goods and value. We must,
therefore, draw a distinction between expositions which are logical but
altogether too narrow, and wholly erroneous ones.(311)

Thus, the Mercantile System admits every mode of applying the three
factors of production, but considers them really productive only in so far
as they increase the quantity of the precious metals possessed by the
nation, either through the agency of mining at home, or by means of
foreign trade. This view stands and falls with the altogether too limited
idea of national wealth before mentioned (§ 9), which this system
advocated.(312) The majority of the followers of the Mercantile System
ascribe more power to industry to attract gold and silver from foreign
parts, than to agriculture, and to the finer kinds of industry than to the
coarser; to active and direct trade, more than to passive and indirect
trade.



                              Section XLIX.


Critical History Of The Idea Of Productiveness.—The Doctrine Of The
Physiocrates.


The doctrine of the Physiocrates is to be explained in part by a very
natural reaction from the narrow-heartedness of the Mercantile System, and
at the same time, by a presentiment, misunderstood, of the true theory of
rent. (§ 150 ff.). Of the six classes of labor mentioned above (§ 38),
those only are called productive which increase the quantity of raw
material useful for human ends. All the other classes, it matters not how
useful, are called sterile, salaried, because they draw their income only
from the superabundance of land-owners and the workers of the soil.
Tradesmen, in the narrower sense of the term, produce only a change in the
form of the material, the higher value of which depends on the quantity of
other material consumed for the purposes of the tradesman’s labor. If any
of this material is saved, the value of their products sinks, although to
the advantage of the economy of the whole nation. In any case, industry
could create no wealth, but only make existing wealth more lasting. It
might, so to speak, accumulate the value of the quantity of food consumed
during the building of a house in the house itself.(313)

But if tradesmen really earned, in the value of their products, only what
they had consumed during their labor, it would be difficult for them to
find employers to provide them with capital. Everyone will acknowledge,
that a Thorwaldsen and an ordinary stone-cutter, with the same block of
marble, the same implements, the same food, would necessarily, after the
same time, turn out exceedingly different values.(314) And, even in the
case that industry should add to the raw material only precisely the same
amount of value as had been consumed by the workmen, can it be said that
the work ceases to be productive simply because it is consumed by the
workmen themselves? If that were so, agriculture even, would, in most
countries with a low civilization, be unproductive.(315)

Commerce, according to the theory of the Physiocrates, only transfers
already existing wealth from one hand to another. What the merchants gain
by it is at the cost of the nation. Hence, it is desirable that this loss
should be as small as possible. Hence sterility!(316) But, the more
important branches of business, especially wholesale trade, are connected
with a transportation of goods (_Verri_), either from one place or from
one period of time, into another. Here the genuine merchant speculates
essentially on the difference of the values in use which are afterwards
greater than before.(317) The ice shipped yearly from Boston to tropical
lands met a much more urgent and wide-spread want there than it would if
it had remained at home. And thus the storage of grain in large quantities
after a bountiful harvest withdraws, indeed, an object of enjoyment from
the consumption of the people; but its sale, after a bad harvest,
undoubtedly increases their enjoyment in a much greater degree than it was
before diminished. Besides, the condition of both parties to the contract
is usually improved in all normal trade. (_Condillac._)(318) No one parts
with exchangeable goods unless they are of less use to him than the ones
he receives in return.(319) And so, the value in use of a nation’s
resources is really increased by commerce. To the other attributes of
goods it adds one of the principal conditions of all use, accessibility
(_Kudler_), with which it either newly endows them, or which it increases
in degree. To this end, the merchant makes use of tools, just as the
manufacturer does. What spinning-wheels, looms and workshops are to the
latter, ships, warehouses, cranes etc., are to the former. If production
be not complete until the thing produced is made fit for its last end,
consumption, commerce may be looked upon as the last link in the chain of
productive labor. It, at the same time, constitutes a series of
intermediate links; as without it no division of labor is possible, and
without a division of labor, no higher economic productiveness.(320) How
commerce may increase the value in exchange of goods, and without in any
way injuring the purchaser, needs no further illustration.(321)



                                Section L.


The Same Subject Continued.


Even Adam Smith called services, in the narrower sense of the term (§ 3),
the grave and important ones of the statesman, clergyman and physician, as
well as the “frivolous” ones of the opera singer, ballet-dancer and
buffoon, unproductive. The labor of none of these can be fixed or
incorporated in any particular object.(322)(323) But how strange it is
that the labor of a violin-maker is called productive, while that of the
violin-player is called unproductive; although the product of the former
has no other object than to be played on by the latter? (_Garnier_.) Is it
not strange that the hog-raiser should be called productive, and the
educator of man unproductive (_List_); the apothecary, who prepares a
salve which alleviates for the moment, productive, the physician,
unproductive, spite of the fact that his prescription in relation to diet,
or his surgical operation, may radically cure the severest disease?

If the productiveness of an employment of the factors of production be
made to depend on whether it is attended by a material result, no one will
deny that the labor of the plowman, for instance, is productive; and no
one, of Adam Smith’s school, at least, that that of the clerk, who orders
the raw material for the owner of the manufactory, is. They have
participated indirectly in the production. But, has not the servant of the
state, who protects the property of its citizens, or the physician, who
preserves the health of the producer, an equally mediate but indispensable
share in it? The field-guard who keeps the crows away, every one calls
productive; why, not, then, the soldier, who keeps away a far worse enemy
from the whole land? (_McCulloch._) But the entire division of business
into two branches, the one directly, and the other indirectly productive,
can be defended only as respects certain kinds of goods.
(_Schmitthenner._) The labor of the judge, for instance, is only
indirectly productive in the manufacture of shoes, inasmuch as he
guarantees the payment of the shoemaker’s account. On the other hand, the
shoemaker contributes only very indirectly to the general security which
the law affords, by protecting the judge’s foot.(324)

Nor can any effectual inferiority of service be claimed, simply because
the productive power of one branch of business is, measured by the
duration of its results, greater than another.(325) What is more
perishable than a loaf of bread bought for dinner? What more imperishable
than the _monumentum ære perennius_ of a Horace? The labor expended on
persons and on relations (_Verhältnissen_) is, both as to the extent and
duration of its results, much less capable of being estimated than any
other; but its capacity of accumulation and its power of propagation are
greater than any other. It is in the domain of the “immaterial,” that man
is most “creative.” (_Lueder._)(326) Finally, neither should the greater
indispensableness of the more material branches of business be too
generally asserted. Agriculture produces grain which is indispensable, and
tobacco which is not; industry, cloth, as well as lace; commerce draws
from the same part of the world rhubarb and edible bird’s-nests; and so,
to _services_ belong the indispensable ones of the educator and judge, as
well as those of the rope-dancer and bear-leader, which can be dispensed
with.(327) Indeed, the dividing line between material and intellectual
production cannot, by any means, be closely drawn.(328)



                               Section LI.


The Same Subject Continued.


The greater number of recent writers(329) have, therefore, come to be of
the opinion that every useful business which ministers to the whole
people’s requirement of external goods possesses economic
productiveness.(330) But it makes a great difference to science, whether a
view is considered true because no one has suggested a doubt of its
correctness, or because all doubts as to its truth have been triumphantly
removed.



                               Section LII.


Idea Of Productiveness.


It should never be lost sight of, that the public economy of a people
should be considered an organism, which, when its growth is healthy,
always develops more varied organs, but always in a due proportion, which
are not only carried by the body, but also in turn serve to carry it. The
aggregate of the wants of the entire public economy etc., is satisfied by
the aggregate activity of the people. Every individual who employs his
lands, labor or capital for the whole, receives his share of the aggregate
produce, whether he contributed or not to the creation of the kind of
produce in which he is paid. Thus, in a pin-manufactory, the workman who
is occupied solely in making the heads of pins is not paid in pins or
pin-heads, but in a part of the aggregate result of the manufacture, in
money. Every department of business, therefore, for the achievements of
which there is a rational demand, and which are remunerated in proportion
to their deserts, has labored productively. It is unproductive only when
no one will need what it has brought forth, or when no one will pay for
it; but, in this case, what is true of the writer without readers—that he
is unproductive—and of the singer without hearers, is equally true of the
peasant whose corn rots in his granary, because he can find no sale for
it.(331)



                              Section LIII.


The Same Subject Continued.


In this matter, again, there is an important difference to be observed
between private or individual economy and economy in its widest sense, in
the sense of a world-economy. The productiveness of labor is estimated in
the case of the former, according to the value in exchange of its result;
in the case of the latter, according to its value in use. There is a great
number of employments which are very remunerative to private individuals,
but which are entirely unproductive, and even injurious, so far as mankind
is concerned; for the reason that they take from others as much as, or
even more than they procure to those engaged in them. Here belong, besides
formal crimes against property, games of chance,(332) usurious
speculations (§ 113) and measures taken to entice customers away from
other competitors. Again, scientific experiments, means of communication
etc., may be entirely unproductive in the individual economy of the
undertaker, and yet be of more profit to mankind in general, than they
have cost the former.(333) In this respect the nation’s economy holds a
middle place between individual economy and the world’s economy.(334)
Strictly speaking, only those employments should be called productive
which increase the world’s resources. Hence, the work of government should
be called so, only in so far as its expenses are covered by the taxes paid
willingly by the more reasonable portion of the citizens; and also only in
so far as its work is really necessary to the attainment of its end.(335)
The productiveness of an employment supposes, also, that it is not carried
on at the cost of other employments which it is more difficult to do
without. In a healthy nation we may, in this matter, rely, to a certain
extent, on the judgment of public opinion, which knows how to appreciate,
at their just value, professional gamblers, pettifoggers and the luxury of
soldiers. The greater, freer and more cultivated a nation is, the more
probable is it that the productiveness of private economy is also
national-economical productiveness, and that national-economical
productiveness is world-economical productiveness.(336)



                               Section LIV.


Importance Of A Due Proportion In The Different Branches Of
Productiveness.


Much always depends on the due proportion of the different branches of
productiveness to one another. Thus, Spain, for instance, has remained
poor under the most advantageous circumstances in the world,(337) because
it allowed a disproportionate preponderance of personal services. The
character of the Spanish people has always given them a leaning towards
aristocratic pride and economic idleness. Tradesmen, in that country,
sought, as a rule, to amass merely enough to enable them to live on the
interest of their capital; after which they, by way of preference, removed
it into some other province, where they might be considered as among the
nobility; or they withdrew into a monastery. Even in 1781, the Madrid
Academy thought it incumbent on it to propose a prize for the best essay
in support of the thesis: “The useful trades in no way detract from
personal honor.”(338) During the century in which the country was in its
greatest glory, the whole people were bent on being to all Europe what
nobles, officers and officials are to a single nation. “Whoever wishes to
make his fortune,” said Cervantes, “let him seek the church, the sea
(i.e., go as an adventurer to America) or the king’s palace.” Under Philip
III., there were in Spain nine hundred and eighty-eight nunneries, and
thirty-two thousand mendicant friars. The number of monasteries trebled
between 1574 and 1624, and the number of monks increased in a yet greater
ratio. A great many of its manufactories, much of its commerce, and not a
few of its most important farms were controlled by foreigners, especially
by Italians. There were, it seems, in 1610, one hundred and sixty thousand
foreign tradesmen living in Castile. In 1787, there were still 188,625
priests, monks, nuns, etc.; 280,092 servants; 480,589 nobles; 964,571 day
laborers; 987,187 peasants; 310,739 mechanics and manufacturers; 34,339
merchants.(339) As a counterpart to this, the United States had, in 1840,
about 77.5 per cent. of its population engaged in agriculture, 16.8 in
manufactures and mining, 4.2 in shipping and commerce, 1.3 in the learned
professions.(340)

We might be tempted, in view of this contrast, to return once more to the
unproductiveness of personal services. It is not, however, the direction
given to the forces of production, but the squandering of them, that is
injurious. When the Magyar, through mere vanity, drives a yoke of from
four to six horses where two are enough; or when, as in 1831, Irish
agriculture employed 1,131,715 workmen to produce a value of thirty-six
million pounds sterling, while that of Great Britain(341) produced one
hundred and fifty millions a year, and employed only 1,055,982 workmen,
these causes are as sure to impoverish the country, as the waste of the
Spaniards in supporting such an army of clergy and servants. Of course,
the temptation to waste wealth on parks is greater than to waste it in
vegetable gardens! The probability that a man will ruin himself by keeping
too many servants is greater than that he will do the same by employing
too many operatives.(342) And all the more, as there are many and
especially important services which regulate their own remuneration: thus,
as a rule, those of the statesman, those of the military in times of war,
and those of the priest in the age of superstition.(343)



                               Section LV.


The Degree Of Productiveness.


Concerning the degree of productiveness, it may be remarked that that
application of the factors of production is most productive, which, with
the least expenditure of means, satisfies the greatest want in the economy
of a people. Here, there is a continual change, corresponding precisely to
the change in wants and faculties. After a bad harvest, for instance, the
labor which procures grain from foreign countries or the supplies of
former years, is most productive; and, after an earthquake which has
destroyed a large city, the labor of the builder. Agriculture is, as a
rule, the more productive labor of undeveloped nations, and industry of
highly developed nations.(344)(345)




                               Chapter III.


The Organization Of Labor.



                               Section LVI.


Development Of The Division Of Labor.


The larger a tree grows to be, the more boughs and branches does it put
forth. The more perfect any species of animal is, the more does it stand
in need of a special organ for each special purpose. And thus the division
of labor has developed and kept pace with the development of human
society. While Crusoe was obliged to provide for all his wants by his own
labor, we find that in the wildest Indian family the male is employed in
war, the chase, in fishing, in the manufacture of arms and boats, and in
the transportation of the latter during long marches; the female, on the
other hand, in the preparation of food, in the hewing of wood, the curing
of skins, the sewing of clothes, in the building and preservation of the
wig-wam, the care of children, and the carriage of baggage when on the
march.(346) These occupations, at first entirely domestic, became, by
degrees, separate industries, which are constantly subject to further
subdivision.(347)



                              Section LVII.


Development Of The Division Of Labor.—Its Extent At Different Periods.


In the middle age of a people, the division of labor is not carried to any
great extent. The courtiers of King Frotho III. advised him to marry,
“since otherwise his majesty’s ragged linen would never be mended.” Saint
Dunstan, although he occupied a high position in politics and in the
Church, was an excellent blacksmith, bell-founder and designer of ladies’
robes. Chriemhild in the Nibelungenlied was an industrious and skillful
milliner. In the corresponding period of Grecian and Roman history, we
find Penelope and Lucretia at the loom, Nausicaa, a laundress, the
daughter of the king of the Lestrigons, fetching water from the spring,
Odysseus, a carpenter, a queen of Macedonia as a cook, and finally the
distaff of Tanaquil.(348) In the highlands of Scotland, in 1797, there
were a great many peasants all of whose clothing was home-made, with the
exception of their caps; nothing coming from abroad except the tailor, his
needles and iron tools generally. But the peasant himself was the weaver,
fuller, dyer, tanner, shoemaker etc. of his own family:(349) every man
jack of all trades.(350)

In present England, on the other hand, the manufacture of watches is
divided into one hundred and two branches which have to be specially
learned; only the so-called “watch-finisher” carries on other branches
besides. In Wolverhampton, it may happen that a man, employed in the
manufacture of keys, may not be able to make a whole key after an
apprenticeship of ten years, for the reason that during all that time he
may have been engaged only in filing.(351) In English agriculture there
are, according to German notions, very few complete wholes. A well-marked
distinction exists there between the cultivators of corn and breeders of
cattle; and the latter are again divided into breeders of young cattle,
into fatteners of cattle etc. Its industries are, in large part, separated
into provinces. Thus, linen manufactures are confined almost exclusively
to Leeds and Dundee, woolen manufactures, to Leeds,(352) cotton
manufactures, to Manchester, and Glasgow, pottery to Stafford, coarse iron
to South Wales, hardwares to Birmingham, cutlery to Sheffield. And so in
the different quarters of the city. Thus, in large towns, the banks,
stores, offices etc., are found in one portion, with scarcely any
intervening dwelling houses.

On the division of labor depends all differences of estate and class, and
all human culture. It cannot be claimed that a division of labor does not
exist among animals;(353) but those animals among which something
analogous to a division of labor among men exists, are raised far above
all others by their human-like economy and the relative importance of
their achievements.(354)



                              Section LVIII.


Advantages Of The Division Of Labor.


The advantages of all suitable division of labor, consequent upon the
natural differences of human faculties and dispositions, are the
following:

A. _The greater skill of the workman._ Even physically, many capacities
are, by an indefinite number of repetitions of the same operation,
enhanced to an extraordinary degree; which, however, renders the
performance of other operations more difficult. Thus, the man who has
developed his muscles and hardened his hands working in a smithy, renders
himself incapable of becoming a violin-player or an operating
oculist.(355) Here belongs especially the possibility of turning every
kind of labor-power to greatest account. Even children(356) and old men
may be made, in this way, to play a part in the production of goods. It
becomes practicable, too, to relieve men endowed with superior faculties
from common labor, and allow them to devote themselves exclusively to the
development of the peculiar powers with which nature has gifted them.(357)

B. _A great saving of time and trouble._ The simpler the operation
performed by a single workman, the more easily is it learned; the smaller
is the price paid or apprenticeship, which depends on this, at least, that
beginners perform poorer work and are paid more poorly. “The shortest way
to the end is most easily found when the end itself is near, and can be
kept continually in view.” (_J. B. Say_.) Where the same workman combines
different operations, a great deal of time is lost in changing tools etc.
Besides, it always takes some time for a workman to get rightly under way
of his work. The person who changes thus frequently becomes more easily
indolent. Lastly, there is a great number of operations which demand the
same aggregate amount of effort, no matter what the number of objects on
which they are performed. It is thus, for instance, with shepherds,
mail-carriers etc.(358) The post carries a thousand letters with almost as
much ease as one; and the entire life of a wholesale dealer would scarcely
suffice to carry all the letters which he mails in a single day, to their
place of destination. During the middle ages, every man was obliged to
watch over his own personal safety and the maintenance of his own rights;
while in 1850, in Great Britain, twenty-one million people are protected
in their persons and property, in an infinitely more effectual manner, and
at less cost, by fifteen thousand soldiers, and by a much smaller number
of policemen, whose place it is to preserve public order. (_Senior_.)
Something similar takes place among merchants, and it may be admitted as
correct in principle, that every new intermediary, freely recognized by
both sides in commerce,(359) makes labor better or less expensive.

C. As the land of a country is, in a sense, the natural extension of the
national body, _the international division of labor_ affords an indirect
means, but frequently an indispensable one, of procuring the products of
foreign countries and climates.(360) If the English people wished to
obtain themselves, and without having recourse to any intermediary, the
quantity of tea which they annually consume, it is possible that its whole
agricultural population would not suffice to procure it; while, at
present, it is obtained by the labor of forty-five thousand industrial
workmen. (_Senior_.) Moreover, the division of labor increases not only
the aptitude of the workman but also his incentive to productive labor,
since it guarantees to every one the certainty of being able, by means of
exchange, to enjoy the productions of every other person.(361)



                               Section LIX.


Conditions Of The Division Of Labor.


It is by its division, that labor, considered as a factor of production,
is raised to the highest degree of efficiency. Its results in any given
industry are, therefore, more important in proportion as the element labor
predominates in it. Hence, these results are much smaller, in agriculture,
for instance, than in the trades, or in personal services.(362) The most
expert sower or harvester cannot be employed the whole year through in
sowing or harvesting. Some kind of rotation of crops, some kind of
combination of tillage and stock-raising is necessary to every
agriculturist. On this depends the importance of the technic secondary
industries of agriculture, which are, in principle, opposed to the
division of labor. Hence, too, almost any person engaged in a trade, no
matter of what kind, supposes a greater number of customers than a tiller
of the land of the same rank.

The more labor is divided, the greater is the amount of capital necessary
to it.(363) It may be even said, that all preparatory labor becomes
capital in its relation to subsequent labor. If ten isolated workmen can
produce ten dozen articles of any kind, daily, and, after the introduction
of a more efficient division of labor, fifty dozen, the employer must
provide them, in the latter case, not only with five times as much
capital, but probably with fifty times as much, as then, five hundred
dozen are making continually.



                               Section LX.


Influence Of The Extent Of The Market On The Division Of Labor.


But it is the extent of the market especially which determines the limits
of the division of labor; for there is a direct and necessary relation
between the division of labor and the exchange of its surplus. Hence, the
division of labor may be carried farthest in the case of those products
which are most easily transported from place to place, and which, at the
same time, possess the utility that is most widely recognized. The
smallness of the market may depend upon the scantiness of the population,
or upon its scattered condition;(364) upon their smaller ability to pay,
or upon the bad means of communication at their disposal.(365) Hence it
is, that in villages, small cities, and still more on isolated farms, many
branches of business are carried on by one person, which are divided among
many in larger cities; and this is especially true in the case of
businesses which have a chiefly local demand.(366) While, in small places,
the barber is also frequently the physician, in larger ones there are
dentists, oculists, accoucheurs, surgeons etc.(367); and while, in the
former, the tavern keeper is both dry goods merchant and grocer, there
are, in the latter, tea merchants, cigar-dealers, dealers in mourning
goods (in London childbed-linen warehouses) etc., and hotels for all the
different classes of travelers. There can be a distinct class of porters,
hack-men etc., only where commerce is very active.(368) And even in cities
like Paris, where the costly industries that minister to luxury, that of
the jeweler, for instance, admit of only a limited division of labor, this
effect depends on the smallness of the market; a market, indeed, which
geographically may extend over the whole earth, but which, in an economic
sense, must always remain small, on account of the small number of
customers who have the ability to pay for their products. The real wonders
produced by the division of labor and the employment of machinery we must
look for in the manufacture of the cheapest and commonest
commodities.(369)



                               Section LXI.


The Division Of Labor—Means Of Increasing It.


Whoever, therefore, would increase the division of labor among the people,
must, first of all, extend their market; and this is done most efficiently
by improving the means of communication. Even in our day, it is over the
water-highroads that the heaviest articles are carried with the least
expenditure of force;(370) but where civilization is not advanced, these
highroads possess still greater advantages, because of their safety,
convenience and priority. And here is the explanation of the intimate
connection of the beginnings of all civilizations with the existence, near
the scene of such beginnings, of good natural water-roads. “Even the
wildest inhabitant of the sea coast very soon obtains the idea of
distance, which is altogether wanting to the inhabitant of the primeval
forest. No sooner does he catch sight of the far-off island than his
yearning after the distant assumes a well-defined character. Bits of wood
floating past him suggest to his mind the best material to buoy himself up
upon the water, and a fish the best form for his craft.” (_Klemm._) Hence
the Mediterranean sea, especially the eastern portion, with the various
peoples and products of its coasts, with its numerous islands, peninsulas
and bays, its easy navigation, but little influenced by the tides or by
ocean currents, was the principal seat of ancient civilization.(371) The
literal meaning of Attica is coast-land. (_Strabo._) The colonization of a
new country is wont, where possible, to begin on the coast, especially on
islands near the coast; and to follow the course of rivers into the
interior. Even whole continents occupy, for the most part, in the history
of the world, the position assigned them by their coast-development.(372)
While it is hard to determine whether, in the case of the European
continent, its limbs predominate or its trunk, Africa may be said to be a
trunk without members. Its islands, most of them insignificant in
themselves, are almost entirely cut off from it by ocean currents. This
explains why Madagascar had not, by any means, the influence on African
civilization which Crete, Sicily and Britain have had on the civilization
of Europe. Asia occupies, in this respect, about a middle position between
Europe and Africa. The trunk of that continent bears to its members about
the proportion of 670,000 to 150,000 square miles. And what is worst of
all, the middle of the whole is an almost insurmountable wall between
north, south, east and west Asia. Hence the tenacious peculiarity and
isolated development of the Chinese, Malayan, Indian and Arabic
civilizations; while the three peninsulas of southern Europe, for
instance, have affected one another so largely, and in so many different
ways.(373) The northern hemisphere compared with the southern, presents a
contrast similar to that between Europe and Africa, or of the rich
coast-groups of the Atlantic compared with the poor ones of the
Pacific.(374) But it is most especially, large, well-watered plains that
are best adapted to the construction of roads, and thus to facilitate the
division of labor. And while we find, in many countries, that the
mountainous regions reached a certain stage of development earlier than
any others, because they were more easily protected by military force, we
find, too, that even here, plains, have, for the most part, had the
largest share of power and of civilization (northern Italy, northern
France, the plains of Switzerland and north Germany). See § 36.(375) We
must not, however, fail to consider the reverse side of the picture of the
great highways of the world. The same reasons that raise them to the
dignity of lines of commerce, make them lines of war; and even the
contagion of great plagues and of the ruling vices follows, as a rule, the
avenues of trade.



                              Section LXII.


The Reverse, Or Dark Side Of The Division Of Labor.


There are hardships often attending the highly developed division of
labor, the dark and bright sides of which are most strikingly observable
only in large cities. However, when it is charged with adding to the
natural inequality of men, the accusation can be met only by the answer,
that, without the division of labor, we should be all equally poor and
equally coarse; for each one would be absorbed by the necessity of
providing for his lower wants, and no one would be in a way to develop his
higher faculties. Even the poorest man has more enjoyment in consequence
of the division of labor, than he could have living in a state of
isolation from his fellow men. The most wretched among us, the invalid
without property of any kind, the father of a family with more children
than he can support, would simply starve in the primeval forest.

Those socialists who never tire of preaching “association,” overlook for
the most part, the great, free association which our needs, wants or
tastes are ever changing, and which is given us, as of course, by the
division of labor.(376) Yet the skill produced by the division of labor is
unavoidably connected with a corresponding one-sidedness. The Russians,
for instance, are exceedingly apt, but they rarely distinguish themselves
in any thing.(377) Love of his avocation, or pride in it, is a thing
unknown to the Russian workman. He shirks all continuous labor.(378)
Experience has shown that the Neapolitans and Italians, in general,
exhibit great skill when they work alone; but that when a great many of
them work together, they become rapidly confused. The English, on the
other hand, are slow to learn anything new, or to overcome unlooked for
difficulties; but they have no equals as workmen in organized
industries.(379) The difficulty experienced in seeking a new calling,
where a high division of labor obtains, arises as much from the fact that
each person here has received a more one-sided training, as from the
necessity he is under of competing from the first with only consummate
workers. Rousseau’s school has laid too much stress on the tendency of
higher civilization to diminish individual independence. _Quand on sait
creuser un canot, battre l’ennemi, construire une cabane, vivre de peu,
faire cent lieues dans les forêts sans autre guide que le vent et le
soleil, sans autre provision qu’un arc et des flêches; c’est __ alors
qu’on est un homme!_(380) We might reply that to build a steamship or a
palace, and to travel around the world are far better. (_Dunoyer._) Even
physically, civilized man is superior to the savage, as might be inferred
from the greater average duration of life of the former. Of course,
extremes should not be compared, nor should we contrast the frame of a
weaver or student with that of a savage chief.(381)

In a similar way, the one-sidedness of the international division of labor
may be pregnant with great danger to national independence.



                              Section LXIII.


Dark Side Of The Division Of Labor.—Its Gain And Loss.


Where, indeed, the one-sidedness produced by the division of labor goes so
far as to cause the degeneration(382) of the workman’s personality, the
human loss of the nation is greater than the material gain purchased by
it. Thus the occupation of polishing metals or gilding, when continued for
a long time without interruption, invariably ruins the health. What must
be the aspect of the soul of a workman who, for forty years has done
nothing but watch the moment when silver has reached the degree of fusion
which precedes vaporization! who is blind to all else, but receives a good
fat salary for his services.(383) Schleiermacher rightly declared all
human action which is purely mechanical, through which man becomes a
living tool (slave!) immoral. When the division of labor has reached this
point, machines should take the place of men. The morality of a profession
may be measured by the degree in which it corresponds with the universal
calling of the race.(384) It is not, therefore, a piece of inconsistency
but rather a deeply felt want, when, where civilization is at its highest,
so many demands are made that the division of labor should take a
retrograde path. The practice of gymnastic exercises by the sedentary
classes, universal military duty, the participation of citizens in
municipal government and in political affairs, of laymen in the government
of the church, of the wealthy in the administration of charity; all these
things are, from a materialistic stand-point, considered a great
squandering of time. It may be, that, if the division of labor were more
rigidly carried out, we might, by its means, obtain more perfect results
with less economic expense. But the whole man is of more importance than
the sum of his achievements and enjoyments. (Luke, 9:25.) Wo to the nation
where only jurists have a developed sense of the right, where political
judgment and cultivated patriotism are the portion of only officials and
placemen, where only the standing army has warlike courage, and the clergy
only conscious religiousness; where parents leave all care for education
to the teachers of the various branches of learning, and where physical
vigor is to be found only among the proletarians. Hence there is nothing
more ruinous than premature one-sided education in a single trade or
profession—a thing which often happens from poverty before the foundations
of the general education becoming a human being have been laid. The higher
a man’s position, the more should he, so to speak, be a representative of
the whole human race. Who, for instance, would wish to see a ruler brought
up as men are to a special branch of science or to a special
profession?(385)(386) The best corrective for the one-sidedness produced
by a high division of labor consists in the extension and many-sided
employment of leisure time, both of which are made more easy by the same
high civilization which always accompanies the division of labor.(387)



                              Section LXIV.


The Co-Operation Of Labor.


The coöperation or combination(388) of labor must, however, always
correspond to the division of labor. Both are but different sides of the
one idea of social labor; the separation of different kinds of labor, in
so far as they would disturb one another, and the union or combination of
them so far as they help one another.(389) The vintner or grower of flax
would necessarily die of hunger if he could not certainly count on the
grower of corn. The workman in a pin-factory, who prepares only the heads
of pins, must be sure of his colleagues who sharpen the points, if his
labor would not be entirely in vain. The labor of the merchant is not even
thinkable without that of the different producers between whom he
mediates. Where the production of a certain article depends on the
services of six different kinds of labor, one of which, however, demands
thrice the time, and another twice the time of the rest, it is clear,
that, in order that the business may be properly carried on, so many
workmen should be employed that their number divided by 9 should leave no
remainder. (_Rau._) The union or combination of different kinds of labor
is most perfect when the workmen live nearest together; when, therefore,
they are not separated by great difficulties of transportation; or in
different countries, in which case, a war might tear all to pieces.



                               Section LXV.


The Principle Of Stability, Or Of The Continuity Of Work.


Coöperation in time is of equal importance: the principle of the
stability, or of the continuity of labor. When a workman dies, it is
necessary to be able to calculate on a substitute. It is well known that
it is much harder to begin a business, than it is, afterwards, to improve
and enlarge it; and this, the more complicated it is. A new enterprise
will take root easily, only where there are several similar ones already
in existence; a new manufacturing establishment, for instance, where by
the existence of other such establishments, the requisite habits of the
workmen, of capitalists and of the public in general, have been previously
developed. The skill of workmen is propagated especially by observation
and the personal emulation of the young; whence it is, that the
introduction of new industries is best made by the immigration of skilled
workmen.(390) Hence the baleful influence of such interruptions, as for
instance, the repeal of the edict of Nantes. Hence too, it is, that
despotism and the reign of the populace are so unfavorable to the economy
of a country, where there can be no guarantee of a consistent observance
and development of the laws. To the best applications of the principle of
the continuity of labor belong the church-building of the middle ages, the
national canals, the street and fortification systems of modern times; all
of which have been created only by the coöperation of several generations
to the same end.(391) The most striking means by which such a coöperation
has been advanced in modern times is public credit, “a draft on
posterity;” yet, all saving is, in principle, the same. The most powerful
element in the coöperation in time of labor is the economy in common of
the family, although it differs in degree, according to the different
kinds of family inheritance. Where, as among the English middle classes,
it is customary to secure the business property of the family to one child
by will, and to entrust the conduct of the business, during the life of
the father, to the devisee, to provide for the other children by
insurance, by savings etc., made from the surplus of the business, there
may be old firms which remain always new, however; because they combine
the experience of age with the energy of youth, and are never broken up by
a division of the inheritance. But the compulsory equality of heirs, which
actually obtains in France, compels almost every new generation to begin
with a new firm. (See § 85 seq.)(392)



                              Section LXVI.


Advantage Of Large Enterprises.


On the results of the division and coöperation of labor rests the superior
advantage of all great undertakings, and they are, therefore, smaller in
agriculture than in industry. “It is harder to acquire the first thousand
than the second million.” Abstraction made of the conditions of capital
and of the market, the limit up to which the growing magnitude of an
enterprise becomes more advantageous, lies in the increasing difficulty of
superintendence. Numberless commercial improvements, such as the
post-office, railroads, telegraphs, exchange, banks etc., have operated
powerfully to extend these limits. It is frequently possible, even in
small enterprises, to secure the advantages of large enterprises, by
association among those concerned. They must, of course, possess the
necessary capital. If they have not got it, as property, they must borrow
it. It is, of course, peculiarly difficult here to preserve the necessary
unity, without which the coöperation of labor becomes the confusion of
labor. The more moral and intelligent the participants are and the simpler
the business, the more extensive may it become, and the more probable will
be its success. (§ 90.)(393)(394)(395)




                               Chapter IV.


Freedom And Slavery.



                              Section LXVII.


The Origin Of Slavery.


An institution like that of personal bondage, which, it can be shown, has
existed, among all nations of which history gives us information, at one
time or another, must have very general causes. Among these may be
mentioned especially subjection through war. It is not possible to
calculate how much the principle, that it was proper to reduce the man to
slavery whom it was considered right to kill, contributed to make war less
bloody in an uncivilized age.(396) A nation of hunters is almost compelled
to grant no quarter; the conqueror would be obliged either to feed his
prisoner or to put arms in his hands. It is certainly a great humanitarian
advance, when this state of things is superseded by slavery among nomadic
nations.(397)

In times of peace, economic dependence is the result of poverty, excessive
debt etc.(398) Where there is no division of labor, the individual has no
means of supplying his wants, except by cultivating a spot of ground. But,
how can the poor wretch who has neither capital(399) nor land exchange
anything of value for either? Such an advance, where there is no security
in law, can be made only on the credit of a very important pledge. But the
man who is destitute of all property can offer nothing but the productive
power of himself or of his family.(400) And so it is with the small landed
proprietor who has lost all his capital;(401) for, considering the
superabundance of land, the part which he possesses has value in exchange
only to the extent that it is joined with the certainty of being
cultivated; and here is the origin of the _glebæ adscriptio_. The
hereditary transmission of the relation to the children seems to be
equally useful to them; or who, were this not the case, would think of
providing them with food? It also frequently happens that poor parents
prefer to sell their children to seeing them starve.(402) Hence the
strange fact that most nations have the most rigid system of slavery
precisely at the time that the soil produces food most readily. We need
only cite the instance of the South Sea Islands, at the time of their
discovery. In many negro countries, where the people have not yet learned
to use animals for transportation, the lowest classes, although they enjoy
a nominal liberty, are used as beasts of burden.(403)



                             Section LXVIII.


The Same Subject Continued.


In all very low stages of civilization, the greatest absence of the
feeling of wants, and the greatest indolence, are wont to prevail, and in
the highest degree. As soon as their merest necessities are provided for,
men begin to look upon labor as a disgraceful occupation, and indolence as
the highest kind of enjoyment. (§ 41, 213 ff.) Sustained and voluntary
efforts, in any number, then become possible only by the creation of new
wants; but these new wants suppose a higher civilization. Escape from this
sorry circle is then effected in the most humane manner, through the
agency of foreign teachers; inasmuch as the representatives of a more
highly cultivated people (missionaries, merchants etc.), by their own
example, make the nation acquainted with more wants, and at the same time
help toward their satisfaction.(404) But, in the case of nations whose
civilization is completely isolated, or having intercourse only with
others equally low, progress is the creature of force exclusively. The
barbarous isolation of families ceases when the strongest and most
powerful force the weaker into their service. It is now that _the division
of labor really begins_: the victor devotes himself entirely to work of a
higher order, to statesmanship, war, worship etc.; the very doing of which
is generally a pleasure in itself. The vanquished perform the lower. The
one-half of the people are forced to labor for something beyond their own
brute wants. And it is, here as elsewhere, the first step that costs.(405)
(§ 45.)



                              Section LXIX.


Origin Of Slavery.—Want Of Freedom.


It is not to be supposed that slavery, at this stage, is so oppressive
even to those who have been deprived of their freedom. The feeling of
moral degradation which slavery, abstraction even made of its abuses,
awakens in us, is unknown in a very uncivilized age.(406) The child
willingly obeys the orders of strangers, and is hired out to service by
his parents etc. The want or craving for liberty keeps pace with the
intellectual growth of a people. The systematic over-working of servants
or slaves, in the interest of their masters, is scarcely thinkable in an
uncultured age, when, in the absence of commercial intercourse, every
family consumes what it produces.(407) The only thing which the slave has
to fear is an occasional outburst of tyranny on the part of the master, a
thing which is far from unfrequent in all the relations of low
civilizations. Fear restrains masters to a certain extent; for, in those
early days, how few were the institutions of state which could protect
them against the vengeance of their slaves!(408)(409)



                               Section LXX.


Emancipation.


As states grow greater and men’s manners gentler, the ranks of slavery are
less and less liable to be recruited through the agency of war.(410) It
then becomes necessary to have recourse to the family to keep up their
number, which makes their condition much more endurable, and which
supposes that it has been made more endurable in other respects
beforehand. Modern states, are, as a rule, larger than the ancient were.
The Germans had, long before the time of Charlemagne, treated prisoners of
war of German origin more mildly than those of Gallic or Slavic
origin.(411) The condition of the latter even improved from the time that
nations began to think of making permanent conquests. Since the Slavic
wars of the tenth century, certainly since the Lithuanian contests, it
seems that prisoners of war were not reduced to slavery.(412) Chivalry,
and allowing prisoners to go free, on their word of honor, contributed
largely to this result.

The more productive agriculture is, the more numerous the wants of land
owners, the more extensive the division of labor and commercial
intercourse become, the easier it is for a large class of the community to
obtain support for themselves and families without cultivating land of
their own. (Wages.) When exchanges through the medium of money become
customary, the chief argument for slavery disappears; and the strong, rich
and able man can, without having recourse to force, command the labor of
other men. Every further advance in economic culture must necessarily help
forward in this direction. Thus, without the plow, for instance, we should
all be really only so many _glebæ adscripti_. It is due especially to the
ever increasing perfection of tools, machines and operations, that the
slave of antiquity was transformed into the serf of the middle ages, and
afterwards into the day laborer of modern times.(413) It is more
particularly to be remarked, that machines, since 1750, “first made the
constitutional liberty of many, instead of the feudal freedom of a few,
possible.” (_Schäffle._)



                              Section LXXI.


Disadvantages Of Slavery.


Slavery promotes the division of labor only in the very beginning. The
more dependent the slave is, the worse he works. Whatever he spoils or
allows to go to waste injures only his master. Hence it is that
slave-husbandry is only one degree removed from what the Germans call
_Raubbau_, and which means, as nearly as we can translate it, the most
thoughtless and wasteful management possible.(414) Whatever he consumes is
simply so much gain to himself. Industry and skill are injurious to him,
because, if remarkable for these qualities, his master exacts more work
from him and is more adverse to setting him at liberty. Instead of the
numberless incentives of the free workman: care for the future, for his
family, honor and comfort, the slave is generally moved by one—the fear of
ill-treatment, and to this he gradually becomes insensible.(415) The
division of labor demanded by manufactures, and which is to be found for
the most part only where each person is at liberty to choose his own
avocation, is scarcely supposable where slavery, in the strict sense of
the word, prevails. The same is true of the spirit of invention and
improvement.(416) And even where the milder _glebæ __ adscriptio_ obtains,
the division of labor is much hindered. Hence, competent judges all agree
on the badness of slave labor;(417) which, as for instance in the United
States, was used only where the slaves were crowded together in large
numbers and could therefore be easily superintended. And not only are the
slaves themselves indolent, but their masters as well; more particularly
in slave countries where all labor is considered disgraceful. What must be
the national husbandry of a people, one half of whom refuse to do anything
that is right and proper, through malice, and the other half through
pride! As soon as, on account of increased population and consequent
increased consumption, this enormous waste of force can be endured no
longer, free workmen become more profitable, not only to themselves and to
the whole community, but to the greater number of the individuals who
compose it.(418) On the Bernstoff estates the quantity of rye harvested
before and after emancipation was as 3:8-⅓; of barley-corn as 4:9-⅓; of
oat-grain as 2-⅔:8.(419)

The owners of serfs, especially, are apt to be very wasteful of their
labor, because they imagine that they obtain it gratis. Tucker has made a
curious calculation tending to show that when civilization reaches a
certain point, the master’s self-interest leads to emancipation. In
Russia, where there are seventy-five persons to the English square mile,
it seemed to him that serfdom was still a good economic speculation. In
western Europe, where there were one hundred and ten persons to the square
mile, freedom, in all relations of master and servant, he considered more
advantageous to all parties. Emancipation began in England in the
fourteenth century, when that country had a population of forty to the
square mile, and was completed in the seventeenth, when the population was
ninety-two to the square mile.(420) Tucker concludes, that the turning
point comes, when the population is relatively to the number of square
miles as 66:1.(421) Such a calculation cannot, of course, be universally
true. The free workman can usually command a much larger portion of the
sum total of economic profits than can the slave or serf, who must be
satisfied with the minimum necessary to support life.(422) Hence, free
labor is more profitable to masters only when production in general is so
much enhanced thereby that a greater quantity of goods falls to their
share also. But this will always be the case where workmen are capable of
development.(423)



                              Section LXXII.


Effect Of An Advance In Civilization On Slavery.


At the same time, the same degree of servitude becomes more and more
oppressive to the bondman as civilization advances. The greater his
intellectual progress, the more does he feel the want of liberty, and the
more keenly he experiences the degradation of his condition. The
development of luxury digs a gulf between master and servant which grows
wider every day. (§ 227 ff.) As commerce extends, it becomes more
profitable for the master to exact excessive work from his slave. In the
West Indies, it was a problem which every slaveholder solved for himself,
whether, by immoderately increased production, which cost the lives of
many slaves, the gain in sugar was greater than the loss occasioned by the
consequent death of the negroes.(424) When, with the advance of
civilization, the state guarantees to all more certain protection of their
rights than they enjoyed in a less advanced stage of social improvement,
the last check on masters, the fear of the vengeance of their slaves, is
removed.(425) Demoralization naturally increases in the same proportion;
and that of the master as well as that of his servants.(426)



                             Section LXXIII.


The Same Subject Continued.


This explains why it is that, in all countries, the power of the state, in
a period of transition towards a higher civilization, has endeavored to
render slavery milder. Great credit is due the Church in this regard. It
soon extinguished slavery entirely in Scandinavia,(427) and in portions of
Europe it abolished at least the sale of prisoners to foreign
countries.(428) The _Concilium Agatheuse_, in the year 506, decreed that
serfs should not be killed by their masters at pleasure,(429) but that
they should be brought before a tribunal of justice. (The manorial
tribunals of more recent times.) Moreover, the numberless holidays of the
church operated greatly in favor of the bondmen. Pope Alexander III.
recommended their gradual emancipation.(430) One of the principal steps in
the way of progress was made when they could no longer be sold singly, but
only with the village or on the estate to which they belonged.(431) The
feudal aristocracy improved the condition of the bondmen by reducing a
great number of freemen to their level.(432) This could not be effected
without a real amelioration of slavery; and, later, when the feudal
aristocracy declined, the older serfs were, with those who had been
formerly free, raised from their abject condition. The sense of chivalry
would not permit a lord to be served by a bondman. The old adage “the serf
lives to serve and serves to live,” by degrees, lost its force. Serfs were
required to perform certain tasks on the lands of their master and to pay
him a certain quantity of the produce of their own. Heriots
(_mortuarium_), which became usual from the 8th century (_J. Grimm_), may
be considered evidence that even bondmen were permitted to acquire and
hold property in their own right. Thus was one of the chief disadvantages
of slavery, in an economic sense, removed.(433) It may be affirmed, as
characteristic of the aristocracy of feudal times, that they treated
those, who like the serfs were entirely at their mercy, with much more
consideration than those who were free, and, although dependent on them,
had certain rights guaranteed by contract. The absolute monarchy found in
nearly all nations, at the opening of modern times, was forced by its
struggle with the mediæval aristocracy to favor the emancipation of the
serfs and of the lower classes. Even in Russia, Iwan III. (1462-1505)
seems to have restored to the peasantry the right of migration, of which
they had been deprived by the invasion of the Mongols, nor did they lose
it again until the great troubles at the beginning of the seventeenth
century, which gave the ruling power to the nobility.(434)

Where civilization has reached its highest development, the irresistible
power of public opinion, governed by the ideas of the universal
brotherhood of man and of democratic equality, causes the abolition of all
irredeemable and of all hereditary relations of servitude.(435)(436)(437)



                              Section LXXIV.


The Same Subject Continued.


It cannot be doubted, that an entirely direct leap from complete servitude
to complete freedom may be attended by many evils. No man is “born
free,”(438) but only with a faculty for freedom; but this faculty must be
developed. The knowledge and respect for law, and the self-control, which
are the conditions and limits of freedom, are never acquired without
labor, seldom without the making of grave mistakes, and never except
through the practice of them. As a rule, both parties, masters as well as
servants, would like to get rid immediately of all the inconveniences of
the former condition and yet continue to enjoy its advantages. The
servant, for instance, will now yield no more the specific obedience of
former times, but demands still specific mildness from the land-owner, or
loaner of capital, his former master. It is inevitable that there should
be complaints on both sides.(439) But in the higher stages of economic
culture, the relation of paternal protection and childlike obedience
between the different classes of the people, which, even in medieval
times, never obtained in all its purity, is certainly unrecallable. Hence
it is, that all hope of a better condition of things is based only on
this, that the lower classes may as soon as possible attain to true
independence.(440)



                              Section LXXV.


The Same Subject Continued.


Even in antiquity, the principal nations of the world could not keep the
humanizing influence of civilization from making itself felt on their
slaves. And if they did not go so far as to bring about the total
abolition of slavery, it is unhesitatingly to be attributed to their
religious inferiority.(441) In Athens, during the Peloponnesian war, it
was almost impossible to distinguish the slaves from the poorer freemen by
their looks or dress. Their treatment was mild in proportion as desertion
was easier by reason of the smallness of the state or the frequency of
war. It was forbidden to beat them; and only a court of justice could
punish them with death.(442) Emancipation, in individual cases, was very
frequent, and the names of Agoratos and of the law-reviser Nicomachos show
how great a part an emancipated slave might play in the nation.(443) The
helot system of the Lacedemonians preserved much longer a great deal more
of medieval barbarism; but even here, we may infer from the frequent
uprisings and emancipations of the helots, from their services in war
etc., that their lot was made less hard than it had been.(444)

Among the Romans, with whom war and conquest were so long considered(445)
the principal means of acquisition, slavery was relatively very hard.(446)
But, later, there came to be several different grades of slavery (_servi
ordinarii_ and _mediastini_ etc.); and in slavery, every gradation denotes
some amelioration of condition.(447) The slave obtained the right to
possess resources of his own (_peculium_).(448) In addition to this,
emancipation became much more frequent in the later republic; so much so,
that Augustus considered it necessary to pass laws taxing frivolous
emancipation. (_L. Aelia Sentia_ and _Furia_.)(449) Where men like
Terence, Roscius, Tiro, Phædrus and the father of Horace rose from the
condition of slavery, the treatment of slaves cannot have been entirely
brutalizing.(450) Under the emperors who oppressed the free citizens,
legislation was directed more than ever towards the protection of the
slaves.(451) Instead of permanent slavery, a condition of things was
introduced and became more general every day, one in which the bondman
might contract a legal marriage, have property of his own, and in which he
was protected against an arbitrary increase of the quota he had to pay his
master, whether in money or produce, although he still remained bound to
the land. This class was formed not only of the _originarii_, or those
born into it, but also of a large number of impoverished freemen,
barbarian prisoners of war etc.(452)(453)



                 Section LXXVI. (Appendix To Chapter IV.)


The Domestic Servant System.


In most countries the servant system developed itself gradually out of
serfdom, or of some condition of tutelage analogous thereto. This is seen
most clearly in the long continuance of forced service, by which the
subjects of the lord of the fee were compelled to allow their children to
remain in the court of the lord as servants, either without any
remuneration whatever, or for very low wages fixed by long continued
custom.(454) Here, also, belongs the right of correction, so generally
accorded to masters in former times. In the higher stages of civilization,
the whole relation is wont to be resolved more and more into freedom of
competition; and this process is wont to take place earliest and most
strikingly in the cities. Where vast numbers of men are brought together,
demand and supply of services meet most easily. The nearer in the course
of this development the servant system approaches to piece-wages and
day-wages, the shorter does the customary (presumptive) duration of the
contract last,(455) the more voluntary is the period of leave-taking by
both parties;(456) the more does the entire relation tend to be limited to
single acts of service agreed upon in advance (§ 39), and the more
frequently do both parties endeavor to supply the place of the domestic
servants by workmen who receive wages and live outside of the family.(457)
The extreme of this direction at present is the servant-institutes in
cities, the more movable and more democratic character of which finds
expression in this, that they have extended the use of personal services
to a lower circle of consumers than could previously have thought of
employing them. In English agriculture this transition was completed
mainly in the third decade of this century. The change was unquestionably
favorable to the improvement of the art of agriculture, but it was
frequently damaging to the social relation existing between the rich and
the poor in the country.(458) In Germany, the sale of the public domains,
conscription and _Landwehr_ duty have operated in this direction.(459)
Hence it is, for instance, that in Prussia, the servants, in 1816, were
15.18 per cent. of the entire male population over 14 years of age, and
17.84 per cent. of the entire female population over 14 years of age. In
1861, on the other hand, there were only 11.88 and 12.93 per cent.,
respectively, while the number of day laborers and workmen, in the same
time, increased from 16.29 per cent. males, and 10.87 per cent. females,
to 20.95 and 16.65 per cent., respectively.(460) In most civilized
countries, the grade of society from which servants are recruited grows
lower and lower as the spirit of independence extends to the deeper strata
of humanity.(461)

The servant class may continue a long time yet to be a school of
development for those of the lower classes, who, ripe in body, are not
intellectually independent; just as the duty of bearing arms has been a
school of improvement for all male youth. Life-long servants are as seldom
to be desired as life-long soldiers.

In most places, the long transition period from complete bondage to free
competition was governed by a police system of wardship, which was very
unfavorable to the servant class. Such especially was the provision that
all young people of the lower classes, who could not expressly show that
they were employed under the paternal roof or at some trade, should be
compelled to seek some outside or inland work;(462) such also was the
strict prohibition of “usurious” wage-claims, and the “decoying” of
servants from their masters.(463) Besides, a great many provisions
relating to servants, and based on views belonging to an older economic
condition, were intended to throw obstacles in the way of farm hands and
country servants(464) becoming servants in towns; and, on the other hand,
to facilitate the speedy abandonment of service in all cases in which the
servant desired to marry.(465) All these preferences in favor of one class
of contractors, and at the cost of another, are radically opposed to the
modern political spirit. The laws relating to servants are wont, in our
day, to have but one object, the prevention, by registration with the
police, of fraud and breach of contract, and of all strife and litigation
by the legally formulating of the conditions which are very frequently
tacitly understood.

The ideal of the relation of master and servant is attained when it is
considered by both as a part of the life of a Christian family.(466)
Hence, benevolence on the one side and devotedness on the other, fidelity
on both sides, disinterested care for the present and future interests
each of the other _tanquam sua_; and especially for each other’s eternal
future. Whether this state of mutual feeling is best furthered by the
patriarchal system, by a police system, or by free competition, it is
scarcely possible to say. It may, however, be affirmed that it depends
upon a mutual and continued denial of self not easy to attain. Where it
really prevails, all the advantages of the piece-work system are obtained
in a worthy and organic manner, and without its atomistic drawbacks.(467)




                                Chapter V.


Community Of Goods And Private Property. Capital—Property.



                             Section LXXVII.


Capital.—Importance Of Private Property.


As human labor can attain its full development, only on the supposition
that personal freedom is allowed to develop to its full economic
importance and dimensions, so capital can develop its full productive
power only on the supposition of the existence of the freedom of personal
property. Who would save anything, that is, give up present enjoyment, if
he were not certain of future enjoyment?(468) The legitimacy of private
property has, since the time of Locke,(469) been based, by the greater
number of political economists, on the right inherent in every workman,
either to consume or to save the product of his labor. But it should not
be forgotten here that, at least in the higher stages of the economy of a
nation, scarcely any work or saving is possible without the coöperation of
society. And society must be conceived not only as the sum-total of the
now living individuals that compose it, but in its entire past, present
and future, and also as being led and borne onward by eternal ideas and
wants.(470)



                             Section LXXVIII.


Socialism And Communism.


In opposition to this, the idea of a community of goods has found favor,
especially in times when the four following conditions met:(471)

A. _A well-defined, confrontation of rich and-poor._ So long as there is a
middle class of considerable numbers between them, the two extremes are
kept, by its moral force, from coming into collision. There is no greater
preservative against envy of the superior classes and contempt for the
inferior, than the gradual and unbroken fading of one class of society
into another. _Sperate miseri, cavete felices!_ In such a state of social
organization, we find the utmost and freshest productive activity at every
round of the great ladder. Those at the bottom are straining every nerve
to rise, and those higher up, not to fall below. But where the rich and
the poor are separated by an abyss which there is no hope of ever
crossing, how pride on the one side and envy on the other rage! and
especially in the _foci_ of industry, the great cities, where the deepest
misery is found side by side with the most brazen-faced luxury, and where
the wretched themselves conscious of their numbers, mutually excite their
own bad passions. It cannot, unfortunately, be denied, that when a nation
has attained the acme of its development, we find a multitude of
tendencies prevailing to make the rich richer and the poor, at least
relatively poorer, and thus to diminish the numbers of the middle class
from both sides; unless, indeed, remedial influences are brought to bear
and to operate in a contrary direction.(472)

B. _A high degree of the division of labor_, by which, on the one hand,
the mutual dependence of man on man grows ever greater, but by which, at
the same time, the eye of the uncultured man becomes less and less able to
perceive the connection existing between merit and reward, or service and
remuneration. Let us betake ourselves in imagination to Crusoe’s island.
There, when one man, after the labor of many months, has hollowed out a
tree into a canoe, with no tools but an animal’s tooth, it does not occur
to another who, in the meantime was, it may be, sleeping on his bear-skin,
to contest the right of the former to the fruit of his labor. How
different this from the condition of things where civilization is
advanced, as it is in our day; where the banker, by a single stroke of his
pen, seems to earn a thousand times more than a day-laborer in a week;
where, in the case of those who loan money on interest, their debtors too
frequently forget how laborious was the process of acquiring the loaned
capital by the possessors, or their predecessors in ownership. More
especially, we have, in times of “over-population,” whole masses of honest
men asking not alms, but only work, an opportunity to earn their bread,
and yet on the verge of starvation.(473)

C. _A violent shaking or perplexing of public opinion in its relation to
the feeling of Right, by revolutions_, especially when they follow rapidly
one on the heels of another, and take opposite directions. On such
occasions, both parties have generally prostituted themselves for the sake
of the favor of the masses; and the latter have become conscious of the
changes which the force of their arms may effect. In this way, it is
impossible that until order is again entirely established, the reins of
power should not be slackened in many ways at the demands of the
multitude. In this way, too, they are stirred up to the making of
pretentious claims which it is afterwards very difficult to silence. In
every long and far-reaching revolution, whether undertaken in the interest
of the crown, the nobility or the middle classes, we find, side by side
with the seed it intended to sow, the tares of communism sprout up.

D. _Pretensions of the lower classes in consequence of a democratic
constitution._ Communism is the logically not inconsistent exaggeration of
the principle of equality. Men who always hear themselves designated as
“the sovereign people,” and their welfare as the supreme law of the state,
are more apt than others to feel more keenly the distance which separates
their own misery from the superabundance of others. And, indeed, to what
an extent our physical wants are determined by our intellectual mould! The
Greenlander feels comfortable in his mud hut, with his oil-jug. An
Englishman in the same condition would despair.(474)(475)



                              Section LXXIX.


Socialism And Communism. (Continued.)


What has just been said will serve to explain why, in the following four
periods of the world’s history, socialistic and communistic ideas have
been most widespread: among the ancients at the time of the decline of
Greece,(476) and in that of the degeneration of the Roman Republic;(477)
among the moderns in the age of the Reformation,(478) and again, in our
own day.(479)



                              Section LXXX.


Socialism And Communism. (Continued.)


We thus see, that the attempts made by socialism and communism are, by no
means, phenomena unheard of in the past, and peculiar to modern times, as
the blind adherents and opponents of them would have us believe. They are
rather diseases of the body social, which have affected every highly
civilized nation at certain periods of its existence. If the body be too
weak to react healthily and curatively (§ 84), the evil is very apt to
lead to the decline of all true freedom and order. The communist, viewing
all other things, especially the organization of the state, only as
instruments to supply his material and absolute wants, considers the
liberal either as a fool who is ever pursuing the phantoms of the brain,
or as a knave who covers his own selfishness under the mask of the public
welfare.(480) Hence the adherents of communism are satisfied with any form
of government which seems to offer them most, and this a ruthless
despotism can do, at least, for the moment. And, although they are ever
ready for any revolution in the form of government, and easily to be won
over to it, they are most readily captivated by a despotic revolution. On
the other hand, when communism seriously threatens all that constitutes
the wealth of a people, the owners of that wealth are compelled to fly to
any refuge which holds out the promise to protect them from it, although
by seeking that same refuge they may destroy their own political
freedom.(481) The Achean league, which under the leadership of Aratos, the
“enemy of tyrants,” had come into existence, promising so much hope,
beheld itself later, and mainly through fear of the contagious effects of
Spartan socialism under Cleomenes, compelled to unite with the
Macedonians, that is, to give themselves up entirely. (§ 204).



                              Section LXXXI.


Community Of Goods.


We now, for the present, turn our gaze from the frightful revolution,
destructive of all civilization, which would necessarily precede the
establishment of a community of goods,(482) and inquire what would be the
consequences. Among angels (“gods and sons of gods” of Plato) and mere
animals, a community of goods might, perhaps, exist without producing
injury. And so, too, it might exist among men bound one to the other by
the bonds of the truest love. The life of every model family is
accompanied by a species of community of goods.(483) But in more extensive
social organizations, this love is never found except as an element of the
most exalted religious enthusiasm, which, as a rule, is of very short
duration; of which the Acts of the Apostles (II, 44 ff, 32 ff, V, I, II)
affords us the best known and most beautiful example.(484)

Where this love does not exist, each participant in the community of goods
will, as a rule, seek to do the least and enjoy the most possible.(485) In
a society of one hundred thousand members, each individual would be
interested in the results of its aggregate frugality only indirectly, and
only to the extent of a one-hundred thousandth part of the whole; that is,
practically, not at all.(486) Individual selfishness would expend itself
entirely on the division of what the whole community produced. It would,
consequently, and almost always be detrimental to the whole, and to the
other individuals of the society; whereas, at present, it does so only in
exceptional cases. When Louis Blanc, as Mably had before him, recommended
that the _point d’ honneur_ should take the place of the _interêt
personnel_, as a spur to production, and a check on consumption, and cited
the army as an illustration of its workings, he forgot, among other
things, the thirty cases in which the _code militaire_ pronounces sentence
of death on the violators of its provisions. And, as a matter of fact, the
Münster Anabaptists could not help punishing with death every
transgression of their communistic precepts.(487) If, in a community in
which the principles of communism were rigorously carried out, all the
burthens and enjoyments of life were equal, and equally divided according
to the ideas of the crowd, men like Thaer, Arkwright, and others of their
class, who now provide bread for hundreds of thousands from their studies
and laboratories, would then be able, at most, with a rake and shovel, to
provide food for three or four. The division of labor, with its infinite
amount of productive force, would, for the most part, cease. Nor would the
consequence be that the humbler classes would be freed from work of a
coarse, mechanical, unintellectual and severe nature; but that the higher
classes would be dragged down to engage in it likewise. And what an
increase there would be in the number of consumers at the same time! Every
man would, with a light heart, follow the most imperious of human impulses
if the whole community were to educate his children. But we have seen that
a community of goods is desired most urgently in times of over-population.
Hence, here it would make the evil greater yet, by increasing consumption
and diminishing production.

Where there are now one thousand wealthy persons, and one hundred thousand
proletarians, there would be, after one generation, no one wealthy and two
hundred thousand proletarians. Misery and want would be universal.(488)
For the purpose of giving the crowd a very agreeable,(489) but rather
short-lived period of pleasure, a period simply of transition, almost all
that constitutes the wealth of a nation, all the higher goods of life,
would have to be cast to the waves, and henceforth all men would have to
content themselves with the gratifications afforded by potatoes, brandy
and the pleasures of the most sensual of appetites. And then, the equal
education of all, demanded by the communists, would have no result but
this, that no one would acquire a higher scientific training.(490) But,
after all, there lurks concealed in communism much more of envy than is
generally supposed.



                             Section LXXXII.


The Organization Of Labor.


Most theoretical adherents of the doctrine of a community of goods,
feeling(491) more or less the weight of the above objections, have
supplemented it with the idea of an organization of labor(492) or the
centralized superintendence of all production and consumption, either by
the government already existing, or by one to be created anew. Such a
government would be, of course, a despotism such as the world has scarcely
yet seen, a Cæsaro-Papacy, usurping both the place and power of Father of
the universal Family.(493) But the evils mentioned above would be entailed
none the less. Every incentive which now moves man to industry or
frugality would disappear, and nothing remain but universal philanthrophy;
or, if you will, but patriotism, virtues which are not wanting even now.
Even guardianship of the government newly created would be carried on in a
very loose manner; for it would be exercised without any feeling of
personal interest, even in the most favorable case supposable. It is well
known and easily understood, that state industries are never engaged in,
in the long run, with the same zeal, nor crowned with the same success, as
competing private industries. It is well known, too, how intimate the
connection is between the political freedom of a people and their economic
production; that, for instance, England’s greater wealth, as compared with
that of Turkey, depends, most largely, on the freedom that obtains in the
former country and the servitude that prevails in the latter.(494) And we
may inquire just here, what the result would be, if the despotism of
government should go ten times farther that it has ever gone in Turkey,
when, moreover, the despot who led the state, was not an individual with
his few officials, but the whole crowd, with its million eyes and million
hands. It would, practically, be to give every producer an escort of a
policeman and a revenue agent, as if he were a prisoner.

And where would be the gain? A division of wealth which would seem unjust
to many would exist now as well as before, because the idle and the
unskillful would receive the same reward as the most industrious and
skillful.(495) The opposition of one class of society to another, so much
complained of, would continue. The only difference would be, that whereas,
it now comes from the weak, it would then come from the strong.(496)
Compulsory association is certainly more prolific in strife and crime than
is a state of society in which everybody manages his own affairs.

A journey on foot, in company with others, is allowed, on all hands, to be
a very good test of friendship. But, a community of goods would, in the
strictest sense of the word, be a journey on foot through the whole of
life with numberless “friends.” Here, every one would believe himself
entitled to possess whatever pleased him. And, who would decide; since so
many communists preach the dissolution and extinction of all government,
and the reign of anarchy? Besides, there can be no doubt, that the
difference of human talents and human wants, would soon, spite of every
law, lead to a difference in property again. Hence, that first revolution
would have to be repeated from time to time—a real Sisyphus labor! No
sooner have the bees produced anything, than the drones come, and divide
anew!



                             Section LXXXIII.


The Organization Of Labor. (Continued.)


Experience, however, teaches us, that, in all the lower stages of
civilization, a community of goods exists to a greater or lesser
extent.(497) The institution of private property has been more fully
evolved out of this condition of things, only in proportion as well-being
and culture have been developed as cause and effect of such well-being.
Thus, among most nations of hunters and fishermen, the idea of private
property was unknown when these nations were first discovered. This is,
indeed, very natural. Their chief spring of production flows as if of
itself, apparently inexhaustible; and the hunter can hardly think of such
a thing as saving any of his booty.(498) And, among nomadic nations, the
land is a great meadow held in common; and the industry of plunder is
considered, as it is in all inferior stages of civilization, especially
honorable.(499) The _conquistadores_ of Peru found there something very
like a community of goods, under the despotic guardianship of the state,
viz.: a yearly division of all lands among the people, in proportion to
their rank; the cultivation of these lands in common, under the
superintendence of the state, and to the sound of music. But, at the stage
of civilization that Peru was then in, land is about the only resource
possessed. The results were the usual ones. A country like Peru, with only
one city, no beasts of burthen, no plows, no trades and no commerce,
cannot possibly be rich.(500) That the constitution of Lycurgus
established a sort of community of goods among the Spartans, is well
known. I need only recall the public education, the meals in common, the
authorization of stealing,(501) the prohibition of trade, of the precious
metals and fine furniture, the equal division of property and the
inalienable character of the land(502) etc. With such laws, Sparta could
neither be, nor desire to become, wealthy. Of all Greek states of any
historical importance, it preserved longest the economic peculiarities
belonging to a low stage of civilization. Among most modern nations, the
fundamental idea of their land laws, which had their origin in the middle
ages, is, that each family is only the usufructuary, and that the
community is the sovereign proprietor of the soil. This community of
landed possession finds expression, among other things, in the vast extent
of communal woods and pasturages, in the varied intersecting of parcels of
land one by the other, which, indeed, change proprietors from time to
time, and in the common working of the land, carried as far as possible
etc.(503) In all medieval times,(504) not only the individual is
considered an owner of the land, but, over and above him, the family. At
the same time, we are wont to find existing an amount of mortmain property
in the hands of corporations, monastery lands, crown lands and domains of
very great importance.(505) All these institutions have declined in number
and shown a disposition to disappear, in proportion as national husbandry
or economy has grown more productive.



                             Section LXXXIV.


The Organization Of Labor. (Continued.)


To this tendency we find, indeed, another, and a no less powerful one,
opposed. Everywhere as civilization advances, the sphere of action of the
state grows larger, and the ends it serves more numerous.

In its origin, government was established to preserve only the external
security of its subjects. By degrees, it comes to look after their
internal legal security, by enforcing internal peace, prohibiting revenge
for bloodshed etc. It next extends its care to the well-being, the
culture, and even to the comfort of the people. But the claims of the
state must grow in the same proportion as the service it renders. While
Lowe, in 1822, estimated the yearly net income of the British people at
£251,000,000; the government expenses,(506) in 1813 and 1814, averaged
£106,000,000, and these sums were voluntarily devoted to public purposes
by parliament. And so, between 1685 and 1841, the population of England
more than trebled its numbers, But, in the same period of time, the outlay
of the state increased forty fold. (_Macaulay_.) Simultaneously with this
development of things, it becomes more and more usual by the exercise of
the power of eminent domain and others like it, to sacrifice private
rights, acquired by the very best of titles, to the preponderating common
good. We may allude, further, to the duty, universally imposed in modern
times, of performing military service, to the national systems of public
instruction in so many countries; to the large number of societies,
joint-stock companies, popular holidays; but particularly to the
associations for insurance of every description. And so it may, indeed, be
claimed that we have come nearer to a community of goods than could have
been dreamed of a hundred years ago.(507) And yet, these are, for the most
part, institutions in which we find reflected the peculiar strength and
solidity of our age. Whoever wishes to compare the power of one people
with that of another, must take into account not only the elements which
constitute their intellectual and physical force, but especially their
inclination to permit these elements to coöperate for public
purposes.(508)

We may now inquire: At what point does this increasing community cease to
be a gain? This is as easily determined generally, as it is difficult to
say what the limit to it is in particular instances. Progress in the
direction of a community of interests of this nature is beneficial, only
so long but certainly as long as it corresponds with the feeling
entertained by the community, that they have interests in common. Hence it
is, that such a noble kind of communism reigns in art and literature, one
which causes the stronger to willingly labor for the weaker, and with the
greatest success.(509) And so, too, the christian care of the poor, even
were it carried to the height of the Gospel counsels (Luke, 3:11), would
be no direct obstacle in the way of the development of a nation’s public
economy, provided it were given, and accepted, only as christian
benevolence. Every approximation towards a community of goods should be
effected by the love of the rich for the poor, not by the hatred of the
poor for the rich. If all men were true Christians, a community of goods
might exist without danger. But then, also, the institution of private
property would have no dark side to it. Every employer would give his
workmen the highest wages possible, and demand in return only the smallest
possible sacrifice.(510)(511)



                              Section LXXXV.


The Right Of Inheritance.


The right of inheritance to resources has its origin in a combination of
the idea of the family with the idea of property. And, indeed, this
combination of ideas is a very natural one. The larger portion of mankind
consider the pleasures of the family as the highest attainable, and
endeavor, whenever their economic means make it at all possible, to secure
them. At the same time, the selfishness of most men is not confined to
their own persons, but extends also to their posterity. Hence it is that
bed and board, _eonnubium_ and _commercium_, have, from time immemorial,
been considered correlative ideas; and, to all the more logical
socialists, a community of wives (or celibacy)(512) is as dear as a
community of goods.(513) (§ 245.) And in practice, the greater number of
nations of hunters, who, according to our conceptions, have no knowledge
of a real family and no knowledge of property, have a custom of burying
with the dead the things they used, to kill their cattle etc., or to
deprive minor children of their inheritance.(514)



                             Section LXXXVI.


Economic Utility Of The Right Of Inheritance.


The certainty, that the material welfare of their children depends, in
great part, on their industry and frugality, is one of the most powerful
incentives to good, in the case of most men. And this is the basis of the
economic utility of the family right of inheritance.(515) There is
scarcely any other institution which opposes over-population with such
efficiency, for the reason, that the obstacle placed in its way here is
placed very directly, at the point where it can make itself felt most,
viz.: in the life of the family itself. The weaker the family feeling, the
less does the abolition of the right of inheritance interfere with the
economic interests of a nation. Hence, for instance, it is, that taxes
imposed upon legacies, bequests, testamentary gifts etc., are less
objectionable in proportion as they affect only those in the more remote
degrees of relationship in which inheritance is something merely
accidental. While, when a nation is yet in the intermediate stages of
civilization, the _family_ right of inheritance seems to be very strong,
especially as regards landed property, a consequence of the fact, that a
superior kind of title to such property is recognized to exist in the
family; at a period, when individualism becomes more developed, the
liberty of devise by will is wont to prevail more and more.(516) Then the
right of inheritance becomes, so to speak, a more elevated species of
personal property, a prolongation of the same beyond the grave. Should
testamentary freedom be too much hampered, selfishness would manifest
itself in a way much more detrimental to economic interests, viz.: in the
consumption of wealth, during the lifetime of its owner. Every man would
be but a life annuitant of his own property.

But, at the same time, in periods of moral decline, complete freedom may
degenerate so as to produce evils equally great. The wealthy Bœotians, in
the later days of Hellenic history, were wont to form themselves into
dissolute drinking companies; and not only the childless, but even fathers
of families made over their property to these companies, limiting their
offspring to a portion which it was made their duty to let them have. It
was so in Rome, also, in Cicero’s time, when every acquaintance of
standing took it very ill if not remembered in the will of the testator,
and where Octavian, for instance, in the last twenty years of his reign,
received about 70,000,000 thalers through legacies left him by his
“friends.”(517) Here, the repeal of the law making it obligatory on
testators to leave a certain proportion of their wealth to their children
would remove the last safe-guard of their material welfare.(518)



                             Section LXXXVII.


Landed Property.


As land, in its uncultivated state, has neither been produced by man, nor
can be entirely consumed by him, the above demonstration of the necessity
of private property cannot without any more ado, be extended to land.(519)
Hence, individual property in land is everywhere much more recent than
individual property in capital.(520)

But a certain expenditure of capital and labor is necessary that land may
be used productively, and, in most instances, this employment of capital
and labor is of long duration, irrevocable in the very nature of things,
and one the fruits of which can be reaped only after some time has
elapsed. Now, this cooperation of capital and labor is such, that no one
would undertake to employ them in the cultivation of the land, had he not
the strongest assurance of possessing it. Hence, agriculture in its most
rudimentary stage supposes ownership of the land, at least from the time
that it is “tickled with the hoe,” until it “smiles with the harvest;” or,
to express it more accurately, all the time intervening between the work
of the plow and the labor of the sickle. The more, afterwards, population
and civilization increase, the more products must be wrung from the soil.
But this can be accomplished only by means of its more _intensive_
cultivation (higher farming), by lavishing a greater amount of capital and
labor on it, and, as a rule, by extending the circle of agricultural
operations by means of combinations more and more artificial. Hence, the
progress of civilization demands an ever increasing fixity, and a more
pronounced shaping of landed property (the _specification_ of jurists), in
the interests of all who share in this progress, and even of those who own
no landed property themselves. Were there no property in land, every one
would find it more difficult and laborious to gratify his want of
agricultural products;(521) and the products themselves would be of an
inferior kind.

Thus, for instance, in Camargo, the lackmus was formerly prepared from
plants to be had “free” in the woods. It was then, however, much dearer
than it is now that the plants are artificially raised on landed
property.(522) It is otherwise with the fisheries. The appropriation of
rivers or seas would not tend to increase the abundance of their products,
and hence this appropriation is, on the whole, rare.(523)



                            Section LXXXVIII.


Landed Property. (Continued.)


Whenever this admixture of capital and labor with land has taken place to
no great extent, private property in land is not found developed in any
degree. Thus, there are even now many half-civilized countries in which
the land is forfeited because not tilled for many years, and where it may
be occupied by the first person who will cultivate it.(524) In Europe,
common possession of forests and pasture lands asserted itself much longer
than that of arable land, because, in the case of the former, labor and
capital play a much less important part in the management of them. And
yet, even in the case of arable land etc., and, in the highest stages of
civilization, the property-quality is yet less developed than the
property-quality of capital. How seldom do we find _fidei commissa_ of
capital, or capital juridically tied up. We find that the law of all
ancient nations drew a marked distinction between moveable and immoveable
property, and that the power of disposing of the former by sale, pledge,
in dowry, partition etc., was a much freer one. And even now, the police
power which may be exercised over moveable property is much more
restricted than that over houses and land.(525) The justice of the
exclusive right of possession to what one has earned and saved is obvious
to every one. On the other hand, the appropriation of “original and
indestructible natural forces” has its basis not so much in justice as in
the general good; and the state has always considered itself entitled to
attach to the “monopoly of land,” which it accorded to the first
possessor, all kinds of limitations and conditions in the interest of the
common good, and sometimes to consider private property in land in the
light of a semi-public function.(526) I may instance the feudal principles
of the latter portion of the middle ages, which are so far removed from
our ideas of private property in land; and yet, of which many echoes are
heard, even in our day, and are not without their influence in practice.
Thus, further, for instance, even in England, the greater number of the
poor-rates, of taxes for the support of the established church, the
maintenance of public highways etc., are heaped upon the rent of land.
Many socialists have proposed to make the state the sole proprietor of the
soil,(527) sometimes adding the condition, that the previous private
owners should be compensated in capital, when it would be at least
supposable that private capital might be enticed to cultivate it, if long
and sure leases of it were made. This would be a “good” demesne-husbandry,
extending over the entire country. We need only glance at those kingdoms
in which something analogous is to be found, especially the despotisms of
the east,(528) to divine that such a system does not suffice to insure the
real productiveness of a nation’s economy.(529)




                               Chapter VI.


Credit.



                             Section LXXXIX.


Credit In General.


Credit(530) is the power of disposition over the goods of another,(531)
voluntarily granted in consideration of the mere promise of the
counter-value.(532) As Franklin says: A good pay is master of another
man’s purse. Hence, it is evident that whoever would obtain credit must be
believed to possess the ability as well as the intention to fulfill his
promise. Where this belief is based simply on the opinion entertained of
the person of the debtor, we speak of personal credit,(533) in
contradistinction especially to the credit based on bailment, pledge,
hypothecation etc. The longer the time between the making of the promise
and the period fixed for its fulfillment, the less certain is the latter,
where the security is simply the person of the debtor. It is chiefly in
very uncivilized nations and also in nations in their decrepitude, and
during periods of anarchy, and in despotisms, that personal security
stands higher than any other. The same is true, though for other reasons,
in very energetic civilized nations, where the people put a high estimate
on the element of labor in their economy, among whose members legal
security is, indeed, found, but where the peculiar sensitiveness of
speculation would be too much hampered by the more sluggish nature of
other credits; as, for instance, in North America, and even in ancient
Rome. Civilized nations that have reached the stationary economic state,
on this account much prefer the greater security and the absence of care
which accompany non-personal credit.(534) In estimating the ability of the
debtor to meet his promise, we must take into account, especially, the
disposable character of his resources; otherwise it would be impossible to
understand why the merchant may so frequently obtain a loan on his stock
equal to its whole value, while the owner of land can place it as security
only to the extent of half its value.

Credit, on the whole, grows in importance with an advance in civilization,
and this is true especially of credit intended for productive purposes.
This is a consequence of the greater division of labor which causes
unfinished products to be put on the market more and more
frequently,—products which come to have a value only after some time, but
which, when that time has elapsed, have present value. And, indeed, as the
world advances and civilization grows, it becomes much easier to forecast
the future with certainty. The future, also, then becomes more a source of
solicitude, and fixed capital, as a consequence, plays a part which grows
daily more important. The limit to the development of credit is this: it
is safe only when the debtor invests his borrowed goods in the production
of, to say the least, their equivalent. This is why the personality of the
state, clothed with immortality and with a formally boundless power of
taxation, is so often seduced into engaging in transactions of credit
which are never self-discharged.(535) The social diseases of panics and of
extravagant enterprises stand in the same relation to credit that unbelief
and superstition do to true religion.(536) (_Schäffle_.)



                               Section XC.


Credit—Effects Of Credit.


As regards the effects of credit, we may remark, that it is as powerless
directly to produce new capital as is the division of labor to produce new
workmen. To every credit of the creditor corresponds a debit of the
debtor. As Turgot said: _Tout credit est un emprunt_.(537)(538)(539) But,
on the other hand, credit facilitates the transmission of the elements of
production, especially of capital, from one hand to another.(540) When,
therefore, the debtor employs the capital that he has borrowed, more
productively than the creditor would have done, the whole country is a
gainer; as it is a loser, on the contrary, when a person engaged in
industry advances to the idler, the frugal man to the spendthrift, the
solid man to the wild speculator. In declining nations, where every new
development hastens decay, the latter alternative may be the prevailing
one; and, especially here, may the usurious giving of credit by the shrewd
to the simple lead to ruinous debtor-slavery. Among a vigorous and
energetic people, the former is apt to govern, as it is only by the
productive employment of the loans made that they are permanently enabled
to pay interest. Here credit is an invaluable means, not only of putting
idle capital in motion, and of making active capital still more active,
but especially of concentrating capital, by which it may gain as much in
productive power as labor does by the coöperation of labor. This is
effected, very frequently, by means of joint-stock companies, the
principle of which recommends them especially in enterprises where
stationary capital is required rather than circulating capital, and where
capital generally plays a greater part than labor; and where this labor
can be subjected to provisions which may be accurately laid down
beforehand; as, for instance, in the case of docks, insurance companies,
banks,(541) etc. Banks, then, become real reservoirs of capital, provided
they are properly and judiciously established and managed; real reservoirs
which receive in one place the capital which is superfluous elsewhere, in
order to supply some other place with that which is necessary to it. The
more confidence increases, the more are even the smallest driblets of
capital awakened from their slumbers, and made active and productive. It
is only by means of credit that the help of foreign capital can be
obtained for home production. Indeed, credit, considered as an exchange of
probable future goods against actually existing goods, is one of the
principal functions of the temporal solidarity of the economy of nations.
(_Schäffle_.) Without credit, there would be very little place for
speculation proper.

We may see how the possibility of giving and receiving credit promotes
wealth, by contemplating the poorer classes, whose poverty, both as cause
and effect, is very closely related to the absence of credit. And here we
have a suggestion of the reverse to the bright side of the picture of
credit, analogous to that mentioned in § 62 of the coöperation of labor,
viz.: that it tends to intensify inequality among men. The man who is
distinguished by the amount of his wealth, or by his position is naturally
known to a much wider circle than others are. From which it follows, that
he may, by the way of credit, increase his power, already so much greater
in the economic world, by a much larger multiplier.(542) Hence, it need
not surprise us, that the great obtain credit from those in a lower
position, at least as frequently as they give them credit in turn.

On the side of the creditor, the possibility of making loans is a powerful
incentive to frugality. Were there no credit, those who were not in a
condition to employ their capital productively would make savings only
within very narrow limits.(543)



                               Section XCI.


Debtor Laws.


Private credit is always conditioned, and in a great many ways, by the
situation of the whole nation’s business; in other words, by their
politico-economical situation. It is especially in the higher stages of
civilization, that one bankrupt may easily drag numberless others down
with him; and where the laws are bad or powerless, not even the wealthiest
man can predicate his own solvency for any length of time in advance. One
of the most important conditions of credit is the certainty that, if the
debtor’s good will to meet his obligations should fail, it shall be
supplied by the compulsory process of the courts. Hence, the importance of
a judicial procedure, at once impartial, enlightened, prompt and
cheap.(544) The more vigorous the laws relating to debt are in preventing
dishonesty on the part of the debtor, the more advantageous are they to
honorable and honest debtors. Adam Smith has rightly said, that in
countries in which creditors are not completely protected by the courts,
the honorable man who borrows money is in the same condition as the
notoriously dishonest man or the spendthrift, in better governed
countries. He finds it more difficult to borrow and is obliged to pay a
higher rate of interest.(545) Rigorous debtor laws, on the other hand,
diminish in the whole nation the amount of “bad debts,” that is, a not
insignificant portion of the cost of production. They, at the same time,
promote, as far as it is in the power of laws to do it, national honor and
the mutual confidence of man in man. The excellence of their debtor laws,
in their most flourishing period, was one of the principal elements which
contributed to make Athens and Rome of such importance in the history of
the world.(546)



                              Section XCII.


History Of Credit Laws.


In the history of laws relating to credit, we may distinguish, in a great
many countries, three stages of development.

A. The laws, in the first stage, are very severe. In the Germanic middle
age the insolvent was disgraced. He became the slave of his creditor (_zu
Hand und Halfter_), who might imprison him, fetter him (_stöcken und
blöcken_), and probably kill him. A Norwegian law allowed the creditor,
when his debtor would not work and his friends would not ransom him, to
take him before the court, and “to lop off from his body what part he
will, above or below.”(547) To judge of these provisions correctly, it is
necessary to bear in mind the many ways in which family resources were at
this time bound and tied up, and not forget “the power of defiance in
these iron natures.”(548) (_Niebuhr_.)

B. The canon law introduced milder principles. Gregory the Great had
already prohibited the holding on to the body of the debtor.(549) On this
account, during the latter portion of the middle ages, it was customary to
stipulate by contract that the provisions of the ancient law should govern
in this matter, to submit to imprisonment etc.(550) The influence of the
Roman law made it gradually more usual, in the case of insolvent debtors,
to demand no more from them than the assignment of their property for the
benefit of their creditors. This, however, led to numerous frauds; and
these became more frequent in proportion as the laws governing the
property of parties while the marriage relation existed between them, and
as executions against landed property etc. were defective.

C. Hence, in more highly civilized times, there has been a return to the
severity of earlier ages. Persons engaged in commerce, especially those
whose capital is so volatile, and to whom time is a thing so precious, can
scarcely dispense willingly with personal imprisonment for debt. Hence,
legislation on bills of exchange, sanctioned especially by imprisonment of
the person, plays a very important part in the commercial cities of the
seventeenth century, as it did, naturally, much earlier in Italy and the
Netherlands.(551) Modern laws in many cases punish the bankrupt whenever
an examination of his books, kept after approved methods, does not
demonstrate his innocence.(552) The great facility of fraudulent
bankruptcy, where commerce has attained a high degree of development and
complication; the absence of honor shown in engaging in speculation for
one’s own gain with a stranger’s capital, and without the real owner’s
knowledge; the comparatively small number of blameless and irreproachable
bankruptcies,(553) certainly justify these provisions.(554)(555)



                              Section XCIII.


Means Of Promoting Credit.


One of the most efficient means of promoting credit consists in
legislation intended to dry up the source of bad debts, by placing
obstacles in the way of reckless or usurious credits for objects of luxury
or pleasure, to bad customers.(556) But the application of these laws
should be clear and simple as to their matter, and require no inquiries,
relating to the person, impracticable for a business man to make.(557)
Thus, for instance, a short period of limitation established by statute in
the matter of advances made for ordinary money-claims is a beneficial
restraint, as well on the creditor as on the debtor, since it prevents the
accumulation of a multitude of small debts which almost imperceptibly but
at the same time irresistibly overpower the debtor under their
weight.(558) Another efficient means is associations of business men to
circulate lists of bad debtors, and to prosecute their own demands in
common.(559) On the other hand, experience has shown that imprisonment for
debt, as a means of enforcing a creditor’s claim, where the amount of the
debt is very small and such as only very poor debtors are apt to incur, is
of little service. It is even injurious, because a great many sellers
would rely on that means of compelling payment in the future instead of
demanding it immediately, as they should do in the interest both of
themselves and of their customers. As a rule, it is only rich creditors
who can resort to it with success, a class who compel payment through this
means by wringing it from the debtor’s relations more frequently than from
the debtor himself. The working out of debts in correctional institutions
seems, for the same reasons, to fail of its object, since even well
governed institutions scarcely cover their current expenses from the
income derived from this source.(560) The inequitable character of
imprisonment for debt lies in this, that it punishes the unfortunate
debtor as severely as it does the malicious one. It must be clearly
distinguished from the imprisonment recognized by the courts as a
punishment for reckless or fraudulent bankruptcy.(561) We must pass a
judgment similar to that on the imprisonment of the person of the debtor
on the seizure of his wages not yet due, so far, at least, as an amount
absolutely necessary to save himself and family from want, is not
excepted. The prohibition of such seizure, beyond this, would amount to a
declaration that all workmen without capital, even the best, should be
considered unworthy of credit.(562) We may also include in this category
such laws as except from execution the necessary tools of a tradesman,
since to deprive him of them would be to prevent his employing even his
labor to satisfy(563) his creditors’ claims.



                              Section XCIV.


Letters Of Respite (Specialmoratorien).


_Special letters of respite_ (_Specialmoratorien_) are a suspension of the
laws relating to debt, made in favor of an individual. (_Quinquennalia._)
They were intended to protect not only the debtor, but also the aggregate
of creditors against the short-sighted severity of one of their number.
They were wont to be given especially when the debtor showed that
immediate execution would not only have the effect of ruining himself, but
of sending his creditors away empty handed; while, if time were given him,
he would be able to satisfy every one.(564) But the granting of such
letters has, in recent times, been prohibited(565) in nearly all countries
as arbitrary, and as a species of cabinet-justice. Nor should the granting
of them be compared with the pardoning power. In the case of a pardon, the
offended State forgives. In this case it sacrifices the unquestionable
right of one party to the very doubtful advantage of another. Where such
letters are granted in great numbers, credit cannot fail to suffer.
“_Quinquinnellen gehören in die Hollen!_”

Yet in troublous times, when a great many debtors are insolvent at the
same time, the question of modifying the laws relating to debt,
temporarily, has been mooted. It has been urged on such occasions, that it
would be a matter of enormous difficulty to treat, _lege artis_, thousands
as bankrupts at once; that thousands of businesses would have to be
closed, their stocks cast upon the market at mock prices, and their
employees thrown out of employment. But, if certain privileges were to be
accorded to all who should declare themselves unable to meet their
obligations before a certain day, it would be known, at least, that the
others were in a solid condition; and this would have the effect to
strengthen the credit which had been before universally shaken. We must,
however, leaving all cases of abuse out of the question, remember, that a
really unrightful favor, granted to the debtor, may possibly entail the
ruin of his creditor. Besides, the uncertainty of the law would have a
much worse effect on credit than uncertainty as to the personal status of
individuals.(566) Where, as is the case generally in inferior stages of
civilization, debtors and creditors form two distinct classes, the
question of right is not, indeed, changed, but there is a solid basis
afforded for the political admeasurement of opposing interests. In another
work I have shown how, after great wars, land owners, who became involved
in debt, have been protected against capitalists. (See _Roscher_,
Nationalökonomik des Ackerbaues, § 137, ff.)(567)(568)





                                 Book II.


THE CIRCULATION OF GOODS.




                                Chapter I.


Circulation In General.



                               Section XCV.


Meaning Of The Circulation Of Goods.


The more highly developed the division of labor is, the more frequent and
necessary do exchanges become. While the hermit engaged in production
thinks only of his own wants, and the mere housekeeper of the wants of his
household, the man who is part of a nation and who plays a part in its
general economy, must bear in mind the MARKET in which goods of one kind
are exchanged against goods of other kinds. The greater, more various and
more changeable the conditions of this market are, the greater are the
intellectual faculties demanded to engage in it successfully, and to the
advantage of everybody concerned in it.(569) Goods intended to be
exchanged are called commodities. By the circulation of commodities is
meant their going over from one owner to another.(570) Among the principal
causes of circulation, we may mention the difference in the nature and
civilization of countries and peoples, the distinction between city and
country, the division of people into classes etc.(571) The rapidity of
circulation depends, on the one hand, on the quantity of commodities, and
on the other, on the degree to which the division of labor has been
carried. In both respects it is, therefore, an important indication of the
wealth of the nation, and of the world.

Different commodities have very different degrees of capacity for
circulation (_Circulationsfähigkeit_), that is, of certainty of finding
purchasers, and of facility of seeking purchasers. The smaller, compared
with its value, the volume and weight of a commodity are; the longer and
more conveniently it can be stored away; the more invariable and
well-known are its value in use and value in exchange: the more readily
does it go from one place to another, the more easily is it transmitted
from one period of time to another and from the possession of one person
into the possession of another. Thus, for instance, the precious metals
circulate more rapidly than industrial products; these in turn more than
raw material,(572) and immovable property circulates least rapidly of all.
An improvement in the means of transportation naturally increases the
capacity of circulation of the entire wealth of a people, and especially
of those commodities which were not before transferable as well as of
those of which the cost of transportation constituted a peculiarly large
component part of the price.(573) The greater the capacity for circulation
of any kind of goods, the greater is the power of control of its owner in
the world of trade. If we compare two men, each of whom possesses a
million of dollars, but one of whom has that million in money and the
other in land, we shall find that the former is able, for present
purposes, such as loaning to the state in case of need, aiding a
conspiracy etc., to command resources much more readily and effectively
than the latter. Under the ordinary circumstances of a nation’s economy,
we find that the owner of money is very seldom in want of bread, fuel or
clothing, whereas very many owners of other property may be in want of
money.(574) True, resources which may, so to speak, take the offensive
most energetically, offer less resistance to unforeseen misfortune. The
possessor of such resources is in a condition to lose his all on the turn
of a single die. As civilization advances, the circulating capacity of a
nation’s wealth increases.(575)



                              Section XCVI.


Rapidity Of Circulation.


With an advance in a people’s public economy, we find an increased
rapidity of circulation connected, both as cause and effect. Every
improvement, every thing which shortens the process of production, must
facilitate and accelerate the circulation of commodities. And so, the
perfecting of the means of transport of commodities, of the media of
exchange and of credit, an increase in the number of middlemen who make it
their business to purchase in order to sell again. On the other hand, the
more rapid the circulation of wealth, the more can it promote production.
The more rapidly, for instance, the manufacturer of cloth exchanges his
wares for money, the more rapidly may he employ the money in the purchase
of new tools and the hiring of new labor; and the sooner may he appear in
the market with new cloth. It is here precisely as it is in agriculture,
which is more productive where the seed returns several times in a year
(several crops(576)) to the hand of the peasant than it is where this
happens only once. The nearer the members of the commercial organism are
to one another, the more rapid is circulation wont to be. Hence, it is
more rapid in industry than in agriculture; in retail trade than in
wholesale; in large cities than in the country; among a dense population
than among a sparse population.

The _regularity_ of circulation increases with economic culture. Its
concentration at large terminal points, its interruption by bad seasons of
the year, belong to the lower stages of the political economy of a people;
although bad harvests, floods, wars, revolutions etc. may, at any time,
lead to a sluggishness or to an arrest of circulation.



                              Section XCVII.


Freedom Of Competition.


But it is especially the freedom of circulation that increases with an
advance in civilization, and this advance, like the two preceding, first
affects the home or inland circulation. Freedom of competition, the
freedom of commerce and industry, technical expressions used to designate
freedom in general in the domain of a nation’s economy, is the natural
conclusion drawn from the principles of individual independence and of
private property. Hence its development is as slow as the development of
these, and attains its full growth only in highly cultivated nations,
their colonies and dependencies. In very low stages of economic
development, the circulation of goods is hampered by the absence of legal
security; later, by privileges accorded to a great number of families,
corporate bodies, municipalities, classes, etc., and later yet by the
mighty guardianship which the state exercises by its power of legislation
and even of education.(577) Each one of these epochs constitutes the end
of the preceding one, and is milder than it was. Finally comes the period
of complete freedom, when every man is permitted to manage his own affairs
even with injury to himself, provided the injury is confined to himself.

The later times of the Roman Empire are the best illustration of how, with
the decline of the conditions which must precede freedom of competition,
that freedom itself decays.(578)

Freedom of competition unchains all economic forces, good and bad. Hence,
when the former preponderate, it hastens the time of a people’s grandeur,
as it does their decline where the latter gain the upper hand.(579) We may
say of economic freedom what may be said of all other freedom, that the
removal of external constraint can be justified and produces the greater
good of the greater number only where a stern empire over self takes its
place. Without this it would not prevent or avoid idleness, usury or
over-population. Freedom must not be simply negative. It must be positive.
If on account of the immaturity or over-maturity of a people, there be no
sturdy middle class among them, unlimited competition may become what
Bazard calls a general _sauve-qui-peut_ (let the devil take the hindmost);
what Fourier designates as a _morcellement industriel_, and a _fraude
commerciale_; what M. Chevalier denominated “a battle-field on which the
little are devoured by the big;” and in such case, as Bodz-Reymond says,
the word competition, meaning simply that each one is permitted to run in
whatever direction he may see a door open to him, is but another and a new
expression for vagabondizing. But here the evil does not lie in too great
competition, but in this, that on one side there is too little
competition.(580) The opposing principle of competition is always
monopoly, that is, as John Stuart Mill says, the taxation of industry in
the interest of indolence and even rapacity; and protection against
competition is synonymous with a dispensation from the necessity to be as
industrious and clever as other people.

A protection of this nature, sufficiently effective to attain its end,
would not fail to arrest the efforts of those who had accomplished
something, and even to turn them backward. That freedom of competition is
a species of declaration of war,(581) among men considered as producers,
is certain; but, at the same time, it makes all men considered as
consumers members of one society, in which all the members are equally
interested, a fact too much overlooked by socialists.(582) It is the means
especially by which the greatest and ever increasing portion of the forces
of nature are raised to the character of the free and common property of
the human race.(583) “Man is not the favorite of nature in the sense that
nature has done everything for him, but in the sense that it has endowed
him with the ability to do everything for himself. The right of freedom of
competition may, therefore, be considered both the protection and the
image of this provision of nature.” (_Zachariä._)(584)

The person, therefore, who claims or asserts an exception from the rule of
free competition, has to prove his position in every individual case,
since the burthen of proof is on him. But the duty of interference on the
part of the state is positively pointed out where any interest common to
the whole people is not in a condition to assert itself; and negatively,
when the custom which hitherto had prevented an undoubted abuse has grown
too weak to continue to perform that service. In _both_ regards I would
call attention to the protection of factory children against the
concurrent selfishness of their parents and masters.(585)(586) _Supra_, §
39.



                             Section XCVIII.


How Goods Are Paid For.—The Rent For Goods.


Payment for goods (§ 1 ff.) of any kind can be made only in other
goods.(587)(588) Hence, the greater, more varied, and the better adapted
to satisfy wants, production is, the more readily does any product find a
remunerative market; more readily in England, for instance, in spite, or
rather, because of, the great competition there, than in Greenland or
Madagascar. From this it follows that, as a rule, a person is in a better
condition to purchase more goods in proportion as he has produced more
himself. According to official accounts, the average value of a harvest of
wheat and potatoes in Prussia was formerly 332,500,000 thalers. In the
year 1850, however, it was only 262,000,000 thalers. As a matter of
course, the country people in that year could not purchase from the cities
as much as in ordinary years, by a difference of 70,000,000 thalers. This
illustrates how every class of people, who live by finding a free market
for their products, are interested in the prosperity of all other classes.
As Bastiat says: “All legitimate interests are harmonious.” The more
flourishing a city, the better off are the towns around it, which furnish
it with provisions; and the richer these towns, the more flourishing is
the industry of the city which ministers to their wants.(589) It is
important that this fact should be borne steadily in mind, especially in
times of advanced civilization, when the feeling that we all have
interests in common, is too apt to grow dormant. Nothing can better serve
to awaken it again when it has become so. A nation, says Louis Blanc, in
which one portion of the people is oppressed by another, is like a man
wounded in the leg. The healthy limb is prevented by the sick one from
performing its functions.(590)



                              Section XCIX.


Freedom Of Competition And International Trade.


Does the same rule apply to the commercial intercourse of nations? Where
the feeling that all mankind constitute one vast family is stronger than
that of their political and religious diversity; where the sense of right
and the love of peace have extinguished every dangerous spark of ambition
for empire and all warlike jealousy; where, especially, their economic
interests are rightly understood on both sides, a real conflict between
the interests of two nations must always be a phenomenon of rare
occurrence, and an exception to the general rule, which should not be
admitted until it has been clearly demonstrated to exist.(591) Highly
cultivated nations generally look upon the first steps in the civilization
of a foreign people with a more favorable eye than they do on the
subsequent progress which brings such nations nearer to themselves.(592)
Yet the realization of the above mentioned conditions on all sides is
something so improbable, unpatriotic “philanthropy” something so
suspicious,(593) the greater number of mankind so incapable of development
except under the limitations of nationality, that I should observe the
total disappearance of national jealousies only with solicitude. Nothing
so much contributed to the Macedonian and Roman conquests as the
cosmopolitanism of the later Greek philosophers.(594)

As all commerce is based on the mutual dependence of the contracting
parties, we need not be surprised to find international commerce so
dependent. But this dependence need not, by any means, be equally great on
both sides. Rather is the individual or the nation which stands in most
urgent need of foreign goods or products the most dependent. Hence, it
seems that, in the commercial intercourse between an agricultural and an
industrial people, in which the former furnish food and the raw material
of manufactures, and the latter manufactured articles, the latter are the
more dependent. In case of war, for instance, it is much easier to
dispense for a long time with manufactured articles than with most
articles of food.(595) However, this condition of things is very much
modified, for the better, by all those circumstances on which the dominant
active commerce of a nation depends. It is, for instance, much easier for
the English, on account of their greater familiarity with, and knowledge
of the laws and nature of commerce, on account of their business
connections, their capital, credit and means of transportation, but more
particularly on account of the greater capacity of circulation of their
national resources, to find a new market in the stead of one that has been
closed to them, than it is for the Russians with their much more
immoveable system of public economy.(596) It is true, however, that an
effective blockade, which excluded both of these nations from all the
markets of the world, would be much more injurious to England than to
Russia.




                               Chapter II.


Prices.



                                Section C.


Prices In General.


The price of a commodity is its value in exchange expressed in the quantum
of some other definite commodity, against which it is exchanged or to be
exchanged. Hence, it is possible for any commodity to have as many
different prices as there are other kinds of commodities with which it may
be compared.(597) But whenever price is spoken of, we think only of a
comparison of the commodity whose value is to be estimated, with the
commodity which, at that time and place, is most current and has the
greatest capacity for circulation. (Money.)(598) When two commodities have
changed their price-relation to each other, it is not possible, from the
simple fact of such change of relation, to determine on which side the
change has taken place. If we find that a commodity A stands to all other
commodities, C, D, E etc., in the same relation as to price as before,
while commodity B, compared with the same, has changed its place in the
scale of prices, we may infer that B, and not A, has left its former
position.(599)

The words costly and dear, as contradistinguished from common and cheap,
both indicate a high price. We, however, call a commodity costly whose
price, compared with that of other similar commodities, is high. On the
other hand, we call a commodity dear when we compare it with itself, and
with its own average price in other places and at other times.(600)

In individual cases, the price of a commodity is determined most usually,
and at the same time most superficially, by custom; people ask and pay for
a commodity what others have asked and paid for it. If we go deeper and
inquire what originated this customary price and may continually change
it, we come to the struggle of interests between buyers and sellers. And
if science would analyze the ultimate elements of the incentives to this
struggle and the forces engaged in it, it is necessary that it should keep
in view the entire economy of the nation, and even all national life.



                               Section CI.


Effect Of The Struggle Of Opposing Interests On Price.


No where in the public economy of a people are the workings of
self-interest so apparent as in the determination of prices. When the
price of a commodity is once fixed by the conflict of opposing
interests,(601) the self-seeking of every individual dictates that he
should thereby gain as much as possible of the goods of others, and lose
as little as possible of his own. In this struggle, the victory is
generally to the stronger, and the price is higher or lower, according to
the superiority of the buyer or seller.(602) But who, in such case, is the
stronger? Political or physical superiority can turn the balance one way
or another only in very barbarous times, and especially in times when
legal security is small.(603) As a rule, it is the party in whom the
desire of holding on to his own commodities is strongest, and who is least
moved by the want of the wares of others. As in every conflict, confidence
in self, sometimes even unbounded confidence in self, is an important
element of success. A party to a contract of sale or barter, who considers
his immediate position decidedly stronger than that of the other party,
will scarcely depart from his demands. Hence it is, that in exchange, one
party so frequently holds back until the other has expressed his
terms.(604) How different is the price of the same pieces of land which a
new railroad enterprise is compelled to pay and the prices it would get
for them, from the adjoining owners, in case of the dissolution of the
company.

But the struggle to raise prices or to lower them, which is always going
on, undergoes modifications of every description among all really
commercial nations, partly through the influence of the public conscience,
which brands as inhuman and blameworthy the spoilation of the opposing
party by acts which the laws do not reach. And this consideration by the
public conscience is all the more severe in proportion as real competition
in the article sold is wanting.(605) But the chief modification in this
struggle is produced by the fact, that where civilization has advanced
farthest, every commodity is offered for sale by a great many and wanted
by a great many.(606) As soon as several seek the same object, there
naturally results a rivalry among them, which induces each to attain the
desired end, even by the making of greater sacrifices than others. The
greater the supply of a commodity is, as compared with the demand for it,
the lower is its price; the greater the demand as compared with the
supply, the higher it is. And, indeed, there is question here, not only of
the _mass_ of things supplied or demanded, but also of the _intensity_ of
the supply and demand.(607)

If the exchange-force of both contractants be equal, or, in other words,
if both, with equal knowledge, are interested in the completion of the
exchange, there results from this attitude of the parties toward each
other, what is called an equitable, or average price, in which both meet
with their deserts. Here each is a gainer, since each has parted with the
commodity which was less necessary to him, and received in exchange the
commodity which was more necessary to him. Looked at, however, from the
stand-point, not simply of a nation’s but of the world’s economy, the
value given and the value received are equal.(608)(609)

As a rule, the price-relation of two commodities is determined by this
relation of demand and supply,—by the desire to possess and the difficulty
of obtaining them. We must, therefore, examine on what deeper relations
supply and demand themselves depend.(610) In the case of the purchaser,
the value in use of the commodity and his own ability to pay constitute
the maximum limit of its price, which price may, however, be modified by
the cost of producing it(611) elsewhere or at another time. In the case of
the seller, the cost of production is the minimum limit, which may,
however, be extended by the cost of procuring the commodity by the
purchaser at another time or place.(612)



                               Section CII.


Demand.


The purchaser in his demand is wont to consider principally the value in
use of a commodity, according as it, in a higher or lower degree,
ministers to a necessary want, to a decency or to a luxury. The difference
of opinion as to which of these categories any given want belongs depends
not only on the nature of the country and the customs of its people, but,
for the most part, also, on the prejudices of class and on personal
individuality.(613) A reasonable man will employ only the surplus of the
first class in the satisfaction of wants of the second, and again only the
surplus of the second in the satisfaction of wants of the third.(614)

If the value in use of a commodity rises or falls, and surrounding
circumstances remain unchanged, its price also rises or falls.(615)(616)



                              Section CIII.


Demand.—Indispensable Goods.


When the supply of articles of luxury diminishes, the price of them, it is
true, rises. But as now there is a number of purchasers no longer able to
pay for them, the demand for them also decreases, and their price, as a
consequence, rises in a less degree than might be inferred from the amount
and condition of the supply merely. And so, on the other hand, an increase
of the supply which lowers the price is wont, in the case of pleasures
capable of a wide extension, such as are ministered to by fine roots,
vegetables, etc., to produce an increase of the demand, and this operates
to arrest the falling price.

It is quite otherwise, in the case of indispensable goods, as for
instance, wheat. When there is a want of such an article, men prefer to
dispense with all other articles, to some extent, rather than to practice
frugality in bread; and all the more, as bread is not so much used as
consumed rapidly, while clothes and metallic articles last a long time.
And even after an over-abundant harvest, leaving voluntary waste out of
the question, consumption is increased by a finer separating of the flour,
an increase in the amount of corn fed to cattle, and the distillation of
spirits. Hence, demand and supply by no means run in parallel lines at
every moment; and indispensable articles tend to greater perturbations in
price than those which can be dispensed with.(617)(618) The price of
grain, especially, varies in a ratio very different from the inverse ratio
of the amount of the harvest;(619) although a formula therefor expressed
in figures, like that of Gregory King, can never be applicable
universally.(620) Farmers must everywhere and always withhold a certain
amount of their harvest for seed, for home use etc., from the market. Only
absolute necessity can induce them to draw on the quantity thus laid by.
But the ratio of this part to the whole is very different in different
countries.(621) In the higher stages of civilization, where payment in
money has taken the place of payment in produce, and all other kinds of
payment, and where the cultivator of the ground pays the wages of his
laborers almost exclusively in money, so that they, like all others,
purchase what bread they require in the market; a given deficit in the
harvest must be spread over a much larger market supply; and prices,
therefore, remain much less affected than in the lower stages of
civilization.(622) And so, it is clear that a like bad harvest must affect
prices very differently, if there be a large importation or exportation of
the means of subsistence, and if several bad harvests, or several harvests
yielding more than the average have preceded.

In another respect yet, the price of indispensable commodities is very
sensitive, because here the mere fear of a future want of them has a far
deeper and wider influence, than has the fear of want of articles of
luxury. No matter how good the wheat crop may have been, if the weather
afterwards interferes with its harvesting, the price of wheat, in
countries in which the spirit of speculation is on the alert, will
certainly rise, because the prospect of the future crop then becomes
somewhat doubtful.(623)



                               Section CIV.


Influence Of Purchaser’s Solvability On Prices.


The purchaser, besides the value in use of the goods he desires to buy,
considers his own solvability (_Zahlungsfähigkeit_ = ability to pay). It
is only solvent demand which can influence prices.(624) For instance,
among a people made up almost entirely of proletarians, there will be a
great many cases of starvation and death after a bad harvest, but the
price of corn will undergo only a slight increase.(625) But where the
greater number of inhabitants own property, and where the wealthy come to
the help of the poorer classes by means of poor-rates and acts of
benevolence, it is scarcely possible to assign limits to the increase of
the price of corn. By a necessary connection, when indispensable articles
grow dear, the demand for articles that can be dispensed with generally
decreases, and _vice versa_.(626) Every merchant, engaged in an extensive
business, is interested in knowing in advance the results of the corn
crop. The higher the price of a commodity rises, the narrower, of course,
grows the circle of those who can pay for it.(627)(628)



                               Section CV.


Supply.


In the case of isolated chance exchanges, the seller, too, takes into
consideration, first of all, value in use, and compares the satisfaction
which the commodity to be parted with and that to be received are able to
afford. It is true that in making this estimate, he is subject in the
highest degree to error and deception.(629) In the well ordered trade of a
nation whose economy is highly developed, the seller, who had this very
trade in view in his production, is wont to consider almost exclusively
the value in exchange of his commodity.



                               Section CVI.


The Cost Of Production.


As no one is willing to lose anything, every seller will consider what his
goods have cost him, and the cost of producing or procuring them as the
minimum price to be asked for them.(630) At the same time, the idea
covered by the expression cost of production, although it always embraces
whatever disappears from the resources of the producer to enter into
production, varies very much according as it is considered from the point
of view of the individual’s, the nation’s or the world’s economy.

An individual who pays taxes to his government, and who has rented land
and employed labor and capital to engage in production, must indeed,
besides the capital he has used in such production, call all his outlay in
interest, wages, rent, and taxes, by the name of cost of production;(631)
since, unless they all come back to him in the price of the commodity, the
entire enterprise can only injure him.(632) He will, of course, add an
equitable profit to remunerate him for his enterprise, since without such
profit, he would not be able to live or produce; or else, he would be
compelled to consume his capital. The moment the current rates of
taxation, interest, wages and rent change in a country, the cost of
production is also changed in the case of the individual engaged in
production, however unaltered the technic process may remain.(633) But
taking the nation, or all mankind into consideration, we must not lose
sight of the fact that these three great sources of income, as well as
taxation, are not, rightly speaking, sources from which income flows, but
rather channels through which the aggregate income of the nation or the
world is distributed among individuals.(634) Hence the wages of labor, for
instance, which afford the means of living to the greater part of the
population, cannot possibly be looked upon simply as a factor in economic
production. The people considered in their entirety have the soil gratis.
All saving made from rent, interest on capital, or wages, is nothing but a
change of the proportion in which the results of production were
distributed hitherto among coöperators in production. Such a change may be
either advantageous or the reverse; but it is not a diminution of the
amount of sacrifice which the people in general must make for purposes of
production. Hence, in a politico-economical sense, to the cost of
production, belongs only the capital necessarily expended in production,
and which has disappeared as a part of the nation’s resources, abstraction
made of the personal sacrifices in behalf of production.(635) The value of
the circulating capital which in the process is entirely used up, must, of
course, be entirely restored in the price, that of the fixed capital used
only to the extent that it has been used.(636)

The risk, which the producer runs until the commodity produced is actually
consumed must also be borne in mind.(637) There are things which are a
real risk in small enterprises that by the intervention of an insurance
company, or where the enterprises are large and insure themselves, become
a more or less variable portion of the cost of production. The price of
the product, in the latter instance, rises, by this means, very regularly.
In the former case, the rise depends partly on the feeling of the people
whether their pleasure in gain is greater than their grief over a
corresponding loss.(638)

Those enterprises which necessarily produce different products at the same
time deserve special consideration.(639) Here we may speak of “_united_
costs of production,” and all that is needed is that the aggregate of
these costs should be covered by the aggregate price of both products.
This complicates to a certain extent the calculations which the seller
must make to determine his minimum demand for each product. To ascertain
this, he must subtract from the united costs of production the amount of
value which he expects with certainty for the other product.(640)



                              Section CVII.


Equilibrium Of Prices.


Goods whose cost of reproduction,(641) that is, the highest necessary cost
of reproduction is the same, have uniformly the same value in exchange.
Every deviation from this level immediately sets forces in motion which
endeavor to restore the level, just as the water of the sea seeks its
level, notwithstanding the mountains and abysses which the winds bring
forth from its bosom.(642)(643)



                              Section CVIII.


Effect Of A Rise Of Price Much Above Cost.


If the market price rises high above the cost of production, producers
make a profit greater than the average profit made in the country. This
induces them, by the appropriation of new land and the employment of new
labor and capital, to increase their business. Other parties also engage
in this profitable department of trade. This competition not only makes
the means of production dearer, but must eventually, by increasing the
demand, reduce the price of the product to the ordinary level of profit,
that is to an equilibrium with other commodities.(644) Hence, in the
beginning, every diminution of the cost of production(645) turns to the
advantage of the producer; but afterwards and permanently to that of the
consumers: an economic law exceedingly beneficent in its operations, and
not unlike the action of positive legislation in the matter of patents.
There is no greater stimulus to the making of improvements than the
certainty of reward to the person who first introduces one. The moment,
however, that the improvement is imitated by all producers, the advantage
gained by it becomes the common good of the whole nation.(646) These are,
as J. B. Say says, conquests made over the gratuitous productive force of
nature. As a consequence, the value in use of a people’s resources
increases; generally, also, their value in exchange, in so far as the
production of the now cheaper goods increases in a degree greater than
their cost of production has diminished.(647)

As to the alternative so frequently discussed, whether it is preferable to
make a large percentage of profit on the sale of a small quantity of
goods, or a small percentage on a large quantity, we find that, in the
lower stages of civilization, the former is preferred, and the latter in
the higher.(648) And, indeed, the latter is not only more humane, but, in
the long run, it is more profitable to the person who adopts it as his
rule in business. In the case of commodities, he now runs but little risk
from a change of fashion, because the fashions of the masses change much
less rapidly than those of the upper circles of society. In the case of
indispensable goods, on the other hand, he may now calculate with more
certainty on the increase of population, and, therefore, on a future
market for his wares. Competition, which in former times, devoted all its
efforts to bringing about the exclusion, by law, of all rivals, is now
engaged, principally, in devising means of surpassing them by superiority
of workmanship, and in thus increasing the power of the real sources of a
nation’s wealth.



                               Section CIX.


Effect Of A Decline Of Price Below Cost.


If the market price sinks below the cost of production, the producer
naturally suffers a loss, and diminishes his stock as soon as possible.
That whole establishments engaged in industry should forsake a branch of
it which is suffering from depression and enter a flourishing one, must
ever remain a rare exception.(649) But the discouraged manufacturer may
delay renewing his stock on hand,(650) replacing his machinery by new
machinery; he may dismiss some of his workmen and diminish the number of
days during which the others shall work. Moreover, most industries are
operated by means of borrowed capital, capital which must therefore, be
returned to the lender. Under certain circumstances, however, the industry
may be continued for some time, even at a real loss,(651) so long as the
loss of interest etc., which would follow the entire suspension of the
work, exceeds the loss produced by the lowering of price, but hardly any
longer. If the supply of the commodity the price of which has fallen has
been diminished, the subsequent result depends on the causes which, in the
first place, brought about the fall in price. If the diminution in price
was caused solely by a too great supply, when this superabundant supply is
gotten rid of, the price will rise again.(652) If it were produced by a
decrease in the value in use of the commodity, the diminution of the
supply can restore the former state of things only in so far as at least a
part of the purchasers ascribe to the commodity the same value in use as
before.(653) Lastly, if the lowering of the price came from a decrease in
the number of buyers, or from a decrease in their ability to purchase, the
former price will be restored when production has been adapted to a
correspondingly smaller circle of consumers.(654) This last is true
especially when the price, without having suffered any absolute change,
has become relatively too low, on account of an increase in the cost of
production.(655)



                               Chapter CX.


Different Cost Of Production Of The Same Goods.


Most goods are produced at the same time, but under different
circumstances, at a very different cost. In order to estimate the
influence of this fact upon price, we must distinguish between those
commodities the cheapest manner of the production of which may be extended
at pleasure, and those in the production of which it is necessary, in
order to satisfy the aggregate want of them, to call in the dearest mode
of production to aid the cheapest.

In the former instance, the price of commodities is naturally regulated by
the least cost of production. The person who is unable to sustain this
competition permanently, would do a great deal better to abandon the
industry altogether; for it is not in his power to raise the price by
diminishing the supply; more powerful rivals would then only need to
correspondingly increase theirs.(656)

If the same law were applicable, in the latter case, producers placed in a
less favorable situation would be compelled to immediately abandon the
market. The market, in consequence, would no longer be able to provide for
the aggregate need; and the price of the commodity would continue to rise
until the producers who had been driven from the market returned to it
again. Hence, here, price in the long run is determined by the cost of the
production of the commodity, produced under the least advantageous
conditions, while such production is necessary in order to satisfy the
aggregate need. The person engaged in production under more advantageous
conditions receives in the same price of the goods, which are cheaper to
him, an excess of profit; one which is greater in proportion as his
situation, _vis-a-vis_ of production, is superior to that of his less
favored competitors.(657)(658)



                               Section CXI.


Different Cost Of Production Of The Same Goods. (Continued.)


Hence the price of a commodity and the ratio between its supply and demand
mutually condition each other. On the height of the price depends, in
great part, how many purchasers shall resolve to make an effectual demand;
but, at the same time, to what amount of cost of production, sellers shall
extend their supply.(659) We can speak of an equilibrium between supply
and demand only when the former corresponds with the _wish_ of those who
are ready to make good the full cost of production. (_Malthus._) It has
been asked, indeed, whether it were more natural and better that demand
should precede supply or supply demand.(660) But the inquiry is an
illogical one, when expressed in so general a manner, since supply and
demand are only two sides of the same transaction. But, we may say that in
the case of indispensable goods, the want of them (demand) is always felt
sooner than the excess of them (supply), and that in the case of goods
which may be dispensed with, including, originally, money, the reverse is
true. Besides, a person engaging in the production of any kind of goods,
can, as a rule, only seldom directly investigate the relation between
supply and demand. Generally, he can do no more than compare the market
price of the commodity with the cost at which he can produce it. Many
mistakes are inevitable here; but the making of them is the necessary
sacrifice which must be endured to purchase the more than counterbalancing
advantages of free competition.(661)



                              Section CXII.


Exceptions.


The rule that goods which have the same cost of production have also equal
value in exchange, is applicable only to the extent that it is possible to
transfer the factors of production at will from one branch of production
to another. Where this really free competition does not exist, the price
depends entirely on the quantity of the supply, compared with the
solvability or capacity to pay of the purchaser; and hence, it may
sometimes rise far above the cost of production (monopoly-price), and
sometimes sink far below it (forced price, or under-price).(662) Such
hindrances to competition depend, in part, upon natural causes. Thus, in
the case of the works of art of a deceased artist, which cannot be
increased in number;(663) or in that of living celebrities who cannot
extend their mental activity in the same degree that their reputation has
grown. So, also, in the case of precious stones, which are sometimes found
free, and therefore cost nothing, but which, at the same time, have a high
price.(664) Many valuable agricultural products are, together with their
production, limited to a definite and sometimes very small district.(665)
It is to be regarded as a modification of such natural monopolies when
substitutes for a kind of goods which diminish, at least in part, the
demand for them, are found, at a cheaper price; for instance, ordinary
table-wines in the stead of fine wines. The rule applies much more
strictly to those goods which, on account of their greater quantity, can
replace inferior ones,(666) than it does to those where this is not
possible.

The principal cause of forced or under-prices (_Schleuderpreise_) is the
facility with which the product deteriorates, and must, therefore, find a
quick sale, especially when its storage or transportation is attended by
further difficulties.(667) But, very durable commodities are also subject
to under-prices, and especially those which last longest, because the
supply of them can be diminished only very slowly. Thus, for instance,
houses, in a declining city. Distress-prices are found most usually in the
case of such commodities as are produced without any intention to produce
them, as for instance, rags and excrementitious substances. The more the
mere forces of nature preponderate in production, the less can the supply
be increased or decreased at pleasure, the more frequently, as a
consequence, do we find monopoly-prices and under-prices. (Compare § 131
ff.) Thus the production of wheat is invariably connected with the order
of the seasons. Between seed-time and harvest, there are a number of
months which neither capital nor skill can shorten to any extent. The
cultivation of land, to be very much greater and more lasting, supposes so
many conditions precedent, increase of live stock, buildings etc., that it
can be attained only after a series of years. Hence it happens that wheat,
much more than manufactured products, is subject to oppressively high
prices and oppressively low ones, during a long period of time. No matter
what the influence of the forces operating in the opposite direction may
be, the price of wheat depends most largely on the result of the last
crop.(668)



                              Section CXIII.


Exceptions. (Continued.)


Other impediments in the way of freedom of competition have their origin
in social conditions. The rule governing prices applies only where the
vendor and purchaser are equally ready to exchange. But in every case in
which the producer carries on his business, not for the sake of free gain,
but simply to obtain a means of livelihood, it may be subject to many
important exceptions.(669) The richer a seller is, the longer can he wait
for a favorable opportunity to sell. Thus, for instance, wheat is somewhat
lower in price at times when payments are universally made than at other
seasons of the year, because a great many country people are then
compelled to sell. Where the country population are universally needy, it
sinks after a harvest to an unusually low figure, and in spring rises
again very high.

Sometimes price is affected by the agreements of the purchaser or seller,
but most readily by those of middlemen between consumer and producer.(670)
Customs peculiar to whole classes may exert the same influence, and such
customs are especially powerful in the lower stages of business and
industrial development. They, even at the present time, take the place,
frequently, of freedom of competition in retail business, in the book
business, and in the determination of lawyers’ and doctors’ fees, as well
as in the distribution of a nation’s income among the three great branches
of its general economy,(671) deciding, instead of competition, how much
shall go to each. Wherever there are guilds, communities, castes etc. with
legal privileges; wherever there are difficulties placed in the way of
exportation and importation; wherever preëmption rights or
monopolies,(672) in the strict sense of the word, exist, the leveling ebb
and flow of the elements of production may be still more seriously
interfered with. Legislation(673) of this sort injures the non-privileged
portion of the population more than it helps the privileged portion. (See
§ 97.)(674)

The word _usury_, so arbitrarily used in every-day language, should be
admitted in science only to designate a famine-price, fraudulently and
intentionally caused or intensified.



                              Section CXIV.


Prices Fixed By Government.


No power can, of course, fix the price of a commodity in the long run,
which cannot at the same time fix the relation of supply and demand.
Hence, set prices fixed by governmental authority can be made to play a
part in practice only in so far as they do not establish a price in
opposition to the real state of things, only to the extent that they give
undoubted expression to it in a manner in harmony with natural conditions.
With this restriction, set or fixed prices may, in the absence of real
competition, which can always best determine prices, be useful to both
parties; otherwise one party would at one time, and the other at another,
profit by an unjust advantage; but it would not be long before both would
suffer from the perturbation caused thereby in all commercial
transactions. How pleasant it is for a traveler in Switzerland, or even in
Italy, to find set prices established there.(675) Especially where
competition is prevented by state privileges, the establishment of set
prices by the state for the protection of the public may be
necessary.(676) It is more difficult to fix a set price for a commodity in
proportion to its complexity and to its variableness in quality; and where
there are different grades of quality of the same commodity, and the
transition from one grade to another is almost imperceptible, such price
is easily evaded.(677) In the case of every enterprise carried on by many
in common, where no competition is possible, it is necessary to supply the
defect by means similar to the establishment of fixed prices; as in the
case of government, by fees for governmental services, and the coöperation
of a chamber of deputies in the imposition of taxes and the determination
of official salaries etc.(678)



                               Section CXV.


Influence Of Growing Civilization On Prices.


On the whole, prices become more and more regular as national-economic
civilization advances. Progress in civilization tends to bring the parties
engaged in the struggle for prices that is buyers and sellers, nearer to
one another, in so far as it uniformly decreases the cost of production,
and increases the purchaser’s ability to pay.(679) (See § 101.) The more
universal division of labor makes commercial intercourse more necessary to
every one, at the same time that it makes it more of a habit to him; and
hence exchange ceases more and more to be a matter of caprice or chance.
The better means of transportation and communication render it easier, in
every way, for supply and demand to meet. With the advance of general
enlightenment and education, an acquaintance with commodities also becomes
more general, and every purchaser is on a better way to be able to
estimate the cost of production which the seller has to bear. Hence,
fraudulent prices and prices founded in error become less frequent; and
all this is helped forward by the greater accuracy of weights and
measures. The increase of population makes competition more active in all
branches of trade, while at the same time, with the greater freedom of
circulation, a number of causes which previously operated to produce very
high prices in one place and very low ones in another are removed.(680)
But especially, the growth of a distinct class of merchants leads to a
uniformity in price. This class are incited by their own interest to
purchase at low prices and sell at high prices. Thus, their competition in
the former case raises prices, and lowers them in the latter.(681) In all
lower stages of civilization, the custom of making offers and beating down
in price plays a great part, while where culture is higher, the system of
fixed prices (but not by government) gains ground continually. Here
Turgot’s principle is applicable, viz.: that the current price of an
article is tacitly understood when one asks a merchant the price of his
wares.(682)

This proposition is true in the case of individuals, as well as of classes
and of whole nations.(683) It is plain, that under a system of fixed
prices we can more certainly discover what the equitable price is, than in
the heat of higgling which besides consumes a great deal of precious time.
Lastly, one of the principal requisites of a well developed scale of
prices is national honor, and this, doubtless, increases in the higher
stages of civilization, not only because of the greater moral culture
which then prevails, but also and especially because that which
constitutes a people’s real and best interests is better understood.(684)
Among declining nations, many of these developments take a retrogressive
road. The very great distinction between rich and poor, between educated
and uneducated, again produces great fluctuations in price. A proletarian
people who have sunk so low as to live on potatoes will suffer much more
from variations in price and of the means of subsistence than a people who
live on wheat; for the reason that it is so difficult to export or to
preserve(685) potatoes. Nor can it be doubted, that the greatest possible
constancy of prices is the most beneficial condition that the general
economy of a people can be in. Where prices change while the cost of
production remains the same, one person can only gain what the other has
lost. But such unmerited gains and undeserved losses have an invariable
tendency to destroy the deepest roots of a people’s economic activity; and
intentional speculation based upon such change usually assumes an immoral
character. (Stock-jobbing.)(686) Even if Macleod be right, that an
increase or decrease in prices is to be regarded as a warning of excess,
the former of excess of consumption, the latter of production, no one will
doubt that it is the interest of every organism to confine pain within the
smallest possible limits, even if its consequences are so beneficial to
the preservation of the whole body.




                               Chapter III.


Money In General.



                              Section CXVI.


Instrument Of Exchange. Measure Of Value. Barter.


Wherever the division of labor is very highly developed, the continuance
of barter, or the direct exchange of one object of consumption for
another, presents difficulties well nigh insurmountable. How difficult it
would be always to find the person who could supply us with precisely what
we wanted, and at the same time have need of what we had a surplus
of.(687) But how much less frequently would it happen that one’s want and
another’s surplus would correspond exactly the one to the other in
quantity; that, for instance, the manufacturer of nails, desirous of
exchanging his nails for a cow, should meet a cattle-dealer who should
want exactly as many nails as a cow is worth! Here there is one chief
difficulty in the way, viz.: that there are so many commodities which
cannot be divided without causing a diminution or even a destruction of
their value; and that others cannot be stored away in any quantity without
becoming a very heavy burthen to their owner. How useful it would
therefore be, if there was one commodity which should be acceptable to
every person, at all times, especially if in addition to this, it
possessed the qualities of durability, capacity for transportation and for
being stored up and preserved. Any person who possessed a proper supply of
this one commodity would then be certain of being able to obtain all other
exchangeable commodities through its instrumentality; and every seller
would be satisfied to exchange what he had to dispose of against this
“universal commodity.” If two values are equal to a third, they are equal
to each other. It is, therefore, a simple matter to use this most current
of all commodities, with which all others are most frequently compared, as
a measure of the relative values of all other exchangeable commodities.
There is need of such a measure, and it is analogous to the want
experienced by the mathematician who has a column of fractions to sum up,
and who does it by first reducing them all to a common denominator.
(_Storch._)(688) A person entrusted with the duty of assessing the values
of two hundred different articles would be obliged, if he had no such
measure to use, to burthen his memory with at least 19,900(689) different
ratios. With it, he need carry only 199 in his head.

Such a commodity, universally in favor, and which, on that account, is
employed as an intermediary in the effecting of exchanges of the most
varied nature, in the measuring of all exchange-values and as a
value-carrier (_Werthträger_) in time(690)(691) and space, we call money.
(_Merce universale: Berri; produit préféré: Ganilh; marchandise
intermédiare; Bastiat._)(692)

The more enlightened portions of every business community gradually come
to require payment in the commodity which has for the time being the
greatest circulating capacity. If to this be added the sanction of the
government, and if the government itself recognizes this same “universal
commodity” as the means of payment of all debts, or as “legal tender”
(_puissance libératoire_), where no other is expressly agreed upon, the
“universal commodity” in question then becomes money in the fullest sense
of the idea conveyed by the word.(693)



                              Section CXVII.


Effect Of The Introduction Of Money.


By the introduction of money, most exchanges are divided into two halves:
purchase and sale.(694) We may also say with Schlözer, that by its means,
exchange, for the first time, becomes a sale, and obscure value in
exchange, clear and definite price. (_Permatio vicina emtioni_). Were
there no money, the party to an exchange, occupying the most advantageous
economic position, would possess a much greater superiority over the other
than he does now. Many a bread-buyer, especially, would be half starved
before he could agree with the seller on the quantity of bread to be
received in exchange for the commodity he had to dispose of. The producer
of the means of subsistence would here possess an extreme advantage, since
the urgent necessity of the exchange for the one party, and the power of
the other to postpone it, would make the determination of the price an
entirely arbitrary matter.(695) Hence, the development of money as the
instrument of trade, keeps pace with the development of individual
liberty. Payment of wages in money makes the workman more responsible for
his husbandry etc., but at the same time, freer, than payment in produce.
Now, also, a higher division of labor becomes possible; for the easier it
is to obtain everything else for money, the easier it is for each person
to devote himself exclusively to one branch of business.(696) Without
money, too, only ready commodities could be exchanged one against another.
Only when money has become the instrument of trade, is it possible to
separate the net from the gross returns, and, therefore, to manage income
properly. (_Schäffle_). Now, also, it becomes for the first time really
remunerative to produce more than one needs for his own use, and to save.
Without money, the owner of any one kind of capital, who could not employ
it himself, would be obliged, if he desired to loan it, to find not only a
person who was in need of capital, but one who needed the very kind of
capital he had. For instance, the person who had one horse too many, would
be obliged to look for another who was in need of one etc. And how
difficult a task it would be to determine the amount of interest, if it
had to be paid in produce or kind, and even to make a return in produce or
kind of capital which had been presumably used. (_Storch_). Moveable
property or resources can attain importance only after the introduction of
good money, since, previous to such introduction, it was by reason of its
great variety,(697) and of its perishable nature, immensely inferior to
landed property. Hence it is, that money, in a nation’s economy, is what
the blood is in the life of the animal. It is, so to speak, the common
reservoir in which all food is first dissolved, and by which, at a later
stage, the elements of nutrition and preservation are distributed to the
several organs.(698) There is, indeed, no machine which has saved as much
labor as money. (_Lauderdale_). It is true that the shadows which wealth
is wont to cast, extravagance, avarice and inequality of every kind, may
readily grow longer and darker in consequence of the introduction of
money.(699) But may not the knife which, in the hands of the surgeon, does
so much for life, become an instrument of danger in the hands of a child?
The invention of money has been rightly compared to the invention of
writing with letters.(700) We may, however, call the introduction of money
as the universal medium of exchange (money-economy),(701) in which goods
intended for use are exchanged against money(702)—instead of barter
(barter economy), which is a system of public economy (_Schäffle_), in an,
as yet, very little developed form, man being there less sociable with his
fellow men—one of the greatest and most beneficent advances ever made by
the race.(703)



                             Section CXVIII.


The Different Kinds Of Money.


Very different kinds of commodities have, according to circumstances, been
used as money; but uniformly only such as possess a universally recognized
economic value.(704) On the whole, people in a low stage of civilization
are wont to employ, mainly, only ordinary commodities, such as are
calculated to satisfy a vulgar and urgent want, as an instrument of
exchange. As they advance in civilization, they, at each step, choose a
more and more costly object, for this purpose,(705) and one which
ministers to the more elevated wants.

A. Races of hunters, at least in non-tropical countries, usually use skins
as money; that is the almost exclusive product of their labor, one which
can be preserved for a long period of time, which constitutes their
principal article of clothing and their principal export in the more
highly developed regions.(706)

B. Nomadic races and the lower agricultural races,(707) pass, by a natural
gradation, to the use of cattle as money; which supposes rich pasturages
at the disposal of all. If it were otherwise, there would be a great many
to whom payments of this kind had been made, who would not know what to do
with the cattle given them, on account of the charges for their
maintenance.(708)



                              Section CXIX.


The Metals As Money.


C. That metals were used for the purpose of money much later than the
commodities above mentioned, and the precious metals in turn later than
the non-precious metals, cannot by any means be shown to be universally
true. Rather is gold in some countries to be obtained by the exercise of
so little skill, and both gold and silver satisfy a want(709) so live and
general, and one so early felt, that they are to be met with as an
instrument of exchange in very early times.(710) In the case of isolated
races, much depends on the nature of the metals with which the geologic
constitution of the country has furnished them.(711) In general, however,
the above law is found to prevail here. The higher the development of a
people becomes, the more frequent is the occurrence of large payments; and
to effect these, the more costly a metal is, the better, of course, it is
adapted to effect such payments. Besides, only rich nations are able to
possess the costly metals in a quantity absolutely great.(712) Among the
Jews, gold as money, dates only from the time of David.(713) King Pheidon,
of Argos, it is said, introduced silver money into Greece, about the
middle of the eighth century before Christ. Gold came into use at a much
later period.(714) The Romans struck silver money, for the first time, in
209 before Christ, and, in 207, the first gold coins.(715) Among modern
nations, Venice (1285) and Florence seem to have been the first to have
coined gold in any quantity.(716) Henry III. of England (ob. 1272), was
the first to coin gold, but with so little success, that for a long time
after, Edward III. (ob. 1377) was regarded as the first English monarch
who had coined gold.(717) How little a barbarous people are in a condition
to make use of very costly material as money, is proved by the account
which Tacitus gives of the ancient Germans, who preferred silver to gold
in trade.(718) England presents us with an instance of the other extreme.
Since 1816, silver, in that country, has been used only as a species of
change, and the circulation of gold governs in almost all commercial
transactions.(719)

D. The local usage of some countries has raised many other commodities to
the dignity of instruments of exchange, especially where the population
are poor and the metals which might be used as money have not existed in
sufficient quantities or in the requisite proportion. But people have
always limited themselves in the material of their money to such
commodities as are universally acceptable, as uniform as may be, and
current as articles of export or import.(720)



                               Section CXX.


Money—The Precious Metals.


That the precious metals are uniformly preferred in highly cultivated
nations(721) as the instrument of exchange, depends on the greatness and
uniformity of their value in exchange, but especially on their durability
and pliancy as to form.

This value in exchange is great, because their beauty, which consists in
their luster and their sonorous ring,(722) gives them great value in use;
and because, at the same time, their rarity in nature makes the supply of
them relatively small,(723) and not susceptible of increase at
pleasure.(724) As they contain so large a value in so small a volume, they
are adapted to transportation from one place to another, with but little
difficulty—a matter of the greatest importance in an instrument of
exchange.(725) Hence, it is much easier to keep the demand for them and
the supply of them at a level all over the world, than it is the demand
and supply of most other commodities. And this all the more as there are
not different kinds of gold and silver, but only different qualities of
their fineness.(726) It also contributes to the uniformity of their value
in exchange, that they minister mainly only to wants of luxury. The most
indispensable commodities are subject to the greatest variations in price
(see § 103), whereas, in the case of the precious metals, the diversity of
uses to which they may be turned contributes greatly to render their
value, as instruments of exchange, more equable. If the supply of them be
small, gold and silver vessels are less in demand; a part of the old ones
are melted down, and _vice versa_.

In durability, the precious metals surpass almost all other commodities.
They are not at all affected by air or water, and they can be corroded
only by very few fluids. Fire may, indeed, change their form, but scarcely
in any degree the value of the material of gold, and that of silver very
little, and then only when it is subjected to a very powerful blast or
draught of air.(727)(728) Hence, while by laying them by, they suffer
virtually nothing at all (a most valuable article is an article to deposit
savings in), their wear and tear from use may be very much decreased by an
admixture with other metals in the proper proportion.(729) This durability
contributes largely to keep the price of the precious metals more uniform.
By the time that the wheat crop is rightly harvested, the great bulk of
the previously stored wheat is, as a rule, consumed; and, therefore, the
supply of wheat depends almost entirely on the yield of the last crop. On
the other hand, it is probable that there is many a piece of money, the
raw material of which was dug from Thracian gold mines in the time of King
Philip or from the silver mines of Spain during the reign of Hannibal, in
circulation to-day. Compared with the immeasurable stores of gold and
silver which have gone on accumulating for thousands of years, the new
yield of them, in any one year, is lost like a drop in a bucket. Hence,
only when the yield of the mines has continued for a very long time, or
when it is exceedingly great or remarkably small, can the price of their
products change to any great extent.(730) Even during the revolution in
prices, between 1492 and 1560, the yearly decline in their prices was only
one-half of one per cent. per annum.

Their great pliability of form has, too, very important advantages for our
purpose: first, that they can be divided very accurately into very small
parts, and that the volume of every part corresponds exactly to the value
of the part;(731) and secondly, that they take an impression at very
little cost, an impression which is an authoritative and trustworthy
expression of their weight and quality, thus saving the commercial public
the perilous trouble of weighing and testing them every time they are
used.(732)(733)(734) This duty the state, as a rule, assumes. (Coinage.)
When its authority, however, is not recognized, as is generally the case
in international trade, gold and silver bars are even now used, and have,
therefore, to be weighed and tested.(735)(736)



                              Section CXXI.


Value In Use And Value In Exchange Of Money.


The original value in use of the precious metals, to satisfy certain wants
of luxury in the most aesthetic and the most substantial manner, continues
still; but with the advance of civilization, the employment of gold and
silver for this purpose has fallen farther and farther behind the more
recent employment of these metals as the best material for money. And
since now the services rendered by money may be divided into two classes:
storing up or preservation, and the transmission (division, concentration)
of values,(737) the former always plays a greater part in the earlier
states of the development of trade by money; and the latter plays the
larger part in the later stages of the same development. We may best
compare money to the other machines or instruments of commerce.(738)

The person who, in times when there is a dearth of goods, and especially
of capital, complains of a want of money, commits the same error as if he
ascribed a scarcity or absence of grain, when it exists, to a too small
number of wagons to carry it, or to the narrowness of country highways.
The inference may, indeed, be sometimes well-founded, but certainly only
by way of exception; and yet it is generally the first which
politico-economical quacks think of in practice.(739) Like all tools or
instruments, money constitutes a part of an individual’s or a nation’s, or
of the world’s capital. Considered from the point of view of private
business or economy, money is circulating capital, but from the point of
view of the world’s economy, it is fixed capital.(740)



                              Section CXXII.


Value In Exchange Of Money.


The value in exchange of money is said to be high when all other
commodities estimated in money are cheap; and low in the opposite case. We
have here to do with the application of the most general of all laws of
price; therefore, with the demand and supply of money. The demand for it
depends on the wants and the means of payment of its purchasers.
Therefore, if a country has little trade, it will, on this account, need
only few instruments of trade, that is, of little money to effect
exchanges. If it be poor in other goods, it will get little money in
exchange. In the former respect, there is a beneficent principle of
equalization or compensation which decreases the price-variations of
money, no matter of what kind, in the necessity, when the number of
business transactions remains the same and money becomes cheaper, to use
more of it, and less when it becomes dearer.(741) The supply of money is,
in the long run, dependent chiefly on the cost of production. But since
the cost of production in different mines is very different, the value in
exchange of the precious metals is determined by the cost of producing
them from the poorest mines which must be worked in order to supply the
aggregate want of them. (See § 110.)(742) The more unfavorable the
conditions of their production are, the greater is the quantity of
commodities which must be given for a pound of gold, silver etc.; that
producers may not be deterred from the prosecution of their work. The
extremes of the value in exchange of money are dependent on the use for
which it is intended. That value cannot rise higher than to the point at
which single pieces of money become inconvenient on account of their
smallness, nor sink lower than the point at which a similar inconvenience
is produced by their too great size. In both instances, it would become
necessary to have recourse to other instruments of exchange.



                             Section CXXIII.


The Quantity Of Money A Nation Needs.


How great the amount of money needed in the entire economy of any state
is, cannot be always rightly determined, either by the amount of the
national resources, or by the number of the population.(743) It is a very
easy thing to refute the opinion, that the aggregate amount of cash money
in a country constitutes an equivalent of the aggregate amount of all
other commodities to be found there at any time, in such a way that the
two pans of this great scales (_Locke_) hang always in a state of
equilibrium, and that an increase of the amount of money, the amount of
all other commodities remaining the same, must be productive of an exactly
corresponding decrease in the value of each piece of money.(744) Think
only of the great many commodities which are obtained and consumed without
any exchange whatever! Rather does the amount of money necessary to keep
the value in exchange of the money employed in a people’s public economy
unaltered,(745) depend on the cooperation of the following conditions:

A. _The number and extent of such commercial transactions as are effected
by means of money_;(746) a relation which, evidently, increases (see § 56,
ff.) with every advance in the division of labor. Hence the transition
from serfdom and socage service to free labor, from domestic-servant labor
to day-labor and piece-work, from feudal military service to that of paid
and standing armies, from land-privileges and allowances in produce, such
as fire-bote etc., to the payment of officials in money, from dues in
produce to taxes in money, and regular lease-hold interests, from
requisitions to loans of money; in a word, from the barter-economy
(_Naturalwirthschaft_) of the middle ages to the trade by means of money
in the higher stages of civilization, that is, from the “feudal” to the
“commercial” system must, of itself, increase the money-need
(_Geldbedarf_) of a people.

B. _The rapidity of the circulation of money_; because, in most commercial
transactions, one dollar which circulates ten times a year really performs
the same service as ten dollars which go from hand to hand once in a year;
just as the economic use of a ship employed in the transportation of
commodities does not depend on its commodiousness alone but on its
rapidity also.(747) The economic use of money does not depend on its
amount simply. Says _Sismondi_: “The amount of the medium of circulation
in a state must be equal to the sum of the payments made in it in a given
time, divided by the sum of the times the former has, on an average,
changed owners within that time.”(748) Under given economic circumstances,
the rapidity of the medium of circulation is, taken all in all, not by any
means an arbitrary matter. It will happen very seldom that one man will
purchase or consume a commodity in order that another may not want
money.(749) Were the greater number of money-earners (and in nations with
a healthy economic life this number is always made up of men noted for the
good management of their own affairs) inclined to pay out the money which
they had taken in, rapidly, a very active production would prevail
everywhere; and this, in turn, supposes general commercial freedom and
great legal security. The less these conditions are developed, the more
difficult it becomes, not only to lay out the money received to-day
productively to-morrow, but the more imperatively does a proper foresight
demand, that a reserve-fund should be maintained for times of necessity.
(See § 43.)(750) Even in the same age and among the same people, money
moves most slowly under the influences of troublesome and critical epochs;
for the dangers of war and sedition, of impending burdensome taxation,
commercial gluts and numerous cases of bankruptcy uniformly operate to
make the possessors of money hold anxiously to their present supply.(751)

In less civilized countries, the same condition of things leads the people
even to bury their money-treasures. In large cities, the circulation of
money is generally more rapid than in the country districts; in a thickly
populated than in a thinly populated country; and in trade than in
agriculture.(752) Every improvement in the means of intercommunication
tends to facilitate it. The rich man possesses, as a rule, less money,
relatively speaking, than the poorer man. Hence, a more equable division
of a nation’s resources among the people would increase the amount of
money needed.(753) While the concentration, as to time, of circulation
into few great terms of payment is calculated of itself to cause a large
sum of money to remain idle in the interval,(754) its concentration in
space in large commercial cities must dispense with the necessity of a
great number of instruments of exchange. In England, it is customary for
every man in comfortable circumstances, as soon as he receives any money,
to deposit with a banker, and to make all his payments by means of checks
upon the latter. Cash money is now employed by Londoners only in payment
of wages, and in trade between retail dealers and consumers. The banker is
there the common cashier of a great number of private individuals, and is
in a condition to make their payments for them with a much smaller amount
of money, especially when they are to be made by one of his depositors to
another.(755) This “union of money-chests” (_Kassenvereinigung_) has been
effected also on a larger scale; inasmuch as bankers, in greater or
smaller numbers, are wont to have one bank as a center; and the country
banks, in turn, to be in constant relation with the great moneyed
institutions of London, subject to a species of general superintendence by
the Bank of England. These great monetary institutions have, so to speak,
a common rendezvous at the Clearing-House, where the greater part of their
payments are made by a mere off-setting of debits and credits;(756) and
this bank is, as it were, the cashier-in-chief of the nation, and in
possession of almost the entire cash stores of the English people.(757)

C. _The quantity and rapidity of circulation of the representatives of
money._ These, in so far as they are worthy of the name here given them,
depend on the credit of those who issue them; that is, on the certainty
that they shall, at the time fixed, be redeemed in money. To this category
belong the paper money of the state which bears no interest, and the
treasury-notes of the state which do bear interest, bank notes, bills of
exchange, promissory notes, book-credits of private persons, sometimes
even certificates of the storage of goods in public stores. It is
estimated, that, at the present time, nine-tenths of all the payments made
in Great Britain are effected without the aid of money, or even of
bank-notes.(758) The capacity of a person to make purchases does not
depend simply on the amount of money he possesses, but on his credit
likewise. The person who buys on credit, contributes as much to raise the
price of commodities as the person who buys for cash; with this exception,
however, that when the former eventually fails to redeem his promise to
pay, the price raised by him quickly falls again.(759) And, indeed, all
the various forms of credit, mentioned above, agree essentially in this,
however they may differ from one another in costliness and rapidity of
circulation.



                              Section CXXIV.


The Quantity Of Money A Nation Needs. (Continued.)


Of the three conditions above mentioned, it is evident that the first
operates on the amount of money needed, in a direction opposite to that of
the other two. The usual course of development is this: among an advancing
people, the number of money transactions increases at first; later, when
education has become general, and the people have grown habituated to the
giving and receiving of credit, the circulation of money is accelerated,
and an increase of the substitutes for money effected. Hence, it is
perfectly natural that the money-need of a people whose public economy is
only half developed, should, in proportion to the number of inhabitants,
be greater, not only than that of a people whose economy is wholly
undeveloped, but also, than that of a people whose public economy has been
carried to the highest point of perfection.(760)(761)



                              Section CXXV.


Uniformity Of The Value In Exchange Of The Precious Metals.


The peculiar properties of the precious metals described above (§ 120),
explains satisfactorily enough, why, at the same time, but in different
countries, they have more nearly the same value in exchange than any other
commodity whatever. Like a fluid in tubes which communicate with one
another, the precious metals seek the one same level of value the whole
world over.(762) Only, it must not be supposed that every absolute or
relative increase of the amount of money in a country must produce
immediately a corresponding diminution of the value of money; and in
addition to this cause an exportation of money.(763) If the number of
trade-transactions increases in the same proportion as the amount of
money, the value of money remains entirely unaffected.(764) The same thing
occurs when the increased influx of money, instead of overflowing the
channels of circulation, only swells the volume in the ready-money
reservoirs. By means of these stores of ready money, very large payments
may be made by one nation to another, without changing the circulation,
or, therefore, the value of money, in the slightest degree, on either
side.(765) If, indeed, such payments should continue for a long time to
flow in the same direction, they would certainly influence the
circulation, and then produce a current in the opposite direction.

However, it may happen, that the value of money in different countries may
be permanently different, when there are lasting difficulties in the way
of the leveling influence of the incoming or outgoing current of money.
Thus, the precious metals maintain a high value in those countries
especially which can obtain them only by giving commodities difficult of
transportation for them. If, for instance, an Englishman, anxious to take
advantage of the high value of money in Poland, should cause Polish
articles, such as wheat, wood, wool etc., to be imported into England,
they would reach their destination very much increased in price, because
of the great cost of transportation. Whether Poland or England would have
to bear this cost depends on the relations of supply and demand. Certain
it is, however, that the migration of money is hereby rendered exceedingly
difficult, forbidden even within the limits of certain value-differences,
especially where the means of communication are universally bad. And so,
the smaller the number of countries which minister to the want of
commodities of precious-metal districts, the more must other nations
obtain the money they need only at second and third hand; by means of
which, naturally, money itself is made dearer each time. Now, it is, as a
rule, nations in a low stage of civilization, that engage in the
exportation of raw material, and they are the worst adapted to engaging
directly in the carrying on of trade. When, therefore, they do not possess
gold or silver mines themselves, money-value is, as a rule, highest with
them; especially as the absence of legal security and protection, which
generally obtains there, makes the value in use of the precious metals one
of great urgency to them.(766)(767)

Direct legislative or governmental provisions may operate in the same
direction; as, for instance, the Japanese embargo laws which, not long
since, limited all foreign trade to two foreign nations.(768) I intend to
treat of the influence of taxation on the value of money, in a future work
to be written by me, on the Political Economy of the State.



                              Section CXXVI.


Uniformity Of The Value In Exchange Of The Precious Metals. (Continued.)


Most nations can satisfy their want of the precious metals, only through
the medium of foreign trade. Hence they very naturally look upon the cost
of production of the articles of export by the exchange of which they
obtain the precious metals either directly or indirectly, as the cost of
production of these metals themselves. But, the rule that all commodities
of equal cost of production have equal value in exchange is applicable
only within the limits of the same economic territory (§ 107), for it is
frequently physically impossible, and still more frequently rendered
difficult, by laws, customs and states of mind to transfer factors of
production from one country to another simply on account of the more
advantageous market they would there find. Thus, for instance, when
England exchanges its cotton and woolen goods, and steel instruments for
Mexican silver, the cost of production of the two equivalents may be very
different, and the one party in this trade may permanently make a larger
profit than the other.(769) According to § 101, that party will be most
favored in whom the desire of holding to his own commodities is farthest
from being out-weighed by his desire to obtain the other. But, at bottom,
silver is no very indispensable article. Especially in highly civilized
commercial communities, it is easiest to obtain substitutes for it, while
the principal articles of English export are, for the most part, objects
with which to satisfy wants rather urgent in their nature, very general,
and of rapid growth; and which, besides, are not, to any extent, difficult
of transportation. It is not a matter of surprise, therefore, that English
commodities, in silver countries, are generally sold above the mean price
between the English cost of production and the Mexican, for instance, or
the cost of procuring them elsewhere; and that silver, on the other hand,
is sold in England, under the same. But this lowers the price of the
precious metals of the latter country in general. Hence a change in the
channels of international trade, which in most countries is the only
source of gold and silver, may make the price of the precious metals
dearer in one place and cheaper in another, even when the conditions of
the production of mines remain entirely unaltered.(770) In an isolated
country, any amount of gold and silver whatever would, finally, as soon as
the people had grown accustomed to it, suffice for all the wants of
circulation. But, in commerce with the rest of the world, the greater
quantity and greater cheapness of the precious metals, that is of those
commodities which are most current and are possessed of the greatest
amount of economic energy, must, without fail, be of the greatest
advantage to a country; and this irrespective of the fact that they are
under certain circumstances the symptom of an especially highly developed
public economy. If we suppose two nations, A and B, equal in every other
point, but that A has twice as much money as B, and that prices are twice
as high there as in B; yet, with the same effort or sacrifice, A could
levy twice as many taxes as B. In case of a war between them, A might pay
in ready money for the necessities of an army which had invaded B, with
one-fourth the sacrifice which B would have to make to support its army in
A, if we reverse the case, and suppose that B had invaded A.(771)




                               Chapter IV.


History Of Prices.



                             Section CXXVII.


Measure Of Prices,—Constant Measure.


If we had a measure of prices with the same universality of application
and the same unchangeableness as the measure of length, which is
determined by astronomical calculation, we should be able, not only to
clearly understand all the data relating to value, that is to say, a not
unimportant portion of historical science, but we should, moreover, have a
practical means to condition and fix even perpetual annuities, in such a
way, that they would always afford the same economic and purchasing power
to the person receiving them. No wonder, therefore, that political
economists since Petty’s time have zealously labored to find a _constant_
measure of prices.(772) If by this we understand a species of goods such
that it should always maintain equal exchange-power, as compared with all
other commodities, the idea of a “constant” measure of prices is
unthinkable. We would have to suppose here, that not a single kind of
goods varied in its price; since, otherwise, at least as compared with
those that varied in price, the measure of prices would itself be
variable.(773) But we may, indeed, search for a kind of goods such that
its inherent elements and the elements peculiar to it, so far as it is
itself concerned, and which go to determine price, should exert the same
uniform influence at all times. If there be such a kind of goods, and its
value in exchange as compared with other kinds of goods were to vary, we
should be certain, at least, that the cause of the change was not in it,
but in them; that _it_ had not grown dearer or cheaper, but that they had
grown cheaper or dearer. Such a kind of goods would have these two
characteristics: A. A given amount of it would, under all circumstances,
have the same value in use for the same number of persons. B. It would
require, under all circumstances, the same cost to produce it, and
therefore the supply might always keep pace exactly with the number of
those who demanded it.(774) In this way the supply and demand of this kind
of goods, abstraction made of the quantity of counter-values, would
preserve forever the same invariable relation.



                             Section CXXVIII.


Value In Exchange Estimated In Labor.


Adam Smith is of opinion that different kinds of goods, no matter how far
removed from one another they may be in time or space, have equal value in
exchange, when an equal quantum of human labor may be purchased by their
means. He adopts, because of the great differences in work, the average
work of the common manual laborer. One work-day, and the sacrifice of
“rest, freedom and happiness” therewith connected, are, under all
circumstances, attended with the same inconvenience (value). If at one
time this day’s labor will exchange for more, and at another for less, of
any kind of goods, it is only because the price of the latter has fallen
or risen.(775)

But we may ask whether the same sacrifice of liberty is as great a
hardship to a Russian as to a Bedouin; or whether the sacrifice of an
equal amount of rest is as hard for the New Englander as it is for a Turk,
or as difficult to endure on a hot day in July as in the cold of winter.
Besides, we have here to do primarily only with value in exchange; and
that value in the case of day-laborers’ work is subject to very great
fluctuations.

The elements on which the demand and supply of labor depend are not, in
themselves, invariable, nor do their variations usually compensate for one
another. In progressive nations, the value in use of day-laborers’ work
increases as well as the capacity of their employers to pay them; but, at
the same time, as a rule, and at least relatively speaking, the supply of
labor diminishes on account of the increase in the cost of production of
workmen. Precisely the reverse of this happens in nations in their
decline, and in over-populated nations. The workman is subjected to the
necessity of accepting distress-prices for his work, and especially of
accepting them for a long space of time.(776) How often it happens that,
if only transitorily, when wages are declining, work improves, and _vice
versa_.(777)

Ricardo’s school employs, as the measure of the price of various kinds of
goods, the quantity of work by which the goods themselves are
produced.(778) It is evident that the same amount of common labor produces
very different results, according as it is well or badly conducted. Hence
Ricardo must have used the word labor in the sense of labor ideally
adapted to its end. But in this way it would be impossible to reduce all
the different kinds of labor to a common denominator.(779) Nor could the
peculiar effects of capitalization, or the influence of the natural or
artificial limitations of competition be estimated in terms of such a
measure. (See §§ 47, 107, 189.)(780)



                              Section CXXIX.


The Precious Metals The Best Measure Of Prices.


It is no more possible to find a constant measure of prices than it is to
square the circle. (_J. B. Say._) If the two magnitudes to be compared are
separated from each other in space but not in time, the precious metals
constitute not only the best measure of their prices, but also a very good
one. But the precious metals are subject to very sensible and accidental
variations in price in long periods of time. If, therefore, we would
compare sums of money belonging to different times with one another, we
must first construct a price-current list of all the more important
articles of commerce for the time in question, and in the quantities they
are needed in every day life. We would next have to calculate the average
of these mean prices, and thus to determine the relative value of the
amounts to be estimated.(781) The person who should limit his comparison
to a few species of commodities, says von Mangoldt, would lose in
exactness what he gained in comprehensibility.

In every such list, the wages of a day would occupy a very important
place. The desire of exerting an influence over the lives and actions of
other men, and the desire of relatively greater social distinction as
compared with the social distinction of others, is very general; and there
is scarcely any better evidence that it has been attained than the
possession of the power of controlling a large number of days’ work. The
man who can keep one thousand day laborers is certainly, in a
politico-economical sense, an important personage. Besides, the height of
day-wages has the most direct influence on the price of many other
commodities.(782)

No less important is the price of wheat, or rather of the principal
article of food of the people, for the time being, with which the price of
inland raw material—in so far as it can be produced from the same soil
alternately with wheat—and, in the long run, also the wages of labor, are
so essentially connected.(783) The same indispensable necessity of wheat
which causes its price to fluctuate so largely from year to year, and from
month to month, promotes the uniformity of its average price,(784) when
many years are taken into the account.(785)(786) (_Malthus._) If, by
reason of great progress made in the art of agriculture, the cost of the
production of wheat should fall to one-half of what it was, a large
increase of population would certainly not be delayed long. And so, on the
other hand, there would be a decrease of population if, by the destruction
of artificial means of irrigation, or other steps in the direction of a
retrogressive civilization, the cost of the production of wheat were to be
permanently increased.

But even the average price of wheat, during a long series of years, is not
entirely invariable. The increasing consumption compels the nation, as a
whole, to provide for its requirement of wheat from less fertile sources,
which increases its price generally. It is true that the progress of the
science of agriculture and of the corn-trade counteract this tendency,
retard the advance of the price of wheat, and may, for a time, produce an
opposite tendency. It is true, also, that the people are induced by their
most general and vital interests to take advantage of this possibility.
But spite of the frequency of exceptions to it, the rule remains.(787) If,
therefore, we wished to so fix a perpetual annuity that it should always
be worth as much money as a certain quantity of wheat had cost, on an
average, during the three preceding decades, the thing-value of this
annuity would, on the whole, rise with an advance in civilization.(788) To
obtain something that would remain the same, it would be necessary to
combine wheat with at least one chief commodity, the intrinsic basis of
the price of which had a development independent of the price of grain;
but the whole to be made payable in money. The precious metals are, in
many respects, so diametrically opposed in properties to wheat, in their
dispensableness, transportable character and durability, for instance,
that these two classes of commodities are best adapted to act as
counter-balances to each other.(789)



                              Section CXXX.


History Of The Prices Of The Chief Wants Of Life.


The higher civilization advances, the dearer all those commodities in the
production of which the factor nature with value in exchange predominates
are apt to become; and the cheaper, on the other hand, all those in which
labor and capital play the principal productive part.(790) This is
accounted for, not only by the almost unlimited capacity of labor and
capital to be increased, while the natural forces which have value in
exchange are susceptible of increase to so small an extent; but also, and
especially, because new additions of labor and capital are wont to cause
relatively smaller results in the production of raw material, and
relatively larger ones in industry and commerce. (§ 33, ff).(791)

Hence, from the relations the prices of the different classes of
commodities bear to one another, we may draw important conclusions as to
the degree of civilization which a country has attained. The above law
also affords an explanation of the fact, that a young nation, which has
made no great strides in the way of development, and in which, of course,
the production of raw material preponderates, draw their commercial and
manufactured necessaries, by way of preference, from precisely the most
highly civilized foreign nations. The latter are in a condition, and
accustomed, to give the largest quantity and the best quality of
manufactured articles for a required quantity of raw material; and, of
course, _vice versa_. Hence, in this intercourse of nations, the most
urgent want, and the completest and easiest possibility of satisfying it,
meet.(792) Only very highly civilized mother-countries can hold fast to
colonial possessions in our day.



                              Section CXXXI.


History Of The Prices Of The Chief Wants Of Life. (Continued.)


A. In the case of a great many raw materials, we repeatedly find the
following to be the course of development. In the lower stages of
civilization, they grow of themselves, and in such quantities that a small
amount of labor, and that only the labor of occupation, more than suffices
to satisfy the small demand for them. Here, naturally enough, the price of
raw materials is very low. After this, it rises with every advance made in
civilization, for two reasons: first, because the demand becomes greater
and greater; and then, because the naturally free sources of production,
called into requisition by other wants, now flow less and less
abundantly.(793) This rise in price continues until the point is reached
at which it becomes customary, instead of the mere occupation of the free
gifts of nature, to bring forth the commodities in question by the more
laborious process of production proper. From this time forward, the usual
seeking of prices for a level requires that our commodity should, like all
others which suppose an equal sacrifice of the means of production, claim
an equal value in exchange. If from any peculiar causes, the production of
this commodity is not at all possible, or if it is capable of no great
extension, its price, which would under the circumstances, be limited only
by the purchasing power of the buyer, might attain the utmost extreme
reached in prices under the spur of vanity or of the mere love of the
commodity itself. The latter is true especially in the case of
venison;(794) the former, in the case of the tame cattle,(795) fresh-water
fish,(796) and wood.(797)(798)



                             Section CXXXII.


History Of The Prices Of The Chief Wants Of Life. (Continued.)


B. The rise in prices is observed earliest in that class of goods in
question which by reason of their small volume and their comparatively
great value, and by reason of the greater capacity to be kept in a state
of preservation for a longer time, are best adapted to seeking a more
favorable market. This applies particularly to the skins, fleece, hair,
feathers, teeth, horns, etc., of animals, in which, in the breeding of
stock, etc. people in a low stage of civilization are much more apt to
speculate than in their meat. Here it is considered, and rightly so, to be
much more profitable to raise many animals which are badly cared for, than
a few, that are well cared for; for the care bestowed on animals has, as a
rule, much more influence on the body itself than on their covering.(799)
In fisheries, caviar, sturgeon-bladders, oil and whalebone;(800) and in
forest-culture, pitch, tar, potash and, to some extent, building material
etc., play the same part.(801)

Conversely, the price of those portions which are most difficult of
transportation, by reason of their volume or of the difficulty of
preserving them, rises latest. To this category belongs milk, the
production of which in a fresh state can be made an object of economic
speculation, only where civilization is at its very highest, and
especially in the vicinity of large cities.(802) It is indeed possible by
its transformation into butter or cheese to preserve milk and make it
capable of transportation. But to carry on such a business for the
purposes of trade, a care and a cleanliness are needed which are national
characteristics only of a highly civilized people (§ 229), and the
preparation of a superior quality of cheese, which is always a very long
process, is conditioned by the employment of capital long in advance of a
return, and which no poor nation is in a condition to make.(803) Cows are
primarily milk-producing animals.(804) Hence their price, as a rule, rises
later than that of oxen, but, in the higher stages of civilization, it
rises much more surprisingly. Something analogous is true of those
products which result from what remains after the production of other
goods or commodities. As long as this alone supplies the demand, the cost
of production of the former commodity is almost nothing, and hence its
price is very low. For this reason hogs are relatively cheap in two very
different periods of a people’s national economy, in a very low stage of
civilization where forests are plentiful and they are fattened on acorns
and the nuts of the beech, and also when they may be considered as a
collateral product of some great industry, such as distilleries and
dairy-farming; and when raised by a numerous, especially a rural
population of small means and laborers, in order to turn to advantage, in
the former instance, the remains of production, and in the latter of
consumption.(805) Where neither of these two reasons obtains, the price of
hogs is wont to increase largely with an advance in
civilization.(806)(807)(808) (See Roscher, Nationalökonomik des
Ackerbaues, §§ 177 ff.)



                             Section CXXXIII.


History Of The Prices Of The Chief Wants Of Life. (Continued.)


C. Those raw materials which, from the very first, have been obtained by
the means of production properly so called, maintain a much greater
uniformity in price. In the lower stages of civilization, they are never
found permanently in excess; and as the economy of a people advances, the
growing dearth of natural forces may be more or less counterbalanced by
the greater cheapness of capital and labor. This is true, especially of
wheat. (See § 129, and Roscher, Nationalökonomik des Ackerbaues, p.
43.)(809)

D. In the case also of those raw materials which are objects of
occupation, and never of real production, as, for instance, minerals, a
progressive public economy, by altering the different elements of price in
an opposite direction, may leave their price on the whole unchanged. Here,
indeed, the discovery of new and especially of rich natural stores may
exert an incalculable influence; but such “accidents” underlie the laws of
human development only to the extent that those ages which are
intellectually most active are those also which are most industrious and
fortunate in the discovery of their natural resources.(810)



                             Section CXXXIV.


History Of The Prices Of The Chief Wants Of Life. (Continued.)


E. The products of industry become cheaper and cheaper as economic culture
advances; whereas, for instance, in England, towards the end of the middle
ages, a single shirt was considered of importance enough to be made not
unfrequently an object of testamentary bequest.(811) And, indeed, the
price of industrial products sinks lower the more important the part
played in their production by capital and the division of labor is as
compared with the part played by the raw material.(812) On this account,
in recent times, fine cloths have grown, relatively speaking, much cheaper
than coarse ones.(813) Lead, which during the middle ages in England was
much cheaper than iron, because of the difficulty of mining the latter,
has become much dearer in our days.(814) Conversely, where raw material
plays the most important part in manufactures, the price of the
manufactured article may increase with an advance in civilization. Hence,
articles made of wood are procured at the cheapest rates in mountainous
countries, where the division of labor is not carried very far, but where
the raw material is cheap.(815)

F. But the price of commodities decreases, especially in the higher stages
of civilization, to the extent that it is dependent on commerce.(816) Here
capital and human labor almost exclusively are effective, and the modern
improvements of communication, legal security and competition are
especially striking.(817)

G. Since personal services are, as a rule, performed and received only by
individuals, the principle in accordance with which labor in general
becomes cheaper in the higher stages of civilization, does not apply to
them to any great extent.(818) Yet we may claim that advancing
civilization has pretty universally a twofold influence on the price paid
for personal services. In the first place, freedom of competition, with
the more accurate and equitable determination of price which it produces
(in contradistinction to servitude, privilege and custom) always tends to
obtain the upper hand; and further, by the growing combination of labor
and of use (§§ 56, ff. 207), a better and better and more clearly defined
gradation between ordinary services and those of a higher order is
effected. When the latter cannot be increased at pleasure, the price paid
for them may, as the wealth of consumers increases, become, from motives
of vanity or of custom (_Gebrauchsgründen_), almost unlimited. The dancing
maid, to whom Herod (Mark, 6, 23) promised even the half of his kingdom,
is both in a politico-economical and in a moral sense a warning example to
over-refined nations.(819)



                              Section CXXXV.


History Of The Values Of The Precious Metals.—In Antiquity And In The
Middle Ages.


It is impossible to write a real history of the values of the precious
metals in ancient and medieval times: the sources of information are too
few. But it does seem possible to suggest some fragments and something of
the development of that history,(820) at least in outline.

Thus, for instance, the supply of the precious metals furnished by the
mines, in the earlier times of ancient history, was kept from entering the
market by the system which then prevailed everywhere, of hoarding treasure
by the state, by the temples etc., and later by great reserves of treasure
kept by individuals.(821) The revolutions in prices in ancient times were
produced as frequently by the sudden opening of such reservoirs, as by the
discovery of richer sources. Thus, for instance, such events as the
dissipation of Pericles’ treasures, the subsidies of the Persian kings,
the spoliation of many temples in consequence of declining religiousness,
the distribution of Persian treasures by Alexander the Great,(822) had a
vast influence on the undeniable rise in the price of Greek commodities in
the century succeeding the Peleponnesian war.(823) Later, it is said that
in Rome, the price of pieces of land was doubled by the influx of Egyptian
war-booty.(824) It is a remarkable proof of the undeveloped condition of
trade in the earlier periods of ancient history, that the perturbations in
prices were, apparently, at least, so entirely local. Phœnicia, Palestine
etc., must have experienced, in the age of Solomon, a formal deluge of the
precious metals, while Greece, for instance, was then, and for centuries
after, extremely poor in them.(825) It is not, on the whole, to be
doubted, that the value in exchange of the precious metals was on a
continual decline until the most flourishing time of the Roman
emperors.(826) During the middle ages, it seems to have stood much higher
again; because the great loss of treasure caused by the migration of
nations etc., the almost complete cessation of production at the mines,
and the slowness of the circulation of money, played a much more important
part than the decrease of trade.(827)(828)



                             Section CXXXVI.


Effect On The Discovery Of American Mines Etc. On The Value Of The
Precious Metals.


The discovery of America influenced the market of the precious metals less
by the peculiar wealth of the mines in that part of the world than by
their almost incredible number.(829) The sources of wealth that the
conquistadores first lighted upon were, however, much over-estimated.(830)
The production of the American mines first assumed great importance after
the discovery of Potosi, in 1545, which was soon followed by the working
of the American mines at Guanaxuato. (1558.) Coincident with this was the
extraordinary “chance” of Medina’s invention, in 1557; by means of which,
it became possible to separate silver from foreign elements by the cool
process of amalgamation, instead of melting it as had hitherto been done;
an invention all the more important in America, for the reason that in
that country, where there is so much rich ore, there is scarcely any fuel,
in the neighborhood(831) of where it is found. During the first hundred
years the mines of Peru occupied the most prominent place; whereas they
were afterwards completely overshadowed by the Mexican.(832) According to
Humboldt,(833) the annual export of gold and silver from America to
Europe, between 1492 and 1500, amounted to 250,000 piasters; between 1500
and 1545, to 3,000,000;(834) from that time to 1600, to 11,000,000; in the
seventeenth century, to about 16,000,000; during the first half the
eighteenth century to 22,500,000; during the second half, to 35,300,000.

The production of gold in Brazil began to be important after the
commencement of the eighteenth century,(835) and the working of the
Mexican silver mines of Valencia, Biscaina etc. from the middle of the
same century. In the beginning of the nineteenth century, Mexico produced,
annually, 537,512 kilogrammes of silver, and 1,609 kilogrammes of gold;
Peru, 140,078 and 782 of silver and gold respectively; Buenos Ayres,
110,764 and 506; Chili, 6,827 and 2,807; New Granada, 4,714 kilogrammes of
gold; Brazil, 3,700 kilogrammes of gold; the whole of America together,
795,581 kilogrammes of silver and 14,018 kilogrammes of gold, worth about
60,750,000 thalers.(836) During the uprisings between 1810 and 1825, which
separated Spanish America from the mother country, the production of the
mines diminished as surprisingly as it had increased in the previous
generation by reason of the greater liberality of Spanish colonial
policy.(837) Since that time, a certain increase has, indeed, been
noticed, which, however, had not immediately before the discovery of the
gold mines of California by any means attained the height reached in 1808,
but only an annual production of 701,570 kilogrammes of silver, and of
15,215 kilogrammes of gold, with an aggregate value of more than
56,000,000 thalers.(838)

In Europe, also, the obtaining of the precious metals during the fifteenth
and sixteenth centuries took a great stride, especially in Germany;(839)
but, on the other hand, the Spanish gold and silver mines were closed in
1535 by a law. In the seventeenth century, there was another lull,
followed, at the end of the eighteenth, by a second period of activity
which has not yet closed. The great development of the production of gold
in the Ural mines since 1819, and in the Altai mines since 1829,(840) the
revival of the production of silver in the old Spanish mines since
1835,(841) and Pattinson’s discovery, by means of which the poorest lead
ores containing silver may be refined, are here of great importance.(842)
Shortly before 1848, it was estimated that all the mines of the old world
produced annually about 274,000 kilogrammes of silver, and 56,000
kilogrammes of gold, with an aggregate value of over 69,000,000
thalers.(843)(844)



                             Section CXXXVII.


Revolution In Prices At The Beginning Of Modern History.


The mere discovery of new and richer mines need not, of itself, lower the
price of the precious metals. Their price depends on their cost of
production; and it may be very much increased, even under the most
favorable natural conditions, by the unskillfulness of labor, the dearness
of the means of subsistence, of machinery and of auxiliary substances, by
insecurity to property or to the person; by war, oppressive taxes(845)
etc. The new mines can produce a decline in the price of the precious
metals only to the extent that, for the same amount of capital and labor
expended, they, spite of all such deductions, produce a greater
result.(846)

I opine that the price of metallic money, since the discovery of America,
has diminished until the present time in the ratio of from three to four
to one.(847) The prices of wheat in France, from 1800 to 1850, were about
seven times as great as in the second half of the fifteenth century; and
in England about six times as great. But, it is not to be overlooked here,
how wheat may have grown dearer in itself (_an sich_) and how gold
declined considerably less than silver. True, this decline of the precious
metals was not an entirely steady one. We meet at the beginning of the
modern era with a real revolution in prices. The prices of rye, in lower
Saxony, from 1525 to 1550, were twice as high as from 1475 to 1500.
According to Garnier, the French prices of wheat, from 1450 to 1500, were,
on an average, 408 francs of the present time per _setier_; from 1501 to
1520, 5 francs; from 1522 to 1540, 11.26 francs; from 1541 to 1560, 11.69
francs; from 1561 to 1580, 21.33 francs; from 1581 to 1600, 32.51 francs;
during the first half of the seventeenth century, 22.77 francs; in the
second half, 26.83 francs; from 1701 to 1750, 19.64 francs. Similarly in
England, where wheat cost, from 1560 to 1600, 2.64 times as much as from
1450 to 1500.(848)

Now, the increased production of the mines cannot be the only cause of
this great perturbation in prices. It commenced, in most countries, at a
time when the supplies from America were still too small to account for
such an effect. One of the chief causes of the phenomenon was, that
precisely at this period, there was in so many nations a transition from a
sluggish circulation of money, made still more sluggish by the custom
which everywhere prevailed of hoarding treasure, to a rapid circulation,
which was made still more rapid by the use of all kinds of substitutes for
money. (§ 123).(849) In the earliest ripe fruit of European civilization
(Italy), this transition had long been accomplished; and, on that account,
the value in exchange of the precious metals was there, for a long time
previous, comparatively low.(850)

From the second third of the seventeenth century, the value of the medium
of circulation seems, on the whole, to have remained stationary.(851)
Tooke seeks to demonstrate the steady decline of the value of money until
late in the eighteenth century, from the fact that the wages of labor
increased during that time; but I should rather connect the latter
phenomenon with the simultaneous elevation of the classes engaged in
manual labor. And so Adam Smith infers a rise in the price of money after
the beginning of the eighteenth century, from the prices of wheat;(852)
but it would be better to consider the cause of this to be the unusually
long series of good crops.(853) An equally unusually long series of bad
harvests, during the second half of the century, accounts satisfactorily
for the simultaneous rise of the medium prices of corn. The great war
which lasted from 1793 to 1815, too, according to a very prevalent
opinion, must have caused the value of money to decline; a fact which is
generally accredited to the increase of paper money in so many states.

Every great war may very easily have for effect to slacken the speed of
the circulation of money, to promote the hoarding and even the burial of
treasure for a rainy day, and to paralyze credit and its power to supply
the place of money. Hence, it seems preferable to seek for the cause of
the variations in price, during the great war, in the commodities
themselves whose price was affected; since their production must have been
enormously disturbed. It rendered the brawniest men and the most powerful
horses unproductive, and even employed them as agents of destruction. It
interrupted trade in a thousand ways, or drove it into unnatural channels,
and turned the intellectual interests of nations into every direction save
that of economic industry. To this must be added the absence of security
everywhere.(854)

The cessation of these restrictions upon production, in consequence of the
restoration of peace throughout the world and the great progress
afterwards made in almost all branches of industry, explain why, from 1818
to 1848, the precious metals have apparently stood higher than during the
period immediately preceding.(855)(856)



                            Section CXXXVIII.


Revolution In Prices.—Influence Of The Non-Monetary Use Of Gold And
Silver.


To understand why so great an increase in the production of the precious
metals produced so small a decline of their value in exchange, we must
turn our attention to the other and further uses of gold and silver. The
amount devoted to these uses can never be very accurately determined,
since governmental stamping of every new gold or silver article would
afford no evidence as to the number of such articles manufactured out of
old articles etc.(857) Certain it is, however, that the aggregate amount
of gold and silver thus employed, increases with the increase of luxury
and wealth among modern nations, and that a quantity of the precious
metals thus used, especially when used for purposes of gilding for
instance, is irrestorably lost.(858) In addition to this, there is the
wear and tear of coin in circulation, which is naturally greater in the
case of large pieces than of small, and, therefore, in the case of silver
than of gold. There is, further, the damage caused by the loss of coin in
conflagrations and shipwrecks, and that occasioned by buried and forgotten
treasure.(859)

But, lastly, the principal cause consists in the powerful increase of the
demand for money, which, during the last two centuries, the great impulse
given to the rapidity of circulation, and the great increase in the
substitutes for money, have scarcely been able to outweigh. Besides the
great growth of population and of wealth, at least in Europe and the new
world, I need call attention only to the immense advance made in the
division of labor, and to the transition from trade by barter to trade
through the instrumentality of money. The entire war and merchant marine
of England, about 1602, had, according to Anderson, a capacity of only
45,000 tons,—that is, not one-fifth of what the small city of Bremen has
now; a capacity which at the close of the year 1873 amounted to 237,206
tons—while in 1872 its merchant marine alone had a capacity of 7,213,000
tons. The aggregate foreign trade of England, France, Russia and the
United States, in 1750, amounted to about 260,000,000 thalers; in 1864, it
was over 5,400,000,000, and between 1871 and 1872, in one year, over
9,000,000,000 thalers. Nor should it be forgotten that Europe’s trade with
the East, since the beginning of the sixteenth century, increased
immensely. This, at present, produces uniformly a very “unfavorable
balance” for Europe, which can be made up for only by very large shipments
of silver to foreign parts.(860) If China and India were suddenly to draw
on us for other commodities instead of gold and silver, the result would
be a great revolution in prices in Europe.



                             Section CXXXIX.


History Of Prices.—Californian And Australian Discoveries.


Tengoborski is of opinion, that the flow of gold from Siberia alone would
have been absorbed by the ever-increasing want of civilized nations of
money; but that the coincident discoveries in California and Australia, in
September 1847, and February 1851, must sooner or later produce a
revolution in prices. And, indeed, the fecundity of these countries is
unparalleled. North America, which in 1846 produced only 3,600 pounds of
gold, according to Sœtbeer, produced in the years from 1849 to 1863,
respectively, 118,000, 148,000, 178,000, 195,000, 180,000, 165,000,
165,000, 165,000, 160,000, 145,000, 125,000, 120,000, 115,000 and 110,000.
Austria produced in the years from 1851 to 1863 respectively, 27,000,
196,000, 250,000, 160,000, 170,000, 195,000, 180,000, 175,000, 160,000,
150,000, 160,000, 160,000, 170,000, pounds of gold.

From 1864 to 1867, the aggregate production of gold in the world was,
according to the last mentioned authority, a yearly average of 188.4
millions of thalers, and of silver, 94.8 millions. In Europe, Russia not
included, the production was, in 1863, 3,960 pounds of gold and 405,000
pounds of silver; in the Russian Empire, 46,500 pounds of gold and 40,000
of silver; in Mexico 12,000 pounds of gold and 1,250,000 pounds of silver;
in South and Central America, 12,500 pounds of gold and 520,000 pounds of
silver; in Africa, India and Lesser Asia, 30,000 pounds of gold and 40,000
pounds of silver—a total of 384,000 pounds of gold, and 2,905,000 pounds
of silver. F.X. Neumann(861)(862) estimates that the whole world produced,
in the years 1868-1870, annually, 192.8 million thalers of gold, and 94
million thalers of silver; and in 1873, of both metals, 291 million
thalers.

The question, whether in this second half of the nineteenth century, we
are to have a revolution in prices similar to that which took place in the
sixteenth century can be answered only hypothetically. The gold diggings
now most productive will, probably, as we may judge from analogous cases
in the past, be soon exhausted.(863) But it is entirely possible that, for
a long series of years, other diggings will be found equally rich. It is
almost certain that the restless activity of the English and of North
Americans will not cease until they have exhausted the favors of
nature.(864) Every improvement in agriculture, in the means of
communication, and in the public security of the gold lands, makes the
cost of production smaller. There are doubtless in other countries a great
many _placers_ which need only to be touched with the finger of European
civilization to produce gold in abundance.(865) It would, indeed, be
necessary that this same civilization should make these same countries
better markets for the precious metals by increasing their demand.

So far as silver is concerned, there can be no question that America
possesses mines unlimited in extent, and, as yet, almost untouched. “The
time will come,” says Duport,(866) “a century sooner or later, when the
production of silver will have no other limits than those put to it by the
continual decline in the price of silver.” There seems, also, to be no
lack of quicksilver, especially in California; and the cost of its
production hitherto may be lessened very much by the labor of better
workmen, machines and means of transportation.(867) All this supposes
great progress of the mining countries in civilization in general; and
yet, thus far, Mexico’s republican independence etc., as compared with the
later years of the Spanish colonial system there, is a great
retrogression. The conquest of Spanish America by the United States would
give a vast impetus to economic improvement; and here, again, the increase
of production would be attended by an increased demand.

But especially must the demand for the precious metals, which naturally
increases with the wealth, commerce and luxury of nations, constitute a
decisive element in answering our question. Nothing, for instance, were a
reduction in prices impending, would promote it so much as a series of
devastating wars or revolutions in Europe. Moreover, it should not be
forgotten, that the money market is now almost commensurable with the
world, and will soon embrace it within its limits; and that market
embraces not only the precious metals but the numberless representatives
of money and media of credit. The basin, therefore, to which the gold and
silver streams of the world are tributary is immeasurably greater than it
was in the sixteenth century; its level cannot be changed as readily, and
an equal addition made every year to its previous contents can increase it
only by a small amount.(868) Nor could a considerable decline of the value
of the precious metals be readily produced without making the circulation
of money slower, and the employment of means of credit relatively less
frequent, in consequence of which, the further decline would, to a certain
extent, be arrested.(869) In the case of other commodities a decline of
prices leads only probably to an absolutely greater demand; in the case of
money, it leads to a demand necessarily greater. That the money market in
our days can stand pretty rude shocks is evident from the fact, among
others, that the price of gold is so high as compared with that of
silver.(870)(871)



                               Section CXL.


Revolution In Prices.—Its Influence On The National Resources.


The ulterior consequences of such a revolution in prices would contribute
to the real wealth of a people only in the sense that they would place
such a people in a way, with less sacrifice, to employ the precious metals
on a large scale in ministering to the luxuries of life. This small
advantage itself would be counterbalanced by the depreciation of the
metallic stock, and especially by the necessity of henceforth devoting a
larger quantity of gold and silver to the purposes of circulation.(872)
But such a revolution would produce a sudden reverse in the distribution
of a nation’s wealth among its constituent members. All those who, by
virtue of contracts antecedently made, have payments to effect, are
benefited to the extent of the difference between the old and the actual
price, while those who are to receive such payments lose to the same
extent.(873) Therefore, those engaged in industrial enterprises improve
their condition, because they immediately increase(874) the prices of
their own productions; and, for a time at least, continue the use of
capital borrowed from others, of land leased or rented etc. at the old
prices.(875)

Besides, at the beginning, and before a corresponding depreciation of its
value has taken place, an increase of money produces as a rule a low rate
of interest (§ 185), and an itch to buy on the part of the public. All
this may serve as a powerful stimulant to production on a large
scale.(876) Those most certain to suffer loss are officials(877) with a
fixed salary, and so-called annuitants, creditors of the nation and of
individuals. Even bankers, too, have no means to fix the value of their
wares which they see disappearing, so to speak under their eyes.(878) Of
land owners, those who are in debt gain, that is especially the poorer,
and the more speculative among them.(879) On the other hand, owners of
large estates who have alienated their tithe-rights, or right to
vassal-service etc. for capital, or for fixed sums to be paid at regular
intervals, that is, in a great many places the great mass of the nobility,
undergo a not insignificant social fall.

The condition of those who earned a living by manual labor no doubt
deteriorated in the sixteenth century, as may be inferred from the
extraordinary activity of public charity in that period.

Between 1500 and 1550, silver purchased, in Orleans, from 4.1 to 4.5 times
as much common labor as it does now, while silver, as compared with the
average price of twenty-seven commodities, has grown cheaper in the ratio
of only from 2.6 to 2.7:1. (_Mantellier._) It was impossible for this
class to raise the price of their wares as rapidly as that of the medium
of circulation declined, because they could not wait, nor hold back their
commodity even for a moment. (§ 164.)(880) This would, indeed, be very
different in our day. Wages, because of the facilities, both physical and
moral, which have everywhere been placed in the way of emigration, were
necessarily one of these articles which rose soonest in price, as compared
with money.(881) Lastly, the state itself profits by the diminished
thing-value, that is, real value of its public debt;(882) but it loses, at
the same time, on all taxes, duties etc., which are not estimated at a
certain percentage of the value of the articles taxed.(883) As a rule,
therefore, it would need to impose new taxes. Now, the parliamentary right
to impose taxes, however extensive it may juridically be, is, ordinarily,
of great importance in practice only when there is question of increasing
the existing burthen. Hence, this right, wherever it exists, is brought
into the utmost activity by a revolution in prices.(884)(885)

However, the new additions of gold and silver to the already existing
supply may not immediately produce a corresponding depreciation of the
value of the precious metals. If the first receivers of the additional
supply of money exchange it rapidly for other goods, it will probably
bring them the former value in exchange of the metal. Not until it has
passed into a third or fourth person’s hands is the depreciation apt to be
perceptible. It is, therefore, in this case, a great advantage to be the
first hand. The world-threatening power of Spain, in the seventeenth
century, was very essentially promoted by the American gold and silver
mines;(886) nor is it a matter of less significance to-day, that the great
mineral wealth of the world belongs to Siberia, California and Australia;
that is, especially to Russia and to countries colonized by Great Britain.
Further, as to the classes into which a nation is divided, it was only the
crown, the Church and a comparatively small number of officials, soldiers
and officers who controlled Spanish America;(887) and who can tell how the
absolute monarchy of Spain was strengthened by this fact? In the
seventeenth century, on the other hand, it is principally manufacturers
and merchants, and more especially yet, workmen, who reap the immediate
advantages of new discoveries of gold.



                              Section CXLI.


Effect Of An Enhancement Of The Price Of The Precious Metals.


A great enhancement of the precious metals would naturally and necessarily
produce a revolution in prices in a direction(888) opposite to the one
just described, and one which would be much more injurious to a nation’s
economy. Such a revolution would weigh most heavily on the most sensitive,
and the momentarily most productive classes of the people, inasmuch as the
price of the ready product as compared with advances made for the purposes
of production would be a declining one; and it would benefit those classes
who live in leisure on the fruits of previous labor. There would, at the
same time, be a perceptible growth of consumption in certain departments,
useful, no doubt, in themselves, but apt to degenerate into excess, and
which are, therefore, most easily cared for. (§ 212, seq.) To this extent,
the gold discoveries of the nineteenth century, without which an
enhancement of the price of money would undoubtedly have taken place, have
warded off a great economic malady from the nations. Moreover, this
inverted revolution in prices may be moderated by governmental measures,
such as a diminution of taxes, emissions of paper money etc.(889)



                              Section CXLII.


The Price Of Gold As Compared With That Of Silver.


The price of gold as compared with that of silver does not, by any means,
depend entirely on the ratio of the quantities of the two to each other.
Rather is it, in the long run, determined by the average cost of
production necessary at those gold and silver mines which exist under the
most disadvantageous conditions, but which it is still necessary to work
in order to satisfy the aggregate requirement of these metals. On the
whole, with an advance of economic civilization, the dearness of gold as
compared with that of silver has been enhanced. The former, in the middle
ages, was worth from ten to twelve times as much as the latter,(890) while
now it is worth from fifteen to almost sixteen times as much.(891) In the
same period of time, also, gold in highly civilized countries is wont to
be comparatively dearer.(892)

These facts are explained as well by the demand as by the supply. As the
production of gold requires so little skill or capital, and that of silver
so much of both, the former may be considered a natural product to a
greater extent than the latter, and therefore, the rule laid down in § 130
is applicable to it. (_Senior._) Besides, in the higher stages of
civilization, especially when the precious metals are cheap, larger
payments are usual, to the making of which, gold is certainly best
adapted; just as in every day trade merchants are wont to accept a gold
piece in payment, even at something of a premium, while the peasantry
hesitate to do so.(893)

It is very much of a question whether gold or silver is, on the whole,
subject to greater variations in price. The fact that gold is more
strictly a natural product would of itself constitute a powerful element
of variation. (§ 112). But, on the other hand, its greater durability and
the greater care bestowed on its preservation, have for effect to make the
existing quantity preponderate in importance over its annual increase. The
demand for gold varies more suddenly than the demand for silver. In case
of war or sedition, the former is more easily carried away or hidden. It
is also more desirable for the state for its military fund. On the other
hand, on account of its greater capacity for transportation, it may follow
such claims when made on it, more easily, from country to country. On the
whole, I am inclined to think that, for short periods of time, silver
maintains its value better, and gold for longer ones.(894)



                             Section CXLIII.


The Price Of Gold As Compared With That Of Silver. (Continued.)


If the gold-production of California should be attended(895) by a notable
depression of the value of that metal, it becomes a question whether or
not silver would be necessarily depreciated with it. Senior claims that it
would not, for the reason that the two precious metals do not, for most
purposes, act as substitutes each of the other. If a country needed 1,000
pounds of gold and 15,000 pounds of silver as money,(896) and these two
sums of metal were equal in value, an increase of gold by one-half, which
would depreciate its price in relation to silver to 10:1, would not
overflow the channels of circulation. The 1,500 pounds of gold are now
also equal to only 15,000 pounds of silver, and _vice versa_.

I would put very important limitations to this assertion. Even a moderate
depreciation of gold would drive out the silver from all those countries
which had a mixed coinage made up of the two metals; and hence the supply
of silver would be increased in the other countries. And so it is quite
possible, up to a certain point, that the larger silver coin should be
replaced by small gold ones, ten and five franc pieces etc. Rau is
certainly right in his surmise that a general rise in the price of
commodities as compared with coin, the result of a great increase of gold,
would go farthest in countries in which the gold is the medium of
circulation, begin later in those which had a mixed circulation, and
continue for the the shortest time in those countries which, by force of
law, had a silver circulation only.(897)(898)




                               Appendix I.


Paper Money.



                                Section I.


Paper Money And Money-Paper.


Paper money must be distinguished from other value-paper or
money-paper,(899) which may also run to the possessor or holder, and not
unfrequently serve as a medium of payment. In the case of these bonds or
obligations,(900) their circulating capacity is a secondary matter, and
the principal thing the authentication of an economic legal relation;
whereas paper money is intended principally, if not exclusively, to act as
money.(901) Money-paper appears in a great many different forms, but it
nearly always bears interest. Its value depends in great part on the rate
and certainty of its interest. On the other hand, the endeavor to insure a
more favorable reception for paper money by the promise of interest has
been exceedingly seldom successful.(902) And in reality, good prospects as
to interest (_Zinsaussichten_) and ease of transfer from one hand to
another are two qualities which lie in very different directions.(903)

The many recent writers who claim for paper money the marks of
irredeemableness and forced circulation, confound the unfortunately too
frequent degeneration of an institution with its real nature. They
contradict, too, usage of speech, which, in countries where silver is the
standard, unhesitatingly calls gold coins money, although they cannot be
forced on any one.(904) The paper money issued by the state deserves,
indeed, the appellation in the fullest measure; but starting from this
point we find a number of grades in a downward direction, which may still
be called money;(905) and we shall see especially that the differences
between state paper money and bank notes so widely asserted are, in great
measure, differences not of kind but of degree.

The idea of replacing the precious metals as a medium of circulation by a
less costly material, even the ancients were acquainted with; but with the
exception of the Carthaginians, they scarcely ever made any use of it
except in cases of need and transitorily.(906)

Similarly, the middle ages in Europe; as in general all greater
development of the credit-system—and all paper money is credit-money—has a
natural growth only in the higher stages of civilization.(907)(908)



                               Section II.


Advantages And Disadvantages Of Paper Money.


Where it is at all possible to give paper money the same purchasing power
as metallic money possesses, it is unquestionable that the former must
have many advantages over the latter. True, paper money is very
inconvenient for small amounts;(909) but all the more convenient for large
amounts, as well for purposes of counting as for purposes of the storing
up of values and for transmission from place to place; a matter of greater
importance in proportion to the badness of a country’s means of
transportation, and to the cheapness of the metal of its currency
hitherto.(910) It seems a still more important matter to most people that
paper money dispenses with the use of a great quantity of the precious
metals for purposes of circulation, which can now either be turned into
utensils, etc. in the country itself or used in foreign countries to make
investments of capital there, or in the purchase of commodities.(911) In
national economies whose commerce is a growing one, the same advantage
finds a negative expression in this, that they are not compelled to
satisfy the increasing demand for money by procuring costly metals.(912)
Of the individual members of the nation, all these advantages of
convenience will be experienced by those who employ the paper money. The
economical or saving advantages of paper money are appropriated by the
issuers to themselves, in the form of a non-interest bearing loan, which
they make to those owners of money or to those who are entitled to a
money-claim and to whom the paper money is acceptable instead of cash
money.(913) A diminution for instance of the number of bank notes or of
state paper money does not diminish the available capital of the people.
Its only effect is that a smaller portion of it is at the disposal of the
bank or of the government.

But in contrast with these advantages are the great disadvantages, since
paper money is wanting in most of those properties which originally made
the precious metals the best instruments of exchange and the best measures
of value. In addition to this, paper money may be increased at pleasure,
and at almost no cost; and an occasional surplus of it cannot flow either
into other branches of employment (as a surplus of metallic money may into
utensils, ornamentation, etc.) nor into other countries. And thus the
constancy of value of paper money, that is, one of the chief requisites of
all good money, is imperiled in the highest degree. True, the
payment-power, or “legal tender” character given such money by the state
may certainly supplement in some way its matter and form-value. But this
supplement or addition constitutes, in the case of large amounts(914) a
small quota; or else the quantity of money as compared with the amount of
money needed for commerce would have to be fixed very accurately; a thing
of peculiar difficulty in the case of paper money, which is almost
costless.(915)



                               Section III.


Kinds Of Redemption.


While precious metal money carries, so to speak, by far the greater
portion of its value in itself, and this to such an extent that it appears
on the inscription found on its face, the inscription found on paper money
is almost the only reason of its value.(916) (Credit-value.) The issuer
promises in one form or another, expressly or tacitly, that he intends to
redeem the note, almost valueless in itself, in real goods; and the value
of this promise depends on the probability of its fulfillment.(917) The
only fully satisfactory kind of redemption consists in this, that every
holder of the paper money may, immediately on demand, obtain its nominal
value in good current metallic money. This only can, in the long run, keep
paper money up to its full nominal value. But experience teaches that even
with less perfect modes of redemption, paper money may maintain a part of
its nominal value, and a part greater in proportion as the following
conditions are approximated to: freedom from personal considerations, the
immediateness of the redemption, and currency of the goods by means of
which redemption is effected. Thus, for instance, the acceptance of paper
money for all debts due the state, in countries where taxation is heavy,
where there are large state industries etc.; where the lands of the state
are farmed out etc., has a great influence on its course of exchange.
Redemption in parcels of land is a very imperfect one, not only on account
of the great differences in the value of pieces of land according to
quality, situation, the times etc., but also because only a very small
number of men, especially where money is the usual medium of exchange, are
in a condition to accept parcels of land.(918) It is a question whether
the threat of punishing the refusal to accept paper money, or to accept it
at its full nominal value, can be called a negative mode of redemption.
Certain it is, however, that it is the most barbarous and in the long run
the least efficient mode, one in which the issuer calculates only on the
fear of those who accept it; and, what is most demoralizing, on the hope
they entertain that they in turn shall be able to dispose of it to others
as timid.(919)(920)



                               Section IV.


Compulsory Circulation.


When paper money which is not completely redeemable—and it is scarcely
possible that in the long run it should be thus redeemable—has sunk below
its nominal value, the result in the case of all private paper money is
the bankruptcy (_Vermögensbruch_) of the individual issuing it; in the
case of state paper money, the legal provision that it shall have a
compulsory circulation (_Zwangcourse_; _cours forcé_).(921) To what extent
the real rate of exchange of paper money shall fall in any case depends
not only on the amount issued as compared with the wants of trade, but
also and still more on the degree of confidence which the state of public
affairs inspires.(922) The first consequence attending a depreciated
currency is, that the good precious metal money is withdrawn from
circulation and even from the country; for the reason that it cannot
maintain its true value side by side with the paper money; the usual
effect in all untenable mixed standards or currencies.(923) A second, and
worse consequence is the unrightful revolution produced in so many income
and property relations, based on old contracts, to the advantage of the
debtor, to the disadvantage of the creditor, and of those who receive
nominally fixed salaries.(924) These consequences are in kind similar to
those produced by the clipping of the coin; but in degree they are much
more dangerous.(925) Besides, the depreciation of paper produces, by no
means, an equal rise in the prices of all commodities. The prices of those
commodities, the sellers of which are most favorably situated in the
struggle for prices, rise earliest and highest. This is true especially of
foreign commodities, also of those inland commodities which can be easily
exported, and most particularly of those commodities which have the
greatest capacity for circulation, for instance, gold and silver.(926)
Hence, it would be a great mistake in countries where there is an
irredeemable paper currency with compulsory circulation, to measure its
purchasing power at a special discount as compared with the precious
metals. Therefore, a depreciated paper currency has transitorily an effect
on industry similar to that of a protective tariff, and even as the
payment of export premiums; inasmuch as it enables manufacturers to permit
a part of their cost of production, viz.: that which they have to pay
their workmen, their older creditors, and in part, also, their furnishers
of raw material, to rise in a less degree than the paper money has
declined in value.(927) This is indeed a very inequitable advantage
accorded to private individuals in the face of the universal distress of
the country.(928)(929) And these bad consequences are aggravated by the
downward-path principle which a depreciated paper money always involves.
The state whose financial distress introduced the evil, sees a great
portion of its revenues melt away before its eyes;(930) while in what
concerns its outlay, nothing is more calculated to mislead it than such an
imagined creation out of nothing. And a thing which greatly contributes to
this its the frightful sensitiveness of a depreciated paper currency in
the presence of complications of foreign politics, a quality which may
cause the government as many inconveniences from without as the issue of
its paper money produced conveniences to it at home.(931) Hence recourse
is had to additional issues of paper, which are easily increased in the
same measure as the rate of exchange (_Cours_) has declined.(932) Great
private interests operate in the same direction. Between the increase of
the volume of the paper currency in circulation and its consequent
depreciation, some time always elapses; and in the mean time, either the
purchasing power of the money-owner or his loaning capital is really
greater than before. The former increases the demand for commodities, the
latter facilitates their coming into existence. However, the flight of
speculation with which the increase of paper money is wont to be
accompanied(933) in the beginning depends on an error shared by many men
as to its true value. Hence it does not last long, and the critical
shriveling up of the inflated bubbles is greater in proportion to what the
previous dimensions of these bubbles were. And now many believe that the
nation’s business or economy might be kept on its course by new emissions
of paper money; and the wise ones hope, at least, to be able thereby to
postpone the catastrophe long enough to enable themselves to get their
property into a safe condition. And in fact, the restoration of a
depreciated currency is accompanied by crises entirely similar to those
which followed its first decline; only they are in an opposite
direction.(934) And hence conscientious statesmen are frequently deterred
from seeking to effect such a restoration. Yet the darkest side of a paper
currency severed of due connection with precious metal-money consists in
the frequent and violent fluctuations of value to which it is
subject.(935) The consequence of these fluctuations is, that every
commercial transaction, every credit-transaction, and even every act of
saving, in which money plays any part, is made to bear the impress of a
game of chance;(936) a consequence of far and deep reaching influence,
especially in the higher stages of civilization, where the importance of
commerce, of the credit-system, and of money-economy as
contradistinguished from barter-economy is so great; producing there a
state of uncertainty which is otherwise peculiar only to barbarous
medieval times.(937) All this discourages the best business men and the
best husbandmen more than it does any other class of people, and
demoralizes the whole economy of a nation; and demoralizes it the more in
proportion as it is easier for the state to influence the value of paper
money as compared with specie, and as its influence is more
irresistible.(938) The compulsory circulation of paper money is a much
more powerful and yet a much more simple screw by means of which to
practice extortion than is the most burdensome taxation or forced loan,
and at the same time the most comprehensive power which a government can
possess to carry out both these measures. (_Ad. Wagner._)

All the horrors of the later Roman republic, the draining of the provinces
by robber-governors with their publicans and sinners, the building up of
monstrous fortunes without any production proper, but through usury and
rapine alone: all this is made to revive again through the instrumentality
of the national-economic disease called a paper crisis, in a less violent
form, indeed, but in one which is much more insidious and scarcely less
pernicious.



                                Section V.


Resumption Of Specie Payments.


The healing of such a paper-money disease as we have described, it has
been endeavored to effect in three ways more particularly.

A. By the reduction or bringing back of the depreciated paper money to its
full nominal value. And this is best done by gradually drawing paper money
into the state treasury by means of taxation or by loans, and refusing to
allow such paper money to be again issued. The consequent rise in the rate
at which the outstanding paper money notes exchange against specie is
produced not only by the diminution of the quantity of paper in
circulation, but also by the increasing confidence in the future which
such a governmental measure inspires.(939) While this mode of procedure
has in the abstract most in its favor, yet it is not to be recommended in
practice except where the depreciation of paper money has either not gone
very far or where it has existed only a short time.(940) Otherwise the
revolution in all property-relations and the disturbance of all rightful
speculation—always dangerous and easily abused—produced by the
depreciation would be repeated by the restoration of values, with this
difference only that the disturbance would be produced the second time in
an opposite direction. And that those who were previously injured should
now be compensated for the damage sustained in the first instance is
impossible in proportion as the depreciation has been of longer duration.
Many of the sufferers from the effects of depreciation are now compelled,
even as tax-payers, to contribute to the enrichment of the speculators who
have accumulated the depreciated paper into their own hands.

B. The extreme opposite of such a course would consist in this, that the
depreciated paper should be allowed to go on sinking lower and lower until
it was practically worthless, whereupon a new currency, whether of metal
or paper, would have to appear like a new world after the waters of a
deluge had been abated. Hence, therefore, one of two things: universal
bankruptcy entered into with the clearest purpose, or the resignation of
despair!(941)

C. The middle course between these two has, therefore, been most
frequently pursued, viz.: _the legal reduction_ of the value of the coin
(_gesetzliche Devalvirung_), which consists in reducing the nominal value
of paper money to its current value at the moment the law goes into force,
and by redeeming it either in specie or in other paper to be issued in
smaller quantities.(942) Although this has been not seldom based on the
false principle that the value of every separate amount of money is
inversely as the aggregate amount of all the money in circulation; yet it
cannot be questioned that it is only the open declaration of the state
bankruptcy which the whole measure involves, and which in most instances
has already happened beyond repair. Here there is no new and dangerous
disturbance of the nation’s economy whatever; and the fluctuations of
value in the future which are inseparable from the gradual contraction of
the volume of paper, continued until it has reached its nominal value, are
avoided: this last, of course, only on the supposition that either the
pure metallic or the redeemable paper currency is rigidly adhered to.(943)
But the problem, how to protect both parties(944) to contracts entered
into at a rate of the currency different from that under which they are to
be performed, from all damage, is one which will never be perfectly
solved. Hence, of the different measures to economically preserve a state
in cases of extraordinary need, the emission of paper money with
compulsory circulation is much more universally disastrous to the people
than the effecting of loans at the very highest rate of interest, and even
than being in arrears in the matter of paying the officials and creditors
of the state.(945)



                               Section VI.


Paper Money—A Curse Or A Blessing?


Considering the double-edged-sword character of this mighty
instrument,(946) and the frightful consequences which its abuse produces,
it is easy to conceive why so many political economists have expressed
such serious doubts as to whether, on the whole, the invention of paper
money has been more of a curse or of a blessing to mankind. The
controversy is an idle one to a certain extent, since no mature nation (or
individual), and no nation which considers itself mature will renounce the
possibility of a brilliant growth simply because it fears that it may not
be able to withstand the temptations to dangerous abuse connected
therewith. Politically, the best safeguard against such temptation is a
so-called moderate constitution, which compels the supreme power in the
state by wise and appropriate counterweights, to allow all rightful
interests to assert themselves, or at least to find expression; and itself
to make use not only of the most skillful but also of the most highly
esteemed instruments and measures. Such a constitution, indeed, cannot be
made; it must be the ripe fruit of a long continued and well conducted
national life.(947) Of the extremes of forms of government, unlimited
monarchy and democracy are about equally exposed to the paper-money
disease.(948) Aristocracies are less exposed to it, for the reason that
from their very nature they eschew centralization; and the paper-money
system is intimately connected with the latter. Nothing so strengthens the
central authority as the paper-prerogative with an unlimited power over
the prices of all commodities; and, on the other hand, whenever paper
money is to have a wide field for action, there is supposed(949) a
far-reaching and intimate interwearing of the different members of the
nation’s economy with one another. And in what concerns the various
economic stages, paper money is far removed from all medieval times; and
for the same reasons that make external commerce here preponderant and
condense all commerce into caravans, staple-towns, fairs, and recommend
the collection of treasure etc.(950) Later, on the other hand, we find two
stages especially adapted to paper money. We have first, as yet
undeveloped but intellectually active (and therefore desirous of progress)
colonial countries, possessed in abundance of natural means of production
without however being able to concentrate them into the hands of an
undertaker (_Unternehmer_) for want of money.(951) Here both the saving of
the precious metals and the facilitation of transportation effected by
means of paper money are of greatest utility. And then we have very highly
developed and rich countries; not only because their economic popular
education may protect them against the dangers of paper money, but because
the rich man has relatively least need of money and may dispense with
stores of specie most readily, because of his influence over the supply of
others.(952)






FOOTNOTES


    1 The author’s preface to the twelfth edition is confined to pointing
      out the improvements etc., made in the eleventh. There is no new
      preface to the thirteenth edition of the original, which appeared in
      1877.—TRANSLATOR.

    2 “We shall never thoroughly understand the reason of customary law
      unless we also have a knowledge of that which is not customary. The
      one is connected and bound to the other. We have no slaves; why vex
      ourselves with questions about slaves?—Words worthy of a novice.”

    3 “I am a man; I think nothing foreign to me that pertains to man.”

    4 “That excellent and glorious philosophy.”

    5 Introduction to the Civilistisches Magazin.

_    6 Dunoyer_, De la Liberté du Travail.

_    7 Cicero_, De Leg., I.

    8 Discours Préliminaire du Code Civil.

_    9 Cicero_, De Leg., II, 4. “Legem neque hominum ingeniis excogitatam,
      nec scitum aliquod esse populorum, sed æternum quiddam quod
      universum mundum regeret, imperandi, prohibendique sapientia.”
      _Ibid._

   10 Revue de Législ. et de Jurispr. (1841, XIII, p. 39.) _Montesquieu_
      says: “The relations of justice and equity are anterior to all
      positive laws.”

   11 Mr. Wolowski translated the second edition of Roscher’s Principles
      into French, and prefixed the present essay thereto as a preface.
      Since Wolowski’s translation appeared, the original work has gone
      through eleven editions, been largely increased in size, and
      enriched with new notes, the result of nearly twenty additional
      years of research and thought. The thirteenth German edition, from
      which the present translation is made, is larger than the first by
      one hundred and seventy pages.—_Translator’s note._

   12 And he adds: “Animals which yield only to an impulse or blind
      instinct, come together only fortuitously or periodically and in a
      manner destitute of all morality. But in the case of men, reason is
      mixed up more or less with every act of their lives. Sentiment is
      found side by side with desire, and right succeeds instinct. I
      discover a real contract in the union of the two sexes.”

      It would be impossible to present a more complete or eloquent
      refutation of the definition of the Roman jurisconsults which
      debases marriage to the level of the promiscuous coming together of
      animals, and which limits the natural law to the law common to man
      and beast. “Jus naturale est quod natura omnia animalia docuit; nam
      jus istud non humani generis proprium, sed omnium animalium quæ in
      terra, quæ in mare nascuntur, avium quoque commune est. Hinc
      descendit maris atque feminæ conjunctio, quam nos matrimonium
      appellamus, hinc liberorum procreatio, hinc educatio; videmus etenim
      cætera quoque animalia, feras etiam, istius juris peritia censeri.”
      D. L. I. De Just. et Jure.

   13 Comment. in tit. Dig., De Just. et Jure, VII, 11th Naples edition.
      The ingenious argument of the great jurisconsult falls to the ground
      under the beautiful words of Cicero: “Ut justitia, ita jus sine
      ratione non consistit; soli ratione utentes jure ac lege vivunt.” De
      Natura Deorum, II, 62. “Virtus ratione constat, brutæ ratione non
      utuntur, cujus sunt expertia, ergo jure non vivunt, et ut rationis,
      sic jures sunt expertia.” Besides, Cujas himself recognizes how
      faulty and incomplete was the definition he was defending: “At ne
      jus quidem naturale, de quo agimus, est commune omnium animalium
      quatenus rationale, est, sed quatenus sensible est, sensui congruit.
      Tullius participare hominem cum brutis eo quod sentit, sed ratione
      ab eo differre. Et alio loco: jus naturale esse commune omnium
      Quiritium, veluti ut se velint tueri: sed hoc distare hominem a
      bellua, quod bellua sensu moveatur, homo etiam ratione.”

_   14 Rossi._

   15 Politics, I, ch. I, II.

   16 Ueber die Nothwendigkeit eines Allgemeinen burgerlichen Rechts fur
      Deutschland.

   17 Vom Beruf unserer Zeit für Gesetzgebung etc.

   18 In one of his latest productions (Ueber die sogennante historische
      und nicht historische Rechtsschule, Archives du Droit Civil,
      Heidelberg, XXI 1838) the veteran of the philosophical school,
      resuming a debate begun a quarter of a century before, energetically
      defends himself against the erroneous interpretations which it was
      sought to give to his thoughts. “Does it follow,” he inquires, “that
      because a man is desirous of reform, he must surrender the study of
      the past? And if there be new laws to construe, how could his evil
      genius deter him from the necessary knowledge of ancient laws? Is
      there a single jurisconsult, who, in the hope of a better future,
      despises the meaning and spirit of that which still exists? I do not
      know even one.... And when I am accused of passing by the
      institutions of the past with coldness and hatred in my heart,
      because I was one of the first to express the hope of a better
      future, a charge is laid at my door which is perfectly
      incomprehensible ... I am reproached with despising the history of
      law. It is a slander on me. Although I have only laughed at these
      reports, one man’s mistake grieved me; for that man’s name was
      Niebuhr.... When he [Niebuhr] returned from Italy to devote himself
      entirely to science, in his retreat at Bonn, he passed through
      Heidelberg, where he remained five or six days. During a great part
      of that time we came frequently together. He was at first a little
      cold; but Cicero made us friends. After a happy word let drop
      concerning that writer, he asked me what I thought of him. I
      answered laconically: ‘If they were burning all the Latin authors,
      and I were permitted to grant a pardon to one of them, I should say,
      without hesitation: Spare the works of Cicero.’ He joyfully
      exclaimed: ‘I have at last found a man who judges rightly of Cicero.
      I share your admiration for him, and that is the reason I have given
      my boy the name of Marcus.’ The ice was now broken, and he frankly
      told me that he could not understand how I could be an inveterate
      enemy of Roman law and of the history of law. I gave him to
      understand that I had simply been slandered, and I added, that, in
      order to live entirely with the classics, I had always refused to
      give legal advice, or act as a counsellor, although I might have
      made a fortune in that way. I told him that I owed my gayety and
      vigor, in great part, to my love for the classics of all ages, even
      those outside the domain of jurisprudence; but that I held, above
      all things, to the good qualities of the German nation, and that I
      did not hesitate to say with Facciolatus: ‘Expedit omnes gentes
      Romanis legibus operam dare, suis vivere.’

      “When he heard those words of mine, he exclaimed with his usual
      energy and vivacity: ‘Habes me consentientem, labes me
      consentientem.’ From that moment all coldness between us was at an
      end, and we approached, without any embarrassment, a host of
      questions in one conversation in which I endeavored, as I had
      before, to learn from him.

      “Thus I receive with sincere gratitude, all the works, both useful
      and profound, which have appeared in our day on the history of law.
      It would be folly in me to deny the impetus which the study of
      positive law has received. New sources have been discovered. Their
      newness and importance have excited the zeal of many scholars who
      have studied them profoundly; a fact which made a review of the
      older sources, still by far the most important, necessary. These two
      circumstances soon rendered it imperative to proceed to the making
      of scrupulous dogmatic researches. Thus there now is a new life
      among jurisconsults, and a great activity, which, it is my hope, may
      continue long.”

   19 Revue de Législ. et de Jurisprudence, 1834-35.

_   20 Rossi._

_   21 M. de Bonald._

_   22 M. Cousin_ has brought this out in an admirable manner in his
      lectures on Adam Smith. Cours de Philosophie Moderne.

_   23 Channing._

_   24 Knies._ Die politische Œkonomie vom Standpunkte der geschichtlichen
      Methode, Braunschweig, 1853.

   25 Cours Complet d’ Economie politique, II, 540, éd. Guillaumin.

_   26 Cousin._

   27 We here append an extract from _Heinrich Contzen’s_ Geschichte,
      Literatur, und Bedeutung der Nationalökonomie, Cassel und Leipzig,
      1876, p. 7: “Roscher ... is rightfully considered the real founder
      and the principal representative of the historical school. This
      school is continually gaining in extent, and has found, both in
      Germany and in France, the most distinguished disciples—men who
      honor Roscher as their teacher and master, the leader whose beacon
      light they follow. Roscher combines the richest positive learning
      with rare clearness and plastic beauty in the presentation of his
      thought. These are conceded to him on every hand; and it does not
      detract from him, or alter the fact that he possesses them, that,
      here and there, an ill-humored or maliciously snappish critic calls
      them in question.” It should be borne in mind here that Wolowski
      wrote in 1857; Contzen, like Wolowski, a politico-economical writer
      of mark, in 1876.—_Translator’s note._

   28 Leben, Werk und Zeitalter des Thukydides.

_   29 Rau’s_ Archiv., Heidelberg. This remarkable essay has since
      appeared in Roscher’s Ansichten der Volkswirthschalt vom
      geschichtlichen Standpunkte, 1861.—_Translator’s note._

   30 Grundriss zu Vorlesungen über die Staatswirthschaft nach
      geschichtlichen Methode.

   31 Berliner Zeitschrift für allgem Geschichte.

   32 Ueber Kornhandel und Theuerungspolitik, 3d ed., 1852.

   33 Untersuchungen über das Kolonialwesen.

   34 Umrisse zur Naturlehre der drei Staatsformen (Berliner Zeitschrift,
      1847-1848).

   35 Ueber das Verhältniss der Nationalökonomie zum klassischen
      Alterthume (K. Sachs Akademie der Wissenschaft, 1849). Also to be
      found in Roscher’s Ansichten etc.—_Translator._

   36 Zur Geschichte der englischen Volkswirthschaftslehre im 16 und 17
      Jahrh.

   37 Ein nationalökonom. Princep der Forstwirthschaft.

_   38 Roscher’s_ complete work he calls “A System of Political Economy.”
      It embraces the four parts above referred to; but each of these
      parts constitutes an independent work. The first part, or the
      Principles of Political Economy, covers the ground generally covered
      by English treatises on Political Economy.

      Besides the works above mentioned, _Professor Roscher_ has written
      Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte,
      2d ed., Leipzig, 1861; Die deutche Nationalökonomik an der
      Grenzscheide des sechszehnten und siebenzehnten Jahrhunderts,
      Leipzig, 1862; Gründungsgeschichte des Zollvereins, Berlin, 1870;
      Betrachtungen über die geographische Lage der grossen Städte,
      Leipzig, 1871; Bertrachtungen über die Währungsfrage der deutschen
      Münzreform, Berlin, 1872; Geschichte der Nationalökonomik in
      Deutschland, Munich, 1874; Nationalökonomik des Ackerbaues, 8th ed.,
      Stuttgart, 1875.—_Translator’s note._

   39 Die politische Œkonomie vom Standpunkte der geschichtlichen Methode.

   40 Die National Œkonomie der Gegenwart und Zukunft.

   41 Recherches sur les Finances de France.

_   42 Frédéric Passy_, de la Contrainte et de la Liberté.

   43 Poor peasantry, poor kingdom; poor kingdom, poor sovereign.

   44 Cours d’ Econ. polit., 2e., Leçon I, p. 33.

   45 This would be: Propter vitiam, vitæ perdere causas.

_   46 Cousin_, loc. cit., p. 276.

_   47 Ibid._, 274.

_   48 Frédéric Passy_: De la Contrainte et de la Liberté.

_   49 Schäffle_, Deutsche Vierteljahrsschrift (1861), emphasizes this.
      _Adam Smith_, Wealth of Nations (1776), very characteristically,
      begins with the yearly labor of the nation; _J. B. Say_ (Traité
      d’Economie Politique, 1802), with _richesses_; _Ricardo_ (Principles
      of Political Economy and Taxation, 1817), with the idea of value.

   50 The sum total of the wants (_Bedarf_) of the Bavarian people, for a
      whole year, is estimated by _Hermann_, Staatswirthschaftliche
      Untersuchungen (2d ed., 1870, p. 81), at 177,000,000 florins for
      food (77 millions for wheat and potatoes, 69 millions for meat, 15
      millions for milk etc., 16 millions for eggs, vegetables, salt and
      spices); 50 millions for clothing, 45 millions for shelter, 37.5
      millions for fuel, 60 millions for beverages.

   51 The original adds: _deren Gesammtheit sein Bedarf heisst_; the
      aggregate of which is called his [man’s] Requisite (_Bedarf_). There
      being no exact equivalent in English for the word _Bedarf_ in this
      connection, this note is appended.—_Translator._

   52 According to _Boisguillebert_ (ob. 1714) Traité des Grains, I., c.
      4, the wants _nécessaire_, _commode_, _délicat_, _superflu_,
      _magnifique_, arise in successive order with increasing welfare or
      prosperity, and are surrendered in a reverse order, with increasing
      need. _Tucker_ distinguishes necessaries, comforts, and conveniences
      of the respective conditions, elegancies and refinements, and
      lastly, “grand and magnificent.” (Two Sermons, 1774, 29 ff.); _F. B.
      W. Hermann_, loc. cit, 1st, ed., 1832, 68; necessary goods (Güter
      der Nothdurft), goods that contribute to pleasure and recuperation,
      to culture and splendor.

   53 Compare _Tucker_, On the Naturalization Bill (1751 seq.), IV, note.

   54 No people without fire (Prometheus!); and it seems that broiling was
      the earliest mode of preparing food; then followed baking in heated
      cavities, and lastly came boiling in vessels. (_Klemm_, Allgemeine
      Kulturgeschichte, I, 180, 343.)

   55 There is an interesting attempt by _Faucher_, in the
      Vierteljahrsschrift für Volkswirthschaft und Kulturgeschichte, 1868,
      III, 148 ff., to determine the relative place of our various wants
      according to their capacity for extension or contraction.

   56 The qualification “true,” excludes from the circle of goods, not
      only all those things which might satisfy only irrational or immoral
      wants (compare _Mischler_, Grundsätze der Nationalökonomie, 1856, I,
      187), but also vindicates the fundamental idea of the whole system
      of Political Economy, as a subject of moral as well as of
      psychological investigation.

   57 Even _Aristotle_ (Eth. nicom. V, 8), considers that all things
      intended to enter into commerce, should be susceptible of comparison
      with one another, and that the measure of this comparison is _want_,
      which is the foundation of all association among men.

   58 An Arab helped pillage a caravan, and carried away, as his share of
      the booty, a chest of pearls. He thought it a box of rice, and gave
      them to his wife to cook, but finding they did not boil tender, he
      threw them away. (_Niebuhr_, Beschreibung von Arabien, 383). See a
      similar anecdote in _Ammian. Marcell._, _XXII_. Compare _Strabo_,
      _VIII_, 381.

   59 As soon as the Persians renounce the superstition that the daily
      contemplation of a turquoise is a talisman against the "evil eye"
      (_K. Ritter_, Erdkunde, VIII, 327), that precious stone will lose
      much of its value. On the other hand, the amulets of antiquity,
      although they have long lost the quality of goods as objects of
      superstition, have now a real value for the archæologist.

   60 Since observation shows, that, as time runs on, matter tends more
      and more to become _goods_, the blind forms of motion in nature to
      become useful labor and useful sustenance, impersonal and objectless
      existence to be transformed into personal property and personal
      culture, _Schäffle_ inclines to the belief that the whole mechanism
      of unconsciously governing nature is destined ultimately to aid in
      the realization of moral good, which alone is really valuable. Das
      gesellschaftliche System der menschlichen Wirthschaft, III, Auff.,
      1873, I, 3.

_   61 Hermann_, loc. cit, 1st ed., I, calls internal goods whatever each
      of us finds in himself, the free gift of nature; also that which we
      develop in ourselves by our own free action; and external, whatever
      we create or obtain, through the external world, as a means of
      satisfying our wants. The internal goods of one man may be external
      goods to another, as, for instance, when the former conveys them
      directly to the latter to be enjoyed, by words, demeanor, etc., or
      indirectly, in combination with other external goods.

   62 The exclusion of all else, has, indeed, been called one-sidedness
      and materialism. But, as _Senior_ says, no one blames the writer on
      tactics, because he confines his attention to military subjects; nor
      is the objection raised, that by so doing, he is encouraging eternal
      war. On the other hand, _J. B. Storch_ (1815) devoted a special
      division of his work to the consideration of “internal goods”
      (health, knowledge, morality, security, leisure,.etc.). See _Rau’s_
      translation of his Manual, II, 337 ff. Compare _Gioja_, Nuovo
      Prospetto delle Scienze economiche, 1815 ff. VIII.

   63 The inclination to exchange is, according to _Adam Smith_, one of
      the most important marks which distinguish man from the brute.
      (Wealth of Nations, I, ch. 2). But see _Büsch_, Geldumlanf (1780),
      I, § 29, on exchange among the lower animals.

   64 Observed by _Aristot._ Polit. I, ch. 6.

   65 The efforts of political economists to select from among the
      infinite number of goods, those which should constitute the subject
      of their investigations, have taken two directions in recent times.
      _Bastiat_ here confines himself too exclusively to commerce. The
      political economist should concern himself only with wants and
      satisfactions, where the labor, which is the connecting link between
      them, is undertaken by some other person for a consideration. Thus
      the ordinary act of respiration lies outside the circle, that of the
      diver, which is paid for, does not. (Harmonies économiques, 1850, 68
      ff.) But even Robinson Crusoe had his own system of economy. Are the
      products which the farmer consumes in his own home, the work he does
      himself, any the less matters of economic moment than the products
      he sells, or the labors of his servants? _Schäffle_ is right when he
      says that ordinary respiration is no economic function, because it
      is an unconscious necessity of nature. But his definition is too
      broad, inasmuch as he places the essence of the economic character
      of goods or of an act, in the conscious adaptation of means to human
      ends. (Tübinger Progr. z. 27 Sept. 1862, 9, 24 seq.) To take a walk
      is no economic operation, although it may be the best means to a
      very important end,—health. The same goods or the same act may have,
      frequently, according to the end proposed, an economic or
      non-economic character. The beauty of the human body, for instance,
      however systematically made use of for purposes of vanity, is not
      economic _goods_. But it is an economic speculation, base though it
      be, when a man relies on his handsome figure to secure a wealthy
      wife, or, for purposes of gain, allows her to pose as a model to
      artists or to take part in _tableaux vivants_. According to _C.
      Menger_, Grundsätze der Volkswirthschaftslehre (1871) I, 51 ff.,
      there are no economic goods, but those the disposable supply of
      which is, at most, equal to the quantity that is required. But is
      not the largest navigable stream, even in the most thinly populated
      country, an economic good?

_   66 Hegel_, Rechtsphilosophie, § 67. Even the use of a corpse as
      manure, or for any mercantile purpose, is repugnant to our feelings,
      “because of the dignity of personality.” (_Schäffle_, National
      Œkonomie, 1860, 28.) In this respect, prostitution is a remnant of
      slavery. _Schäffle_ is right, when he says that to repay personal
      services with material commodities which do not afford as much food
      etc., as the former have cost in expenditure of vital energy, is a
      slow and frequently a very cruel kind of cannibalism. (Kapitalismus
      und Socialismus, 1870, 18).

_   67 Bornitz_, De rerum Sufficientia in Republica procuranda, 1625,
      gives in this encyclopædia of political science, together with a
      dissertation on agriculture, commerce and manufactures, a complete
      survey of the _ministeria_. Several modern writers refuse to look
      upon personal services, or the ability to render such services, as
      elements of wealth: compare _Kaufmann_, Untersuchungen im Gebiete
      der politischen Œkonomie, 1830, II, Heft I. They demonstrate,
      however, no more than this, that that class of goods has something
      very peculiar. Thus _Malthus_, Principles of Political Economy
      (1820), chap. I, sect. I, objects that they cannot be inventoried or
      taxed; but can material goods be so completely? Can all the parts of
      the wealth of a nation be so inventoried and taxed? _Rau_, Lehrbuch
      der pol. Œkonomie (1826) I, § 46, remarks that the personal aptitude
      to perform services dies with the person, and that personal services
      cannot be stored up (?), etc. I appeal simply to the definition I
      have given above of economic goods, and which applies equally to
      services of every kind which can be performed for other people.
      Besides, those who oppose this view are unable to give a
      satisfactory explanation of all the phenomena of commerce. Of
      course, the qualification “recognized as useful” is of the utmost
      importance as a mark to determine what is goods. But a prima donna,
      or a world-renowned physician, cast naked by shipwreck on the shores
      of North America, is certainly, better off than a blind beggar, his
      fellow sufferer. Compare _Storch_, Handbuch II, 335 ff. and his
      Considérations sur la Nature du Revenu National.

_   68 Ad. Müller_ compares persons, so far as they render any kind of
      service, to things, and, so far as they are required to be preserved
      in their individuality, to persons. The children in the “status” of
      a country gentleman, for instance, are treated more as persons, and
      domestics, more like things; the land partakes of a species of
      personality, but not the implements of labor. (Nothwendigkeit einer
      theolog. Grundlage der Staatswissenschaft, 1819, 48.)

   69 The privilege of selling refreshments in the garden of the Palais
      Royal was formerly let for 38,000 francs a year.

   70 See the cases cited by _Hermann_, Staatswirtsch. Untersuchungen, 6
      ff. and by _Bernoulli_, Schweiz. Archiv. für Statistik und N. Œkon.
      II, 55. Think of the firm of J. M. Farina! In Athens, good stands
      were leased at a very high rent, even where there was no investment
      of the lessee’s capital. (_Demosthenes_, pro. Phorm., 948; adv.
      Steph. I, iiii.) There is, again, the sale of inventions, while they
      are still “mere ideas.” According to _Schäffle_, Theorie der
      ausschliessendnen Verhältnisse, 1857, II ff., the value in exchange
      of these relations depends on the extra income which is assured in
      fact, or in law, against diminution, by the exclusion of
      competition. He, therefore, recommends, instead of the word
      “relations,” “custom,” or “publicum.” But these words, by no means,
      exhaust the meaning expressed by “relation.” Thus, the good
      administration of public affairs, although it has no value in
      exchange, is one of the most valuable economic goods which a people
      can possess.

   71 The relation mentioned above of a general to an army may even have
      great value in exchange. Instance, the Italian condottieri in the
      fifteenth century!

   72 Relations which take from one man, as much as they afford to their
      possessor, are of value as components of a man’s private fortune,
      but not of the wealth of the nation. To this class belong debts due
      from persons or from things, compulsory custom or good-will of every
      description; as for instance, the seventy-two places of the _agents
      de change_ in Paris, each of which was worth more than a million of
      francs; or the right of navigating the Elbe as far as Magdeburg,
      which, about the beginning of this century, was worth in every
      instance about 10,000 thalers. (_Krug_, Abriss. der St. Œkonomie,
      62.)

_   73 Schäffle_, N. Œkonomie, 10. In the German language, this same word
      is used to designate utility, and sometimes useful objects (so
      called values). A clear distinction, however, should be made between
      utility and value in use. Utility is a quality of things themselves,
      in relation, it is true, to human wants. Value in use is a quality
      imputed to them, the result of man’s thought, or of his view of
      them. Thus, for instance, in a beleagured city, the stores of food
      do not increase in utility, but their value in use does. Compare
      _Schäffle_, System, III, I, 170.

_   74 Genovesi_, Economia civile (1869), II, I, 7. _L. Say_, De la
      Richesse individuelle et de la Richesse publique (1827), 29,
      estimates the value of goods according to the degree of discomfort
      attendant on the privation of them.

_   75 Friedländer_ has, however, made a general attempt in this
      direction. Theorie des Werthes (Dorpat, 1852). But says _Th. Fix_
      (Journal des Economistes, 1844, IX, 12): “It is as impossible to
      establish a scale of values, as it is to find an exact mathematical
      and permanent measure of our wants, passions, desires, tastes and
      fancies.”

   76 Compare _Knies_, Geld und Credit, 1873, I, 126 ff. The very
      respectable attempt made by _A. Samter_, Sociallehre (1875), with
      the idea society-value (_Gesellschaftswerth_) covers too nearly the
      idea of value in exchange. Further research will here have to be
      made, with the idea of “impotent need,” inasmuch as, from a high
      ethical, national-dietetical point of view, the question is asked
      whether, to what extent, and how, “impotent need” may be made a
      potent one.

_   77 Friedländer_, loc. cit, 50. If too many copies of the very best
      book be published, there is a certainty that a number of them will
      remain little better than waste paper.

_   78 Schäffle_, System, II, aufl., 55. See also his Kapitalismus und
      Socialismus, 1870, 31, 35, 43.

   79 Thus _Kleinwächter_ (Hildebrand’s Jahrbücher für N. Oek. und
      Statistik, 1867, II, 318), defines value in exchange=value in use +
      costliness. According to Schäffle, it is “a covert comparison
      between the cost-value and the value in use of the two kinds of
      goods to be exchanged.” (Kapitalismus und Socialismus, 35.)

   80 An intermediate dealer can, so far as he is himself concerned,
      attribute value in exchange to goods only to the extent that they
      have use for the last person who has acquired them. Hence, _Storch_
      calls _value in use_ immediate, and _value in exchange_, mediate
      value. As the English are always wont to express the immediate in
      words of Germanic origin, and the mediate in words borrowed from the
      Latin, _Locke_ calls value in use “worth,” and value in exchange,
      simply “value.” (_K. Marx_, Das Kapital. Kritik der politischen
      Œkonomie, 1867, I, 2.)

   81 It is, of course, otherwise when, for instance, a beautiful sea
      view, or a desirable position as regards air and sunshine, is
      connected with a piece of land.

   82 In Ravenna a cistern had greater value in exchange than a vineyard:
      _Martial_, III, 56. In Paris, too, drinking water, which is
      transported only with considerable trouble, costs 1-1/3 thalers per
      cubic meter. We may also mention snow and ice in summer, which last
      sells in the capitals of southern Europe at 0.34, silber groschens
      per pound. According to _Carey_, “utility” is the measure of man’s
      power over nature, “value,” the measure of nature’s power over man.
      He very inaccurately adds, that both are always in an opposite
      direction. (Principles of Social Science, 1861, VI, ch. 9.)

   83 Hence _Ad. Müller_ calls value in use, individual value, and value
      in exchange, social value. The Germans call the value of goods whose
      value in use is recognized by only one person, _Affectionswerth_,
      (affection-value) a value which influences its value in exchange
      only when the individual who holds it in high esteem is not himself
      the possessor of the goods. An instance of this latter is a piece of
      paper covered with notes, intelligible only to the maker of them.

   84 The very important difference between value in use and value in
      exchange was recognized oven by Aristotle. _Aristot._ Pol. I, 9.
      _Hutchinson_, System of Moral Philosophy (1755), II, 53 ff. The
      Physiocrates speak very frequently of _valeur usuelle_ and _vénale_,
      on which, according to _Dupont_, Physiocratie, CXVIII, the
      difference between _biens_ and _richesses_ is based. _La valeur d’un
      septicr de blé, considéré comme richesse ne consiste que dans son
      prix._ (_Quesnay_, éd. Daire, 300.) _Turgot_ distinguishes between
      “_valeur estimative_” and “_échangeable_ or _appréciative_;” the
      former designating the relation between the amount of energy,
      physical and mental, which one is willing to spend in order to
      obtain the goods, to the sum total of his energies, physical and
      mental; the latter the relation between the aggregate like energy of
      two persons which they are willing to spend in order to procure each
      of the goods to be exchanged, and the sum total of their energies in
      general. (Valeurs et Monnaies, p. 87, seq., éd. Daire.) _Ad. Smith_,
      in his Wealth of Nations, I, ch. 4, shows that he knew the
      difference between value in use and value in exchange; but he
      afterwards drops the consideration of the former, altogether. In
      this respect he has had only too faithful and one-sided followers
      among his countrymen, so that _Ricardo_, Principles, ch. 28, asks
      what value in exchange can have in common with the capacity of
      commodities to serve as food or clothing. (See, however, ch. XIX
      seq.) Many “free traders” would have no objection to interpose, if a
      people should abandon the cultivation of wheat, etc., to devote
      themselves exclusively to the manufacture of point lace, provided
      the latter had a greater value in exchange. The two degrees of the
      idea of value have been examined with much thoroughness by
      _Hufeland_ in his Neue Grundlegung der Staatswirthschaftskunst
      (1807), I, 118 ff.; _Lotz_, Revision der Grundbegriffe (1811 ff.),
      I, 31, ff.; _Storch_, Handbuch, I; _Rau_, Lehrbuch, I, 56, ff.;
      _Thomas_, Theorie des Verkehrs, I, p. 11; _Knies_, Tübing. Zeitschr.
      1855; _Bastiat’s_ declaration (Harmonies, p. 171 ff.): that
      “_valeur_” (by which Bastiat means only value in exchange), = _le
      raport de deux services échangés_, contains a two-fold error: the
      ambiguity of the word _services_, which applies equally to a
      yielding or affording of utility, as to useful labor, and the error
      that the labor necessary to produce a commodity, and of which the
      purchaser is relieved, alone determines its value in exchange.
      Compare _infra_ §§ 47, 107, 110, 115 ff., and _Knies_, loc. cit., p.
      644 ff.

_   85 Proudhon_, Système des Contradictions économiques, 1846, ch. 2.

   86 In France, according to _Cordier_ (Mémoire sur l’Agriculture de la
      Flandre Française), the wheat harvest yielded, in

      1817, forty-eight million hectolitres, with a value in exchange of
      two thousand and forty-six million francs; in

      1818, fifty-three million hectolitres, with a value in exchange of
      one thousand and four hundred and forty-two million francs; in

      1819, sixty-four million hectolitres, with a value in exchange of
      one thousand and one hundred and seventy million francs.

      A rise in the value in exchange of wheat, such as was witnessed in
      1817, is synonymous with a decline in the value in exchange of
      money, and of all those goods whose money price has not risen. It is
      no objection to the views here advocated, that when the necessaries
      of life are very scarce, the want of clothing, furniture, articles
      of luxury etc., is not felt so keenly as at other times, and that
      the value in use of these commodities really falls; and _vice
      versa_.

   87 Compare _B. Hildebrand_, N. Œkonomie der Gegenwart und Zukunft,
      1848, I, p. 316 ff. _Knies_, loc. cit.

   88 The greater importance attached, in our days, to value in exchange,
      than to value in use, is seen especially in the attitude which the
      buyer, who is possessed of the more current commodity (money),
      assumes toward the seller,—an attitude not unlike that of a patron
      towards his client. In the interior of Africa, the possessor of
      money, as such, would scarcely look down on the possessor of the
      means of subsistence. The South American Indians are ready to render
      an amount of service for a little brandy, which it would be in vain
      to ask them to perform for ten times its value in gold. (Ausland,
      Jan. 15, 1870.) The miser estimates the possibility of being able to
      procure for himself, for one dollar, a hundred different articles
      worth a dollar each, to be worth one hundred dollars.

   89 When the wants of a person or of a people change, it is possible for
      the value in use of one kind of goods, which had the greater
      prominence before, to take the place occupied previously by its
      value in exchange; and _vice versa_. Thus, the youth sells the
      plaything he used in childhood; the man, the educational apparatus
      of his earlier years; the old man, the implements that enabled him
      to acquire wealth, and which he can no longer use except with great
      effort. (_Menger_, Grundsätze, I, 220 ff.)

_   90 Rau_ (Lehrbuch, I, § 61 ff.) distinguishes between the concrete or
      quantitative value which a certain kind of goods may have for a
      certain person, under certain circumstances, and the abstract or
      species-value which a whole class of commodities may have for men in
      general.

      But _F. J. Neumann_, (Tübinger Zeitschrift, 1872, p. 288 ff.)
      objects, that even the abstract value of a commodity always suggests
      the relation of a definite number of concrete men to a definite
      quantity of goods; else, by the expression, value of goods, is to be
      understood not what it is generally meant to signify, but only the
      capacity to satisfy a single want.

_   91 Storch_, Ueber die Natur des Nationaleinkommens (1824, 1825), 5,
      defines (_Vermögen_) thus: a source of income, permanent in its
      nature, and capable of being transmitted, the possessor of which
      does not need to work, on its account. Hence he does not approve of
      the expression “the people’s resources” (_Volksvermögen_).

   92 See especially _Lord Lauderdale_, Inquiry into the Nature and Origin
      of Public Wealth, 1804, ch. 2. _Storch_, loc. cit.

_   93 Moreau de Jonnès_, Le Commerce au 19. Siècle (1825) I, 114 ff.,
      says that the United States imported from abroad 9.6, France 6, and
      Great Britain 5.8 per cent. of their annual consumption; and
      exported respectively 10.4, 6.2, 9.8 per cent. of their annual
      production. The recent free trade tendencies, and the improvement in
      the international means of transportation, have certainly increased
      the relative importance of foreign commerce. In the kingdom of
      Saxony (1853), _Engel_ estimates that 10/47 of the whole production
      of the country was destined for foreign countries, and that 10/47 of
      the consumption was imported.

   94 When the land of a country becomes dearer, simply on account of the
      increase of population, or goods, the quantity of which is
      susceptible of increase, because the cost of production has been
      increased, this cannot be considered an increase in the wealth of
      the people, (_v. Mangoldt._)

   95 Neither is value in exchange a quality inherent in goods, but only a
      relation between them and other goods. Hence it is absurd to speak
      of a rise or fall of all values in exchange. If the goods A lose in
      capacity to be exchanged against goods B, goods B of course increase
      in exchange power as compared with A, and _vice versa_. It is
      necessary to guard against being misled here by the intervention of
      money, that is, by the custom universal among men of employing a
      definite kind of goods as a medium of exchange for all others. Yet
      there are many writers who have been thus misled. Thus _Galiani_,
      Delia Moneta (1750), II, p. 2, who regards the lasting increase of
      the prices of all commodities as an infallible sign of national
      prosperity. To the same effect is the motto of the Physiocrates:
      _Abondance et cherté c’est opulence_. In its coarsest form, in
      _Saint Chamans_, Nouv. Essai sur la Richesse des Nations (1824),
      456, who would have that which is now the free gift of nature, to
      come to us or be produced only as the reward of toil. _Verri_, on
      the other hand, Meditazioni sull. econ. pol. (1771), ch. V, thinks
      that the number of buyers in a country should be as small as
      possible, and that of sellers as great as possible, in order that
      thus prices might be low; (as if every buyer was not, _eo ipso_,
      also a seller.)

_   96 Kaufmann_, Untersuchungen, I, p. 165 seq. Also, _Verri_,
      Meditazioni, XVII, 2.

   97 The differences characteristic of poverty, indigence, managing to
      live, fortune and wealth, cleverly treated by _von Justi_,
      Staatswirthschaft, I, p. 449, seq. _Rau_, Lehrbuch I, § 76, seq.,
      establishes the following gradation: privation and wretchedness,
      poverty, indigence, “getting on,” comfort, wealth, superfluity. _L.
      Say_ calls those who can satisfy the wants of luxury rich;
      well-to-do, those who can command the comforts of life; and
      wretched, those who cannot obtain a sufficiency of the objects of
      prime necessity. In France, the limits of these situations are
      marked by an income of respectively 60,000, 6,000 and 900 francs per
      family, so that a family with an income of only 300 francs per year
      is in a condition of wretchedness. (Traité de la Richesse, 1827, I
      ff., 71 ff.)

_   98 Palmieri_, Ricchezza nazionale, Introd. The greater number of the
      definitions of wealth are rather onesided than false. _Socrates_,
      for instance, looks only at the relation existing between means and
      their owner’s wants. (_Xenoph._ Memor., IV, 2, 37, seq. Œconom. II,
      2 ff.). _Plato_, on the other hand, as the socialists are wont to
      do, looks to the excess over that possessed by others. (Legg. V,
      742, seq.). _Xenophon’s_ observations, Hiero, 4, on the nature of
      wealth, are many-sided and beautiful. _Aristotle_ distinguishes
      between natural and artificial wealth: πλῆθος ὀργάνων οἰκονομακῶν
      καὶ πολιτικῶν—πλῆθος νομίσματος. (Polit, I, 3, 9, 16.) Compare
      _Cicero_, Parad. VI. The dominant idea of the so-called Mercantile
      System is thus expressed in a Saxon pamphlet of 1530
      (Müntzbelangende Antwort, etc.): “Money is the real watchword; where
      there is much money, there is wealth, it is clear.” Compare
      _Luther_, Werke, Irmisch edition, XXII, p. 200 seq. See some
      excellent remarks in opposition hereto, in the Saxon pamphlet,
      Gemeyne Stimmen von der Müntz, 1530. _Schröder_, Fürstliche
      Schatz-und Rentkammer, 1686, ch XXIX. “A country grows rich in
      proportion as it draws gold or money, either from the earth or from
      other countries; poor, in proportion as money leaves it. The wealth
      of a country must be estimated by the quantity of gold and silver in
      it.” See a very passionate argument against this view in
      _Boisguillebert_, Dissertation sur la Nature des Richesses, written
      sometime between 1697 and 1714. _Berkeley_, Querist (1735), Nos.
      562, 542. Among Englishmen, the correct view was prevalent much
      earlier, especially among the founders of the American colonial
      empire. See _Hachluyt_, Voyages (1600) III, 22 ff. 45 ff. 152 ff.
      165 ff. 182 ff. 266 ff; but especially the work “Virginia’s Verger”
      in “Purchas Pilgrims” (1625), IV, p. 809 ff. However, several
      Spaniards were led by hard experience to adopt a view opposed to the
      Midas-view (compare _Aristotle_, Polit. I, ch. 3, 16), by which the
      first American explorers were carried away: _Garcilasso de la Vega_
      (1609), Comment. reales II, ch. 6; _Saavedra Faxardo_, Idea
      Principis christiani (1640) Symb. 69: _potissimæ divitiæ ac opes
      terræ fructus sunt, nec ditiores in regnis fodinæ, quam agricultura;
      plus emolumenti, acclivia montis Vesuvii latera adverunt, quam
      Potosus mons_. Contemporary with those Englishmen, was the Italian,
      _Giov. Botero_, who called attention to the fact, that France and
      Italy were the countries of Europe richest in gold, although they
      possessed no mines of the precious metal themselves: Della Ragion di
      Stato (1591) p. 88 ff. Also _Sully_, who called agriculture and
      cattle-breeding the breasts of the state, the real mines and pearls
      of Peru. (Economies royales I, ch. 81. See however, II, p. 381).
      _Montchrêtien_, Traité d’Économie politique (1615) 81, 172 seq.
      According to _Sir D. North’s_ Discourses upon Trade, 1691, wealth is
      synonymous with freedom from want, and the ability to procure many
      comforts, while _Temple_ (ob. 1700, Works I, 140 seq.) looks
      entirely at the subjective side of wealth. _Pollexfen_, “England and
      East India inconsistent in their Manufactures” (1697), considers
      gold and silver as the only real wealth. To this definition Davenant
      (ob. 1714), opposes another. Wealth, according to him, is whatever
      places prince or people in a condition of superabundance, peace and
      security. See his Works, I, p. 381 seq. He even reckons intellectual
      powers, alliances etc., among the national wealth. Compare _W.
      Roscher_, Zur Geschichte der englischen Volkswirthschaftslehre 1851,
      in the acts of the royal Saxon Academy of Sciences, vol. III.
      _Vauban_ (Dime royale 1707), Daire’s edition, says: “The real wealth
      of a people consists in an abundance of those things, the use of
      which is so necessary to sustain the life of man, that they cannot
      at all be dispensed with.” By the wealth of a people _Galiani_,
      Della Moneta II, c. 2, understands the aggregate of all lands,
      houses, movable property, money, etc. which belong to them, but,
      that the chief element of wealth, and the condition precedent of all
      others, is men themselves. Hence, the process of the impoverishment
      of a people in their decline, takes the following course: money
      first emigrates, next, population diminishes, afterwards, the houses
      fall in ruin, finally, the land itself becomes a waste. According to
      _Broggia_, wealth is _un avanzo osia valore di tutto cio che avanza
      al proprio consumo e bisogno_, Delle Monete, 1743, IV, 307, 314;
      Cust. _Palmieri_ (ob. 1794), also says: _il superfluo constituisce
      la richezza_. (Publica Felicità.) According to _Turgot_, Sur la
      Formation et Distribution des Richesses 1771, § 90, the wealth of a
      nation consists in the net proceeds of landed property capitalized
      at the ordinary price of land, and then of the aggregate of all the
      movable property of the country. _Büsch_, Geluumlauf III, § 27,
      considers a certain duration of the produce or revenue as an
      essential element in the idea of wealth. _Lauderdale_, Inquiry, ch.
      II, distinguishes national wealth and private wealth; the former
      embracing all that man covets as agreeable or desirable; while it is
      one of the marks of the latter, that there should be no general
      superfluity of it on hand. Several modern English economists call
      wealth only that, the production of which cost human labor. Thus,
      _Malthus_, Definitions (1827) p. 234. _Torrens_, Production of
      Wealth, 1821, ch. I. When _Rossi_, Cours d’Economie politique, 1835,
      L. 2, says: _tout chose propre à satisfaire aux besoins de l’homme
      est richesse_, he demonstrates how the frequent inaccuracy of the
      French language stands in the way of a close analysis. The greater
      number of more recent definitions are true of resources rather than
      of wealth. _Bastiat_ distinguishes between _richesse effective_ and
      _relative_, the former being based on _utilité_, the latter on
      _valeur_. (Harmonies, ch. 6.)

   99 The national wealth of Athens, at the time of the hundredth
      Olympiad, is estimated by _Böckh_ (Staatshaushalt der Athen, I, p.
      636, 2d ed.) to have been from thirty to forty thousand talents,
      besides the non-taxable property of the state. That of Great Britain
      is estimated at about 8,000 million pounds sterling. (Athenæum 5
      March, 1853.) _Wolowski_ estimated that of France at, at least, 116
      milliards of francs, with an annual increase of 1-½ milliards, (L’or
      et l’Argent, 1870. Enquête, 59.) _David A. Wells_ estimated that of
      the United States, in 1860, slaves not included, at 14,183 million
      dollars, or $451.20 per capita, whereas in England, the per capita
      wealth was about $1,000. (_Hildebrand’s_ Jahib., 1870, I, 431.) The
      national wealth of the kingdom of Saxony is equal to 600 million
      thalers immovable, and 600 million movable, property. (_Engel_,
      Statist. Zeitschr. August, 1856). That of Würtemberg=2,710 million
      florins, of which 700 millions represent movable goods, and 100
      million, claims on foreign countries. (Statistisches Handbuch,
      1863.) Of course all these estimates are very inexact.

_  100 Ch. Dupin_, Forces productives, p. 82. See _infra_, § 230.

  101 Compare _Meidinger_, Das britische Reich in Europa, pp. 79, 238,
      261.

_  102 Davenant_ considers an increase in the number of houses, ships and
      stocks of goods, as the surest sign of an increase in the national
      wealth; and on the other hand, a high rate of interest, a low price
      of land, small wages, a decrease of population, and an increase of
      uncultivated land, as the signs of national impoverishment. (Works,
      I, pp. 354, seq. II, p. 283.) _Sir M. Decker_, Essay on the Causes
      of Decline of Foreign Trade (1744), 3, gives as the signs of
      impoverishment, the following: a wretched condition of the poor and
      of manufactures, a low price of wool, long credit to retail dealers,
      frequent cases of bankruptcy, exportation of the metals, unfavorable
      exchange, few new coins, many cases of unpaid rent of leased land,
      and high poor rates.

_  103 Storch_, Handbuch, I, 45. Compare _infra_, § 187.

  104 On the difference between human and animal economy, see _Schön_,
      Neue Untersuchungen der N. Œkonomie, (1835), 4.

  105 Compare _Schäffle_, System, III, Aufl. I, 2, 28.

_  106 Knies_, in his Polit. Œkonomie vom geschichtl. Standpunkte, 1853,
      p. 160 ff., shows, very happily, how the love of one’s self,—which
      must, indeed, be distinguished from self-seeking—is not in conflict
      with the love of one’s neighbor; but that, in healthy natures, it is
      found allied with a feeling of equity, and of the common good. See,
      also, _F. Fuoco_, Saggi economici, Pisa, 1825, Nr. 7. _Schutz_, Das
      sittliche Element in der Volswirthschaft: Tübinger Zeitschrift für
      Staatswissensch. 1844, p. 132, ff.

  107 “That they should seek the Lord if haply they might feel after him.”
      (Acts, 17, 27. Compare Matthew, 6:33, also I. Timothy, 5:8.) _Adam
      Müller_ in his Nothwendigkeit einer theolog. Grundlage, 49 seq., is
      a strong advocate of all this, but a rather narrow one. The farmer,
      he says, should first work for the love of God, then for the fruit,
      that is, for the gross product, and lastly for the net product. His
      work is a trust. _Müller_ considers the business relations of men,
      as they exist at present, as “the comfortless mutual slavery of
      all.” (Nothwendigkeit einer theolog. Grundlage, 49 ff.) The
      economist, _Ch. Perin_, who writes from the Catholic
      politico-economical standpoint, substitutes for conscience,
      _renoncement_, as the force antagonistic to _intérêt_, an expression
      inappropriate, because merely negative, although in perfect harmony
      with the ascetic religiousness of the middle ages. (De la Richesse
      dans les Sociétiés chrêtiennes, 1861, II vol., passim) Compare
      _Roscher_ in _Gelzer’s_ Protestant. Monatsblättern, Jan. 1863.
      _Puchta_, Institutionen, I, f. 8, opposes to individualism—or the
      impulse to distinguish ourselves from others, and which, when
      uncontrolled, leads to egotism, pride and hate—love and right, which
      are controlling powers over the former.

  108 Even the ancients conceived Eros as a world-building principle.
      According to _Schön’s_ expression, loc. cit., which it is not
      difficult to misconstrue, the feeling of the common interest
      manifests itself, both as law and force. And, in reality, it is
      necessary that, in order not to permit the drowsy conscience to fall
      too far behind self-interest, which is always awake, it should
      create lasting institutions and regulations above and beyond the
      caprice of the individual or of the moment; for instance, in the
      family, marriage, education etc.

  109 The more private interest ceases to be momentary, and becomes
      life-long and even hereditary, the better does it harmonize with the
      feeling of the common interest.

_  110 Perin_ says (1, 93), that the conflict of interest is reconciled in
      the seeking for the attainment of the supreme good, that is God,
      “who gives himself to all in equal measure, and yet always remains
      the same, and out of whose fulness all may draw, and yet no one’s
      share grows less.” But the same is true of all ideal goods, and of
      every form of the feeling for the common interest, the highest of
      which is, indeed, religiousness.

  111 According to _Kant_, Anthropologie, p. 239, the desire of comfort
      and well-being, and the inclination to virtue, when the former is
      properly restrained by the latter, produce the highest degree of
      moral, united to the highest degree of physical, good. It is well
      known, that during the middle ages, in all countries except Italy
      and, even up to the seventeenth century, the moral sciences were
      under a one-sided theological influence, whose ascetic condemnation
      of self-interest may have been well enough during a period of
      violence. By virtue of a very natural reaction, and as a protest of
      individualism against the constraint of absolute monarchy, the
      materialists of the eighteenth century endeavored to discover, even
      in the most exalted phenomena of human society, only the expression
      of an enlightened self-interest. See _Mandeville’s_ Fable of the
      Bees, or private Vices public Virtues (1723), but especially,
      _Helvétius_, De l’Esprit (1758). _Voltaire_ says, that, in all the
      celebrated maxims of _De Rochefoucauld_ (1665) there is but one
      truth contained, _que l’amour propre est le mobile de toutes nos
      actions_. (But see, per contra, _Pufendorf_, Jus Naturæ et Gentium,
      1672, II, 3, 15.) This tendency was opposed, especially by the
      English, who could not be blind to the influence exerted in public
      life by the feeling for the common good. _David Hume_, Treatise on
      Human Nature (1739), III, 54, is of opinion that the interests of
      others are, on the whole, in the case of nearly every man stronger
      than even his own self interest. _Hutcheson_, System of Moral
      Philosophy (1755), speaks of the innate principle of benevolence.
      Man is not a perfect whole; a part belongs to his own person, part
      to his family, part to the nation, part even to all humanity.
      _Burke_, Inquiry into the Origin of our Ideas of the Sublime and
      Beautiful (1756), distinguishes two fundamental principles of
      action, that of self-preservation and that of society. On the former
      is based the sense of the sublime; on the latter, of the beautiful.
      According to _Ferguson_, History of Civil Society, (1767), I, 3, 4,
      the “sense of union” is frequently strongest where the advantage
      drawn from the connection is smallest; for instance, it is weakest
      in highly cultured commercial countries. _Adam Smith_, Theory of
      Moral Sentiments (1768), has been as one-sided in reducing
      everything to “sympathy,” as he has been in his Wealth of Nations in
      reducing everything to “self-interest;” but not without the
      consciousness, that to explain the reality, it is necessary to take
      both into consideration (_Buckle_). It would, indeed, be just as
      preposterous to base economy on self-interest alone, as to base
      marriage merely on the sexual appetite. Recently, _Hermann_,
      Staatswirthschaftliche Untersuchungen, 1st ed., part 1st, discovers
      in self-interest, and in the feeling for the common good, the two
      springs of all economy. He would even base the so-called theoretic
      Political Economy, on the study of self-interest, its practice in
      that of the common good. _M. Chevalier_, Cours d’Economie politique,
      1844, II, 412 ff., understands something very like this by the
      contrast between liberty and centralization. The _antagonisme_ and
      _association_ of _Bazard_, Exposition de la Doctrine de Saint Simon
      (1829), p. 144 ff. Closer investigation will show, however, that
      self-interest, which must not be confounded with egotism, and the
      common interest, are neither coördinate nor exhaustive opposites.
      Compare the beautiful contrast drawn by _Goethe_ (Pocket edition of
      1833, vol. 46, 97), between “Pietät” and “Egoisterei.”

_  112 Paul_, I. Corinth. 12, gives the most beautiful model description
      of a social organism. Compare, however, the fable of Menenius
      Agrippa in _Livy_, II, 32.

  113 Excellent beginnings of a general theory of economies in common in
      _Schäffle_, N. Œkonomie, II, Aufl., 62 ff., 331 ff.

  114 The French and English, with their strong political bias, use the
      expressions respectively _economie politique_ and Political Economy.
      In Germany, where the terms the people (_Volk_) and the state
      (_Staat_) are much less nearly coextensive, the words
      _Volkswirthschaft_ and _Nationalökonomie_ are preferred. But even
      _Hufeland_, who first gave currency to the term _Volkswirthschaft_
      (Grundlegung, I, 14), called attention to the peculiarity “that the
      term economy suggests that there is one who economizes and guides,
      an economist in chief, and that such a one is, even according to the
      most correct opinion, wanting in the public economy of a people.”

  115 According to _Th. Cooper_, Lectures on the Elements of Political
      Economy, (1726), 1, 15 ff. 117, the wealth of society is nothing but
      the aggregate wealth of all the individuals that compose it. Each
      individual looks out best for his own interests, and, hence, that
      nation must be the richest, in which each individual is most
      completely left to himself. (If this were so, savage nations would
      be the richest!) _Cooper_ goes so far as to disapprove of the
      protection afforded to commerce on the high seas by a national navy;
      no naval war is worth what it costs, and merchants should protect
      themselves. He says, too, that the word “nation” is an invention of
      the grammarians, made to save the trouble of circumlocution, a
      nonentity! _Adam Smith_ is, as might be expected, far removed from
      such absurdities. (Compare Wealth of Nations, IV, ch. 2, and the end
      of the fourth book.) But, even he is of opinion that men, in the
      study of their own advantage are led “naturally, or rather
      necessarily” (IV, ch. 2), to the employment which is most useful to
      society. But here _Adam Smith_ overlooks the fact, that every
      individual nation strives after earthly immortality, and is, in
      consequence, frequently compelled to make immediate sacrifices for
      the sake of a distant future, a thing which can never be to the
      private interest of the mortal individuals who compose it. And thus,
      _D. North_, Discourses upon Trade (1691), 13 seq., says, that in
      commercial matters, different nations stand in precisely the same
      relation to the whole world, that individual cities do to the
      kingdom, and individual families to the city. Similarly,
      _Boisguillebert_, Factum de la France, ch. 10, 327, Daire’s edition.
      _Benjamin Franklin_ (ob. 1790), Political Papers, § 4. And _J. B.
      Say_, Traité d’Economie politique (1802) I, 15: every nation is, in
      relation to neighboring nations, in the situation of a province in
      relation to neighboring provinces. Unfortunately, such doctrine is
      only too palpably refuted by every war! _J. Bentham’s_ saying: _Les
      intérêts individuels sont les seuls intérêts réels_ (Traité de
      Législation, I, 229). _Infra_ § 98.

      Among those who, in antiquity, most energetically maintained that
      the idea of national economy is not a merely nominal one, is _Plato_
      (De Republ., IV, 420, I, 462); more recently, _Fichte_ (Der
      geschlossene Handelstaat, 1800), although, in general, the
      socialists attach as little importance to nationality as their most
      decided opponents. Adam Müller is a writer who deserves recognition
      for his advocacy of national economy, and of the state as a whole,
      paramount to individuals, and even generations. He gives war the
      credit of causing the scientific knowledge of the state to cast
      deeper roots, and of enlightening individuals in the most forcible
      way, that they are parts of one great whole. (Elemente der
      Staatskunst, 1809, I, 7, 113). He calls public economy, as a whole,
      the product of all products. What, he inquires, is the use of all
      wealth, if it does not guarantee itself? And this, it can do, only
      through the organization of the whole people, that is, through the
      nation (I, 202). _Adam Smith’s_ theory of labor would be correct if
      it considered the entire national life of a people itself as one
      huge piece of labor. (II, 265). And so, Müller directs his polemics
      against Adam Smith’s premise of a merely mercantile world-market.
      (II, 290). Similarly, the protective tariff theoreticians, _Ganieh_,
      Théorie de l’Economie politique (1822), II, 198 ff. and _Fr. List_,
      Nationales System der politischen Oek. (1842), I, 240 ff. _Colton_,
      Political Economy of the United States, 1853. _Sismondi_, Nouveaux
      Principes (1819), I, 197, ridicules the opinion which resolves the
      public interest into merely private interests: It is A’s interest to
      rob B; B, the weaker, is equally interested to let himself be
      robbed, that he may fare no worse. But the state—?!

  116 National wars are really no mere operations of the will of the
      state! Since 1800, Ireland, and, since 1858, even British India,
      constitute one state with England, and yet how different are the
      economic tendencies of these different countries of which the
      individual husbandman or business man must take cognizance!

  117 One might also deny the reality of a stream, considered as a whole,
      since its bed, no one calls a stream, and its watery contents change
      every moment. And yet, it is well known to scientific geography that
      every stream has its own individual character.

  118 This would be to be guilty of explaining _ignotum_ per _ignotius_.
      And yet, there are a great many modern writers who imagine that they
      have said something all-sufficient, when they have told us that the
      state is an organism. As early a writer as _Hufeland_ (N.
      Grundlegung, I, 113), enters his protest against such abuses. The
      person who would operate with this notion, should, at least, have
      read the acute observations, so well calculated to dissipate
      preconceived opinions, made by _Lotze_, in his Allgemeine
      Physiologie des körperlichen Lebens, 1-165. The organic conception
      of national life, the life of a whole people, where the individual
      organs are free and rational beings, is evidently a much more
      difficult one to form than that of the animal or human body.

  119 I first called attention, in my work on the life-work and age of
      _Thucydides_, to the fact that that great historian always accounts
      for causes in the following manner: A. is produced by B., and B. by
      A. (_Roscher_, Leben Work und Zeitalter des Thukydides, 199 ff.;
      compare especially _Thucyd._, I, 2, 7, seq.) Such a circle is not a
      vicious one. All first class historians have thus explained
      historical phenomena. The one-sided deduction of A. from B., and B.
      from C., etc., which the so-called pragmatic writers like
      _Polybius_, for instance, is the result of overlooking all
      reciprocal action. _Scialoja_, Principii (1840), p. 60, makes a
      somewhat similar observation for Political Economy.

  120 Whether we call the unknown and inexplicable ground back of all
      analysis, and which our analysis cannot reach, vital force, generic
      form, spirit of the nation, or God’s thought, is for the present a
      matter of scientific indifference. All the more necessary are the
      self-knowledge and honesty, in general, which admit the existence of
      this background, and which do not, by denying it, deny the
      connection of the whole, which is, for the most part, much more
      important than the analyzed parts. But I must at the same time,
      enter my energetic protest against the imputations of heresy made by
      those who do not comprehend the sacred duty of science, by never
      ceasing investigation, to push farther back the bounds of this
      inexplicable background.

  121 When _Hildebrand_, for instance, objects to the application of the
      expression “natural law” to the economic actions of man, for the
      reason that it conflicts with human freedom and man’s capacity for
      progress (Jahrbücher der N. Œek. und Statistik., 1863, Heft., I), I
      cannot agree with him. I use the expression “natural law” wherever I
      observe uniformity, explicable in its broader connections, and not
      dependent on human design. That there are such uniformities there
      can be no question. I need only mention the philological law of the
      so-called “permutation of consonants,” which individuals follow when
      speaking—certainly not through compulsion,—and, by means of which,
      the progress of the speaking aggregate is made manifest. Or, I might
      call attention to the well known fact, that, in populous countries
      marriages and crimes, which are for the most part free, are divided
      among the different age-classes in a proportion much more uniform,
      from year to year, than are deaths, which are not free. I adhere all
      the more firmly to the expression “natural law,” because no one
      takes offense at or objects to the expression, “nature of the human
      soul.” But to this very nature of the human soul belong the freedom
      and responsibility of the individual, as well as the capacity of the
      species for progress. Compare _A. Wagner_, on Law in the Apparently
      capricious Actions of Man (_Die Gesetzmässigkeit in den scheinbar
      willkürlichen menschlichen Handlungen_, 1864, p. 63 seq.), in which,
      however, he only goes so far as to show that law and freedom coexist
      side by side as indubitable facts, while the seeming contradiction
      between the two remains. _Drobisch’s_ Moralische Statistik und die
      menschliche Willensfreiheit, 1867, is an important contribution to
      the literature of this question.

_  122 Whately_, in his fourth lecture (Lectures, 1831), shows in a very
      clear way, how London is supplied and provisioned by men with no
      object in view but their own personal interest, each of whom is
      possessed of but a very limited knowledge of the aggregate wants of
      its inhabitants, and yet they work into one another’s hands, in the
      interests of the whole, purely instinctively, and infinitely better,
      perhaps, than the operations of the most skillful governmental
      commission, organized for the same purpose.

  123 Alphonsus of Castile, the king astrologer of the thirteenth century,
      is reported to have said, that the universe would have been much
      better constituted, if the Creator had asked his advice beforehand.
      Astronomers like Newton and Gauss have, certainly, judged otherwise.

_  124 MacCulloch_ remarks, that there is an essential difference between
      the physical and the moral and political sciences in this, that the
      principles of the former apply in all cases, those of the latter,
      only in the greater number of cases—a thought very ably developed by
      _Knies_, loc. cit., _passim_. If, with _Newmarch_, (London
      Statistical Journal, 1861, p. 460 seq.), we could grant, that there
      is no “law,” except where it is possible to predict each individual
      occurrence under it, there would be no such thing even as the “laws”
      of the probability of life. The word “element,” also, means
      something very different in Political Economy from what it does in
      chemistry: a combination which might be broken up, but which that
      science leaves it to other sciences to do. The “element” of
      Political Economy is Man. Compare _Pickford_, Einleitung in die
      politische Œk., 1860, 17.

  125 It is in this sense that _Aristotle_ (Polit., I, p. 1, 9 Schn.)
      says: φανερὸν, ὅτι τῶν φύσει ἡ πόλις ἐστὶ, καὶ ὅτι ἄνθρωπος φύσει
      πολιτικὸν ζῶον. According to _L. Stein, Lehrbuch der
      Volkswirthschaft_, 1858, 33, the political economy of a people
      begins at the point where the overplus of individuals begins.

  126 Compare _K. L. von Haller_, Restauration der Staatswissenchaft, I,
      p. 446 ff.

  127 As _Sallust_ characterizes the political apogee of the Romans:
      _Optimis moribus et maxima concordia egit populus Romanus inter
      secundum atque postremum bellum Carthaginiense._ See _Augustin_
      (Civ. Dei II, 18). _Puchta_ (Institutionen, I, f. 83), with a great
      deal of good sense, distinguishes in every people their individual
      character from that which they share in common with all mankind. The
      latter exists among savage nations, only as a germ buried under the
      overpowering weight of that which is special to them. The period of
      the perfect equilibrium of both elements is coincident with that of
      a people’s real culture. In the further course of development, the
      latter, more general element becomes gradually over-powerful,
      destroys the individual, and thus dissolves nationality.

  128 Thus formulated, the principles of the two great parties, evidently,
      no more contradict one another than their ordinary watchwords,
      “freedom” and “order,” are in contrast with one another. Hence all
      the great statesmen of the best periods of history have adopted the
      middle course recommended by Aristotle.

  129 See _Lotze_, Allgemeine Pathologie, 1842. _Ruete_, Lehrbuch der
      allgemeinen Therapie, 1852. These analogies, obviously, should not
      be pushed too far. One of the most essential differences between the
      two consists in this, that in the diseases of the body politic,
      physicians and nurses are themselves part of the diseased organism.

  130 See _Ahren’s_ very beautiful exposition, Organische Staatslehre,
      1850, I, 77. National economy (_Nationalökonomie_=public economy);
      national economics (_Nationalökonomik_=the science of public
      economy). The latter term was first proposed, in Germany, in 1849,
      by _Uhde_; the former was naturalized therein 1805: _v. Soden_,
      Nationalökonomie, 1805; _Jacob_, Grundsätze der N. Œk., 1806. In
      Italy, _G. Ortes_ used it as early as 1774, in his Dell Economia
      nazionale, and in England it was employed, even in 1867, by
      _Ferguson_, History of Civil Society, III, p. 4. Holland.
      Volkshuyshoudkunde. As a rule, outside of Germany, the term
      political economy, _économie politique_, one which is somewhat
      calculated to mislead the student, is used. (Thus _Montchrêtien
      sieur de Vatteville_, Traité de l’Economie _politique_, 165; later
      _J. J. Rousseau_, Discours sur l’Economie politique, later yet the
      Traités d’E. p., _Maillardère_, _Page_ and _J. B. Say_, 1801-1803).
      Political Economy (_Sir J. Stewart_, Inquiry into the principles of
      P. E., 1767); also Public Economy (_Petty_, several Essays, 1682,
      35); _Economia politica_ or _pubblica_ (the latter by _Verri_ and
      _Beccaria_). The title _Economia civile_ (_Genovesi_, Lezioni, d’Ec.
      civ. 1769), has found few adherents. It has, however, been used
      recently by _Cernuschi_: Illusions des Sociétés coöperatrices
      (1866). The term, _Economie sociale_ has been used all the more in
      France (Dunoyer, Nouveau Traité d’Ec. soc., 1830), since recommended
      by _J. B. Say_, and employed by _Buat_ (Des vrais Principes de
      l’Origine et de la Filiation du Mot Economie politique, in the
      Journal des Economistes, 1852.)

_  131 Stein_, Lehrbuck der V. W., prefaces his “Science of Public
      Economy” (pp. 329-358), by a “Science of Economy” (pp. 96-328),
      which, however, treats individual economies only as the elements of
      the national economy. A science of household or isolated individual
      economy could, of course, treat only of the economic relations of
      anchorites. Those who object that Political Economy is not a real
      whole will be satisfied with the definition of it given by _F. I.
      Neumann_: “The Science of the bearing of household or separate
      economies to one another, and to the state as a whole.” (Tüb.
      Zeitschr., 1872, 267.)

  132 In so far as these various institutions are concerned, with objects
      beyond the human, or supernatural, only the manner in which they are
      accepted, or in which they are made use of, is an expression of
      national life.

  133 Thus, _J. Tucker_ thinks that religion, the state and commerce, are
      only the parts of one same general plan: no institution, therefore,
      can be called appropriate, within the limits of the province of any
      one of these, if it be clearly in opposition to the other two,
      because the harmony of God’s work can not be broken up. (Four Tracts
      and two Sermons on political and commercial Subjects, 1774, Serm.
      I.)

_  134 Riedel_ (National Œkonomie, 1838, I, p. 178 seq.), gives a good
      illustration of the difference between the manner in which law and
      Political Economy look at the same question. The law (to avoid
      strife, or to settle controversies) looks upon the debtor as the
      owner of the capital, and lets him run all the risk; Political
      Economy, on the other hand, looking deeper into the nature of the
      contract, reaches an entirely opposite result. The mere jurist has a
      dangerous tendency to undervalue the reign of the laws of nature;
      the mere political economist, just as readily, undervalues the
      element of free will. (_Arnold_, Cultur und Recht I, 97.) In this
      respect, the two sciences complement each other very well. _Roesler_
      (_Hildebrand’s_ Jahrb., 1868, II, and 1869, I.) shows, and he does
      not exaggerate the fact, that political economists have made
      altogether too little use of the results of the science of law.

  135 Jurists will always experience the want of divesting their isolated
      ideas of their purely accidental character, by grouping them
      together in such a manner as to make them constitute a complete and
      independent whole. One must be possessed of profound knowledge to
      perceive their necessary connection from an historico-juridical
      point of view. Political Economy, with its characteristic accuracy
      and practical utility, can best take its place, at the present time.
      It is in the greater number of legal questions, the systematically
      elaborated science of “the nature of the thing.” See the able
      beginnings of a policy of legislation and higher history of law,
      based on Political Economy, by _H. Dankwardt_: N. Œk. und
      Jurisprudenz, 3 Hefte, 1857, and my preface to _Dankwardt’s_
      Nationalökonomisch-civilistischen Studien, 1862.

  136 The intellectual power of a people depends upon the vigorous and
      harmonious development of all seven spheres of life.

_  137 Montecuccoli_, Besondere und geheime Kriegsnachrichten (Leipzig,
      1736). A very similar judgment by Cæsar in _Dio Cass._, XLII, 49.

_  138 Bülan_, Handbuch der Staatswirthschaftslehre, 1835.

  139 Thus _v. Justi_, Staatswirthschaft 1755. _Kraus_, Staatswirthschaft,
      published by Auerswald, 1808; _Schmalz_, Handbuch der
      Staatswirthschaft, 1808. More recently, _Hermann_,
      Staatswirthschaftliche Untersuchungen, 1832. In France, the
      expression _économie de l’état_, is very seldom used. _Gavard_,
      Principes del’E. d’Etat, 1796.

_  140 Pölitz_, Staatswissenschaften im Lichte unserer Zeit, II, 3.
      Compare _Lotz_, Handbuch der Staatswirthschaft (2d ed., 1837), I, 10
      ff.

  141 Our view of Political Economy holds a middle place between opposed
      extremes. The view expressed by _Whately_, Lectures on Political
      Economy (1831), No. 1, and covered by the proposed term
      “catalactics,” is by far too narrow. Similarly, _Macleod_, Elements
      of Political Economy, 1858, I, 11. A like objection may be raised to
      the earlier title of _Pritzwitz’s_ book: Die Kunst reich zu
      werden,—the art of growing rich. On the other hand, _Dunoyer_,
      Liberté du Travail (1845), L. IX, ch. I, goes too far altogether:
      “not only in what manner a nation grows rich, but according to what
      laws it best succeeds, in the execution of all its functions.” And
      so _Storch_, Handbuch, translated into German by _Rau_, I, 9. Many
      modern writers define Political Economy simply as the theory of
      society; for instance, _Scialoja_, Principj. dell’Economia sociale,
      1840. _Cibrario_, E. polit. del medio Evo, III, 1842.

  142 For the many and various definitions of the police power, see _von
      Berg_, Handbuch des Polezeirechts, I, 1-12; _Butte_, Versuch der
      Begründung eines System der Polezei (1807), 6 ff.; _Rosshirt_, Ueber
      den Begriff der Staatspolizoi (1817), 34 ff. One of the principal
      difficulties is, that the practical domain of the police power is,
      in consequence of the successive grades of civilization through
      which a people passes, subject to greater modifications than any
      other state power. We call attention especially to the expressions
      “without mediation, to prevent,” and “external order,” in our
      definition. The church, the school, the administration of justice
      etc., act mediately towards the prevention of such disturbances; and
      there are many other institutions which offer immediate protection
      to order of a higher and more intellectual nature.

  143 See the great number of earlier definitions collected in _R. von
      Mohl_, Gesch. und Literatur der Staatswissenschaften III, pp. 637
      ff. There are two principal groups of them, the one of which
      considers it as the science of things of political note, the other
      as the science of actual or past conditions.

  144 See _Dufau_, Traité de Statistique, 1840; _Moreau de Jonnès_,
      Elements de Statistique, 1847; _Knies_, Die Statistik als
      selbstständige Wissenschaft, 1850. _B. Hildebrand_, in his
      Jahrbüchern, 1866, I etc., but especially _Quetelet’s_ works. For
      the contrary view, see _Fallati_, Einleitung in die Wissenschaft der
      Statistik der St., 1843; _Jonak_, Theorie der Statistik, 1856, and
      _Heeren_, in the Gött. Gelehrten Anzeigen, 1806, No. 84, 1807, 1302.

  145 So thinks _v. Rümelin_ (Tübinger Zeitschr., 1863, 653 ff.); and he
      recommends in place of statistics an independent branch of learning
      bordering on history and geography, to be called demography. His
      statistics is a science auxiliary to all the experimental sciences
      of man, just as criticism and hermeneutics are a methodological
      science auxiliary to many sciences, otherwise different. It would be
      difficult to justify the use of the name statistics for such a
      science, as such a science corresponds to neither of the two
      meanings of the word _status_ (state—condition).

  146 The ancients understood by the term καμάρα _camera_, covered places
      such especially as were vaulted, also vaults of the most varied
      kind. Compare _Herod_, I, 199; _Diod._, II, 9; _Strabo_, XI, 495;
      _Arrian_, Exp. _Alex._, VII, 5, 55; _Dio Cass_. XXXVI, 32;
      _Sallust_, B. C., 55; _Cicero_, ad Q. fratrem III, 1; _Plin._, H. N.
      XXX, 27; _Seneca_, Epist., 86; _Tacit._ Hist. III, 47; _Sueton_,
      Nero, 34. During the middle ages, the meaning treasure-chamber
      (_Schatzkammer_) became predominant: _camera est locus, in quem
      thesaurus recoilligitur, vel conclave, in quo pecunia reservatur_
      (_Ocham_, Cap. Quid sit Scaccarium). It gradually became synonymous
      with finance,—from the time of Charlemagne, or at least since Louis
      II. (Charter of 874). See _Ducange_, Glossarium, v. Camera, and
      _Muratori_ Antiquitt. Ital., I, 932 ff.

  147 “A husbandman must plow and manure his land if he would reap a
      harvest from it. He must fatten his cattle if he would slaughter
      them; and furnish his cows with good fodder if he would have them
      give good milk. In like manner, a prince should begin by assuring
      his subjects healthy and abundant food, if he would take anything
      from them.” _von Schröder_, Fürstl. Schatz-und Rentkammer (1686),
      preface, § 11. _Von Horneck_ before him, Oesterreich über alles wann
      es nur will, p. 220, ed. of 1707, had expressed the idea that the
      watchful solicitude for the public economy of the country was no
      _parergon_, no _appendix_, to the council (_Kammer_), but its real
      basis, and that it embraced many subjects which had nothing in
      common with the cameralia (“_Cameralien_”).

_  148 Morhof_, Polyhistor (1688), III. _Thomasius_, 1728, Cautelæ circa
      præcognita Jurisprudentiæ (1710), ch. 17. (Cautelæ circa studium
      œconomicum.) Also, in his lectures on _Seckendorff’s_ “Teutschen
      Fürstenstaat.” Compare _Roscher_, Gesch. der N. Œk. in Deutschland,
      328 ff.

  149 While _Dithmar_ (1731) distinguishes economy-police and cameralistic
      sciences and restricts the latter to finance and taxation; _Darjes_
      (1756) comprises under the name of cameralistic science, economy
      (municipal and rural), and police, as well as cameralistic subjects
      in the strict sense of the term, that is, the public, domain and
      regal rights. While _Nau_ (1791), in his “Ersten Linien der C.,”
      treats only of the branches of private economy, _Schmalz_, (1797)
      treats also of national or public economy, and _Rössig_ (1792)
      divides cameralistic science into the doctrine of the public demesne
      and regal rights (cameralistic science in the narrower sense), and
      the doctrine of taxation and police.

  150 Thus, for instance, all that concerns domestic economy, book-keeping
      and private financial administration.

_  151 John Stuart Mill_, Principles of Political Economy (1848), I, p.
      25, draws a distinction between the physical conditions which
      influence the economic situation of a people, and the moral and
      psychological conditions; which last have their origin in social
      institutions or in the fundamental principles of human nature. Only
      the latter belong to the domain of Political Economy. According to
      _J. B. Say_, Traité, Introd., this science embraces at once
      agriculture, manufactures and commerce, but only in their relation
      to the increase or diminution of wealth, and does not concern itself
      with the means employed to reach the desired end. As a rule, says
      _Arndt_ (Naturgemässe Volkswirthschaft, 1851, p. 16), it takes into
      consideration not so much things themselves as their exchange value.
      _Lotz_ (Handbuch, I, p. 6 seq.), in like manner, defines Political
      Economy—the science of the one activity which constitutes the basis
      of all industries etc. _F. G. Schulze_ (Ueber volkswirthschaftliche
      Begründung der Gewerbswissenschaften, 1826), characterizes Political
      Economy as the science of the fundamental conditions of the
      well-being of a people, in so far as they lie in human nature.

      When _Adam Smith_ (book IV, c. II) says that the government in
      respect to matters of economy is inferior to the first best person
      engaged in industrial pursuits, he is right only from a technic
      point of view. And when _Stewart_, on the other hand, vindicates for
      the state the office of a pater-familias (book II, ch. 13), he
      evidently means only in national economical matters.

  152 See also _Rau_ (Ueber die Cameralwissenschaft, Entwickelung ihres
      Wesens und ihrer Theile, 1825); _Baumstark_ (Cameralistische
      Enclycopädie, 1835).

_  153 Xenoph._ Œconom. I, 8 ff. Cyrop. VIII; 2, 23. He saw with equal
      clearness the moral light and shade of wealth. (Œcon. XI. 9. Conviv.
      4. Memor. I, 6. Cyrop. VIII, 3, 35 ff. Hiero 4.)

_  154 Thomas Aquinas_ values earthly goods according to the end they are
      made to serve; when used for a good purpose, they have a mediately
      true value. Hence it was an error of the stoics to despise them
      under all circumstances. (Summa Theol. II, 2. Qu., 50, 3. 58, 2. 59,
      3. 125, 4.)

_  155 Whateley_ considers the savage much beneath the materialist,
      instead of superior to him. The latter possesses, although he
      frequently abuses it, the faculty of self-control and forethought,
      which is entirely wanting in the former. (Lectures, No. 6.)
      _Dunoyer_, De la Liberté du Traväil, liv. IV, ch. I, 8, an apology
      for the moral wholesomeness of civilization, since promotive of
      military prowess, favorable to the development of the sciences, and
      even poetical. _Baudrillart_, Manual d’Œkonomie politique, 1857, 24.
      See _Fallati_, Ueber die sogennannte materiellen Tendenz der
      Gegenwart, 1842.

  156 See the inscription on the tomb of Sardanapalus: ταῦτ᾽ ἔχω, ὄσσ᾽
      ἔφαγον καὶ ἐφύβρισα καί μετ᾽ ἔδωτος τέδπν ἔπαθον. (Strabo, XIV,
      672.) _Isaiah_, 122, 13, 56, 12, and the book of wisdom (2)
      characterizes the view of the fallen Jewish people. In Greece, the
      Cynic and Epicurean schools were only different phases of the same
      degeneration. “Thirst, for money, and nothing else, will be the ruin
      of Sparta!” (_Cicero_, De Offic, II, 22, 77.) See the magnificent
      description by Demosthenes, in which he shows the over-estimation of
      material things to be the principal cause of the decline of Athens,
      and in which he lays great stress on the fact, that Athens, on its
      decay, had a larger population, more wealth, ships, and evidences of
      external power, than in its golden age. (Phil., III, 120 seq.) Also
      Phil., IV, 144, cautions us against the Manchester criterion of
      national prosperity. See _Plato_, De Rep., VIII. In Rome, the
      principle _ommia venalia esse_ was a chief element in the total
      decline and fall of the republic. (_Sallust_, Cat., 10 ff., Jug., 8
      ff.) In an age when people think they can do everything with money,
      the ruin of all things is the last end of mercantile, financial and
      political speculation. (_Condillac_, Le Commerce et le Gouverment,
      1776, II, 18.)

  157 Under Pericles, the Athenian treasury of the state contained at most
      9,700 talents. (_Thucyd._ II, 13.) On the other hand, Alexander the
      Great had a treasure of 180,000 talents accumulated in the citadel
      of Ecbatana. (_Strabo_, XV, 731); Ptolomy II. left after him 740,000
      talents. (_Appian._ præf. 10, _Droysen_, Geschichte des Hellenismus
      II, 44 ff.) In Nero’s time there was many a freedman’s daughter who
      owned a looking glass worth a greater sum than the senate had
      appropriated as a dowry to the daughter of the great Scipio.
      (_Seneca_, Quæst. Natur. I, 17. Compare Cons, ad Helviam, 12.)
      _McCulloch_ says that an intelligent despotism can enrich a nation
      as well as freedom. (In his Discourse on the Rise, etc. of Polit.
      Econ., 1825, 77 seq.)

_  158 Bacon_ (Sermones, 56) says that youthful states distinguish
      themselves specially by their warlike instincts; mature states in
      literature; old and decaying ones in industry and commerce.
      _Davenant_ very happily remarks, that the development of commerce
      among a people has an ambiguous value. It, indeed, increases wealth,
      but, at the same time, it may introduce luxury, covetousness and
      fraud, destroy virtue, do away with simplicity of manners and
      customs, and then it inevitably ends in internal or external
      slavery. (Works II, 275.) The simplicity of the patriarchal state,
      however, cannot last always, if for no other reason, because of the
      emulation of foreign nations. (1, 348, ff.) The impoverishment of
      even the wealthiest nation is certainly inevitable when its morality
      declines. It is especially true, that the public economy of a people
      can be prosperous only where political liberty obtains, and this,
      independent of the fact that wealth without freedom has no value.
      (II, 336 ff., 380, ff., 285.) According to _Ferguson_, private
      wealth, honestly acquired, used rightly and with moderation, managed
      with a sense of independence, may be to those who possess it, an
      element of self-confidence and of liberty, provided they loosen
      their purse strings not through vanity or for their personal
      gratification, but for commendable party purposes. But in periods of
      decay, even a greater amount of wealth is very far from producing
      these results. (History of Civil Society, VI, 5.) _Whately_, on the
      contrary, maintains that only personal wealth—never national
      wealth—has a disastrous influence on morals. Lectures, No. 2.

  159 “The method of a science is of much greater importance than any
      individual discovery, however wonderful.” (_Cuvier._)

  160 Thus, for instance, _G. Biel_ (ob. 1495), the “last of the
      schoolmen,” gives us his doctrine of Political Economy, in a work on
      Dogmatic Theology, in the chapter on Penance, his starting point
      being the inquiry, how the economic damage caused by the sinner may
      be repaired. _Roscher_, Geschichte der Nationalökonomik in
      Deutchland, 1074, I, 23. The Melittotheologia, Arachnotheologia of
      later times! A recent attempt in this direction has been made by
      _Ad. Müller_, Nothwendigkeit einer theologischen Grundage der
      gesammten Staatswissenschaften und der Staatswirthschaft
      insbesondere (1819), i.e., “necessity of a theological basis for all
      political science, and especially for Political Economy.” He divides
      political science into two parts: the science of law, and the
      science of wisdom, embracing under the latter denomination,
      politics, Political Economy, etc. Law emanates from God, as supreme
      judge; the science of wisdom from God, as our Supreme Father.

  161 Abstraction is indulged in on a large scale, when a number of
      elements which are always found combined in life, are here separated
      and examined apart. It is precisely thus that anatomy proceeds,
      dissecting each member of the human frame, separating the bones,
      ligaments and muscles from one another, thus becoming the necessary
      preparatory school to physiology.

  162 Thus, for instance, _Canard_, Principes d’Economie politique (1801).
      Also _Kröncke_, in several of his works, and _Count Buquoy_, in his
      Theorie der Nationalwirthschaft (1816), p. 333 ff.; _Lang_,
      Grundlinien einer politischen Arithmetik, Charkow, 1811, and more
      especially _v. Thünen_, Der isolirte Staat, vol. I (1842), vol. II,
      1850. See my criticism of his method in _Birnbaum’s_ Georgika, 1869,
      77 ff. _Voa Thünen’s_ first volume is an essay towards a geometrical
      exposition of the science. See also _Rau_, Lehrbuch I, § 154,
      appendix; _von Mangoldt_, Grundriss der Volkswirthschaftslehre
      (1862); _Cazaux_, Elements d’Economie privée et Principes
      mathématiques de la Théorie des Richesses (1838); _F. Fuoco_, Saggi
      economici (1827) II, 61 ff. _Walras_, Eléments d’Econ. politique
      pure (1874). _Jevons_ has recently endeavored to give Political
      Economy a mathematical basis by reducing the objects of which it
      treats to the calculable feelings of pleasure (+) and pain (-). The
      duration of a feeling is treated as an abscissa, its intensity as
      the ordinate of a curve, and its quantity as the area. Future
      feelings are reduced to present ones, by allowing for their
      distance, and the uncertainty of their occurrence. All this,
      however, is rather curious than scientifically useful.

_  163 Herbart_, Ueber die Möglichkeit und Nothwendigkeit, Mathematik auf
      Psychologie anzuwenden; Kleinere Schriften, II, 417.

  164 How detrimental it is to ignore the psychological nature of
      Political Economy is evident from the errors of _Karl Marx_, who
      personifies things in a manner almost mythological. Thus, according
      to him, modesty should be ascribed to a coat which exchanges for a
      piece of linen, and purpose to the linen, etc. (Das Kapital, 1867,
      I, 19, 22, seq.) The greatest fault of this intelligent but not very
      acute man, his inability to reduce complicated phenomena to their
      constituent elements, is greatly increased by his way of thus
      looking at things.

  165 Compare _J. B. Say_, Traité I, introd. Thus, it would be certainly
      possible to describe every individual’s physiognomy by means of a
      very complicated mathematical formula, and yet there is no one who
      would not prefer the usual mode of taking pictures. The simple
      motions of the heavenly bodies, on the contrary, are always treated
      mathematically. (_Lotze_, Allgemeine Physiologie, 322 ff.)

  166 When _Fawcett_ says that all “principles of Political Economy are
      describing tendencies instead of actual results” (Manual of
      Political Economy, 1863, p. 90), our method, the historical, would
      give also the theory of the latter.

  167 This was lost sight of by most writers during the second half of the
      eighteenth century, because they looked upon that equality as the
      really oldest condition, and its restoration the ideal to be striven
      for. How much of this still clings to the present free-trade school;
      see in _Roscher_, Gesch. der N. Œk. in Deutschland, 10, 17 ff.

  168 Thus, for instance, _Ricardo_ examines, almost exclusively, the
      actual condition of things, while the socialists confine themselves,
      still more exclusively, to the investigation of how things should
      be. It has been very usual in Germany since _Rau_ wrote, to draw a
      distinction between theoretical and practical Political Economy.
      There are many who think that a good manual of practical Political
      Economy, dropping the introduction, demonstrations etc., would be
      also a good code of law, of universal application. _Mercier de la
      Rivière_ has said that he wished to propose an organization which
      should be necessarily productive of all the happiness which can be
      enjoyed on earth. (Ordre essentiel et naturel (1767), Disc. prélim.)
      Compare, also, _Sismondi_, N. Principes, I, ch. 2.

  169 The word method is used in an essentially different sense, when the
      inquiry is, whether the inductive or deductive method is followed in
      Political Economy. _J. S. Mill_ calls Political Economy, and,
      indeed, all “sociology,” a concrete deductive science, whose _a
      priori_ conclusions, based on the laws of human nature, must be
      tested by experience, either by comparing them with the concrete
      phenomena themselves, or with their emperical laws. It, in this,
      resembles astronomy and physics. (System of Logic VI, ch. 9. Essays
      on some unsettled questions of Political E., No. 5.) According to
      this, an economic fact can be said to have received a scientific
      explanation only when its deductive and inductive explanations have
      met and agreed. “Only those principles which, after they have been
      obtained by the one, are confirmed by the other method, can be said
      to have a scientific basis.” (_von Mangoldt_, Grundriss, 8.) While I
      agree to this view, it seems necessary to me to mention points
      wherein caution is necessary: A. Even the deductive explanation of
      economic facts is based on observation, namely, on the
      self-observation of the person accounting for them, who, consciously
      or unconsciously, must always inquire: If I had experienced or
      accomplished the same fact, what should I have thought, willed and
      felt? The man who cannot translate himself into the souls of others,
      will give a wrong explanation of most economic facts. In the
      question, for instance, of the determination of the price of an
      article, the person who can look into the mind of one of the
      contracting parties only, will give a one-sided explanation of the
      facts. B. Moreover, every explanation, that is, satisfactory
      connection of the fact seeking explanation with other facts which
      are already clear, can be only provisional. The wider our horizon
      grows, the deeper should our solution of all questions become. A
      hundred years hence, should science increase in the mean time, the
      solutions which are satisfactory to us will be looked down upon by
      our posterity, as the speculations of our fathers antecedent to Adam
      Smith’s time are looked down upon by us.

_  170 Tanquam e vinculis sermocinantur_, says _Bacon_ (De Dignit. et
      Augm. Scient., III, 3), of those who have written in a not
      non-practical way on the laws. _Hugo_, also (Naturrecht, 1819, p.
      9), calls attention to the resemblance of the so-called laws of
      nature, to the positive law in force at the time. As to political
      idealism, see _Roscher_: De historicæ doctrinæ apud sophistas
      majores vestigiis (Gött. 1838, 26 ff.). The only exceptions to this
      rule are the eclectics, who form their own system from the blossoms
      of all foreign ones, a system, indeed, without root, and which
      therefore must soon wither.

  171 In this place, naturally, such an assertion can be made only as a
      programme to be carried out, the proof whereof is to be sought in
      the rest of the work. By “the people,” we do not mean the governed,
      to the exclusion of the governing classes, but both classes
      together. We attach to the expression the most extensive meaning
      possible. We do not limit it to the present generation, but intend
      it to cover all the generations from the beginning of a people’s
      history to its end.

  172 The custom, which has become general, of calling all democratic
      movements, and them only, revolutions (thus _Stahl_: Was ist
      Revolution? 1852, and many other writers of an entirely opposite
      tendency, especially in France), is not warranted. It is true that
      democratic (and imperial) revolutions are more frequent than others
      in our times, just as aristocratic revolutions were in the middle
      ages, and monarchical at the beginning of modern history. The
      essence of revolution, however, is in the operation of change
      contrary to positive law, acknowledged as such by the consciousness
      of the people.

  173 Compare, especially, the first pages of _Sir J. Stewart_, Principles
      of Polit. Economy.

  174 See _Colton_, Public Economy of the United States, p. 28, who,
      indeed, unwarrantedly, refers to the whole of Political Economy,
      what properly belongs to its precepts.

_  175 Je n’impose rien, je ne propose même rien: j’expose._ (_Ch.
      Dunoyer_). _Cherbuliez_, Précis de la Science économique, 1862, p. 7
      ff., has exaggerated this idea in a strangely non-practical manner.
      That the historical method does not differ essentially from the
      statistical as recently recommended, see _Roscher_, Gesch. der Nat.
      Œk., 1035 seq.

_  176 Storch_, Handbuch, II, 222.

_  177 Ad. Müller_, an essentially mediæval mind, is guilty of this same
      braggadocio in an opposite direction, when he calls the “present
      with its political disorders simply an intermediate state,—the
      transmission of the natural or unconscious wisdom of the fathers,
      through the inquisitiveness of their children to the rational
      acknowledgment of that wisdom by their grandsons.” (Theorie des
      Geldes, 1816, pref.)

  178 Thus, for instance, it can not be said that a model university is
      better than a model public school; and yet the former is higher,
      because the age to which it is adapted is doubtless intellectually
      higher.

_  179 Knies_ (Polit. Œk., 256 seq.) remarks, that it would be a great
      mistake, and it is the mistake of the majority, to consider what has
      been achieved or striven for in the present, as the absolute _non
      plus ultra_, and thus to look upon all future generations as called
      upon to play the parts of apes and ruminators; a remark worthy to be
      taken to heart.

  180 I have, myself, no doubt, that up to the present time, mankind, as a
      whole, has, from the beginning of historical knowledge, always
      advanced. In individual cases, their movement has been interrupted
      by so many pauses, and even by so many occasional retrogressions,
      that great care must be taken not to infer superior excellence from
      mere subsequency.

_  181 Buckle_ writes of people whose knowledge is about limited to that
      which they see going on under their eyes, and who are called
      practical, only because of their ignorance; and he adds that,
      although they assume to despise theory, they are in fact slaves of
      theory, of others’ theories.

  182 Compare this whole chapter with _Roscher_, Leben Werk und Zeitalter
      des Thukydides, 1842, pp. 25, 239-275; _Roscher_, Grundries zu
      Vorlesungen über die Staatswirthschaft nach geschichtlicher Methode,
      1843, preface; _Roscher_ Geschichte der Nat. Œk. in Deutchland
      (1874), 882 f., 1017 seq., and D. Vierteljahrsschrift, ff. See also
      _J. Kautz’s_ learned and accurate Theorie und Geschichte der N.
      Œkonomik, vol. I, 1858, II, 1860. I find no real contradiction
      between the views here expressed and those of _Kautz_, when he (I,
      pp. 313 ff.) introduces history and ethico-practical reason with
      their ideals as sources of Political Economy, to the end that the
      science may be something more than simply a picture, namely, a model
      of economic life. Apart from the fact that it is only the
      ethico-practical reason that can understand history at all, the
      ideals of a period constitute one of the most important elements of
      its history. The aspirations of an age find in them their best
      expression. The historical political, economist as such, is
      certainly not disinclined to form plans of reform, nor can it be
      said that he is not adapted to the performance of such a task. Only,
      he will scarcely recommend his reforms as absolutely better than
      what they are intended to supplant. He will confine himself to
      showing that there is a want which may, probably, be best satisfied
      by what he proposes. See _Sartorius_, Einladungsblätter zu
      Vorlesungen über die Politik, 1793.

  183 “There is a book which youth may use to grow old, and the old to
      remain young—History.” (_K. S. Zaccharia_).

  184 Especially when natural science begins to be “a practical science.”
      (_L. Stein_).

  185 The difference between the broader and narrower sense of production,
      corresponds essentially with that of gross and net income (§ 145).
      Compare also §§ 206, 211 ff.

_  186 Von Mangoldt_ distinguishes the coming into existence of free
      values of the production undertaken for an economic purpose.
      (Grundriss, 9.)

_  187 Gioja_, Nuovo Prospetto delle Scienze economiche (1815), I, 49 ff.
      Besides positive production, there is a latent production, which
      prevents the decay of goods. It is not possible to make as exact an
      estimate of the latter as of the former; and much more depends in
      the latter case than in the former on continuity and proper
      extension. Hence, latent production is especially a state concern.
      (_Knies_, Telegraph als Verkehrsmittel, 1857, 232.)

  188 See _Schäffle_, in the Tübinger Univ. Programm, September 27, 1862,
      on the disastrous effect on the community of idleness. The leading
      of a happy life the Greeks called very appropriately, εὐπράττειν
      (_Garve_).

  189 We use the expression “external nature” through the whole of this
      work in contradistinction not only to the soul, but also to man’s
      body, designating his entire physico-intellectual activity by the
      term “labor-force” (_Arbeits kraft_).

  190 By the expression “natural forces,” we designate the economically
      useful changes of matter, changes of place as well as of
      composition, which are made without man’s cooperation; for instance,
      the gigantic machinery which supplies the greater part of mankind
      with water to drink, for domestic and other purposes—the evaporation
      of the sea, the formation of clouds, rain, springs, rivers etc. See
      _Bastiat_, Harmonies, 277. Thus the sun’s rays are indirectly the
      cause, not only of vegetation, but also of all wind and steam
      forces.

  191 Spite of this “freedom,” it may well happen that these gifts of
      nature can be utilized, in many cases, only on condition of some
      expenditure. The photographer can compel the sunlight to work for
      him only by means of a camera obscura, and the smithy the
      atmosphere, only by means of a bellows. But neither will ever
      successfully make an item, in their accounts with their customers,
      of the services of the sun or air.

  192 The most important ocean currents may be explained by two causes:
      the flowing of the water from the polar seas to the equator (polar
      current), and the revolution of the earth about its axis
      (equinoctial current); besides which, there are the reflex currents
      produced by the horizontal form of the coast-lands. Thanks to these
      natural ocean highways, England is nearer to almost all the
      important mercantile coasts of the world by 300 geographical miles
      than the Eastern States of the American Union. The only exception is
      the Atlantic coast of America north of the Equator. North Americans
      to pass the line, or to double one of the two great capes, are
      obliged first to traverse the ocean as far as the Azores. On the
      other hand, the western coast of South America is very widely
      separated from Mexico, for instance, by its ocean currents. The
      colonization of America by Europe, instead of by China, is a
      consequence of the direction of ocean currents, as is also the fact
      that America has now the fairest prospect of influencing the
      civilization of China and Japan. What an influence the warm gulf
      stream has on the mild climate of north-western Europe!

  193 While the Mississippi has no ebb or flow whatever, the influence of
      the ocean is felt in the Hudson, which is 60 geographical miles
      long, a distance of 29 miles from its mouth.

  194 Thus, _A. Young_, Travels in France I, 293 ff., has defined, with
      approximate accuracy, the limits within which the vine, maize and
      the olive grow. And so _von Cancrin_, Dorpater Jahrbuch IV, 1,
      distinguishes the ice zone, the reindeer-moss (a lichen on which the
      reindeer live in winter) zone, the forest zone, the zone within the
      limits of which cattle are raised; that in which the culture of rye
      begins, that in which it becomes permanent; the wheat, fruit-tree,
      vine, maize, olive, sugar cane and silk-worm zones. The United
      States are divided into cattle-raising, wheat-raising,
      cotton-raising, rice-raising and sugar-raising zones. Even in
      Europe, beyond the 60th parallel of north latitude, wheat can
      scarcely be cultivated; the polar limits of rye raising extend, at
      most, six or seven degrees farther. Towards the north, barley
      extends sometimes as far as the 70th degree. Here agriculture almost
      ceases, and the inhabitants are compelled to confine themselves to
      animal substances for food. On the other hand, these three cereals
      are not adapted to a tropical climate, while the bread-fruit tree,
      for instance, does not thrive at more than 22 degrees from the
      Equator, nor the banana at more than 35. Compare _Grisebach_, Die
      Vegetation der Erde nach ihrer klimatischen Anordnung. II, 1871.

  195 Thus rye and wheat thrive in many parts of Siberia (Iakutzk) at an
      annual temperature of - 7.50, while in Iceland no cereals ripen at
      an annual temperature of + 4°. But in the former place the summer
      heat is + 16.2°; the winter cold, - 39.2°; in Iceland, + 12° and -
      1.6°. In England, the myrtle, laurel, camelia and fuchsia stand the
      winter well; while the vine no where ripens. On the other hand,
      Astrakan and Hungary are vine growing countries, although the former
      is as cold in winter as North Cape, and although the cold is more
      intense in Hungary than in the Faroe Islands, where neither the oak
      nor the beech grow any longer. No good wine is produced on the
      western coast of France, north of 47° 20’ north latitude; in
      Champagne, north of 49°, or in the Rheingau, north of 51°. In
      Norway, the average heat is greater on the coast than in the heart
      of the country where, however, grain ripens, while it does not on
      the coast; for the mildness of the winter, no matter how great, can
      make no compensation for the want of heat. On the other hand, the
      cattle on the coast can remain much longer out of doors, and the sea
      seldom freezes in such a way as to interfere with the fisheries.
      _Blom_, Norwegen I, 39. _Boussingnault_ (Economie rurale considérée
      dans ses Rapports avec la Chimie, II) has made some interesting
      attempts to calculate by a mathematical process the amount of heat
      necessary to vegetable, during the period of vegetation. Thus, for
      instance, wheat requires about 12° (Réaumur) of heat during 140
      days; that is, nearly 140 x 12° = 1680° Réaumur. In Venezuela, the
      sugar cane requires a longer time to grow in a higher and therefore
      cooler position than in a lower and warmer, and the length of time
      required is in proportion to the height.

  196 Hence it is that the isothermal lines are not parallel with the
      equator or with one another. The greater number of these have two
      northern and two southern summits; the former on the western coasts
      of Europe and America, and the latter in eastern North America, and
      in the interior of Asia.

  197 The quantity of rain which falls every year is, at St. Petersburg
      and Pesth, from 16 to 17 inches; at Berlin 19, Mannheim 21, Tübingen
      26: in the interior of France 16-24; on the French coast 25, on the
      eastern coast of England 24, on the western coast 35, in Milan 36,
      Genoa 44, on the coast of most tropical lands 70-120. On the
      political-economical influences of most climates, see _Gobbi_, Ueber
      die Abhängikeit der Populationskräfte von den einfachen
      Grundfstoffen, 1842.

  198 The snow limit at Mageröe in Norway is 2,200, in Iceland 2,900, in
      the northern Ural 4,500, in the Alps 8,200, in the Caucasus 10,400,
      and Quito 14,850 feet high. Hence it is that mountainous countries
      which produce nothing in the north, make magnificent vineyards in
      warmer countries.

  199 In central Germany, even a second crop can be produced after the
      corn harvest. In Arabia, the same seed produces three harvests,
      because the grain which falls at the time of harvesting to the
      ground, germinates immediately and suffices for new seed.
      (_Niebuhr_, Beschreibung, 154.)

  200 Thus in the northern states of the American union, wheat yields a
      return of only from four to five times the amount sown; in France,
      5-6 times (_Lavoisier_): in Chili, 12 times; in northern Mexico, 17
      times; in Peru, 18 and 20 times; in southern Mexico, 25 and even 35
      times; in Germany, maize seed yields at best one hundred fold, while
      in the torrid zone there is a return of from three hundred to four
      hundred fold, generally.

  201 Andalusian corn produces in the mill only one-half as much
      bran-waste as Baltic wheat produces. _Bourgoing_, Tableau de
      l’Espagne, II, 155. Baltic wheat contains 6-7 per cent, of azote,
      and Algerian, 20-25 Per cent. (_Kabsch_, Pflanzenleben der Erde,
      1865.)

  202 In Europe the blossoming season is retarded four days for each
      degree of northern latitude. (_Schübler_.) As we advance towards the
      north, the difference becomes less noticeable, but more so as we go
      towards the south. In mountainous countries a similar difference is
      observable, produced by a like climatic influence. It is from about
      10 to 12 days, for a height of from 500 to 600 feet. (_Wolff_,
      Naturgesetzliche Grundlagen des Ackerbaues I, p. 332 ff.) In the
      cantons, in which the Swiss confederation had its origin, the
      pasturage of the Alps lasts generally thirteen weeks, but in the
      higher Alps it lasts only from six to seven weeks. (_Businger_, C.
      Unterwalden., p. 52.)

  203 In central Italy, winter wheat may be sown in October, November or
      December; summer wheat, in February or March. (_Sismondi_, Tableau
      de l’Agriculture Toscane, p. 35.) In Judæa, it was possible to
      harvest figs ten months in the year. (_Joseph_, Bell. Jud., Ill, p.
      10.) On the other hand, there is Jemtland, where the peasant in many
      places surrounds the northern portion of his cornfield with fagots,
      and lights them in August when the north wind blows, to protect his
      land from the frost; and where the expression “green years” is used
      to designate those in which the harvest has to be reaped before it
      is ripe. (_Forsell_, Statistik von Schweden, 24.) In the valuation
      made of the lands of the kingdom of Saxony, for assessment purposes,
      the cost of supporting a yoke of oxen in the lowest country is
      estimated at only three-fourths of what it is in the highest
      localities, because in the former, 200 work days can be calculated
      upon in the year, in the latter only 159. In central Russia, the
      greater part of the labor of agriculture, sowing and harvesting, has
      to be finished within the space of four months. In central Germany,
      they are spread over seven months. Other things being equal, seven
      horses and ploughmen are needed in Russia where only four are called
      for in central Germany, (_von Haxthausen_, Studien I, 174.) On the
      impediments put in the way of agriculture by the climate of eastern
      Prussia, see _Meitzen_, Boden und landwirthsch. Verhältnisse des
      preussichen Staats, 1868, I, Abschn., 6.

  204 “In both hemispheres, the zone in which the temperature decreases
      most rapidly lies between the 40th and 50th degrees of north
      latitude. This circumstance must have a happy influence on the
      culture and industry of the nation inhabiting the neighborhood of
      that zone. Here is the point where the regions of the vine touch
      upon those of the olive. Nowhere in the world, do the products of
      the vegetable kingdom, and the most varied wonders of agriculture,
      follow with such rapidity on one another. The great variety of
      products enlivens the commerce and increases the industrial activity
      of agricultural nations.” (_Humboldt_.) It is true, however, that
      tropical countries possess, also, in their mountainous parts, the
      _tierra fria_, _templada_ and _caliente_, superimposed the one on
      the other.

  205 The aggregate coal supply of Great Britain (1869) was 2,180 millions
      cwt.; of Belgium (1862), 207 millions; of France (1868) 256
      millions; of Prussia (1870), 600 millions, of Austria (1870),
      including brown lignite coal, 158 millions; of Russia (1868), only a
      little over 9 millions. The great English coal field, in the
      counties of Durham and Northumberland, embraces 732 English square
      miles; that of South Wales, 1,200, with a depth of 95 feet, so that
      the geographical square mile contains here 679 millions of tons,
      each of twenty cwt. To obtain the same quantity of combustible
      material as was furnished to Prussia, in 1865, by its coal, it would
      be necessary to use up 6,331 square miles of forest, (_von Dèchen_,
      in _Engel’s_ Zeitschrift, 1867, 258.) The supply of coal is, of
      course, exhaustible while, for instance, turf-fields replace
      themselves by slow degrees. Compare _Griesbach_, über die Bildung
      des Torfs, in the Göttinger Studien, 1845, vol. I. The importance of
      the coal-fields of the United States, which are twenty-two times as
      large as those of Great Britain, in the distant future, cannot be
      over-estimated.

  206 I need only call attention to the earth-fire (_Erdbrand_) for the
      purpose of forcing the growth of garden plants in the neighborhood
      of Zwickau, which is said to have existed since 1505.

  207 Thus, in Watt’s steam engines of the larger kind, an hourly
      consumption of ten pounds of coal is needed to produce a force
      equivalent to that of one horse, while in the smallest machines of
      only one horse power, twenty-two pounds are needed. See _Prechtl_,
      Technolo. Encyklopädie, III, 669.

  208 It is easy to see that it is the most important substances needed in
      industry which are mentioned in this section. Many political
      economists have considered the principal difference between
      agriculture and the industries and economies of towns to lie in the
      contrast here referred to. Thus, _A. Sena_, Sulle Cause che possono
      far abbondare li Regni d’oro e d’argento, dove non sono miniere,
      1613, I, 3. See the description of the difference between land and
      machines in _Malthus_, Principles, III, 5; _Senior_, Outlines, 86.
      But it is nothing more than a difference of gradation. Even in the
      most active of businesses there is a limit which the accumulation of
      means of production cannot pass without a relative diminution of the
      income. This boundary is imposed by the limited nature of those
      organic beings which must contribute to production either actively
      or passively. Thus, for instance, a manufacturing establishment or
      commercial business can be enlarged with advantage only so long as
      it is still possible for one superintendent to conduct it. And so,
      when cattle are furnished with very abundant and substantial food, a
      pound of meat costs the producer a much higher price than when they
      are more moderately supplied: sometimes in the ratio of 1.95:0.98.
      _Boussingault_, Economie rurale, II. Where there is absolute
      over-feeding, the producer must suffer loss. But, even inorganic
      nature imposes its own limits here; as, for instance, when ships,
      machines etc., on account of the insufficient strength of the
      materials of which they are made, cannot be constructed beyond a
      certain size. But all these limits are much narrower than those
      imposed by the quality of immovability.

_  209 Senior_, Outlines, 26, 81 ff. See _Stewart_, Principles, II, ch.
      11; _Ortes_, E. N., I, 18, II, 18 ff. This most important principle
      in Political Economy is thus illustrated by _John Stuart Mill_,
      Principles, book I, ch. 12. “The limitation to production from the
      properties of the soil is not like the obstacle opposed by a wall,
      which stands immovable in one particular spot, and offers no
      hindrance to motion short of stopping it entirely. We may rather
      compare it to a highly elastic and extendible band, which is hardly
      ever so violently stretched, that it could not possibly be stretched
      any more, yet the pressure of which is felt long before the final
      limit is reached, and felt more severely the nearer that limit is
      approached.” This is, if possible, more obvious in building than in
      agriculture, both as to the construction of new stories and the
      excavation of deeper cellars.

_  210 Ad. Mayer_, Das Düngerkapital und der Raubbau (Heidelberg, 1869),
      sees the only conditions of production which man cannot increase at
      will exclusively in the sun’s rays, the employment of which also
      depends on the quantity of land. Thus would he explain _Senior’s_
      law.

  211 See the tables of increase in _Cotta_, Anweisung zum Waldbau, p.
      228. _Count Buquoy_, Theorie der N. Wirthschaft, p. 54, ridicules
      the absurd procedure of a great many farmers, as if by forcing the
      ploughshare deeper into the soil, they could compel it to produce a
      double return, and asks: if one should dig a square foot of land to
      the center of the earth and manure it, who would take it off his
      hands? As to the effect of manure, _Kuhlmann’s_ investigations have
      shown that 300 kilogrammes of guano produced in three years an
      increase per _hectare_ in the yield, of 2,469 kilogrammes of hay;
      while 600 kilogrammes produced an increase of only 2,870
      kilogrammes. _Schübler_, found that where salt had been used for
      manuring purposes, 40 kilogrammes produced a maximum of fertility
      from which point forward every increase in the amount of salt was
      attended by diminished returns, and finally led to complete
      barrenness. See _Wolff_, Naturgesetzliche Grundlagen, I, 408, 412,
      502. Constantly increased irrigation would convert the land into a
      swamp instead of indefinitely adding to its fertility. Nor can
      abundant sowing be of any use when it reaches such a point that the
      plants stand so closely together as to interfere with their proper
      development.

  212 These differences correspond with the differences in the kinds of
      deterioration to which land is liable from rivers, floods, lava,
      etc., soil-exhaustion, and the growing wild of the land.

  213 From a technic point of view, it would, perhaps, be practicable, in
      most instances, to obtain the phosphoric acid immediately from the
      land and transfer it to other land; but the relation of the cost to
      the result makes it impossible from an economical point of view.

  214 It most certainly is always an uncommon advantage that certain kinds
      of soil, rich in kali and decayed vegetable matter, yield a long
      series of harvests without the addition of manure, provided, always,
      that a short interval is allowed to the process of decay to replace
      the exhausted plant-food. Thus in many volcanic regions. Compare on
      similar districts in the Deccan: _Rilter_, Erdkunde, V, 714.

  215 According to _Schübler_, the absorption of water by 100 parts of
      earth is, in the case of quartz-sand, 25 per cent. of its weight;
      for clay, 70 per cent.; for calcareous earth, 85 per cent.; humus,
      190 per cent.; and for 100 parts of their value, respectively, 37.9,
      66.2, and 69.2 per cent. The consistency of the four kinds of earth,
      in a dry state, is in the proportion of 0.100, 5, 8.7; their
      adhesion in a moist state, to iron agricultural implements, is in
      that of 0.17, 1.12, 0.65, 0.40. Of 100 parts of water mixed with
      these kinds of earth, the evaporation in four hours, at a
      temperature of 18° 75’ (centigrade) is 88.4, 31.3, 28 and 20.5 per
      cent, respectively. The diminution of volume when the moist earth
      dries, under the same degree of temperature, is, 0, 18.3, 5 and 20.
      Their relative absorption of atmospheric moisture for 48 hours is as
      0, 24, 17.5 and 55; their absorption of oxygen in 30 days is
      respectively 1.6, 15.3, 10.8 and 2.03 per cent.; and, lastly, their
      heat-holding power is in the ratio of 95.6, 66.7, 61.8, 49.

  216 In Austria, below the Enns, only 3.8 per cent. of the soil is
      barren; in the Tyrol, 29 per cent.; in Dalmatia, 48.1 per cent.
      (_Springer_). In the French Pyrenees, 43 per cent. is considered
      incapable of cultivation; in the Alps, in Landes and Morbihan, 42
      per cent.; in the departments of Nord and Somme, 1.3 per cent.
      (_Schnitzler_). _Franscini_ considers 36 per cent. of Switzerland
      unfit for tillage. The idea “barren” is a very vague one, and hence
      a comparison of different countries on this point should not be made
      without great caution.

_  217 Wolff_, loc. cit., 353 ff. As to the manner in which soil and
      climate mutually improve or injure one another, see _Schwerz_,
      Prackt. Ackerbau I, 12.

  218 In this respect, also, the fundamental difference between
      agriculture and industry is very important, inasmuch as the products
      of the former, equal in value to those of the latter, require a very
      large supporting or bearing surface; those of industry, a very small
      one. If _Nobbe’s_ “water-cultivation” should ever come to assume any
      great practical importance, agriculture would approach to industry
      in this respect.

_  219 Wolkoff_ has called special attention to mere _emplacement_:
      Lectures d’Economie polítique rationelle (1861), pp. 90 seq., 157
      seq. _Bastiat’s_ rather broad and enthusiastic assertion, that no
      mere product of nature possesses value (in contradistinction to
      utility), an exaggeration of his very honorable contest with the
      socialists (1848!), is refuted by daily experience, as when, for
      instance, discoveries are made accidentally of metallic veins,
      coal-fields etc., which immediately acquire great exchange value.

_  220 Aristotle_ distinguishes between ἀπολαυστικὰ and κάρπιμα. (Rhet.,
      I, 5.)

_  221 Humboldt_, Essai politique, súr la N. Espagne, IV, 9, in which he
      estimates the relation of the culture of the banana to that of
      wheat, in respect of mere quantity, to be as 4,000 to 30,—“probably
      the best gift of nature to awakening man, and the object of the most
      ancient cultivation.”

  222 It was said that in Easter Island, three days’ labor sufficed for a
      man’s maintenance through the whole year. A similar gift of nature
      to tropical lands is the date tree. It is turned to so many
      different uses that the Arabs of the coast of the Persian Gulf say
      that it is possible to construct a ship, rig it, supply and freight
      it, from date trees. Houses are built of palm wood, covered with
      palm leaves, furnished with palm mats, lighted with palm chips, and
      heated with palm coals. The whole architecture of these countries is
      fashioned by the date tree. Date wine is the favorite intoxicating
      beverage. There is a proverb current there that a good housewife can
      vary the preparation of the date for her guests every day in the
      month. Even the pulp is eaten. Each tree yields an average of 50-250
      lbs. of dates; and a tree may last over 200 years. An acre may
      contain more than 200 trees. The labor of cultivation is very
      slight, although it demands more care than the banana. Compare
      _Ritter_, Erdkunde, XII, 763. An acre planted with the sago-palm
      yields as much nourishment as 163 acres of wheat land. (Reise der
      Frigatte Novara, II, 113.)

  223 See _D. Hume_, Discourses No. I (On Commerce). While in hot
      countries “the sun does more work for man, it diminishes human
      strength itself.” (_M. Wirth_.) That, however, such people, to their
      surplus of the natural means of enjoyment and the consequent
      laziness and absence of care, add the bright side of a joyous
      disposition, is well shown by _Goethe_, Werke (16 mo., 1840), XXIII,
      246.

  224 Noticed even by _Thucyd._, I, 2. See also _Euripides’_ comparison of
      Sparta and Messina, in _Strabo_, VIII, 366.

  225 We find, in a great many countries, that their northern portions are
      endowed more sparingly by nature with means of enjoyment
      (_Genussmitteln_) than southern portions, but more abundantly with
      means of acquisition. (_Erwerbsmitteln_.) Hence, the former are
      latest to develop; but once developed, they assume a much higher
      place in civilization than the latter. This is true of Italy, Spain,
      Portugal, France, the Netherlands, and the United States, and of
      North America in general, as compared with South America. Something
      similar may be seen in the contrast between Austria and Prussia. The
      latter is colder and less fertile, but far superior to the former in
      extent of coast, in rivers, and fossilized combustible matter.

  226 The rule is not without its exceptions. Thus, for instance, Borneo
      and New Guinea are physically very like each other, but zoölogically
      two different worlds; the former belonging to India and the latter
      to Australia.

  227 Even language, which is the most general and most accurate
      expression of the intellectual genius of a people, presents a
      strikingly analogous contrast in mountainous and coast countries.
      Thus, compare the Ionic, Latin, Low German, Danish and Portuguese,
      with the Doric, Oscan, High German, Swedish and Spanish.

  228 See _Strabo_, II, 126. seq.

  229 The most striking instance, illustrative of the manner in which the
      nature of a country influences the character of a people is afforded
      by the difference in the development of the Aryans in India and
      Persia, especially when their sojourn in the territory of the Indus
      before that near the Ganges is looked upon as an intermediate stage.

  230 French writers, especially, have exaggerated the influence of nature
      over man. Thus, _Bodin_. de Repub. (1584), V, I; _Montesquieu_,
      Esprit des Lois, XVII, 6. XVIII, 1, 18. _Cabanis_, Rapport du
      Physique et du Moral de l’Homme (1805), IX, Mémoire, Influence des
      Climats. _Comte_, also, Traité de Législation (1827), is of opinion
      that “the degree of civilization which a people may attain does not
      depend on the degree of development of which they are capable by
      nature, but on that which their geographical situation permits them
      to attain.” See, also, _Herodot_., III, 106; _Hippocr_., De Ære
      etc., 71; _Euripid_., Medea, 820 ff.; _Plutarch_, De Exilio, 13. The
      proper mean has been found by _E.M. Arndt_, in his Anleitung zu
      historischen Characterschilderungen (1810), and by _Ritter_, and his
      school. See, also, _K.S. Zachariæ_, Idee einer
      volkswirthschaftlichen Geographic als Grundlage der praktischen N.
      Œkonomie fur jedes einzelne Volk: Vierzig Bücher v. Staate, II, 79.
      See, also, _Turgot_, Géographie politique, 1750, Œuvres (ed. Daire,
      II, 611 ff.); _Lueder_, Nationalindustrie und Staatswirthschaft,
      III, 1800 ff.

_  231 Malte Brun_, Précis. de la Geographie universelle, VI. pr.

_  232 Strabo_, IV, 178. On the climate of ancient Germany, see _Tacit_,
      Germ, 2.

_  233 Fraser_, Travels in Koordistan and Mesopotamia, II, 5. See, also,
      the description of ancient Susiana in _Strabo_ XV, 731, with that of
      the new one by _M’Kinneir_, Geogr. Memoir of Persia, 92.

  234 Thus, _Galenus_, De Usu Partium Corporis humani, L. I. The animal
      nearest to man mentally, the elephant, is also possessed of a member
      more like the human hand than any other animal. Its trunk was called
      _manus_ by the Romans. Hence the Indians call the elephant, the
      animal gifted with a hand. _Buffon’s_ view is exaggerated by
      Helvetius in the interests of materialism. _Aristotle_, (De partt.
      anim. IV, 10), opposes the saying of Anaxagoras: διὰ τὸ χεῖρας ἔχειν
      φρονιμώτατον εἶναι τῶν ζώων ἄνθρωπον. Compare _Bell_, On the human
      Hand, 1836.

  235 As to the imperfection of the ordinary division into agricultural,
      industrial and commercial labor, see _John Stuart Mill_, I, ch. 2,
      9. The division of all labor into mental and physical, is not more
      satisfactory; for even the basest labor is not wholly physical. See
      _Buckle_, History of Civilization, vol. II.

_  236 Dioscorides_ and _Galen_ were acquainted with, at most, 600 plants;
      _Linnæus_, with 8,000. About 1812, about 30,000 had been described;
      in 1837, about 60,000; in 1849, about 100,000. _Buckle_, History of
      Civilization etc., II, p. 359.

_  237 Industrie extractives_, according to _Dunoyer_. When nature’s
      spontaneous gifts are exhausted, this _occupation_ readily becomes
      _production_.

_  238 Industrie voituriére_, according to _Dunoyer_; _industria
      traslocatrice_ in opposition to _trasformatrice_, according to
      _Scialoja_. _Ortes_ distinguishes only four classes: _agricoltori_,
      _artefici_, _dispensatori_ and _administratori_, or _raccoglitori_,
      _manifattori_, and _difensori di bene_ (E. N. I, 2; III, 14). _A.
      Walker_, Science of Wealth (1867), p. 34, knows only three classes:
      transmutation, transformation, transportation.

  239 This is not to be understood in the sense, that there ever was a
      period in which these sciences were unknown. We need only mention
      the position occupied by the priest and knight in the middle ages.
      But, looked upon as economic labor, intended only for purposes of
      free commerce, they have become very important only within a
      relatively recent period of time. Thus, for instance, there was in
      Lower Austria, in 1866, one lawyer or notary to every 6,569
      inhabitants; in Bohemia, to every 14,860; in Galicia, to every
      22,361; in the whole of Cis-Leithanian Austria, 12,259. In 1865,
      there was in Prussia, one to every 11,149; in Bavaria, to every
      7,350; in Hanover, to every 4,946; in 1862, in Baden, one to every
      4,992; in 1867, in Saxony, one to every 3,048. _Hildebrand’s_
      Tagebuch, 1868, I, 234. There was in Prussia, in 1871, one doctor to
      every 3,230 inhabitants; in Berlin, to every 1,100; in Heldesheim,
      to 1,803; in Cologne, to 2,120, in Marienwerder, to 7,240; in
      Gumbinnen, to 10,047. _Engel_, Preuss. Statis. Zeitschrift, 1872,
      376. The verb “to plow” is, according to comparative philologists,
      of more recent origin than “to weave.” (_Lassen_, Indische Alterth.
      I, 814 ff.) And yet agriculture, in the sense above indicated,
      undoubtedly precedes industry.

  240 Observed by _Geiler v. Kaisersberg_. Compare _Schmoller_ in the
      Tübinger Zeitschr., 1860, 483. Hour wages occupy a middle place
      between day wages and piece wages.

  241 Thus the introduction of piece wages into lower Silesia has
      increased the daily earnings of workmen by one-third, one-half, and
      even more. _Engel’s_ Stastist. Zeitschr. (1868), p. 327. The
      investigations of the German agricultural congress on the condition
      of agricultural laborers in the German empire (report of _v. d.
      Goltz_, 1875) show that in all Germany on an average, the daily
      earnings of a contract workman (_Accordlöhner_) is to the daily
      summer wages of a day laborer as 15:10 (1420). On the other hand,
      _Brassey_, in the construction of a railway, found that the same
      workmen engaged in grading, digging, etc., cost 18 pence per yard
      when paid by the day, and 7 pence when paid by the piece. (Work and
      Wages, 266.) Swiss experience is, that production became 20 per
      cent. cheaper under the piece wages system. (_Böhmert_, Beitr.,
      109.)

  242 According to _v. d. Goltz’s_ Enquête, the earnings of workmen by the
      piece, compared with the wages paid workmen by the day in summer, is
      especially high in middle Franconia (16.5:10); in the Leipzig circle
      of the German empire (16.6), in the Braunschweig plain (16.8),
      within the jurisdiction of Hildesheim (18.1), of the Bavarian
      Palatinate (18.6), in Rhenish Hesse (23.2), especially low in
      Stettin (13.2:10), in Stralsund (12.4), in Schleswig Holstein (12),
      in Osnabrück, (11.7.)

  243 According to _v. Flotow_, Anleitung zur Fertigung der
      Ertragsanschlage, I, 80, four days of serf labor are equivalent to
      only three of a free day laborer. According to _v. Jacob_, Ueber die
      Arbeit Leibeigener und freier Bauern (1815), 21, two day laborers
      are equal to three serfs, and one farm horse is equal to two
      employed by serfs. It is as impossible to obtain accurate general
      estimates here, as in the case of slave labor. As a rule, hope is
      not only a more humane but a sharper spur to action. But if force is
      employed at all, there is no doubt that the greater it is, the more
      effectual it is. Wherever the right of corporal punishment has been
      taken from the masters, the technic value of serfdom has uniformly
      decreased. In the English West Indies, formerly, philanthropic
      masters who treated their negroes with unwonted gentleness, obtained
      from them, as a rule, very poor economic results. While each of the
      slaves expressed the greatest indignation at the idleness of the
      others when they had “so good a master,” they were all equally and
      excessively lazy. The weekly production of a plantation sank rapidly
      under this system from thirty-three hogsheads to twenty-three, and
      finally to thirteen. _Math. Levis_, Journal of a West India
      Proprietor, 1834; Edinburg Review, XLV, 410. For the same reason,
      the negroes in the Spanish colonies, who were treated much more
      gently than those owned by other European nationalities produced
      much worse work. See, however, _Columella_, De Re rust., I, 8.

  244 According to _Howlett_, The Insufficiency of the Causes to which the
      Increase of our Poor Rate have been ascribed (1788), piece wages had
      become usual “a few years ago.” Very recently the trades unions have
      again restricted the system of piece wages (§ 176).

  245 This system is inapplicable in the case of domestic servants
      (_Gesinde_) who are a part of the household, and who afford to their
      masters, besides their services, the advantage of having a person at
      their disposal always about them, and whose wages are therefore in
      great part their board and lodging. Still less can it apply to the
      case of the family physician, whose services consist not simply in
      writing prescriptions, but who is also the professional family
      friend. The same may be said of the state official, clergyman etc.,
      from whom it is demanded that he should sacrifice his entire life to
      the service of the public. Against adopting piece wages in the case
      of state officials, it may be further urged that no case at law, no
      act of public life is precisely similar to any other. It cannot be
      applied to that of soldiers, because they are called upon for action
      only after a long term of peace, during all of which they must keep
      themselves in readiness for war. (_Schäffle_, N. Œk., II, 388.) It
      has also been the practice of courts, until recently, on account of
      their dignity, to pay their mechanics not by the piece, wherever
      that was practicable, but by a fixed salary. An able professor in a
      university is of use to it not only by his lectures, but by his
      reputation and example etc.; hence, here, a combination of piece
      wages and of a regular salary is preferred. As to services, the
      permanency of which constitutes their essential character,
      remuneration is also wont to be permanent or hereditary, as in the
      case of very many public officers, while civilization is as yet
      unadvanced. Later, in proportion as the progress of civilization
      makes itself felt, this hereditariness is wont to be confined to the
      sovereign. For an opposite view, see _Boxhorn_, Institutt. politt.
      (1663), 41.

  246 Thus, the Chinese, who, by a ridiculous exaggeration bordering on
      caricature of many of our recent tendencies, may afford us a warning
      reflection of ourselves in our present state of civilization, rarely
      labor efficiently when not watched. Only by means of piece wages or
      the share-system can they be induced to do good work. _R. M.
      Micking_; Recollections of Manilla and the Phillippine Islands,
      1851.

  247 Day laborers, for instance, must be watched over during the harvest,
      to prevent their idling away their time, and piece-workers to
      prevent their continuing to work in spite of wet weather, binding
      sheaves, for instance, which causes the sheaves to rot. In England,
      it is considered almost an impossibility to induce laborers to cut
      wheat close enough to the soil. (_Sinclair_, Code of Agriculture,
      102.) The haste of piece-workers, in the harvest of the rape,
      occasions great loss, by the fall of the seed. In Russia the
      removing of the hide from animals is paid for by the piece, and the
      laborers injure a very large number of skins in their haste.
      _Steinhaus_, Russlands industrielle und commercielle Verhältnisse,
      425. Piece-wages are to be entirely discountenanced in the reeling
      of silk. See _Bernouilli_, Technologie, II, 215. A yearly salary is
      to be recommended in the tending of cattle, because here a certain
      connection (_Anschluss_) with individuals is desirable. In building
      trades, contractors in England prefer a regular salary; but they
      employ model workmen, the so-called “bell horses,” to whom they pay
      a large salary, and who keep the others on the strain by their
      example, and who on that account are very much hated by their
      colleagues.

_  248 Adam Smith_, W. of Nations, I, ch. 8. _Howlett_, also, l. c.,
      thinks that piece-wages increase the earnings of workmen, but at the
      expense of their capacity for constant labor. _Count Görtz_, in his
      Reise, 328, relates with what fatal effect piece-work in Demarara
      tells on white laborers and their horses. After the February
      Revolution, Parisian workmen demanded the abolition of piece-wages,
      and obtained it in several manufactories. Revue des deux Mondes,
      March 15, 1848.

  249 In several Swiss factories, understrappers receive a salary, while
      _monteurs_ work by groupe-contract. (_Böhmert_, Arbeiterverältnisse
      und Fabrikeinrichtungen der Schw., II, 70.) Sub-contracting, where
      the contract is generally made with only one person, for the most
      part of more than average capacity, and this latter contracts with
      other workmen on his own account entirely, is considered by
      philanthropic employers of labor as one of the worst kinds of
      remuneration. The more democratic system of gang-contract is much
      better, although even here, it is very easy for the weaker members
      of a good gang to overwork themselves. (Edinburg Review, October,
      1873, 365.)

  250 Especially important in chemical factories. The expense of greasing
      on the Rhenish railways fell, through premiums offered as rewards
      for saving, from 27,000 thalers to 5,000, in spite of an increase in
      the amount of traffic. (_v. Mangoldt_, Volkswirthschaftslehre, 349.)
      This was, besides, the most effectual way of controlling the theft
      of material.

  251 In the cachelot fishery, the captain receives one-sixteenth, the
      master, one twenty-fifth, the second master, one thirty-fifth, the
      boatswain, one-sixtieth, each sailor, one eighty-fifth of the
      profit. (_Humboldt_, N. Espagne, IV, 10.) This system is very common
      in North America. See _Carey_ in _J. S. Mill’s_ Principles, V, ch.
      9, 7. In heathen Iceland, mariners were always paid a certain quota
      of the profits. _Leo_, in _Raumer’s_ historischem Taschenbuch, 1835,
      524. The same was often the case in China. _McCulloch_, Comm.
      Diction. v. Canton. In England, its employment was rendered very
      difficult by the laws of partnership, which made each individual,
      except in great chartered societies, responsible for all kinds of
      debts contracted by the rest of the firm. _J. S. Mill_, B. IV, ch.
      7, 5.

  252 The house painter Leclaire, in Paris, obtained very high results in
      this respect. _Leclaire_, Répartition des Bénéfices du Travail,
      1842. He retained for his own services as contractor the sum of
      6,000 francs, and paid each workman the salary he had hitherto
      received. What remained was, at the end of the year, equally divided
      among all. _Leclaire_ assures us that he was always satisfied with
      the system. The paying of a proportion of the general profits to
      laborers is advisable only in case their ability of surveying the
      whole is not much inferior to that of their employers. Where a
      special proportion is paid, in special branches of business, it is
      sufficient if their supervision extends over that particular branch.
      But a sharing in the profits of business always supposes a
      corresponding supervision of the business itself, and also the
      keeping of accounts.

  253 A very good remedy against indigence among the lower classes.
      (_Umpfenbach_, National Œkonomie, 1867, 214.) But whether it will
      ever be possible to make the remuneration of the navvy or that of a
      type-setter depend on the final success of his work, _qnœre_.

_  254 Tournefort_, speaking of the fatalism of the Turks, says that they
      always and everywhere leave the world as they found it. According to
      their own proverb, no grass grows again where the Osman has set
      foot.

  255 The experiments made with the dynamometer in 1800 ff. show that the
      average _force manuelle_ of an inhabitant of Van Dieman’s Land is to
      that of an inhabitant of New Holland, of Timor, of a French marine,
      and of an English colonist in Australia, in the ratio of 50, 51, 58,
      69, 71 kilogrammes. _Péron_, Voyage de Découverte aux Terres
      australes, 2d ed., II, 417. It was found more recently in the
      American army, that the average lifting-power of white soldiers was
      314 to 343 -lbs.; of white marines, 307; students, 308; negroes,
      323; mulattos, 348; and Indians, 419. _Gould_, Investigations in the
      Military and Anthropolog. Statistics of American Soldiers, 1869,
      458, seq. According to English manufacturers, an English laborer
      accomplishes almost as much again as a French one(?), and the latter
      in turn more than an Irishman. An English contractor, who had worked
      in French manufactories, expressed his opinion concerning the French
      to this effect: “It cannot be called work they do; it is only
      looking at it and wishing it done.” _Senior_, Outlines, 149. Thus,
      for instance, a good English spinner with a machine of 800 spindles
      could produce 66 lbs. of yarn, No. 40, while a Frenchman could
      produce only 48 lbs. (_M. Mohl_, Reise durch Frankreich, 535;
      compare _Dingler_, Polyt. Journal, I, 63 seq.) That the Americans
      also are inferior to the English in strength and dexterity is
      attested by the American _Hewitt_. See _Brentano_, Arbeitergilden,
      II, 231. A Berlin wood-sawyer accomplished as much in ten days as a
      West Prussian from Labiau in twenty-seven days. _J. G. Hoffmann._
      English farmers on the Hellespont prefer to pay Greek laborers £10
      per year “besides their keep,” rather than £3 to Turkish laborers.
      (_Lord Carlisle_, Diary in Turkish and Greek Waters, 1854, p. 77
      seq.) In Paulo-pinang, the Malayan agricultural laborer receives
      $2-½ per month, the Malabar, $4, the Chinese, $6; for which
      compensation they work respectively 26, 28 and 30 days. _Ritter_,
      Erdkunde, v, 54.

  256 Little light can be thrown on this subject by a comparison of
      different countries. Thus, in France, there are 614 persons in every
      1,000 examined fit for military service; in Bavaria, 705; in
      Denmark, 523; in Austria, 498; in Prussia, 284; in Saxony, 259; in
      England, where the conscription is from among the lowest classes,
      665; and in Württemberg, 490. (_Wappäus_, Allg.
      Bevölkerungsstatistik, II, 71, 140.) _Massy_, Remarks on the
      Examination of Recruits, 1854. (_Memminger_, Würt. Jahrb., 1843,
      103.) The comparison of different parts of the same state is much
      more instructive. Thus, in Saxony, cities afford only 197, and the
      flat country only 265 per 1,000 (Sächs. statist. Ztschr., 1856, No.
      4 ff.); and in France there are among those of illegitimate birth a
      very large number unfit for military service. (Journ. des Econ.,
      1850, XXV, 69.) According to the Austrian Annual of military
      statistics, there were in 1870, on an average, throughout the entire
      monarchy, 211 per 1,000 of those liable to enter the ranks of the
      military, fit for service; in the Innsbruck command, 325; in
      Lemberg, 179.

_  257 M. Chevalier_, Cours, I, 115. _Adam Smith_, B. I, ch. 8, noticed
      the great industry of well paid workmen. Among the uneducated, labor
      must almost necessarily be repulsive in proportion as it is illy
      remunerated.

  258 Thus _A. Young_ remarked that wages in Ireland are wretchedly low,
      while labor is far from being cheap. In his “Evidence in Respect to
      the Occupation of Land in Ireland,” II, 135, he says that a Scotch
      day laborer at 1s. per day is cheaper than an Irish day laborer at
      ½s. According to _McCulloch_, “Statis. Account of the British
      Empire,” I, 666, industrial labor in Germany and France is dearer
      than in England, because in the former countries there are, _ceteris
      paribus_, twice as many laborers employed in most manufactures. See
      _Senior_, Lectures on Wages, 1830, 11, and the reports of the
      committees of parliament, _passim_ on French manufactures (1825).
      The same has been experienced in the agricultural history of
      Schleswig-Holstein. See _Hanssen_, Archiv. der Politisch. Œk. IV,
      421. _La main d’œuvre est chère en Russie dès qu’il s’agit d’une
      certaine capacité et d’un certain degré d’instruction
      professionelle, tandis que celle de l’ouvrier ordinaire n’est nulle
      part aussi bas._ (_Tégoborsky._)

  259 Thus even _Columella_, R. R. I, 9. _J. S. Mill_, Principles, I, ch.
      7, 5.

  260 Thus, for instance, the Lex Visigoth., VIII, 4, 16, graduates the
      fine to be paid by the murderer according to the age of his victim.
      It increases up to the 20th year in the case of males, and
      diminishes after the 50th. In the case of females, the maximum is
      attained between the ages of 15 and 40. Similarly even _Moses_, Book
      III, 27.

  261 As to what concerns the two sexes, the _force rénale_ of adult males
      is twice that of females in the human species. The difference
      between them in youth is not so great. The force _manuelle_ of the
      two sexes at the age of 30 is as 9:5. (_Quételet_, Sur l’Homme II,
      p. 73 ff.) The numerical ratio of one sex to the other varies but
      little among those nations which have attained a certain degree of
      civilization. See _infra_, § 245.

  262 It is of great importance to calculate here the number of days in
      the year in which the laborer is compelled to be idle on account of
      sickness. _Fenger_, (Quid faciant ætas annique tempus ad frequentiam
      et diuturnitatem morborum, Hafniæ 1840), finds the following result:

      Between 15 and 19 years, 7.2 days.  Between 35 and 39 years, 7.8
      days.
      Between 20 and 24 years, 10.3 days. Between 40 and 44 years, 8.3
      days.
      Between 25 and 29 years, 9.5 days. Between 45 and 49 years, 11.6
      days.
      Between 30 and 34 years, 7.6 days. Between 50 and 59 years, 14.1
      days.

      According to _Villermé_, in the Annales d’Hygiène, II,

      At 60 years, 16 days. At 67 years, 42 days.
      At 65 years, 31 days. At 70 years, 75 days.

      The latter table is the result of a comparison made of the tables of
      seventy Scotch mutual aid societies. Compare _Digler_, Polyt.
      Journal, XXIV, 168.

_  263 Tacit._, Germ., 14. _Leo_, in _Raumer’s_ Taschenbuch, 1835, 418.
      _Maxime sua esse credebant, quæ: ex hostibus cepissent._ (_Gajus_
      IV, 16.) Roman auction _sub hasta_! Similar views obtained among the
      Thracians. See _Herodot._, V, 6. In Sparta, even in the time of
      Agesilaus, economic labor was considered unworthy of a free man,
      (_Plutarch_, Ages, 26); while the Athenians, from the time of Solon,
      punished idleness, and from that of Pericles “knew no other festival
      but attending to their business.” _Thucyd._, I. 70. For some happy
      observations on this subject, see _Riehl_, Die deutsche Arbeit,
      1861.

  264 Compare _Erasmus_ Colloq. (ed. _Stallb._), 21 ff., 213 ff., 392 ff.

_  265 Temple_ learned from the Dutch of his own age that the time of
      industrious men is the greatest home commodity of a country. (Works
      I, 129.) “A trader’s time is his bread.” (_Sir M. Decker_, Essay on
      the Decline etc., 1744, 24.) _Walpole_, in his Testament politique
      II, 385, speaks of the inferiority of the Roman Church in this
      respect. I would allude to the medieaval prohibition “to sell time”
      as one of the chief grounds of the prohibition of usury. (See
      _Roscher_, Gesch. der N. Œk. in Deutschland, 7.) _Economia di tempo
      equivale a prolungamento di esistenza._ (_Soialeja._)

_  266 Douville_, Voyage au Congo I, 239. See _v. Haxthausen_, Studien,
      II, 439; _W. Jacob_, Production and Consumption of the precious
      Metals, II, 209. The division of the day into hours dates from the
      time of the sun dials of Alexandria. It was not known in Rome until
      after the year of the city 491. (_Mommsen_, Römische Geschichte, I.
      301.)

_  267 Pinckard_, Notes on the West Indies, 1806, II, 107. In Spain it
      looks as if no one in the streets was in a hurry. What a contrast
      between the _sans souci_ gait of persons at bathing places and the
      resorts of pilgrims and the precipitate haste in commercial centres!

_  268 Meyendorff_, Voyage à Boukhara, 246.

  269 The history of this idea affords a remarkable example of the
      confusion produced by the employment of scientific terminology in
      daily life. Until within a short time every possible meaning of the
      word _capital_ was to be found in the dictionary of the French
      Academy, its scientific politico-economical meaning alone excepted.
      During the middle ages, the Latin _capitale_ was used to signify
      both loaned money and cattle. (_Ducange_, s.v.) When culture was at
      its highest in Greece, _Demosthenes_ entertained very good ideas of
      the nature of capital which he sometimes calls ἀφορμὴ, sometimes
      ἔρανος, the meaning of which he extends also to the incorporeal
      capital of a good reputation. (Adv. Mid., 574; pro Phorm, 947.) The
      same may be said of the Roman in conception of _peculium_. See
      _Hildebrand’s_ Jahrbb., 1866, I. 338. On the beginnings of the
      present idea of capital among the later schoolmen, see _Funck_,
      Tübinger Ztschr., 1869, 149. The diary of _Lucas Rems_, 1491-1541
      (ed. _Greiff_, 1861), calls commercial capital, in most instances,
      the chief good (_Hauptgut_) p. 37; also _Cavedal_. The words money
      and capital, interest and the price of money are now confounded in
      daily life, as they were formerly by most writers. In the 17th
      century, _Child_ and _Locke_ may be mentioned as instances. _Hobbes_
      had some faint notion of the productive power of capital. See
      _Roscher_, Zur Geschichte der englischen Volkswirthschaftslehre, 49,
      60, 102. Thus, also, in the 18th century, _Law_, Sur l’Usage des
      Monnaies, 697; Trade and money (1705) 117; _Mélon_, Essai politique
      sur le Commerce, 1734, ch. 22; _Galiani_, Della Moneta, IV, 1, 3;
      _Blackstone_, Commentaries, 1764, II, 456; _Genovesi_, Economia
      civile, II, 2, 18, 13; _Stewart_, Principles, IV, 1, ch. IV;
      _Verri_, Meditazioni, XIV; _Büsch_, Geldumlauf, V. 14; _A. Young_,
      Political Arithmetics (1774), 1, ch. 7. _Hume_, on the other hand,
      Discourses (1752), No. 4 (on interest), shows, that the rate of
      interest is dependent, not as _Locke_ supposed, on the abundance or
      scarcity of money, but on the state of profit and on the relation
      between the demand and supply of capital. Similarly, _J. Massie_, An
      Essay on the governing Causes of the Rate of Interest (1750).
      _Quesnay_, Dialogue sur le Commerce, 173 (ed. Daire), shows that he
      had a very clear conception of the operation, and of the principal
      component parts of capital. _Turgot_, Sur la Formation et la
      Distribution des Richesses, § 14, 54-79, came very near the truth,
      and yet missed it. He recognized the necessity of advances which, as
      a rule, are the result of saving, in every case of production. He
      also distinguishes in the product of the soil, besides the _produit
      net_ and the _subsistance du laboureur_, the _profit_ of the latter.
      He likewise points out a great number of differences between the
      “price of money” considered in its relation to trade, and in its
      relation to loans. He explains the interest on capital, as
      _Schröder_, in his Schatz-und Rentkammer, 231, and _Benjamin
      Franklin_, in his Inquiry into the Nature of a Paper Currency (1729)
      had done before, by the fact that the owner of capital can purchase
      a piece of land with his capital, and thus draw an income without
      working. Money, he said, was indeed not productive, but neither was
      any other thing that could be loaned or leased, with the exception
      of land and cattle. _Adam Smith_ deserves the greatest credit for
      his analysis of the idea of capital, although he opposes “capital”
      to what the Germans call capital-in-use, the “stock for immediate
      consumption.” When _Canard_, Principes d’Economie politique (1801)
      and _J. B. Say_, Cours pratique, 1828, I, 285, included man’s power
      of labor in capital, they took a retrograde step. “Labour is
      Capital, primary and fundamental.” _Colton_, 275. Every grown-up
      individual, says _McCulloch_, Principles, 1825, II, ch. 2, may be
      looked upon as a machine which has cost several years of continued
      care and a considerable sum for its construction. It is only another
      side of this same perversity, when _McCulloch_ seeks to force the
      results produced by animals and machines into the definition of
      labor. _Schlozer_, Anfangsgründe (1805), I, 21, goes so far as to
      call the soul, raw material, which receives productive power from
      the labor of the teacher! For a calculation of the money value of
      man in the different ages of life, see Statis. Journ. XVI, 43 ff.
      See, on the other hand, _Malthus_, Definitions, ch. 7; and _Rossi_,
      in the Journal des Economistes, VI, 113. Nor does the view of
      _Ganilh_, Systèmes d’Economie politique (1809), I, 243; of _Ad.
      Müller_, Concordia, 93 ff., 211; of _Hermann_, “Staatswirth”
      Untersuchungen, No. 3; of _Dunoyer_, Liberté du Travail, L. VI; of
      _Bastiat_, _Carey_ and others, who include pieces of land in
      themselves under the head of capital, seem to be better founded.
      _Hermann_ defines capital the durable basis of every utility
      possessed of value in exchange. _Schäffle_ reckons land as nature
      offers it to us, among _free_ goods. From the moment that labor and
      capital are spent upon it, it becomes immovable capital, but he
      concedes that it still preserves many essential points which
      distinguish it from other capital. (N. Œk. Theorie der
      ausschliessenden Absatzverhältnisse, 1867, 65 ff., 89 ff.) These
      differences appear to me to be still more important than that which
      land and capital have in common; especially as the historic
      development of their relations proceeds for the most part in
      opposite directions. Thus, for instance, as civilization advances,
      land is wont to become dearer and capital cheaper. How difficult
      would it be to introduce clearness into the ideas of _intensive_ and
      _extensive_ agriculture, if land were accounted capital! And it is
      not only always theoretically, but also very often, in practice,
      possible to separate the value of a given piece of land from the
      most durable capital-improvements (_Kapitalmeliorationen_) made on
      it. It is only necessary to call to mind the area of buildings.

_  270 Marx_ makes a very arbitrary assertion when he says that only the
      capital operating in trade, and even only that operating in trade
      where money is used as the instrument of exchange, can properly be
      called capital; and that, therefore, the modern biography of capital
      dates only from the 16th century, (Das Kapital I, 106 ff.)

  271 See, on the other hand, _Wolkoff_, Lectures d’Economie politique
      rationelle, 167.

_  272 Hermann_ (II ed., 238 ff.) distinguishes especially _preparatory
      contrivances_ auxiliary to labor, such as stationary structures
      etc., vessels, tools, machines and instruments for measuring etc.

  273 Thus, for instance, the plow and the gun are machines, the spade and
      the blow-pipe are tools. A hammer may be considered as a hard,
      insensible fist; the bellows as a pair of very strong and durable
      lungs. Tongs take the place of fingers, just as a spoon does of the
      empty hand, and the knife the place of the teeth. A great number of
      machines, on the other hand, may be compared to a complete workman.
      Thus, the action of the mill which grinds grain has very little
      resemblance to the blowing of the wind or the running of the water,
      whereas the rising and falling of the pestle in the small mortar for
      throwing grenades corresponds to the motion of the arm. (_Rau_,
      Lehrbuch I, § 125.) The infinite number of functions of which our
      members are capable is related to their inability to attain alone
      the greater number of their ends. Hence animals which require no
      tools can undertake to achieve very few things. “Man is a
      tool-making animal.” (_B. Franklin._)

  274 This is seen most clearly in the history of the grinding of corn. In
      the time of Moses, and even of Homer, there were only hand-mills,
      and originally only mortars. Later, mills set in motion by
      horse-power were employed. Shortly after Cicero’s time, mills driven
      by water-power came into use. _Brunck_, Analecta, II, 119, Ep. 39.
      Mills built on pontoons do not date farther back than the time of
      Belisarius. Wind-mills have been known since the ninth century;
      Dutch wind-mills, only since the middle of the 16th century. See
      _Beckman_, Beiträge zur Geschichte der Erfindungen II, I ff.

  275 Compare _Plato_, Polit., 280.

  276 Thus, _Ganilh_, Théorie de l’Economie politique I, 133, calls the
      knowledge, talents and probity of merchants, as well as their
      reputation, valuable parts of their capital in trade. See, also,
      _Möser_, Patriot. Ph. II, 26. See some happy observations on the
      intellectual capital of nations, as consisting of “known and unknown
      preparatory labor through their history,” in _Lotze_, Mikrokosomos
      II, 353 seq.

  277 Compare _Dietzel_, System der Staatsanleihen (1856), 71 ff. And,
      earlier yet, _Ad. Müller_ had looked upon taxes not in the light of
      an insurance premium, but as “the interest of the invisible and yet
      absolutely necessary intellectual capital of the nation.” (Elemente,
      III, 75.) Of course, the State is much more than a species of
      capital; just as a Gothic cathedral is something more than a piece
      of masonry, but does not on that account cease to be a piece of
      masonry.

_  278 J. B. Say_, Traité d’Economie Politique I, ch. 10. Only think of
      what is known in physiology as the change or transformation of
      matter (_Stoffwechsel!_).

  279 Productive capital has been rendered into German by the word
      _Erwerbstamm_, by the author of “Staatswirthschaft nach
      Naturgesetzen,” 1819. _Malthus_, Definitions, ch. 10, and _Rau_,
      Lehrbuch, I, § 51, call productive capital alone, capital. According
      to _M. Chevalier_, goods lose their quality of capital as soon as
      they come into the hands of a consumer. _Schäffle_, N. Œk., II,
      aufl., 59, calls capital in use _Genussvermögen_ (resources intended
      for enjoyment) and productive capital, _Kapitalvermögen_
      (capital-resources). On the other hand, _J. B. Say_, Traité, I, 13;
      _McCulloch_, Principles, II, 2, 3, _Hermann_, Staatswirthschaft.
      Untersuchungen, p. 60 ff., and _v. Mangoldt_,
      Volkswirthschaftslehre, 122, divide capital into capital in use and
      productive capital, according as it provides the possessor with that
      which he may turn to account directly or indirectly by becoming the
      owner of goods through its means. _Aristotle_ distinguishes between
      ὄργανα and κτήματα, the former relating to ποίησις; for instance, a
      shuttle; the latter to πράξις, as, for instance, bedding and
      articles of dress. (Polit., I, 2, 5.)

  280 Thus, for instance, class A embraces parks and forests; B, theaters,
      churches, manufactories, arsenals, granaries, public walks and
      roads. Walks can, besides, be used for the cultivation of fruit, and
      roads for pleasure trips.

  281 Translated “capital de consommation” by Wolowski, p. 96 of his
      Roscher’s Principles.—_Translator’s note._

  282 Dead, or better, dormant capital is such productive capital as, for
      the time being, remains unused, and which, therefore, does not yield
      even personal enjoyment. The sum total of this kind of capital is
      very much diminished by the agency of savings banks. Loaned capital
      which has been employed unproductively evidently constitutes no
      longer a part of the wealth of a people. See _infra_, § 189.

_  283 Wolkoff_ is so far right, when in his Lectures, p. 142, he calls
      the return of capital in use not _revenu_, but _déstruction
      graduelle_. _Schäffle_ is right, too, and entirely so, when he says
      that only such an increase of the property, intended for enjoyment
      simply, is anti-economic, as does not make the personal capacities
      of labor (_Arbeitsvermögen_) as much more productive than they would
      otherwise be. N. Œk., II, aufl., 224.

_  284 Humboldt_, N. Espange, II, ch. 17; _v. Schlözer_, Anfangsgründe,
      II, 109. Ausland, 140, No. 313. On the extraordinary wealth of even
      Russian peasant women in pearls, see _v. Haxthausen_, Studien, 87,
      309.

_  285 Townsend_, Journey in Spain, I, 115, 310. In the patriarchal age of
      the Jews, there was a relatively very large quantity of ornamental
      objects in gold and silver: _Michælis_, De Pretiis Rerum apud
      Hebræos, in the Comm. Soc. Götting., III, 151 ff., 160. Conservative
      Sparta, in the middle age of its history, was certainly not rich,
      and yet it had more gold and silver than any other Grecian state:
      _Plato_, Alcib., I, 123. According to _St. John_, The Hellenes, III,
      142, the ancients had relatively much more of the precious metals in
      the form of objects for ornament than the moderns. The Romans, with
      their usual good sense, did not make use of silver as an article of
      luxury until they had attained great wealth. See _Cato_, R. R., ch.
      23, and _Seneca_, De Vita beata, ch. 21. Then the Carthaginian
      ambassadors railed at their hosts because they found the same pieces
      of table silver in all the houses to which they were invited. The
      younger Scipio, even, did not possess more relatively than 32 pounds
      of silver ware. _Mommsen_, Römische Geschichte, II, 383. The
      relatively great importance of the stores for domestic use,
      nevertheless, runs through the whole of Roman history. The title _de
      penu legato_, in the Pandects (Digest, XXIII, 9), points to this,
      during the reign of the emperors, and in earlier times, the
      derivation of _penates_ from _penu_. See _Rodbertus_, in
      _Hildebrand’s_ Jahrbuch, 1870, I, 365. Immense importance of the
      ring in the old north countries: _Weinhold_, Altnord. Leben, 184 ff.
      The age of chivalry was very rich in silver plate, cups, basins,
      etc. _Büsching_, Ritterzeit und Ritterwesen, II, 137. _Anderson_,
      Origin of Commerce, a. 1386. _Lord Burleigh_, in the age of queen
      Elizabeth, left after him between fourteen and fifteen thousand
      pounds sterling in silver ware; that is almost as much as the rest
      of his whole estate; and, it would seem, that for a man of his rank,
      even this was not considered a great deal. _Collins’_ Life of B.,
      44. According to _Giustiniani_, cardinal Wolsey owned articles of
      silver to the value of 1,500,000 ducats, and the greater number of
      the lords of the time were equally well provided with them.

  286 The Bedouins are fond of decorating their wives and children with
      all the jewels that they possess, both on holidays and other days,
      so that they sometimes have four or six bracelets on each arm and
      fifteen ear-rings in each ear. _Burckhardt_, Bemerkungen, 188.
      _Wellsted_ (Roederer’s translation), I, 224. In Asia Minor, girls
      wear their whole dowry in the shape of personal ornaments.
      _Belgiojoso_, Revue des deux Mondes, Feb. 1, 1855. In East India
      even the most wretched towns have their silver workers. The emirs of
      Scinde, with an annual income of £300,000, had a treasure worth
      £20,000,000, nearly £7,000,000 of which were in jewels. _Ritter_,
      Erdkunde VII, p. 185. On the upper Ganges more jewels and other
      ornaments are worn than on the lower, where the wealthy prefer to
      spend their capital on landed estates. _Ritter_, VI, 1143.

  287 The first beginnings of this division are to be found in _Quesnay_
      (Analyse du Tableau économique, 1758), in which he develops the
      difference between _avances primitives_ and _avances annuelles_. See
      also _Adam Smith_, W. of N., II, ch. 1, who, however, reduces the
      difference between them mainly to the relations of possession, and
      hence includes grain and seed in fixed capital. _Hermann_, Staatsw.
      Untersuch., 269 ff.; _Ricardo_, Principles, ch. 1, sec. 2;
      _Schmitt-henner_, Staatswissenschaften, I, 387, divides capital into
      I, _infungible_, that is, 1, fixed in the strict sense of the word;
      2, transportation-capital; II, _fungible_, 1, transformable capital;
      a, material (raw material, auxiliary material etc.), b, formed
      products; 2, circulating capital; a, wares; b, money. _A. Walker_,
      S. of W., 57, calls circulating capital that which may be easily
      transferred from one branch of production to another; fixed, that
      which can be used with advantage only for the purpose for which it
      was originally intended.

  288 Old wood-work is burned; old iron utensils sold; also houses when
      pulled down. _Emminghaus_, Allg. Gewerbelehre, 1868, 175.

  289 If the Mongols, for instance, should despoil China of all its
      moveable property with the exception of its buried money, its
      immovable property would become productive only from the time that
      that money would be used to secure other moveable articles. In any
      case, the production would be proportioned only to the borrowed
      seed, cattle, etc. (_Sismondi_, Richesses commerciale, 1803, I, p.
      61.)

  290 That the Athenians left everything in the lurch to oppose Xerxes,
      much more readily than under Pericles, even, the flat country of
      Attica. _Büchsenschütz_ (Besitz und Erwerb im griech. Alterthum,
      589) explains by the fact that in the interval between the two
      periods, fixed capital increased largely. In rude ages under the
      appellation of a community or nation was understood a number of men;
      and the state, while its members remained, was accounted entire.
      With polished and mercantile states, the case is sometimes reverted.
      The nation is a territory cultivated and improved by its owners;
      destroy the possession even while the master remains, the state is
      undone. _Ferguson_, Hist. of civil Society, V, 4; _v. Mangoldt_,
      Volkswirthschaftslehre, 159. Fixed capital is not so sure of being
      completely used up as circulating. On this point see _Schäffle_, N.
      Œk., 53.

  291 If the aggregate productive activity of man be designated by the
      word labor (just as everything produced on a piece of land is
      inaccurately called its product), then all capital may be considered
      as the unconsumed result of labor. The recent socialistic theory
      that considers capital as the wages which have been earned but not
      paid, is a gross misconception of this truth. This is the origin
      only of the capital of oppressors and deceivers, and of theirs only
      in part. See _infra_, § 189.

  292 “While we are clothed in our winter garments, the spring stuffs are
      already in the shops of retail dealers; the light material of next
      summer’s wear is already manufacturing, and the wool for our next
      winter’s clothing spun.” Think of the study in advance which the
      physician must have gone through, whom we summon to us at a moment’s
      notice! _Menger_, Grundsätze, I, § 33. seq.

  293 Thus in dangerous callings, as for instance, among soldiers and
      sailors, there is very little saving. The same may be said of times
      of plague. See _J. Rae_, New Principles on the Subject of Political
      Economy, 1834.

  294 That we keep our property under lock and key, while it was customary
      in Plato’s time to seal it up, is in itself a great advance. See
      _Becker_, Charicles, I, 202 seq. Earlier yet, artificial knots were
      used. _Homer_, Odyss. VII, 443.

  295 Compare _Hearne_, Reise, nach Prinzwalesfort, 43, 58, 119. _Barrow
      von Sprengel_, 282. _Humboldt_, Relation historique, II, 245.
      Ausland, 1844, No. 359; 1845, No. 84. _Stein-Wappüus_, Handbuch der
      Geographie, I, 310. For proof that the clergy by preaching self
      denial contributed largely to the creation of capital in the earlier
      part of medieval history, see _Guórard_, Polyptiques d’Irminon
      Préf., 13.

  296 On the inevitableness of slavery, where capital is needed, and no
      one cares to save, see _de Metz Noblet_, Phénomènes économiques, I,
      306.

  297 The origination of capital by “social connexions”
      (_gesellschaftliche Zusammenhänge_) _Lassalle_ (Bastiat-Schultze,
      92, 98) exaggerates into the absurdity that no capital was ever
      saved. This is in part related to his confounding land with capital
      (103 seq.). On the other hand, _P. L._ (_v. Lilienfeld_), Gedanken
      über die Staatswissenschaft der Zukunft (1873), distinguishes
      between the external and internal creation of capital in human
      society; the latter based on the condition of every organic being,
      by virtue of which the present is generated by the past, and
      generates the future. The intercellular substance of plants, the
      honey-comb of bees, and the blood in the animal body, correspond to
      the capital of a nation.

_  298 Hermann_, St. Untersuchungen, 289 ff.; _List_, System der
      politischen Œkonomie, I, 325 ff. Thus, for instance, capitalization
      among a race of hunters may be continued longest by the creation of
      herds; that of a race of shepherds by the building of houses, and by
      land-improvements; that of an agricultural people by the
      establishment of trades, artificial roads, etc. As to how, in
      general the accumulation of goods to any great extent, supposes
      exchange, and as to how, first of all, with exchange through the
      existence of a superabundance wealth may originate, see _Hermann_,
      loc. cit., II, Aufl., 25 ff.

  299 The annual increase of the capital of France during the later years
      of Louis Philippe’s reign, was estimated at from 200 to 300 million
      of francs; during the best years of Napoleon III’s reign, at 600
      million. Journal des Econ., Nov., 1861, 170. The capital of the
      British empire, judging from the statistics of the income tax,
      increased from 1843 to 1853, in Great Britain alone, at least
      £42,000,000 yearly; from 1854 to 1860, in the whole empire, at least
      £114,000,000; and in 1863 alone by £130,000,000. London Statis.
      Journal, 1864, 118 ff. A war carried on on English soil would
      doubtless be more destructive of capital than one waged in Russia;
      but Russia would recover from one like that of 1854-55 with much
      greater difficulty because of the small tendency of its people to
      amass capital. In countries in which the middle classes
      preponderate, the influence of the amassing of capital on foreign
      politics is one that favors peace. In despotic or democratic
      countries, it may as readily favor war.

  300 The “absolute formation” of capital above described is, of course,
      the only one in the general economy of mankind. In the economy of
      individuals, we frequently meet with another which is only
      “relative,” as when the increase of one’s resources is attended by
      as great or even greater decrease of another’s. This is the case,
      for instance, where privileges or monopolies are granted. The same
      phenomenon is found also in the intercourse of economies of
      different nations. _Supra_, § 64.

  301 Thus _Cicero_, De Off., II, 3, 4. Nature may indeed produce mere
      value in use without the coöperation of labor, in the narrow sense
      of the word; as, for instance, a forest which protects a district
      from avalanches etc. But “everything which has been transformed into
      goods tends constantly to return to its natural state, and to
      withdraw itself from the life of goods.” _Stein_, Lehrbuch.

  302 Compare _List_, System der Polit. Œkon. But see also the very fine
      discussion of _J. S. Mill_, Principles, IV, ch. VI, 2, on the
      dreariness of nature, when taken exclusive possession of by man;
      “with every rood of land brought into cultivation which is capable
      of growing food for human beings; every flowery waste or natural
      pasture plowed up; all quadrupeds or birds which are not
      domesticated for man’s use, exterminated as his rivals for food;
      every hedgerow or superfluous tree rooted out, and scarcely a place
      left where a wild shrub or flower could grow, without being
      eradicated as a weed, in the name of improved agriculture.”

  303 In Paris, in 1820, the necessary tools of a rag-gatherer cost 6-¼
      francs. _Garnier_, Elements d’Econ.-polit., 43.

  304 It is not to be overlooked that all labor expended for a distant end
      also falls under the head of capital. See _Droz_, Economie
      politique, 1829, I, 6.

  305 For a good exposition as to how England has need of more
      agricultural products, the East Indies of more capital, and the West
      Indies of more labor, see _Fawcett_, Manual of P. E., 110.

  306 It is a very significant fact, that, at present, in certain European
      countries, in Germany for instance, the laborer is called a _taker_,
      and the capitalist a _giver_ of work. The expressions employed by
      _Canard_, _Say_ and _Hermann_, teach a similar lesson.

_  307 Schäffle_, Kapitalismus und Socialismus, 124 seq.

  308 It is evident, that, absolutely considered, the predominating factor
      of an earlier period may continue to increase during the following:
      and, as a rule, it does continue to increase.

  309 I need cite only the instance of the slaves, who called out the
      hours, thus performing the functions of a clock: _Martial_, VIII.
      67; _Juvenal_, X. 216; _Petron._ 26; of the turning of water wheels,
      in Egypt and Babylon, by human hands. _Strabo_, XVI. 738, XVII.,
      807. Among the ancients, it required one shepherd, and shepherd boys
      besides, to take care of twenty sheep. (_Geopon._ XVIII, 1.) In
      highly cultivated regions, the number ran up to fifty. (_Demosth._,
      adv. Euerg. et Mnes., 1155.) It seldom passed eighty (_Varro_, De re
      rust., II. 10, 10. 2, 20), or one hundred (_Cato_, R.R. c. 10);
      while, recently, five men are sufficient to take care of eighteen
      hundred sheep. See _Roscher’s_ discourse on the relation of
      Political Economy to classical antiquity, in the reports of the
      Royal Saxon Science Association, May, 1849. Also _D. Hume_,
      Discourses, No. 10.

  310 The productive power of each of the factors of production has been
      over-estimated by some schools. After _Gratian_ (c. i, C. XIII. qu.
      i), had clearly recognized the necessary coöperation of the three
      elements, there was in the one-sidedness with which the Reformers
      emphasized God’s blessing as the only source of wealth, a great
      over-estimation of the factor nature. The Mercantile System
      over-estimated the factor capital, in one of its most obvious
      component parts, money. In later times again: “_La terre est la
      source ou la matière d’où l’on tire la ichesse; le travail de
      l’homme est la forme qui la produit. Tous les hommes d’un état
      subsistent et s’enrichissent aux dépens des propriétaires des
      terres._” (_Cantillon_, Sur la Nature du Commerce, 1755, I. 33, 55.)
      _La terre est l’unique source des richesses._ (_Quesnay_, Maximes
      générales de Gouvernement, 1758, ch. 3.) In another place, indeed,
      the same writer says: _les revenus sont le produit des terres et des
      hommes (Grains_, p. 276, Daire), and _Mirabeau_ frequently laid
      stress on the necessary coöperation of labor and capital.
      (Landwirthschaftsphilosophie, translation by _Wichmann,_ I, 5.)
      _Turgot_, Sur la Formation et Distribution des Richesses, § 7. For
      an excellent refutation of this “Physiocratic” one-sidedness, which,
      if all men are endowed by nature with equal rights, leads to
      socialism, see _Canard_, Principes, 6. According to _Gioja_, N.
      Prospetto, I. 35, the part played by labor, in the production of
      _Parmesan_ cheese, is a thousand times as great as that played by
      the soil; and in the production of a Dutch tulip, a hundred thousand
      times as great. The English are wont, similarly, to over-estimate
      the relative power of labor. (_Ponocratie_, after _Ancillon_, Essais
      philosophiques, 1817, II. 327.) “Commerce and trade first spring
      from the labour of men.” (_North_, Discourses upon Trade, 112.)
      Thus, _Locke_ (1690), Of Civil Government, II, 5, 40 ff., is of
      opinion, that, at least 9/10 of the value of the products of the
      soil, useful to man, are to be ascribed to labor, and, in the case
      of most, even 99/100. And so, _Berkeley_ (1735), Querist, No. 38
      seq. This view is advocated in its boldest form,—a thing unusual in
      the case of the independent disciples of a great master—by
      _McCulloch_, Principles, II, ch. i, that it is to labor, and to
      labor alone, that man owes everything that possesses any value in
      exchange. Similarly, _J. Mill_, Elements (1824), III, 2. The
      consequences which socialism might draw from these premises are
      self-evident. _Karl Marx’s_ whole system, for instance, rests,
      without any attempt at demonstration, on the assumption that the
      Ricardo school is right. Much more moderate views are met with
      earlier. Thus, _Hobbes_, De Cive, XIII, 14, and _Leviath_., 24 (1642
      and 1651), calls _labor et parsimonia_ necessary sources of wealth;
      _proventus terræ et aquæ_ useful ones; and _Petty_, On Taxes (1679),
      47, says: “Labour is the father and active principle of wealth, as
      lands are the mother. Land and labour together are the sources of
      all wealth; without a competency of lands there would be no
      subsistence, and but a very poor one without labour.” _Harris_, Upon
      Money and Coins, 1757, P.I. _Adam Smith_, also, in spite of the well
      known passage at the beginning of his work, very frequently lays
      stress on “the annual produce of land and labour.” (See the passages
      collected in _Leser_, Begriff des Reichthums bei A.S., 97.)
      According to _Leibniz, regionis potentia consistit in terra, rebus,
      hominibus_. (ed. Dutens, IV. 2, 531.) _Ricardo’s_ school is wont to
      bring capital under the head of labor, as saved-up labor. This is
      about as correct as to say, that all that a grown man does, his
      parents had done. (_Umpfenbach_, Nat. Œk., 64.) There is only one
      way in which labor, and even then the expression is not exactly
      correct, can be looked upon as the only factor in production; and
      that is to presuppose the forces of nature as matters of course
      (_als sich von selbst verstehend_), and to call the aggregate use
      made of them by the human mind, labor. Or we might say with old
      _Epicharmos_, that the gods sell all goods for labor. (_Xenoph_.,
      Memor. II. 1.) Moreover, even in purely intellectual productions, in
      poetical productions for instance, nature, labor and experience, the
      culture inherited from former ages (a kind of intellectual capital)
      uniformly coöperate. But how almost completely valueless in
      literature are all entirely pure (empty!) productions of the fancy!

  311 Before the predominance of the Mercantile System, _Montchrétien_
      very cleverly called all trades: _parcelles et fragments de cette
      sagesse divine que Dieu nous communique par le moyen de la raisen_.
      By means of the three estates; _labourers, artisans, merchands, tout
      état est nourri; par eux tout profit se fait. L’utilité règle les
      rangs des arts_. (Traité, 12, 45, 66.) The teaching of _P. Gregorius
      Tolosanos_ (ob. 1597) on the different classes of society and the
      different callings of men, is still more in keeping with the present
      doctrine of production; only, in the moralizing tone of the time, he
      speaks rather of their dignity than of their influence in creating
      wealth: De Rep. I, 195. See, also, the earlier views of _Franc.
      Patricius_ (ob. 1494), De Rep. I, 4, 7, 8.

  312 Compare _A. Serra_, Breve Trattato delle Cause che possono far
      abbondare i Regni d’Oro d’Argento, 1613. _Th. Mun_, England’s
      Treasure by foreign Trade, 1664. _Ch. King_, British Merchant or
      Commerce Preserved, 1721. But, particularly, _A.C. Leib_, Von
      Verbesserung Land und Leuten etc. (1708), who, from the point of
      view of the Mercantile System, draws a very clear distinction
      between the productive and unproductive classes. See, also, _infra_,
      § 116. First thoroughly refuted by _W. Petty_, Political Anatomy of
      Ireland, 67, 82. Quantulumcunque concerning Money (1682). _D.
      North_, Discourses upon trade (1691). See _Roscher’s_ Geschichte der
      englischen Volkswirthschaftslehre, 77, 88, 138. And later,
      especially, _Ad. Smith_, W. of N. IV., ch. 1 ff. _Adam Smith’s_
      doctrine of productive and unproductive labor is to be found
      already, in this period, in _Petty_, Several Essays, 127 ff.
      Political Anatomy, 185 ff; also, in the anonymous work, A Discourse
      of Trade, Coyn and Paper Credit, London (1697), 44, 159.

_  313 Quesnay_, Dialogue sur les Travaux des Artisans, 210 ff.; 289 éd.
      Daire; _Turgot_, Sur la Formation etc., § 8; _Dupont_,
      Correspondence avec J.B. Say, 400, éd. Daire. _B. Franklin_, Letter
      to Dr. Evans (1768), and Positions Concerning National Wealth
      (1769), Works ed. Sparks, VII and II. Similarly even _Aristotle_,
      Oec., I, 2, says, that commerce, wage-labor and war win from men,
      with or without their will; but that only agriculture obtains booty
      from nature. And so _Cicero_ says of merchants: _nihil proficiunt,
      nisi admodum mentiantur_. De Off., I, 42. The same view seems to
      have prevailed during the middle ages. See _Thom. Aquin._, De Rebus
      publicis, II, 3, 5 seq. _Luther_ entertained a like notion (Vom
      Kaufhandel und Wucher, 1524). He prefers agriculture to the trades.
      See the Irmischer edition of his works, XXII, 284; XXXVI, 172; LXI,
      352. _Calvin_ considered commerce both useful and honorable; so that
      _ex ipsius mercatoris diligentia atque industria_, its profit may be
      greater than that of agriculture. (Opp. ed. Amstelod, 1664, IX,
      223.) _Asgill_, Several Assertions proved in order to create another
      Species of Money than Gold (1691): “what we call commodities is
      nothing but land severed from the soil; man deals in nothing but
      earth.” Concerning _Cantillon_, compare § 47, note 4. How violent an
      innovation the Physiocratic theory was in its time may be inferred
      from what _Zincke_ writes in the Leipzig Sammlungen, X, 551 ff.
      (1753), p. 20, XIII, 861.

_  314 Quesnay_, l. c., 189, does not ignore that many workmen earn more
      than the cost of their necessary subsistence; but he claimed that
      this was a result of a natural or legal monopoly of the same. The
      dearer labor was, the more productive it seemed. Per contra, see
      _Dohm_ on the Physiocratic system, in the Deutsch. Museum, 1778, II,
      313 ff.

_  315 Gournay_ (compare _Turgot_, Eloge de G., in Guillaumin’s edition,
      I, 266, 271 ff.), as well as _Raynal_, Histoire des Indes, vol. X,
      Livre 19, spite of the similarity of their and Quesnay’s views,
      acknowledged on this account, the productiveness of industry. For
      some remarkable examples illustrative of how it may increase the
      value in exchange of raw material, see the anonymous work, Paying
      Old Debts without New Taxes, London, 1723. See also _Algarotti_ (ob.
      1794), 318, in _Custodi_, Economisti classici italiani, Parte
      moderna, I. Thus a cwt. of coarse cast iron is converted, in a
      Berlin manufactory, into 88,440 shirt buttons worth 6-⅔ silver
      groschens each. Hence the value is raised from 1-2 thalers to 19,653
      thalers. The increase of the value in use by industrial labor is
      self-evident.

_  316 Quesnay_, Dialogue sur le Commerce.

  317 Recognized very early by _Ad. Contzen_, Politicorum, Lib. VIII, C.
      10 (1629).

  318 This did not escape the notice of Frederick II. _Von Raumer_,
      Hohenstaufen, III, 535.

_  319 Condillac_ acknowledges the productive power both of industry and
      of commerce; and that the service rendered by the state is at least
      economically indispensable. (Le Commerce et le Gouvernment, 1776, I,
      6, 7, 10.) _Beccaria_, Economia pubblica (1769 ff.), IV, 4, 24.
      _Boisguillebert_ (ob. 1714), Sur la Nature des Richesses,
      illustrated the utility of commerce by the picture of a number of
      men bound to pillars, one hundred steps apart, one with a
      superabundance of food but naked, a second with a superabundance of
      fuel, a third with a superabundance of clothing etc.; all of whom
      perish, because unable to exchange their respective surpluses with
      one another. According to _Lotz_, Revision, I, 217, “buying dear,”
      apart from real fraud, means only a decrease of possible gain.

_  320 Verri_, Meditazioni, XXIV, instead of calling the merchant
      productive, calls him a mediator between producers and consumers. It
      would be just as reasonable to call the shoemaker a mediator between
      the production and consumption of leather; or the cloth merchant,
      who cuts the material from the piece, an assistant preparatory to
      the tailor. The labor of commerce is especially like that of the
      fisherman or the turf digger, because they produce only in so far as
      they transfer goods from inaccessible to accessible places. See,
      however, _Rau_, Lehrbuch, I, § 103. See the demonstration of the
      productive power of commerce in general, as well as of what is, by
      way of preference, called industry, in _Ad. Smith_, W. of N., IV,
      ch. 9. A much more fundamental refutation of the Physiocratic
      Principle is to be found in _Jacob_, N. Œk., 204 ff.

  321 In 1843, about 55,000 tons of ice were shipped from Boston. Less
      than 25 cents per ton was paid for the ice in the first instance.
      When packed on board ship, it was worth $2.55 per ton. The ultimate
      sale brought $3,575,000. Ausland, 1844, No. 278. The ancients were
      acquainted with a similar production of ice, the value in exchange
      of which might be almost entirely reduced to the labor of commerce.
      See _Xenoph._, Memor., II, I, 30; Athen. III 97: Proverbs of
      Solomon, 25, 13.

  322 W. of N., ch. 3. See, however, _Garnier’s_ French translation of Ad.
      Smith, Préf. p. IX and V, note 20. Similarly, _Malthus_, Principles,
      ch. 1, Lect. 21. Definitions, ch. 7, 10.

_  323 Bacon_ had already said of the nobility, clergy and literateurs:
      _sorti reipublicæ nihil addunt_ (Serm., 15, 29); in opposition to
      which, _Hobbes_ justly remarks, that even human labor may, like
      other things, be exchanged against goods of all sorts. (Leviathan,
      24.) In the work, Discourse of Trade, Coyn and Credit, p. 44 ff.,
      and p. 156, the absolute necessity of “head-work” as well as bodily
      labor, is conceded; but it is insisted that physicians, clergymen
      and jurists can never enrich a country, and that a relatively large
      number of them would even conduce to national poverty. (See
      _Roscher_, Geschichte der englischen Volkswirthschaftslehre, 138.)
      _David Hume_ considers merchants as productive, but says that a
      doctor or lawyer can grow rich only at the expense of some one else.
      (Discourses, No. 4, On Interest.) _Ferguson_ very cleverly compares
      such a valuation of national wealth to that of a miser. Hist. of
      Civil Society, VI, I.

  324 Similarly _Lauderdale_, Inquiry, 355; _Lotz_, Handbuch der
      Staätswirthschaft, I, § 39, and _Rau_, Lehrbuch I, § 195, concede
      only indirect productiveness to commerce. It may be shown, in a
      great many instances, that such productiveness exists side by side
      with direct productiveness, on account of the thousand ways in which
      all economic threads are interwoven with one another. Thus _Paley_
      remarks in his work on the Principles of Morals and Politics, that a
      tobacco manufacturer even may contribute indirectly to the
      cultivation of grain; an actor, to industry etc.

  325 Thus _Sismondi_, Nouveaux Principes, II, ch. 1, and, earlier,
      _Mengotti_ Colbertismo, 317. (Cust.) See, on the other hand,
      _Hermann_, Staatsw. Untersuchungen, 34 ff. Even _J.B. Say_ does no
      manner of justice, in this respect, to personal services. He speaks
      _of produits qui ne s’attachent à rien qui s’évanouissent à mésure
      qu’ils naissent, qu’il est impossible d’accumuler, qui n’ajoutent
      rein à la richesse nationale_. Compare Catéchisme (3d ed.) 52 ff.,
      174 ff. On the other hand _Dunoyer_, Libertê du Travail, L.V.,
      remarks that here labor and its result are made to change places;
      the former like all labor is very perishable, the latter as lasting
      as in the case of other kinds of labor. In the one case the utility
      is fixed in things, in the other in persons. _Ad. Müller_, Elemente
      der Staatskunst passim, calls special attention to how the kinds of
      labor, called unproductive by _Adam Smith_, preserve the state, and
      in that way, all individual exchangeable goods. Similarly, _Storch_,
      Handbuch, I, 347; _Steinlein_, Handbuch, I, 460. _Lauderdale_ (443),
      however, is correct when he says, that the continued duration of the
      product of labor depends, usually, more on the caprice of consumers
      than on the nature of the labor.

_  326 Garnier_ calls attention to the fact, that there is a great
      quantity of material products, such as laces, perfumes etc., that
      can scarcely be ever used in further production, and, generally
      speaking, one’s resources for the most part are not kept in lasting
      goods, but are preserved by the change of technic forms in
      production. _Hermann_, I, Aufl., 115.

  327 When _Schön_, Nat. Œkonomie, 33, ridicules the idea of the
      productiveness of personal services, by citing the instance of
      prostitution carried on as a trade, he forgets that many material
      goods also may conduce to the moral damage of the purchaser of them.
      It is said that there are in France 3,500 retailers and colporteurs
      of immoral writings and pictures, who sell yearly nine million
      numbers or pieces, at a cost of six million francs! (Moniteur, 9
      Avril, 1853.)

  328 Compare _Schäffle_, Theorie der ausschliessenden Absatzverhältnise,
      1867, 135. seq.

  329 Many of the socialists take a retrograde step in this respect, in as
      much as they consider only manual labor productive. _Fourier’s_
      school particularly, declaim passionately against the
      unproductiveness of commerce and of most personal services. Compare
      _V. Considérant_, Destinée sociale, 1851, I, 44.

  330 Besides the above, see _Gioja_, N. Prospetto, I, 246 ff.;
      _Scialoja_, 42; _J. B. Say_, Traité, I, ch. 2; _Hufeland_, N.
      Grundlegung, I, 42, 54; _Gr. Soden_, Nat. Œkonomie, I, 142 ff.
      _Hermann_, St. Untersuchungen, 20 ff., distinguishes three
      politico-economical points of view; that of the producer, that of
      the consumer, and that of the whole nation’s economy. The producer
      calls his labor productive, in case he receives back his outlay of
      capital with the rate of profit usual in the trade of the country.
      To this point of view, therefore, every service which is paid for,
      according to wish, seems productive. On the other hand, the consumer
      ascribes productiveness to all those kinds of labor the achievements
      of which he may use, and which he can obtain at a convenient price.
      Whenever, therefore, he pays for a service voluntarily, he
      acknowledges its productiveness. Lastly, from a national-economical
      point of view, all labor is considered productive which increases
      the quantity of goods exposed for sale in the market; and this,
      personal services do. The technic productiveness, which depends on
      the execution of the technic ideas floating before the mind of the
      workman, must be distinguished from this economic productiveness. It
      is possible that, technically labor may be very productive, and yet
      cause economic loss; for instance, the fine arts and the so-called
      master pieces of the trades! See _Seneca_, De Benef., II, 33. _H._
      (33) furnishes a very good refutation of the doctrine that a great
      deal depends on whether the labor has been paid from capital or from
      income. _Eiselen_, Volkswirthschaft (1843), 27 ff., remarks, that
      the laborer, for instance, who grows corn, must besides look after
      his health and the preservation of his house; this is a part of his
      necessary aggregate labor. Why, then, should it be called
      unproductive when such secondary labor is performed by particular
      persons? Otherwise the farmer would have no time whatever for his
      principal business! Edinburgh Review, 1804, IV, 343 ff.;
      _Wakefield_, An Essay upon Political Economy, 1804, who is concerned
      mainly with the theory of the productiveness of labor. _L.
      Lauderdale_ says, that when the nation’s wealth is estimated
      according to its value in use, all useful labor is productive; and
      that when estimated according to its value in exchange, all labor
      that is paid is productive. (Inquiry, ch. 3.) _Stein_ (Lehrbuch, 68;
      Tüb. Zeitschr., 1868, 230) conditions the notion of productiveness
      by the presence of a superfluity of values. But, it may be asked,
      does a family, which does no more than support itself, labor
      unproductively? (Compare, however, § 30.) _J. S. Mill_ took a
      surprisingly retrograde step in the doctrine on this point, in his
      Principles, I, ch. 3. Compare his Essays on some unsettled Questions
      of Political Economy, No. 3. A still more surprising exaggeration in
      _de Augustinis_ Instituzzioni di Economia sociale (Napoli 1837), who
      goes so far as to call a person guilty of arson a productive person
      because he has produced for himself “the pleasure of destruction”!
      More recently, _von Mangoldt_ distinguishes between economic labor
      and the labor of culture: the latter is incorporated into the man
      himself, the former one employed on the external world, in order to
      transform it in a way corresponding to human wants. Viewed from the
      stand-point of Political Economy, the latter only is productive.
      (Volkswirthschaftslehre, 1865, 26 ff.)

  331 We might, indeed, compare original production, that which preceded
      all other, to eating; the trades, to digestion; commerce, to the
      movements of the several members of the body; personal services to
      inspiration, and yet all are equally necessary to the life of the
      body! Thus, _Gamilh_ compares agriculture to the root of a tree of
      which the service rendered by the state is the top. The growth of
      the latter contributes, as well as that of the former, to the
      nutrition of the whole, and is far removed from exhausting the tree.
      Théorie de l’ E.P., II, 46 ff. “Natural production” would, indeed,
      accomplish very little without the legal protection guaranteed by
      the state, or without the tools furnished by industry etc. But it
      is, besides, in most instances, a distortion of the truth to speak
      of productive and unproductive men or classes of men. These
      expressions are proper only when applied to individual kinds of
      labor. See _Murhard_, Ideen über Nat. Œk., 88 ff. Persons seriously
      ill are temporarily unproductive, and children who die early, are
      unproductive for their whole life.

  332 Not, however, in the case in which the loser estimates the pleasure
      of the play higher than the loss.

_  333 J. B. Say_, Traité, I. ch. 1.

_  334 v. Cancrin_, Œkonomie der menschlichen Gesellschaften, 1845, 10,
      speaks, in this case, of privative production. Among the Socialists,
      _Bazard’s_ expression _l’exploitation de l’homme par l’homme_, has
      found loud echo; instead of which only _l’exploitation du globe par
      l’homme_ should be allowed to obtain. (Exposition de la Doctrine de
      St. Simon, 24.) But _von Schröder_ had already warned the world of
      “imagined food” which led only to idleness. (F. Schatz- und
      Rentkammer, 191, 363.)

  335 Therefore, there should not be too many nor too highly salaried
      offices. See _Storch_, Nationaleinkommen, 33 ff.

  336 See _v. Mangoldt_, Volkswirthschaftslehre, 29 ff.

_  337 Remained_, and not _become_, poor, as is generally supposed; for
      the enormous wealth of Spain, under Ferdinand and Isabella, as well
      as during the early period of Charles V. is only a _fable convenue_.
      Charles V. said: France has a superabundance of everything, and
      Spain is in want of everything. See also the embassy report of
      _Navagero_ (1526), Viaggio fatto in Spagna e in Francia (Venet.,
      1563), and _Ranke_, Fürsten und Volker, I, 393 ff.

  338 The prize was won by _Arreta de Monteseguro_. The author of the
      history of Portuguese Asia, translated by _Stevens_, is of opinion
      (III, ch. 6), that commerce is not a proper subject for serious
      history to treat.

  339 There is a very fine description of this spirit in _Clenard_, Epist.
      I. ad Latomum (1535 ff.) Compare _Juvellanos_, in _Laborde_,
      Itinéraire déscriptif, IV, 176. _Townsend_, Journey through Spain,
      II, 207, 117. _Buckle_, History of Civilization, II, ch. I. The
      census of 1788 gave the number of priests and monks, soldiers,
      mariners, nobles, lawyers, tax-gatherers, authors, students and
      domestics, at 1,221,000, in a total of 3,800,000 men; from which
      number there was a multitude of beggars, vagrants etc. to be
      deducted. _Laborde_, Itinéraire, II, 32 ff. The seventeen
      universities and the numberless small Latin schools, with their
      gratuitous instruction, and their many scholarships, misled a
      disproportionately large number to engage in study. At the beginning
      of this century, there were at least 200,000 priests, nuns
      (_Geistliche_), etc., in a population of from three to three and a
      half millions only. (_Ebeling_, Erdbeschreibung von Portugal, 66.)
      _Senior_ shows that the poverty of the Osman is caused by too many
      state employees, tax-farmers and retail merchants. (Journal kept in
      Turkey and Greece, 1857-58.) Thus, also, _J. Tucker_, Four Tracts,
      1774, 18, contrasts men engaged in industry with rich idlers, whose
      increase, possibly by immigration, would make the people a nation of
      “gentlemen and ladies, footmen, grooms, laundresses etc.”
      _Schmitthener_, N. Œk., 656, calls a condition such as that of
      Spain, “national-economical phthisis.”

_  340 Tucker_, Progress of the U.S., 137. The following data also will
      serve for a comparison: In Belgium, in 1856, it was estimated that,
      leaving persons _sans profession_ out of consideration, 45.6 per
      cent. were agriculturists, 37.2 industrials, 6.7 in commerce, 2.8 in
      the liberal professions, 1.5 _force publique_, 2.1 _propriétaires,
      rentiers, pensionnés_, 3.7 _domesticité_. In Prussia, in 1871, of
      the entire male population, 28.6 per cent. were engaged in
      agriculture, forest-culture, hunting and fishing: 32.3 per cent. in
      mining, industry, building, and in founderies: 8.56 in trade and
      commerce; 20.3 in personal services and handiwork not belonging to
      any of the groups above mentioned; 2.3 in the army and navy; 3.7 in
      other callings; 2.7 were renters, pensioners, and persons who lived
      by selling or renting houses, reserving lodgings for themselves
      therein, and persons who gave no account of their calling. (Preuss.
      statisc. Zeitschr., 1875, 32. ff.) It is, however, surprising that
      _Engel’s_ Amtl. Jahrbuch, III, 1867, gives only 48 per cent. as
      belonging to the first category, and 25 to the second. In the
      kingdom of Saxony in 1861, 25.1 per cent. of the population were
      agriculturists and foresters; 56.1 were engaged in industry; 7.7 in
      trade and commerce; 6.8 in art, science, the service of the state
      and of private persons; while 4.1 per cent were without any
      particular calling, or returned none. Bavaria, in 1852, had 67.9 per
      cent. of its population engaged in agriculture; 22.7 in the trades
      and in manufactures; 5.5 per cent., persons living on the interest
      of their money, and by performing the higher class of personal
      services; 1.9 in the army; and 2 per cent. of listed poor. In
      _Hermann_, Beiträge zur Statistik des Königreichs Bayern. In France,
      according to the official reports, there were:

      _Agriculteurs_ 61.46 per cent. in 1851, 51.49 per cent. in 1866;
      _Industriels et commerçants_ 25.95 per cent. in 1851, 32.78 per
      cent. in 1866;
      _Professions libérales_ 9.73 per cent. in 1851, 9.48 per cent. in
      1866.

      To which it must be added, that, in 1851, there were 2.86 _sans
      profession ou dont les professions n’ont pu être constatées_; and
      that, in 1866, on the other hand, there were 2.87 per cent. in
      _professions se rattachant à l’agriculture, industrie et commerce.
      (Legoyt.)_ In England and Wales, leaving the domestic class out of
      consideration (women without an independent means of employment,
      school children, servant girls etc.), and also the “indefinite
      class,” there were, in 1861, 25.3 per cent. of the population
      engaged in agricultural pursuits; 60.7 in industrial; 7.8 in
      commercial; and 6.06 in professional pursuits. In Italy, omitting
      housewives, children and infirm persons, there were, in 1862, 57.4
      per cent. of the population engaged in agriculture; 22.9 in
      industrial pursuits; 4 in commerce; and 3.9 per cent. in the army
      and in the liberal professions. (Annali univ. di Statistica, Febbr.,
      1866.) On Holland, in the middle of the 17th century, see _J. de
      Wit_, Mémoires, 34 seq.

_  341 Csaplovics_, Gemälde von Ungarn II, 1. _Torrens_, The Budget: On
      commercial and colonial Policy, 106 ff.

  342 Precisely as there are more people ruined by spirituous liquors than
      by bread. Time thieving is also more frequent among servants. There
      is scarcely anything in agriculture analogous to the lazzaroni who
      wait all day to help a gondola to land, to unload a coach, etc.
      There is more in the chase, in the fisheries, or in the cattle
      raising.

  343 Compare _Bastiat_, Harmonies économiques, ch. 17. Hence _Sismondi_
      accounts it one of the chief merits of the constitutional state,
      that in it, the _population gardienne_ does not regulate its own
      remuneration. (N.P., I, 144.) _Saint Simon_, indeed, says that the
      French members of the _Chambre_, in his time, drew a revenue from
      the state, three times as large as from their own resources, and
      were, therefore, deeply interested in increasing the budget. (Vues
      sur la Propriété et la Législation, 1818.) I would call attention
      also to the national over-estimation and over-crowding of learned
      callings from which Germany suffered, even as far back as the time
      of Louis XIV. (_v. Schröder_, Fürstl. Schatz-und Rentkammer, 302
      ff.); to the disproportionate number of keepers of public houses,
      which is related to the system of popular assemblies, and is a
      regular attendant upon Democracy (_Bronner_, Der C. Aargau, I, 451.)
      Taxation-legislation may here become a good means of popular
      education.

  344 This was recognized very early by _Gregor. Tolsan_, l.c. _Ad.
      Müller_, Elemente, II, 255. _Storch_, Handbuch, II, 229 ff.
      (_Schleiermacher_, Christ. Sitte, 668.) _A. Smith,_ W. of N., II,
      ch. 5, ascribed greater productiveness to agricultural than to
      industrial labor; in the former case, not only human labor was put
      in operation, but the forces of nature were compelled to coöperate
      with them. Similarly, _Malthus_, Additions (1817) to the Essay on
      the Principle of Population, B. III, ch. 8-12. Principles of P. E.,
      217 ff. Both thus explain the rent of land, and so far as products,
      which have only value in exchange are concerned, they are right.
      Hence it is all the more surprising that _Carey_, the zealous
      advocate of a protective tariff and opponent of rent, comes back in
      this to Adam Smith. Principles of Social Science, 1858, II, 35, and
      passim. Compare also _J. B. Say_, Traité, II, ch. 8; _Sismondi_, N.
      P., II, ch. 5. For the best refutation of this view, see _Ricardo_,
      Principles, ch. 2, 3. Does not all labor put the force of nature in
      operation? _Ad opera nihil aliud potest homo, quam ut corpora
      naturalia admoveat, reliqua natura intus transigit._ (_Bacon._)
      Similarly, _Verri_, Meditazioni, III, 1. An expression escapes even
      _Ricardo_ himself (ch. 7), to the effect, that capitalists are the
      producing class.

  345 Relying on very superficial statistics of England and France,
      _Ganilh_ advocates a theory of the productive forces of the several
      branches of economy the very reverse of _Adam Smith’s_. He places
      foreign trade first; then follow wholesale trade, industry and
      agriculture. (Théorie, I, 240 seq.)

  346 Ausland, 1846, No. 54. Expressions still used in Europe, such as
      _Spindelmagen_ (spindle-relation), _Kunkellehen_ (apron-string-hold)
      etc., for instance, suggest this most ancient and purely family
      division of labor. The lower classes of the population, even in the
      most civilized countries, are wont to preserve some of the peculiar
      customs of very primitive times. Hence it is that among
      proletarians, the division of labor between males and females is
      still very small. The employments usual at different stages of life
      among men, and the costumes worn by them are much more uniform than
      among the higher classes. See _Riehl_, Die Familie, 1855, passim.

  347 As _Dankwardt_ shows, the _jus civile_ of the earliest Roman time is
      based on the condition of isolated labor, the later _jus gentium_,
      on the division of labor. N. Œk. und Jurisprudenz, 1857, Heft. I.

_  348 Saxo Gramm._, Hist. Dan. V, 101. _Turner_, Hist. of the A. Saxons
      B. VII, ch. 11. Nibel., 351 ff. There is a French proverb: _du temps
      que la reine Berthe filait_. Queen Bertha was a mythic daughter of
      Charlemagne. It may be that the character meant is the old German
      spinning goddess Berchta. Concerning the daughter of Otto the Great,
      see _Dithmar_, Merseb. II. _Homer_, Od. V, 31 ff.; X, 106; XXIII,
      189 ff. _Herodot._, VIII, 137. _Livy_, I. 57.

_  349 Eden_, State of the Poor I, 558 ff. In the interior of Peru, the
      priest is also usually a shop-keeper (_Pöppig_, Reise, II, 365); in
      Canada, as in many of the villages of the Alps which are not often
      visited, a hotel keeper. In countries with an unadvanced
      civilization, the little division of labor that exists is also very
      awkwardly regulated. Thus in Russia, weak children are very
      frequently put to work on farms, while powerful men are found in the
      city offering all kinds of eatables and the pictures of saints for
      sale. (_Storch_, Gemälde des russischen Reichs II, 364. _v.
      Haxthausen_, Studien I, 335.)

_  350 Babbage_, Economy of Machinery, 1833, 201. _L. Faucher_, Angleterre
      II, Ch. “_la Ville des Serruriers_.” The industrial statistics of
      Paris, furnished by _H. Say_ in 1847 and 1848, show that in that
      city alone there are 325 different branches of industry, 17 of which
      are concerned with the production of food; 21 with building; 32 with
      the manufacture of furniture; 21 with that of clothing; 36 with that
      of thread and tissues; 7 with skins and leathers; 14 with vehicles,
      saddlery, and military equipment; 33 with chemicals and pottery; 33
      with working in metal, glass etc.; 35 in that of the precious metals
      and jewels; 27 with printing, engraving and paper; 15 with that of
      wooden-ware and wicker-ware; 34 with _articles de Paris_. Journal
      des Economistes, Janv., 1853, 107. According to the industrial
      almanac of Birmingham, there are in that city manufacturers of
      buttons in gold, silver, metal, mother-of-pearl etc.; manufacturers
      of hammers, ink-stands, coffin-nails, dog-collars, tooth-picks,
      stirrups, fish-hooks, spurs, pack-needles etc.

  351 And so with the subdivisions. Flannel is manufactured almost
      exclusively in Halifax, woolen blankets between Leeds and
      Huddersfield etc.

  352 The same division of labor was developed among the Dutch in the 17th
      century, and excited then the wonder of the English. See _Sir W.
      Temple,_ Observations upon the U. Provinces, 1672, ch. 3. Works, I,
      128, 143. In 1615, _Montchrêtien_ held up the Flemish as a model to
      the French, in this respect.

  353 On the bees, see _Virgil, Georg._ IV, 158.

  354 The principle of the division of labor was known to the ancients:
      _Xenophon_, Cyri Discipl., VIII, 2, 5. _Plato_, de Rep., II, 369,
      III, 394, IV, 443; _Isocrat_., Busir., 8. _Aristot_., Polit., II, 8,
      8. Among the more modern writers, compare _Thomas Aquin_., De Reg.
      pr., I, 1, II, 3. _Luther_ (Works by Walch, I, 388), in his
      Commentary on Genesis, 3, 19. _Petty_, Several Essays, 1682, p. 113.
      Considerations upon the East India Trade, London, 1701. _Roscher_,
      Geschichte der englischen Volkswirthschaftslehre, 118. _Mandeville_,
      The Fable of the Bees, enlarged edition of 1723, p. 411. _Berkeley_,
      Querist, 1735, No. 415, 430, 520 ff., 586: “What is everybody’s
      business is nobody’s.” _Harris_, on Money and Coins (1757), I, 16.
      _J. J. Rousseau_, Emile (1762), L. III. _Turgot_, Sur la Formation
      et la Distribution des Richesses, § 3, p. 50, 62, 66. _Diderot_,
      Encyclopédie de l’Art, s. v. Art. _J. Tucker_, Four Tracts (1774),
      p. 25 ff. _Boccaria_, Economia pubblica, I, 1, 9. But the author to
      whom we owe most on this score is undoubtedly _Adam Smith_. To him
      we are indebted almost entirely for our knowledge of the natural
      laws developed in § 59 seq.

  355 According to _Adam Smith_, a nailer can make 2,300 nails (_Rau_ says
      3,000 shoemaker’s tacks in the Odenwalde) per day; a smith who is
      only occasionally employed in the manufacture, from 800 to 1,000;
      and smiths who never made nails before, from 200 to 300. A clever
      filer makes 200 strokes in a minute; a skilled comb-maker can make
      in a day from 60 to 70 combs of such fineness that there are from 40
      to 48 teeth to the inch in them; eight Liege brick-makers, working
      together, produce 4,800 bricks per day; children employed in a
      needle manufactory, in making the eyes of needles, grow so skillful
      at it that they can make a small hole in the finest hair and draw
      another hair through it. _Rau_, Lehrbuch I, § 115. The old proverb,
      “practice makes perfect,” is followed even by thieves in their great
      division of labor. See _Thiele_, Die jüdischen Gauner I, 87.
      _Fregier_, Des Classes Dangéreuses.

  356 Children, with their thinner fingers, can point twice as many
      needles in the same time as a grown person.

  357 The manufacture of English needles demands, on the part of workmen,
      degrees of skill so different that their pay varies from 6 pence to
      20 shillings per day. If the most skillful workman were to
      manufacture whole needles alone, he would partly be obliged to be
      satisfied with one-fortieth of what he might otherwise receive.
      _Babbage_, loc. cit.

  358 In the case of machines and in the chemical branches of industry,
      the labor increases in a much smaller ratio than the material used
      in production.

  359 In opposition to monopolies, and to practical constraint which has
      its source in ignorance etc.

  360 Hence _Torrens_ calls foreign trade the “territorial division of
      labour.” (Essay on the Production of Wealth (1821), 155 ff.)

  361 See _Bastiat_, Harmonies, ch. 1, for a very beautiful exposition of
      the doctrine that each man receives much more from society than he
      accomplishes on his part, for it.

  362 The working together of a great number of persons is often carried
      on to the detriment of agriculture, for each then waits for all the
      others to work, throws all the blame on them etc. (_Columella_, I,
      9.) As many a housekeeper must have observed, two seamstresses or
      ironers accomplish, in a day, less than one, in two days. Of course,
      this rule does not apply in the case of work which cannot be
      performed by one man, under any circumstances, or the magnitude of
      which would easily discourage him, and in which mutual aid is easily
      obtained; as in the raising of heavy loads, the construction of
      roads, dikes etc.

_  363 Ad. Smith_, B., II, Introd. _Hufeland_, Neue Grundlegung, I, 215.
      In many instances, a division of labor, of course, favors the saving
      of capital. If every workman needed all the tools necessary to the
      work in which he participates, three-fourths of them would have to
      lie idle at present. _J. Rae_, New Principles on the Subject of
      Political Economy, 164.

  364 This necessity is observable, although in a peculiar form, even
      where what has been called the “despotic organization of labor”
      prevails, instead of freedom.

  365 In the highlands of Scotland, in Adam Smith’s time, there were no
      smiths who manufactured nails only; for the reason that no smith had
      a market for more than 1,000 nails a year, that is not for so many
      as might be manufactured in a single day.

  366 It is of course very different when there is question of a foreign
      market, even if it be only indirectly. Thus, for instance, there are
      in the Hartz mountains, persons who are simply post-makers,
      trough-makers, chess-wood-makers, block-hewers, shingle-makers etc.

  367 Too much should not be inferred from the existence among the
      Egyptians of physicians, specialists for the several members of the
      body. _Herodot._, II, 84. Something analogous is to be found even
      among barbarous nations; but it is accounted for entirely by the
      superstition of the people. See _Klemm_, Kulturgeschichte, I, 266.

  368 In the whole of Hesse, there were under Philip the Magnanimous, only
      two apothecaries, one at Cassel and one at Marburg. _Rommel_, Gesch.
      v. Hessen, IV, p. 419, note. And there were no bakers among the
      Romans before the time of the war with Perseus. All the bread needed
      by the family was baked by the wife or by female domestics. _Plin._,
      H. N. XVIII, 28. The common oven in new towns marks the period of
      transition. Even yet, in the central part of France, there are
      localities where each family bakes its own bread for a whole month
      in advance; and, in the Alpine departments for even a year in
      advance. _M. Chevalier_, Cours II, 366.

  369 It is obvious from the foregoing that, in decaying nations, in which
      the market contracts and capital decreases, the division of labor
      also must grow less.

  370 According to _Arago_, a horse uses the same amount of force to draw
      20 cwt. along an ordinary road that he does to draw 200 over a
      railroad track, or 1,200 on a canal. He could carry scarcely 2 or 3
      on his back! Moniteur, 1838, No. 116. It is, however, certain that
      the introduction of our railroads has somewhat detracted from the
      advantages of coasts.

  371 Compare _Humboldt_, Essai politique sur l’Ile de Cuba, II, 205.

_  372 Strabo_, II, 121 ff. In Europe, there is one mile of coast to every
      31 square miles in the interior; in North America, to 56; in South
      America, 91; in Asia, 100; in Africa, 142. (_Humboldt._)

  373 If the original connection of the Caspian sea and the sea of Aral
      with the Frozen Ocean were still in existence, it is probable that
      an Asiatic Scandinavia would have been formed in consequence.

  374 What is true of the sea in this respect may be claimed, also, though
      in a less degree, for the streams that carry the civilizing fruits
      of the coasts far into the interior. Nearly all large cities not
      situated on the harbors of coasts derive their importance from
      rivers; especially when they have been built on spots adapted by
      nature to the transhipment of merchandise. That Venice finally
      eclipsed Genoa is to be ascribed, in greatest part, to its control
      of an important stream, the Po. The economic importance of Holland,
      of Hamburg and Bremen will, in the long run, bear the same relation
      to one another as the geographical importance of the valleys of the
      Rhine, Elbe and Weser. As nothing is more disastrous to a nation
      than the loss of its coast (we need only cite the efforts of the
      Lybian kings and, later, of Philip of Macedon to conquer the Greek
      colonies on their coasts; and in more recent times, of Russia before
      Peter the Great, or of the Zollverein without the shores of the
      German sea), so, also, the economic and political influence of a
      stream increases as one approaches its mouth. Hence the
      justification of the great interest taken by Germany and Austria in
      the question of the Danubian principalities. The United States
      recognized this fact when they purchased Louisiana for 80,000,000
      francs. _Bignon_, Hist. de France III, 111 seq. Readers of history
      are familiar with the important part played by the three Asiatic
      Mesopotamias: that between the Euphrates and the Tigris; that
      between the Ganges and the Brahmapootra; that between the Hoang-Ho
      and the Yang-tse-Kiang, to which finally the Punjab might be added.
      This relation is recognized by popular consciousness, in the case of
      the Ganges, by the belief in the sacredness of the stream. No river
      has had so much influence on civilization as the Nile: its
      periodical risings have made the labor of agriculture
      extraordinarily easy; their extent and regularity favored the
      progress of astronomy; the flooding over of the land led to geodesy;
      the hydraulic labors necessitated by the rising of the waters
      produced a school of architecture to which the river furnished an
      excellent means of transportation for the enormous masses to be
      moved. _K. Ritter_, Erdkunde, I, p. 880 seq; VI, p. 1,168 seq. In
      this matter, also, America and Europe have the advantage over Asia
      and Africa. While the Danube is, in places, scarcely three German
      miles from the Rhine—which, however, flows in an almost opposite
      direction—in Asia, the eastern streams are separated from the
      western, and the northern from the southern, by a strip of land
      difficult to be traveled, and about 300 German miles in extent.
      Besides, the principal streams of northern Asia have their exit into
      the Frozen Ocean, a fact which diminishes their importance greatly.
      The source of the Missouri is only about one mile distant from the
      Columbia river, although the two flow towards opposite seas.

  375 The law governing the march of civilization from the mountain to the
      plain and to coast lands was observed even by _Strabo_, XIII, 592,
      and partly by _Plato_, De Leg., 677 ff.

  376 Thus, for instance, that all the customers of a shoemaker together
      form a shoe-association etc. _Dunoyer_, Liberté du Travail, L. IV,
      ch. 10.

_  377 Storch_, Handbuch, III, 188 ff. The Dutch traveler, _Usselinx_,
      speaks in a similar way of the imitativeness and many-sidedness of
      the Swedes (Argonautica Gustavica, 20). Chilian servants (_peones_)
      are a good combination of the cook, the muleteer, builder, courier
      etc. Once they have passed over a road, they never forget it. A
      knife stands them in stead of most tools, and pieces of leather in
      stead of nails. _Pöppig_, Reise, I, 171 ff.

_  378 von Haxthausen_, Studien, I, 63, 113. In 1827, a Russian hatter got
      12 rubles for a hat, a German one 35 (_Schön_, N. Œkonomie, 78).

  379 See the report of a large manufacturer in _Kohl_, England und Wales,
      p. 332 seq.

_  380 Raynal_, Histoire des Indes (1780), L. XV. And so _Rousseau_,
      Discours sur l’Inegalité (1754), who also declaims against all kinds
      of capital; were there no ladders, men would climb better; and throw
      a stone better if they had no slings. There is certainly a
      misunderstood truth in this saying. It is assuredly very salutary,
      in the actual state of society, in which every one’s business is
      transacted for him by some one else, that a time should occasionally
      come when no one can take our place, and a man can only call upon
      himself. And herein lies the immense value which just war, when not
      much prolonged, but which is brought to a happy termination,
      sometimes has upon the life of a people.

  381 The American savages are, on an average, weaker than the whites. In
      a fist-fight the Kentuckians and Virginians showed themselves far
      superior to the Indians. See _Lawrence_, Lectures, 403, _supra_, §
      40.

  382 For a very unprejudiced estimate of the dark and bright sides of the
      division _of labor_, even before Adam Smith’s time, see _Ferguson_,
      History of of Civil Society (1767), IV, I, V, 3 ff. Also _Garve_,
      Versuche, III, 41. _Adam Smith_ was not blind to the dark side of
      the division _of_ labor, which, in part, he would remove by popular
      instruction at the expense of the state, and by a species of
      compulsory education. W. of N., V, ch. 1, 3, art. 2. One of the
      chief peculiarities of _J. Möser’s_ Political Economy is his great
      opposition to all highly developed division of labor. Patr. Ph., I,
      2, 21, III, 32, 34.

_  383 von Ledebur_, Reise in Altai, I, 384. The working together of wife
      and child, introduced recently by manufacturers, cannot be
      considered as a higher grade of the division of labor, but only as a
      very unfavorable change in the kind of it; inasmuch as it were
      better to employ the women in their domestic avocations and to leave
      children to their studies and their sports. Among the higher
      classes, it should be made the part of female education, to
      counterbalance, in the family, the effects of the ever increasing
      division of labor among the male portion, by the development of that
      which is universally human—art, sociability, house-keeping etc.

_  384 Schleiermacher_, Christliche Sitte, 465 ff., 676 ff., 154 ff. From
      a similar feeling, although much exaggerated, the Greeks of the
      classic age proper considered all callings followed for gain
      dishonorable, not excepting even those of the physician and of the
      teacher. _Plato_, de Rep., I, 347 ff. _Aristot._, Rhet., I, 9, 27:
      μηδεμίαν ἐργάζεσθαι βὰναυσον τέχνην, ἐλευθέρον γάρ τὸ μὴ πρὸς ἄλλον
      ζην.

  385 As, for instance, the superintendent of a manufactory must have a
      better general training, but can get along with less of a special,
      than his workmen.

_  386 Thucydides_ says of the contemporaries of Pericles: “The same men
      devote themselves, among us, in part to domestic and political
      business; in part, others who busy themselves with agriculture and
      industry have no mean knowledge of the affairs of state. We call
      those who take no part in the former not people loving their ease,
      but useless men.” (II, 40.) During the succeeding period, Athens was
      destroyed mainly by the ever increasing division of labor between
      citizens and soldiers. For, “to separate the arts which form the
      citizen and the statesman, the arts of policy and war, is an attempt
      to dismember the human character, and to destroy those very arts we
      mean to improve.” (_Ferguson._) We know from _Valerius Maximus_,
      that the Roman soldiers from the time of Marius had, doubtless, a
      better technic training than their ancestors who who defeated
      Hannibal; but was it in a military or political sense that they were
      thus better trained? The beautiful definition of Cato intimates
      something of the same nature; the good orator was _vir bonus dicendi
      peritus_. (_Quintilian_, XII, I.) And so _Garve_, Versuche, IV, 51
      ff., expects from the political elevation of citizenship, of those
      possessed of the right of citizens, not only usefulness in a
      particular direction but the development of the whole man, a thing
      hitherto expected only of the nobility.

  387 As one’s peculiar calling does not take up all his life, we must
      draw a clear distinction between the one-sidedness of labor and the
      one-sidedness of life, (_von Mangoldt_, Volkswirthschaftslehre,
      227.) Only the last is to be avoided at all hazards; and we find it
      in the middle ages, with its limited divisions of labor, perhaps
      more frequently than where civilization has attained a higher stage.
      During the middle ages, it was not unusual to make feelings which
      every one should cultivate at times, if only temporarily, the
      lasting calling of some. Thus one prayed his whole life long, or was
      engaged in contemplation, and relieved others of the necessity of
      performing these duties. The consequence was, that the latter sank
      as deeply in worldliness and want of the interior spirit as the
      former were plunged in idleness and hypocrisy. But, on the other
      hand, when, in our day, the printer relieves the writer of a portion
      of the labor which might be his, the personal development of neither
      suffers.

_  388 L’uomo è un’ tal potenza, che unita all’ altra non fa un eguale
      alla somma, ma al quadrato della somma._ (_Genovesi._) As to how the
      action of every individual man is a species of division and union of
      different kinds of labor, see _Stein_, Lehrbuch, 24.

  389 Compare _Ad. Müller_, Elemente der Staatskunst, III, 1809. _Fr.
      List_, System der polit. Œkonomie, 222 ff., 409 ff. _Wakefield_, in
      his edition of Adam Smith, distinguishes two degrees of coöperation,
      simple and complex. In the case of simple labor, the same sort of
      work is performed at the same time and place by several individuals,
      as, for instance, by a lot of hod-carriers in building. In the other
      case, there are different kinds of work performed at different times
      and places, but all intended for the one greater end. Agriculture
      affords room for the first especially, and it is known also to a
      great number of animal species.

  390 Flemish weavers in England, French refugees in Protestant countries;
      German miners in Spain, Scandinavia, Hungary and America.

  391 This, so very largely developed in Egypt and India, where the
      principle of caste obtains, is very little developed in the
      despotisms of Asia. The great princes, in the latter countries,
      build largely from vanity only. Hence their successors seldom
      complete their works, and scarcely repair them. Nowhere else are
      there so many half completed and yet decaying buildings. _Klemm_,
      Kulturgeschichte, VIII, 86. _Riedel_, N. Œkonomie I, 259, very
      correctly remarks that such kinds of coöperation as contribute most
      to the propagation of skill, both in commerce and manual labor, have
      less real division of labor, and vice versa.

  392 Compare _Leplay_, La Réforme sociale en France (1864).

  393 Concerning association in general, see _M. Chevalier_, Cours, III,
      Leçon, 24, 25. On this subject so much talked of in our day, see,
      more in detail, concerning its application to agriculture, my work,
      Nationalökonomik des Ackerbaues, 4, § 39, 47 ff.; 68, 133 ff.; on
      its application to industry, especially where there is question of
      the relation of handiwork and manufactures to large factories; see
      _Roscher_, Ansichten der Volkswirthschaft, II, Aufl., 1861,
      Abhandlung, IV, V.

_  394 Adam Smith_ remarked that the laws of the division of labor obtain
      also in intellectual works; and indeed, among all nations in a very
      low grade of civilization, the germs of all art and science are
      found connected with theology; and later, the germs of all poetry
      and history with the epic. The expression: _non defuit homini, sed
      scientiæ, quod nescivit Salmasius_, is a clear proof of the
      insignificance of the science of the time. Think of the increase
      during the last hundred years of the branches of study in our German
      universities. There are now thirty-four regular professors in the
      Leipzig philosophical faculty, where then there were only nine. But
      here also the principle proves true, that an excessive division of
      labor, where the broader connection and the deeper foundation of all
      sciences disappear from the consciousness, undermines intellectual
      health and freedom. And the injury here is greater and more
      irreparable than in the domain of mere physical labor. See
      _Hufeland_, N. Grundlegung, I, 207 ff. If we have just become
      Alexandrians, we have, however, no Aristotle to hope for.
      _Jurisprudentia est divinarum atque humanarum rerum notitia, justi
      atque injusti scientia_ (_Ulpian_). It is remarkable that nations
      who possess no real national literature of their own, when they once
      get beyond the bounds of utter barbarism, learn foreign languages
      etc., most easily.

  395 The socialistic utopia of _Ch. Fourier_ (Théorie des quatre
      Mouvements, 1808. Théorie de l’Unité universelle, 1822. Le nouveau
      Monde industriel et sociétaire, 1829) are based upon the following
      fundamental ideas. A. The present civilization is that of a
      topsy-turvy world, especially in so far as it ascribes a “moral” (a
      word always used by him in an ironical sense) self-government to
      man. In Fourier’s world, on the other hand, every man is supposed,
      at all times, to give free rein to every _passion_; and the play of
      these gratifications constitutes the _harmonie_, in which the
      poorest find more enjoyment than do kings at the present time. (See
      § 207 of this work.) B. The main thing to further this is a radical
      reform in the division and cooperation of labor as they exist at
      present. Instead of the present villages and cities, we should have
      only phalansteries, each with 2,000 inhabitants, and situated in the
      center of the land cultivated by them. Instead of the present
      nations and states, we should have a universal confederate republic,
      hierarchically graded, with French as the universal language.
      According to the demands of the _passion papillonne_, each one
      should carry on the most different kinds of business side by side,
      and each one of them at most two hours per day; i.e., every one
      should be a dilettante, no one a master, and everything should be
      done as badly as possible. _Proudhon_, Contradictions économiques,
      ch. 3, objects to this, that a workman must, in some way, be held
      responsible for his work. _Fourier_ himself calculates that, in his
      _harmonie_ all pleasures are productive labor; and that by this
      constant change, one might be satisfied with from 4-½ to 5-½ hours
      of sleep, and that even children 2-½ years old might take part in
      the work. Thus, there would be a great rivalry between apple-growers
      and pear-growers, so great “that more intrigues in attack and
      defense [_passion cabaliste_] would arise there than in all the
      cabinets of Europe,” in the settling of which the growers of quinces
      would act as intermediaries. There are, in addition to all this,
      wonderful aids; a fructifying crown of light rises over the north
      pole; oranges bloom in Siberia; the sea becomes as delicious as
      lemonade; dangerous animals die, and in their stead anti-lions and
      anti-whales come into being, animals useful to man, which draw his
      ships for him during calms. These ideas are by no means retracted in
      _Fourier’s_ later works, See Nouveau Monde (Oeuvres) IV, 447. The
      propositions of _Robert Owen_, A new View of Society (1812), have
      much similarity with those of Fourier. They differ only in the
      absence of the French barrack-like character of the phalanxes, and
      the fantastic character of the presentation of the doctrine. He
      would have all the land divided into districts of 1,000 acres each;
      each district to have a four-cornered town with 1,000 inhabitants,
      following a system of production and consumption in common, but not
      with full equality; carrying on both agriculture and other business.
      A principal feature here is an entirely new system of education. The
      author says that man has hitherto been the slave of an execrable
      trinity: positive religion, personal property and indissoluble
      wedlock. (Declaration of mental independence.)

  396 Compare _Tacitus_, Histor., II, 44.

  397 See _Iselin_, Geschichte der Menschheit (1764), III, 7. _Bazard_,
      Exposition de la Doctrine de Saint Simon, 1831, 153. Among negro
      nations deprivation of freedom is one of the most usual punishments
      for crime; but the criminal has the option of substituting his wife
      or child for himself. _L.A. de Oliveira Mendez_, in the Memor.
      econom. of the Royal Academy of Lisbon, vol. IV, I, 1812. As to
      slavery on account of crime among the Germans, see _Grimm,_ D.
      Rechtsalterth., 328 seq.

  398 Loss at play was a frequent cause of slavery among the ancient
      Germans. _Tacit._, Germ., 24. For the principal causes of slavery
      among the Israelites, see the books of Moses, II, 22, 3; III, 25,
      39; IV, 21, 26 seq.; among the Indians, Laws of Menu, VIII, 415. The
      first serfs of Russia were prisoners of war and their children. The
      laws of Jaroslaws recognize, besides, the following causes:
      insolvency, contracting marriage with a slave, the illegal breach of
      a contract for service, flight, unconditional contract for service.
      _Karamsin_, Russ. Gesch., II, 37.

  399 At least seed and the means of subsistence until harvest time.

  400 Cases of voluntary slavery to escape famine. _Papencordt_,
      Geschichte der Vandalen, 186; _Victor_, Chron., V, 17; Tur., VII,
      45; Lex Bajuv, VI, 3; L. Fris, XI, I. According to the Edictum
      Pistense (a., 864), c., 34, one could free himself again by paying
      back the purchase money and 20 per cent. in addition. It frequently
      happened that people spontaneously accepted the condition of a
      vassal in order to enjoy the protection of a powerful personage. See
      _Stüve_, Lasten des Grundeigenthums, p. 74. In 1812, a young
      Himalayan offered himself to the traveler Moorcroft as a slave in
      order to obtain food during the famine. _K. Ritter_, Erdkunde, III,
      p. 999. The same fact occurred, but in greater proportions under
      Joseph in Egypt. _Moses_, I, 47, 18 seq.

_  401 Cæsar_, B.G., VI, 13.

_  402 Solon_ was the first to prohibit this commerce in Athens.
      _Kindlinger_, in his Geschichte der deutschen Hörigkeit, p. 621,
      speaks of a child promised as a slave before its birth, by its
      parents, as a species of farm-rent. (See the Edictum Pistense, in
      _Baluz_, II, 192.) In Chili, the poorest country people who were not
      entirely white, sold their children in the towns, where they grew up
      with the families of their masters, and were then kept as servants
      in a state of semi-serfdom. There is, it is true, no law governing
      this condition of things. (_Pöppig_, Reise, I, 201 ff.)

_  403 Ritter_, XIII, 727. For instance, men in South America used for the
      purpose of riding. _M. Chevalier_, Cours, I, 251; _Lœwenstern_, Le
      Mexique, Souvenirs d’un Voyageur (1843); and _Stephens_, Travels in
      Yucatan (1841), show how, even yet, in Central America, although the
      Indians are legally free, yet, by their senseless way of running
      into debt, a number of legal relations, amounting virtually to
      _glebæ adscriptio_, arise. But compare, however, _Humboldt_,
      Neuspanien, IV, 263. This condition of things has been produced in
      Peru, also, by the payment of one or two years’ wages in advance.
      (_Pöppig_, Reise, II, 225.)

  404 Thus _Forbonnais_, Eléments du Commerce (1854) I, 364, says of trade
      with savages: _il fait naître dans ces nations le goût du superflu
      et des commodités, qui multiplie le, échanges et leur donne le goût
      du travail._

  405 In very uncivilized nations, among whom serfdom is not known, we
      generally find the slavery of woman and the temporary bondage of the
      son-in-law in order to secure the daughter in marriage. This is
      still the case among the Laplanders. _Klemm_, Kulturgeschichte III,
      p. 54. Slavery was unknown among the Greeks in the very earliest
      times. _Herod._, VI, 263. _F. A. Wolf_, Darstell. der
      Afterthumswissenschaft, III, doubts whether any great advance in the
      higher development of the mind would have been possible without
      slavery.

  406 In Russia, where free peasants and serfs lived side by side, it has
      been remarked that the latter were never so rich and never so poor
      as the former. (_Kohl_, Reise durch Russland II, 8, 300.) The
      Livonian peasants have become poorer since their emancipation.
      (_Cancrin_, Œkonomie der menschlichen Gesellschaften, 41). Many of
      the serfs refused to accept emancipation. (_Büsch_, Geldumlauf,
      Einleitung, § 6.) And so _Martius_, Reise in Brasilien II, 552 ff.,
      assures us that the negro slaves in Brazil are as a rule a very
      merry set. He is also of the opinion that they are better clothed,
      lodged, fed and employed than in their own country. For the
      remarkable official defense of North American slavery directed by
      _Calhoun_, to Lord Aberdeen, see the Allg. Zeitung, 1844, No. 145.
      In this document, we find a comparison instituted between the free
      negroes of the north and the slaves of the south. In the north,
      there was one deaf-mute, a case of blindness and of insanity in
      every 96; in the south, in every 672; a pauper, invalid and prisoner
      in every 6 at the north, in every 54 at the south. In Maine, 1/12th
      of the negroes were afflicted by disease; in Florida, 1/1105th(?).
      The fact that the slave population of the United States increased,
      between 1840 and 1860, from 2,873,698 to 4,441,830, while the free
      negro population of Jamaica, between 1833 and 1843, underwent a
      frightful decrease, is to the same purport. However, too much must
      not be inferred from all this, as the negroes in America are very
      far from being the children of the soil.

  407 The servants in the Odyssey who cared for hogs and cattle etc. were
      certainly in a better condition in many respects than the peasants
      of Attica, who were free, but buried in debt until the time of
      Solon. Concerning the mildness of the treatment of slaves in very
      early Roman times, see _Plutarch_, Coriol., 24, and _Cato_, I, 3, 20
      ff.; _Cato_, de Re rust, 5, 56 ff.; _Macrob._, Stat. I, 10 ff. On
      the state of the serfs among the Germans, see _Grimm_, Deutsche
      Rechtsalterthümer, p. 339 ff.; among the ancient Scandinavians etc.,
      _Dahlman_, Geschichte von Dänemark, I, 163. See _Tacit._, Germ., 25.

  408 Compare Landnamabok, I, 6.

  409 The opinions of the ancients for and against slavery are found in
      _Arist._ Polit. I, 2. See especially the beautiful passages in
      _Philemon_: _Meineke_, Comicorum jr., 364, 410. _Aristotle_ even
      thinks that there are cases in which master and slave might be
      brought together by a mutual want, each of the other. The former
      wants hands to execute the work of his brain; the latter a guiding
      brain for his hands. Where the degree of dependence corresponds
      exactly to the difference of ability, _Aristotle_, leaving its
      abuses out of the question, declares slavery to be just. See, also,
      Eth. Nicom., VIII, 11. Similarly the Pythagorean _Bryson_ in
      _Stobœus_, Florid. LXXXV, 15. But _Aristotle_ would hold up
      emancipation to all slaves as a reward they might have in prospect.
      Polit VII, 9, 9; Œcon. I, 5. It is characteristic of the many
      testaments of philosophers, found in _Diogenes Laertius_, that they
      contain declarations giving slaves their freedom. The Essenes and
      Therapeutics condemned slavery under all circumstances. _Philo._,
      Opp. II, pp. 458, 482, Opp. I. See _Seneca_, De Benef. III, 20. The
      _jus naturale_ of the age of the Cæsars recognized the freedom and
      equality of man. Digest, XII, 664., L. 17, 32. The New Testament
      does not reject it absolutely, but would sanctify it as well as all
      other relations in life. Compare Luke, 17, 7; Eph. 6 5 ff.; Coloss.
      3, 22; Tit. 2, 9. More especially, I Timothy, VI, 1 ff. It was not
      until the ninth century that the opinion that slavery was
      anti-Christian because men were all made in the image of God, arose.
      _Planck_, Geschichte der kirchlichen Gesellschaftsverfassung, II,
      350. Sachsenspiegel, III, 42. A writer as recent as _Pufendorf_
      explains slavery as arising from a free contract; _faciam, ut des._
      Jus naturæ (1672) VI, 3. More recently _Linguet_, Théorie des Lois
      civiles (1767), V, ch. 30, and _Hugo_, Naturrecht, § 186 ff. have
      endeavored to prove that slaves are in a condition preferable to
      that of poor free men. And so _Möser_ Patriot Phantasien, II,. p.
      154, seq. Those who with _Thaer_ separate the element of production,
      “labor” from that of “intelligence,” justify slavery on the same
      principle that Aristotle did, without knowing it. Per contra, see
      _F. G. Schultze_, N. Œkonomie (1856), 418.

_  410 Turgot_, Sur la Formation etc., § 21. The universal empire of the
      Romans demonstrated this. Then it was, for instance, that during the
      wars of Lucullus, a slave cost only four drachmas. (_Appian._, Bell.
      Mithr., 78.) _Sardi venales_: on account of the glutting of the
      market with Sardinian slaves, made through the victory of Tib.
      Gracchus, 177, before Christ. Many of the lesser wars of the Romans
      can be looked upon only as slave-hunts. But the great wars also were
      followed by uprisings of slaves on account of the many new slaves
      which they made. Thus 198 in Latium, 196 in Etruria. (_Bücher_,
      Aufstände der unfreien Arbeiter von, 143-129, v. Chr., 1874.) During
      the relatively peaceful periods which preceded many of the Roman
      revolutions, pirates delivered over great masses of slaves. It
      frequently happened that several thousand slaves were led to Delos
      and sold in a single day. (_Strabo_, XIV, 668.) As emancipation was
      a measure which people could not make up their minds to adopt, these
      pirates satisfied a “want” for a time, and this partly explains the
      otherwise incomprehensible forbearance of the state towards them.

_  411 Gregor. Turon._, III, 15.

_  412 Grimm_, D. Rechtsalterthümer, 323. It is a strange fact that
      prisoners of war were in several remarkable instances sold as slaves
      in Italy during the fifteenth century. (_Sismondi_, Hist. des
      Républiques italiennes, IX, p. 312 seq.; XI, p. 138 seq.) And even
      in the sixteenth century, the pope allowed those of states opposed
      to him to be treated in this way. _Sismondi, supra_, XI, 251; XIII,
      485. _Raynold_, Ann. eccl. 1506, § 25 ff.

  413 This graduation of slave, serf and workman, has been carried out
      especially by _Saint Simon_, Oeuvres, 328 ff. Even _Proudhon_ admits
      that the condition of the lower classes is better now than formerly.
      (Contradictions économiques, ch. X, 2.) Compare _M. Chevalier_,
      Cours, I. Leçons 1 and 2, where he shows that our productive power
      has increased during the last four or five centuries in the
      production of iron in the proportion of 1 to from 25 to 30; in the
      preparation of flour since the time of Homer in the proportion of
      1:144; in the production of cotton during the last 70 years in the
      proportion of 1:320. _Aristotle_ predicted, long ago, that “when the
      shuttle would move of itself, and plectra of themselves strike the
      lyre, we should need no more slaves.” Polit., 2, 5. Every step of
      true progress brings us nearer the fulfillment of the prophecy.

  414 The North American planters employed coarse tools rather than fine
      ones, mules rather than horses, because their slaves took so little
      care of them.

  415 It can never obtain as much labor from the slave, as the fear of
      losing his situation and of not being able to obtain another, will
      from the free workman. (_Hume._) _Marlo_, Weltœkonomie, 1848, I, 2,
      38, grants this to be true only where all the forces of nature are
      appropriated by occupation, and the number of workmen is greater
      than the want of workmen.

  416 Even in Brazil, only free men are, as a rule, employed as sugar
      refiners, distillers, teamsters etc. (_Koster_, Travels in Brazil,
      1816, 362.) _Storch_, Russland unter Alexander I, Heft, 23, p. 255,
      cites the opinion of an eminent Russian manufacturer, that it would
      first be necessary to liberate the serf factory-hands. Masters have
      generally given up employing their own serfs in manufactures,
      allowed them to seek work for themselves, and only required them to
      pay them a species of tax. When this plan was adopted, it was found
      that they worked much better, (_v. Haxthausen_, Studien I, 61, 116.)
      It was a consequence of slavery that, in antiquity, the very wealthy
      purchased so little: _omnia domi nascuntur_! (_Petron._, 38.)

  417 Thus _Homer_, Od. XVII, 322, in whose time even there were day
      laborers, θῆτες or ἔριθοι. (Od. IV, 644; X, 85; XI, 490; XIV, 102.
      _Hesiod_, Opera, 602.) And _Varro_, De Re rust. I, 17, advises that
      difficult labor should be performed rather by day laborers. _Coli
      rura ab ergastulis pessimum est et quidquid agitur a desperantibus._
      _Plin._, H. N. XVIII, 7. _Omne genus agri tolerabilius sub liberis
      colonis, quam sub villicis._ (_Columetta_, De Re rust I, 7.) It has
      been estimated, that, in the West Indies, a negro slave performed
      only one-third of the work performed by an Englishman in his own
      country. (_B. Edwards_, History of the British West Indies, II,
      131.) During the one afternoon, in every week, in which the negroes
      were allowed to work on their own account, they accomplished as much
      as on other entire days. Edinburgh R. IV, 842. Compare _Bentham_,
      Traité de Législation I, 319. _Ch. Comte_, Traité de Législation,
      1827, Livre V.; _Cairnes_, The Slave-Power, its Character, Career
      and probable Designs, 1862; _Olmsted_, Journeys and Explorations in
      the Cotton Kingdom, 1861.

  418 While the older tyrants had prohibited idleness, Draco and Solon
      even under pain of degradation (see places in _Büchsenschütz_,
      Besitz und Erwerb, 260). _Socrates_ called the ἅργια the sister of
      Freedom (Aelian, V.H.X, 14), and the σκολή the most beautiful of all
      professions.

_  419 B. Franklin_, Observations concerning the Peopling of New Countries
      etc., 1751.

  420 Monument erected to _Bernstorff_ by his peasants, 8, 15. The
      _Zàmoiski_ estates yielded, 17 years after emancipation, three times
      as much as they did when serfdom prevailed. _Coxe_, Travels in
      Poland, I, 22. The transformation of the serfs into hereditary
      farmers cost _Count Bernstorff_ 100,000 thalers; but the revenue
      derived from his lands increased in consequence, in twenty-four
      years, from 3,000 to 27,000 thalers. An English mower can mow a
      field two and three times as great as a Russian mower in a given
      time. If the former receives daily wages equivalent to seventy
      pounds of wheat, and the latter to only twelve, the Englishman’s
      labor is still the cheaper; for he turns out 100 pounds of hay while
      the latter turns out only eight. _Jacob_, 43 seq. But the hiring out
      of serfs in the large cities of Russia yielded less to their masters
      than in the interior. _Storch_, Handbuch, II, 286.

_  421 Tucker_, Progress of the United States, 1843, pp. 111 ff. We need
      not call attention to the inaccuracy of these figures, nor remark
      how little serviceable for our present purpose an average obtained
      from the density of population in different parts of Russia, where
      such densities are themselves so very different, would be.

  422 The Spartans seemed to have counted on an adult free man for twice
      as much coarse food as a bondsman. (_Thucyd._, VI, 16.)

_  423 Stewart_, Principles, I, 7, in accordance with historical data,
      says, that the peasantry in our days work for other people, because
      they have wants which can be satisfied only in this way; because
      “they are slaves of their own wants.” The unquestionable superiority
      of free to slave labor, in point of economy, has been dwelt upon
      especially by _Turgot_, Sur la Formation et la Distribution, § 28,
      and by _Adam Smith_, Wealth of Nations, I, 8, III, 2. But see _J. B.
      Say_, Traité, I, ch. 19, and _Storch_, Handbuch, II, 184. When
      _Hume_, Discourses, No. 11, Populousness of ancient Nations,
      demonstrates the greater cost of slavery from the fact that the
      master of slaves must either breed or buy them, he forgets that in
      the case of free workmen he is obliged to provide also for the
      support of the workman’s children. Only, the slaveholder has,
      indeed, to advance the whole at once.

_  424 Humboldt_, Cuba, I, 177. _Ashworth_, Tour in the U.S. Cuba and
      Canada, 1861. The slaves in Louisiana were so overworked that they
      lived, on an average, scarcely seven years. Edinburg Rev., LXXXIII,
      73. Even the Stoics were not agreed, whether it was right, in case
      of shipwreck, to sacrifice a cheap slave in order to save a valuable
      horse. (_Cicero_, de Off. III, 23.) Whether the self-interest of
      masters is an inducement to the mild treatment of their slaves
      depends on the price for which fresh slaves may be obtained. This is
      a strong reason why a high degree of civilization, where there are
      not counteracting influences, must make slavery less endurable. The
      more valuable slaves are, the worse is their condition. In the
      unfertile Bahamas, the price was £21; in Demarara, £86. In the
      former place they were required to do little work and were well fed
      and well clothed. Hence their numbers have increased there, while in
      Demarara they have decreased. (Edinburgh Rev., XLVI, 496, 180.)

  425 Proverb: _quot servi totidem hostes._ (_Macrob._, Sat. I, 11, 13.)

_  426 Jefferson_, Notes on Virginia, 212. The chastity of both parties
      especially suffers. The _leno_ of ancient comedy was a slave trader!
      Compare L. 27, Digest, V, 3. In the English negro colonies, it was
      not unusual for the guests of the planters, even in the best
      families, on retiring, to ask the accompanying servant for a girl,
      with as little concern as they would in England for a light. (Negro
      Slavery, or a Creed of ... that state of Society as it exists in the
      United States and in the Colonies of the West Indies, London, 1823,
      53.)

  427 Even the law of Upland forbade the sale of Christians. The children
      of a slave and of a free person were born free. Emancipation was
      considered a Christian act, to be performed for “the salvation of
      one’s soul.” Voluntary slavery was prohibited in 1266, and Magnus
      Erichson forbade slavery generally from the year 1335. See _Geijer_,
      Geschichte von Schweden, pp. 157, 185, 273. _Estrup_, in _Falcks_ N.
      Staatsburg Magazin, 1837, 179, ff.

  428 L. Alam, 137, 1. L. Fris., 17, 5. Decree of 960 concerning the
      abolition of the trade in Christian slaves between Germany, Italy
      and the Byzantine Empire. _Tafel und Thomas_, Urkunden der
      Staats-und Handelsgeschichte von Venedig, I, 18 ff.

_  429 Tacit_. Germ. 25. In the Legg. Walliæ 206 (Wolton) we read: “_Hero
      eadem potestas in servum suum ac in jumentum._”

  430 The council of London in 1102 forbade men to be sold like beasts.
      (Concil., ed. Venet. 1730, XII, 1100, No. 27.) _Guérard_,
      Polyptiques d’Irminon, Prolegg., 220, describes a pedagogical model
      emancipation by the Church of its own serfs. On the whole, the
      church contributed more towards the emancipation of the serfs of
      others than of its own. See ch. 39, C. XII, qu. 2; c. 3,4; De Rebus
      eccl.

  431 In Flanders since the end of the twelfth century. _Warnkönig_,
      Flandrische Staats und Rechtsgeschichte (I, 244).

  432 In what relates to Germany, compare _Sugenheim_, Geschichte der
      Aufhebung der Leibeigenschaft in Europa, 1861, p. 350 ff. The
      destruction of the old manorial system (_Hofwesen_) in the fifteenth
      and sixteenth centuries, was often unfavorable to bondmen and
      favorable to serfs. _Maurer_, Gesch. der Frohnhöfe, II, 92. In
      Poland, where all were originally equal land-owners, many sank
      gradually through poverty to the condition of the so-called
      _kinetes_, who, although personally free, were not very far removed
      from slaves. Beginning with the thirteenth century, a great number
      of immunities, after the model of those accorded in Germany, were
      granted, by means of which they lost, for the most part, their
      direct subjection to the emperor and the empire alone. This was soon
      followed as a consequence by their personal oppression. (_Röpell_,
      Geschichte von Polen, I, p. 308 seq., and p. 570 seq.) In Bohemia,
      the old form of serfdom had so far disappeared in the fourteenth
      century, that it might be said it was known only to history. But
      during the reign of the weak king, Ladislaus II, a new species of
      serfdom came into vogue, the result of the preponderance of the
      aristocratic element. _Palacky_, Gesch. von Böhmen, II, p. 33 seq.;
      III, 31 seq. Aristocratic Denmark, before the peasant war of
      1255-1258, subjected the free peasantry who had been leaseholders
      for a term of years to unlimited socage duty. Waldemar III, reduced
      to the same kind of service the land-owning peasantry, which
      especially from the date of Margaret’s reign, developed into a
      species of _glebæ adscriptio_. From the sixteenth century, when the
      royal power almost disappeared, these public privileges were
      abandoned to the nobility to such an extent that, in 1650, there
      were scarcely 5,000 free peasants. _Dahlmann_, III, p. 73 seq.
      However the severity of _traeldom_ made way in the fourteenth
      century for the _vornedskap_ (modified bondage), a milder species of
      vassalage. See _Kolderup Rosenvinge_, Grundriss der dänischen
      Rechtsgeschichte, § 94.

  433 The French expression _mainmorte_ comes originally from the
      deprivation of the right of inheritance. In Beaumanoir’s time, 1283,
      it was customary, after a number of serfs had lived together for a
      year and a day, for their chattels movable to become the common
      property of the community. (_Warnkönig_, Französische
      Rechtsgeschichte, II, 157.)

  434 In France, Louis X. made it a fiscal speculation to sell serfs their
      liberty in whole districts, even against their will. His edict,
      Ordonnances, I, 583, recognizes that all men are by nature free, and
      that France is not without reason called the land of the Franks etc.
      Even in 1298, Philip IV. had exchanged the serfdom to the crown of
      several provinces for a land duty. The last ruler of Dauphiny gave
      all the serfs of the crown their liberty gratis, in 1394.
      (_Sugenheim_, p. 130.) When the so-called _coutumes_ were written,
      there were only nine provincees in which by local law serfdom was
      permitted. The defeat of the _jacquerie_ injured the cause of
      emancipation in France in the same way that the suppression of the
      war of the peasants did in Germany. About 1779, _mainmorte_ was
      abolished in all lands of the crown, and its proof made almost
      impossible in all others. (_Warnkönig_, II, 151 seq.) Yet it is said
      that there were 150,000 _serfs de corps_ in France in 1789.
      (_Cassagnac_, Causes de la Revolution, III, 11.) Koloman, who died
      in 1114, forbade the slave trade in Hungary, and labored to raise
      all Christian slaves to _conditionarii_ (renters). But the right of
      migration was abolished in 1351. King Sigismund, and still more,
      Matthias Corvinus, restored it, after the suppression of the war of
      the peasants, but in 1514 it was again lost until 1586. Further
      progress was arrested until the Urbarium of Maria Theresa.

  435 In Italy, Frederick II. liberated all the serfs of the crown.
      (Constitutt. Regni Sicil., 164.) A model instance of emancipation at
      Bologna in 1256. The serfs of the state were simply set at liberty;
      the freedom of those of private persons was purchased with the money
      of the state, and a small corn-tithe laid on the emancipated as a
      compensation for the expense incurred in their behalf. In the
      future, there was not to be a bondman on Bologna territory. The
      motives which led to this measure are a strange admixture of
      Christianity and Democracy. (_Muzzi_, Annali di Bologna, 1840, I,
      479.) Italy, at the end of the fourteenth century, was entirely free
      from Christian serfdom. (_Muratori_, Antt. Ital., I, 798.) In the
      canton of Berne, Switzerland, slavery was gradually abolished, the
      process commencing about the beginning of the fifteenth century. It
      continued, however, in the case of ordinary masters until 1798.
      _Sugenheim_, p. 530 seq. In England, Alfred the Great’s efforts
      towards the gradual abolition of slavery (_Wilkins_, Leges, 29)
      remained without result. The steps taken by William I, towards a
      much narrower end, however, seem to have been more successful.
      (Leges Will. Conq., 225, 229; _Turner_, Hist. of England, I, 135.)
      From the time of the Norman conquest, prisoners of war ceased to
      recruit the ranks of slavery. Under Henry III and Edward I, socage
      tenants became more and more frequent; but, before long, their
      duties became less onerous, and might be discharged by others hired
      for the purpose, instead of by themselves. The first remarkable
      vestige of a class working for wages is met with in the law of 1351,
      which may be considered an effort made by the nobility to oppose the
      tendencies in favor of emancipation, which were a consequence of the
      development of cities. (_Eden_, State of the Poor, I, 7, 12, 30,
      41,) _Infra_, § 175. Although the peasant war under Wat Tyler and
      Straw, who wished to abolish servitude at a blow, failed of its
      object, we find that there were a great many instances of
      emancipation by individuals in the fourteenth and fifteenth
      centuries when death or sickness overtook them, in which they
      declared the moral unfitness of slavery. (_Wycliffe_: “When Adam
      dalve and Eve span, who was then the gentleman?”) Elizabeth
      liberated the last serfs of the crown. Compare 12 Charles II, ch.
      24, 1660. Emancipation in the lowlands of Scotland was completed in
      1574. (_Tytler_, Hist. of Scotland, II, 260.)

  436 Modern Emancipation Laws: in Prussia, 1719, 1807, 1819; Lausitz;
      1820, Westphalia; in Austria, 1781 (Bohemia and Moravia), 1782
      (other German countries and Galicia); 1785 (Hungaria);
      Schleswig-Holstein, 1804, after many of the landed gentry had
      voluntarily emancipated their own serfs; in Bavaria, in 1808; in the
      kingdom of Westphalia, in 1808; in Hessen-Darmstadt, in 1811; in
      Württemberg, in 1817; in Baden, in 1783, 1820 in newly acquired
      countries; in Mecklenburg, in 1820; in the kingdom of Saxony, in
      1832; in Hanover, in 1833. The law of 1702, abolishing serfdom in
      Denmark, was evaded until 1788, and in part, even until 1800 by the
      _Schollband_ (clod-bond) introduced in its stead. The only Christian
      people in Europe, who, until recently, kept serfs, was the Russian.
      The serfs of Russia, in 1834, numbered 22,000,000, i.e., about 40
      per cent. of the entire population. In the meantime, the law of
      February 19, 1861, passed after four years of preparation, fixed the
      date of emancipation at the beginning of the year 1863. Slavery has
      been abolished in the United States since January 1, 1863; first of
      all in all portions of the country engaged in rebellion.

  437 There is a very interesting discussion in the Journ. des Economistes
      for June 1863, of the question whether the owners of serfs are
      entitled to compensation on their emancipation, by _Laboulaye_,
      _Wolowski_, _Lavergne_, _Garnier_, _Simon_ and others. In the United
      States it would have required $2,000,000,000 to fully compensate the
      slave-holders for depriving them of their slaves. (Quart. R., Jan.,
      1874, 142.) Compare my view, _Roscher_, Nationalökonomi des
      Ackerbaues, § 124.

  438 Leave a new-born child to its “natural freedom” for twenty-four
      hours, and it will in all probability be dead at the end of the
      time!

  439 Compare Edinburgh Review, LXXXIII, 64 ff., April, 1851, 333.
      _Klein’s_ Annalen XXV, 70, ff. Even in the fifth book of Moses, 15,
      13, ff., we see that experience had taken into consideration that a
      freed serf without capital or landed property might very readily be
      in a worse condition than he was before. In the United States, the
      anticipation that the emancipated negroes might diminish in numbers
      has not been realized. The census of 1870 showed a negro population
      of 4,880,000, nearly ten per cent. more than in 1860. The increase
      of the number of churches, schools and savings banks also bears
      testimony to the prosperity of the negro. (_R. Somers_, The Southern
      States since the War, 1871.)

_  440 J. S. Mill_, Principles, 10, ch. 7.

  441 As to the Jews, see _Ewald_, Geschichte von Israel, I 2, p. 198. In
      general, see _H. Wallon_, Hist, de l’Esclavage dans l’Antiquité, II,
      1847.

_  442 Thucyd._ IV, 27; _Xenoph._ De Re. rep. Art. I, 10 ff., _Aristoph._
      Nubes, 6; _Antiph._ De Caede Herod, 727. In the “Frogs” of
      Aristophanes, the relation between the slave Xanthias and his master
      is eloquent testimony to the good treatment he received. Slaves
      enjoyed great freedom of speech. (_Demosth._ Phil. III, iii.)
      Concerning masters accused of cruelty, see _Demosth._ Mid. 529, 7.
      Athen. VI, 266. The slave who had been ill-treated might seek refuge
      in a temple, after which his master was compelled to sell him.
      (_Schol. Aristoph._ Equitt. 1309. _Plutarch_, Thes. 36.)

  443 Slaves might purchase their own freedom with their _peculium_. See
      Petit. Legg., Art. II, 179. There were many who lived entirely on
      their own account, paying a certain duty or tax to their masters,
      and who were well able to make savings. _R. F. Hermann_,
      Privatalterthümer, § 13, 9, 58, 11 ff. See the instance in _Plato_,
      De Rep. VI, 495, where a slave who had grown wealthy asks the
      daughter of his former master in marriage. Moreover, there was a
      general indisposition to hold Greeks as slaves. (_Philostr._ Apoll.
      VIII, 7, 12.) The case cited in _Demosth_. adv. Nicostr. 1249 ff.,
      is all the stronger on this account.

  444 Under Cleomenes, many purchased their freedom with their own means.
      _Plutarch_, Cleom. 23. At an earlier period, men like Lysandros,
      Gylippos, Kallikratidos had belonged to a class composed of the
      children of slaves brought up as citizens.

_  445 Cicero_, pro Muræna, IX, 22.

  446 Think of the subterranean _ergastula_, the fettered door-keepers and
      the gladiatorial exhibitions.

  447 Even from the time of _Plautus_, the _servi honestiores_ were wont
      to keep _vicarios_, or subordinate slaves. _Plaut._ Asin. I, 4,
      _Seneca_ De Tranq. Anim. 8. Compare _Cicero_, Parad. V, 2. Of the
      slaves of the state, the public scribes were sometimes found in
      excellent circumstances.

  448 The peculium was fully developed in the time of Plautus and Terence.
      Compare _Terent._, Phorm. I, 1. It was customary to promise slaves
      their freedom as soon as they had acquired a certain _peculium_.
      (_Dionys. Hal._, Antt. Rom., IV, 24. _Tac._, Ann., XIV, 42.) Humane
      masters permitted their slaves to dispose freely of their _peculium_
      by will. (_Plin._, Ep., VIII, 16.) There were many of the Romans who
      gave their slaves a fixed salary, from which they could make
      savings. (_Senec._, Epist., 80, 7.) Shepherds raised some sheep for
      themselves alone. (_Plaut._, Asin., III, 1, 36; _Varro_, R. R., I,
      17, 7.) Premiums were offered for certain products (_Athen._, VI,
      274 d), and there were cases even in which businesses were farmed
      out to slaves. (Corp. Inscr. Gr., No. 4,713 f.) The _servi publici_
      had the right to dispose of the half of what they owned, by will.
      (_Ulpian_, XX, 16.) Contracts of loan were sometimes made between
      master and slave. (_Plut._, Cato, I, 21, L., 49, § 2, Digest, XV,
      1.)

  449 Compare _Tacit._, Ann., XIII, 26 seq. During the time from 356 to
      211 A.C., it seems that there were, on an average, 1,380 slaves
      emancipated yearly. (_Dureau de la Malle_, Economie polit. des
      Romains, I, 290 ff.)

  450 Concerning the highly educated slaves of Atticus, of the like of
      whom the Greeks had formerly few examples, see _Drumann_, Geschichte
      Roms., V, 66. The high prices, 100,000, and even 200,000 sesterces,
      paid for slaves, suppose a very high degree of education.
      (_Martial_, I, 59; III, 62; XI, 70; _Seneca_, Ep., 27.) But even
      _Cicero_ was ashamed of his affliction over the death of an
      exceptionally clever slave. (Ad. Att., I, 12.)

  451 At an earlier period, even the censor had punished cruel masters.
      But most of what was done to prevent the arbitrary condemnation to
      death of slaves, their castration etc., and to give them rights
      against their masters for libidinous acts towards them, for cruelty
      and insufficient support, or the furnishing them with bad food, was
      done after the time of Hadrian. (Compare _Seneca_, de Benef., III,
      22; de Ira, III, 40, _Sueton._, Claud, 25, Dom., 7; _Spartian._,
      Hadr., 18; _Gaius_, I, 53; L., 1, § 2, Digest, I, 6; L., 1, § 8, D.,
      I, 12; L., 1, § 2, D., XLVII, 8; L., 1; Cod., IX, 14; Contra, see
      _Dio Cass_, I, V, 17.) However, the _vitæ necisque potestas_ existed
      in the time of Justinian. (_Zimmern_, Geschichte des röm.,
      Privatrechts, I, 2, 661 ff.)

_  452 Salvian_, De Gubern. Dei, V, 8. _Theod._, Cad. V, 4. _Eumenis_,
      Paneg Coast. 8, 9. _Trebell_, Poll. Claud., 9. _Justin._ Cad., XI,
      26, 47. Compare _v. Savigny_, Ueber den romischen Colonat. Berliner
      Akad., 1822-23.

  453 The figures given in _Athen._, VI, 103, concerning the number of
      bondmen in Greece are almost incredible. For Attica alone, the
      estimates vary between 110,000 (_Letronne_, in the Mem. de
      I’Académie des Inscr., 1822, 192, ff.) and 400,000 (_Athen._ 1. c.),
      while the free men are estimated at from 130,000 to 150,000. In
      Rome, during the time from the expulsion of the kings until the
      destruction of Carthage, the number of the slaves remained about the
      same. (_Blair_, State of Slavery among the Romans, 1833, 10, 15.) On
      the other hand, _Dureau de la Malle_ is of opinion, that in 576
      B.C., the number of slaves was to the number of free men as 1 to 25,
      and in 225 B.C. (including the metics), as 22 to 27. (Economie
      polit. des Romains I 270 ff., 296.) Compare _Cato_, de Re. rust. I,
      3, IV, X, 1 XI; 1, XVII, XVIII, 1. In Germany, the number of
      bondmen, from the eighth to the tenth century, was estimated to be
      at least as great as that of free men. (_Grimm_, D.
      Rechtsaltherthümer, 334.) Among the Anglo Saxons, before the Norman
      conquest, it was much higher, even three-fourths of the entire
      population. (_Turner_, Hist. of the A. S., VIII, 9.) Compare on the
      subject of this whole chapter my paper in the Archiv. der polit
      Œkonomie, N. F., IV, 30 ff.

_  454 Klöntrupp_, Abhandlung der Lehre vom Zwangsdienste, 1801.
      Frequently, the lord had only a right of preference in case the
      children of the tenant desired to abandon the parental roof and take
      service elsewhere.

  455 In _Adam Smith’s_ time, in England, the presumption was that a
      servant had been hired for a year. (I, 2, 15 ed., Bas.) Frederick
      the Great’s ordinance of 1769, on this subject, forbade any one to
      enter into service for a shorter time than this (II, § 1 ff.), while
      the Saxon ordinance of 1835, on the same matter, allowed engagements
      by the month, in cities. _Darjes_, Erste Gründe der
      Cameralwissenschaften, 2d ed. (1768), p. 432, demands that servants
      should always hire themselves for at least four or five years, and
      that their masters should have, during the whole of this time, the
      right to enforce the contract. In North America, however, service by
      the month has become customary and general, and no notice of the
      dissolution of the contract is, as a rule, required. (Deutsche
      Vierteljahrsschrift, 1853, II, 191.) In Switzerland, contracts for
      service by the week are frequently made even by country servants.
      (_Böhmert_, Arbeiterverhh., II, 157.)

  456 In the south of England, farm hands were used to change service only
      at Michaelmas. The choice of such a date made farmers very dependent
      on them, as it fell in harvest time. (_Marshall_, Rural Economy of
      the Southern Countries, II, 233.) A similar complaint in Cleves.
      (_Schwerz_, Rheinischwestphälische Landw., 21 ff.) In Jülich, a half
      year’s notice was required, during which time the servant who had
      received it, performed his work with disgust, and stirred up his
      fellow servants against their master. (_Schwerz_, II, 87.)

  457 The families of day laborers, to whom the owner of the land gives
      the use of a house, small garden, a cow etc., constitute such a
      transition; and also, workmen who are fed. In Brandenburg, in 1644,
      only married persons or widowers with children were permitted to
      work as day laborers. (_Mylius, C. C. March._, V, 1, 3, 11.)

_  458 Wakefield_, Swing Unmasked, or the Causes of rural Incendiarism,
      1831.

  459 By means of the former, the number of independent small householders
      was much increased in the country. Masters feel indisposed to hire
      young men liable to be subjected to military duty, because they may
      be called away at the moment their services are most needed. The
      returning soldier, as a rule, feels above doing menial service.
      (_Schwerz_, passim, I, 191 ff., 236.) On this account, servants’
      wages in Cleves rose much higher than those of day laborers. (194.)
      In Belgium, a farm hand cost, on an average, 400 francs a year; a
      day laborer, counting 300 working days to the year, only 339 francs.
      (_Horn_, Statist. Gemälde, 175.) In the Palatinate, day laborers who
      receive nothing but their wages cost their masters less than those
      who receive only their food; and servants are the dearest of all.
      (_Hanssen,_ Archiv der Politischen Œkonomie, N. F. X, 243.) If
      servants were relatively more poorly paid in 1813 than day laborers
      (_Lotz_, Revision, III, 147), it was because of the at least
      temporary retrogression of civilization which every great war
      causes.

_  460 Engel_, Preuss. Statist. Jahrb., II, 261. Services which contribute
      to personal convenience are naturally committed much less frequently
      to independent day laborers than those which aid in production
      proper. Hence it is, that, as civilization advances, house-servants,
      especially of the female sex, constitute an ever-increasing portion
      of the total number of servants. In Prussia, in 1816, the number of
      servants who ministered to personal comfort was only 4.19 per cent.
      of the total number of servants engaged in industry; of female
      servants, it was 13.4 per cent. In 1861, on the other hand, the
      percentages were 8.4 and 37.2. In Great Britain, of the total number
      of servants over 20 years of age, only 2 per cent. were engaged in
      personal services. In 1841, they were 3-½ per cent. (_Meidinger_.)
      In France, in 1851, 2.5 per cent. of the whole population were in
      _domesticité_. (Stat. off.)

  461 In England, now more especially, out of farm-hand day laborers:
      Edinburgh Rev., April, 1862.

  462 A chief element in the earlier “organization of labor.” So, also, in
      the Magdeburg Gesindeordnung (service-regulation) of 1789.

  463 Saxon _Landesordnungen_ of 1482 and 1543. Cod. August. I, 3, 23. The
      _Gesindeordnung_ (service regulation) of Frederick the Great,
      threatened with the house of correction the receivers, and under
      certain circumstances also the givers of wages higher than the fixed
      rate of wages; but as a “matter of course,” the payment of wages
      less than this was permitted. (V, § 7) Great care was taken that
      wages greater than the law allowed should not be evaded by the
      payment of _arrha_ or payment in produce. The same law forbade the
      deprivation of the servant of his right to determine the service by
      making of loans to him on long time (II, § 7.) Even _v. Berg_,
      Handbuch des deutschen Polizeirechts, calls it a duty of the public
      authorities charged with the protection of property and of the
      public security, to see to it that there be no lack of good
      servants, and that the public (as if those who sell their services
      were not a part of it) should not be made the victims of exorbitant
      demands in the matter of servants’ wages. _Jung_, more humane,
      demands that the authorities shall protect, especially, the weaker
      party. (Grundlehre der Staatswirthschaft, 1792, 700.) In Prussian
      legislation, the Silesian rescript of March 13, 1809, is the
      beginning of the new order of things. (_Rabe_, Samml. preuss.
      Gesetze, X, 59 ff.) The _Obertribunal_, or high court, decided, in
      1874, that the bringing back of absconding servants by the police,
      which the law concerning servants of 1810 provided for, should not
      be allowed to occur any more.

  464 Ordinance of the elector of Saxony of 1766, prohibiting the
      inhabitants of cities to take an apprentice from among the
      peasantry, unless he had served at least four years as a farm hand,
      beginning with his fourteenth year. Similarly, in Prussia in 1781.

  465 In Berlin, even before the “populationistischen” period: _Fidicin_,
      Histor. diplom. Beiträge zur Gesch. der Stadt Berlin, I, 101. (From
      the year 1397.)

  466 I Peter, 2, 18 ff.; I Timoth., 6, 12; Ephes., 6, 5; Philem., 15 ff.

  467 In the German colonies of Mennonites in Russia, every youth serves a
      few years in the family of some other peasant. This is considered a
      sort of school. Wages are of course very large, and the treatment
      very mild. _v. Haxthausen_, Studien, II, 185. Southwestern Germany
      where small landed proprietors are many, something very analogous to
      this continues. (_v. d. Goltz_, loc. cit., 452.)

  468 For a masterly exposition of the doctrine that the right of
      prescription or limitation is related to the politico-economical
      necessity of property, see _John Stuart Mill_, Principles, 3, II,
      ch. 2, sec. 2.

_  469 Locke_, On Civil Government, II, §25-51; and so _L. Mendelssohn_,
      Jerusalem (1783), 32; _Thiers_, Du Droit de la Propriété (1849).

  470 Modern writers, in their attempt to find a philosophical basis for
      the right of property, have taken two principal directions, the
      first a juridical, the second a political one. The axiom, _res
      nullius cedit primo occupanti_ (compare L. 3, Digest, XLI, 1),
      explains only the smallest part of the relations of property, and
      that only because of a very fortuitous circumstance. According to
      _Hobbes_ (Leviathan, 24), property has its origin in the recognition
      of it by the power of the state, by the _autorité publique_, the
      _gouvernement_ (_Bossuet_, Politique tirée de l’Ecriture, Sainte, L.
      3, 4), or as _Montesquieu_ (Esprit des Lois XXVI., 15) more mildly
      expresses it, in the laws. The application of this principle would,
      on account of the extreme changeableness of the laws of every state,
      lead to most extreme insecurity, and to a steady oscillation from
      one Utopia to another, from one revolution to another, if it were
      not, at the same time, recognized that each one had a just title to
      the acquisitions he had made, not because the law, for the time
      being existing, acknowledged the right, but because they were the
      product of his labor and saving. The theory which bases the right of
      property on contract cannot be objected to with as much reason.
      Thus, _Hugo Grotius_, Jus Belli et Pacis, II, 2, who even justifies
      the occupation of things without an owner, on the supposition of the
      existence of an implied contract. It is very characteristic of the
      English, that in their political language, the words “liberty” and
      “property” are so frequently found in each other’s company. In one
      of his classic speeches made by Fox in 1784, he gives a definition
      of liberty which begins with the words, “It consists in the safe and
      sacred possession of a man’s property” etc. The recent doctrine, not
      unfrequently to be met with, that every man has a right to an amount
      of property corresponding to his wants, may be used to sanction all
      kinds of socialistic inferences. An entirely bewildered and
      bewildering description is to be found in _Proudhon’s_ Qu’est ce que
      la Propriété, 1848, as the precursor of which _Brissot’s_ Recherches
      philosophiques sur le Droit de Propriété et le Vol, may be
      considered. In medieval times, there are always a multitude of other
      titles to property besides production and saving. The title which is
      held in highest esteem for the time being is always because of this
      very extreme vis-a-vis of all other titles, strengthened and made
      general.

  471 The word socialism brought into use by _L. Reybaud_ is as ambiguous
      as the word communism is simple and intelligible. But most
      socialists agree that actual “society” (which is indeed to be
      distinguished from the state) is, together with its foundations, the
      existing relations of property and the family, entirely wrong. A
      radical reconstruction, they say, is needed to remove forever the
      chief evil of this system, viz.: the glaring difference between the
      rich and the poor, the educated and the uneducated. The difference
      between the doctrines of the socialists and of Political Economy
      does not, by any means, consist in this, that the former concerns
      itself more with the welfare of the lower classes, or even that it
      gives wider scope to economy in common. But socialism is, indeed, a
      living or housekeeping in common (_Gemeinwirthschaft_), which goes
      far beyond the feeling for the common interest (_Gemeinsinn_). Such
      economy in common is always opposed to freedom, and, at its first
      introduction, contrary to law. It can guarantee no compensation to
      those who have suffered from violence or force, because it leads to
      a thoughtless and wasteful exhaustion of the nation’s resources,
      inasmuch as it weakens the incentive to industry and frugality.
      Political Economy, on the other hand, recommends an _expropriation_
      when the incentives to industry and frugality are thereby
      strengthened; and the increased resources thus obtained serve it, as
      full compensation to those whose property has been _expropriated_.

  472 See _Roscher_, Betrachtungen über Socialismus und Communismus,
      Berliner Zeitschrift für Geschichtwissenschaft, 1845, III, 422 ff.

_  473 Vivre en travaillant ou mourir en combattant_—the device on the
      flags of the mutinous silk-weavers at Lyons, in 1832.

  474 We are so assured by _Vauban_ (Dime Royale, 34 seq), of the later
      years of the reign of Louis XIV, that nearly 1/10 of the French
      people begged, that 5/10 could give no alms, because they were
      themselves on the very brink of indigence; 3/10 were _fort malaisés,
      embarassés de dettes et de procès_; scarcely one per cent. could be
      said to be _fort à leur aise_. How much better off is the present
      Parisian workman! And yet, at that time, there was not the least
      spread of communistic doctrines. It is indeed seldom that completely
      down-trodden men react against their wretchedness with great energy.

  475 “If my _caprice_ be the source of law, then my _enjoyment_ may be
      the source of the division of the nation’s resources.” _Stahl_,
      Rechtsphilosophie, II, 2, 72.

  476 That the socialism of _Plato_, De Repub., V, was no mere fancy, is
      proved by the polemic which _Aristophanes_ directs against it in his
      Ecclesiazuses. See also _Aristot._, Polit., II, 2, Schn. In the
      contemporary practice of the Greeks, with the increasing
      democratization of the state, it became more and more usual for it
      to bear the expense of the outlay for the means of subsistence of
      the great crowd. (See _Plutarch_, Cimo, 10.) Every act of public
      life was paid for. Citizens were paid for attending popular meetings
      three oboli per day, while the pay of the soldiers was six, and that
      of the sailors three. (_Thucyd._, III, 17; VII, 27; VIII, 45.) The
      pay of the commonest day laborer was from three to four oboli per
      day. _Aristophan._, Eccl., 310, and _Pollux_, VII, 29. The number of
      magistrates was very large, in order that as many as possible might
      participate in this species of remuneration. Thus, in Athens, when
      it had only about 20,000 inhabitants, there were 6,000 judges. In
      addition to all this, there were numberless feasts, plays, banquets
      etc., which were offered to the people gratis. The wealthy who were
      compelled to meet all the expense thus incurred, lived in such a
      state of terror of the populace, that they considered their own
      impoverishment as a species of deliverance. (_Xenoph._, Conviv., 4,
      and _Lysias_, pro Bonis.) _Isocrates_ called it much more dangerous
      to be rich than to commit a crime, since in the latter case one
      might obtain a pardon or a mild punishment. (De Permut., p. 160.)
      (_Lysias_, De Invalido, de sacra Olea, seq.) There is little
      difference between this state of things and a semi-community of
      goods. Only that, indeed, the great mass of the slaves were excluded
      from enjoying them. The contrast which somewhat later distinguished
      the Cynics from the Cyreno-Epicureans affords a striking analogy to
      that which, in our own times, exists between the pure socialists and
      the worshipers of mammon after the fashion of Doctor Ure. Concerning
      the Utopia of _Iambulos_, see _Diodor._, II, 55 ff.

  477 Our sources of information concerning the division of the Roman
      republic into a moneyed oligarchy, and the proletariat are very
      numerous. Compare _infra_, § 205. The speeches of the Gracchi (e.g.
      _Plut._, T. Gracchus, 9), and still more the violent discourses of
      Catiline’s conspiracy (_Sallust_, Cat., 20, 23, 37-39), remind us
      very forcibly of the shibboleths of modern socialism. We very
      frequently meet with the expression of a longing desire to return to
      the most uncivilized and hoary past, when there was no money and no
      wealth—an aspiration which lies at the very foundation of communism.
      Thus _Virgil_, Geo., I, 125, ff., _Tibull._ I, 3, 35, ff. _Propert._
      II, 13, III, 5, 11; _Seneca_, Epist., 90; _Senec._, Oct. II,
      _Hippol._, II, 2; _Plin._, H. N. XXXII, 3. On the other hand, the
      practice of supporting the populace at the expense of great
      candidates or of the state, was developed to a very great extent.
      The masses lived very largely by the sale of their right of suffrage
      to the highest bidder. At the election of consuls in the year 54,
      500,000 thalers were offered to the century called on to vote first.
      (_Cicero_, ad Quintum II, 15; ad. A.H. IV, 15.) Even _Cato_ had a
      part in such bribery. (_Sueton._, Caes., 19.) In the social reform
      of the younger Gracchus, besides the limitation of large
      land-ownership, the principal points were the following: the sale of
      wheat under the market price, but only to the inhabitants of Rome
      itself; the construction of great highways in Italy; colonization at
      the expense of the state, and the increase of soldiers’ pay.
      (_Ritsch_, Gracchen, 392 ff.) The socialistic plans of Rullus went
      much further. Were his agrarian laws put in execution, he would have
      confiscated very nearly the entire country in the interest of the
      poor, and of their demagogues! (_Cicero_, De Lege agrar.) Rome twice
      experienced a social revolution of the most frightful character, one
      by which a great portion of all private goods fell into the hands of
      the propertyless (soldiers), who knew nothing of how to turn it to
      account or to invest it—under Sulla, and then under the later
      Triumviri. (Compare _Appian_, Bell, civil., V, 5, 22.) Complaints
      concerning the latter, in _Horat._, Epist., I, 2, 49; _Virgil_,
      Buc., IX, 28; _Tibull._ I, 1, 19, IV, 1, 182; _Propert._, IV, 1,
      129. The elder Gracchus had promised compensation to the last
      possessors. _Tabulæ novæ_ of Cinna, Catiline, Cælius, Dolebella.
      Clodius introduced the distribution of wheat, which according to
      Cicero pro Sext., 25, ate up almost one-fifth of the public
      revenues. About 320,000 persons were, in this way, supported for a
      long period of time (_Sueton._, Caes, 41, _Dio C._, XLIII, 21; L.
      LV, 10), but only in such a manner as to keep them from starvation.
      (_Sallust_, 268 ed. Bip.) To all this was soon added distributions
      of salt, meal and oil, also free baths, numberless public plays,
      colossal banqueting, payment of one year’s rent etc. _Panem et
      circenses!_ (Juvenal, X, 80 seq.) The mere distribution of money
      under Augustus, in which from 200,000 to 320,000 men participated,
      cost each time from 2,500,000 to 6,000,000 thalers. (Monum Ancyr.,
      372 Wolf.) Extraordinary assistance was, by way of preference,
      accorded to colonies of the poor. (_Sueton._, Caes, 42.) Concerning
      this entire policy, see _Plin._, Paneg., 26 ff. Even in
      Constantinople, at the time of its foundation, large distributions
      of bread were made at the expense of Egypt, although there could
      scarcely be any real pauperism in that new and flourishing city.
      (_Theod._, Cod., XIII, 4, XIV 16; _Socrat._, II, 13.) I can only
      allude to the plan proposed by the emperor Gallien by the
      neo-platonist Plotin, to found a city in which the ideas of Plato’s
      republic should be carried out. (Porphyr., V, Plotin., 8.)

  478 During the two centuries of which the Reformation constituted the
      middle point, the transition from the peasant system of agriculture
      to the large farming system of modern times bore very heavily on the
      inferior classes. Such, too, was the operation of the fall in price
      of the precious metals. (§ 140.) The suppression of the many
      monasteries caused an increase in the wretchedness of the poor; and
      the numerous poor-laws enacted in England, Spain etc., were not
      sufficient to supply a remedy. The feeling of the people during this
      period of tribulation found expression in the War of the Peasants,
      in the sect of Anabaptists, in the many reformations and
      counter-reformations, in the revolt of the Netherlands, in the
      conflicts for the crown in France and England etc. In Italy, the
      contrast existing between the moneyed oligarchy and the proletariat
      had been developed several centuries, but from the middle of the
      sixteenth century, it had become much more oppressive by reason of
      the universal impoverishment of the country. For an account of the
      pantheistic “Brethren and Sisters of the Free Spirit,” with their
      community of goods and of women, see _Ullmann_, Reformatoren vor der
      Reformation, II, 18 ff. They were very numerous from the thirteenth
      to the fifteenth century in Italy and France, as well as in Germany,
      and lead us to the Adamites in the Hussite war. (_Aschbach_,
      Geschichte K. Sigismunds, III, 109.) Earlier yet, we have the sect
      of the Giovannali, who had their property and women in common, and
      who, in 1355, had won the third of Corsica, but who were afterwards
      suppressed by Genoa and the Church. (_Lebret_, Geschichte von
      Italien, VI, 208 ff.) The coarse socialist, _John Balle_, bears
      about the same relation to Wycliffe, that Münzer and Bockholt did to
      Luther. (_Walsingham_, Hist. Angliæ in _Camden, Scriptt._, 275.)
      Hans Böheim of Würzburg, 1476, seems to be the direct precursor of
      Münzer. (_Ullmann_, I, 421 ff.) It was almost as usual in Luther’s
      time, as in 1848, or in our day, to hear of the deep demoralization
      of trade—the _Fuggerei_ of the Germany of the time—and of the
      universal system of fraud that prevailed. See the citations in
      _Hagen_, Deutschland’s Verhältnisse im Reform-Zeitalter, II, 313 ff.
      Münzer’s fundamental principle: _Omnia simul communia!_ _Sebastian
      Frank_, Chronica, Zeytbuch und Geschychtbibel etc., 1551, fol. VI,
      16, 27, 116, 194, 414, 433. John Bockholt’s life presents us with a
      striking contrast. While they were bringing his perfumed women,
      sparkling with jewels, to his rose-covered bed, hung with curtains
      of gold cloth, on which he was reclining, his subjects were a prey
      to the horrors of famine, to such an extent that they were compelled
      to salt the bodies of children who had died of starvation. How
      frightful the end of this communistic benefactor of mankind!
      Libertine community of goods and women. (_Calvin_, Instructio adv.
      Libertinos, cap. 21.) English communists in the age of the
      reformation. (_J. Story_, Comment. on the Constitution of the U.S.,
      I, 36.) Even under Cromwell, there were many Englishmen who believed
      that farmers were no longer obliged to pay rent to land-owners. On
      the sect of Levellers, see _Walker_, History of the Independency,
      II, 152. Even in _Erasmus_, we find some sympathy with communism.
      (Enchirid. milit. Christ, 80.) _Contra_, see _Melanchthon_, Prolegg.
      in Cic. de Off., Corp. Reform, XVI, 549 ff. The most remarkable
      systematic works of this period are _Thomas More’s_, Utopia, 1516,
      and _Campanella’s_ Civitas, solis, 1620. _Thomas More_ bluntly says
      that all existing governments are in fact only permanent
      conspiracies of the rich to further their own interests under the
      mask of the common good, and to despoil labor. The abolition of
      money, which should be continued in use only to carry on foreign
      war, would, he contends, remove all misery. There was no really
      private property in his Utopia. There should be a rigid
      superintendence of all work by the public authorities, whose duty it
      should be to see to it, that no one should abandon agricultural
      pursuits. All should eat at a common table and dress after the same
      fashion. Internal commerce should give way to a mutual exchange of
      gifts under the supervision of the state. _Campanella_, besides a
      community of goods, recommends continually varying occupation, to
      last not more than four hours daily; education in common, especially
      by means of pictures, popular encyclopedias etc., all under the
      supreme guidance of a despotism to be composed of the wise, some
      secular and some spiritual, operating through the confessional.
      Socialists nearly always succeed better in the critical part of
      their works than in the positive. Compare _R. Mohl_, Geschichte und
      Literatur der Staatswissenschaften, § 1, 165 ff.

  479 Considering the aversion exhibited against private property by _J.
      J. Rousseau_, and the unlimited power which he accords to the
      majority for the time being in the state (Contrat Social, 1761, II,
      ch. 4), it cannot be denied that his freedom and equality contain,
      to say the least, germs of communism by no means insignificant. But,
      he would, in the present state of civil society, have a feeling of
      respect for the rights of property implanted in the mind of the
      child very early, and even before the feeling of liberty is
      developed. (Emile, 1762, Livre II.) About the same time _Morelly_
      published his Basiliade ou Naufrage des Iles flottantes, 1753, a
      political romance in the interest of communism. See the same
      author’s Code de la Nature, 1755. _Mably_, in his two works, Doutes
      proposés aux Economistes, 1768, and La Législation ou Principes des
      Lois, 1776, recommended the abolition of all inequality and a real
      community of goods. The introduction of property seems to him, _une
      faute qu’il était presque impossible de faire_. Even _Beccaria_
      calls property a dreadful but perhaps a necessary right which has
      left to the unfortunate nothing but a naked existence. (Dei Delitti
      e delle Pene, 1765, cap. 22.) The French Reign of Terror came pretty
      near carrying these ideas into effect. We need only refer to the
      abolition of the census, the payments made to the workingmen who
      attended the section meetings, two francs per diem, the enormous
      extension of confiscation, requisitions and forced loans, the
      revolution effected in the fortunes of individuals by the system of
      issuing assignats, the maximum affixed to the price of all the
      necessaries of life, the abolition of indirect taxes, and of what
      remained of the economic institutions handed down from the middle
      ages. According to _St. Just_: _l’opulence est une infamie; il ne
      faut ni riches ni pauvres_. The Cahier des Pauvres demands, first of
      all, that salaries “should no longer be estimated in accordance with
      the murderous principles of unbridled luxury.” See Forster’s letter
      dated November 15, 1793. (Sämmtl. Schriften, IX, 125.) On the
      conspiracy of Baboeuf, who was executed in 1796, and who wanted to
      see the completest equality and community of labor, of enjoyment and
      education, the abolition of large cities etc., see _Buonarotti_, La
      Conjuration de B., 1821. This book contributed powerfully towards
      the revival of communistic ideas after the July revolution. Among
      modern communists who are to be distinguished from the more ancient,
      especially by the industrial coloring given to their theories,
      _Cabet_, Voyage en Icarie, 1840, II, holds a very prominent place.
      He declares the abolition of religion, of the family and of the
      state, to be open questions, and desires to bring the practice of a
      community of goods to a successful issue only through the peaceful
      channel of conviction.

      Compare _Reybaud_, Etudes sur les Réformateurs contemporains ou
      Socialistes modernes, 1840. _L. Stein_, Der Socialismus und
      Communismus des heutigen Frankreich. See, also, the learned history
      of socialistic systems in _Marlo’s_ Weltökonomie, I, 2, 435 ff.; and
      in what concerns the most recent time, _R. Meyer_, Der
      Emancipationskampf des vierten Standes, II, 1874, seq.; a book
      which, in spite of its many defects, both doctrinal and
      journalistic, is as rich in thought, and in the knowledge of the
      subject it treats of, as it is permeated by a love of truth
      regardless of consequences. Among the opponents of socialism and
      communism, _Malthus_, On Population, B. III, ch. 3, and _B.
      Hildebrand_, Die Nationalökonomie der Gegenwart und Zukunft, vol. I,
      1848, hold a very distinguished place. _J. S. Mill_, Principles, II,
      ch. 1, 3, calls attention to the fact that hitherto the principle of
      free property has never been consistently carried out. The first
      social arrangement of modern society was almost everywhere the
      result of conquest and violence, large traces of which yet remain.
      Things have always been made property which ought not to be
      property. Governments have endeavored to intensify the darkness of
      the dark side of property, and favored the concentration instead of
      the diffusion of wealth etc. Hence, no one can claim that the social
      wrongs, so-called, had their origin in property as such. _Schäffle_,
      Kapitalismus und Socialismus, 1870, has made a very note-worthy
      effort to recognize whatever of truth there is in socialism, and to
      combat its errors.

_  480 Saint Simon’s_ reproach to the liberals, that their fundamental
      principle was: _ôte-toi de là, que je m’y mette_, is well known.

  481 Compare _Malthus_, Additions to the Essay on Population, 1817, IV,
      ch. 7.

  482 The _travailleurs égalitaires_ wished to murder not only the king,
      the court, and the ministry, but also the Liberals and all owners of
      property.

  483 As soon, indeed, as this true love disappears in the married state,
      the community of goods even there degenerates only too easily into a
      spoliation of the better party by the worse.

  484 The community of goods of the first Christians at Jerusalem, so
      frequently cited and extolled (_James_, I, 1), was only a community
      of use, not of ownership (Acts IV, 32), and, throughout, a voluntary
      act of love, not a duty (V. 4), least of all, a _right_ which the
      poorer might assert. Spite of all this, that community of goods
      produced a chronic state of poverty in the church of Jerusalem.
      Hence, Paul had collections taken up for them on all sides, without,
      however, anywhere establishing a similar institution. (Romans, 15,
      26; I. Corinth., 16, 1.) Compare _Mosheim_, De vera Natura
      Communionis Bonorum in Ecclesia Hierosol., in his Dissertatt. ad
      Histor. Eccles. pertinentes, II, 1 ff. As to whether _Barnabas_
      (Epist., 19) desired to say anything more, compare Epist. ad
      Diognetum, 5. For a real recommendation of a community of goods, on
      economic grounds, see _Joh. Chrysostom._, in Acta Apost., Hom. XI.
      Also _Clemens Rom._ c. 2 C. 12, qu. 1. Community of goods among the
      Essenes: _Philo._ Opp. II. 457 ff. _Joseph. Bell_, Jud., II. 8.
      _Bellermann_, Geschichtliche Nachrichten über die Essener. (1821.)
      In many monasteries, there has been and is a species of community of
      goods. There was once a singular contest on this subject, carried on
      between the Minorites and the Pope, in the time of Louis of Bavaria.
      The Minorites claimed that property was a thing, so much to be
      condemned, that even food, at the moment of eating it, did not
      belong to the person using it. The Pope taught on the other hand,
      that even Christ and the Apostles possessed property, part personal
      and part in common. (_Raynaldi_, Ann. eccl., XV, 241, 285 ff.)
      Community of goods of the Homiliates, later of the Brothers of
      Common Life, after the manner of the monks, but of a much higher
      kind. (_Ullmann_, Reformatoren v.d. Reform, II, 62 ff.) The first
      settlers of New Haven, Connecticut, held their property in common.
      Land was divided among families in proportion to the number of
      persons in them, and of the number of cattle they had brought with
      them; and all sales and purchases were made on account of the whole
      community. And so in Massachusetts during the first seven years of
      the colony’s existence. (_Ebeling_, Geschichte und Erdbeschreib. der
      Vereinigten Staaten, II, 391, I, 557.) _Herrnhut_ community of goods
      in Pennsylvania, from 1742 to 1762, but which was done away with
      when the number of colonists became too great. (_Ebeling_, IV, 717.)
      Community of goods of the Shakers and Lutheran Rappers.
      (_Buckingham_, Eastern States, II, 214, 427. _Prinz Neuwied_, Reise
      in Nord Amerika, I, 136, ff.) Russian sects with community of goods.
      (_v. Haxthausen_, I, 366, 407.) _Harless_, christliche Ethik § 501,
      distinguishes very well between the “anti-christian” and “pseudo
      christian” stand point, from which it is sought to establish the
      doctrine of a community of goods. The Christian view of this subject
      (compare Ephes., 4, 28, I; Thess., 4, 11, II, 3, 12; Matth., 6, 24;
      Pet. 4, 10; Matth., 26, 7-11) is accused of hypocrisy by many
      socialists. It is very easy, they say, when one is himself in
      comfortable circumstances, to represent to the poor that their
      poverty is a school for heaven, and to preach a contempt for riches
      etc. They entirely forget, that the first promulgation of the Gospel
      was made at a time when the worst kind of pauperism prevailed; and
      that even the Master Himself, and the greater number of His Apostles
      belonged to the lowest stratum of society. _Luke_, 9, 58. Many of
      the Fathers of the Church, however, in their exhortations to
      benevolence, used language in which modern Socialists have found a
      rich mine which they have sedulously worked. (Compare
      _Villegardelle_, Histoire des Idées sociales, 1846, 61 ff.)

  485 Even _Aristotle_ says that what is common to many is a matter of
      little concern to any one. (Polit., II, 1.) _Bastiat_ remarks: “We
      compete to-day to see who works most and best. Under another regime,
      we should emulate one another to see who should work least and
      worst.” (Harmonies Econ., ch. VIII.) When the first settlers of
      Virginia, in 1611, gave up the system of common labor and of
      joint-stock companies, as much work was performed in a day as
      formerly in a week, or as much by three workmen as formerly by
      thirty. (_Purchas_, Pilgrims, iv, 1866. _Bancroft_, History of the
      United States, I, 161.) Even in New England, therefore among men
      both steady and accustomed to labor, who for conscience sake had
      sacrificed so much, a community of goods was accompanied
      uninterruptedly by famine. A change for the better took place, for
      the first time in 1623 with the introduction of the institution of
      private property which was followed in 1624 by the right of
      inheritance. (_Bancroft_, I, 340.) The military colonies of Algeria,
      also, in which husbandry in common was carried on, begged, at the
      end of a year, that the system should be abandoned, for the reason
      that it was good for nothing but to generate idlers; and yet, these
      colonists were all powerful men of about the same age, and
      accustomed to order and service in common. They were, moreover,
      assisted by the nation with pay and food. Compare _Bugeaud’s_
      account: Revue des deux Mondes, June 1, 1848. “The French
      associations (after 1848), whose object was labor in common, have
      nearly all died out.” _M. Chevalier_ in the Journal des Débats, Feb.
      3, 1851. In the United States, sixteen phalansteries of Fourierites,
      founded between 1840 and 1846, had all collapsed in 1855. (_D.
      Vierteljahrsschrift_, October, 1855, 205 ff.)

  486 Even in New Harmony, the members considered the task which they had
      to perform to obtain food, clothing and shelter, as villeinage in
      the worst sense of the term. (_H. Bernhard v. Weimar_, Nordamerikan.
      Reise, V, 134 ff.; 151, 310, ff.) It is very inconsistent in
      socialists to continue the proprietorship and heirship of the state.
      To be consistent they should give both these rights only to mankind
      as a whole. Compare _Kiraly_, Ueber Socialismus und Comm., 1868, 35.

  487 It would not be entirely fair to take a partisan view of the
      _ateliers nationaux_ of 1848, and claim them as a practical
      refutation of socialistic utopias, since no serious experiment was
      made with them. Compare _E. Thomas_, Histoire des Ateliers nationaux
      considérés sous le double Point de Vue politique et social, 1848.

  488 Socialists generally overlook the fact, that the greater number of
      enjoyments from which the poorer classes are excluded, by the right
      of property, would not exist at all were it not for that very right.
      (_Spittler_, Politik, 356 ff.) This remark may also be made of
      _Hugo’s_ ingenious objections. (Naturrecht, § 208 ff.) One of the
      most effective pieces of socialistic declamation is that the lower
      classes have a much shorter average of life than the upper. Hence
      the institution of private property is charged with being a species
      of spoliation of the poor of so many years of life, and the entire
      “present society” condemned on that account. Here again it is not
      borne in mind, that a few centuries ago the general average of life
      was probably still smaller; and that it was precisely the growth and
      development of “present society” that lengthened the days of the
      poorer classes even, although it may have lengthened those of the
      rich in a still greater proportion. See § 246.

  489 But a community of goods would not, by a great deal, accomplish as
      much as is generally supposed. In Prussia, for instance, in 1867,
      only about three per cent. of the entire number of families in the
      community had a yearly income of 1,000 thalers; only nine per cent.
      had 500 thalers or more, and only 6,465 returned an income of more
      than 4,000 thalers, while only 590 returned one of 16,000 thalers.
      (Preuss. statist. Ztschr, 1868, 83. _Held_, Die Einkommensteuer, 197
      ff) How little, therefore, could the poor here gain by the
      spoliation of the rich! Besides, the purely personal consumption of
      the rich is, after all, not so great; and if all luxury were
      abandoned, an innumerable number of men would lose their gains.
      (Compare _Ad. Smith_, Wealth of Nations, I, ch. 11, 2.) It would be
      to kill the hen that had hitherto laid the golden egg in order to
      divide its flesh a little more equally.

_  490 Babeuf_ declared all arts and sciences to be evils. He would have
      no one learn anything but Reading, Writing, Arithmetic, and a little
      of the Geography of France; and have the strictest censorship
      enforced to keep every one within these limits. Compare the able
      criticism of _Proudhon_, Contradictions, ch. 12.

  491 According to _Umpfenbach_, Nationalökonomie, 201, where a community
      of goods obtains, there can be but the alternative, viz.: whether
      each person or each family shall receive just the same amount. (The
      former would be more in harmony with principle, but what an
      over-population would be the consequence!) Precisely so, too, if
      each person were to come and take his own portion (anarchy!), or if
      it were parcelled out to each by a board of distributors
      (despotism!).

  492 This expression came into vogue, principally, through _L. Blanc_,
      Organization du Travail (1841), the leading ideas in which work are
      the following: The suppression of competition by the establishment
      of state industries; equality of remuneration for labor; equality
      and legislative determination of the rate of interest; the choice of
      superintendents by the workmen. With many modern socialists, the
      shibboleth is not so much _liberté_ as _solidarité_. Besides,
      _Fichte’s_ Naturrecht (1796), and his geschlossener Handelsstaat,
      are, without doubt, among the most remarkable works favoring an
      “organization of labor.” They aim at the destruction of the present
      social system, which, at most, needs only to be reformed and
      rejuvenated; and to galvanize the dead body into a new and different
      life (Medea’s magic cauldron!). Compare _Corvaja_, Bancocrazia o il
      gran Libro sociale, 1840.

  493 Cabet’s Icarian colony in America numbered 298 adults and only 107
      children. Yet spite of this condition, so favorable to production,
      it did but a very sorry business. Its government was very similar to
      that of a house of correction or a penitentiary. Even in religious
      matters, spite of all pretended toleration, those members who did
      not agree with Cabet were described in the official weekly paper as
      _des infames ou des aveugles_. (D. Vierteljahrsschrift, 1855,
      October, 205 ff.)

  494 An eastern sage says, that land possesses the ideal of legal
      security through which a beautiful woman, decked with pearls, might
      travel without danger. What would such a sage say of a European
      country, in which even orphan children have their property not only
      preserved to them, but find it increased from having been placed at
      interest, as soon as they reach their majority? (_Barrow_.)

  495 “The equality of communism is the worst species of inequality,
      because it guarantees to one for two hours of poor labor as much as
      it does to an other for four hours of good work.” (_Bastiat_,
      Harmonies économiques, ch. 8.)

_  496 Proudhon_, Qu’est-ce que la Propriété, 283, says, very justly, that
      “a community of goods is the spoliation of the strong by the weak.”

  497 Called a negative community of goods, by _Zacchariä_, Vierzig Bücher
      vom Staate, IV, 146, in contradistinction to the positive and
      universal community of gain, as desired by the communists.

  498 Community of goods and of women among the Ichthyophages on the Red
      Sea, who lived in caves, went naked for the most part, plundered all
      shipwrecked people, and never reached an advanced age. _Diodor._,
      III, 15 ff. _Peripl._, Maris Erythr., 12. Concerning the Scythians,
      see _Strabo_, VII, 300; the Spaniards, _Plutarch_, Marius, 6; the
      Rhetians, _Dio Cass._ LIV, 22; the Triballi, _Isocr._, Panath., §
      237; the Kilici, _Sext._, Empir. Pyrrh. Hypot. III, 24. Community of
      goods among the Caribs who performed all their work in common, and
      had, at least in the case of males, a common table and common stores
      with supplies. (_Petr. Martyr_, Dec. VII, 1. _Rochefort_, II, c. 16.
      _B. Edwards_, History of the West Indies, I, 43 ff.) Among the
      Kuskowimers of Russian America, all the able-bodied men of the tribe
      live together. (_v. Wrangell_, Nachrichten, 129.) Among the
      inhabitants of the Aleutian islands, at least in times of scarcity
      of food, the produce of the fisheries is divided according to their
      need. (_V. Wrangell_, 185.) The organization of labor is rigidly
      enforced among the Otomacs, on the banks of the Orinoco, and they
      are, nevertheless, more civilized than their neighbors. (_Depons_,
      Voyage, I, 295.) A community of goods must, however, be considered
      an advance, in the case of an isolated people; and it is an error to
      look upon it as the most primitive condition, as does, for instance,
      _Ambrosius_, De off. Minist. I, 28, and _Frederick II_, in the
      preface to his general code. (Allgemein. Gesetzbuche, 1231.) The
      hospitality of the inhabitants of the Friendly Islands borders on a
      community of goods. (_Mariner_, Freundschaftsinseln, 75, 81.
      _Klemm_, Kulturgeschichte, IV, 398.) Concerning the beginnings of
      property among the Esquimaux, See _Klemm_, II, 294.

  499 Οὐκ ἄδοξον ἧν παρὰ τοῖς παλαιοῖς ληστεύειν, ἀλλ᾽ ἔνδξον. (_Didym._,
      ad Odyss. II, 73, IX, 252.)

  500 In Mexico, the Spaniards found land ownership among the most
      distinguished of the natives, but only a species of possession in
      common and common store houses among the peasantry. (_Robertson_,
      History of America, § VII.) Hence, the agriculture of the country
      was so unimportant that the little army of the _conquistadores_
      frequently produced a famine by their marches.

  501 The Tcherkesses considered robbery honorable provided the robber was
      not caught _in flagrante_. Compare _Koch_, Reise in den kaukasischen
      Isthmus, I, 370 ff. _Bell_, Journal of a Residence in Circassia, I,
      181, II, 201. The organized robber bands of ancient Egypt, when it
      was so highly civilized (_Diodor._, I, 80) may, on the other hand,
      be accounted for by similar conditions actually existing in the
      large cities of our own day.

  502 What a frightful organization of labor we find in Sparta, combined
      with a community of goods! Let us recall the exposing of children
      authorized by law, the mode of education which must have cost the
      life of all whose constitution was weak, the _cryptia_, the stern
      hierarchy of age etc. _Plut._, Inst. Lac. 2, appreciates the bad
      taste of the black broth at its true value. The Cretan community of
      goods was based chiefly on the unnatural relation created by the
      authorities known as paiderastia; and which was a very efficient
      means to prevent over-population. (_Plat._, De Legg, I, 636.
      _Arist._, Polit. II, 8.)

  503 Remarkable reasons therefor in _Cæsar_, Bell. Gall., VI, 22.

  504 There are, especially in Russia, a multitude of such institutions
      among the inhabitants of the country still. See _Roscher_,
      Nationalökonomik des Ackerbaues, § 71 ff.

  505 In the Corpus Juris Canonici, that crown of medieval theology,
      politics and jurisprudence, the ideal of a community of goods
      occupies a place almost as prominent as in the works of modern
      socialists. The only difference is, that in the former the
      opposition to private property arises from a one-sided religiousness
      and contempt of the world, while, in the latter, it arises generally
      from irreligiousness and over-estimation of worldly goods.

  506 This does not include the cost of the schools, churches and
      benevolent institutions.

  507 According to _Lassalle_, System der erworbenen Rechte, 1861, § 259,
      history shows that law, as civilization advances, curtails more and
      more the proprietary sphere of private individuals, inasmuch as it
      tends more and more to place a greater number of objects outside the
      circle of individual ownership.

  508 Saint Simonism is a warning example of this tendency. Saint Simon
      never lost an opportunity to give vent to his utter contempt for the
      liberals, and for constitutional government—_ce bátard du régime
      féodal et du régime industriel_; and to counsel the crown, after the
      example of Louis XI. to place itself at the head of the working
      class, and in opposition to the middle class. (Oeuvres de _Saint
      Simon_, éd. 1841, 44, 148, 209.) _Bazard_, Exposition, 76, demanded
      that all antagonism between the temporal and spiritual powers, all
      opposition for the sake of freedom, _méfiance organisée_ of
      parliaments, and all competition, should cease. Even education he
      would have bestowed according to _capacité_, which he would have
      determined by the _chefs légitimes de la société_ (280). To the
      criminal court should be referred all cases of _delicts_, that is,
      all inopportune acts, even in the scientific and artistic
      departments. They should be tried after the manner of the “courts of
      trade;” that is, in a summary way, without appeal, and by experts
      (317 ff). All the relations of property should be determined by the
      _décision arbitrale des chefs d’industrie_ (326). _Bazard_
      everywhere insists that the reign of genius and of self-sacrifice on
      the one hand, and on the other of confidence and obedience, is the
      only true policy (330). Saint Simonism was nearly related to
      Bonapartism.

_  509 Schäffle_, Nat. Œk., III, Aufl., I, 61.

  510 If we remove in thought, all injurious elements from a community of
      goods, and add to it all the incentives and restraints necessary to
      be added, we shall have a state of things entirely similar to that
      in a nation whose public and private affairs are carried on in
      accordance with the principles of a healthy system of Political
      Economy as understood to-day. (Edinburgh Review, January, 1851.)

  511 How true freedom is accompanied by what _Bastiat_ calls “true Saint
      Simonism and true communism,” see _infra_, § 210.

  512 The experiments of a community of goods, which have proved
      successful in practice, were all based on the more or less complete
      celibacy of the members of the societies. Compare _Hermann_,
      Staatsw. Unters., II, Aufl., 45.

  513 Thus _Proudhon_ (Contradictions, ch. 5) says that the many
      socialists, who would construct their societies after the type of
      the family, as the _molscule organique_, are all wrong. The family
      has a “monarchical, patriarchal” character. In it, the principle of
      authority is formed and preserved. On it, ancient and feudal society
      was based; and “precisely against this old patriarchal constitution,
      modern democracy protests and revolts.” _Fourier_ calls marriage,
      _un groupe essentiellement faux: faux par le nombre borné à deux,
      par l’absence de liberté et par les dissidences du goṅt, qui
      éclatent dès le premier jour_. (Nouveau Monde, 57.)

  514 On the Indians of North America, see _Schoolraft_, Information
      respecting the Indian Tribes of the United States, II, 194; on the
      South American _d’Orbigny_, Voyage, IV, 220, and passim, on the
      South Sea Islanders, the Novara-Reise, II, 418; on the ancient
      Albanians, _Strabo_, XI, 503.

  515 The hereditary transmission of property to posterity has an obvious
      tendency to make a man a good citizen. It ranges his passions on the
      side of duty, and induces him to make himself profit the common
      good, and it assures him that his reward shall not die with himself,
      but that it shall be handed down to those to whom he is joined by
      the dearest and most tender feelings. (See _Blackstone’s_
      Commentaries, II, 11.) Without the right of inheritance, credit is
      scarcely possible, since with the death of the debtor the only stay
      of the creditor would cease.

  516 Testamentary freedom (which obtained in places there about the
      beginning of the eighteenth century) prevails completely in England
      at present, contrary to the principle of the Roman law requiring an
      obligatory portion (_la légitime_) to be left to the heirs, which is
      still binding in France, but in a very much developed form. The
      consequence is that last testaments are as frequent in England as
      they are rare in France. There were, in Paris, in 1825, 7,649
      judicial, and only 1,081 testamentary partitions of property.
      (_Monnier_.) In Great Britain, in 1838, the number of testamentary
      alienations of property taxed stood to those in which there was no
      will, in the proportion of 8:3; and the values of the alienated
      property as 10:1. (_Porter_.) Among a people noted for their high
      moral tone, testamentary freedom is a powerful means of
      strengthening paternal authority on the one hand, and of keeping
      alive, in the minds of parents, on the other, a sense of
      responsibility for the future of their children. Compare
      _Helferich_, Tübinger Zeitschr., 1854, 143, ff.

_  517 Polyb._, XX, 6. Hence it was, that all (?) the wealth of Thebes,
      when it was destroyed by Alexander the Great, was only 440 talents.
      (Athen., IV, 148.) _Drumann_, Gesch. Roms. etc., VI, 333 ff.
      _Cicero_, Phil., II, 16. _Hoeck_, Röm. Gesch., I, 2, 118. _Sueton._,
      Octav., 66. An especially scandalous instance in _Petron._, 140. For
      a masterly theory of legacy-hunting, see _Horat._, Sat., II, 5.
      Compare _Lucian_, Dialogues of the Dead, 5-9. _Petronius_ speaks of
      a _turba hæredipetarum_. (124.)

  518 Even the revolutionary shibboleth, _paternité_, really means nothing
      more than the equal right of inheritance of all, i.e., the abolition
      of the right of inheritance! (_R. Meyer_.) The strongest attack,
      from a scientific point of view, made on the right of inheritance in
      more recent times, comes from Saint Simonism. The founder himself,
      after a life rich in experience but poor in action, spent in the
      search of much but in the finding of little, succeeded only in
      arraying the industrial and proprietary classes against each other,
      in declaring the poorest class to be the most important of all, and
      in basing the new _religion of love_ on the emancipation of labor.
      His disciples went further. In order to abolish all the privileges
      of birth, _Bazard_, Exposition de la Doctrine de Saint Simon, 1831,
      p. 172, ff., taught that it was not enough to distribute public
      employments according to merit, and in the interest of the people
      generally, but that the distribution of property should be made in
      accordance with the same principle. The inequality of ownership
      should correspond with the inequality of merit. Every one may,
      during his life, keep what he had acquired himself, but give it to
      the state at death. Thus would a reconciliation be effected between
      the general interest and private interest; and the public revenue,
      supplied in this way, might easily be employed in place of the
      revenue raised by such taxation as weighs most heavily on the
      inferior classes. _F. Huet_, also, Le Regne social du Christianisme,
      1853, III, 5, would have all private property, after the death of
      the owner, fall _également à tous les jeunes travailleurs_. The
      practical consequences of this system may now be seen in Turkey.
      There, the principal military fiefs are held in this way. Hence it
      is, that the Turkish owner of such a fief builds as little as
      possible. When one of his walls threatens to fall, it is kept
      standing by means of props. If it falls in fact, the only
      consequence is that there are fewer rooms in the house, and the
      owner settles beside the ruins. (_Denon_, I, p. 193.) In the Butan,
      there exists a species of practical Saint Simonism. _Robinson_,
      Descriptive Account of Assan, 1841.

  519 It was chiefly fear of the consequences of the declamations of the
      socialists and their declamation against “monopoly” that induced
      _Bastiat_ to reduce all the value of landed property to that of the
      capital employed in its manuring, improvement etc. (Harmonies, ch.
      9.) We may, however, unreservedly grant him that, as a rule, until
      the time of its original possession by man, land had no _valeur_
      whatever (278).

_  520 Kant_ thinks the very contrary: Metaph. Anfangsgründe der
      Rechtslehre, (Werke, IX, 72 ff). _Contra_, _Grotius_, J. B. et P.,
      II, 2. _Graswinkel_, in his Schriften für die Freiheit des Meeres,
      1652 ff., in _Laspeyres_, Geschichte der niederländischen N. Œk.,
      12. _Hufeland_, Neue Grundlegung, I, 307.

  521 “A district of Tartary of ten square miles, in which several hordes
      pasture their flocks, may contain between 400 and 500 shepherds, who
      find employment in this mode of production.” In Brie, in France, on
      the same area, 50,000 peasants who own no land, live and draw their
      sole income from their labors in the fields (_J. B. Say_).

_  522 Schubert_, Reise durch Frankreich und Italien, I, 188.

  523 “Without labor, the earth bestows nothing on man but a stopping
      place. Hence, the reasons for private property do not extend so far
      as to prove that the great land and water highways should not be
      reserved as common property, and as a home to every man.”
      (_Zachariä_, vom Staate, VII, 43.)

  524 This is the practice in Taway. _Ritter_, Erdkunde, V, 130. And so in
      ancient Germany. _J. Grimm_, Rechtsalterthümer, 92. Right of the
      “dead fire” in Spain and Portugal during the middle ages. _S. Rosa
      de Viterbo_: Elucidario das Palavras etc., I, 470. In many parts of
      Persia, the land belongs to anyone who has provided it with water by
      canals or wells. (_Fraser_, Journey in Chorasan, ch. 7.) Especially
      after the Mongolian devastation about the beginning of the
      fourteenth century, it was decreed that land which had remained
      uncultivated for a long time should belong to the person who made it
      productive. (_d’Ohsson_, Hist. des Mongols, IV, 418.) Similarly, in
      the time of the ancient Persians (_Polyb._, X, 28, 3), the harvest
      for the first five years belonged to the person who first irrigated
      the land. On the upper Euphrates, likewise, the land is very often
      neither sold nor leased. Anyone who will till it and pay one-tenth
      of the produce to the bey may have it for nothing. (_Ritter_, X,
      669; compare VIII, 468; IX, 900.) So, too, among the Fulah and
      Mandingo negroes, and even among the Tscherkessans. (_Klemm_,
      Kulturgeschichte, III, 337 ff.) As the latest stages of development
      so often present instances of a reversion to the earliest, we find
      that Theodosius and Valentinian decreed that the _agri deserti_
      should, after two years’ cultivation, belong to the possessor. L. 8,
      Cod. Just., XI, 58.

  525 Thus anyone may burn his own coat or throw it in the water; but no
      one may set fire to his own house or drown his land by the
      destruction of a dam. Even the non-user of a large area, in a
      thickly populated region, would scarcely be permitted. The taking of
      property by the state, at the present day in times of peace, is
      confined almost exclusively to land.

  526 Thus _P. v. Arnim_, in a work entitled “Ideen zu einer vollständigen
      landwirthschaftlichen,” Buchführung, 1805, a treatise on
      “agricultural book-keeping,” considers the farmer as a state
      official who should cultivate whatever he believed in conscience, or
      what the state declared to be, most necessary. He suggests that the
      state should subject all new purchasers of land to an examination to
      ascertain whether they are rich and noble enough to act in this way.

  527 Thus, for instance, _Herbert Spencer_, Social Statics, 1851, 114
      ff., and to some extent _Spinoza_, Tract. polit., VI, 2. There are
      now in England several Land-Tenure-Reform-Associations, some of
      which would “expropriate” all land and vest the title in the state.
      The programme of the others embraces not only opposition to the
      right of primogeniture, to family _fidei commissa_ and the assertion
      of the right of freedom of trade in land, and of a more democratic
      use of common lands, but also the appropriation by the state of the
      increase in the rent of land which is caused by no labor of the
      landlord, but solely by the increase of population and of the wealth
      of the community or of the nation. _Newmarch_, on the other hand,
      very correctly remarks, that since it is impossible to draw a line
      of demarkation showing the increase of the value of land growing out
      of the increase of population etc., the owner of land in making
      improvements would never know whether he made them for himself or
      for the state. (Statist. Journal, 1871, 488 ff.) Compare _Wolkoff_,
      Sur la Rente foncière, 1854, and _H. H. Gossen_, Entwickelung der
      Gesetze des menschlichen Verkehrs (1854).

  528 In Congo and on the gold coast of Guinea the land, in whole
      villages, is tilled in common and the harvest distributed among the
      families per capita. Wherever absolutism reigns, the prince is also
      the owner of all the land. (_Klemm_, III, 337.) In China, where the
      original tenure in common of the land by all was broken through in
      the third century before Christ, all the land of the country now
      belongs, strictly speaking, to the state; and the possessor of land
      who permits it to go untilled is punished. (_Plath._ in the
      phil.-hist. Sitzungsberichten der Münchener Akad., 1873, 793 ff.) In
      Corea, private property in land is unknown; arable land is divided
      by the state according to the number in a family. (_Ritter_, IV,
      633.) The example, on the largest scale, of a country without
      private property in land is the British East Indies. Compare the
      paper by _Ch. Campbell_, in the Essays published by the Cobden Club;
      System of Land Tenure in various Countries, 1870.

  529 The legal and economic difference between property in land and
      property in capital is well defined by _J. S. Mill_, Principles, II,
      ch. 2, 6. “The reasons which form the justification, in an
      economical point of view, of property in land, are only valid in so
      far as the proprietor of the land is its improver. In no sound
      theory of private property was it ever contemplated that the
      proprietor of land should be merely a sinecurist quartered on it.”
      He here alludes specially to Ireland. The Fourierist, _Considérant_,
      distinguishes accurately between the capital produced by labor and
      saving, and the increase of the value of land caused by capital and
      labor, and its original value. Only the first two elements can
      justly be made property. But as, for prudential reasons, it is
      necessary to grant individuals the right of private property in
      land, those who are not such proprietors must, as a compensation for
      the common property which they have lost, be guaranteed the right to
      labor. (Théorie du Droit de Propriété et du Droit au Travail.) In
      England, the opinion that the compulsory support of the poor was
      introduced in compensation to them for the establishment of private
      property in land has met with considerable favor. _Bishop Woodward_,
      On the Expediency of a Regular Plan for the Maintenance of the Poor
      in Ireland, 1775. Compare _Eden_, State of the Poor, I, 413.
      However, the poor rates, in a country like England, are much more
      than an equivalent of what its soil could produce without the
      assistance of capital.

  530 The principal classical work on this subject is _Nebenius_, Der
      öffentliche Credit, 1820, 2d ed., 1829. Previously, _Salmasius_, De
      Modo Usurarum, 1639; and even _Demosthenes_, adv. Dionysiod, 1283.
      Compare further _Schäffle_, in the Deutsch. Vierteljahrsschrift, No.
      106, II, 289 ff.

  531 Compulsory loans by the state, for instance, occupy an intermediate
      position between taxes and credit-operations, properly so called.

  532 Besides loans proper, all payments in advance, or delays made in the
      payments of earnest-money, all leases and lettings, which
      _Courcelle-Seneuil_ calls _un médiocre degré de crédit_, insurances
      and even all contracts for wages where the payment is delayed for a
      long period of time, are species of credit. For a nice distinction
      between leasing (_Pacht_) and letting (_Miethe_), see _Knies_,
      Tübinger Ztschr., 1860, 180 ff., and the Freiburger Univ. Programm.,
      9. September, 1862. _D. Wakefield_, Essay upon Political Economy,
      1804, 35, distinguishes between “loan-credit” which is given to a
      poor man in the hope of his paying it by means of his labor, and
      “exchange-credit,” or credit between property owners.
      _Cieszkowski’s_ definition: _le crédit c’est la métamorphose des
      capitaux stables et engagés en capitaux circulants et dégagés_. (Du
      Crédit et de la Circulation, 2d ed., 1847.) According to _Knies_,
      Tübinger Ztschr., 1859, 568, every credit-operation is an exchange
      or sale of services, one of which is to be performed in the present,
      and the counter-service of the other party in the future. According
      to _Macleod_, it is “a sale of debts.”

  533 Personal credit, of course, preponderates in commerce. Hence it is,
      that in mercantile life, information concerning the personal status,
      reputation etc. of his colleagues, plays so important a part with
      the merchant. This information was made more accessible in England
      by the Lloyd institution. On similar North American institutions,
      see _Tellkampf_, Beiträge, I, 51. Credit given on security is a
      modification, sometimes of personal and sometimes of real credit.
      Compare, _infra_, the theory on bankers, brokers etc.

  534 In despotisms, credit is almost entirely personal. _Montesquieu_
      Esprit des Lois, L.V., 15. In New York, says _M. Chevalier_, a
      merchant with resources worth 200,000 francs, can do a business of
      from 1,000,000 to 1,500,000 francs. In Paris, under similar
      circumstances, the same man would find it difficult to be credited
      to the extent of 500,000 francs. In Holland, two hundred years ago,
      a person who hypothecated his property was obliged to pay a higher
      rate of interest than in business (_Becher_, Polit. Discurs, 1763,
      699), while the stationary period, one hundred years ago, made
      personal credit extremely difficult. In Zurich, it was encouraged by
      the prohibition of loaning money out of the country. (_Büsch_,
      Geldumlauf, III, 40.)

_  535 Schäffle_, Nat. Œk., II, Aufl., 112.

_  536 Schäffle_, according to the purpose which it is intended to
      subserve, divides credit into production-credit (investment of loans
      in immoveable property and in moveable property engaged in
      industrial operations), consumption-credit and clearing-credit, or
      loans made to pay respited purchase and earnest money, inheritances
      etc. (Kapitalismus und Socialismus, 552.)

_  537 Pinto_, Traité de la Circulation et du Crédit, 1771, considers
      loans bearing interest as new portions of the resources of a country
      (p. 161), and that government loans not made in excess of its powers
      are _une alchymie réalisée dont souvent eux mêmes qui l’ opèrent n’
      entendent pas tout le mystère_, (p. 338.) Similarly and earlier, _v.
      Schröder_, F. Schatz-und Rentkammer, 238 ff; _Mélon_, Essai
      politique sur le Commerce, 1734, ch. 6; next, _Hamilton_, Report to
      the House of Representatives on the subject of Manufactures, Dec. 5,
      1791; _Von Struensee_, Abhandlungen, 1800, I, 259. See infra, § 210.
      More recently, _St. Chamans_, Nouvel Essai sur la Richesses des
      Nations, 1824, 83 ff. To some extent, even _Dietzel_, System der
      Staatsanleihen, 1855, 200. This is a dangerous error, since to every
      credit there is a set-off in the nature of a debit of an equal
      amount; and the evidences of debt are nothing but claims on the
      future revenue of the state. This was fully recognized by
      _Cantillon_, 291 ff. One of the principal advocates of that view
      among writers on Political Economy is the vivacious, acute and
      practically not unskillful, but sophistically superficial _Macleod_.
      (Elements of Political Economy, 1858, ch. 3, Dictionary, 1862, v.
      Credit.) The creditor’s assignable right of demand, he considers
      immaterial capital. While bills of lading, warehouse receipts, dock
      yard receipts etc., only represent goods, the bank note is new
      goods. Even metallic money has only a credit-value, inasmuch as it
      can be used only to effect exchanges. To the - of the creditor may
      correspond a + of the debtor; but the latter is negative only in the
      sense that we speak of negative electricity, a negative
      thermometrical degree. When an estate is leased, the owner has, in
      his demand for rent, a vendible _plus_; but the lessee no
      corresponding _minus_. (Not so. To the same extent that the
      proprietor has his future payments on the lease discounted, the
      present sale-value of his estate is diminished; or if it is not
      sold, the last party obtaining the discount has made his available
      capital as much less by the advance as that of the lessor has been
      increased.) The “discounting of the future,” that is, the apparent
      capitalization of hopes, so much in vogue at the present time, may
      be a great spur to production as it may also be to baseless
      extravagance.

  538 Many theoreticians ascribe a direct creation of new capital to
      credit, in so far as the capacity of the evidences of debt to
      circulate as a medium of exchange effects a real saving, and permits
      the former very costly and intrinsically valuable instruments of
      exchange to be used in some other way. (§ 123.) Compare _Ricardo_,
      Proposals for a secure and economical Currency (1817). _J. S. Mill_,
      Principles, II, 174 and 36. _McCulloch_, Commercial Dictionary, art.
      Credit. And so it was in the first four editions of this book of
      mine. But here, too, there is, immediately, only a transfer of
      already existing capital. The person, for instance, who accepts a
      bank note for payment, loans a part of his capital to the bank; and
      the advantage to the whole community of such credit-operations
      consists chiefly in this: that so large a quantity of cash-capital
      which lay idle in banks etc., may be used more productively.

  539 When _Roesler_ says that credit is capital, the product of saving,
      and very serviceable in further production (_Grands._, 300), he
      confounds credit itself with the foundations of credit, which are,
      indeed, in large part material or moral capital.

  540 Compare Discourse on Trade, Coyn and Paper-Credit, London, 1697, 72
      ff.

  541 Compare _Buron_, Guerre au Crédit, 1868. _Schäffle_, Tüb. Ztsch.,
      1869, 296 ff. With a thorough understanding of its
      politico-economical bearing, _O. Michaelis_, (Berliner V. Jahrsschr.
      1863, IV, 121,) says: The capital-value of my credit is not equal to
      the nominal value of my evidences of indebtedness [notes etc.], but
      to the capitalized amount of the extra surplus which I have obtained
      in my business by means of credit, after deduction is made of the
      costs and of the risk-premium.

  542 We shall, in the books to follow this, inquire with great care, what
      are the means best calculated to remedy this dangerous tendency. We
      need only remark here, that it is to be found in a judicious
      association of small capitalists, and also in the capitalization, so
      to speak, of personal qualities. A well organized society of
      work-men, without capital, may indeed obtain credit, as for
      instance, the Schultze-Delitsch societies, the Russian
      _artel-schnicks_ (market-aid societies) etc. prove. (_Frühauf_, Die
      russ. Artels in _Faucher’s_ Vierteljahrsschrift, 1868, I, 106 ff.)
      We may also mention the greater credit accorded to a land-owner the
      moment he becomes a member of a land-loan association as compared
      with what he could obtain before he had joined it. The popular
      belief of the ancient Egyptians afforded them a very great
      instrument of credit in the pledging of the remains of their
      ancestors. (_Herodot._, II, 136.)

_  543 B. Hildebrand_ is of opinion that the Political Economy of the
      future may be characterized as credit-economy, in the same way as
      the Economy of the present may be called money-economy, and that of
      the past as barter-economy of barter. (National Œkonomie der
      Gegenwart und Zukunft, I, 276 ff.) _Hildebrand’s_ view is correct in
      so far as that, with every advance in civilization, credit comes to
      have absolutely and relatively an ever increasing importance,
      although in the middle ages, especially under feudal forms
      (_Lehensformen_), there were numberless operations in credit.
      Otherwise, however, _Hildebrand’s_ three kinds of economy are, by no
      means, coördinated. While barter and purchase through the
      instrumentality of money, in every instance, entirely exclude each
      other, it is impossible to imagine a credit-transaction of which the
      promise of a barter-performance or of a money-performance does not
      constitute the base. During a “money-economical
      (_geldwirthschaftlichen_) period” [i.e., one during which money is
      the medium of exchange, and not notes; and when barter does not
      obtain.—_Translator_.] the service rendered by money as a medium of
      exchange may, for the most part, be supplanted by credit. Money, as
      a measure of value, still remains the substratum of credit itself.
      (See _Knies_ in the Tübinger Ztschr., 1860, 154 ff.; and in the
      Freiburger Programm, 9 Sept., 1862, 19.) Earlier yet, _A. Wagner_,
      Beitr. zur Lehre von den Banken, 1857 ff. Among the most practical
      propositions of Saint Simonism is that of a _système genéral des
      banques_, intended to administer all the goods of the nation, and to
      loan them to individuals engaged, in production. (_Bazard_, 205 ff.)

  544 It is destructive of credit to allow the debtor to await several
      decrees or judgments before his liability is established; to allow
      him, on easy terms, delays, reversals of judgment, the costs of the
      case etc. The term within which a creditor might bring in his claim
      before the meeting of creditors in the Amsterdam Boedel-chamber was
      formerly thirty-three and a third years. (_Büsch_, Darst. der
      Handlung, Zusatz, 82.) In the presidency of Bengal there were, in
      1819, 81,000 cases in arrears, and in 1829, 140,000. Westminister
      Review, XIX, 142.

  545 And yet _Melon_ is of opinion that the state should favor the debtor
      as much as possible. (Essai politique sur le Commerce, ch. 12, 18.)
      This was the view entertained on this subject by the older
      practitioners. In Bengal, the _dhura_, a species of “judgment of
      God,” in which the party who could hold out longest against hunger
      was declared the victor, was the only means to compel a debtor to
      pay his debt. As a consequence, the Bengal peasant could not borrow
      money at less than 60 per cent. per annum. Edinburgh Review, XXII,
      67. On the damages attending the credit-laws and credit-courts of
      Russia, by which all foreign goods are rendered exceedingly dear,
      see _v. Sternberg_, Bemerkungen über R., 100 ff. In a country in
      which a great many powerful personages are above the laws, an
      incorporated loaning bank may be an indispensable necessity.
      (_Storch_, Handbuch, II, p. 23 ff.) In Naples, even as recently as
      1804, no debtor could be arrested during the last six months of the
      queen’s pregnancy. At a previous period, one might fail in business
      there and escape all punishment by exposing the hindermost part of
      himself in a nude state publicly before a column of the _Vicaria_.
      (_Rehfues_, Gemälde von Neapel, I, p. 203 seq., 222.) In Schwytz,
      the rate of interest is so high, because the law allows the debtor
      to pay his creditor, whether the latter will or not, in articles of
      household furniture, clothes etc., estimated at a very high value.
      (_Hermann_, Staatsw. Untersuchungen, 202.) It has now become quite
      usual in the United States, on account of the many delays granted to
      the debtor by “democratic” laws introduced there, instead of mere
      mortgage, to give full warranty deeds when capital is loaned. By
      this means, the creditor is in danger, when misfortune overtakes
      him, to see himself compelled to let his property go at one-fourth
      of its value.

  546 See the Heliast oath in _Demosth._, adv. Timocr., 746. The Roman
      system of credits in the time of Polybius was much better than the
      Carthaginian. _Polyb._, VI, 56, XXXII, 13.

  547 Sachsenspiegel, III, 39. _J. Grimm_, Deutsche Rechtsalterthümer, 612
      ff. _Dahlmann_, Dänische Gesch., II, 245, 339. _Hermann_, Russ.
      Gesch., III, 357. On slavery for debt among the Malays, see Ausland,
      1845, No. 157.

_  548 Beaujour_, Tableau du Commere en Grèce, II, 176.

  549 C. 2 X. De Pignor. An appropriate provision in a priestly
      government. _Diodor._, I, 79.

  550 Staying in a place by the debtor until the creditor is satisfied,
      and other degrading stipulations, which, however, were prohibited by
      the police regulations of the Empire in 1548, art. 17.

_  551 Marten’s_ Ursprung des Wechselrechts, 1797. Statuta Mediol., 1480,
      fol. 238 ff. The municipal law of Florence unconditionally
      imprisoned the father or grandfather for the debt of the son, when
      the latter engaged in industrial pursuits with their consent. (Stat.
      Flor., I, 201.) In Bologna, the brothers of a bankrupt who had
      constituted one household with him were held responsible for his
      debts. (Statuti dell’ Università de Mercantati della Città di B.,
      1550, fol. 110.) The law of Geneva excluded from all positions of
      honor the son who had left his father’s debts unpaid. _Montesquieu_,
      E. des Lois, XX, 16. The consequence was, that among the higher
      classes not a creditor lost anything for centuries. (_K. L. v.
      Haller_, Restauration der Staatswissenschaften, VI, 519.) Compare
      the “Nurenberger Reformation” of 1479, fol. 61 and 68 of the edition
      of 1564.

  552 Compare the R. P. O. of 1548, art. 22. And so, by the Code de
      Commerce, III, 4, I, even the simple bankrupt in contradistinction
      to the fraudulent bankrupt is punished, and every person unable to
      pay his debts is declared a _simple_ bankrupt, who, among other
      things, has made excessive household expenses, or lost considerable
      sums by play etc. Compare _Sully_, Mémoires, Livre XXVI, who
      declares it to be his most wholesome law, that fraudulent bankrupts
      should, like thieves, be punished with death, and that all their
      fraudulent assignments, gifts, etc., should be declared void.
      Further, Ordonn. de Louis XIV., sur les Failletes, art. 11; _J. de
      Wit_, Mémoires, 77 ff; _v. den Heuvel_, Sur le Commerce de la
      Hollande, 110 ff. Frederick William I., in 1715, threatened with the
      galleys all light-headed bankrupts, and, in 1723, all those who,
      knowing their insolvent condition, should effect further loans.
      _Mylius_, Corp. Const. March. II, 2, 31, 40. For China, see _Davis_,
      The Chinese, I, 247 ff. _Gr. Soden_, Nat. Oek., III, 231, demands
      that, in case of doubt, the guilt of the bankrupt should always be
      presumed.

  553 In England only one-tenth of the number of bankrupts are considered
      innocent. _Elliot_, Credit the Life of Commerce, 1845, 50 ff.

  554 The _contrainte par corps_ of debtors was abolished in France in
      1792, but restored in 1797. Even _Turgot_ remarked that since
      slavery had ceased there was no further fear (?) that the poor would
      be oppressed by imprisonment for debt. (Sur le Prêt d’ argent, §
      31.) According to _Droz_, the question is not one of weighing
      “freedom” against “miserable money,” but the deprivation of a few of
      that freedom and the non-fulfillment of obligations entered into,
      that is against the destruction of public confidence.

  555 A similar development among the Greeks:

      A. Rigorous slavery for debt, which Kypselos moderated at Corinth.
      (_Pausan._, V. 17, 2), and Solon abolished in Athens. (_Plutarch_,
      Sol., 15. _Demosth._, de fals. Legat., 412.)

      B. The reckless creation of debts as seen in Aristophanes; while
      outside of Athens slavery for debt lasted yet a long time.
      (_Hermann_, Griech. Privatalterth., § 57, 20.) In the time of
      Demosthenes, the merchant in arrears in the payment of his debts was
      cast into prison, and the bottomry-debtor who deprived his creditor
      of his security might be punished with death, (_Demosth._ adv.
      Pharm., 922, 958), and this although the _cessio honorum_ was
      introduced. _Hermann_, § 70, 3. Compare _Xenoph._, Vectigg., 3,
      _Demosth._ adv. Apat., 892; adv. Lacrit., and adv. Dionys. In
      Corinth, the state superintended expenses made by parties. This was
      part of its credit-policy. (_Athænæus_, VI, 227.) For a remarkable
      Rhodian law relating to debts, see _Sext._ Emp., Hypot. I, 149.

      In Rome:

      A. The chief characteristic of the ancient law in this matter was
      the eventual sale of the person of the debtor on the getting of the
      loan (_nexum_); the power of the creditor to put the _addictus_ to
      death or to sell him in foreign parts; finally, the _in partes
      secanto_, in the concourse of creditors. Without these rigorous
      provisions, the borrower might easily have evaded his debts, by the
      emancipation of his son and turning over his property to him.
      (_Niebuhr_, Rom. Gesch., II, 770 ff; _Savigny_ in the Abb. der
      Berliner Acad., 1833. _Zimmern_, Gesch. des röm. Privatrechts, III,
      131 ff.)

      B. Later, we find nothing of the execution of the debtor, or of the
      sale of his person; but he might be compelled to do slave labor for
      his creditor without any protection against ill-treatment. Slavery
      for debt was restricted by the Lex Poetelia. (_Niebuhr_, III, p.
      178; _Mommsen_, III, 494.) The Prætorian law introduced the custom
      of putting the creditor in possession of the goods of the debtor,
      with power of sale, which proceeding rendered the debtor infamous.
      See several passages in _Walter._, Röm Rechtsgesch, 763 ff;
      _Tertull._, Apol., 4; Tab. Herac. I, 115 ff. Later, Cæsar’s Lex
      Julia permitted the honest debtor to escape imprisonment by the
      assignment of his goods.

      C. The moneyed oligarchy which prevailed in Rome caused the adoption
      of exceedingly severe measures against delinquent debtors. (_Plut._,
      Lucull., 20. _Cic._, ad. Att. V. 21, VI.), although its members
      themselves incurred debts in the most reckless manner. Cæsar, in the
      year A.C. 62, excluding his active (_activen_), owed debts to the
      amount of 25,000,000 sesterces; M. Antonius, in the year 24,
      6,000,000; in the year 38, 40,000,000; Curio, 60,000,000; Milon,
      70,000,000. (_Mommsen_, Römische Geschichte, III, 486.) Compare
      _Gellius_, XX, 1, XV, 14.

  556 Whenever a new shop-keeper, who sells goods on monthly credits,
      settles in a district, the number of poor persons invariably
      increases. (_McCulloch_, Commercial Dictionary.) The ruinous credit
      given by the Jews to the Westphalian peasants begins with an account
      for the goods which they have succeeded in pressing upon them, after
      five or six years have elapsed. The Jew seldom sues accounts at law;
      but he besieges the debtor and discovers where his last head of
      cattle and his last little supply of provisions are to be found. As
      he is willing to accept everything that has any value, sometimes in
      payment of arrears, and sometimes in payment for some new piece of
      trash, he is sure to obtain his dues in the end, but not until his
      victim, who is sunk deeper and deeper in the abyss of debt by every
      “accommodation,” is entirely ruined. (_Schmerz_, Rheinish-Westphäl.
      L.W., 396 ff.)

  557 In the lower and middle stages of civilization, we find a multitude
      of laws by which minors, students etc., but especially land-owners
      are limited to a minimum of credit, which, however, varies very much
      with the person, and is subjected to a number of embarrassing forms,
      the consent of a third person, for instance etc. (Compare Bayerische
      L.O. von 1553, fol. 83.) Such laws, however, give as much room to
      the play of dishonesty as they take away from that of want of
      reflection.

  558 On the municipal regulations (_Städteordnungen_) of the 14th and
      15th centuries, which compelled Jewish creditors especially to have
      their evidences of indebtedness redeemed within from every two to
      five years, see _Stobbe_, Juden im Mittelalter, 129. Compare further
      the Würtemberg L. O. of 1515, Statut. Ferrar, ed. 1650, lib. II,
      rub. 37, 289. According to the other provisions of the laws in North
      America, some book accounts were required to be sued on within six
      and others within seventeen years. (_Ebeling_, Gerchichte und
      Erdberschreibung der v. Staaten, II, 247, 298.) The Prussian law of
      March 31, 1838, provides a period of limitation of three years for
      all ordinary commercial debts. A similar law was passed in the
      Kingdom of Saxony, in 1846. In London, there has been found a great
      number of hatters, tailors, boot and shoe dealers etc., whose books
      showed credits of more than £4,000, most of them not to exceed over
      £10. How much of all this must be lost entirely, and how that loss
      must increase the sums paid for boots, shoes and hats by the prompt
      payer! (_McCulloch_, v. Credit.) We find, even in Athens, that the
      period of limitation was shortened in the interest of credit, and
      that in the case of minors, it did not exceed five years.
      (_Demosth._ adv. Nausim., 989.) Security for a debtor not over one
      year. (_Demosth._, adv. Apatur., 901.) The prohibition of Zaleukos
      to issue any evidences of debt whatever goes much farther.
      (_Zenob._, Proverb. V, 4.)

  559 Compare the report of the Dresden Handelskammer, 1864, 11.

_  560 A. Mayer_, in _Faucher’s_ Vierteljahrsschrift, 1865, IV, 65.

  561 We learn from the debates in the English parliament of February 9,
      1827, that, in two years and a half, there were, in London and its
      environs, 70,000 cases of imprisonment for debt, the costs of which
      were from £150,000 to £200,000. In 1831, there were in one debtors’
      prison 1,120 prisoners, who owed on an average £2 3s. 2d.
      (_McCulloch_, l. c.) There was, in 1792, a case of a woman who, for
      a debt of £19, remained in prison 45 years, and others like it. (See
      _Archenholtz_, Annalen, IX, 87 ff; X, 169 ff, XIII, 125.) In England
      in 1844, arrest for sums less than £19 was prohibited. _Johnson_ had
      already proposed a similar provision. (Idler, 1758, Nos. 22 and 38.)
      Imprisonment for debt was abolished in France, England and Austria
      in 1867; in the North German Confederation, on the 29th of May,
      1868, but arrest for security’s sake was retained. _Sismondi_ finds
      fault with nearly all laws in the premises, because they attack the
      person of the debtor rather than his personal property, and his
      personal, rather than his immovable, property. He would have all
      this just the contrary of what it is. The first interferes with the
      very source of wealth, the productive power of labor; the second
      causes goods to be sold much below their value. Neither of these
      evils attends the last. (_N. Principes_, I, 250.)

  562 A law of the North German Confederation allows the pledging of
      future wages, only in the case of public officers, and those holding
      permanent places in the service of private parties, whose salaries
      are over 400 thalers per annum. The original draft had excepted only
      the things necessary to workmen and those directly depending on
      them; while the law as passed makes the prohibition general. This
      was undoubtedly done for the convenience of employers as well as of
      courts; as for instance in the circuit of Dortmund, there were, in
      one year, 10,000 cases in which wages were garnisheed. (Annalen des
      N.D. Bundes und Zollvereins, 1869, 1071 ff.) But the recklessness of
      those workmen whose wages are below the average, might have been
      just as well guarded against without dragging those whose wages are
      above the average down to their level, if a distinction had been
      made between production-credit and consumption-credit, and the
      latter had been limited by providing that no suit should be
      instituted for supplies made to public houses, taverns etc.

  563 In the second book of _Moses_, 22, 25 ff., and the fifth, 24, 6. A
      very old Norman law provides that in actions for debt, execution
      should not issue against effects of the debtor which are
      indispensably necessary to him to maintain his position, such as the
      horses of a count or the armor of a knight. (Dialog. de Scaccario.)
      Magna Charta extended this provision so as to include the
      agricultural implements and cattle of the peasantry. The moment
      these laws, in consequence of a false principle of humanity, except
      anything but what is absolutely necessary, they injure credit. Thus,
      for instance, in Brazil, a law of 1758, providing that nothing
      immediately employed in or directly necessary to the production of
      sugar should be seized on execution, caused great injury to the
      production of sugar. (_Koster_, Travels in B., 1816, 356 ff.)

  564 § 2, Cod. De Prec. Imper. Off., I, 19. The diets of the Empire had
      granted such letters in the fourteenth century. (_Wachsmuth_, Europ.
      Sittengesch., IV, 690.) They were granted, as a rule, only with the
      previous knowledge of the Emperor, by the police ordinances of the
      Empire of 1548, art. 22.

  565 So in Austria, Saxony, Brunswick, the electorates of Hesse and
      Baden. In Prussia, they could be granted only after a juridical
      decree to that effect; and an appeal to a superior court was allowed
      to reverse or affirm it. Compare _Mittermaier_ in the Archiv. für
      civilist. Praxis, XVI, and also _P. de la Court_, Aanwysing der
      politike Gronden en Maximen van Holland etc., 1669, I, ch. 25.
      Nürnberg obtained as a privilege, in 1495, that no _moratorium_
      should be valid as against its citizens. (_Roth_, Geschichte des
      Nürnb. Handels, I, 86.)

  566 Compare the discussions in the French National Assembly, in the
      month of August, 1848. It is much less disadvantageous in times of
      great commotion, when all business is brought to a stand still, to
      extend the time in which bills of exchange etc. are payable. Such a
      measure prevents a number of bankruptcies which the real balance of
      debts due to one and owing by him does not render necessary.

  567 In the persecution of the Jews in the middle ages, the so-called
      _Brief-todten_ (letter-killing), or the destruction of titles, was
      very common. In 1188, the French government released all crusaders
      from the payment of interest on their debts, and granted them an
      extension of three years’ time to pay off the principal.
      (_Sismondi_, Hist. des Français, VI, 82.) Similar compulsory
      measures were provided against the Jews and usurers in 1223 (Ibid,
      VI, 539 ff.); and in 1299 (Ordonnances, I, 1331), on the formal
      request of the nobility. (Ordonnances, II, 59.) Again, in 1594,
      there was a release of one-third of the interest on all national and
      private debts. (_Sismondi_, XXI, 318.) The general _moratorium_ of
      the Milanese for a term of eight years, introduced in 1251, after
      their war with France, was of an essentially different character.
      (_Sismondi_, Geschichte der italienischen Republiken, III, 155.) The
      same is true of the general _indult_ granted by Philip II. in
      Belgium. (_Boxhorn_, Disquisitt. politicæ, 241 ff.)

  568 The abolition or release of debts, so frequent in ancient
      revolutionary times, reminds us, in many ways, of the crises
      precipitated in modern times by paper money and produced by the
      state. The ancestors of Alcibiades and Hipponikos laid the
      foundation of an immense fortune, in Solon’s time, by purchasing
      land in large quantities with money borrowed from several citizens,
      a short time before the abolition of debts. (_Plutarch_, Sol., 15.)

  569 Enormous consumption of wax in the churches of the middle ages. In
      the cathedral of Wittenberg alone, a short time before the
      Reformation, more than 35,000 pounds of wax candles etc. were burned
      yearly. At the same time, honey was generally used instead of sugar.
      How much more important, therefore, at that time must bee-culture
      have been, considered from the point of view of circulation as
      compared with what it is to-day. And so in Catholic countries, a
      difference in the external manifestation of religion causes the
      relative importance of the consumption of fish to increase and
      decrease. In 1803 there was little demand in France for ivory
      crucifixes, rosaries etc. In 1844, the demand for them and for
      _prie-Dieu_ for the bed-room etc. was increased. (_Mohl_,
      Gewerbwissenschafliche Reise, 101.) To engage successfully in the
      sale of sugar in Persia, it is necessary to know that in that
      country it is liked only in little hat-shaped lumps, which are used
      only as semi-voluntary gifts; and that, in such case, custom fixes
      the number of lumps. (_Steinhaus_, Russlands commercielle etc.
      Verhh., 151.) In the Levant, workmen prefer bars of iron which are
      small and of varied form because they find it difficult to
      manipulate the large ones. The English bear this in mind much better
      than the Russians. (_Steinhaus._) A merchant sending wood to
      Southern France must be acquainted with the form of the staves used
      in the manufacture of barrels there. Compare _Büsch_, Geldumlauf,
      VI, 2, 2.

  570 The circulation of goods compared to the circulation of the blood:
      by _Mirabeau_, Philosophie Rurale, ch. 3. _Turgot_, Sur la Formation
      etc. § 69. _Canard._, Principes, ch. 6.

_  571 Eiselen_, Volkswirthschaftslehre, 98 ff. If in ancient times
      commerce played a much less important part than it does among the
      moderns, it was, as _Montesquieu_ says, because the whole commercial
      world was then more uniform in climate and the character of its
      products than it is now. (Esprit des Lois, XXI, 4.)

  572 Of the successive steps, sheaves, corn, flour, bread,—flour has the
      greatest capacity for circulation. And, indeed, the last operation
      of labor on a great many goods, because of their consequent more
      narrowly specialized utility, is accompanied by a decrease in their
      capacity for circulation. As an illustration, we may mention
      ready-made clothing as compared with cloth. The capacity for
      circulation of a commodity is very much advanced when the demand is
      wont to increase with the supply, as is the case with gold and
      silver, but not with learned books, optical instruments etc. Many
      commodities have but little circulating capacity, because no one
      desires to purchase them but at first hand. See _Menger_,
      Grundsätze, I, 245 ff.

_  573 Knies._, Die Eisenbahnen und ihre Wirkungen, 1853, 79.

  574 Compare _Schmitthenner_, I, who calls attention and with reason to
      the importance of loans on chattel mortgages. But _Berkeley_,
      Querist, No. 265, remarks that a squire with a yearly income of
      £1000 can, “upon an emergency,” do less good or evil than a merchant
      with £20,000 ready money.

  575 A very important difference between Russia and England.

_  576 Storch_, Handbuch, I, 273 ff. There is also a useless circulation
      which is not calculated to promote the division of labor, but to
      employ idle time or idle capital, as in the case of games of hazard,
      speculation in stocks, wheat etc. Even impoverishing consumption may
      produce rapidity of circulation, as in Germany during the war years
      1812 and 1813. (_F. G. Schulze_, N. Œkonomie, 1856, 667.) Relying on
      this fact, _Hume_ (1752) on Public Credit, Discourses, No. 8, argues
      in favor of the old opinion, that all circulation is wholesome and
      to be encouraged. _Boisguillebert_, Traité des Grains, I, 6, went so
      far as to laud war because it accelerated the circulation of wealth.
      On the necessity of a _circulation sans repos_, see ibid., II, 10.
      In a similar way _Law_, Trade and Money, 1705, and _Dutos_,
      Réflexions Politiques sur le Commerce, over-valued the circulation
      of wealth as such. Concerning the Mercantile System, see § 116.
      _Darjes_, Erste Gründe der Cameralwissenschaft, 1768, 531. And even
      _Büsch_, Geldumlauf, I, 29, 32 ff., III, 96, who in other places
      nearly always overlooks real production and sees only the
      circulation of money caused thereby. Thus he calls the poor when
      they are helped in money, and spend it, useful members of society!
      (IV, 32, 39. Similarly, _v. Struensee_, Abhandlungen, 1800, I, 282
      ff., 400 ff.)

  577 As, for instance, happened in France in 1577, when all commerce, and
      in 1585 all industry, were declared to be _de droit domanial_. Louis
      XIV. was of opinion that the king was absolute master of all private
      property of priests and people. (Mémoires histor. de Louis XIV., II,
      121.) Compare _Duclos_, Mémoires, I, 14 ff.

  578 Compare Theod. Cod., V, 9, 1; Just. Cod., X, 19, 8; XI, 47, 21, 23;
      XI, 50, 51, 52, 55, 58. How full the really classic period of the
      Roman jurists was of the idea of freedom of competition, we see in
      _Paullus_: L. 22, § 3, Dig. XIX, 2. The provisions concerning _lœsio
      enormis_ appear first in the time of Diocletian. (Just. Cod., IV,
      44, 2.)

_  579 Benjamin Franklin_ says that the freer the form of government is,
      the more the people show themselves in their true aspect. Ancient
      Rome, with the early development of its rational disposition, soon
      learned to favor freedom of commercial intercourse. Compare
      _Mommsen_, Römische Geschichte, I, passim. This was, certainly, an
      element of its greatness, but also of the proletarian evils
      developed in it an early date, and which were weighed down only by
      the absolute growth of the state and the development of its economic
      interests during centuries.

  580 Nor must it be forgotten that competition raises prices as well as
      lowers them. The expressions higher price and lower price denote
      only different sides of the same relation. _M. Chevalier_ is of
      opinion that our present breathless competition is characteristic
      only of a period of transition prolific in new inventions, a
      competition soon to be followed by peace. (Cours, II, 450 ff.)

  581 Ἀγαθὴ ἔρις: Hesiod., Opp., 10 ff.

  582 “Whoever speaks of competition suppresses the existence of a common
      aim,” says _Proudhon_, although he adds, after _Bileam’s_ way, that
      to cure the evils of competition by competition, is as absurd as to
      lead men to liberty by liberty, or to cultivate the mind by
      cultivation of the mind.

  583 Compare _Bastiat_, Harmonies économiques, ch. 10.

  584 If all classes were protected against competition, no class would
      derive any advantage from it, since a “universal privilege” is an
      absurdity. If only certain classes or individuals are protected, it
      is done at the cost of all others.

  585 The question should not be formulated thus: “Caprice or rule?” but
      “Rule of morals, or rule of law?” _Schmoller_ against _v.
      Treitschke_ in _Hildebrand’s_ Jahrbb.

  586 Concerning the arguments by which the commercial restrictions of the
      middle ages were defended, see below. They were, for the most part,
      well founded for the age in which they were advanced. A judicious
      education will often be compelled to provide limitations, but always
      with the intention, by this means, of making possible a really
      greater independence. Thus the current of commerce may be too weak
      in a poor and thinly settled country in order that supply and demand
      should always and everywhere meet and be satisfied. Under such
      circumstances, their artificial concentration at certain points is
      among the most efficient means of promoting the economy of the whole
      people. The policy of freedom of commerce was recommended even in
      the seventeenth century by _J. Child_, by _North_ and _Davenant. W.
      Roscher_, Zur Geschichte der englisch. Volkswirthschaftslehre, 65
      ff., 85 ff., 113 ff., 142 ff. And earlier yet, in Holland, by
      _Salmasius_, De Usurus, 1638, 583 and _de la Court_. Compare
      Tübinger Ztschr., 330 ff. Thus _Boisguillebert_ says: _Il n’y avait
      qu’à laisser faire la nature et la libertê, qui est le
      commissionaire de cette même nature_. (Factum de la France, 1707,
      ch. 5.) See, also, Dissertation sur la Nature des Richesses, ch. VI;
      Détail de la France, 1697, II, ch. 13; Tr. des Grains, II, 8. For
      the most part dictated by a reaction against Colbertism.

      See further, _Mélon_, Essai Politique sur le Commerce, 1734, ch. 2.
      _M. Decker_, Essay on the Causes of the Decline of Foreign Trade,
      1744, 31 ff, 106 ff. _J. Tucker_, Essay on the advantages and
      disadvantages which respectively attend France and Great Britain
      with regard to Trade, 1750. _Forbonnais_, Elémens du Commerce, 1754,
      I, 63. _Genovesi_, c. I, 17, 3, is of opinion that at least in case
      of doubt, commerce stood more in need of freedom than of protection.
      _Verri_, in his Meditazioni, goes still farther. The Physiocrates,
      with their _laissez aller_ and _laissez faire_ recommend competition
      as the best means to increase the net income of a people. According
      to _Dupont_, 147 ff, éd. Daire, the province of legislation is
      confined to declaring the laws of nature. His motto is: _liberté and
      propriété_. _Adam Smith_ asks that the state should do only three
      things: insure protection against foreign states, the administration
      of justice at home, the establishment and maintenance of certain
      institutions of advantage to the whole community, but which private
      interest could not establish for want of means to cover the expenses
      attending them. (Wealth of Nations, V, ch. I, 2.) Hence he demands
      (III, ch. 2) the abolition of all kinds of _fidei commissa_, of
      royalty in mines (I, ch. 11, 2), of all corporate and exclusive
      privileges, of all protective duties etc. (IV, ch. I ff), but
      especially of the colonial policy hitherto in vogue. (IV, ch. 8.)

      The attacks of the Socialists on freedom of competition were begun
      by _Fichte_, Geschlossener Handelsstaat, 126, in which it is called
      a robber-system or system of spoliation. He would have the state
      have more solicitude for human industry than if men were so many
      swallows. See further, _Sismondi_, N. Principes, passim, who
      everywhere demands the protection of the government for the weaker.
      _Fourier_, N. Monde industriel, 396, who thinks that _le monopole
      général_ is always a _preservatif contre le commerce_. _Bastiat_,
      Harmonies économiques, ch. 10, has a very valuable refutation of
      these follies. Recently, _Rodbertus_, Hildebrand’s Jahrbücher, 1865,
      II, 272, is of opinion that “social individualism” has ever had in
      history the task of dissolving decaying societies, as, for instance,
      under the Cæsars.

  587 Whoever would sell to others must purchase of them. (_Child._,
      Discourse of Trade, 358.) Similarly _Temple_, Works III, 19, and
      _Becher_, Polit. Discurs, 1547. This view seems to have become the
      national one first in Holland. Compare also _Quesnay_, 71 and
      _Mirabeau_, Philosophie rurale, 1763, ch. 2.

  588 We often hear it said: “nothing sells because there is no money.”
      But the real cause here is, in most instances, not a want of money,
      but a want of other goods which might serve as a counter-value. In
      bad times, for instance, there is many a weaver who would consider
      himself fortunate, even if he could get no money for his cloth, to
      obtain instead, meat, bread, wood, raw material etc. If money only
      were wanting, that might easily be as favorable a symptom in
      commerce, as when there are not enough shops, steamers etc., to
      carry on the business of the country. Compare _North._, Discourses
      upon Trade, 1691, 11 seq., but especially _J. B. Say’s_ celebrated
      theory of Markets, traité I, ch. XV.

  589 See _Humboldt’s_ observations as to how, in Spanish America,
      agriculture in the vicinity of the mines increases and decreases
      with the wealth of the latter. (N. Espagne, III, 11 ff.) See also
      _Harrington_ (ob. 1677), On the Prerogative of a Popular Government,
      I, ch. 11; _Cantillon_, Nature du Commerce, 16. And so _Stein._,
      Lehrbuch, 122 seq., points out how great enterprises produce
      especially for the consumption of the small householder without
      capital, and how, therefore, the flourishing condition of the one
      determines that of the other.

  590 Those indeed who live by the spoliation of others, as robbers,
      deceivers etc. are interested in the economic prosperity of the
      latter only so long as their spoliation of them is not endangered.
      Only to this extent can it be claimed with _Fr. List_ that the
      nobility of the Middle Ages, in obeying the selfish calculation
      which led to the oppression of the peasantry, engaged in as bad a
      speculation as a manufacturer of our day would who should feed his
      steam-engine with nothing but saw-dust or scraps of old paper. The
      cities of the middle ages had a much more undoubted economic
      interest in the emancipation of the peasantry as a class than the
      nobles or the clergy.

  591 Such exceptions there certainly are, even if it were not true “that
      the most godly cannot rest in peace unless he is acceptable to his
      ungodly neighbor.” Nations that furnish the same products as we do
      may, indeed, “spoil our market,” just as at home the selfish
      shoemaker may desire the prosperity of all wearers of shoes, that is
      of all other industries, but not that of all other producers of
      shoes. The view that long prevailed, that one man’s gain was always
      some other man’s loss (_Th. Morus_, Utopia 79, ed. Colon. 1555;
      _Baco._, Sermones fideles, cap. 15; _quid-quid alicubi adiicitur,
      alibi detrahitur_; _M. Montaigne, Essais_ I, 21: _les prouficit de
      l’un est le dommage de l’autre_) prevailed much longer in
      international affairs where observation is much more difficult than
      in national affairs; although even here, _P. de la Court_, Maximes
      politiques, 1658, contrasts the economic interest of Holland with
      that of the rest of the Netherlands and prefers it to theirs. Even
      _Voltaire_ says: “The desire of the greatness of the Fatherland
      includes the desire of evil to our neighbor. Evidently no country
      can gain except what another loses.” (Dict. philosophique, v.
      Patrie.) Compare, however, the _peut-être_ in his Histoire de la
      Russie, I, 1, on the occasion of the English-Russian treaty of
      commerce. Similarly, _Galiani_, Della Moneta, I, 1, IV, 1; _Verri_,
      Opuscoli, 335, and recently _v. Cancrin_ who says that “in every-day
      life, property is acquired only at some other person’s expense.”
      (Weltreichthum, 1821, 119. Oekonomie der menschl. Gesellschaft,
      1845, 23.) The cosmopolitan view (_Xenoph._, Cyrop., III, 2, 17.
      Hier., 10) which prevails in Adam Smith’s school was introduced by
      _Hume_, Essays, 1752, On the Jealousy of Trade. _Quesnay_,
      Encyclopédie, v. Grains, 294, ed. Daire; _A. Smith_, Theory of moral
      Sentiments, 1759, p. 6, sec. 2, ch. 2. _Pinto_, Lettre sur la
      Jalousie de Commerce, 1771, and _J. Tucker_, Four Tracts on
      commercial and political Subjects, 1776, 34 ff and 42 ff. “The
      system of states exercises no influence whatever on the world’s
      commerce.” (_Lotz_, Handbuch I, 11.) More recently, _R. Cobden_, in
      his Russia, Edinb., 1836, among others argued, that the conquest of
      Turkey by the Russians would be useful to England, because then more
      (?) English products would probably be sold there. Russia would
      become no stronger thereby, as conquests always injure the conqueror
      more than they benefit him. The idea of European equilibrium is
      therefore a chimera, because no state can be prevented from having
      an internal growth, as great as may be. Thus, in the summer of 1853,
      we heard the London Times sometimes preach that every cannon-shot
      fired by the English at the Russians might kill an English debtor or
      an English customer. The Venetians entertained a similar view at the
      beginning of the fifteenth century. Compare _M. Sanudo_ in
      _Muratori_, Scriptores, XXII, 950 ff. See above, § 12.

      Moreover, Malthus had recognized that there were natural rivalries
      between nations which produced exceptions to Tucker’s laws.
      (Principles, Preface.) Similarly _Garve_, in Cicero’s Pflichten
      (1783), III, 146 ff.

_  592 B. Franklin_, Works, vol. III, 49. _Sismondi_ claims for all
      civilized nations the right of interfering with the governments of
      other nations with whom they have or might have commercial
      relations, and of insisting that they shall have a good government
      under which commerce may freely develop. (N. P. VII, ch. 4.)

  593 As for instance when the _ami des hommes_ says that he felt towards
      an Englishman or a German as he did towards a Frenchman with whom he
      was not acquainted. _Mirabeau_, Philosophie rurale, ch. 6.

  594 Thus, for instance, the Stoic, Zeno: _Plutarch._ De Alex, fort, 1,
      6.

  595 Compare even _Lauderdale_, Inquiry, 274 ff.

  596 How well, for instance, the English sustained Napoleon’s continental
      blockade, the evils produced by which were intensified by several
      bad harvests. Its worst time did not, indeed, coincide with that of
      the struggle with the United States. The ancient Athenians, during
      their contest with Philip of Macedon, considered the question of the
      supplies from the Bosphorus etc. as one of life and death. But this
      can be looked upon only as a cogent proof of the small development
      which their commercial talents had received at the time. How easily
      might they not, according to our ideas, have obtained corn from
      Sicily or Egypt.

  597 According to the acute analysis of language made by _F. J. Neumann_,
      Tübinger Ztschr., 1872, 317 ff., the word “price” has reference to
      an actual purchase or sale, while the expression “value in
      exchange,” generally called simply value, is based upon a valuation,
      or intimates in a general way that an object possesses value; value
      in exchange is, so to speak, the average of several
      price-determinations. Price, according to _Schäffle_, is the
      external consequence of value in exchange, a means of representing
      the latter. (N. Œk., III, Aufl., I, 218.) Only through the
      difference between value in exchange (universal possibility) and
      price (special reality) is the _laesio enormis_ of the jurists
      possible. (_Schmitthenner_, Staatswissenschen, I, 416.)

  598 By market price, _prix courant_, is meant the money-price of
      commodities, determined by competition.

  599 A problem very similar to that of the motion of bodies in space.

_  600 Lotz_, Handbuch, 50 ff., calls those commodities costly which are
      obtained only at a high cost of production, and dear, those whose
      price is above the cost of production.

  601 Compare _Canard_, Principes d’Economie politique, ch. 3. Almost
      simultaneously, _H. Thornton_, 1802, Paper-Credit of Great Britain.

  602 See _Jackson’s_ Account of Morocco, 284, for cases in which, in the
      Sahara, when the burning winds of the desert had dried up the water
      in the leathern bottles of the caravan, a drink of water cost from
      $10 to $500.

  603 The North American aborigines very frequently consent, in their
      exchanges, to take any offer made to them by their equals, however
      insufficient it may be, because they fear revenge. _Schoolcraft_,
      Information etc., II, 178. As to the effects of cunning, the
      Tungusi, when they get a glass of brandy from the Russians, grow
      almost idiotic, and give away their goods at mock-prices in drink.
      (_v. Wrangell_, Nachrichten, I, 233.) In the higher stages of
      civilization, on the other hand, very distinguished people are, by
      no means, privileged because of their position, in the struggle for
      prices. In modern times, claims (_reclamen_) have taken the place of
      greater physical or political power. Compare _E. Hermann_, Leitfaden
      der Wirthschaftslehre 1870, 91 ff.

  604 Thus _Galiani_ says, that before one of the two parties has
      expressed his want to buy or to sell, the pans of the scales are in
      equilibrium. The first that speaks breathes on one of them, and it
      drops. (Dialogue sur le Commerce des Bleds, 1770, No. 6.) This has
      been verified in a striking manner in California, where the most
      valuable commodities were often purchased at auction at the lowest
      prices, while when purchased from merchants and even the most
      wretched shopkeepers, they were sold enormously dear. (_Gerstäcker_,
      in the Allg. Zeitg., May, 1850.) Thus there were harvested in
      France, in 1817, 48,000,000 hectolitres of wheat, valued at
      2,046,000,000 francs, in 1820, 44,500,000 hectolitres valued at
      895,000,000 francs. (_Cordier._) This vast difference in price
      existed, because in 1817, the whole world was still trembling under
      the impression made by the failure of the crops in 1816, while in
      1820, the feeling of comfort and security caused by the rich year
      1819, still prevailed. Low prices at forced sales under decree etc.
      See below, § 5. That travelers are so frequently taken advantage of
      in effecting changes of money is explainable partly by their urgent
      wants, which are well known to the opposite party, and partly by
      their supposed ignorance in the matter. And so, at auction sales,
      out-bidding one another has something very seductive in it for
      ignorant or hot-headed purchasers.

  605 It was considered immoral by his contemporaries, when William the
      Conqueror introduced the custom of farm-letting to the highest
      bidder. (_A. Thierry_, Conquête de l’Angleterre, II, 116, éd.
      Bruxelles.) It is repugnant to poetic and delicate minds to think
      that everything has a price exactly fixed. (§ 2.) I need only refer
      to the picture of Helen which Zeuxis exhibited for money, which act
      of his was characterized, by his cotemporaries, as a species of
      prostitution. _Val. Mac_, III, 7. _Ælian_, V, 4, IV, 12. _Socrates_
      judgment on the payment of the sophists. _Xenoph._, Memor., I, 6,
      13.

  606 Competition has only a negative influence on prices, inasmuch as it
      modifies the extreme operation of the other grounds of their
      determination. _Thornton_, Paper Credit. _Lotz_, Revision, 1811, I,
      74 ff, 241 ff.

  607 The expression, “intensity of demand,” in _Malthus_, Principles, ch.
      2, sec. 2. As early a writer as _Sir J. Stewart_ calls attention to
      the difference between large and high and small and low demand. A
      high demand will always raise the price, as when, for instance, two
      wealthy virtuosi compete at an auction. _Paucorum furore pretiosa_,
      as Seneca says. An English penny of the time of Henry VII, once
      sold, on such an occasion, for £600. In 1868, at the Lafitte
      auction, seven bottles of wine sold to Rothschild at 235 francs a
      piece after the _Maison dorée_ had offered 233. (N. freie Presse,
      Dec. 17, 1868.) A great demand has frequently no result but to
      increase the supply, and the price rises only in so far as the
      demand is too sudden to permit a parallel growth of the supply.
      (Principles, Book II, ch. 2, 10.) The present price of tea could not
      remain unaffected, if ten different private merchants, competing one
      with another, or the agent of a privileged commercial society,
      should send orders to China for an equal quantity of tea. (_Verri_,
      Meditazioni, IV, 8 ff.)

  608 Immense weight laid on the _æqualitas permutationis_ (after
      _Aristot._, Eth. Nicom., V. 7,) in the ethics and economics of the
      scholastic middle ages, and in the time of the Reformation. Compare
      _Melancthon_, in Corp. Ref., XVI, 495 ff, XXII, 230.

  609 A very barbarous theory of price in _Xenoph._, De Vectigg., 4. The
      ancients made little progress in this respect, although there are
      not wanting ingenious observations on certain phenomena of prices.
      (See _Aristot._, (?) Oecon. II; _Cicero_, De Off. III, 12 ff.)
      _Mariana_, De Rege et Regis Institutione, 1598, III, explains price
      as the relation of value to quantity. According to _Locke_, the
      price of a thing is determined by the relation between “quantity”
      and “vent”: the increase or diminution of its useful qualities
      influences it only so far as it alters that relation.
      (Considerations on the Consequences of the Lowering of Interest etc,
      1691, Works II, 20 ff.) _Law_, on the contrary, says that the “vent”
      can never be greater than the “quantity,” but that the “demand” may
      be. Wherefore, he proposes the formula: quantity in proportion to
      the demand. (Trade and Commerce considered, 1705, ch. 1.) In chap.
      6, _Law_ distinguishes three elements in price: quality, quantity
      and demand. The expression “quantity” is, certainly, very
      unsatisfactory. How many examples does not _Tooke_ (Thoughts and
      Details, on the high and low Prices of the last thirty Years, 1823,
      part IV) give to illustrate how, when the supply was smallest,
      prices were lowest and _vice versa_! It was so almost always after
      the market was over-filled, when a great many speculators had lost
      and no one dared to purchase anew. _Montanari_ (ob. 1687) furnishes
      us with an excellent theory of prices. (Della Moneta, 64 ff.,
      Custodi.) And a still better one, _Sam. Pufendorf_, Jus Naturæ et
      Gentium, 1672, V. 1, who must be considered the best authority on
      the laws of prices before _Stewart_. _Boisguillebert_, Traité des
      Grains, II, 1, 10. _Galiani_, Della Moneta, I, 2, knows only the
      factors _utilità_, and _rarità_, although in his exposition of the
      latter, he discusses many points which would be called the cost of
      production in our time. The wisdom of Providence has granted us the
      most useful things in the greatest abundance to make them cheap.
      _Stewart_, Principles II, 2, 4, rendered a great service to the
      theory of prices, tracing back supply to the cost of production,
      demand to want and ability to pay; and his deserves to be called the
      immediate predecessor of _Hermann’s_ remarkable theory. (_Hermann_,
      Staatsw. Untersuchungen, 66 ff.) For a peculiar theory of prices,
      see _Paganini_, Saggio sopra il giusto Pregio delle Cose, 189 ff.
      _Neri_, Osservazioni, 1751, 127. _Gust. Menger_, Grundsätze, I, 179
      ff., has made an interesting attempt to explain the formation of
      prices in its simplest shape, in the supposition of a monopoly in
      the seller, and by then going over to the subsequent modifications
      introduced by the competition of many sellers.

  610 “Instead of separating, in the same matter, the points of view of
      the buyer and seller, we may distinguish the consideration of the
      thing to be acquired and the thing to be given by one and the same
      person.” (_Rau._) The possessor of the more current commodity
      appears especially as demanding, that of the less current as
      offering or supplying, (_v. Mangoldt._)

  611 This is for free goods=0, for monopolized goods=1/0.

  612 The obvious fact that every price supposes a comparison of two
      commodities, and that every buyer is, at the same time, a seller,
      has been overlooked by only too many writers. And hence _Dutot’s_
      opinion, that, as all men buy and few only sell, the state, in case
      of doubt, should favor the buyer. (Réflexions sur le Commerce et les
      Finances, 1738, 962, éd. Daire.) And so the often-mooted question
      whether universal dearness or cheapness is more useful: the latter
      advocated, for instance, by _Herbert_, Police générale des Grains,
      1755; _Verri_, Meditazioni, V; the former by _Boisguillebert_,
      Traité des Grains, I, 7, II, 9; and by the Physiocrates. (_Quesnay_,
      Maximes générales, Nr. 18 ff., I, Problème Économique; also by _A.
      Young_, Polit. Arithmetics, ch. 8.) The laity in Political Economy
      understand by dearness only the general cheapness of the medium of
      circulation or exchange, and _vice versa_.

  613 Thus, even a poor man in Naples sometimes requires a glass of
      ice-water. The introduction of the extensive use of snow into Sicily
      improved the condition of the public health. (_Rehfues_, Gemälde von
      Neapel, I, 37 ff.) On the other hand, furs, in the far north, are
      articles of prime necessity. Newspapers in a free country satisfy a
      want much more urgent than in countries which are not free. And so,
      _Senior_ says that shoes are “necessaries” to all Englishmen, since
      without them, their health would suffer. To the lower classes of
      Scotland they are “luxuries.” Custom permits them to go barefoot
      without hardship or degradation. For the middle classes of the same
      country, they are “decencies.” Shoes are worn there, not to protect
      the feet but one’s civil position. In Turkey, tobacco is a decency
      and wine a luxury. The reverse is the case in England. (Outlines, 36
      ff.)

  614 As to the relativity of the opposites of “temperance” and “excess,”
      every person should attend to the following points: a, not to exceed
      one’s income; b, to provide for one’s self and one’s family; c, to
      lay by something for a rainy day; d, to place one’s self in a
      position to care for the poor; e, to indulge in no pleasure
      injurious to body or mind; f, to give no bad example. (_Tucker_, Two
      Sermons, 29 ff.) _Menger_, Grundsätze, I, 92 ff., endeavors to
      compare the value in use of different commodities from the point of
      view, that the means of gratification of a less urgent want, when
      the more urgent wants of the present are satisfied completely,
      should be preferred to the means of over-gratifying the latter.

  615 Thus the price of many dark articles of apparel rises in a moment of
      unexpected universal mourning. A very remarkable case in Paris, at
      the death of Henry II. (_Montanari_, Delia Moneta, 85, Custodi.) On
      the other hand, a change of fashion may greatly depress the price of
      many commodities. Such a change may take place even in the case of
      precious stones; as, for instance, now in London, a perfect emerald
      is most highly prized. (_King_, Precious Stones and Metals, 1871.)
      The rise of many drugs in times of cholera, and of leeches, for
      example, in Paris, 600 per cent. Rise of the price of powder, horses
      etc. at the outbreak of a war, and of the price of iron caused by
      extensive railroad building. In Circassia, a good shirt of mail was
      formerly worth from 10 to 200 oxen: but since it was discovered not
      to be a protection against cannon balls, its price fell 50 per cent.
      (_Bell_, Journal of a Residence in Circassia, I, 403.)

  616 On “connected” (_connexen_) goods, the use of one of which supposes
      the use of the other, as, for instance, sugar and coffee, wood and
      stone used in the construction of buildings, see _Schäffle_,
      Nat.-Oek, II. Aufl., 179.

  617 Observed by _Necker_, Sur la Législation et le Commerce des Grains,
      1776. Compare _Roscher_, Ueber Kornhandel und Theuerungspolitik,
      1853, 1 ff. In Athens, for instance, the _medimnos_ of wheat cost
      ordinarily five drachmas, but during the siege by Sulla it rose to
      1000 drachmas. (_Demosth._ adv. Phorm., 918. _Plutarch_, Sulla, 13.)
      Compare II. Kings, 6, 25, 7, 1. In Paris during the siege by Henry
      IV. it rose to 5000 per cent. of the ordinary price. (_Lauderdale_,
      Inquiry, 60 ff.) During the siege of Breisach, in 1638, a mouse was
      finally worth 1 florin, the quarter of a dog, 7 florins, a quarter
      of wheat, 80 thalers. (_Röse_, Leben H. Bernhards, M., 11, 269.)
      Compare _Strabo_, V, 248 seq.

  618 Wheat is still more indispensable than meat. Hence, in the ten
      principal markets of Prussia, the price of rye rose much more from
      1811 to 1860 than the price of beef; the former between 0.32 and
      1.03 silver groschens and the latter between 2.32 and 4.94 silver
      groschens. (Annalen der preussischen Landwirthschaft, 1869, No. 9.)
      And so in the Rhine district, the wine harvests have undergone much
      greater changes in price than the prices of must, although the years
      differed very largely in the quality of the yield. Thus the crop of
      1830 was only 225, that of 1868, 10,845 pieces, and yet the minimum
      price between 1831 and 1865 was only from 3 to 58 flr. per ome.
      (_Engel_, Preuss. Statist., Ztschr., 1871, 168 ff.)

  619 In England, the price of wheat has not unfrequently risen from 100
      to 200 per cent. when the harvest was from one-sixth to one-third
      under the average, and when a supply from abroad had modified even
      this condition of things. (_Tooke_, History of Prices, I, 10 ff.)
      _Tooke_ is of opinion that in a country with poor-laws like those of
      England, a deficit of one-third in the wheat crop, if there were no
      stores remaining and no importation from abroad, would cause the
      price of wheat to rise, 500, 600, and even 1000 per cent (p. 15.)

  620 See _Davenant_, Political and Commercial Works, London, 1771, II,
      224. Tooke was somewhat acquainted with Davenant. According to this
      law, a deficit in the harvest of 10 per cent. would raise the price
      of corn 30 per cent.; one of 20 per cent. would raise the price of
      corn 80 per cent.; one of 30 per cent. would raise the price of corn
      160 per cent.; one of 40 per cent. would raise the price of corn 280
      per cent.; one of 50 per cent. would raise the price of corn 450 per
      cent.

  621 In England, it is 38.8 per cent. of the supply that comes to the
      market. (Quart. Review, XXXVI, 425.) In Belgium 40, and in Saxony at
      least 50 per cent. (_Engel_, Jahrb. der Statistik etc. von Sachsen,
      I, 276.) In Germany, the farmers consume on an average two-thirds
      themselves. (_v. Viebahn_, Zoll.-v-Statist., II, 958.) With this
      _Plato_, De Legg., VIII, agrees remarkably well.

  622 On the difference in this respect between England, Germany and
      northwestern Norway, see _Hermann_, p. 71.

  623 Hence it not unfrequently happens that grain grows dear not from any
      real want of it, but because it is generally supposed that such want
      exists. For an explanation of why it is that wheat and similar
      commodities have an almost invariable price, when the average is
      taken of a long series of years, see _infra_ § 129.

  624 Case in Naples in which after a poor harvest the price of corn
      remained very low, because the oil-harvest had also failed, and the
      poor could earn nothing in that industry in which they were largely
      employed, and _vice versa_. (_Galliani_, Della Moneta, II, 2.) Thus
      _Adam Smith_, Wealth of Nations, I, ch. 7, distinguishes between
      “effectual” and “absolute” demand. Similarly _J. Steuart_,
      Principles I, ch. 18. Care should be taken to distinguish in this
      respect between desire and demand.

  625 Thus, in the famine in Ireland in 1821, during which potatoes rose
      to fabulous prices, but wheat scarcely at all, and had therefore to
      be exported.

  626 In _Tooke_, History of Prices (2d edition of the Thoughts and
      Details etc.), we meet repeatedly with the assertion that when the
      price of wheat rises, the price of colonial products and
      manufactured articles sinks, and _vice versa_. Thus, in England, the
      price of the evidences of national debt increases from two to three
      per cent. in fruitful years above what it is after a bad harvest.
      (_Lauderdale_, Inquiry, 93.) The British nation paid for the cotton
      it needed for their own consumption in 1845 over £19,500,000; in
      1847 only £9,500,000. (_Banfield_, Organization of Industry, 162.)

  627 Hence _J. B. Say_ has said that the disposable wealth of a people is
      like a pyramid, with the scale of prices of the various commodities
      inscribed on its side. The higher a commodity is in this scale of
      prices, the smaller is the corresponding section of the pyramid.
      Compare _Sir W. Temple_, Essay on the Origin and Nature of
      Government, Works I, 23 ff.

  628 This fact, in connection with the preceding, explains the well known
      puzzle, why the remnant of a piece of goods is comparatively cheaper
      than the whole piece, while a small share in the public debt is
      dearer than a large one. (_Lauderdale_, ch. 1.)

  629 Rhode Island was, it is said, bought from the Indians in 1638 for a
      pair of spectacles. (_B. Franklin_, Political ... Pieces, 1707.)
      According to _Chalmers_, it was bought for 50 threads of coral, 12
      hatchets and 12 overcoats. (Political Annals of the U. States.)
      Compare _Ebeling_, II, 108. Holland cloths and opium were exchanged
      for a long time at Sumatra for gold dust worth ten times their
      value. (_Saalfeld_, Geschichte des holl. Kolonialwesens, I, 260.)
      The Hudson Bay Company realized, it is said, at the beginning of
      this century, in trading with the Indians, a profit of 2000 per
      cent. (_Anderson_, Origin of Commerce, a. 1751.) When Altai was
      discovered, the natives gave as many sable-skins for a Russian
      kettle or boiler as could be crammed into it. With 10 rubles in iron
      it was an easy easy matter to gain 500-660 rubles. _Storch_, Gemälde
      des russ., R., II, 16; _K. Ritter_, Erdkunde, II, 557. Similar cases
      among the Germans: _Tacit._, Germ., 5.

  630 A seller not actually engaged in the business of selling for a
      livelihood, and who has not purchased or produced with the intention
      of selling, is apt to consider instead of this the market price,
      towards the determination of which those actually engaged in trade
      have coöperated. Somewhat inaccurately, the amount of the cost of
      production is called by _Adam Smith_ and _Ricardo_, “natural price,”
      by _J. B. Say_, _prix naturel_, also _prix originaire_, because the
      commodity at its first entrance into the world cost so much.
      _Sismondi_ and _Storch_ call it _prix nécessaire_, and _Lotz,
      Kostenpreis. P. Cantillon_, Nature de Commerce, 33 ff., understands
      by the _prix intrinsique_ of a commodity, the amount of land and
      labor, taking the quality of both also into consideration, necessary
      to its production.

  631 The cheapest cotton thread is numbered from 60 to 80. The coarser is
      dearer on account of the quantity of raw material in it, and the
      finer because of the greater amount of labor in it. (_Babbage._) For
      similar reasons, the Venetian chains cost per _braccio_, No. 0, the
      finest, 60 francs; No. 1, 40 francs; Nos. 2 and 3, 20 francs; No.
      24, coarsest, 60 francs. (_Rau._)

  632 If a person engaged in production has himself furnished certain of
      the elements of production; if, for instance, he has worked with his
      own hands, employed his own capital etc., he is wont to charge as
      much for these as they would be worth, if he hired himself out or
      loaned his capital.

  633 The greater number of political economists consider the cost of
      production only from the standpoint of the individual engaged in
      production. Thus _Darjes_, Erste Gründe, 218 seq.; _Ad. Smith_,
      Wealth of Nations, I, ch. 6. _J. B. Say_ calls even production an
      exchange in which the productive services of natural forces, of
      labor and of capital are parted with in order to obtain products.
      The estimate put upon the value of these services is the cost of
      production. For some interesting examples as to how the cost of
      production, in this sense, is calculated, see _Hermann_, I ed., 136
      ff.

_  634 Jacob_ translated by _Say_, 1807, II, 450. _Hufeland_, N.
      Grundelgung, I, 309.

  635 Compare _L. Lauderdale_, Inquiry, 124, against the Physiocrates.
      (_Riedel_, Nat.-Oekonomie, 1838, I, 68.) A country which possesses
      advantages over other countries, in respect to the cost of
      production of a commodity, can offer it in the market cheapest.
      Where, for instance, with the employment of the same amount of
      capital, a specially large quantity of wheat can be produced,
      whether it be because of the unusual fertility of the soil, or
      because of the _extensiveness_ of agriculture (farming over a large
      area), wheat will, the demand being the same, be specially cheap,
      whatever the proportion of the three branches of income may have
      been. If relatively a great number of workmen have been employed in
      its cultivation, each will receive smaller wages, and _vice versa_.

  636 Copper and steel engraving affords an example of the different kinds
      of wear of fixed capital, and the influence it may have on prices.
      _Canard_, Principes, ch. IV, considers that one of the most
      important elements in the cost of production is the length of time
      that capital must “stagnate” for the sake of production.

  637 On this risk depends, for instance, the high price of vanilla
      (_Humboldt_, N. Espagne, IV, 10,), sparkling wines and articles of
      fashion.

_  638 Mangoldt_, Lehre vom Unternehmergewinn, 1855, 81 ff. Compare _v.
      Thünen_, Der isolirte Staat, II, 1, 80 ff.

  639 Wool and mutton, brandy and fattened cattle, calves and milk, honey
      and wax, gas and coke, hens and eggs etc.

_  640 Adam Smith_ himself remarked that all artificial lowering of the
      price of skins or wool must necessarily raise the price of the meat,
      and _vice versa_. (Wealth of Nations, I, ch. 11, 3.) For a very
      elaborate theory on this subject, see _J. S. Mill_, Principles, III,
      ch. 16, § 1. Thus Australian wool did not rise as much in price as
      the production of gold there might have led us to suppose, for the
      reason that mutton rose to an exceedingly high price.

  641 It is an important and correct remark of _Carey’s_, that the price
      of a commodity depends much more on the cost of producing its like
      than on its own cost of production, which already belongs to the
      past.

  642 Compare _J. S. Mill_, III, ch. 3, § 1. A much too high price, caused
      by speculation, or a much too low one, by depreciation, is regularly
      followed by an ebb or flow just as much too great. (_Tooke_, History
      of Prices, III, 55.) And _Law_, Trade and Money, 41, remarks that
      the price of a commodity always tends to coincide with the “first
      cost.” This fact _Adam Smith_ expresses by saying that the cost of
      production is the center about which the market price always
      gravitates. (I, ch. 7.) But here there is still the error lurking,
      that the producer’s profit is a part of the cost of production.
      Compare _Malthus_, Definitions, ch. 6.

  643 The English view, one very characteristic of the people, is that the
      equilibrium of prices depends on this, that all commodities should
      have a value equal to that of the labor they have cost. (Compare
      _Aristot._, Eth. Nicom., V, 5.) The same doctrine is to be found in
      its germinal state in _Hobbes_, Leviathan, 24, 1651, and _Rice
      Vaughan_, Discourse of Coin and Coinage, 1675. More exhaustively in
      _Petty_, Treatise of Taxes and Contributions, 1679, 24, 31, 67.
      (Compare _Locke_, Civil government, II, § 40 ff.; _B. Franklin_,
      Inquiry into the Nature and Necessity of a paper Currency, 1729;
      Works, ed. Sparks, vol. II.) _Adam Smith_ admits this to be true
      only of the first beginnings of society, before the origin of
      property in land and in capital. (Wealth of Nations, I, ch. 5.) Most
      largely developed in _Ricardo_, Principles, ch. I, 4, 30. _Marx_,
      Zur Kritik der polit. Œkonomie, 1859, 6, endeavors to improve on
      this by calling all values in exchange “a determinate quantity of
      thickly curdled working-time,” meaning by work an averaged
      _qualitätslose_, social work of production. _Per contra_, compare
      _Hufeland_, N. Grundlegung, I, 134, 156 ff.; and _Malthus_,
      Principles, ch. 2, secs. 2, 3, who claims very earnestly that price
      is not determined by the cost of production, but by the relation
      existing between demand and supply, the cost of production
      influencing it only to the extent that it influences this relation.
      He calls attention to the poor-rates by which the cost of production
      of labor is raised, but its wages decreased; also to the case of
      bank notes etc. (_Tooke_, History of Prices, V, 49 ff; _J. S. Mill_,
      Principles, III, ch. 16, 2.) For a very marked case of reaction
      against Adam Smith and Ricardo, see _Macleod_, Elements, ch. 2, who,
      however, is much too one-sided in considering only the amount
      necessary to the purchaser, and his means. Even _Condillac_ had
      said: _une chose n’a pas une valeur, parcequ’elle coûte, mais elle
      coûte (du travail ou de l’argent), parcequ’elle a une valeur_.
      (Commerce et Gouvernement, 16.) _Ricardo’s_ doctrine is more tenable
      than appears at first blush. We need only to interline his theory of
      rent, admit that capital is accumulated labor, subtract all objects
      constituting a natural monopoly, and not forget that the intrinsic
      value of labor is one of the causes of the difference of price of
      different sorts of labor. _Ricardo_ does justice to value in use
      even _en passant_. A strange effort by _McCulloch_ to make labor the
      cause of the non-use of capital. (Principles, III, ch. 6, 2.)
      _McCulloch_ has not unfrequently exaggerated the half-truths of his
      doctrines to such an extent as to produce unwittingly a _reductio ad
      absurdum_. According to _Torrens_, before any separation of
      capitalists from workmen, price depends entirely on the work done,
      and afterwards on the capital expended, inasmuch as wages, rent etc.
      are covered by the capital of the person who engages in the
      enterprise. (Production of Wealth, ch. 1.)

_  644 Ce que l’ on appelle chereté, c’est l’ unique remède à la chereté._
      (_Dupont de Nemours._) Tenders of division in common, in England,
      increase and decrease according to the higher or lower price of corn
      during the preceding year. (_Tooke_, Thoughts and Details, III, 105
      ff.) The cotton famine after 1861 increased the price of flax-yarn
      in a short time fifty per cent., although the raw material of flax
      did not rise in price, but only because care was not taken to
      increase the number of flax-spinners. (_Ausland_, I, 1865.) However,
      there were in 1864, 490,000 flax-machine spindles in course of
      erection. (Report of the Chemnitz Chamber of Commerce, 1864, 101.)

  645 By the discovery, for instance, of new natural forces, the invention
      of machines, improved division of labor, improved roads etc. In
      France, in consequence of technic improvement, a quintal of
      saltpeter fell from 100 to 9 francs. See a similar instance in
      _Chaptal_, De l’ Industrie française, II, 64, 70, 434.

_  646 Hermann_, Staatsw. Untersuchungen, 212.

  647 The highest but unattainable ideal of such progress would consist in
      this, that all products should be obtained without cost. If this
      ideal were attainable, every one would be infinitely rich and all
      wealth would be free, like the air and the sunshine. (Compare _J. B.
      Say_, Traité, II, 2.) The complete victory of mankind over nature
      would consist in that all men should be free and all the forces of
      nature the slaves of man. (_Smitthenner._) _Carey_ intimates
      something similar when he says that, with the advance of
      civilization the tendency is for men to become more and more
      valuable and commodities to have less of “value.”

  648 We might here speak of an aristocratic and democratic principle of
      the determination of prices. The greater utility of the latter is
      advocated in the Discourse of Trade, Coyn and Credit, London, 1697.
      _Bacon_ has a good word to say for the maxim: “Light gains make
      heavy purses; for light gains come thick, whereas great come now and
      then.” Similarly, _Gurnay_ in _Cliquot de Blervache_, Considérations
      sur le Commerce etc., 1758, 48, 54. As to how Morrison, the
      celebrated merchant, became rich by adhering to the principles: “to
      sell cheap as well as to buy cheap,” and “always tell the truth,”
      see _Chadwick_, in the Statistical Journal, 1862, 503. Compare the
      related opinion of _Adam Smith’s_ continuator in an ethical
      direction, _Garve_, zu Cicero’s Pflichten, III, 100. The contrary
      principle, the cunning of the Judæans, according to _Strabo_, XVII,
      800, was followed by the Dutch East India Company, when it, in 1652,
      caused the greater number of the vegetable roots on the Moluccas to
      be destroyed. _Saalfeld_, Geschichte des holländischen
      Kolonialwesens, I, 272. Also, when great quantities of roots were
      destroyed by burning in the East Indies. (_Huysers_ Beschryving der
      Oostindischen Etablissmenten, 1789, 22.) For a clever argument
      against such practice, see _de la Court_, Anwysing der heilsame
      Gronden, 1663. The principle similar to that of the patent,
      mentioned in the text, works at the same time democratically and
      aristocratically, both words understood in their best sense.

  649 This is true, first of all, in those industries which are intimately
      connected with one another, or of those which are carried on with
      scarcely any fixed capital; also in lower stages of civilization,
      where the lights and shades caused by a highly developed division of
      labor are not very intense. On the numerous difficulties overlooked
      by Ricardo in every other case, see _Sismondi_, N. P., II, ch. 2.
      The workman thereby loses his former skill, that is his principal
      capital, and can certainly not wait until he has acquired other and
      different skill.

  650 When a lowering of prices is expected, demand is less than
      consumption: “postponed demand;” whereas, an expectation that the
      price will rise, produces “anticipated demand.” _Tooke_, History of
      Prices, II, 155.

  651 Thus, for instance, if the workmen were exposed to starvation, or
      were likely to take their departure; if great stores of raw material
      were in danger of spoiling; if fixed capital of great value were
      engaged in one industry and could not be easily transferred to
      another. The first and third causes are frequently met with in
      mining, and give rise to the mode of carrying on the operation known
      as _Zubusgruben_, that is, a species of working mines upon shares.
      In England, after the spring of 1862, cotton yarn was not so much
      dearer than raw cotton, that the loss caused by the decline could be
      made up. (_Ausland_, 24 Sept., 1862.)

  652 Besides, in the time immediately following, the price lowered by too
      great a supply, may produce a species of desperation among
      producers, which would lead them, in the hope of covering their
      losses, to increase the supply still more, until many of them were
      ruined. Generally, when a time of high prices is followed by a time
      of low prices, we find an interval during which sellers endeavor to
      defend themselves against the decline, and during which, as a
      consequence, scarcely any business is transacted, while high prices
      are nominally continued. And so _vice versa_. _Tooke_, History of
      Prices, II, 62.

  653 Thus, for instance, when the change of fashion brought about the
      disuse of long periwigs in every-day life, their price did not cease
      to fall until they had entirely disappeared. But, if a person wishes
      to have one made to-day for a masquerade, for the stage, etc., he
      would pay as much for it as its former price. On the other hand, the
      price of whalebone has never been again as high as it was in the
      time when hooped petticoats were worn.

  654 The great plague in the time of Edward III. caused during the first
      year, on account of the decreased consumption, an extraordinary
      cheapness of provisions. In the following year, however, they became
      alarmingly dear, because there were few producers, especially among
      the humble classes. A quarter of wheat cost in 1348, 4s. 2d.; in
      1349, 5s. 5d.; in 1350, 8s. 3d.; in 1351, 10s. 2d.; while in 1346
      and 1347, its average price was 6s. 8-7/8d. _Rogers_, History of
      Agriculture and Prices, I, 232.

  655 As for instance when new taxes or excises are imposed. Generally
      when the cost of production has largely increased, purchasers do not
      wait until a decrease of competition among sellers compels them to
      exact higher prices, but meet them half way, especially when many
      greatly desire the commodity, and the increase of the cost is only
      small. (_Rau_, Handbuch, I, § 163.)

  656 Under this rule fall, according to § 33, most products of industry
      properly so called. “If we lose a market for a year, we generally
      lose it for all time,” said an experienced manufacturer before the
      parliamentary hand-loom weavers’ committee, 1840-42. Of course the
      cost of transportation as far as the market must be estimated as
      part of the cost of production. In consequence of this, as well as
      of the difference of taxation duties etc., the superiority of one
      producer to another may be more than overcome. In the case of
      colonial commodities, which go into the interior of a country from
      different sea-ports, the territory supplied from each port is
      determined for the most part by these data. Thus, in Switzerland,
      for instance, we find the districts supplied by Havre, Genoa and
      Rotterdam; in Austria, the districts supplied by Hamburg and Triest
      contiguous, but the boundary line subject to many changes. (_Rau_,
      Lehrbuch, I, § 164.) It must be understood that we do not here speak
      of abnormal expenses made by producers individually, whether in
      consequence of want of skill or because of accident.

  657 This is true especially of agricultural production, in which, as a
      rule, beside the most fertile and most advantageously situated land,
      the worse must be used. What _Whately_ calls “surplus-profit”
      appears here in the form of rent, whereas, in other cases, it takes
      the shape of unusually high wages, or profit on capital. This is
      very beautifully and systematically developed by _Schäffle_, N. Œk.,
      II; Aufl., 192 ff. According to _Senior_, Outlines, 15, the
      price-relation of two commodities to each other depends not on the
      quantities of them which come to market, but on the relative power
      of the difficulties which stand in the way of an increase in these
      quantities. If the same producers can pursue the cheaper mode of
      production which does not suffice to supply the market, as well as
      the dearer, we have, generally, a price which is the mean between
      the two costs of production. The same is true in the case of
      “smuggled” goods which ought to have paid duty. (_Hermann_, loc.
      cit., 83, seq.)

  658 To this section belong the secrets of production which may be taken
      advantage of either _ad libitum_ or within certain limits. In
      agriculture, advantages of production can seldom remain secret.
      Compare, however, the case mentioned in _Garnier’s_ translation of
      _Adam Smith_, V, 119, and that of the orchards which yielded £1,000
      yearly for every 32 acres, and which were a result of the recent
      introduction of the culture of the cherry in Kent, in the reign of
      Henry VIII. (_Anderson_, Origin of Commerce, a, 1540.) There is
      therefore, a certain odium attached by agricultural producers to
      keeping secret a means of agricultural improvement.

  659 Compare _Boisguillebert_, Traité des Grains, II, ch. 2. _John Stuart
      Mill_ speaks of an equation: the price of a commodity in a given
      market is always high enough to produce a demand corresponding to
      the present supply, or to an expected supply. The price of such
      commodities only which may not be increased to any desirable extent
      depends on supply and demand. In the case of all others, on the
      other hand, demand and supply depend on the price, and this on the
      cost of production. Supply and demand always tend to an equilibrium
      which is never really attained where the price is high enough to
      cover the cost of production (?). (Principles, III, ch. 2, § 4; ch.
      3, § 2.) _Schäffle’s_ theory of prices is topped by the proposition
      that all competing sellers and all competing buyers, after an
      economic fashion, do not wish to sell below individual cost-value,
      nor to rise above individual value in use, in purchasing. Hence, in
      a throng of competition of supply the costliest productions step out
      of the field of competition in a descending cost-value series; and
      in a throng of competition of demand, the most wearied cravings in
      an ascending value-in-use series; until the quantities offered in
      supply and asked for cover each other without loss, and have placed
      each other in quantitative equilibrium. (N. Œk. Aufl., I, 188 ff.;
      compare 173, 185.) It is, however, to say the least, an instance of
      baseless solicitude, when _Wade_, History of the middle and working
      Classes, 214, says that one unemployed workman might depress the
      aggregate wages of labor, almost _ad infinitum_.

_  660 Hufeland_, N. Grundlegung, I, 78; _Ricardo_, Principles, ch. 31.

_  661 Dunoyer_, Liberté du Travail, VIII, ch. 4; _Rau_, Lehrbuch, I, §
      158.

  662 For a good classification of monopolies, see _Senior_, Outlines, 103
      ff. _Menger_, Grundsätze, I, 195, shows that no monopolist can
      arbitrarily determine the extent of the market for his
      monopoly-product when the price is fixed, nor when the extent of the
      market is known, the height of the price. Moreover, the price may
      remain longer above than under the cost of production, for the
      reason that it is easier to abandon a business than to begin one,
      and that the fear of loss is more frequently an incentive to action
      than the hope of gain. Hence the price of corn, when everything else
      is very dear, is more apt to vary from the average price, than in
      times when everything is very cheap. For instance, the Munich prices
      from 1750 to 1800 show that its highest price was 147 per cent.
      above, and its lowest 47 per cent. below the average of twenty
      years. (_Rau_, Lehrbuch, § 162, 182.)

  663 Chance plays a great part here. Thus, Murillo’s Conception which
      Marshal Soult had offered several times for 150,000 francs, but in
      vain, was sold in May, 1852, for 586,000 francs. Paul Potter’s young
      bull at the Hague, which cost 625 florins in 1748, was valued before
      the middle of the nineteenth century at 200,000 florins.
      (_Dethmar._)

  664 The purchaser resolves to do so because it would, in all
      probability, cost him more to go to India or Brazil in search of
      precious stones. Besides after the working of the Brazilian mines in
      1728, and again after the French Revolution, the price of diamonds
      fell greatly; in the one case, from an increase of the supply, in
      the other from a decrease of the demand. (_Ritter_, VI, 355, 365.)

  665 Thus, the Champagne and Johannisberg grapes, when transplanted to
      the Crimea, lost most of their native taste. On China’s practical
      monopoly of tea culture, and Ceylon’s, especially in its
      southwestern part, of cinnamon, at least so far as the peculiar
      aroma is concerned, compare _Ritter_, Erdkunde, VI, 123 ff. The
      small deer of Angora no sooner leave the little district of Asia
      Minor to which they belong, than they are in danger of degenerating.
      (Revue des deux Mondes, May 15, 1850.) Indian birds-nests cost no
      more than 11 per cent. to gather, dry etc., of the market price.
      (_Crawfurd_, East India Archipelago, III, 432 ff.; _Hogendorp_, Sur
      l’Ile de Java, 201.)

  666 Poor material for fuel, poor day-laborer work—dwellings, medical
      attendance. (_Menger_, Grundsätze, I, 116.)

  667 Thus sea fish, oysters etc. were formerly much cheaper during the
      summer than during the winter, at Ostend and Scheveningen, because
      during winter they could be sent to a distance. At Billingsgate
      market, in the mackerel season, fish cost per hundred 48 to 50
      shillings at 5 o’clock in the morning, 36 shillings at 10 o’clock,
      and 24 shillings in the afternoon. (_H. Schulze_, Nat-Œkonomische
      Bilder aus England, 1853, 241.) In the Rhine country, the price of
      fruit does not vary so much as in Saxony, because it is customary
      there to employ the surplus in the manufacture of cider, of
      preserves etc., thus making it transportable and durable.
      Frequently, after a very abundant crop of grapes or olives,
      under-prices prevail, sometimes on account of a want of vessels,
      cellar-room etc.; they must, therefore, be sold rapidly.

  668 Compare _Adam Smith_, Wealth of Nations, I, ch. 7.; _Tooke_, History
      of Prices, I, 97. Furs vary very much in price, sometimes 300 per
      cent. in a year, because, in the case of this entirely natural
      product, every thing depends on the stores of them, on the
      temperature etc. (_McCulloch_, Commerc. Dict., s.v.) On the other
      hand, the price of coffee usually varies only after periods of a
      number of years, because new plantations produce only after a lapse
      of years. (_Ibid._) Pigs vary much more than cattle in price,
      because the former may be made ready for the slaughter house in
      one-third of the time required for the latter. (_Thaer_, Rationelle
      Landwirthschaft, IV, 374.)

  669 Thus the rent of farms, where a numerous proletarian population will
      live exclusively from agriculture, depends on scarcely anything but
      the number of people and the extent of the land. (_J. S. Mill_,
      Principles, III, ch. 2.) In retail trade, where personal want comes
      in question, prices are much more subject to be modified by small
      circumstances, than in wholesale trade, where both parties are only
      intent on “doing business.” (_J. S. Mill_, III, ch. 1, § 5. _Tooke_,
      II, 72 f.)

  670 Hucksters, butchers, dealers in corn, inn-keepers etc. A remarkable
      case where Parisian dealers in hare-skins attempted to ruin the new
      fashion in silk hats by distributing a great number of them among
      the rabble, at mock-prices. (_Hermann_, 1st ed., 91.) The author
      witnessed a similar but unsuccessful attempt in Berlin in 1838-39,
      by the tailors against the so-called Macintosh coat. On the
      conspiracy of the English dealers in second-hand goods against
      auctions, see Athæneum, Dec. 5, 1863. It is one of _McCulloch’s_
      characteristic exaggerations, that he says that conspiracies to
      raise the price of a commodity by artificial means, are broken just
      as soon as they begin to obtain their object by the interest of the
      individual members to profit by the advanced prices. (Edition of
      _Adam Smith_, Edinb., 1863, p. 59.)

_  671 J. S. Mill_, Principles, II, ch. 4.

  672 Monopolies universally prohibited: L. un. C. De Monopol. (IV, 59.)
      Police-order of the Empire, 1548, tit. 18.

  673 Privileges which the purchaser voluntarily accords to the seller are
      wont to be useful to both parties. (_Hermann_, loc. cit. 155, 158.)

  674 Besides, guilds, castes, corporations etc. may, when the vent
      diminishes, produce under-prices as readily as they may
      monopoly-prices when the vent is very good. (See _Adam Smith_,
      Wealth of Nations, I, ch. 7.)

  675 Thus, for instance, the traveler who wanted to cross a stream, would
      find himself delivered over to the tender mercies of the ferry-man,
      without protection of any kind against his demands. But repeated
      impositions in the matter of prices would have for effect to bring a
      point into disrepute as a place of crossing, and would induce the
      public to seek another. Similarly in the case of hackney-coachmen
      and carriers in large cities, and in that of innkeepers, at hotels
      and postal termini etc.

  676 Fixed prices by governmental authority were soonest attempted after
      bad harvests, but, indeed, with a strange ignorance of the natural
      grounds of the increase in price of bread-stuffs. Thus in the time
      of Charlemagne. (Capitul. a, 805; _Baluz_, I, 423.) Similarly in the
      case of other articles of universal necessity, when oppressively but
      necessarily dear. (See § 175.) During the last centuries of the
      middle ages, with their multitude of actual monopolies, and at the
      beginning of the modern era, fixed prices became more and more
      general. The earliest instance in the history of England of a fixed
      price for bread was in 1202 (_v. Raumer_, Hohenstaufen, V, 372), and
      in 1266, 51 Henry III. The earliest in Prussia was in 1393.
      (_Voigt_, Geschichte von Preussen, II, 659.) Many instances of fixed
      prices in the Rhine provinces of Austria in 1530. In _Mylius_, Corp.
      Const. March, V, 2, 587 ff., we find an ordinance of 1653 fixing
      prices in Berlin, and including 72 industries. There is a very
      complicated system of fixed prices in the police ordinance of the
      electorate of Saxony of 1612, and in the decree concerning the coin
      of 1822. As to how, in Saxony in 1578, an attempt was made to
      ascertain the cost of the production of shoes by shoemakers, see
      _Joh. Falke_, Gesch. des Kurf. August in volkswirthschaft.
      Beziehung, 1868, 252. There was an enormous extension of
      governmental fixing of prices under Philip II.; one of the principal
      causes why Castile was so far behind Aragon economically.
      (_Townsend_, Journey through Spain, II, 221.) Sometimes these
      measures were adopted to prevent distress-prices; as in Hochheim, in
      favor of the vintners. (_Becher_, Polit. Discurs, II, 1652.) The
      predilection especially of German authorities for the fixing of
      prices by governmental power, in the sixteenth and seventeenth
      centuries is very remarkable. Thus _Luther_, vom Kaufhandel und
      Wucher, 1524; _Calvin_, Leben Calvins, by _Henry_, II, Beilage, 3,
      23; _Bornitz_, De Rerum Sufficientia, 1625, 246; _Seckendorff_,
      Teutscher Fürstenstaat, 5th ed., 1776, 210; _Becher_, II, 1823 ff.;
      _Horneck_, Oesterrich über Alles, wenn es will, 1684, 123; _Leibniz
      ed. Dutens_, VI, I, 250; _Thomasius_, Göttl. Rechtsgelahrtheit,
      1709, 209; even _Frederick_ the Great, _Mylius_, N. Corp. Const.
      March, I, 190. Similarly, _Mariana_, De Rege et Regis Institutione,
      III, c. 9. Compare, however, III, c. 8, and _Bacon_, Serm., 15;
      Historia Henrici, 1037, 1040. On the other hand, _Child_, 1690, and
      _North_, 1691, reprove all such measures. _Roscher_, Zur Geschichte
      der englischen Volkswirthschaftslehre, 65, 90 f. Earlier yet,
      _Salmasius_, who would allow the free _fori ratio_ to govern. (De
      Usuris, 1638, 583.) For a very rigorous price-tariff in the old
      Indian laws, by which, _inter alia_, the price of provisions was to
      be fixed anew every fourteen days, see _Menu_, Laws, VIII, ch. 401
      ff.

  677 Where trade is free, the _filet de boeuf_, for instance, is worth
      four times as much as the flesh of the ox’s neck or throat; but
      prices fixed by a government can scarcely take cognizance of the
      difference. How easily might not a fixed price for beer, for
      instance, be evaded by diluting that beverage with water, or fixed
      prices for inn-keepers by dealing out portions smaller in quantity
      or of an inferior quality. Moreover, as early a writer as _De la
      Court_, Polit. Discoursen, 1662, c. 4, remarks that the
      establishment of fixed prices by governmental authority raises the
      average price of all commodities rather than lowers it, for the
      reason that the few who are sellers by trade can do more to
      influence the authorities than the many buyers, whose interests are
      divided among numberless different commodities.

_  678 Schäffle_, Nat.-Œkonomie, II, 384 f.

_  679 Banfield_, Organization of Industry, 120. “Where the economic life
      of a people is still undeveloped, and the production of one
      enterprise is not from the first based on the estimated consumption
      of another, the circulation of goods brings with it great profits
      and great losses; whereas, profits and losses grow smaller, but at
      the same time more uniform and regular, in proportion as the
      circulation of goods increases in rapidity and regularity.”
      (_Stein_, Lehrbuch, 212.)

  680 In Belgium, during the last forty years, the price of wheat has
      become more constant every year, while the price of rye has become
      more variable; for the reason that rye has gradually ceased to be an
      article of popular consumption, and therefore to be an important
      article in trade, and is consumed almost entirely and directly by
      its producers. (_Horn_, Statist. Gemälde von B., 1853, 185.)
      _Rodbertus_ rightly conjectures that the price of wheat was much
      more variable in ancient times than it is with us. (_Hildebrand’s_
      Jahrb., 1870, I, 36.) That it was so may be inferred from the
      surprisingly large family supplies which were laid in, as appears
      from Digest, XXXIII, De Penu legato.

  681 In Würtemberg even officials etc. buy their own wine almost always
      directly from the vintner. This causes prices there to be
      exceedingly variable, frequently from hour to hour. (_v. Reden_,
      Statist. Zeitschrift, Nov. 1847, 1008.) How greatly the mere
      presence of a regular market has contributed to make prices more
      constant, may be seen in the suburbs of Hamburg, where fish offered
      for sale on the street are sold in the evening for one-third of the
      price asked for them in the morning. Besides, purchases made with a
      view to speculation may increase the variations of price, if the
      speculation is unskillfully conducted, especially when a low rate of
      interest, and of the profit of the person engaged in it, has
      produced a blind race among the speculators. Here the price of a
      commodity rises, not from any natural cause, but because it once
      rose before, and _vice versa_. (_Senior_, Outlines, 17 ff.;
      _Hermann_, 90 ff.)

  682 That fixed prices suppose that men are engaged in the production of
      the commodity in question, as their calling in life, see _Garve_, Zu
      Cicero’s Pflichten, III, 64 ff. Chess-like commerce of colporteurs,
      and in caravans etc. Concerning the dreadful higgling of the
      Bedouins, see _Wellsted_, Reise in Arabien, _Rödiger’s_ translation,
      I, 147; and the still worse bantering in Cashmere, where the
      merchant, in the first place, always denies that he possesses the
      desired commodity, then begins to search for it, in order to
      discover what value the purchaser puts upon it etc. (_K. Ritter_,
      Erdkunde, III, 475.) On the practices in Indian fairs, see _Th.
      Skinner_, Excursion in India, 1832, I, ch. 6; on the bazaars in
      Asia, _Andree_, Globus XII, 7, 211. _Herberstein_ says of the
      Russians in the sixteenth century: _mercantur fallacissime et
      dolosissime nec paucis verbis ... mercatores nonnunquam non uno
      tantum aut altera mense suspensos detinent, verum ad extremam
      desperationem perducere solent_. Hence the great variations in
      prices and commodities. (Rerum Moscov. Commentt., ed. Starczewski,
      39 f.) Similarly also, in 1674, according to _Kilburger_: Büsching’s
      Magazin, III, 249. But, on the contrary, it is said of the
      Plescovers, educated by intercourse with the Hanse; _tanta
      integritas ... in contractibus, ut uno tantum verbo res ipsas
      indicarent omni verbositate in fraudem emptoris omissa_.
      (_Herberstein_, 52.) In the England of the present day, the custom
      of marking each piece of goods with its price is very general.
      Concerning the rapidity and the paucity of words with which prices
      are settled in that country, where business men do not even salute
      their customers, nor customers the business man, see _C. G. Simon_,
      Observations recueillies en Angleterre, 1835, I, 129 f. The Athenian
      laws (?), that fixed prices should be asked, and that sellers should
      not sit down that that they might sell more rapidly, points to
      something similar. (_Athen._, VI, 226 f. _Plato_, De Legg., XI, 916
      f.) Athenian law prohibiting mendacity in the markets. (See
      _Demosth._, Lept., 459.)

  683 Thus the German book-trade has fixed prices. Many merchants never
      make an offer to their educated customers who are wont to do so with
      peasants etc.; because they are aware that the latter purchase only
      after they have compelled the seller to come down greatly from his
      first proposed price. Among the Quakers it has been a rule from the
      beginning, never to ask more for their wares than they were
      determined to accept. (_Hume_, History of England, ch. 62.)

_  684 Sir William Temple_, Observations upon the Netherlands, Works I,
      134, compares honor in trade to discipline in an army. Similarly,
      _Law_, Trade and Money, 209 f. _Ferguson_, History of Civil Society,
      III, 4. Where the seller is not obliged to make known the existence
      of certain defects in his wares to the purchaser before sale, there
      is always scope for fraud. Compare Digest De Edict. aedilit., XXI,
      I. On the meaning of the German legal maxims: _Hand muss Hand
      wahren_, and _Ein Wort, ein Mann_, see _Eisenhart_, Deutsches Recht
      in Sprüchwörtern, 311 f., 319 f. It is a principle in matters of
      business, that the person who through malice or carelessness
      recommends a man of whose probity there is already some doubt,
      should bear the damage caused by his recommendation. (_Martens_,
      Grundriss des Handelsrechtes, 24 ff.) Many attempts at dishonesty
      are prevented by laws which in important contracts, especially in
      sales of land etc., require the presence of witnesses, and this
      particularly in the lower stages of civilization. (_Meier_ and
      _Schömann_, Attischer Process, 522; Roman, Emancipatio; _Grimm_,
      Deutsche Rechtsalterthümer, 608 f.), or even a public proclamation
      before the assembled community, at least written documents invested
      with all legal formalities as practiced among civilized peoples. On
      Greek laws of this nature, see especially, _Theophrast._, in
      _Stobaeus_, Sermon., XLIV, 22. Very remarkable in Sparta. _Schol.
      Aristophan._, Aves, 1284.

  685 Compare _Lotz_, Revision, I, 255 ff. In England the price of wheat
      scarcely ever varied more than from 1 to 2. In Ireland the price of
      potatoes varied from 1 to 6. (_McCulloch_, Comm. Dict., v.
      Potatoes.) Compare _Engel_, Jahrbuch für Sachsen, I, 491 ff. The
      custom of asking enormous prices with the expectation of being
      beaten down, is usual in Italy and carried to a frightful extent,
      and related to the bad custom prevalent there of begging a little
      after-payment to every little gratuity or drink-money which has been
      received.

_  686 Storch_, Handbuch, I, 311. _J. B. Say_, Traité I, ch. 16. As to how
      commerce, when fully developed, is wont to be more moral than when
      only half developed, see _Garve_, loc. cit., and Versuche IV, 149
      ff. How fortunate for the public economy of nations that the prices
      of corn especially have been growing more steady all the time since
      the middle ages. See _Roscher_, Ueber Kornhandel, 56, 61.

  687 Trade by barter was very general in several states of the American
      Union about the close of the eighteenth century. In Vermont, for
      instance, it was usual for a doctor to exchange his medicines
      against a horse, and for the printer to buy corn, butter etc. with a
      newspaper. (_Ebeling_, Geschichte und Erdbeschreibung, II, 537.) In
      Maryland, the Assembly fixed by law the relative proportions at
      which tobacco, pork, corn and wheat should be exchanged the one
      against the other. (_Ebeling_, V, 435 ff. _Douglas_, Summary of the
      British Settlements in N. America, 1670, V, 2, 359.) Even as late as
      1815, children were wont to run the streets of Corrientes, crying:
      “Salt for candles, tobacco for bread etc.” It was commerce with
      England that first led to trade by money in the United States.
      (_Robertson_, Letters on South America, 1843, I, 52.) Similarly in
      Rhokand until the end of the eighteenth century, where the cities,
      as a consequence, presented the appearance of a fair the whole year
      round. In the beginning of this century, the khan introduced the use
      of copper money made from Persian cannons; and much later yet, there
      were scarcely a million rubles in money to a million men. (_Ritter_,
      Erdkunde, VII, 753.) _Basil Hall_ found the uncivilized inhabitants
      of the Loo-Choo Islands ignorant of the use of money. (Voyage of
      Discovery, 1818.) Concerning trade by barter in the Homeric age, see
      the Iliad, VII, 472 ff. A supposed law of Lycurgus prohibited the
      use of money in purchases, and allowed barter only. (_Justin._, III,
      2.) According to _Pausan._, III, 12, only barter existed in India
      (?) in his time.

  688 The person who has been used to paying for four pounds of meat with
      twenty pounds of bread, and is asked to give twenty pounds of bread
      in exchange for some other article, must of course have some unit of
      measure in his mind to serve as a means of comparison between the
      value of that article and that of four pounds of meat. In Denmark,
      during the rule of the aristocracy, there were fixed prices
      sanctioned by the tradition of long usage, in accordance with which
      the prices of all commodities were estimated in relation to a ton of
      barley or rye—a natural consequence, apparently, of the want of a
      common measure to govern in the greater number of transactions.
      _Bergsoe_, Archiv der Polit. Œk., IV, 314; _Graugan’s_ Icelandic
      Code contains a remarkable fixed price of this nature in the
      supplement to the _Kaupa-Balkr_ or Commercial Code, I, p. 500.
      Similarly among the ancient Persians. _Reynier_, Economie publique
      des Perses, 308.

  689 That is, (200x(200-1))/2. Compare _Rau_ in _Storch_, Handbuch, III,
      253. The “at least” has reference to the fact, that in barter, the
      many different kinds of most commodities has to be borne in mind.
      (_Knies_, Geld und Credit, I, 218.)

  690 This transportation of values supposes an equality of values of the
      money in two places, while the transportation of goods supposes
      different values of the same kind of goods in both places. (_Knies_,
      Geld und Credit, I, 218.)

  691 While the words _pecunia_, _danaro_, _dinero_, and _argent_, are all
      derived from unessential qualities, the German word for money,
      _Geld_, corresponds with the essential quality of money, since it
      denotes that which is of value everywhere (_gilt_). On the other
      hand, _nummus_ and νόμισμα from νόμος, (_Bœckh._ Metrolog. Unters.,
      310.), _moneta_ (the English, money), are from the temple of Juno
      Moneta, in which the Roman coins were for a long time stamped. In
      old German, the word for money, _Geld_, means everything that is
      paid by any one. (_Grimm_, D. Rechtsalterth., 382.) The present
      meaning of the word is to be met with in a very old document of
      1327. (_Arnold_, z. Geschichte des Eigenthums in den deutschen
      Städten, 89.)

  692 The wrong definitions of money may be divided into two classes:
      those which convey the idea that it is more than a commodity, and
      those which imply that it is less.

      This was a point which was contested even among the Greeks. There
      were many who claimed that wealth consisted exclusively in the
      possession of much money; as we find, for instance, in the
      pseudo-Platonic dialogue Eryxias; while others insisted that money
      was something purely imaginary (λῆρος), and the creation,
      exclusively, of human laws. (_Aristot._, Polit., I, 3, 16, Schn.)
      Νόμισμα σύμβολον τῆς ἀλλαγῆς ἔνεκα. (_Plato_, De Rep., II, 371.)
      _Anacharsis_ compares money to counters. (_Plutarch_, De Profectt in
      Virtute.) _Aristotle_, himself, subscribed to the second opinion,
      although he saw clearly, that only useful and current things (χρείαν
      εὐμεταχείριστον πρὸς τὸ ζῆν) could be used as money. (Polit., I, 3,
      14 ff. Eth. Nicom., V, 5, 6, Rhet., II, 16.) _Xenophon_ ascribed
      properties to money which no other commodity possessed; especially
      when he said that it could never be too plentiful, and that its
      price could never fall. (De Vectt. Ath., 4.) The finest ancient
      explanation of the nature of money is that of the jurisconsult
      _Paullus_, L. I.; Digest, XVIII, 1; and it well deserves the long
      commentary devoted to it by _P. Neri_, Osservazioni etc., in
      _Custodi_, P.A., VI, 324, ff.

      Among the moderns, _Melancthon._, Corp. Ref., XVI, 498, and _Seb.
      Frank_, Chronik., 760, consider money as a mere symbol. On the other
      hand, the over-estimation in which the precious metals were held by
      the adherents of the Mercantile System was owing, without doubt, to
      their very superior utility as money; for we very frequently find
      that the adherents of that school insist that the precious metals
      must circulate. (See § 9 and § 210.) _v. Schröder_, Fürstl. Schatz-
      und Rentkammer, III f., considers new copper coins as an increase of
      the national wealth, but not other copper which is merely a
      commercial commodity. He frequently calls money, the _pendulum
      commercii_, and expresses ideas concerning it as enthusiastic as
      they are obscure (p. 86.) _Horneck_, in his Oesterreich über Alles
      wenn es will, 1864, calls gold and silver “our best blood, the very
      marrow of our strength,” and “the two most indispensable universal
      instruments of human activity and existence.” (p. 188.) _Th. Mun_,
      England’s Treasure by forraign Trade, 1664, (ch. 2) considers
      cash-money and resources as synonymous in every way. Only, he says
      (ch. 4) that it is sometimes advisable to allow one’s money to
      remain in foreign countries, and to use bills of exchange, banks
      etc., at home, as a substitute. _F. Gee_, Trade and Commerce of Gr.
      Britain, edition of 1738, laments the “stiff-necked folly of those
      who think money a commodity like any other.” It is one of the most
      common demands of the adherents of the Mercantile System that the
      home mines of gold and silver should be worked at no matter what
      sacrifice, since the money employed in working them continues to
      remain in the country and the newly coined precious metal is clear
      gain. Compare _Schröder_, loc. cit. 109 ff., 181. _Horneck_, loc.
      cit. 173. _Broggia_, Della Monete, 1743, cap. 33; _v. Fusti_,
      Staatswirthschaft, 1755, I, 246: _Forbonnais_, Finances de France,
      1758, I, 148. _Ulloa_, Noticias Americanas, 1772, ch. 12. We seldom
      meet with the correct view on this subject in the seventeenth
      century. _Sully_, of whom Henry IV. said that he never found
      anything to be possessed of beauty which cost double its real value,
      had it at times. (Economies royales, LXXIII.) So had _v.
      Seckendorff_, Teutscher Fürstenstaat, 1655, 5th edition.

      It is in accordance with the usual course of human development that
      the exaggerations of the Mercantile System led to a reaction
      characterized by an exaggeration in the opposite direction. Even
      _Davanzati_, Sulle Monete, 1588, traces the value of money back to
      human convention and refuses to find it in nature. A natural calf,
      he thinks, is _più nobile_ than a golden one; although he elsewhere
      expresses his admiration of the precious metals, calls them _cagioni
      seconde della vita beata_, and lauds them because they procure us
      _tutt’essi beni_ (20, 21, Cust.) _Montanari_ (ob., 1687)
      demonstrates from the use of leather money etc., that the authority
      of the state is the only power which gives money its character as
      money. (Della Moneta, 35.) _Davenant_ (ob., 1714) carries his
      inclination to call money “the servant of trade, measure of trade,”
      so far as to compare it to a ticket or counter. (Works, I, 355,
      444.) Strongly as _Law_, himself, opposes the convention theory
      (Trade and Money, ch. I; Sur l’ Usage des Monnaies, 1720, p. 1.),
      his disciple _Dutot_, in his Réflexions polit. sur le Commerce et
      les Finances, 1738, 905, éd. Daire, contrasts not only paper money
      but also gold and silver as representative wealth, with real wealth.
      _Berkeley_, Querist, 1735, teaches that the real notion of money is
      not that of a “commodity, standard, measure, pledge, but [No. 23]
      ticket or counter, entitling to power and fitted to record and
      transfer such power.” (441, 475.) Even if the names, _livre_,
      shilling etc., remain, and the metal is dropped, every article may
      still as well as before be counted and sold, industry promoted and
      the course of commerce preserved. (p. 440.) According to
      _Montesquieu_, Esprit des Lois, XXI, 22, gold and silver are a
      _richesse de fiction ou de signe_. Compare Lettres persanes, II, 18.
      _Benjamin Franklin_ also maintains that the value of gold, for
      instance, is principally a credit-value. Remarks relative to the
      American Paper-Money, 1765, Works, II, Sparks’ edition.
      _Forbonnais_, Finances de France, I, 86 f., calls money, simply a
      means to put commodities, which alone have value originally, in
      circulation. Hence it is, in itself, a matter of indifference
      whether, for a given quantity of coin, a person gives one thaler, or
      ten. In the Elements de Commerce, I, 11, II, 67 ff., he draws a
      distinction between _richesses naturelles_ (raw material),
      _artificielles_ (manufactured products), and _richesses_ de
      convention (money.) _von Schlözer_, Aufangsgründe, 1805, 100, 138,
      calls money something imagined; and _Th. Smith_, Essay on the Theory
      of Money and Exchange, 1807, asserts, that true money is only an
      ideal measure of value, of which coins in turn are only the
      representatives. Compare, however, Edinb. Review, Oct., 1808.
      _Oppenheim_, Die Natur des Geldes, 1855, grants that in the
      beginnings of trade, money possessed the character of a commodity;
      but says that as soon as the services of circulation of the
      money-commodity prevailed over its services in consumption, it lost
      all its importance for the latter purpose, and that all relations
      dependent thereon ceased. At present, he claims money is only the
      representative of commodities, but no commodity itself. See, on the
      other hand, _Roscher’s_ critical analysis in the Literarisches
      Centralblatt, 1855, December.

      The true doctrine was advocated in a classic form by _Nicolaus
      Oresmius_ (ob. 1382). See his Tractatus de Origine et Jure nec non
      et Mutationibus Monetarum, newly edited by _Wolowski_: Paris, 1864.
      See _Roscher’s_ essay in the Comptes rendus of the Académie des
      Sciences morales et politiques, vol. 62, 435 ff. Based on the latter
      we have _Gabr. Biel_ (ob. 1495), De Monetarum Potestate simul et
      Utilitate, 1542, and _G. Agricola_, De Re metallica, 1556, I, 4 ff.
      This true doctrine was acclimated earliest in England and Holland,
      and before the mercantile system invaded them. Compare _Hobbes_,
      Leviathan, 24, in which the _concoctio bonorum_ is described by
      means of money, and the full and clear chapter 12 of _Salmasius_, De
      Usuris (1638), who, among other things, shows how Midas, who turned
      everything into bread, died of thirst. _Petty_ shows very clearly
      that national wealth does not consist exclusively nor mainly in
      money. Every country, he says, needs a certain quantity of money to
      carry on trade. It would be a waste to increase the former, the
      latter remaining the same. But the precious metals, by reason of
      their durability and universally recognized value, possess the
      character of wealth in a higher degree than other commodities.

      On the whole, the use of money in a nation is like the use of fat in
      the individual. (Quantulumcunque concerning Money, 1682.) Compare
      _Roscher_, z. Geschichte der eng. Volkswirthschaftslehre, 80 f.
      _Davanzati_ and _Hobbes_ had compared it to the blood, as has
      recently _Schmitthenner_, Staatswissenschaften, 1839, I, 459.
      _North_ calls money a commodity of which there may be an excess as
      well as a want. (Discourse on Trade, preface and postscript.)
      Compare _Locke_, Considerations on the Lowering of Interest, 1691,
      Works II, 13 ff., 19. _Galiani_, 1750, Della Moneta, IV, holds a
      very happy middle place between the alchymists and the philosophic
      contemners of gold. See, further, _Quesnay, éd. Daire_, 64, 75 ff.
      _Turgot_, Sur la Formation des Richesses, § 30 ff, had many clear
      views on this subject. _Verri_, Meditazioni, 1771, II, 1, calls
      money the universally current commodity. The expressions, measure of
      value, pledge, representative of all commodities might be true also
      of all other wares. It cannot, however, be denied that most modern
      political economists have not borne sufficiently in mind the
      peculiarities which distinguish money from all other commodities, as
      is apparent from the doctrine of the balance of trade prevalent in
      Hume’s and Adam Smith’s time. To this extent, therefore, the
      semi-mercantilistic reaction instituted by _Ganilh_, Théorie de
      l’Economie politique, 2822, II, 380 ff., 426; _St. Chamans_, N.
      Essai sur la Richesse des Nations, 1824, ch. 3; and _Colton_, Public
      Economy for the United States, 1849, 203 ff., who bring into relief
      the difference between “money as the subject” and “money as the
      instrument of trade,” was not wholly unfounded. _Ad. Müller_
      exaggerates a correct thought, and causes it to degenerate into a
      species of mystic pleasantry, when he calls every individual in the
      state and every commodity that possesses value, in exchange or a
      social character, money.

      The highest object of the state is to develop this money-character
      more and more. (Elemente der Staatskunst, II, 194, 199.) The
      statesman, he says, should be money. (III, 206.) A very valuable
      monograph on this subject is _M. Chevalier’s_ De la Monnaie, 1850,
      constituting the third volume of his Cours d’Economie polititique.
      _Knies_, Geld und Credit, I, 1873, is here most thorough and acute,
      especially in keeping separate, by well defined lines of
      demarcation, the five different functions of money: measure of value
      (by proper division into parts: price-measure), instrument of
      exchange, means of transportation of values, and means of storing up
      and preserving values.

_  693 Knies_ shows how the making of money legal tender by the state,
      although of only secondary importance, is by no means an irrelevant
      matter, since persons must then have it, even if they do not want it
      for purposes of use or exchange, to discharge their liabilities
      thereby etc., etc. (Tübinger, Zetschrift, 1858, 272.)

      In all these cases, barter-economy (_Naturalwirthschaft_) meets with
      greater and greater difficulties as civilization advances. How, for
      instance, could 50 days annually of socage-service or labor be
      redeemed by the achievement at one time of 1,000 days of
      socage-service or labor? The rich man requires money principally as
      a means of payment, the poor man as a medium of exchange. The
      requirement or need of a people of media of payment is much more
      susceptible of extension or contraction, than that of media of
      exchange, made especially so by the intervention of claim-rights
      instead of money. _(Knies_, loc. cit, 200 ff.) _Ravit_, Beitr. z.
      Lehre vom Gelde, emphasizes this feature of money altogether too
      much after the manner of a jurist. But he is entirely right in
      adopting the exclusion of the _rei vindicatio_ against the honest
      possessor as necessary to the completion of the idea of money.

_  694 Sismondi_, N.P., I, 131, very rightly remarks that this has made
      practice as much easier as it has theory more difficult.

_  695 Law_, Trade and Money, 19. Hence, before the invention of money,
      scarcely anything but the things most indispensable to existence
      were produced. Were there no money, there would be very few
      scholars, artists etc.; for the classes who produce most of the
      things indispensable to existence make but few demands for them.
      _Büsch_, Geldumlauf, I, 11 ff., 36, II, 54.

_  696 Turgot_, Formation et Distribution, § 48 ff. Commodities which
      perish rapidly could be produced by persons devoting themselves to
      their production as a business only after the invention of small
      coin. (_Lueder_, N. Œk., 1820, 283.)

  697 Compare _Knies_, Geld und Credit, I, 219.

  698 Compare _Schmitthenner_, loc. cit., I, 457. One of the principal
      advantages of money consists in this, that every producer can
      discover what there is an over-supply or under-supply of in the
      nation, by means of the relation of the price in money of his
      products to the cost of producing them, estimated in money, (_v.
      Thünen_, Isolirte Staat, II, 2, 235.)

  699 Hence it is that so many socialists attack money. _Th. More_ assures
      us that with the simple abolition of money, vice and misery would,
      for the most part, disappear of themselves. Hence in his Utopia,
      criminals are bound in golden chains and the chamber-pots are made
      of gold and silver in order to make these metals contemptible. (Ed.
      1555, ff., 197 ff.) Similar views among the over-cultured Romans.
      (Compare §§ 79, 204.) _Auri sacra fames_. _Virgil_, Æneid, III, 56.
      _Pliny_, too, would recall the days of trade by barter. (H. N.,
      XXXIII, 3.) Even in _Boisguillebert_, Factum de la France, ch. 4, we
      find, together with many correct views on the nature of money,
      passionate declamation against it because of its darker side.
      _Argent criminel_. (Détail de la France, 7. Dissertation sur la
      Nature des Richesses etc.) More recently this darker side has been
      dwelt upon by _F. Möser_, Patriot. Phant., I, 28; _Ortes_, Economia
      nazionale, II, 17, and the would-be restorer of the middle ages,
      _Ad. Müller_. While the latter writer lauds the feudal system as a
      “sublime fusion of person and thing” (Elemente I, 221), the present
      system of wages, because it is a system of compensation, he blames,
      and prefers the feudal for the opposite reason (?). “The only
      _merit_ which the state recognizes in our day is one _of service_.”
      (III, 259.) _Kosegarten_, Geschichtliche systematische, Uebersicht
      der N. Oek., 1856, 146 ff., is no friend to the economic system to
      which money gives a distinctive character. _Per contra_, compare
      _Bastiat_, Maudit Argent, 1849.

_  700 Mirabeau_, Philosophie rurale, 1763, ch. 2, adds as the third great
      invention the _tableau économique_ of the Physiocrates. For a
      comparison of money and language, see _Hamann_, Werke, II, 135 ff.,
      509. _Hehn_, Kulturpflanzen und Hausthiere, finds it characteristic
      of the race, that wine, writing with letters, and money, all owe
      their origin to the monotheistic stem of the Semitic people.

  701 Where every man becomes a merchant, and the society itself a
      commercial society. _Ad. Smith_, Wealth of Nations, I, ch. 4.

  702 Just as descriptive is the German word _billig_ (_equitable_) for
      cheap. Here it is plain that language takes sides with the possessor
      of money!

  703 The contrast between barter-economy and money-economy is of great
      and fundamental importance. It repeats itself with so much
      regularity in the history of every highly developed nation, that
      political economists gifted with perception for the historical,
      could not possibly overlook it. Thus, _Aristotle_, for instance,
      establishes with the utmost care and accuracy the difference between
      οἰκονομικὴ and χρηματιστικὴ, that is, between natural economy and
      artificial economy, corresponding to the difference between value in
      use and value in exchange. (Polit., I, 3, Schn.) Similarly _D.
      Hume_, who allows a period of luxury, culture, industry, of trade
      and manufactures, of freedom and circulation of money, to be
      preceded by one in which the feeling of wants is not awakened, in
      which coarseness and idleness prevail, one in which agriculture is
      alone pursued, and monetary economy and freedom decline, and trade
      by barter obtains. (Discourses, passim, especially On Interest and
      on Money.) A similar contrast we find frequently, and as one of his
      fundamental thoughts, in _J. Steuart_.

      As to how the transition from barter-economy to monetary-economy is
      generally effected, see _F. G. Hoffmann_, Lehre vom Gelde, 1838, 176
      ff. In the Tyrol, as late as 1820, the greater portion of purely
      mechanical work, such as that of the smith, the carpenter, and the
      washerwoman, were purely feudal duties. On the other hand, payment
      in money was the rule, in the beginning of the fourteenth century.
      (_F. Beidermann_, Technische Bildung in Oesterreich, 3.) Yet, for a
      long time after, the functions of a measure of value were performed
      by pieces of land, and those of an instrument of exchange by cattle
      and natural products. (_Arnold, Gesch. des Eigenth_., 207.) In
      France, money-economy, i.e., trade by money, had grown to importance
      earlier. (_Nitsch_., Ministerialität und Bürgerthum, im 11. und 12.
      Jahr., 143.) Even in the time of Mary Stuart, the Scotch estimated
      the rent of land in “cauldrons of victuals.” (_Moryson_, Itinerary,
      1617, III, 155.) In ancient Italy, during the first three centuries
      of Rome, there was, with the exception of the Greek colonies, only
      trade by barter. _Mommsen_, Römische Gesch., I, 293, shows that the
      oldest ases were not money in the higher sense of the word, but
      belonged rather to the stage of barter-economy. On the other hand,
      we find in the time of the classic jurists, much as slavery had
      limited the sphere of action of money, the principle: _pecuniæ
      nomine non solum numerata pecunia, sed omnes res, tam soli quam
      mobiles, et tam corpora quam jura continentur_. (L. 222, Digest L.
      16; compare 4, 5, 178.) Similarly in _Cicero_, Top. 6. De Invent,
      II, 21. De Legg, II, 19, 21; III, 3. Compare _Dionys. Hal._, N.R.
      IV, 15.

  704 Were money nothing but a measure of values in exchange, it should on
      that account, if on no other, have value in exchange itself, as a
      measure of length must necessarily have length itself. (We measure
      time on a clock by means of the revolution of the hands on the
      dial.) Again, value in exchange supposes value in use. The so-called
      “money of account,” such as the East Indian _lac de roupies_, the
      Portuguese reis, and the earlier English _pound_ sterling are no
      imaginary magnitudes, which would disappear with the figures of our
      system of counting (see _Hufeland_, N. Grundlegung, II, 33, in reply
      to _Struensee_, Abh., III, 501); but real coin-values which can not
      be represented by only single pieces of coin, units of value for the
      most part no longer recognized by the state, but which the people
      still retain. See _M. Park’s_ (Travels, 27) refutation of the fable
      circulated by _Montesquieu_, Esprit des Lois, XXII, 8, that the
      regular standard money of the Mandingo negroes was a mere imaginary
      standard. _Hobbes_, Leviathan, 24, exhibits a very good knowledge of
      this subject.

  705 Compare _P. Neri_, Osservazioni, 1751, VI, 1. _Lord Liverpool_,
      Treatise on the Coins of the Realm, 1805. The person who takes money
      as such must always harbor the hope of being able to dispose of it
      again as money. Hence, such an acceptance always supposes the
      existence of a certain amount of commercial confidence. The savage
      Goahiros, between Rio de la Hacha and Maracaibo, are too
      “distrustful” to take anything in trade but commodities fit for the
      most immediate use. (_Depons_, Voyage dans la Terrefirme, I, 314.)
      Similarly in the twelfth century, the heathen Laplanders. (_Arndt_,
      Liefl. Chronik, II, 3.) Commodities which barbarians can consume
      immediately are objects of the first necessity, whereas more
      civilized people, who are in a condition to undergo greater expense,
      look more to the technic qualities of money, such as divisibility,
      capacity for transportation and durability. _v. Scheel_ shows in a
      very happy manner how, as commerce increases, money comes to be, as
      it were, subjected to a process resembling that of distillation:
      first mere increase of stores for use, next preponderating values in
      exchange, lastly mere orders for the same possessing no independent
      value. _Hildebrand’s_ Jahrbb., 1866, I, 16.

  706 The last circumstance continues to be one of great importance for a
      long period of time in the frigid zones. Thus, the beaver-skin
      continues still to be the unit of measure of trade in much of the
      territory of the Hudson Bay Company. Three martens are estimated to
      be equal in value to one beaver, one white fox to two beavers, one
      black fox or a bear to four beavers, a rifle to fifteen beavers.
      (Ausland, 1846, No. 21.) The Esthonian word, _raha_, money, means in
      the related language of the Laplanders, fur. (_Krug_, Zur Münzkunde
      Russlands, 1805.) Concerning skin-money in the middle age of Russia,
      see _Nestor_, _Schlözer’s_ translation, III, 90. The old word
      _kung_, money, means marten. By degrees it came to pass that instead
      of whole skins, only two “snouts” were given or other pieces of
      leather about a square inch in size, which were probably stamped by
      the government and redeemed in whole skins at the government
      magazines. Hence, there is here supposed a species of assignats, and
      of disturbances of credit. The Mongolian conquerors would not
      recognize them, and they therefore became suddenly valueless. In
      Novgorod and Pskow, the system continued some time longer, for the
      reason that these places had little trade with the Mongols. In the
      rest of the kingdom it now became necessary to introduce silver
      money, and in the north to return to real squirrel and beaver skins.
      _Karamsin_, Russ. Gesch., I, 203, 385; I, 96, 191 f. Voyage de
      Rubruquis, in _Bergeron_, Voyages I, 91. _Herberstein_, Rer. moscov.
      Commentt, 58 ff. Even in 1610, a Russian military chest was captured
      by the enemy, and in it were found 5450 silver rubles, and 7000 fur
      rubles. (_Karamsin_, XI, 183.)

  707 When the Danes progressed so far as to practice agriculture, they
      used grain instead of cattle, in quantities corresponding to the
      value of one cow or one sheep, for money, to the end that their idea
      of a unit of measure might not become obscured. (_Ravit_, Beiträge,
      3.)

  708 Homeric determination of prices in oxen. Iliad, II, 449; VI, 236;
      XXI, 79; XXIII, 703 ff; Odyss., I, 431. Compare, however, II, VII,
      473 ff. In Draco’s time, money-fines were imposed in cattle
      (_Pollux_, IX, 60 ff.), and in Athens, before Solon’s time, even the
      metal coins were, for the most part, stamped with the figure of an
      ox. _Plutarch_, Theseus, 25. _Böckh_., Metr. Uuntersuch., 121 ff.
      Among the most ancient Romans (_Cicero_, de Rep., II, 35) the
      imposition of fines in property, the coins first stamped by Servius,
      _boum oviumque effigie_ (_Plin._, H. N., XVIII, 3, _Cassiodor._,
      Var., VII, 32), and the words _pecunia_, _peculium_, _peculatus_,
      derived from _pecus_, point to something analogous. (_Varro_, De L.
      L., V, 19; De Re rust., II, 1; _Cicero_, De Rep., II, 9; _Ovid_,
      Fast., V, 281; _Plutarch_, Publicola, 11.) Old German fines in
      cattle, in _Tacitus_, Germ., 12, 21; Lex Ripuar, 36, 11; Lex
      Saxonum, 19. _Ulfilas_ translates αργύριον δοῦναι (_Mark_, 14, 11),
      _faihu giban_. Very old German documents, of the seventh and eighth
      centuries, name horses as purchase-price. (_Grimm_, Deutsche
      Rechtsalterth., 586 f.) Otho the Great imposed cattle-fines.
      (_Widuk_ Corb., II, 6.) Similarly, in King Stephen’s laws of Hungary
      (_Wachsmuth_, Europäische Sitturgesch., II), in the old Irish Brehon
      laws (_Leland_; History of Ireland, 36 ff.), as well as in the
      Scotch collection of laws, _Regiam Majestatem_, of 1330. (_Honard_,
      II, 263 f, 537.) _Viva pecunia_ of the Anglo-Saxons in the laws of
      William I. In ancient Sweden, all property was estimated in
      _fä_=cattle (_Geijer_, Schw. Gesch., I, 100), just as now, in
      Icelandic, _fe_=property. In Berne, the German _vieh_, cattle, is
      used to express commodities. Among really nomadic races this is, of
      course, still more the case. Thus the Kirghises use horses and sheep
      as money, and wolf-skins and lamb-skins for small change. (_Pallas_,
      Reise durch Russland, 1771, I, 390.) Among some of the Tartar
      tribes, everything is stipulated for in cows. (_v. Haxthausen_,
      Studien, II, 371.) Among the Persian nomads, sheep are used as
      money; or when they are held in subjection in the cities, corn,
      straw and wool. (_Ritter_, Erdkunde, VIII, 386.) Oxen in use as
      money among the Tscherkessens. (_Klemm_, Kulturgeschichte, IX, 16.)
      _W. B. Hermann_ doubts, however, whether cattle were ever used as a
      medium of exchange. He thinks rather they were employed only as a
      measure of price. (Münchener Gel. Anz., 580.)

  709 That of vanity which presents itself among some people sooner than
      that of clothing.

  710 In Genesis, 1, 24, gold appears only as a valuable ornament. Abraham
      paid for his purchases in silver.

  711 For this reason, zinc-money is just as natural with the Malays and
      Chinese as iron-money with the Senegambians. (_Mungo Park_, Travels,
      27.) And so _Plutarch_, Lysand., 17, may be right when he calls iron
      the earliest universal means of payment. In Sparta, too, where
      industrious efforts were made to maintain the lower stage of
      culture, this medium of payment was longest maintained. Compare,
      however, _St. John_, The Hellenes, III, 260 ff. The first copper
      coins were stamped a short time before Philip, father of Alexander
      the Great. (_Eckhel_, Doctr. Numm, I, XXX ff.) On the other hand,
      Italy, partly because it had mines of its own, and partly because of
      its intercourse with Carthage (Cyprus), had become, at a very
      distant period, so rich in copper that the circulation of copper, or
      to speak more accurately, of bronze, was naturally introduced.
      Compare _Niebuhr_, Röm. Gesch., I, 475 ff. (_Aes alienum, obæratus,
      ærarium, æstimare._) Copper was all the more adapted to this end the
      more frequently it was found unmixed. It was generally used in
      preference to iron because of the greater facility of working it.
      (_Hesiod._, Opp., 150 f.; _Lucret._, V, 1285 f.) In modern nations
      copper money seems to have been employed only after silver money.
      Thus, it was not stamped in England before the time of James I.
      (_Adam Smith_, I, ch. 5), nor in Sweden before 1625. (_Geijer_,
      Schwed., Gesch., III, 56.) Money was struck from the metal of molten
      bells during the French Revolution!

  712 In Russia, between 1763 and 1788, there were 76 million rubles of
      gold and silver coins struck, against 54 million of copper rubles.
      (_Hermann_). On the other hand, in France, between 1727 and 1796,
      there were struck only 40 million francs of copper, 10 million of
      _billon_ or base coin, and 3967 million of gold and silver.

_  713 Michaelis_, De Pretiis Rerum apud veteres Hebræos, 183.

_  714 Strabo_, VIII, 358. Hiero, tyrant of Syracuse, found it exceedingly
      difficult to obtain gold. When the Spartans wished to make an
      offering of gold at Delphi they were obliged to have recourse to
      Crœsus. (_Herodot._, I, 69; _Theopomp._, in _Athen_, VI, 231 ff.)
      _Aristoph._, Ranae, 720, calls gold “new” in contradistinction to
      the “old money,” that is, silver.

_  715 Plin._, H. N., XXXIII, 13. Compare, however, _Dureau de la Malle_,
      Economie polit. des Romans, I, 69, after _Varro_, apud Charisium, I,
      81. (_Putsch._) It is certain, however, that when Italy was
      conquered, the Romans had introduced a circulating medium of silver,
      and that it was the prevailing medium; but in the time of Cæsar and
      Augustus, a gold circulation was the prevalent one. Yet the state
      treasure was deposited in gold during the period of silver
      circulation, because gold was, without question, better adapted to
      storing up and transportation.

_  716 Muratori_, Antiquitt., IV, Diss., 28.

  717 Henry was obliged to issue an order to the mayor and sheriffs of
      London, to get his gold into circulation; but he soon saw himself
      compelled to desist from executing his design. Edward III. was able
      only after a voluntary circulation of them had continued for a long
      time, to prohibit any one’s refusing the rose-nobles. (_L.
      Liverpool_, loc. cit.)

  718 German., 5. Still more striking is the example cited by _Herbelot_,
      Bibliothéque Orientale (1697), 485. _Rubruquis_, Voyage, ch. 13. In
      the time of Nadir-shah, the Kurds gave, without the slightest
      hesitation, a pound of gold for a pound of silver or copper.
      (_Ritter_, Erdkunde, VIII, 395.)

  719 Recommended even by _Adam Smith_, ch. 5, and for Germany by _F. G.
      Hoffmann_, Drei Aufsätze über das Münzwesen, 1832. In Egypt, also,
      for a long time the wealthiest country of the middle ages, the
      circulation of gold prevailed until the twelfth century. (_Macrisi_,
      Historia Monetae Arab., cap. 3 ed., _Tychsen_.) Harun Alraschid’s
      income was estimated at about 7,500 cwt. of gold. (_Ritter_,
      Erdkunde, X, 235.) Something similar related of the Carnatic, “the
      land of ancient emporiums.” _Ritter_, Erdkunde, V, 564, after
      _Ferishta_.

  720 The use of the _cauris_ (_Cypræa moneta_) in India this side and
      beyond the Ganges, in upper Asia, and in southern Africa depends on
      their employment for purposes of ornament, on their greater
      uniformity, and on the rarity of copper which would otherwise be
      better suited to purposes of change. In Calcutta, 1280 _cauris_ are
      equivalent to about half a shilling. (_McCulloch._) Compare _K.
      Ritter_, Africa, 149, 324, 422, 1038; Asien, I,964; II, 120; III,
      233, 739; IV, 53, 420; _Salin_, III, 62; _Botz_, in the Tübinger
      Ztschr. Similarly among the fishing population of Northwestern
      America. (_Stein-Wappäus_, Handbuch I, 352.) Salt as money on the
      Chinese-Birman boundary (_Marco Polo_, 38), but especially in the
      interior of Africa, where nature does not at all produce it, but
      into which it is brought by caravans from the deserts, where salt is
      found in great quantities. _M. Polo_, Travels, 305, found the
      current price of a salt-tablet, two and a half feet long, one foot,
      two inches broad, and two inches thick, to be equal to the value of
      two pounds sterling among the Mandingos. In Abyssinia, the salt-bars
      are generally six inches long, three inches broad, one and a half
      inches thick, and they are bound with an iron ring to protect them
      against fracture. Sixty of them are worth one thaler. (Ausland,
      1846, No. 35.) Slaves used as money: _Barth_, Reise, III, 338, 344.
      Tea-blocks in upper Asia and Siberia; and they are given by the
      Chinese to the Mongols as pay for troops. (_Ritter_, Asien, III,
      252,) In Keachta, a tea-block is equal in price to one paper ruble.
      (Ausland, 1846, No. 20. _Timkowski_, Reise nach China, 143.)
      Date-money in the Sivah oasis. (_Hornemann_, Reise, 21.) Also in the
      Persian date-country, where, formerly, the lowest silver piece of
      money was coined in the form of a date (_Ritter_, Asien, VIII, 752,
      819.)

      The ancient Mexicans used as money cocoa-nuts, in bags of 24,000
      pieces, cotton-stuffs, small pieces of copper, and gold dust in
      quills. (_Humboldt_, N. Espagne, IV, 11.) Cocoa-beans are still used
      as small change there. (Ibidem, IV, 10.) On the Amazon, wax-cakes
      weighing one pound are used. (_Smyth_, Journey from Lima to Para,
      1836.) Among the ancient inhabitants of Rügen, linen (_Helmold_, I,
      39); and still among the Icelanders, the so-called _Vadhmâl_. During
      the middle ages, 120 ells of _Vadhmâl_ were equal in value to one
      milch cow or six milch sheep, or two and a half ounces of silver.
      (_Leo_ in _Raumer’s_ histor. Taschenbuch, 1835, 515.) That the
      ancient northern mode of valuation, by the _Vadhmâl_ and in cows is
      older than by the _mark_ is shown by _Wilda_, Gesch. des deutschen
      Strafrechts, I, 331. The cod-fish money used by the Icelanders was,
      on account of its great commercial importance as an article of
      export, an advance upon the use of the _Vadhmâl_. Among the Caffirs,
      besides _cauris_, mats, javelins, glass corals, but particularly
      brass rings, are used as money. From three to four hundred of these
      rings are strung together, and two such strings are equal in value
      to one cow. (_Klemm_, Kulturgeschichte, III, 308, 320 f.) Ivory used
      as money in the neighborhood of the Portuguese colonies in Africa.
      (_Martius_, Reise, II, 670.) In Logone, _Denham_ (1822) ff., had met
      with pieces of iron as a medium of circulation; but on the other
      hand, _Barth_ (1849), with small strips of cotton from 2 to 3 inches
      in breadth, and shirts for larger sums. (A. R., III, 274, 297, 538.)
      In colonies, money of this nature is continued for a long time. Thus
      cod-fish used in Newfoundland, sugar in the English West Indies
      (_Adam Smith_, I, ch. 4), tobacco in Maryland and Virginia.
      (_Douglas_, V, 2, 389; _Ebeling_, V, 435 ff.) The last was related
      to the inspection and storage of the tobacco intended for
      exportation. Payment was made in orders on the stored and inspected
      tobacco, even as late as the end of the eighteenth century. In 1618,
      the forced circulation of tobacco was decreed in Virginia, and under
      severe penalties. (_Gouge_, History of Paper-Money and Banking in
      the United States, ch. 1.)

  721 When the caravans no longer touched at the oasis Agades, gold and
      silver money fell into disuse, and grain, stuffs etc. did service as
      instruments of circulation. (_Barth_, Reisen und Endeckungen, I,
      144.)

_  722 Ad. Müller_ says very pertinently, but in a very mystical vein,
      that the precious metals combine in a very high degree and yet in a
      very simple manner, the principal qualities in which man’s greatness
      finds expression: rarity, flexibility, uniformity, mobility,
      durability and beauty. (Elemente, II, 266.) In another place, he
      says, the highest ideal good is God, the highest material good,
      gold! (III, 65.) The mysticism of gold was most highly developed
      among the alchymists of the sixteenth and seventeenth centuries.

  723 Iron beds are worked only when they contain at least 18 per cent. of
      metal. Generally it is estimated that the furnace should yield 30
      per cent. In the copper mines of Mansfield, Norway, Agordo and
      Venice, it goes as low as from one to three per cent. On the other
      hand, silver mines which yield 0.17 per cent. of metal are
      considered worth working. Lastly, gold is so rare that generally it
      can be extracted only from time to time by the ordinary mining
      processes. As a rule, men are content to gather it where nature has
      charged itself with its refining. The extreme limit of the working
      of gold appears, according to _Plattner_ and _Haussmann_, at Goslar,
      to be reached when in 5,200,000 parts of mineral earth there is one
      of gold. Spite of this, however, by reason of their great ductility,
      the precious metals have been able to penetrate even into the
      meanest huts in one form or another. It has been estimated that a
      silver leaf may be attenuated by beating to a thickness of only
      0.00001 of an inch, and a gold leaf to 0.0000035 of an inch. An
      ounce of gold spread on a silver thread may attain a length of
      13,000 English miles. (_McCulloch._)

  724 How easily, for instance, could leather-money, such as was used by
      the ancient Galls (_Cassiodor._, Varia, II, 32,) be increased to any
      desired quantity, and thus its price brought down.

_  725 Engel_, at the usual tariff for land and railroad freight (10 and 5
      _pfennigs_ per mile and hundredths of a mile) estimates the
      enhancement of the price of the following commodities, for one mile
      of transportation of a custom-hundred-weight (_Zollcentner_) at the
      following percentage of their average value:

      Gold, value 47610 German _Reichsthaler_ per cwt., 0.000007 by land,
      0.0000035 by railroad.
      Silver, value 3000, 0.00111 by land, 0.00055 by railroad.
      Cotton, value 45, 0.074 by land, 0.037 by railroad.
      Tin, value 24, 0.1389 by land, 0.0694 by railroad.
      Lead, value 8, 0.416 by land, 0.208 by railroad.
      Iron, value 2.5, 1.333 by land, 0.666 by railroad.
      Rye, value 2, 1.666 by land, 0.833 by railroad.
      Potatoes, value 0.6, 5.555 by land, 2.777 by railroad.
      Coal, value 0.12, 27.777 by land, 13.888 by railroad.

      Their great specific gravity, also, makes the precious metals easy
      of transportation. Thus _Cazeau_ calculates that a given value of
      gold is 17,222 times as easy to transport as the same value in
      wheat. But as, where the weight is the same, the labor of
      transportation is inversely as the volume, this number must be
      multiplied by 26, and we therefore have 447,772 times. In the case
      of silver, the relation to wheat is as 1:15,554. Concerning copper,
      see _Storch_, Handbuch 1, 488. _Chevalier_, Cours, III, 17 ff.

  726 This, at bottom, is also true, of the various kinds of copper; only,
      here, complete refining is impracticable on account of the relation
      between the cost of production and the product-price.

  727 On the other hand, copper, and still more zinc, tin and lead lose
      much of their value in the fire. Pearls may lose their entire value
      by fire, and diamonds more than half of it.

_  728 Aqua-regia_, a mixture of nitric and muriatic acid, dissolves gold.
      Chlorine and bromine attack it. It has been noticed to vaporize at a
      very high temperature. A gold thread vaporizes when a strong
      electric current is passed through it. A small ball of gold gives
      off a great deal of vapor if placed between two carbon points and
      subjected to the action of a powerful galvanic pile. (_K. F.
      Naumann._)

  729 Compare _Hatchett_, Experiments and Observations of the various
      Alloys, On the specific Gravity and comparative Weight of Gold,
      1863. The French five-franc pieces wear away, on an average, in a
      year, 0.00016; the English crown, 0.00018; the half crown, about
      0.00173; and the shilling, about 0.00456. (_L. Liverpool_, Treatise
      on the Coins. 204; _M. Chevalier_, Cours, III, 128 ff.) The wear
      from use of the south German gulden is 0.292 per 1,000. (_Rau_, in
      the Archiv. N.F.X, 256.) According to _Jacob_, the average wear of
      coin is 2.38 per 1,000. (Historical Inquiry into the Production and
      Consumption of the Precious Metals, ch. 23.)

_  730 Adam Smith_, Wealth of Nations, I, ch. II, Digr.

_  731 Solera_, Sur les Valueurs, 1785, 271 ff.; _Custodi_. Half an ox,
      for instance, is worth half the value of a whole one only for a few
      well defined purposes. As to how much the value of the diamond
      varies with the size etc., see _Dufrênoy_, Traité de Minéralogie,
      II, 77 f. On the other hand, the separated parts of a piece of metal
      are very readily reduced to a whole.

  732 In the case of the ox, it is impossible to imagine a mark which
      might not be eluded by its losing flesh.

  733 The cost of coinage since 1849 has been ¾ of 1 per cent. in the case
      of silver, and in that of gold not quite 2 per 1,000. (_M.
      Chevalier_, Cours, III, 110.)

  734 Platinum possesses many of the properties necessary to an instrument
      of exchange in as high a degree as gold and silver,—great value in
      exchange, great specific gravity and great durability. On the other
      hand, its pliability as to form is very small, and therefore the
      cost of coining it would be high. The conversion of platinum coins
      into utensils, and of utensils into coin, which would contribute to
      the supply of money when needed, and to a diminution of that supply
      when the demand decreased, would be much more difficult on this
      account; and also because of the small degree of beauty possessed by
      that metal, which renders it little adapted to purposes of luxury.
      Under these circumstances, the rarity in nature of the metal is a
      great drawback; for the discovery of a new mine would create a great
      perturbation in prices. For this reason, the Russian platinum coins
      have been generally very much undervalued since 1828 in the
      commercial world, and the whole experiment was given up in 1845-46.
      Compare _J. Schòn_, National Œkonomie, 128 ff. Aluminum, discovered
      by Wöhler, and which can be prepared from argillaceous earth, is
      capable of manipulation in a very high degree (_malléable et ductile
      à peu près sans limite, excessivement fusible_), almost as
      indestructible as the precious metals, but easily distinguished from
      silver by a fine bluish color, which has been compared to that of
      tin; by its small specific gravity, from 2.5 to 2.67, and its ring
      like that of iron. Hence it is very doubtful whether aluminum can be
      made to play the part of a substitute for silver, and still more so
      whether it can be used for coining.

_  735 Lingot, bullion_. In India, beyond the Ganges, and in China, bars
      are very much used. (_Sycee._) In the latter country, besides these
      bars, there is no coinage except that of a mixture of copper and
      lead, for small change. (_Th. Smith_, An attempt to define some of
      the first Principles of Political Economy, 31. _Timkowski_, Reise
      nach China, III, 366.) Concerning Brazilian trade by bars, see _Spix
      und Martius_, Reise, I, 346 f. They are stamped with the national
      coat of arms, the sign of the mint, the number by which registered,
      that of the year and of the degree of fineness. Concerning the
      Persian bars, the _laries_, see _Noback_, Handbuch der Munzverrh.,
      III, Taf. 29.

  736 Concerning the utility of the precious metals for purposes of money,
      see _Pliny_, A.N. XXXIII, 3; _Oresmius_, De Mutatione Monetarum, ch.
      2; _Law_, Sur l’ Usage des Monnaies, 683 f. _Daire_, where we read
      that before the invention of money, silver had served all kinds of
      useful purposes, but that now it served its most important purpose,
      namely the making of the best material for money on many accounts.
      Yet _Law’s_ book, Money and Trade considered (1705) is based mainly
      on the idea that pieces of land are much better adapted for purposes
      of money than the precious metals (185)! _Galliani_, Della Moneta,
      1750, I, 3, 4, and _P. Neri_, Osservazioni, 1751 ff, Cust., have
      very correct ideas on this subject.

_  737 North_, Discourses upon Trade, 16. The capacity of money to act as
      a storer of wealth has been as much over-estimated by the so called
      Mercantile System, as its capacity to transfer wealth has been by
      the so called currency-school.

_  738 Adam Smith_ compares money to a large wheel, by means of which a
      due share of the means of subsistence and of enjoyment is
      distributed to each member of society. Elsewhere he compares its
      utility to streets and roads. (Wealth of Nations, II, ch. 2.)
      _Hume_, On Money, Pr., prefers to compare it to the oil with which
      the wheels of circulation are greased. _Sismondi_ compares money to
      porters. (N. Principes, II, ch. 2.) “Money is to commerce what
      railways are to locomotion, a contrivance to diminish friction.”
      (_J. S. Mill._) According to _Schmitthenner_, 455, it bears the same
      relation to other commodities that the written language of a
      people’s literature does to their dialects.

_  739 Law’s_ views on money are, in part, excellent. Thus, for instance,
      he says that the debasement of the coin from financial necessity is
      as great a folly as it would be to try to enlarge a piece of goods
      too small for the purpose for which it was intended, by diminishing
      the length of the yard-stick. (Sur l’Usage des Monnaies, 697.) A
      country entirely isolated from all others could get along as well
      with one hundred pounds sterling as with a million. (Money and
      Trade, p. 88.) Elsewhere, he confounds money and capital to such a
      degree that he considers every increase of the amount of money in a
      country as an enrichment of the people, a means to give employment
      to the poor, to carry on manufactures etc. (Money and Trade, 23, 26
      ff., 168.) A given quantity of money is capable of giving employment
      at most only to a certain number of men. (21.) A nation’s power and
      wealth depend on the population and its stores of goods, these on
      commerce, and commerce in turn on the amount of money. (Pp. 110,
      220.) The advice given, in 1848, to the National Assembly of France,
      but which it had the good sense to reject, to overflow all France
      with the so-called _bons hypothécaires_, is akin to Law’s practical
      propositions. _M. Chevalier_, Cours, III, 8, rightly ridicules the
      literal construction of the words: _l’argent est abondant_, when
      merchants find it easy to obtain credit, and considers it as well
      grounded as it would be to infer from the maxim: _l’argent est le
      nerf de la guerre_, that rifles and bullets were made of silver.

_  740 Adam Smith_ was not entirely clear, in his own mind, on this point.
      Thus inconsistently enough, he calls money unproductive—“dead
      stock,” for the reason that it leaves no material traces behind it
      of the goods which it has transferred from one hand to another. (II,
      ch. 2.) Is not the same true of trade itself? And yet Adam Smith
      calls trade productive. His error is doubtless a remnant of the
      Physiocratic doctrine, to which Smith still held. Compare _Quesnay_,
      94, éd. Daire. Even _Twiss_ says that money employed as money is
      unproductive, but that, when employed as a commodity, it is
      productive. (View of the Progress of Political Economy, since the
      sixteenth Century, 1847.) Besides it is not a peculiarity of money
      alone, that, after it has served the purposes of production, it
      comes out of the product unaltered. The same is true of quicksilver
      employed in amalgamation. (_Hermann_, 2nd edition, 302.)

_  741 Senior_, Three Lectures on the Value of Money, 1840, is, in so far,
      not wrong when he says that the value in exchange of the precious
      metals is still ultimately determined by the want of such
      commodities as are luxuries. This last determines to what extent the
      production shall be extended by the working of the poorest mines,
      whereas the wants of circulation can be met as well by small as
      large quantities of the metals.

  742 The good or bad result of this production depends on many different
      elements which may compensate on another. In California and
      Australia gold is to be found in large quantities, and is easily
      mined; but the workmen make large demands which the nature of the
      country renders it difficult to meet. In the Harz mines, where the
      cost is scarcely covered, (_Lehzen_, Hannover’s Staatshaushalt,
      1853, I, 139), the shafts are sometimes 175-½ fathoms deep, but this
      is made up for in a measure by the moderate demands of the workmen
      and their skill in mining. Among the Mandingos, the auriferous
      material is so rich that ⅓ per 1,000 of the weight of the sand is
      washed out into pure gold in ten minutes (_M. Park_, Journal, 53
      ff., addenda, XIX), while in Europe, where the proportion is only
      1/100 per 1,000, mines are still considered worth working. But then,
      what workmen there are there! In Peru, the burdensome height of the
      mines above the level of the sea and the want of combustible
      material more than counterbalance many favorable advantages, while
      in Norway the cheapness of wood compensates for a great many
      disadvantages. Another thing which contributes towards the
      uniformity of the price of the precious metals is the circumstance
      that the great amount of fixed capital required in the greater
      number of mining enterprises, postpones for a long time the working
      of good mines as well as the abandonment of poor ones.

  743 Older writers have estimated the amount of money necessary in a
      country at 1/5, 1/10 (_Petty_), 1/15, and even 1/30 of the yearly
      income of a people (_Adam Smith_, II, ch. 2.) According to
      _Cantillon_, Sur la Nature du Commerce, p. 73, it is from 1/6 to
      1/10 of the annual gross production of a nation.

_  744 Davanzati_, Lezione sulle Moneta, 1588, 32 ff., Cust., thinks that
      all terrestrial things which serve to satisfy the wants of men are,
      by virtue of agreement, equal in value to all the gold, silver and
      copper; and that the parts comport themselves as the whole. The
      price of a commodity is based on this, that men find in it as much
      of their _beatitudine_ as is afforded them by a given quantum of
      gold etc. Similarly, _Montanari_, who adds as a limitation the
      quantity of money _spendibile in commercio_. (Della Moneta, 45, 64,
      Cust.) The same opinion leads _Locke_ to the singular conclusion,
      that, as there is now in the world, ten times as much silver as
      there was previous to the discovery of America, each single piece of
      silver, separately considered, and taken in relation to such
      commodities as have not varied, is worth only one-tenth of what it
      was then. _Locke_, here, starts out with the gross assumption,
      shared even by _Ganilh_, Théorie, II, 386 ff., that in the case of
      money the demand is always, relatively speaking, equally strong and
      just as great as the supply, or as the amount in the market. (Works,
      II, 23 ff.) Further, _Montesquieu_, Esprit des Lois, XXII, 7, 8. Per
      contra, however, see _Montesquieu_, ibid. XXII, 5, 6, and _Hume_, On
      Money and on the Balance of Commerce, Essays II, 1752.

      Hume knew perfectly well, that only circulating money and
      circulating commodities operated on price, but failed to take the
      rapidity of circulation into account. Similarly, _Forbonnais_,
      Eléments du Commerce, II, 212; even _Canard_, Principes, ch. 6;
      _Fichte_, Geschloss. Handelstaat, 93 ff., and _Stein_, Lehrbuch, 58.
      Contested by _Law_, Trade and Money considered, 140, a work directed
      especially against the Mercantilistic essay, Britannia languens;
      1680, by _Mélon_, Essai politique sur le Commerce, ch. 22;
      _Genovesi_, Economia civile, 1764, II, 1, 15; _Steuart_, Principles,
      II, ch. 28; _Verri_, Meditazioni, XVII, 3 ff.; _Büsch_, Gedlumlauf,
      II, 40. The simple taking of an inventory of most private resources
      which possess so much greater value in other commodities than in
      money is enough to demonstrate the error of _Davanzati’s_ doctrine.
      Thus, in France, in Necker’s time, the cash money in the kingdom was
      estimated at 2,200,000,000 livres, and the average value of the
      wheat crop alone at 1,000,000,000. _Necker_, Législation et Commerce
      des Grains, 1776, I, 215. Recently, _Michel Chevalier_, estimated
      the amount of money in France at from 3-½ to 4 milliards, while the
      official estimate of its immovable property alone was over 83
      milliards.

  745 When money becomes dearer, less of it is of course needed; and when
      cheaper, more, for the same purpose.

  746 In contradistinction to presents, acts of spoliation, but especially
      to barter.

  747 The discoverer of this truth is supposed by many to be _Bandini_,
      Discorso economico, 1737, 141 f., Cust. _Berkely_, however, in the
      Querist, 1735, 477 f, writes: “A sixpence twice paid is as good as a
      shilling once paid.” Much earlier yet, in 1797, _Boisguillebert_,
      Détail de la France, II, 19, had the germ of this doctrine, but he
      confounds circulation with consumption. And _Locke_, Considerations,
      II, 13 ff., presented it in 1691 with great clearness, although he
      did not always remain true to his theory. Compare _Quesnay_, éd.
      Daire, 64; _Cantillon_, 159 ff., 382.

  748 If the number of annual exchanges effected by 1 dollar = u; the
      total number of dollars in the store of money = m; the rapidity of
      circulation, that is the number of exchanges effected on an average
      by each dollar in a year, = s: then is u = m s, s = u/m, m = u/s.

  749 Since good money is so easily stored away and preserved, no one is
      in haste to get rid of it. _St. Chamans_, N. Essai sur la Richesse
      des Nations, 122 ff.

  750 Among the Kurds, all the money in their camps is used for
      head-ornaments for their women. (_K. Ritter_, Erdkunde, X, 887.)

  751 Thus, _Sir David North_, Discourse on Trade, 1691, Postscr.

_  752 Lotz_, Handbuch, 377, is of opinion that even in England £100,000
      employed in trade in land can scarcely effect exchanges to the
      amount of £1,000,000 in a year. The same sum employed for the same
      purpose in London, in stocks and in the trade in commodities, will
      effect exchanges to the amount of £160,000,000.

_  753 Cernuschi_, Mécanique de l’Échange, 1865, 132 ff.

  754 Thus _Petty_ (ob. 1687) is of opinion that England needed as much
      money as ½ of all its ground-rents amounted to, as the ¼ of all
      house-rents, and 1/52 of all the wages of labor for a year; for the
      reason that ground-rents are paid semi-annually, house-rents
      quarterly, and wages weekly. (Several Essays, 179; Political Anatomy
      of Ireland, 116.) _Locke_, on the other hand, assumes 1/50 of the
      wages of labor, ¼ of all the revenue of land owners, and 1/20 of the
      amount cash money taken in in a year by merchants. Of these amounts,
      there should be always, at least, one-half in ready money on hand,
      if commerce would not be brought to a stand-still. If leases were to
      be paid for on short terms, a great saving of money would be
      possible. (Works, II, 13 ff.) _Pinto_, Traité du Crédit et de la
      Circulation, 34, calls special attention to the case of Tournay, in
      which the commandant, during the siege of 1745, made 7,000 florins
      serve him for seven weeks to pay the garrison; by borrowing that sum
      anew every week from the inn-keepers etc.; which they, again, had
      received from the soldiers.

  755 If all were to commit their payments to the care of the same banker,
      it would be possible to do with almost no money. But even now, if
      100 separate merchants were obliged to keep each 3,000 dollars in
      their money-chests for unforseen contingencies, a banker might
      accomplish the same for them with 50,000 dollars, because it is not
      probable that the unforseen contingencies in question would occur to
      all at the same time.

  756 In the London Clearing-House, in 1839, £954,401,600 were paid by
      means of the use of £66,275,600 as a circulating medium, for the
      most part notes of the Bank of England. (_Tooke_, Inquiry into the
      Currency Principle, 27.) From May, 1868, until May, 1869,
      £7,068,078,000. (Statist. Journal, 1869, 229.) The New York Clearing
      House, in 1867, effected payments to the amount of £5,735,031,900
      (Ibid., 1867, 577), and in 1868, $30,880,000,000. (_Hildebrand’s_
      Jahrb., 1869, II, 168.)

  757 This system began in the middle of the seventeenth century. (A
      Discourse of Trade Coyn and Paper Credit, 64.) As early a writer as
      _Sir J. Child_, N. Discourse on Trade, 46, says, that for some time,
      every man who had from £50 to £100 in money, sent it to his banker,
      and that since that time, all the money flowed towards London and
      the country was deprived of it. (127 ff.) As a rule, the goldsmiths
      were also bankers. One such smith had at the time of the Great Fire
      of 1666, emitted £1,200,000 in notes. (A Discourse etc., 67.) The
      Bank of England, as a money center, dates from 1694. The London
      banks developed into intermediaries principally before the time of
      the French Revolution. (_Thornton_, Paper-Credit of Great Britain,
      1802.) This remarkable institution had grown to vast dimensions even
      in Thornton’s time, although it has been much enlarged since 1825.
      (_Tooke_, History of Prices, 152 f.) Similar conditions among almost
      all highly civilized peoples. Thus in Greece, compare _Becker_,
      Charicles, I, 294. Concerning a person who had 14 talents’ worth of
      resources, 26 minæ, and therefore three per cent. in cash, see
      Lysias, adv. Diog., 6. In Rome, compare _Polyb._, XXXII, 13.
      _Cicero_, pro Font., I, 1. For Italian analogous cases, part of
      which may be traced back as far as the twelfth century, see
      _Lobero_, Memorie storiche della Banca de S. Georgio, 1832; or the
      Dutch “cassiere” Richesse de Hollande, I, 376, ff. In France an ever
      increasing centralization of the money-trade is to be noticed in
      Paris (_M. Chevalier_, Cours., III, 418); and now of the money-trade
      of Germany in Berlin.

  758 Compare _Fullarton_, On the Regulation of Currencies, 1845. Among
      the Dutch, the custom of using all commercial commodities as much as
      possible, as a basis of the circulating medium, was much earlier
      developed. (_Child_, Discourse on Trade, 65, 264 f.) In Great
      Britain, the aggregate amount of bills of exchange put in
      circulation was, in 1839, £528,000,000, which sum has been increased
      annually at the rate of about £24,000,000. (_Tooke_, Inquiry into
      the Currency Principle, 26.) Between 1828 and 1847, there circulated
      at the same moment, on an average, £79,127,000 in bills of exchange
      in England, and in Scotland, £17,380,000 (Athenæum, 1850, No. 175),
      and in Great Britain and Ireland, from £180,000,000 to £200,000,000.
      (_Tooke_, History of Prices, VI, 588,) According to _Macleod_, the
      bills of exchange and promissory notes together amounted to
      £500,000,000; bills of exchange, bank-notes and bank-credits, to
      over £600,000,000. (Elements, 12, 325.) _Macleod_ calls the currency
      the sum total of all debts due by every individual in the country.
      (Elements, 43.)

  759 A case in England, in 1857, in which a house with £10,000 capital
      failed with liabilities amounting to £900,000. (Report of the select
      Committee on the Bank Act, 1858, XV.) Or where a speculator with
      £1,200 made purchases on credit to the amount of £80,000, and then
      failed with a deficit of £16,000. (_Fawcett_, Manual, 442 f.)

  760 Remarked by as early a writer as _Davenant_, Works, IV, 106 ff.
      Compare, however, II, 238. _Quesnay_, éd. Daire, 75 ff. _Lord King_,
      Thoughts on the Effects of the Bank Restriction, 1804, 17 ff.
      Exhaustively treated by _Chevalier_, Cours., III, 397 ff. He very
      much laments the fact that the customs of France cause it to need
      from 3½ to 4 milliards of cash money, while England does a much
      larger trade with 1,200 millions. (I, 207 ff.) In France, it is said
      that the amount of money, in 1812, was 1,500,000,000 francs(?).
      (_Peuchet_, Statistique élémentaire, 473.) In Prussia, in 1805, it
      was 90,000,000 thalers. (_Krug_, Betracht. über den
      Nationalwohlstand des preuss. St., I, 244.) The annual amount of
      production in the former country was, 7,036,000,000 francs; in the
      latter it was estimated at 261,000,000 thalers, so that in Prussia
      the relation of money to national income was, as 1:2.9; in France,
      as 1:4.69.

  761 It is scarcely possible to determine exactly the amount of money in
      a country; for the reason that, outside of the suppositions of
      bankers etc., there is no authority which can be safely relied on,
      unless it be the reports concerning the coinage, and of the emission
      of paper money. The information, no less necessary, to be derived
      from the statistics of the importation and exportation of money, the
      melting down of coin by gold smelters etc., can never be exactly
      obtained. In England, at the end of the sixteenth century, the
      circulating medium was estimated at £4,000,000 (_Hume_, History of
      England, ch. 44, App.); under Charles II., at £6,000,000, when the
      population was 6,000,000. (_Petty_, Several Essays, 179.) About
      1711, _Davenant_, New Dialogues, 11 ff., mentions £12,000,000 as the
      amount; and _Anderson_, Origin of Commerce, a., 1659, £16,000,000 in
      1762. The circulation of gold, shortly before 1797, was estimated by
      _Rose_ at, at least, £40,000,000; by Lord _Liverpool_, at
      £30,000,000; by _Tooke_, at only £22,500,000. (History of Prices, V,
      130 ff.) _Moreau de Jonnés_, 1837, assumed £43,500,000 (Statistique,
      I, 329), and _Helferich_ (Schwankungen der edlen Met., 1843, 147),
      £45,000,000. _Sir Robert Peel_, estimated the amount in 1845 at
      £59,000,000, to which was to be added an average of £28,000,000 in
      bank notes, after deduction made of the metallic reserve. According
      to _Jevons_, the amount of British money is now £80,000,000 in gold,
      £14,000,000 in silver, £1,000,000 in copper; the sum total,
      including bullion and bank notes, after the deduction of their
      metallic representatives, £134,000,000. (Economist, December, 1868,
      July, 1869.) In France, _Vauban_, Dîme royale, 104 (Daire),
      estimated the cash money at about 500,000,000 livres, over
      750,000,000 francs, with which _Voltaire_, Siècle de Louis, XIV, ch.
      30, agrees so far as the year 1683 is concerned. In 1730,
      _Voltaire_, assumes the amount to be 1,200,000,000 of the coins of
      that time. _Necker_, Administration des Finances, III, 66, estimated
      it, in 1784, at 2,200,000,000 livres; _Mollien_, about 1806, at
      2,300,000,000. The valuations in Louis Philippe’s time varied from
      2,400,000,000 to 2,500,000,000 (Chamber of Deputies, April, 13,
      1847), and 4,000,000,000. (_Blanqui._) The valuations of 1870 were,
      according to _Wolowski_, 4 milliards; and to _Bonnet_, from 5 to 6
      milliards. Compare _Wolowski_, L’Or et l’Argent, 383 ff., Euquête,
      42. The German Zollverein is said to have had, at the beginning of
      1870 (_Soetbeer_) 480,000,000 or 520,000,000 thalers (_Weibezahn_)
      cash money.

      In Wirtemberg, _Memminger_, 1840, estimated the resources of the
      country at 1,600,000,000 guldens, of which 36,000,000 were cash; and
      the yearly gross income at 179,000,000 guldens; so that the money
      was 20 per cent. of the latter and 2¼ per cent. of the former. The
      annual sales = 226,000,000. Therefore the coin currency must have
      circulated on an average between six and seven times in a year. In
      the electorate of Hesse, there were _per capita_ 4 thalers, 18
      sgrs., 9 hellers, metallic money, and 3 thalers, 9 sgrs., 4 hellers,
      paper-money. (_B. Hildebrand_, Statist. Mitth., 1853, 185.) The
      amount of money in Naples, in 1840, was estimated at 42,000,000
      ducats. (_Scialoja._) It has been estimated that, in 1830, Spain
      possessed 1,725,000,000 francs. (_Barrego von Rottenkamp_, 330.)

_  762 Montanari_, Della Moneta, 52 ff.

_  763 David Hume’s_ very influential essay on the balance of trade does
      not give expression to this error, but he certainly was the occasion
      of making a great many of his disciples advocate it. It is related
      to the error mentioned in § 123. _Quesnay_, 101 (Daire) saw this
      point in a much clearer light. So did _Graumann_, Gesammelte Briefe
      vom Gelde (1762), 12 ff.; 73 ff.

  764 This is seen, for instance, when paper money is issued, in times
      when trade is thriving, and is withdrawn when this conjuncture
      ceases.

  765 Very well elaborated by _Fullarton_, On the Regulation of
      Currencies, 71 ff., 139 ff. Compare, however, _Becaria_, Economica
      publica, IV, 4, 27. When England on the occasion of the removal of
      the bank restriction in 1821 and 1822, caused £9,520,759 and
      £5,356,788 to be stamped, this powerful demand scarcely affected the
      gold-agio in Paris. (_M. Chevalier_, Cours, III, 157.) And, on the
      other hand, the system of assignats, developed during the first
      French Revolution, on so large a scale, had no influence on the
      price of silver in the rest of Europe. (_Lord King_, Thoughts on the
      Bank Restriction, 1804.) And so, _Tooke_, History of Prices, I, 205,
      describes a very large increase of the medium of circulation, after
      which the prices of commodities remained unchanged, corn fell,
      colonial products rose in price, both as they had done before, and
      from causes inherent in the commodities themselves. During the first
      years of the bank restriction, 1799-1801, grain rose very rapidly in
      price, while all trans-Atlantic products sank. (_Tooke_, I, 232 ff.)
      The unusually large importation of wheat from January 1, 1846, to
      January 14, 1847, was paid in France by a decrease of the bank
      metallic reserve (_encaisse_) to the extent of 172,000,000 francs.
      (_M. Chevalier_, Cours, III, 470.) An experienced practitioner in
      England is of opinion that an increase of bank notes to the amount
      of about £5,000,000 would not raise prices nor increase the tendency
      to speculation, but only enlarge the deposits of the bankers. But,
      if on the other hand, £5,000,000, by any sudden contingency, were to
      be put into the hands of the working classes, this money would, for
      the most part, enter immediately into circulation; the price of
      commodities would, therefore, rise and continue to rise until that
      amount had come into closer fists, as it would after some time.
      (_Tooke_, III, 156 ff., II, 323.)

  766 This explains the high price of gold in Farther Asia, which was
      formerly separated from America, the principal source of supply of
      the precious metals, by a journey around the earth, the then usual
      course of the world’s trade.

      The precious metals are generally higher in country places than in
      large cities, and in the interior than on the sea-coast. Since the
      public highways etc. in Germany have been so much improved, the
      difference in the value of money in upper and lower Germany has
      almost disappeared. (_Rau_, in the Archiv der polit. Oek., III,
      338.)

  767 Happy beginning of this doctrine in _Hume_, On the Balance of Trade.
      Further, _Thornton_, The Paper Credit of Great Britain, ch. 11.
      _Adam Smith_, on the other hand, claims that gold and silver,
      because they are costly superfluities are uniformly paid most dearly
      for, in the richest countries. (Wealth of Nations, I, ch. 11, 3:
      Digr.)

  768 Similarly in China, and even in Upper Egypt, the China, so to speak,
      of antiquity! Compare _Herodot._, II, 112 ff; _Homer_, Od., IV, 354
      ff. The religion of the Egyptians prescribed to them a mode of life
      which was scarcely practicable in foreign parts. They were
      systematically inspired with a horror for everything foreign. They
      had a strong antipathy for salt, fish and pilots. In Egyptian
      mythology, Osiris represents the Nile, Typhon the desert and the
      sea! (_Plutarch_, De Iside, 32.)

  769 The other party, of course, makes a profit also. He is in a better
      condition than if he wished to produce the desired commodity in his
      own country.

  770 The first clear germ of this doctrine, which is one of the most
      important theoretical principles of international-trade politics, is
      to be found in _David Hume_, On Interest; _Cantillon_, Nature du
      Commerce, 226, 369 ff. _Ricardo_, Principles, ch. 7. “Gold and
      silver having been chosen for the general medium of circulation,
      they are, by the competition of commerce, distributed in such
      proportions amongst the different countries of the world, as to
      accommodate themselves to the natural traffic which would take place
      if no such metals existed, and the trade between countries were
      purely a trade of barter.” _Rebenius_, Oeff. Credit, I, 29 ff. Still
      further developed, especially by _John Stuart Mill_, Elements, 1821,
      III, 4, 13 f.; _Torrens_, The Budget, 1844. _John Stuart Mill_,
      Essays on some unsettled Principles of Political Economy, 1844, No.
      1, and Principles, III, ch. 19, § 3, 5th ed.: “The opening of a new
      branch of export trade from England; an increase in the foreign
      demand for English products, either by the natural course of events
      or by the abrogation of duties; a check to the demand in England for
      foreign commodities, by the laying on of import duties in England,
      or of export duties elsewhere; these and all other events of similar
      tendency, should make the imports of England, bullion and other
      things taken together, no longer an equivalent for the exports; and
      the countries which take her exports would be obliged to offer their
      commodities, and bullion among the rest, on cheaper terms, in order
      to re-establish the equation of demand; and thus England would
      obtain money cheaper, and would acquire a generally higher range of
      prices.”

      Obscurely surmised by _Beccaria_, E.P., 3, 18, and even by
      _Galiani_, Della Moneta, II, 2. _Senior’s_ admirable work, Three
      Lectures on the Cost of Obtaining Money, 1830, follows up the
      thought that every country obtains indigenous and foreign products
      at a cost which grows smaller in the same proportion as the
      productiveness of its people’s labor is large. This would,
      certainly, explain why it is that perhaps one hundred English days’
      work in cotton manufactures will exchange against as much silver as
      is produced by two hundred days’ work in Mexican mines and
      foundries. This would not, by any means, produce a lowering of the
      price of the precious metals relatively to other English
      commodities, but the influence would be felt equally by all the
      products of English national industry.

  771 To be found in germ in _Cantillon_, Nature du Commerce, 1755, 249
      ff. 307. _Büsch_, Geldumlauf, 14. _Kaufmann_, Untersuchungen, I, 75
      ff. Many of the doctrines of the so-called Mercantile System, of
      which I shall treat in my projected work on the Political Economy of
      Commerce, have given expression to this truth in an inexact and
      exaggerated way; but they were not entirely erroneous, as is
      supposed by the adherents of Hume and Smith. However, _J. S. Mill_,
      Principles II, ch. 19, § 2, does not fully admit the degree of the
      cheapness of money in England usually assumed. According to him it
      is wants of luxury (luxury-wants) become such through habit, that
      produce “the dearness of living in England.”

_  772 Petty_ considers the search for a measure which could be applied
      both to land and labor as one of the principal problems of Political
      Economy. (Political Anatomy of Ireland, 62 ff.) _Sir J. Steuart_,
      Principles, III, ch. I, took the matter very easy by considering the
      so-called “coin of account,” for instance, “bank-money,” as an
      invariable value-magnitude. Compare _Jacob_, Grundsätze der National
      Œkonomie, II, 441 ff. _Cazaux_, Economie politique et privée, 1825,
      16 ff., has a not uninteresting study on this subject; but he goes,
      throughout his argument, on the assumption that the rate of interest
      is the price of money! If the rate of interest in two countries = I
      and i, the prices of the same commodity = P and p, the true
      thing-values, V and v; then we have v: V:: i p: I P!

_  773 Law_, Trade and Money, 181. Before him, and quite correctly,
      _Montanari_, Della Moneta, I, p. 84 ff., compares the means employed
      of measuring one commodity by another, to the means used to estimate
      time in terms of space, as when it is measured by the revolutions of
      the hands of a clock, and again, space in terms of time.

  774 The solvability or capacity to pay of buyers cannot be taken into
      consideration here, because it is synonymous with the amount of
      counter-values which are to be measured.

_  775 Adam Smith_, Wealth of Nations, I, ch. 5. Similarly _Luther_, vom
      Kaufhandel: Werke, ed. _Walch_, X, 1098 f. _B. Franklin_ considered
      the labor employed in the production of wheat as the best measure of
      prices. (Letter to Ld. Kames: Works, ed. _Sparks_, VII.) As Adam
      Smith, so also _Sismondi_, Richesse commerciale, I, 371 f.; _Kraus_,
      Staatswirthschaft, I, 84,; v. _Schlözer_, Anfangsgründe, I, 41. Also
      _Malthus_, in the second and succeeding editions of his Principles,
      ch. I, 6, and Definitions, ch. 8, 9. The Measure of Value, 1823.
      _Zachariä_, Vierzig Bücher, VII, 53 f., maintains that, at least
      within the limits of every separate nation, the average labor-power
      of one man is invariable. Assuming this principle, therefore, to be
      true, the means of subsistence necessary to support a laborer for
      one work-day constitutes, indirectly, a measure of prices. _Tooke_,
      History of Prices, I, 56, says that the amount of a day’s wages is
      always a better measure of the price of the precious metals than the
      price of wheat. Even in 1750, _Galiani_, Della Moneta, II, 2, had
      denied the impossibility of an entirely invariable measure of price
      in this world of change, but he considered man himself the least
      variable of measures, and in a country where slavery prevailed,
      slaves. He thought that the _macuta_ of the negroes were a part of
      the average price of slaves. Practically, Adam Smith’s proposed
      measure was used in the French constitution of 1791, in as much as
      it provided that participation in primary assemblies should depend
      on the participant’s paying an annual tax equal to the wages of
      three days’ work, and eligibility as an _èlecteur_, on the
      possession of an income equal in value to the wages paid for two
      hundred days’ day-labor. _Owen_ endeavored to base the value of the
      paper money in circulation in his Utopian commonwealth, not on any
      metal of a certain weight or stamp, but on hours of labor as the
      unit. (_Reybaud_, Réformateurs Contemporains, I, 255.)

  776 The wretched condition, until within a short time since, of the
      Irish working class, is well known; how they dwelt in mud cabins
      without windows, board-floors or chimneys etc., in the same
      apartment with their pigs; how they lived almost exclusively on
      potatoes, and went about in rags. These same Irish, _coelum, non
      animum mutantes_, received in North America for the coarsest kind of
      labor, 50 to 75 cents wages, besides wheat bread and meat three
      times a day, coffee and sugar twice a day, butter once, and seven or
      eight glasses of whisky or brandy. (_M. Chevalier_, Lettres sur
      l’Amérique du Nord, I, 159.)

  777 Thus in Mauritius, the immigration of the coolies has produced a
      decrease of negro wages, but an increase of negro industry. In the
      Barbadoes, the negroes are more industrious and their wages lower
      than in Jamaica. The wages of good workmen, as for instance during
      the commercial crisis in Manchester, often sink, while the wages of
      bad workmen rise; as, for example, in a village through which a
      railroad is made to pass. Compare _Lauderdale_ Inquiry, ch. 1;
      _Sartorius_, Abhandlungen, 1806, I, 16 ff.; _Lotz_, Revision, I, 99
      ff.; _M. Chevalier_, Cours, III, 88 f.

  778 Besides the passages cited in § 107, compare also _Harris_, On Money
      and Coins, II, 1757 f.; _Jacob_ also preceded _Ricardo_. See the
      German translation of _Say_, II, 435, 507.

  779 The introduction of the words “the socially necessary time of labor”
      into the formulæ does not make the measure any more practical for
      political economists or for socialists.

_  780 Cantillon_, who reduces all the cost of production to land and
      labor, considers the “at par” between these two to be this: that the
      labor of the meanest slave corresponds to the quantity of land which
      the owner is obliged to employ for his support, and the support of
      the slave and of the children who are to take his place. (Nature du
      Commerce, 42.) The Physiocrates thought that the internal (_innere_)
      value of two commodities stood in the same relation to each other as
      the area of land directly or indirectly necessary to their
      production. _Schlettwein_, Grundfeste der Staaten, 1792, 230.

  781 The so-called _Sachwerth_ (thing-value, real-value) of _Hermann_,
      St. Untersuchungen, 101 ff. Thus _Poulett Scrope_ recommended a
      “tabular standard,” to be officially established and renewed from
      time to time, to serve as an anchor to those persons who wished
      permanently to fix their money in such a manner as to make it
      exchangeable for an equal value in _things_. (Principles of
      Political Economy, 1833, 406.) Something of this kind was tried for
      50 commodities, between 1833 and 1837, by _Porter_, Progress of the
      Nation, 1st ed., II, 236 ff., then for 40 commodities by _Jevons_ in
      the Statistical Journal, 1865. Of course, all commodities of a given
      price are not equally important in this respect. Thus, for instance,
      a fluctuation in the price of diamonds would have no effect on the
      thing-value or real-value of a day’s wages, but it certainly would
      on the thing-value of a princely income. There are some excellent
      remarks on this very important subject in _Lowe’s_ work, On the
      Actual Condition of England, chs. 8 and 9. The controversy carried
      on between _Jevons_, A serious Fall in the Value of Gold, and its
      social Effects, 1863; Statist. Journal, 1865; and _Laspeyres_,
      _Hildebrand’s_ Jahrb., 1864, 81 ff.; 1871, I, 296 ff; in which the
      former recommends the geometric mean of the relative prices of
      separate commodities at different points of time, in order to
      calculate the average relative price: and the latter, as usual, the
      arithmetical mean, is very thoroughly reviewed and criticised by
      _Drobisch_, who shows that neither of these methods is sufficient,
      but that the quantity of every separate commodity must also be taken
      into account, for which he furnishes practical formulæ. (Math. phys.
      Berichte der _K._ Sächs. Gesellsch., 1871, I, 143 ff, 416 ff.) It is
      certain that a fixed income in money could maintain its real value
      or thing-value (_Sachwerth_) just as little if the cwt. of bread
      rose by as many dollars as the cwt. of pepper had fallen; as if the
      increasing price of bread depended on a decreasing price of pepper.

_  782 Senior_, Outlines, 187. In addition to this, we may draw from the
      thing-value of a day’s wages a right conclusion as to the economic
      condition of the majority of the people; and assuming the customary
      division of the national wealth, also as to the degree, to which the
      people have subjected the forces of nature to their service.

_  783 Ricardo_, ch. 22, refuted, indeed, only the view that an increase
      in the wages of labor produced by the higher prices of corn, would
      necessarily make all goods or products of labor, correspondingly
      dearer.

  784 Compare § 103. In Paris, in 1817, the _setier_ of wheat cost March
      5, 55½ francs; April 2, 57 fr.; April 23, 60 fr.; May 14, 63 fr.;
      May 21, 66 fr.; May 28, 75 fr.; June 4, 82 fr.; June 11, 92 fr.
      (_Tooke_, History of Prices, II, 17.)

_  785 Locke_, 98. When _Condillac_ asserts that wheat is the best measure
      of prices, he adds, when free trade in wheat obtains. (Commerce et
      Gouvernement, 1, 23.) _Fichte_, on the other hand, while advocating
      the despotic guidance of all trade by the state, would employ wheat
      as the fundamental measure of prices. (Geschl. Handelstaat, 47 ff.)
      That grain does not afford a good measure of prices in very highly
      cultivated nations nor in barbaric ones, see _Hermann_, II, Aufl.,
      451.

  786 The average price must be based on the prices of a great many years,
      since crops vary not only from year to year in price, but from
      decade to decade. See _Roscher_, Nationalökonomik des Ackerbaues, §
      152, and _Roscher_, Kornhandel und Theuerungspolitik, 47 ff. Great
      wars are wont to disturb agriculture in such a manner that the price
      of corn is very much increased by them. Hence, it is not
      unfrequently possible to use the prices of grain as a species of
      barometer to determine the real pressure of a war upon the economic
      life of a people. Judging by this standard, England suffered much
      less from the War of the Roses in the fifteenth century, than from
      the civil wars in the seventeenth; and less than France from the
      religious wars of the sixteenth. The war year 1631-2, in which
      Gustavus Adolphus and the emperors had to spare the country, must
      have been far less oppressive for Saxony than the later Swedish
      campaigns. _Roscher_, in the Tübinger Zeitschrift, 1857, 471.

  787 Most countries go through these successive periods in their corn
      trade: in the first, exportation preponderates; in the second, there
      is an equilibrium; in the third, importation preponderates. (_M.
      Chevalier_, III, 74 ff.) Compare _Tacit._, Ann., XII, 43. Omitting
      the two dearest and the two cheapest years, the Prussian provinces
      were circumstanced as follows:

      In The Whole Kingdom, the price of Rye, 1816 to 1837, was  40.
      silver groschens. The population per square mile, 2,776
      In Prussia, 32.2 silver groschens, and 1,827
      In Posen, 34.3 silver groschens, and 2,180
      In Brandeburg, Pomerania, 38.4 silver groschens, and 2,093
      In Saxony, 40.3 silver groschens, and 2,366
      In Silesia, 38.0 silver groschens, and 3,612
      In Westphalia, 47.7 silver groschens, and 3,600
      In Rhine Province, 49.4 silver groschens, and  5,078

      _Rau_, Lehrbuch, I, § 183. As to when it may be assumed that the
      price of corn has remained unchanged, see _Hermann_, loc. cit., 125
      ff.

_  788 Petty_ recommended the average daily food necessarily required by
      one man as the measure of price, estimated on the basis of the
      cheapest means of subsistence. (Polit. Anatomy of Ireland, 62 ff.)
      _Thaer_ used as such a measure the smallest day’s wages; as he
      supposed, expressed in rye, that is, 1/9 of the Prussian _scheffel_.
      Similarly, _Malthus_, in his first edition, and _Buquoy_, Theorie
      der Nationalwirthschaft, 240. But this is simply to substitute for
      wheat an arbitrarily determined quantity and quality of the same as
      a measure of prices. For practical experiments of this kind, made by
      the depreciation of paper money during the French Revolution, see
      _M. Chevalier_, Cours, III, 98; and Constitution de 1795, V, 68, VI,
      173. _Count Soden_, Nat. Œk., II, 338 f., demands that all taxes,
      salaries of state officials etc., should be regulated in accordance
      with the price of corn. This same view has been suggested recently
      in many German States.

  789 Recognized generally by _Locke_, Considerations 24. Further,
      _Galliani_, Della Moneta, II, 2; _Adam Smith_, I, ch. 5. _Schäffle_,
      N. Œk., II, Aufl., 127, maintains that a constant measure of price,
      such as would enable a person to stipulate for a salary for instance
      that would be always of the same value, is impossible. Similarly,
      _Hildebrand’s_ Jahrb., 1871, 315 ff.

  790 Compare _J. Tucker_, Four Tracts on political and commercial
      Subjects, 28 ff., who maintains that it is a rule, almost without
      exception, that “operose or complicated manufactures” are cheapest
      in rich countries; “raw materials,” in poor ones. Thus, for
      instance, corn (?), garden products in the former; cattle, wool,
      milk, skins, flesh-meat, in the latter. Ships and movable property
      are cheaper in the former, whereas wood may be said to be almost the
      free product of nature here. See especially _Adam Smith_, Wealth of
      Nations, ch. 11, Digr.

_  791 Senior_, Outlines 119 f., makes the following calculation: Of the
      15d. which a loaf of bread costs in England, 10d. goes to buy the
      wheat, the other 5d. to the miller, baker etc. If now, we suppose,
      that in consequence of an increased demand, and therefore of
      increased production under more unfavorable circumstances, the price
      of wheat should rise to 20d., the cost of production would possibly,
      because of an improved division of labor, come down to 3-¾d., and
      hence the price of the loaf of bread would be increased to 23-¾d. It
      is quite the reverse in the case of lace, because here a piece of
      raw material worth only 2 shillings may, by reason of the labor
      expended on it, become worth as much as £105. If the consumption of
      lace should increase so that the value of the raw material rose to 4
      shillings, the simultaneous decrease of the cost of manufacture to
      the extent of one-quarter of the aggregate price, would leave the
      price of the manufactured article £78, 19s.

  792 When, for instance, the inhabitants of the Baltic coasts, by way of
      preference, kept up their relations with the Hanseatic cities, the
      Dutch and English, that is with the most important industrial and
      commercial nations in their own sphere, they in all this pursued
      only their own interest. As to how this intercourse between “old”
      and “new” countries is susceptible of the very highest development,
      see _Torrens_, The Budget: On Commercial and Colonial Policy, 1844,
      and earlier, _Wakefield_, England and America, II, 1823.

  793 The clearing up of primeval forests, the cultivation of natural
      meadows, etc.

  794 In Hungary, during the sixteenth century, the choicest venison was
      consumed by plebeians and nobles alike. _Herberstein_, Rer. Moscov.
      Comm., 97. In Russia, even the lowest classes not unfrequently
      partake of roast hare and duck etc. _Kohl_, Reise in Russland, II,
      386. Still, in St. Petersburg, wild-fowl game rose between the time
      of Peter the Great and Alexander I. 600 per cent. in price.
      (_Storch_, Handbuch, I, 368.) In Pittsburg, in 1807, mutton, beef
      and veal cost from 4 to 6 cents a pound, and game only from 3 to 4-½
      cents a pound. (_Melish_, Travels through the United States, II,
      57.) The more the game laws are enforced, the longer does the low
      price of game continue, especially when it is not easy for the poor
      to procure them. The moderns have seldom thought of raising game
      artificially; among the Romans, artificial raising was confined to
      the hare and fieldfare. (_Varro_, R.R., III, 12 ff.; _Columella_,
      R.R., VIII, 10.) Hence, the enormous prices paid for game, of which
      _Pliny_, H. N. X., 43, relates an example from the time of the
      emperors. On the other hand, Polybius assures us that, in his time,
      game was to be had as good as gratis in Lusitania. XXXIV, 8, 7.

  795 In Buenos Ayres, in the nineteenth century, beggars on horseback
      were to be seen. (_Robertson_, Letters on South America, II, 294.)
      In Krasnojarsk, in 1770, 1-½ rubles was the price of an ox, 1 ruble
      of a cow, from 2 to 3 of a horse, from O.3 to O.5 of a sheep; O.15
      of a deer. (_Pallas_, Sibirische Reise, III, 5, II 12.) According to
      the Tables of Prices in _Sir F. M. Eden_, State of the Poor, Append.
      I, and _Rogers_, History of Agriculture and Prices (1866), I, 245,
      361, the following prices obtained in England;

      (On an average.)

      in 1125-26, one ox, 1 shilling; one quarter of wheat, 20 shillings;
      in 1260-1400, one ox, 13 shillings 1-¼d; one quarter of wheat, 5
      shillings 10-¾d;
      in 1406, one ox, 9-½ shillings; one quarter of wheat, 4-½
      shillings;
      in 1463, one ox, 10-20 shillings; one quarter of wheat, 1-⅔-4-⅔
      shillings.

      Compare _Hume_, History of England, a. 1327. Under Henry VIII. veal,
      beef, mutton and pork were food for the poor in England, and cost on
      an average 1-½d per pound; while wheat cost from 7 to 8 shillings a
      quarter. (24 Henry VII, c. 3. _Price_, Observations, II, 148 f.) The
      same appears from the “reasonable prices” which Charles I, in 1663,
      had established by sworn juries viz.: that the different kinds of
      meat were much cheaper comparatively than corn in our days.
      _(Rymer_, Foedera, XIX, 511. _Anderson_, Origin of Commerce, a.
      1633.) In many places in the highlands of Scotland, in the middle of
      the seventeenth century, one pound of oat-bread cost as much or more
      than one pound of the best meat. The union of Scotland with more
      highly civilized England soon changed the relation, so that in _Adam
      Smith’s_ time, good meat, in nearly all parts of Great Britain was
      worth from 2 to 4 times as much as the same weight of wheat bread.
      (Wealth of Nations, I, ch. 11, 1.) The Thomas Hospital in London
      paid, on an average, for good beef per stone weight:

      1701-1710: 1s. 7.9d.
      1764-1773: 1s. 3.7d.
      1794-1803: 1s. 5.d.
      1804-1821: 1s. 10.9d.
      1822-1842: 1s. 1.5d.

      (_Porter_, Progress of the Nation, III, 112.) Among the most certain
      proofs of the high degree of economic civilization attained in upper
      Italy about the close of the medieval times is the fact, that the
      price of cattle, compared with that of wheat in the thirteenth and
      fourteenth centuries, varies very little from what it is to-day.
      (_Cibrario_, Economia politica del medio Evo, III, 335-383.) Compare
      _Rau_, Lehrbuch I, § 185. In Athens, the cost of a _medimnos_ of
      wheat was as great as that of a sheep in Solon’s time. In the age of
      Demosthenes, it cost only half as much. (_Böckh_, Staatshaushalt der
      Athener, I, 107, 132.) It is obvious, however, that the price of
      meat compared with that of corn, was lowered by the great extension
      of the artificial cultivation of meadows; for, when the former has
      reached its maximum, it becomes a great spur to the promotion of the
      latter. Thus, in England, the price of meat, at the beginning of the
      sixteenth century, was on an average, higher than in _Adam Smith’s_
      time. (loc. cit.) To the same cause is to be ascribed the state of
      things in Prussia mentioned by _v. Podewils_, Wirth
      schaftserfahrungen, II, 15.

      As a common basis for such calculations, the following may be
      accepted. It is plain that meadows, pasturages and forage-fields
      must yield as much in meat, as corn-fields of the same dimensions of
      equal goodness, and situated as favorably, in corn. According to
      _Block_, a Prussian acre (_Morgen_) of the best quality, used as a
      meadow, produces a hay-value equal to 1,000 pounds, a clover-value
      equal to 2,420; as a vegetable field, a beet or potato-value equal
      to 6,050-6,930 pounds, _v. Lengerke’s_ estimate is that 110 pounds
      of cattle-fodder expressed in terms of hay, produces on an average
      40 pounds of milk, and from 3-½ to 4 pounds of meat. This would, at
      most, give 36, 88 and 220-252 pounds of meat. The yield of wheat,
      _v. Lengerke_ estimates, on the best soil, and on an average, at 14
      Prussian _scheffels_ (at 80 pounds, i.e. 1,120 pounds) yearly per
      acre (_Morgen_). The three periods in the history of the prices of
      cattle were clearly recognized by _Thaer_, Landw. Gewerblehre, 1815,
      100.

  796 It is a very characteristic fact, in relation to the river
      fisheries, that the fable that servants formerly stipulated not to
      eat salmon except twice a week is to be found in so many places.
      Thus on the Elbe and the Rhine. Compare _Thaarup_, Dänische
      Statistik, I, 112. In Scotland, about the end of the seventeenth
      century, the story in places ran, that it was five times a week.
      (_Walter Scott_, Old Mortality, ch. 8.) In England, fish seems to
      have been a tid-bit among the poorer classes in the fourteenth
      century. (_Rogers_, I, 606.) It was dearer especially during Lent.
      (Statist. Journ., 1861, 544 ff.) The artificial production of
      sea-fish seems to have been tried only by the ancient Romans. On the
      whole, _Adam Smith’s_ law that a ten-fold demand can, as a rule, be
      met only by a greater than ten-fold labor, applies here. (I, 370,
      ed. Basil.) But this relation is obscured to a certain extent, from
      the fact that the source of the production of sea-fish, the ocean,
      which may be claimed at any time by occupation, is, practically,
      boundless. Here, therefore, the improvements made in nautical
      science, and the progress of geographical knowledge, may yet for a
      long time compensate for the exhaustion of the nearer seas, and even
      more than counterbalance it.

  797 Among a great many nations in a low stage of civilization,
      agriculture consists in the burning down of the forest. In 1594, the
      Lauenförder forest produced 1,110 thalers’ worth of food for hogs,
      and wood to the amount of 44 thalers. (_v. Berg_,
      Staatsforstwirthsch., 213.) The Harzgerode woods, at the ducal line
      of Anhalt-Bernburg, were estimated at 6,000 thalers. A hundred years
      later, they brought in yearly 70,000 thalers, although, in the
      meantime, very little progress was made in the science of
      cultivating them, (_v. Justi_, Staatswirthschaft, II, 211.) We may
      form a notion of the relativity of the idea of the dearness of wood
      from the fact that in Bavaria, for instance, in 1840, there was a
      great deal of complaint, that in the district of Isark the price
      rose from 6 to 9 florins; in the districts of Regen and the lower
      Maine, from 11 to 14 florins to from 15 to 18; in the Rhine
      district, from 20 to 26 florins per cord (_Klafter_). (_Rau_,
      Lehrbuch, III, § 150, a.) Besides, the price of wood in the forest
      rises, with an advance in civilization, much more rapidly than it
      does in the market; in which last, labor and capital play a greater
      part. (_Rau_, I, § 385.)

  798 Plan for the artificial production of pearl oysters. (Novara-Reise,
      I, 303.) Ostriches seem now to be ceasing to be objects of mere
      occupation, and to be becoming objects of breeding. (Ausland, 1869,
      § 13.)

  799 Thus Wolff’s experiments made at Möckern have shown that in the case
      of sheep fed with hay, the wool becomes much heavier and the flesh
      leaner than those of sheep fed with a more concentrated food. While
      it is estimated in England, at the present time, that the wool of
      South-Down sheep is worth scarcely one-tenth what their flesh is
      (_Jacob_, On Corn Trade, 166), mutton, from the year 1260 to 1400,
      was, on an average, worth 17 pence; and this even at a time when
      prices were gradually rising; but the wool of one animal (1 lb., 7-¾
      ounces), 5-¼ pence. (_Rogers_, I, 362, 395.) Even under Anglo-Saxon
      kings the fleece was worth 40 per cent. of the value of the whole
      sheep, (_David Hume_.) And so _W. Macann_, Two Thousand Miles Ride
      through the Argentine Provinces, 1853, I, 151, says that in the
      interior of Buenos Ayres, he purchased 8,000 sheep at 18 pence a
      dozen, and after a march of 200 English miles, sold the skins for
      sixty pence a dozen. In Goya, formerly, a live horse cost 3 pence,
      its skin on the coast 12 pence; and the slaughtering of the beast
      cost 3 pence, the removal and cleaning of the skin 3 pence; and 3
      pence were paid for transportation. (_Robertson_.)

      In Ireland, in 1763, it not unfrequently happened that the skin and
      tallow of an ox cost as much in a commercial city as the whole ox
      had cost in the nearest market town. (_Temple_, Works III, 13.) In
      England, from 1260 to 1400, the average price of a whole cow was 9s.
      9d.; of the hide 1s. 8d., and cows were cheapest in the first
      decade, i.e., 6s. 2d., and the hides dearer than they were generally
      afterwards, i.e., by from 1-9-¼d. (_Rogers_, I, 361, 451.) In
      Saxony, according to _Engel_ (1853), the average price of horned
      cattle was about 46 thalers; of their hide, 4 thalers and 21 silver
      groschens. Russia exported, 1842-1847, 72,636,166 silver rubles
      worth of tallow, 1,832,137 silver rubles worth of horse hair,
      10,811,735 worth of bristles (_Borsten_), 7,387,140 of uncured
      skins, 36,159,452 of sheep’s wool, but flesh-meat only to the amount
      of 370,362 rubles, and entire animals to the value of 6,853,241
      rubles. (_P. Storch_, Der Bauernstand Russlands, 289 ff.) Tallow is
      there ten times dearer than the same volume of wheat. (_Steinhaus_,
      Russlands industrielle und commercielle Verhältnisse, 294 ff.);
      while in Saxony, according to _Engel_ (1821), a pound of wheat cost
      on an average 7.8 _pfennigs_, and a pound of tallow 30 _p._ However,
      Russia’s recent progress in civilization has had for effect: that
      the exportation of tallow (1833 = 4-½ million _puds_; 1869 = 2-¼
      mill.) has greatly fallen off; while that of butter and live stock
      has increased. (_v. Lengefeld_, R. im 19. Jahrh., 220 ff.)

      In England, during the fourteenth century, a pound of meat cost, on
      an average, ¼d.; of lard, from 1-½ to 2. (_Rogers_, I, 411.) On the
      other hand, from 1848 to 1856, the average January price of beef
      from America was 110 shillings; of tallow from St. Petersburg, 48s.
      11d. per cwt. (_Newmarch_.) And so, in the time of _Pallas_, the
      Cossacks chased the deer of their steppes only for the sake of its
      skin and horns. (_Pallas_, Reise, III, 524.) While the Greeks got
      horn from Macedonia and Thrace (_Herodot._, VII, 156), it is a
      striking proof of high civilization that at Athens (?), about the
      time of the hundredth Olympiad, an ox-hide was worth only 3
      drachmas, and the whole ox 77 drachmas. (_Böckh_, Staatshaushalt, I,
      105 ff.)

      As the ox is primarily serviceable as an object of food and an
      instrument of labor, and the sheep on the other hand, only an
      instrument to produce wool, it is easy to understand why, with the
      further advance of civilization, the price of oxen rises
      comparatively much more than the price of sheep. In Athens, during
      the time of Solon, an ox was equal in value to five sheep.
      (_Plutarch_, Solon, 23.) So also in countries with a low
      civilization in the time of Polybius. (_Polyb._, XXXIV, 8; _Gell._,
      XI, 1.) Why the same was the case in Rome at the beginning of the
      Republic? (_Plut._, Popl., 11). In England the proportion between
      the price of an ox and that of a sheep was,

      in 927 as 6:1 (_Henry_.)
      in 1125 as 3:1
      in 1182 as 6.3:1
      in 1197 as 9:1
      in 1229 as 8:1 (_Eden_.)
      in 1260-1492 (av.) as 9.2:1 (_Rog._)
      in 1497 as 10:1
      in 1500 as 11.6:1
      in 1511 as 8:1
      in 1528 as 10:1
      in 1529 as 12.8:1
      in 1531 as 9.4:1
      in 1551 as 10.6:1
      in 1597 as 8.2:1 (_Eden_.)

      At present the proportion may be from 10 to 20:1. In Saxony, it is
      as 48 thalers to 5.27. (_Engel_.)

  800 About 1793, Russia exported 10,000 rubles worth of fish, 452,000 of
      sturgeon bladders, 188,000 of caviar. (_Storch_, Russland, II, 184.)
      But this had undergone a great change even in 1850. At present,
      there are 64 per cent. of sturgeon bladders, 27 of caviar, and 7 of
      whole fish. (_Steinhaus_, Russland’s industrielle und commercielle
      Verhältnisse, 102, 368.) Yet the Astrakan fishermen still throw the
      greater number of the sturgeon they catch back into the water.
      (_Pallas_, Reise im süd. Russland, I, 189; _Steinhaus_, 99.) Salt
      fish are adapted for transportation to a distance not only because
      they can be preserved, but also because they may be caught and
      prepared on the great highway of the water. Athens got from the
      Black Sea besides wood, tar, wool, hides, cordage, honey, wax and
      slaves, also salt fish. (_Wolf_, z. Demosth. Leptin., 252; _Bockh_,
      Staatshaush. I, 51.) The latter from Sardinia, Egypt and Spain.
      (_Pollux_, VI, 48.)

  801 The principal countries that produce potash are Russia and North
      America. It is estimated that a cwt. of potash requires, on an
      average, 480 cwt. of wood. (_Pfeil_, Grundsätze der Forstwirthsch.
      in Bezug. auf National-Oekon. etc., I, 128.) From 1800 to 1840, wood
      for fuel in Würtemberg trebled its price; for building material the
      price increased 1.6 times. (Deutsche Vierteljahrsschrift, 1847, No.
      4, 104.)

  802 Whereas barbarous nations take little trouble to turn the milk from
      their cows to account (_Roscher_, Ideen z. Politik und Statistik der
      Ackerbausysteme, Archiv. der politische Œkonomie, neue Folge, III,
      202), _Reuning_, in 1844, calculated that the milk from all the cows
      in Saxony amounts to a value of 10,000,000 thalers, their meat to
      over 2,000,000, and the labor performed by them in various ways to
      3,000,000. In Silesia, in the last decade of the eighteenth century,
      a quart of milk was estimated to be worth 2 _pfennigs_ (Festschrift
      der deutschen Landwirthschaftsversammlung, 1869, 343), whereas as
      now it is sold almost everywhere for 12 _pfennigs_. (_Schmoller_.)
      In the rather high state of civilization which Saxony had reached at
      the end of the sixteenth century, when game was already dear, and
      the prices of other meat were almost as high as in 1800, a _sheffel_
      of rye was worth 44 measures (_Mass._) of milk, and recently 82-⅔
      measures. (_Schmoller_, Tübinger Ztschr., 1871. 336 ff.)

  803 The principal cheese-producing countries and cities are Holland,
      Limburg, Switzerland, Gloucester, Chester, Ayrshire etc. Compare
      _Roscher_, loc. cit., 195 ff.

  804 In England, in the year 1000, a cow was worth only as much as two
      sheep. (_Anderson_, Origin of Commerce, a., 979.) The best butter
      was worth only 1d. per pound in 1550, while pork was worth 1-1/8,
      veal and mutton, 1-½, and beef, 2-¼d. The price of butter was
      exceedingly variable in the sixteenth century. (_Eden_.)

  805 During the middle ages, pork constituted the most usual animal food
      even of the best classes. (_Büsching_, Ritterzeit und Ritterwesen,
      I, 164.) Immense importance attached to pork by the _Lex Salica_.
      (Tit., II, XIV; Emendatt. Caroli Magni, II, 1 ff.) The archbishop of
      Cologne used every day 24 large and 8 medium-sized hogs, and four
      more on the three great festivals. The abbot of Corvey used daily
      five fat and one lean hog, besides two young ones. (_Kindlingen_,
      Münsterische Beitr., Urkunden, 147, 126.) In 1345, at the court of
      Dauphiny, there were used annually for 30 persons, 30 salt and 52
      fresh hogs; whereas, in modern Paris, with 800,000 inhabitants, only
      32,000 hogs are consumed yearly. (_Roquefort_, De la Vie privée des
      Fr., I, 310 f.) Compare herewith the place occupied by the
      swine-herds in the Odyssey in Greece’s age of chivalry. In England,
      in the time of William I., woods were taxed according to the number
      of hogs they might feed. At present, there is an enormous production
      of hogs in Servia, which, in many places, constitutes the only
      source of ready money to the agricultural population.

      And about the end of the eighteenth century, it is said that Servia
      received from Austria alone 1,300,000 florins yearly for hogs.
      (_Ranke_, Serb. Revolution, 95.) In 1864, Servia’s total exports
      amounted to 62,500,000 piasters, of which 28,162,260 were for hogs,
      7,043,000 for wool, 7,662,000 for the skins of sheep and deer,
      5,732,000 for cattle, 1,222,400 for tallow. (_Kanitz_, Serbien, 598
      ff.) Great production of hogs also in the Moldau and in Wallachia,
      in the United States and Mexico, where, instead of butter, only lard
      and suet are used; also in Lombardy, the Prussian Rhine province,
      Belgium, the English milk-producing districts, Gloucester, Wilt,
      Dumfries, Galloway and the districts where agricultural proletarians
      abound—Ireland and Yorkshire. It is a consequence of the same law
      that, among the South Sea Islanders, the hog was the principal
      domestic animal, as it still is among the Chinese. Similarly in the
      whole of Asia, beyond the Ganges (_Ritter_, Erdkunde, IV, 938,
      1101); in semi-barbarous upper Italy in the time of _Polybios_ (II,
      15); in Gall itself, in the time of Augustus. (_Strabo_, IV, 192,
      197.) The America of the ancient Greeks, Sicily, exported hogs,
      mainly, in the time of Hermippos. (_Athen._, I, 27.) And even among
      the Romans, the consumption of pork was much greater than the
      consumption of beef. (_Marquard-Becker_, Handbuch, V, 2, 39.)

  806 In the cities of Prussia subject to a tax for the privilege of
      maintaining slaughter houses, a pound of beef cost on an average, in
      1846, from 2 silver groschens, 5 _pfennigs_, to 3 s. gr. 4 pf.;
      pork, from 3 s. gr. 2 pf. to 4 s. gr. 4 pf. (_Dieterici._) In
      Moscow, also, the latter is dearer at present. Before the time of
      Peter the Great, it was cheaper. (_Storch_, Handbuch I, 364.) It was
      a sign of high civilization, too, that in Florence, in the fifteenth
      century, veal cost, on an average, 2-½ soldi; mutton, 2-⅓ soldi; but
      pork, 4 soldi. (_Pagnini_, Saggio sopra il giusto Pregio delle Cose,
      325 f., Cust.) It is especially the lower middle class who ask for
      fat meats. The very fat English sheep are taken not to London, but
      into the manufacturing districts. (_Lauderdale_, Inquiry, 322 f.) As
      to whether the relatively high price of pork, and the fact that in
      the later times of Rome, the wild boar was the most fashionable
      dish, compare _Becker_, Gallus, II, 186.

  807 The production of fowl is similar in this, that they are frequently
      fed from remains of consumption; only their production is not
      adapted to uncivilized countries, because it is difficult to protect
      them there. In Texas, it is said, it costs more to raise ten
      chickens than to bring up ten children. (_Kennedy_, Czarnkowski’s
      translation, 1846, 115.) The independent breeding of fowl is
      advisable only where there are a great many rich consumers; for the
      reason that they are naturally a delicacy. Enormous production of
      pigeons in Cambridge, Huntington etc. (_McCulloch_, Statistical
      Account, I, 189.) In Paris the consumption of pork and fowl has
      gained somewhat since the Revolution. (_M’Chevalier_, Cours. I,
      113.)

  808 According to _Schuckburg_, Philosophical Transactions of 1798, and
      _Kraus_, Vermischte Schriften, I, tab. I, the prices of the
      following species of animals rose in England between 1550 and 1795:
      horses, 904 per cent.; oxen, 896 per cent.; sheep, 876 per cent.;
      cows, 2050 per cent.; hogs, 1964 per cent.; geese, 300 per cent.;
      butter rose from 5d. per pound to 11-½d.; beer from 1d. per gallon
      to 2-¾d.; agricultural day wages from ½s. to 1s. 5-¼d.; wheat 326
      per cent. Compare, however, Edinburg Review, III, 246 ff. In Germany
      also, cows and hogs have increased much more in price than horses
      and sheep. (Tübinger Ztschr., 1871, 342.) _Dutot_, Réflexions, 946
      ff., éd. Daire, says that the value of the precious metals in France
      decreased in value between the times of Louis XII. and Louis XV. in
      the ratio of 3-79/91:1. On the other hand, the prices of different
      commodities rise in very different degrees:

      Fat sheep, from 7 sous to 10 livres.
      Lean sheep, from 5 sous to 5 livres 10 sous.
      Hogs, from 10 sous to 25-35 livres.
      Capons, from 1 sou to 12 sous.
      Hens, from 1-½ sous to 6 sous.
      Pigeons, from 1-½ sous to 3 sous.
      Deer, from 1-½ sous to 15 sous.

  809 Thus, in Thuringia, the average price in silver of corn from the
      sixteenth century until the period 1848-61 increased in the ratio of
      from 1 to 3-4; the price of the different kinds of animals, on the
      other hand, from 1 to 5-10. (_Knies_, in _Hildebrand’s_ Jahrbb.,
      1863, 78.) The price of the different kinds of corn as compared with
      one another may, however, be modified by many different
      circumstances. Thus the Capitulare Saxoniæ of 797, c., II, estimated
      the prices of rye, barley and oats to be to one another as 30:30:15;
      while the Magdeburg Chamber of 1804 estimated them to be as 17:14:8.
      In the kingdom of Saxony, in 1841-9, the average prices of wheat,
      rye, barley and oats stood to one another in the ratio of
      144:100:75:47 (_Engel_); while, in the middle ages, wheat, rye and
      oats were as 9:6:3 (_Gersdorf_, Cod. Depl. Sax., II, p. XXXIV);
      under Prince August, corn, barley and oats were as 24:22:12.
      Assuming the price of rye to be equal to 100, the cost was:

      At Brussels, in the 16th century, wheat 126.7, barley 80, oats 50
      At Brussels, in the 17th century, wheat 138.8, barley 82.9, oats
      51.9
      At Brussels, in the 18th century, wheat 147, barley 86.7, oats 55.2
      At Brussels, 1815-1844, wheat 156
      At Brussels, 1841-1850, wheat 153, barley 82.7, oats 51
      At Berlin, 1789-1818, wheat 135, barley 74.8, oats 54
      At Berlin, 1819-1832, wheat 143.5, barley 74.9, oats 52

      (_Rau_, Lehrbuch, I, § 183.) To understand this, it is necessary to
      bear in mind the relatively great increase of wheat bread, beer made
      of barley, and horses, as objects of luxury. The unusually low price
      of oats in North America, as compared with the price of wheat, is
      dependent on the facility of exporting the latter. In Florence, in
      the fifteenth century, the price of wheat was 22-⅔, of rye, 12, of
      barley, 8 _soldi_. (_Pagnini_, Sopra il giusto Pregio delle Cose,
      325.)

  810 The English so called custom-house prices (_Zollhauspreise_)
      correspond to the market prices of 1696. If these are assumed = 100,
      the price

      Of steel and iron was, in 1826, 83, in 1831, 56
      Of coal was, in 1826, 47, in 1831, 45

      Between 1835 and 1850, Scotch iron had already become cheaper by
      one-half (_Meidinger_, 387), and coal in London by one-third
      (_Porter_).

_  811 Rogers_, History of Agriculture, I, 67.

  812 In England, in 1172, an ox cost 2 shillings; in 1175, green cloth
      cost per ell, 2-10/12 shillings; red cloth, 5-½ shillings. (_Eden._)
      In the western states of North America, the farmer gives two pounds
      of coarse wool for one pound of woolen yarn; he sends 4 bushels of
      wheat to the miller for the flour of three bushels (Ausland, 1843,
      No. 68), while in Ravenna, in the thirteenth century, the miller’s
      fee was 1/10 (_von Raumer_, Hohenstaufen II, 437); according to the
      fixed prices in _Fantazzi_, (Monumen. Ravennet.); in Germany, during
      the last centuries of the middle ages, 1/8 (_J. Grimm_, Weisthümer,
      III, 8); at the end of the sixteenth century from 1/8 to 1/5
      (_Coler_, Oeconomia, II, 3); in modern Germany, generally 1/16 of
      the raw material, and in the steppes of southern Russia, when the
      wind is still, in summer, even the half. (Mitth. der freien ökonom.
      Gesellsch. zu Petersburg, 1853, 85.) In Guiana, in 1806, a very
      ordinary saddle and bridle could not be had under 10-½ guineas.
      (_Pinckard_, Notes on the West Indies, III, 1806.) _Count Görtz_ was
      obliged to pay 2 dollars, in Demarara, for the cleansing of a rifle,
      and another person for the oiling of a carriage, 5 dollars. (Reise
      um die Welt, 1864, 327.) A lady’s dress in Mobile costs four times
      as much as in London or Paris. (_Ch. Lyell_, Second Visit to the
      United States, II, 70.) In Athens, articles of clothing, even for
      the poorer classes, were never as cheap as they are in civilized
      countries to-day. (Compare _Plutarch_, De Tranquill. Anim., 10.)

  813 In Upper Italy, between 1261 and 1400, a lady’s chemise and the
      making of it cost 14.77 lire; Rheims linen, 7.04; ordinary mourning
      cloth, O.45; black cloth from Moriana, 2.83; cloth from Mecheln,
      43.83; from Ypres, 47.04; scarlet cloth, 80.44 per ell. (_Cibrario_,
      1. 1.) On the other hand, to-day, in the Leipzig market, the
      difference in price of the dearest and of the cheapest cloth will
      scarcely surpass the ratio 18:1. Even _Scaruffi_, Sulle Moneta,
      1679, 163, Cust, remarks that hemp-linen and similar coarse articles
      had increased much more in price than brocades; but he ascribes this
      circumstance to the disordered state of the coinage. It is much
      better accounted for by _Adam Smith_, Wealth of Nations, I, 386, ed.
      Basil.

  814 Before the plague in the fourteenth century, the cwt. of lead was
      worth 10-½d.; of iron, 4s. 1d. (_Rogers_, I. 599.) On the other
      hand, between 1848 and 1856, the average January price of bar-iron
      was £7, 11s.; of lead, over £20. (_Newmarch._)

  815 Thus, in England, the price:

      Of glass was, in 1826, 387; in 1831, 369 per cent.
      Of leather was, in 1826, 285; in 1831, 123 per cent.
      Of silk goods was, in 1826, 158; in 1831, 249 per cent.

      of the price of the same articles in 1796. (_Rau._) Of 29 chemical
      products of the Parisian manufacture, the wages of labor is on an
      average only 7.4 per cent. of the selling price; and, in some cases,
      only from 1 to 2 per cent. (_Chabrol_, Richerches Statistiques sur
      la Ville de Paris, 1821; _Hermann_, Staatsw. Untersuch., 137.) In
      Buschtiehrad, between 1670 and 1870, barley rose from 1 to 4.8; hops
      to 6.52; fire wood to 6.14; the excise to 6.54; but beer only to
      2.81; although wages increased ten fold. (_Inama Sternegg_, Gesch.
      der Preise im österreich. Ausstellungsbericht von 1873, 43.)

  816 A silk cloak lined with fur cost in the time of Charlemagne, 400
      scheffels of rye, one not so lined 200. (_Hullmann_,
      Finanzgeschichte, 212 ff.) In Florence in the fifteenth century, one
      pound of sugar was equal in value to 15 pounds of mutton.
      (_Pagnini_, 326.) In Turin, in the fourteenth century, 1 pound of
      pepper was equal in value to 28 pounds of salt. (_Cibrario_, III,
      359, 362.) As late as the middle of the fifteenth century, the court
      of Duke William of Saxony paid for one pound of sugar 1 thaler and 8
      groschens, while ducal fees paid to servants and workmen seldom
      exceeded 2 gr. Hence, even at a princely meal, often scarcely ½ a
      pound was consumed. (_Büsching_, Ritterzeit, I, 137 f.)

  817 Charlemagne’s capitularies suppose a merchant’s profits to be from
      100 to 200 per cent. (a. 809, c. 34.) And even in our own day,
      merchants in the markets of Cabul are frequently not satisfied with
      a profit of from 300 to 400 per cent. (_K. Ritter_, Erdkunde, VII,
      244), and the caravans which leave Maroc for the Soudan are wont, in
      exchange for commodities amounting in price to 1,000,000 piasters,
      to return with a supply of other commodities worth 10,000,000.
      (_Stein-Wappäus_, Handbuch, Africa, 33.) According to _Büsch_,
      Geldumlauf, II, 10, the price of East Indian products in Hamburg was
      some 70 per cent. higher than at home, while _Pliny_, H. N. IV, 26,
      speaks of a price one hundred times (?) as high; and its spices, at
      the time of Portuguese dominion, were sold at a profit of at least
      600 per cent., in Europe. (_Crawfurd_, History, VII, 360; _Ritter_,
      Erdkunde, V, 872.)

  818 When Humboldt found a missionary near Cumana who paid 7 piasters for
      a cow, and was obliged to pay 17 piasters for blood-letting, rather
      unskilfully performed, he found an illustration of one of the
      peculiarities of colonial life—to have all the wants of higher
      stages of civilization but not the means of satisfying them.
      (Relation historique, I, 374.)

  819 Enormous payments made to distinguished virtuosi, actors, sophists
      and hetares at the time in question, also to Appelles, Aristides
      etc., for works of art. (_Plin._, XXXIV, 19, 2, XXXV, 36, 19.) The
      actor Aesopus (see § 233, note 6) had a fortune worth 20,000,000
      sesterces, while Pompey, for instance, had 70,000,000. Roscius
      received from the state for every day he played, 286 thalers, and
      earned 43,000 a year. (_Mommsen_, Römische Geschichte, III, 483,
      547.) Compare _Cicero_, pro Roscio Comœdo, 10, and _Plin._, H. N.
      IX, 59, X, 72. The zither-player, Amoebaeos, received one talent for
      each appearance. (_Athen._ XIV, 623.) According to _Pliny_, H. N.
      XXIX, 5, the Roman _principes_ gave the most distinguished doctors
      yearly 250,000 sesterces, and even more as an honorarium. At the end
      of the eighteenth century, the greatest Parisian actors received
      from 4,000 to 5,000 francs per annum. Now 100,000 is considered a
      moderate income for one. (Journ. des Economistes, May, 1854, 279.)
      It is said that Frederick Hase earned $30,000 in America in ten
      weeks. (Leipz. Tagebb., 15 Jan., 1871.) _Steuart_, Principles, II,
      ch. 30. _Adam Smith_ frequently represents it as a rule, that
      superfluous goods like gold and silver, are dearest among the
      richest nations, necessary goods among the poorer, and _vice versa_.
      But the supply has much more to do with the permanent price of a
      commodity than the demand for it has. And the principle above
      mentioned applies only in so far as the supply is here an unlimited
      and there a limited one. Hence, the comparison of silver with
      painters’ and sculptors’ works is not an apposite one—in the case of
      these there is a natural monopoly, while the former, on account of
      its durability and capacity for transportation, may, on the
      contrary, be increased almost at pleasure.

  820 Besides _Böckh._, Staatshaushalt der Athener, 1817, Book I, compare
      _Arbuthnot_, Tables of ancient Coins, Weights and Measures, 2d ed.,
      1754, _Reitmeyer_, Ueber den Bergbau der Alten, 1785, and Michaelis,
      De Pretiis Rerum apud veteros Hebræos, in the Comment. Societ.
      Gottingensis, vol. III. The principal sources of information among
      the ancients are _Diodor._, V; _Strabo_, III, V; _Plin._, H. N.,
      XXXIII.

  821 The money revenue of the Persian king, to the amount of 14,560
      talents yearly, was transformed into bars and thus deposited in the
      treasury. _Herodot._, III, 95 f. Even the little vassal prince
      Pythios of Celænæ had a treasure of 2,000 talents of silver and
      4,000,000 pieces of gold. (Ibid, VII, 26 f.) On the money stores of
      private persons, see _Plin._, H. N., XXXIII, 47.

  822 An ox was worth, in Solon’s time, 5 drachmas; in 410 B.C., 51 dr.;
      374 B.C., 77¼ dr.; a medimnos of wheat in Solon’s time, 1 dr., about
      390, 3 dr., under Alexander the Great, on an average, 5 dr.
      (_Böckh._, I, 102, f.) The usual amount of ransom paid for a
      prisoner of war, in Kleomenes’ time, was 2 minæ (_Herodot._, V, 77,
      VI, 79); under Dionys., I, 300 m. (_Aristot._, Oeconom, II, 21);
      under Philip of Macedon, from 300 to 400 m. (_Demosth._, De fals.
      Legat., 394); under Demetrios Poliorketes, 1,000 for a free man, 5
      for a slave. (_Diod._, XX, 84.)

  823 This booty for Susa alone amounted to from 40,000 to 50,000 talents;
      for Persepolis, to 120,000; for Pasargadæ, to 600. _Curtius_, V, 2,
      6; _Strabo_, XV, 731; _Justin_, XI, 14; _Arrian_, III, 16; _Diod._,
      XVII, 66, 71; _Plutarch_, Alex., 36.

_  824 Oros._, VI, 19; _Dio, C._, LI, 21; _Suet._, Aug., 41. Decline of
      the value of money under Constantine the Great, when the precious
      objects of the heathen temples were coined. (Monitio ad Theod., Aug.
      de inbidenda Largitate, _Thes._, Antt. Renn., XI, 1415; _Taylor_, ad
      Warm. Sandvic, 38.)

  825 Compare I Kings, 10, 14, 27 ff.; I Chron., 22, 2 ff.; II Chron., 9,
      15 f., 12, 10 ff. On Ophir: _K. Ritter_, Erdkunde, XIV, 407 f.; on
      the wonders of the discovery of Spain: _Herodot._, IV, 152.
      _Aristot._, De Mirab., 146; Diodor, V, 35 ff. On the other hand, of
      Greece, _Athen._ VI, 19 ff.

  826 Compare _Plin._, H. N., XIV, 1. Yet the value of money in the time
      of the Cæsars seems to have stood much higher than it is now, as is
      proved, for instance, by the endowments by Trajan (16 sesterces per
      month for boys, and 12 sesterces per month for girls), as the
      _alimenta_ furnished them according to Digest XXXIV, 1, embraced
      their entire support. Compare the excellent essay on this subject by
      _Rodbertus_, in _Hildebrand’s_ Jahrbb., 1870, I.

  827 The conquest of the Avares seems to have temporarily produced a
      considerable cheapness of the precious metals. (_Guérard_,
      Polyptiques, I, 141.) Increase of the value of money in Scandinavia,
      during the later part of the middle ages. (_Wilda_, Gesch. des
      deutschen Strafrechts, I, 323 ff.)

  828 In England, from 1279 to 1509, there were coined on an average only
      6,868½ pounds sterling; from 1603 to 1830, on the other hand,
      819,415 pounds sterling. The average in the time of George IV., per
      annum, was 4,262,652 (_Jacob_, ch. IV.) An evidence of the
      uncertainty of the history of prices in the middle ages is, that
      _Jacob_, ch. 12, infers, from the price of corn, that the price of
      silver remained rather stationary from 1120 to 1550, while _Adam
      Smith_, I, ch. 11, 3, infers from the same fact, a remarkable rise
      in the price of silver from 1350 to 1570. Concerning the latter, see
      _Leber_, Fortune privée au moyen Age, 16 f. _Tooke-Newmarch_,
      History of Prices, VI, 391; whereas _Rogers_, Statist. Journ., 1861,
      544 ff., finds that in England, between 1300 and 1532, there was no
      change whatever in the price of silver. According to _Soetbeer_,
      Forschungen zur deutschen Geschichte, VI, 94, wheat and rye were, as
      compared with silver, worth during the Carolingian period, about
      one-fourth of its value, between 1750 and 1850. _Hegel_, Shassburger
      Chroniken, II, 1012, ascribes to gold over 2½ times as great a
      purchasing power in the 13th and 14th centuries as in the 19th
      century; and to silver, a purchasing power about three times as
      great.

  829 The silver ores of Peru and Mexico yield, on an average, only from 2
      to 3 per 1,000 of metal; those of Potosi, at present, scarcely 1 per
      1,000; those of Mexico, according to _Humboldt_, on an average, from
      3 to 4 ounces per cwt.; so that many of the European ores are
      decidedly richer. While the veins of the Saxon mine, Himmelsfürst,
      have a breadth of only from 0.2 to 0.3 meters; the Veta-Madre of
      Guanaxuato, is in few parts less than 8, and it is sometimes even 50
      meters broad; and the Veta-Grade of Zacatecas is from 5 to 10 meters
      in breadth. In Pasco there are veins of silver ore which have 114
      and even 123 meters. _Tschudi_, Reise in Peru, K., 12; _Chevalier_,
      Cours, III, 184 ff., 241 ff. According to _Humboldt_, Essai sur la
      Nouvelle Espagne, III, p. 413, eleven times as many miners are
      needed at Himmelsfürst as at Valenciana to obtain the same quantity
      of silver.

  830 Thus, for instance, the celebrated ransom-money of Athahualpa (even
      according to _Garcilaso de la Vega_) amounted to only 5,000,000
      thalers, while the French King John, after the battle of Poitiers,
      in 1356, had to pay 41,000,000 francs for his ransom. (_Leber_,
      Fortune privée au moyen Age, 121 ff.)

  831 Compare _M. Chevalier_, III, 190 ff. Discovery of the quicksilver
      mines of Guancavelica, 1567.

  832 The yield of Potosi amounted from 1545 to 1638, to 395,619,000
      pesos. (_Ulloa_, Viage, II, I, 13.) Up to the present time, the
      aggregate yield there has been estimated at from 6,000 to 7,000
      million francs.

  833 On the worse grounded assumptions of former writers, see _Humboldt_,
      N. Espagne, IV, 237.

  834 There was really introduced into Spain, about 1525, not much over
      2,000,000 francs annually; and after 1550, six times as much. (_L.
      Ranke_, Fürsten und Völker, I, 347 ff.) Compare _Humboldt_, Ueber
      die Schwankungen der Goldproduction, in the Vierteljahrsschrift,
      1838, IV, 18.

  835 On the Brazilian exports of gold in the 18th century, see _Schäfer_,
      Gesch. von portugal, V, 192 ff.

  836 According to _Humboldt_, N.E., IV, 218, the amount up to the
      beginning of this century was 17,000 kilogrammes of gold and 800,000
      kilogrammes of silver.

  837 Thus, for instance, Mexico, during this period yielded, on an
      average, 65,000,000 francs, instead of the former amount of from
      130,000,000 to 140,000,000. In Carro de Potosi, there were, in 1826,
      of the former 132 pool-works only 12 in operation. Compare _Adams_,
      The Actual State of the Mexican Mines, 1822. _Jacob_ assumes that
      about 1830, the quantity of money in Europe and America was 1/6th
      less than in 1809. (Ch. 28.)

  838 Of this, 1,800 kilogrammes of gold from the United States.

_  839 Fischer_, Geschichte des deutschen Handels, 2d ed., II, 616 ff.,
      673 ff. But the Schwaz mines, in the Tyrol, are said to have
      produced, until 1523, 55,000 marks annually; the Freiberg silver
      mine, from 1542 to 1616, 16,000 marks annually. Compare _von
      Langen_, Kurfürst Moritz, II, 56.

  840 The Russian gold ores, quite insignificant before the year 1814,
      have made very great progress since 1840. Their aggregate yield,
      between 1814 and 1861, not taking into account the amount embezzled,
      amounted to 37,000 _puds_, the _pud_ being equal to 16.3
      kilogrammes. The best year, 1847, gave a yield of 1,757 _puds_;
      1852-1861, an average of 1,556 _puds_; 1861 alone, 1,442 _puds_, of
      which 1,041 came from the private Siberian gold-sand washings.
      (_Walcker_, in Faucher’s Vierleljahrsschrift, 1869, II, 115.)

  841 Spanish silver production yielded, in 1845, over 184,000 marks; in
      1850, over 291,000. (_Willkomm_, Halbinsel der Pyranäen, 1855, 537.)

  842 Annales des Mines, X, 831 ff.

  843 Of this amount, there came to Europe, not including Russia, 150,000
      kilogrammes of silver, 2,650 kilogrammes of gold; to Russia, 24,000
      kilogrammes of silver and 30,000 kilogrammes of gold (embracing the
      quantities probably withdrawn without the knowledge of the custom’s
      authorities); to the rest of Asia, 100,000 kil. of gold; to Africa,
      4,000. (_M. Chevalier._)

  844 According to _Humboldt’s_ assumption before the time of Columbus,
      Europe had a circulation of 170,000,000 piasters; about 1600, of
      600,000,000; about 1700, of 1,400,000,000; in 1809, of about
      1,824,000,000. Up to 1803, there was produced in America, 9,915,000
      marks (Spanish) of gold, and 512,700,000 of silver. (N.E., 245.)
      _Gallatin_ estimates that, before Columbus, there were 1,600,000,000
      francs; in 1830, in Europe and America, from 22,000,000,000 to
      27,000,000,000 francs. (Considerations on the Currency and Banking
      System of the United States, 1831.) According to _M. Chevalier_,
      1850, all the silver which America produced had a volume of only
      11,657 cubic meters; and all the gold of only 151 cubic meters. The
      latter, therefore, would not even fill the half of a French
      gentleman’s _salon_.

  845 All the more in favor with governments because they affect
      principally foreign consumers. Thus, the Spanish government at first
      imposed a tax of 50 per cent. of the gross yield of the raw
      material, on the purchaser of silver; since 1503, under Orando, of
      33-⅓ per cent.; and later yet, of 20 per cent. This last tax was
      therefore in full force under Cortes. This tax was reduced in
      Mexico, in 1725, and in Peru in 1736, to 10 per cent., and later, in
      the case of gold, to 3 per cent. Heavy taxation of Russian gold ore
      (35 per cent. of the raw material), by virtue of the ukase of April
      14, 1849. Compare _M. Chevalier_, III, 274.

_  846 Cantillon_, Nature du Commerce, 215, 236, shows very clearly how
      the increase of the price of commodities was produced, in the first
      instance, by the increased consumption of the possessors of gold,
      and how it, therefore, first affected those commodities which they
      especially desired.

  847 This is the opinion of _Adam Smith_. Similarly of _David Hume_, On
      Money. According to _Letronne_, Considérations sur l’Evaluation des
      Monnaies Grecques et romaines, 119, and _Böckh_, Staatshaushalt, I,
      88, the average value of wheat in relation to silver was, in Athens,
      400 B.C., as 1:3146; in Rome, 50 B.C., as 1:2681; in France, shortly
      before 1520 after Christ, as 1:4320; in the nineteenth century it is
      as 1:1050. _Th. Smith_, De Republ. Anglorum, I, assumes that the
      price of silver, from the age of chivalry to 1625, decreased in the
      ratio of 120:40. The Spaniard, _Moncado_ (1619), says as 6:1.
      (_Jacob_, ch. 19.) _Jacob_, himself, in comparison with his own
      time, as 7:1 (ch. 15.) Much more moderate is _Newmarch_ in _Tooke’s_
      History of Prices, VI, 345 ff., who assumes an increase in the
      prices of commodities of about 200 per cent. The estimated value of
      tithe-wine (_Zehntwein_) about doubled in lower Austria, during the
      sixteenth century. (_Oberleitner_, Finanzlage N. Oesterreichs im 16
      Jahrhundert, 36.) According to the important researches of
      _Mantellier_, Mémoires de la Société Archéologique de l’Orleanais,
      vol. 1, 103 ff.; extract of _Lespeyres_ in _Hildebrand’s_ Jahrb.,
      1865, I, 1, the purchasing power of silver as compared with the
      average value of twenty-seven commodities, assuming it to have been
      1 from 1750 to 1850, was, from 1350 to 1450, 2.9; from 1450 to 1550,
      2.8; from 1550 to 1650, 1.5; from 1650 to 1750, 2.1. According to
      _Rogers_, the prices of corn in relation to silver were from 1596 to
      1636, at most 2.3 times as high as from 1260 to 1400; from 1637 to
      1700, 2.6 times; from 1701 to 1764, 2.1 times; from 1726 to 1820,
      3.2 times. (_Rogers_, I, 180.)

  848 In Germany, the rise in prices was first observed in the price of
      foreign groceries, which partly rose 400 per cent. Popular opinion
      looked for the cause in the evil disposition of the large commercial
      houses. In order to facilitate the competition of the smaller houses
      with the larger, the Reichstag, in 1522, prohibited all companies
      with a capital of more than 50,000 florins; and, in 1524, the royal
      treasury wished to bring suit against the violators of this law. But
      the cities contrived to avert the blow. (_L. Ranke_, Geschichte der
      Reformation, II, 42 ff., 134 ff.) In Spain, the government,
      especially between 1550 and 1560, endeavored to oppose the growing
      dearness of goods of all kinds, by prohibiting the exportation of
      the most important commodities, and by putting obstacles in the way
      of retail trade. The lower classes in England ascribed the rise to
      the suppression of the monasteries (_Percy_, Reliques of ancient
      Poetry, II, 296), while Henry VIII. endeavored to improve the
      condition of things by laws against luxury, the governmental
      establishment of fixed prices, the expulsion of foreign merchants
      etc. (21 Henry VIII.) The first writer who seems to have clearly
      seen the true cause of the changes in price was _Bodinus_, Response
      aux Paradoxes de Mr. de Malestroit touchant l’Enchérissement de
      toutes Choses et des Monnaies (1568). This work was translated into
      Latin by _H. Conring_, 1671; and done over in the work: Discours sur
      les Causes de l’extrême Cherté, qui est aujourd’hui en France
      (1574). Next, we have the English author _W. S._, A Compendious or
      briefe Examination of certayne ordinary Complaints of divers of our
      Countrymen of these our Days, London, 1581. In _Befold’s_ Vitæ et
      Mortis Consideratio politica, 1623, 13 f., we have a right
      explanation of the _caritas sine inopia_ which is to be considered
      as the common property of his time.

  849 Similarly _Quesnay_, 77, Daire. _Sir J. Stewart_, Principes, ch. 3.
      _Kraus_, Vermischte Schriften, II, 131 ff. _Hermann_, Staatsw.
      Unters., 127. _Helferich_, Von den periodischen Schwankungen im
      Werth der edlen Metalle, 1843, 70 f.

  850 According to _Cibrario_, a hectolitre of wheat was worth, in Turin,
      from 1289 to 1379, on an average, 905 gr. of fine silver; that is,
      about three times as much as in Paris before the discovery of
      America, and as much as in Paris from 1546 to 1556. In Turin, from
      1825 to 1835, it was worth about 1702 gr. In the fifteenth century
      even, the foreign embassadors complain of the enormous cost of
      living there. So, for instance, _Raumer’s_ histor. Taschenbuch,
      1833, 162. Compare also, _Carli_, Del Valore della Proporzione dei
      Metalli monetati con i Generi in Italia prima delle Scoperte dell’
      Indie, 1760, in which he, indeed, exaggerates the matter, and seeks
      to prove his views by the coarsest sophistry.

  851 The chief result of _Helferich’s_ excellent researches.
      (_Helferich_, loc. cit.) The general opinion, indeed, is that this
      _statu quo_ of the value of the precious metals was interrupted
      about the middle of the eighteenth century by another decline, and
      that the latter yielded to a subsequent rise in 1815 and afterwards.
      Thus _David Hume_, History of England, ch. 44, App. 31, ch. 49, App.
      A. _Young_, Political Arithmetics, ch. 6. More recently, _Rau_,
      Lehrbuch, I, § 176. _M. Chevalier_, Cours, III, 320 ff. One of the
      principal advocates of the opinion that every increase made in the
      medium of circulation produces a corresponding depreciation is
      _Nebenius_, Deutsche Vierteljahrsschrift (1841). In England a
      quarter of wheat was worth, on an average, 38s. 8/9d., from 1595 to
      1685. On a similar stability of corn prices in Belgium, see
      _Schwerz_, Belgische Landwirthschaft, III, 37. According to Suckburg
      (l.c.), the value in exchange of money from 1640 to 1700 declined
      32-2/9 per cent.; from 1700 to 1760, 43 per cent.; from 1760 to
      1806, 84 per cent.

  852 From 1637 to 1700 the price of corn in England averaged 51
      shillings; from 1701 to 1764 only 40½ shillings.

  853 Thus, the dearness of wheat in Germany, during the first thirty
      years after the Thirty Years’ War was caused, in large part, by the
      depopulation produced by the War.

  854 In Germany, also, the cause of the enhanced dearness of so many
      goods during the Thirty Years’ War is to be sought for in the goods
      themselves.

  855 Since 1815, most Birmingham and Sheffield wares have fallen from 50
      to 70 or 80 per cent. in price—at least from 20 to 30. (_McCulloch_,
      Statist. Account, I, 705.) The Quarterly Review, May, 1830, speaks
      even of an average decline of prices of English commodities in
      general, of 50 per cent.

  856 Excellently carried out in _Tooke_, History of Prices, III, 1838.
      That the world’s market is not so very readily affected by an
      increase of the medium of circulation, is established by this fact,
      among others, that the immense exportation of French metallic money
      in consequence of the issue of paper money between 1716 and 1720,
      and again in 1790 and the following years, is coincident with very
      low prices of wheat in the neighboring countries. (_Helferich_, loc.
      cit., 139, 190 ff.) And yet, in the former case, the amount was
      400,000,000 francs, and in the latter, at least 1,000,000.

_  857 Jacob_ estimates this part at only 2-½ per cent., _McCulloch_, at
      20, _Lowe_ at 25, _Necker_ and _Helferich_ at 50, _Humboldt_ at 66-⅔
      of the whole quantity worked. It certainly is, in our day, on
      account of the ever growing aggregate supply, greater than hitherto;
      but it is very different in different countries. _Nebenius_,
      Deutsche Vierteljahrsschrift, 1851, 56 seq., estimates the aggregate
      consumption of new gold and silver for industrial purposes at 14-½
      piasters yearly, and in addition to this seven millions of old gold
      and silver (_Bruchgold und Bruchsilber_). The annual wear and tear
      of previously existing articles of gold and silver, it is estimated,
      amounts to 4,420,000 piasters (1/420); the annual increase of their
      aggregate amounts in Europe to 6,000,000 piasters (1-½ per cent.,
      corresponding to the increase of population), and 4,200,000
      (one-fifth of the entire consumption), is employed, as he claims, in
      gilding, plating etc. The last item is probably much increased by
      galvanic silver-plating, the invention of photography etc.

_  858 Jacob_ embraces in the amount of metal employed in industrial
      purposes, in the sixteenth and seventeenth centuries, 1/5 of the
      amount which, after deducting the loss in Asiastic trade, was added
      to the gold and silver stores of Europe; i.e., in the seventeenth
      century, about 2,500,000 piasters yearly; in the eighteenth century,
      ⅔ (!); that is, annually, 15,000,000 piasters; in 1830, in England,
      £2,457,221; in France, 120,000; Switzerland, 350,000; in the rest of
      Europe, 1,605,490; in North America, about 300,000; altogether,
      £5,900,000. _Humboldt’s_ estimate is 21,000,000 piasters;
      _McCulloch’s_, £6,050,000. According to the records of the Paris
      _Monnaie_, the amount of silver ware in France increased seven fold
      between 1709 and 1759. (_Humboldt_.) In England, between 1807 and
      1814, 8,290,000 ounces of silver were stamped for manufacturing
      purposes, from 1830 to 1837, only 7,387,000; in 1851, 924,000.
      _McCulloch_ estimates the annual consumption of silver, in
      Birmingham alone, for plating purposes, at 150,000 ounces; in
      Sheffield, at 500,000; and the gold consumption in the pottery
      districts at £650 per week. Birmingham consumed (1831) for gilding
      purposes, £1,000 gold yearly. (_Whately._) It now employs weekly
      3,000 ounces of gold and 6,000 ounces of silver in the manufacture
      of gold and silver ware, besides the quantity intended for gilding
      and silver-washing purposes. (Quart. Rev., April, 1866, 381.) The
      jewelers of New York manufacture yearly 3,000,000 of dollars worth
      of gold and silver ware, mostly new material. (Economist, April 16,
      1853.) There were in Vienna, in 1781, only 167 workers in gold and
      silver; in 1840, 229; in 1847, 539. (_Baumgartner_, in the Wiener
      Akademie, May 3, 1857.) _Jacob_ estimates the aggregate mass of gold
      and silver ware, in plate, instruments etc., in Europe and America,
      to be 1-¼ as great as that of the ready money; and in England alone
      to be twice as great (ch. 28); while _Tengoborski_ thinks that at
      the beginning of the nineteenth century, the coin constituted ⅔ of
      the entire amount of the precious metals. Sometimes a movement in
      the opposite direction takes place, as, for instance, in those
      revolutions in which the silver of the church was confiscated; in
      the unfortunate wars of Louis XIV., etc. _Nebenius_, loc. cit., 17,
      mentions a South German silversmith who melted down in the years
      succeeding 1802, monastery silver to the amount of 11,000,000
      guldens.

  859 On the wear and tear of coin, see § 120, and _Hermann_, in the
      Archiv. der politischen Oek., I, 1841. Compare also, _Faust_,
      Concilia pro Aerario, 1641, 263 ff. This wear and tear is so great
      that _M. Chevalier_ supposes that it alone would suffice to reduce
      an amount of money under Constantine the Great of 5,000 millions to
      300 millions, in the time of Philip IV. (ob. 1314.) Cours, II, 322.
      How great a number of coins, especially of the smaller
      denominations, are entirely lost is evident from the fact, that at
      the time of the demonetization of the 15-sous and 30-sous pieces of
      1791-92, amounting to 25,000,000, only 16,000,000 were presented for
      redemption. Of the 10-centime pieces stamped with an N, amounting to
      3,286,932 francs, there were only 2,000,000 left when they were
      withdrawn from circulation, and this although individuals had added
      to the coinage. (_M. Chevalier_, III, 321.) The total loss caused on
      this score, _McCulloch_ estimates at 1 per cent. per annum, and
      _Helferich_, at ¾ per cent. The greater the aggregate stock of gold
      and silver, the greater the absolute amount of wear and tear. If,
      therefore, there were annually an equal influx of mineral products
      to the markets, the pressure of this increase of supply from that
      cause alone would take the shape of a converging series of prices.
      (_Tooke_, History of Prices, II, 151 ff.)

  860 The British East India Company exported gold and silver on an
      average per annum from:

      1711-1720, £434,000
      1721-1730, 532,000
      1731-1740, 487,000
      1741-1750, 631,000
      1751-1760, 571,000
      1761-1770, 152,000
      1771-1780, 43,000
      1781-1790, 393,000
      1791-1800, 352,000
      1801-1807, 852,000

      _Milburn_, Oriental Commerce, 1813, 419. According to _M.
      Chevalier_, Introduction aux Rapports de l’Exposition de 1867, the
      trade of Europe and North America, with India, China, Japan and the
      Australian islands, amounted in 1800, to only 410 million francs, in
      1866, to 4,024 million. Yet, for a time, the largely increased
      exportation of English manufactures to East India and of East Indian
      opium to China, had changed the relation so that the exportation of
      the precious metals from South Asia, by a great deal, more than
      counterbalanced the imports. On the other hand, between 1853 and
      1856 240,000,000 thalers were shipped to India and China from
      England and the Mediterranean harbors; in 1863 and 1864, even as
      much as 300 millions, to be, for the most part, buried there.
      Moreover, the immense quantity of cash money—often as much as from
      12 to 15 million in pounds sterling—in the state treasury, and
      silver ornaments (§§ 44, 123) customary in India, demand a
      considerable yearly supply to make up for wear. _Newmarch_ speaks of
      400 million pounds sterling which can be maintained in its condition
      hitherto by a yearly increase of 1 per cent. (History of Prices, VI,
      723.) From 1865 to 1869, English steamships carried gold and silver
      to the East in the following quantities, yearly: 93.9, 66.3, 24.6,
      70.2 and 60.4 million thalers, in addition to which almost as much
      came directly from California. Statist. Journ., 1871, 122 seq.

_  861 Tooke-Newmarch_, History of Prices, VI, 147 ff., estimates the
      aggregate stock of gold at the end of 1848 at £5,600,000; in 1856,
      at £172,000,000 more. According to _Lavasseur_, the amount of silver
      in the East increased, between 1848 and 1857, from 22 to 24
      milliards of francs; and the amount of gold from 9-½ to 15-½
      milliards. (Annuarie d’Economie politique, 1858, 632.) The total
      amount of gold and silver in the civilized world, _Wolowski_
      estimated at from 55 to 60 milliards of francs, in 1870. (L’Or et
      l’Argent, Enquête, 19.) Compare _Mason_, The Gold Regions of
      California from the Official Reports, 1848. _Tengoborski_, Sur les
      Gîtes aurifères de la Californie et de l’Australie, 1853.
      Goldfield’s Statistics issued from the Mining Department in
      Victoria, 1862. _W. R. Blake_, The Production of the precious
      Metals, or statist. Notice of the principal Gold and Silver
      producing Regions of the World (New York, 1869).

_  862 Soetbeer’s_ Denkschrift betr. die deutsche Münzeinigung Mai, 1869,
      and earlier yet, in _Faucher’s_ Vierteljahrsschrift, 1865, II.
      According to _M. Chevalier_, all the mines of the world, a short
      time previous to 1865, produced 284,000 kilogrammes of gold, and
      190,000 kilogrammes of silver in a year: a total of 373,000 thalers
      (Journal des Economistes, June, 1866), while, in 1848, the total
      amount of gold coinage in the world was estimated at 560,000,000;
      Great Britain, France, North America and Sidney had, since that time
      and up to 1871, added to this £597,780,000. The additions have been
      made in decreasing quantities: thus, 1857-59, 37.2 millions
      annually; 1869-71, 16.99 millions annually. (Statist. Journ., 1872,
      376 ff.) The estimates as to how much a gold-digger might make in a
      day have been variously estimated. Thus, _Larkin_ estimates it from
      $25 to $50; _Mason_, at $10; _Folson_, at $25 to $40; _Butler King_,
      at $16, reckoning one ounce at $16. All these estimates seem to give
      an altogether too high average. In Australia, according to _Khull_,
      Colonial Review, June, 1853, a digger can produce only one ounce
      daily, or less than 4 thalers. According to _W. Stamer_,
      Recollections of a Life of Adventure, II, 1866, a gold-washer in
      Victoria earned in 1858, on an average, £250 per year; in 1865, only
      £70; while day labor was worth 15 shillings. Hence, great hopes have
      to be built on the lottery-nature of gold-washing. On the Rhine, a
      gold-washer is satisfied with ⅔ of a gramme of gold, that is worth
      from 13 to 18 silver groschens. (_Daubrée_, Comptes rendus de l’
      Académie des Sciences, XXII, 639.) It should be borne in mind,
      however, that the Rhine-lander devotes to gold-washing only the
      leisure time which his avocation as a fisherman leaves him, while
      the gold-washer in the new world, as a rule, devotes his whole time
      to it; and that his labors are interrupted by the long rainy season,
      attacks of fever etc. To this must be added the great difference of
      the average prices of the means of subsistence and the difference of
      all social conditions.

  863 Compare, for instance, on the early productiveness of the Brazilian
      gold districts which soon ceased: _Spix und Martius_, Reise nach
      Brasilien, I, 262 f., 350. _Gardner_, Travels in the Interior of
      Brazil, 1846. On Hispaniola, see _Benzoni_, N. Mundo, I, 61, and
      _Peschel_, Gesch. der Entdeckungen, 304, 556. Hitherto, gold had
      been obtained by the usual mining process, only in very few places.
      As a rule, it has been found in alluvial land not far from the
      surface. Compare _Ansted_, The Gold-Seekers’ Manual, 1849. These
      circumstances have made the production of gold important from the
      first; and they still make it comparatively easy, while it causes
      little demand for capital but for great skill. As soon, therefore,
      as the greater part of the country washed for gold has been worked,
      which does not require a long time, the whole is abandoned, while in
      the production of silver the great amount of capital fixed in pits,
      shafts, kilns etc. ties the parties engaged in the enterprise to the
      spot, and necessitates the continuation of the enterprise. In recent
      times, however, Australia and California have developed the mining
      and machine production of gold to a surprising extent. According to
      _Laur_, La Production des Métaux précieux en Californie, 1862, 33,
      and the Journal des Economistes, Nov. 1862, Californian gold-quartz
      produced, in 1851, on an average, 635 francs per ton; in 1860, only
      from 80 to 85 francs; but the gold-washing methods have become
      cheaper in the ratio of 2,500:1. However, the production of the
      precious metals seems even now to be decreasing. According to the
      Statist. Journal, 1866, 99, it amounted on an average to:

      in 1849-51, gold £23.9 million, silver £15.5 million.
      in 1852-56, gold 38.7 million, silver 16.1 million.
      in 1857-59, gold 36.5 million, silver 17.1 million.
      in 1860-63, gold 33.5 million, silver 18.2 million.
      in 1864-68, gold 30.0 million, silver 19.5 million.

      The number of gold-diggers in Victoria steadily decreased from
      125,764 in 1857, to 63,053 in 1867.

  864 One of the chief difficulties in the way of the production of gold
      is the loss by embezzlement, which is estimated at an average of 20
      per cent. Small companies of men working on their own account would
      be less exposed to temptation, and the Anglo-Saxon races and the
      North Americans are very well adapted thereto. (_M. Chevalier_, III,
      261.)

  865 Gold is in a certain sense one of the most widespread of metals,
      although it is found anywhere only in small quantities; so that on
      the Rhine, for instance, it takes from 17 to 22 millions of gold
      grains to make a kilogramme. An extraordinary large number of places
      owe their civilization to gold-seekers. Compare _Tacitus_, Agr., 12.
      I select the following “finds” from _Ritter’s_ Erdkunde. The
      Shangallas (I, 249); still more the terrace of Fazoglu itself (I,
      253, compare _Bruce_, Travels, V, 316, VI, 255, 342), in Monomotapa
      (I, 140); in Manica, west from Sofala (I, 145), especially since the
      suppression of the slave trade (I, 305, 471); in Mandigo land (I,
      360, 372); on the road from Gambia to Timbuctoo (I, 457); on Lake
      Mangara (I, 493); between Timbuctoo and Finnin (I, 445); in Nubia
      (I, 667, seq.); unused silver and quicksilver mines on the lower
      Bagradas (I, 493); gold wealth at Malacca, _aurea chersonesus_ (V, 6
      f., 27); Tonkin, Lao and Ava (III, 926, 1, 216, IV, I, 213); Assam
      (IV, 294); smaller Thibet (III, 657); Kashmere (III, 1,155); on
      upper Setledsch (III, 654 ff., 668); in the mountainous sources of
      the Indus (III, 508, 529, 593, 608); on the Cabool (VII, 23); in
      Peshaver (VII, 223); Badakschan (VII, 795); rich silver mines
      abandoned for want of wood near Herat (VIII, 243); in Armenia (X,
      273). It is said that in southern China there are great treasures of
      the precious metals, the removal of which has been opposed thus far.
      (IV, 756.) Arabia’s richness in gold mines, spoken of by _Diodor._,
      II, 50, III, 45, and _Agatharch_, De Mare rubro, 60, is of doubtful
      existence, as no traces of them are to be found in the country
      to-day. On the other hand, on both shores of the Pacific Ocean, the
      portions of the earth richest in volcanoes seem to possess almost
      everywhere quantities of gold equal to those of California and
      Victoria. (Edinburgh Review, Jan., 1863, 82 ff.) What an amount of
      treasure can be obtained at times from old and long since forgotten
      “finds” is proved by the Altai (that is gold mountain), which even
      the old Tschudi had rummaged (_K. Ritter_, II); and where Herodotus’
      (III, 16) love of truth, so frequently called in question, has
      recently been so brilliantly vindicated. Compare _v.
      Ungern-Sternberg_, Gesch. des Goldes, 1835. _A. Erman_, Ueber die
      geographische Verbreitung des Goldes, 1835. According to
      _Murchison_, Siberia, ch. 17, gold is to be found only “in
      crystalline and paleozoic rocks, or in the drift from these rocks,
      which is a tertiary accumulation of the pliocene age;” and that it
      is found most abundantly “in quartz-ore, vein-stones and traverse
      altered Silurian slates, chiefly lower Silurian, frequently near
      their junction with eruptive rocks.”

  866 Compare _Humboldt_, N. Espagne, IV, 147 ff.; _St. Clair Duport_,
      Essai sur la Production des Metaux précieux en Mexique, 1843; _M.
      Chevalier_, Cours., III, 483 ff.

  867 The cost of a kilogramme of silver, expressed in terms of silver
      itself, up to the moment that it is shipped, is estimated by
      _Duport_ as follows: salt and _magistral_, 61 grammes; quicksilver,
      112 grammes; stamping it, 171 grammes; transformation of the ore, 72
      grammes; rent and superintendence, 38; duties etc., 145; smelting,
      transportation and shipping, 35. There remains as profit for mining
      it, 336 grammes. As to how the production of American silver
      increases and runs parallel with the cheapness of quicksilver, see
      _Humboldt_, N. Espagne, IV, 91 ff.

_  868 Wolowski_ calculates that the absolutely much smaller yearly
      increment to the amount of the precious metals in the sixteenth
      century, frequently 1/12, now constitutes only 1/50 of the greater
      existing amount. (L’Or et l’Argent Enquête, 50.)

  869 In the United States the stock of cash money in 1820 was estimated
      at 5.1 thalers per capita; in 1849, at 8.6 thalers; in 1854, on the
      other hand, at 13 thalers.

  870 The weight of the mass of gold introduced into Europe annually stood
      to that of silver in the ratio of 1:60-65 in the seventeenth
      century; in the first half of the eighteenth century, in that of
      1:30; in the second half, in that of 1:40; and yet the variations in
      price were not in the least parallel. According to _Sœtbeer_
      (Beiträge und Materialien zur Beurtheilung von Geld und Bankfragen,
      1855, 102 seq.), the average silver-course (_silbercurs_) of gold
      had, 1852-54, sunk only 2.05 per cent., as compared with that of
      1800-40. And yet the value of the annual production of gold stood to
      the annual production of silver, in the beginning of the nineteenth
      century, as 29 to 71; in 1846, as 47 to 53; in 1848-56, as 3 to 1.

  871 While the public, even since 1850, think they have noticed a
      depreciation in the value of money, there are a great many learned
      political economists who are by no means prepared to grant it. The
      principal advocates of this opinion are _Tooke_, and _Newmarch_, in
      vol. VI. of the History of Prices (1857). Also _Lavergne_, in the
      Journal des Economistes. And really the enhanced dearness of many
      kinds of goods up to 1857, might have been accounted for by causes
      affecting the goods themselves: diminished supply by reason of bad
      harvests, commercial gluts etc.; increased demand by capitalization
      on a gigantic scale, speculation, but especially by the elevation of
      the lower classes etc.

      The London wholesale prices were on the 1st day of January, 1869,
      nearly all lower by 10 per cent. than on the 1st day of July, 1857.
      Only indigo, cotton and meat had risen. (_Hildebrand’s_ Jahrb.,
      1870, I, 328.) In many instances the enhanced dearness is entirely
      local, by reason of the greater facilities for transportation in
      places where prices were already higher. But as new truths are very
      easily exaggerated by their discoverers, much of Tooke’s view
      concerning these events depends upon a polemic carried too far
      against the theory of the balance of trade which was customary in
      the so-called currency school. Compare, in opposition to Tooke,
      _Lavasseur_, in the Journal des Economistes, March, 1838, and _M.
      Chevalier_, La Baisse probable de l’Or, 1858. _Lavasseur_, from the
      difference between the official and real custom-house prices in
      France, calculates that raw materials in 1856 were on the average 63
      per cent., and in 1858, 20 per cent. higher than in 1826; and that
      manufactured articles were in 1856, just as high, and in 1858, 6 per
      cent. lower than in 1856. An average made of all commodities showed,
      in 1856, an enhancement of 30 per cent, and in 1858 of 9 per cent.
      (_Hildebrand’s_ Jahrb., 1864, II, 118.)

      In the Hamburg market in 1847-65, 87 articles declined in price, 183
      rose in price, and 24 remained about stationary. (Amtl. Statistik
      von 1887, 18 ff.) _Jevons_ assumes a general rise in the price of
      commodities between 1849 and 1869 of about 18 per cent. (Economist,
      May 8, 1869.) He makes this estimate from the average March prices
      of 50 of the principal articles. Assuming the average March price of
      1849=100, we have, according to him, for the following years,
      respectively: 101, 103, 101, 116, 130, 125, 129, 132, 118, 120, 124,
      123, 124, 123, 122, 121, 128, 118, 120, 119. Previous years showed:
      1789=133; 1799=202; 1809=245; 1819=175; 1829=124; 1839=144. (Compare
      supra, § 129, note 1.) The budget of a Swiss teacher’s family
      consisting of five persons has become dearer since 1840 ff., their
      consumption remaining the same and of only the simplest articles, by
      72.5 per cent. (Böhmert, Arbeiterervhältnisse etc., I, 302 ff.,
      355.) That, however, the depreciation is under-estimated most
      precisely in England and over-estimated in Germany, _Knies_ very
      well accounts for by the price-leveling effects of the more modern
      means of communication. (Tübinger Zeitschr., 1858, 280 ff.)

  872 Compare _Leibnitz_, on the consequences which would follow the
      realization of the dreams of the alchemists. It would be a great
      misfortune, since then a pocket would no longer suffice for the
      transportation of money, and people would have to use wheel-barrows
      as they do now in Sweden. (Opera ed. Dutens, V, 199, 401.)

_  873 Beccaria_ considers it equitable that the debtor should always pay
      the original value of the metal. (E.P., IV, 2, 17.) _Galiani_, on
      the other hand, would not permit individuals, even when the state
      arbitrarily causes a diminution in the real value of money, to
      maintain the real value of the coinage in their contracts. (Della
      Moneta, V. 3.)

  874 It is precisely this class which first comes to an understanding of
      the essential nature of the change effected.

  875 Thus the English lessees, who in the sixteenth century had leases
      for a long term of years, saw themselves rise in the social scale in
      consequence of the revolutions in price—a fact of importance in the
      political struggles of the seventeenth century. Compare _Sir F. M.
      Eden_, State of the Poor, I, 119 ff.

  876 Too  much stress is laid upon this by _Tooke-Newmarch_, who, on that
      account, considers almost every increase of the precious metals as a
      blessing. As a matter of fact, the population of Australia, of the
      United Kingdom, and of the United States, increased, between 1848
      and 1871, 44.5 per cent.; the production of coal and of railroads in
      England, between 1856 and 1869, by about 60.6 per cent.; the English
      production of woolen goods, linen and cotton and yarn, between 1848
      and 1870, by from 110 to 335 per cent. (Statist. Journal, 1872, 376
      ff.)

_  877 Luther’s_ complaint concerning the poor condition of the clergy.
      See _Schmoller_, in the Tübinger Ztschr., 1860. This very clearly
      shows how much surer for the crown domains are than a civil list,
      and donations of land to a church than payments in money. Law of
      Elizabeth, 18 Eliz., that, in the case of university property, ⅔ of
      the lease rent should be paid in metal and ⅓ in corn. In _Adam
      Smith’s_ time, this latter third was worth as much again as the
      other two. (I, ch. 5.)

  878 In the sixteenth century, this class was of small importance in most
      countries; in our times, their ruin would cause general disturbance.
      The wiser class of capitalists would, indeed, find means to exchange
      their credits for more certain values, or make it a condition that
      they should receive in the end a large sum.

  879 Thus, for instance, the son of a deceased land owner who retains the
      lands as his own acquits himself towards his brothers who have
      entered the military or civil service of their country by paying
      them a certain sum periodically. If a revolution were really
      impending, the owners of land would soon emulate one another to
      improve their estates by borrowing capital, if for no other reason,
      to turn the depreciation of the medium of circulation to their own
      advantage. In the sixteenth century, the indebtedness of land owners
      was relatively unimportant.

  880 It appears from _Roger’s_ Tables, Statist. Journal, 1861, 551 ff.,
      that, between 1583 and 1620, a time during which the population of
      England increased neither in wealth nor in numbers, there was a
      considerable increase in the price of nearly all English
      commodities. Thus, for instance, wheat was, from 1591 to 1600, 468
      per cent., and from 1611 to 1620, even 495 per cent. higher than
      from 1530 to 1533. The Saxon laborer earned, in 1599, in corn, only
      half as much as in 1455. (Tübinger Ztschr., 1871, 354.)

  881 When labor is indispensable to employers, it may happen that a small
      decline in the supply may largely raise the price. Wages, in almost
      all branches of labor, rose between 1851 and 1856, by about from 15
      to 20 per cent.

  882 This, also, was of little significance in the sixteenth century, but
      how important now!

  883 Income taxes, _ad valorem_ duties and tithes rise and fall in their
      nominal amount as the price of the medium of circulation falls and
      rises.

  884 Thus, for instance, the victory of the English Parliament over the
      unlimited power of the crown, in the first half of the seventeenth
      century, was very much promoted by the fact that the crown, in spite
      of all its economy, was always in financial straits in consequence
      of the depreciation of money. (Power of the purse, power of the
      sword!) However, any force kept steadily in action is a two-edged
      sword. While under favorable circumstances, it may be thereby
      developed, under unfavorable circumstances it may be thereby
      exhausted. How great a number of representative assemblies, during
      the revolutions in prices in the sixteenth and seventeenth
      centuries, allowed their energies to grow dormant!

  885 Most of the above points are very well discussed in the work _W.
      S._, cited above, § 137.

  886 As no one then doubted: Compare _W. Raleigh_, The Discovery of
      Guiana, Pref. I refer to Philip of Macedon.

  887 Compare _Roscher_, Kolonien, Kolonialpolitik und Auswanderung, 1856,
      145 ff.

  888 Something similar might have been observed in England in 1819 etc.,
      at the restoration of a depreciated paper currency. Among nations in
      a comparatively low stage of civilization, a variation in the medium
      of circulation is of less importance than among more highly
      civilized nations, because trade in money, and still more, credit,
      are relatively speaking undeveloped.

_  889 Fawcett_ greatly exaggerates when he says that with an increase of
      population and wealth, an increase of money is as much a want as
      hunger. (Manual, 370.)

_  890 Galiani_, Dellab Moneta, III, 1. At the time of the Lex Salica,
      10:1. After the Edictum Pistense of Charles II., ch. 24 (_Pertz_,
      Mon. Germ., III, 488), 12:1. At the time of the Sachsenspiegel (III,
      45), again, 10:1. Under Saint Louis, King of France, 12.5:1.
      (_Leblanc_, Traité historique des Monnaies de la France, ch. 1, 2.)
      In Poland, 1356, 12:1. (_Muratori_, Dissertt. Medii Aevi, II, 28.)
      In England, 1262, 9.6; 1272 = 12.5; 1345 = 13.7:1. (_Rogers_, 1, 593
      ff.) Under Henry VI., and in 1494 = 12:1. (_Anderson_, Origin of
      Commerce, a. 1422, 1494.) In Denmark, under the former Kings of the
      Union = 8:1. (_Dahlmann_, Dänische Geschichte, III, 52.) And so
      throughout almost the whole of Scandinavia’s medieval period, as for
      instance in the Graugans. (_Wilda_, Gesch. des deutschen
      Strafrechts, I, 329.) In Italy, 1579 = 12:1. (_Scaruffi_, Sopra le
      Moneta, 1582.) In Holland, 1589 = 11.6:1. _Bodinus_, De Republ.,
      1584, II, 3, maintains 12:1 as the general ratio; but the Apostolic
      Chamber adopted the ratio of 12.8:1. In Germany, according to the
      instances cited by _A. Riese_, 1522 = 10:1. The monetary laws of
      Germany give it in 1524 = 11-⅓:1, in 1551 = 11:1, 1559 = 11-3/7:1;
      _Budelius_, De Monetis, 1591 = 11-¼:1. At the beginning of the
      seventeenth century the relation in Spain was = 13.3; in Germany =
      12.16; in Flanders = 13.22; in England = 13.5:1. (_Forbonnais_,
      Finances de la France, I, 52.) About 1641, in Flanders, it was 12.5;
      in France, 13.5; in Spain, 14.1. Immediately after Colbert’s death
      it was, in Genoa, 15.03; in Milan = 14.75:1. (_Montanari_, Della
      Moneta, 80.) While in the seventeenth century gold rose, it sank in
      the eighteenth, on account of the Brazilian gold washings and the
      many bank notes in circulation, which were for the most part of a
      large denomination. (_Steuart_, Principles, III, ch. 13.) Still it
      was in Amsterdam in 1751 = 14.5:1.

  891 In Hamburg, the relation of the price of gold to that of silver
      bars, varied, between 1816 and 1852, from between 15.11-16.2 to 1
      (_Soetbeer_); in London, from 1816 to 1837, between 15.80 and 14.97
      to 1.

  892 In Asia, it is generally lower than in Europe—for centuries mostly =
      10:1. But in Birmah it is = 17:1, mostly on account of the extent to
      which indulgence in luxury is carried there. (_Crawfurd_, Embassy,
      433. _Ritter_, Erdkunde, V, 244, 266.) Concerning China, see _M.
      Chevalier_, Cours, III, 359. In Africa, gold is low as compared with
      silver, in proportion to the distance from the civilized world.
      Thus, an ounce of gold in Shenaar cost 12 piastres; in Suakim, 20;
      in Djidda, 22. (_Ritter_, Erdkunde, I, 538.) In Timbuctoo, Mungo
      Park found the relation of gold to silver to be as 1-½:1. Compare
      Marco Polo, II, 39 seq.

  893 In antiquity, a similar course is to be observed. According to
      Manu’s Indian laws, VIII, 134 seq., = 2-½:1; in the East, for a long
      time, = 10:1; under Darius Hystaspis, = 13:1. (_Herodot._, 111, 95.)
      In Greece, in the time of Lysias, = 10:1 (_Lysias_, pro bonis
      Arist., Conon); according to _Plato,_ = 12:1 (_Hipparch._, 231);
      according to _Demosthenes_, adv. Phorm., 214, = 14:1 (_Böckh_,
      Staatst., I, 43); Menander’s estimate, = 10:1, probably because
      Alexander’s victory had made gold cheaper. (_Pollux_, IX, 76.) Among
      the Romans, about 189 B.C., = 10:1 (_Livy_, XXXVIII, 11); somewhat
      later, = 11.9:1 (_Mommsen_, in the histor. phil. Berichten der K.
      Sächs. Gesellschaft, 1851, 184 ff.); in the fourth century after
      Christ, = 14:1. (_Theod._, Cod. VIII, 4, 27.) We sometimes find
      sudden variations. Thus, according to _Polyb._, XXXIV, 10, gold, in
      Italy, sank about ⅓ in consequence of the opening of the mines at
      Aquilea. It sank to the proportion of 9:1 when Cæsar spent the
      contents of the Roman treasure, which consisted of gold. (_Surton._,
      Cæs., 54.) The ratio of 17:1, during Hannibal’s wars, was a species
      of National bankruptcy. See _Plin._, H. N., XXXIII, B.

  894 After the February revolution, the gold-agio, as compared with
      silver, rose from 10-17 to 70 per 1,000. (_M. Chevalier_ Cours, III,
      346.) On the other hand, since the discovery of America, gold, as
      compared with commodities, has declined much less than silver.
      Compare _Hermann_, Ueber den gegenwärtigen Zustand des Münzwesens,
      in _Rau’s_ Archiv., I, 151 ff. According to _Lord Liverpool_,
      Treatise on the Coins of the Realm, the value of gold coin in the
      London market, as compared with bank notes, varied in 40 years,
      almost 5½ per cent.

  895 In recent times, it has become possible to extract from ancient
      silver coins a small quantity of gold, and with some advantage.
      European industry produced in this way about 1,600 kilogrammes of
      gold per annum. One half of this amount is obtained in France and
      the rest in Hamburg, Amsterdam, Brussels and St. Petersburg.
      (_Michel Chevalier_, Cours, III, 302.)

_  896 Senior_, On the Value of Money, 77 ff. It is certain that a simple
      variation in prices would not induce people to have gold table
      services, or architectural ornaments of silver.

_  897 Rau_, Lehrbuch, 6th ed., I, § 277 c. In Rau’s opinion (loc. cit.)
      we may, in the course of the next decades, expect a decline of the
      price of gold of about 76 per cent., and of only 10 percent. of the
      price of silver (because of the low prices of quicksilver.) But here
      he seems to overlook entirely what influence a change of standard in
      important commercial districts would have.

  898 Compare the works already mentioned. _Fleetwood_, Chronicon
      preciosum, or an Account of English Gold and Silver Money, the Price
      of Corn and other Commodities etc., for Six Hundred Years last past,
      1707; _Dupré de Saint Maur_, Essai sur les Monnaies ou Réflexions
      sur les Rapports entre les Denrées et l’Argent, 1746; _Unger_,
      Ordnung der Fruchtpreise, 1752; _Paucton_, Métrologie ou Traité des
      Mesures etc., des anciens Peuples et les modernes, 1780; the
      appendix to _Macpherson’s_ Annals of Commerce, 1805; the tables in
      _Garnier’s_ translation of Adam Smith, vol. II, 1822; _A. Young_,
      Inquiry into the progressive Value of Money in England, as marked by
      the Price of Agricultural Products, 1812; _W. F. Lloyd_, Prices of
      Corn in Oxford, in the Beginning of the fourteenth Century, and also
      from 1583 to the present Time, 1830; _Helferich_, in the Tüb.
      Zeitschrift, 1858, 471 ff. There are some very interesting notes on
      the history of prices during the Merovingian and Carolingian periods
      in _Guérard_, Polyptiques, I, 141 ff.

  899 Thus, for instance, the bonds (and their coupons) of states, cities,
      great corporations, certificates of stock, mortgages, bills of
      exchange, checks.

  900 A Prussian regulation of 1765 (_Goldschmidt_, Handbuch des
      Handelsrechts, I, 550), calls money-paper (_Effecten_), instruments
      of trade in which a value or a _valuta_ is designated.

_  901 Garnier_, French translation of Adam Smith, II, 143 ff.,
      distinguishes between coin-paper and promise-paper: the latter is
      never found in circulation at the same time with the capital which
      it represents. _Say_ says that, for instance, evidences of state
      indebtedness, state bonds, call for money if they would circulate,
      but they seldom act as money in circulation. (Traité, III, ch. 2.)
      _Sismondi_ very well determines the difference in his Richesse
      Commerciale, I, 160. _Rau_, Lehrbuch, I, § 293, requires of all good
      paper money: a., that its mere transfer, even without any proof of
      its rightful acquisition, should suffice to vest the property in it
      in the receiver; b., that the power emitting it should enjoy
      universal confidence or be able to compel universal recognition; c.,
      that its redemption should not be fixed for any definite point of
      time.

  902 That it is not possible to keep paper money from declining in value,
      by the payment of interest, the people of North America learned from
      more than one experiment during the eighteenth century. (_Benjamin
      Franklin_, Remarks and Facts relative to the Paper Money of America,
      1765.) The same phenomenon was observed in the case of the Spanish
      _vales_, which were created during the North American war in
      consequence of the absence of the silver fleet. (_Bour-going_,
      Tableau de l’ Espagne, II, 38 ff. _Humboldt_, N. Espagne, II, 808.)
      When the Portuguese _apolices_ (since 1797) still bore six per cent.
      they depreciated in value; and when the payment of the interest was
      suddenly stopped, the rate of exchange did not become any lower.
      (_Balbi_, Esai statist. sur le Portugal, I, 323.) In Austria, in
      September, 1820, the bank notes which bore no interest were at a
      premium as compared with the imperial treasury notes, which did bear
      interest of 1 per cent., although the credit of both kinds of paper
      had ultimately the same foundation, namely, Austrian state-credit.

  903 The attempt to make paper money pay interest suggests (as the Saint
      Simonists recommend it should, with much ado; _Enfantin_, Ser les
      Banques, d’ Escompte in the Producteur, 1826), that awkward sword,
      invented by Count Wilhelm von Bückeburg, to the blade of which a
      pistol is affixed! Shortly before each term for the payment of
      interest, the circulation of such paper money would be arrested. If
      the rate of discount should sink below the rate of interest such
      notes bore, they would be sought after eagerly and disappear in
      quantities, and, not be ever seen again until the rate of discount
      had risen to a high figure, when they would be suddenly presented
      for redemption. Such interest-bearing paper money, therefore, would
      be a serious element to aggravate the fluctuations of the
      money-market between good and bad times. When interest-bearing paper
      money pays interest at the rate usual in the country, it is hoarded
      by misers, (_v. Struensee_. Abhandlungen, III, 387.) Compare
      _Forbonnais_, Principes économiques, p. 234, ed. Guill., whereas _v.
      Prittwitz_, Kunst reich zu werden (1840, 359), takes delight in
      elaborating the idea of an interest-bearing paper money.

  904 Of jurists, see _Thöl_, Handelsrecht, I, § 51, and the authorities
      for and against in _Goldschmidt_, Handelsrecht, II, Kap. 4, 1, 2.
      The compulsory circulation of paper money is an essential element
      only in reference to the person that issues it. Of political
      economists, especially _A. Wagner_ in _Bluntschli’s_
      Staatswörterbuch, Art. Papiergeld, Band, VII, who, however, is very
      soon compelled to oppose to paper money “proper,” another kind not
      “proper.” _Adam Smith_ unhesitatingly accounts bank notes also
      paper-money. (W. of N., II, ch. 2, p. 28, Bas.) _Huskisson_
      understands by “paper-money” only the irredeemable paper-money of
      the state, while bank notes should be considered as “paper
      currency.” (The Question concerning the Depreciation of our
      Currency, 1810.)

_  905 Seyd_, Münz, Währungs- und Bankfragen in Deutschland, 50 ff.,
      distinguishes four classes of paper-money: 1st class, paper-money
      covered by cash; 2d class, bank notes covered after the manner of
      banks; 3d class, state paper-money; 4th class, such paper money as
      the notes of the Southern Confederacy after its defeat.

  906 Even _Plato_, De Legg., V, 742, was acquainted with money after the
      Spartan type, intended only for internal trade: νόμισμα ἐπιχώριον,
      αὐτοῖς μὲν ἔντιμον τοῖς δὲ ἄλλοις ἀνθρώποις ἀδόκιμον. Besides the
      state kept for foreign trade a supply of the universal Hellenic
      money, of which in case of need, private individuals could acquire
      what portion they needed by exchange. When Dionysius I. issued tin
      instead of silver money, all the Syracusans, although they noticed
      the forgery, acted in their intercourse with one another as if they
      considered the coins genuine. (_Aristot._, Œcon., II, 21, _Pollux_,
      IX, 79.) Timotheos behaved more honorably when, pressed by the
      dearth of money, he gave his troops copper coin tokens, which passed
      for the time being for their full value in the camp; but which were
      later to be redeemed at their full value in silver. (_Aristot._, Œc.
      II, 22.) Compare _Polyæn_, Strateg., IV, 10, 2. The iron money which
      the Klazomenians exchanged with the rich for silver, which bore
      interest, but which the rich were forced to take, had a longer
      duration; the silver was used to pay foreign state creditors, the
      iron money circulated for the time being in the city, and was
      gradually redeemed. (_Aristot._, loc. cit, II, 17.)

      We are still more forcibly reminded of paper money by the
      Carthaginian leather money, where any object whatever of the size of
      a coin was shut up in a leather envelope with the state seal, and
      then circulated as if it were the coin it purported to be. _Mieris_,
      Beschryving der Munstn, 1726, explains the saga of Dido’s ox-skin by
      means of this leather money. Certain it is, however, that the
      surprise with which the sophistical dialogue, Eryxias, mentions the
      matter, is a proof how foreign it was to the Greeks. Concerning the
      Roman plated denarii which were stamped with the silver coins, but
      which were also accepted by the state treasury, see _Mommsen_, R.
      G., I, 405.

  907 In the middle ages, leather money was issued as a promise of future
      payment: by the doge of Venice in the wars of 1122 and 1126
      (_Montanari_, Della Moneta, 34); by King John, of England, during
      the struggle of the barons (_Camden_); Emp. Frederick II. at the
      siege of Faventia (_Malespini_, Hist. Fior., 130, _Villani_, Hist.
      Fior., VI, 21); by Louis IX. during his captivity (_v. Raumer_
      Hohenstaufen, V, 461), John of France, 1360 (_Anderson_, Origin of
      Commerce). On the Frankfurt lead marks which were afterwards
      redeemed by the _Rechnerei_: _Kirchner_, I, 541. Lavallette’s copper
      tokens during the siege of Malta had the inscription: _non æs sed
      fides_. The paper money which was issued during the siege of Leyden,
      the inhabitants afterwards would rather preserve than have redeemed,
      _ad perpetuam liberationis divinæ memoriam_. (_Bornitii_, De Nummis,
      1605, I, 15. Distress coins, _melacs_, during the siege of Landau
      and of the Hungarian _Ragoczy_, _Marpurger_, Beschreibung der
      Banquen, 213. _Krones_, Zur Geschichte Ungarns im Zeitalter R’s,
      1870.)

  908 The Chinese have had various kinds of paper-money in their country
      since the 7th century after Christ. Sometimes they called them
      “flying coins, convenient coins,” and sometimes _coupons_, _bons_,
      _conventions_ (_Klaproth_, Mémoires relatives à l’Asie, I, 375 ff.),
      against which the caravans, as soon as they had passed the limits
      were obliged to exchange their silver (_Pegolotti_, Pratica della
      Mercatura in Della decima etc., III, 3). These had compulsory
      circulation in China. The great Mongolian khans here became
      acquainted with paper-money. (_M. Polo_, II, 21.) Thus, especially
      in Persia, where refusal to accept such money and the imitation of
      it was punished with death (1340). Compare _Ferishta_, ed. _Briggs_,
      I, 414 ff. _d’Ohsson_, Hist. des Mongols, IV, 101 ff.; II, 487. Even
      here there occurred cases of state bankruptcy and finally
      withdrawals of the depreciated paper. (_Klaproth_, loc. cit.) In
      Japan, according to _Oliphant_, Narrative of L. Elgin’s Mission to
      China and Sapan (1859), all foreign coins were required to be
      exchanged against paper-money at the offices of the state bankers.

  909 Adam Smith mentions North American paper money of the amount of 1
      shilling, and Yorkshire bank notes of the amount of 1-½ shillings.
      Sweden had, until 1828, notes of 28 _pfennigs_.

  910 Hence in Sweden, with its copper standard of long duration, the
      system of banks of issue was developed very early. The
      transport-notes (_Transportzettel_) (to be found in that country as
      far back as 1661) of the Stockholm bank are considered the oldest
      bank notes. Compare, however, _Palgrave_, in the Statist. Journal,
      1873. When, in 1768, Catherine II. introduced paper money into
      Russia, the people gladly paid ¼ per cent. exchange to the state
      treasury for it. (_Brückner_, in _Hildebrand’s_ Jahrbücher, 1863,
      49.) According to _Cancrin_, Oconomie der menschl. Gesellschaft,
      116, private individuals in from four to five months exchanged 40
      millions of silver roubles for paper. And thus, in 1780, Berlin bank
      notes stood a few per cent. above par, and the notes of the S.
      Carlos-Bank, in 1788, from 1 to 1-½ per cent. (_Rau_, Archiv., II,
      161.)

  911 When at times in which paper money is looked upon with diffidence,
      peasants and others bury their metallic money, this advantage of
      course is lost. On the other hand, the exportation of precious metal
      money, caused by the emission of paper money, must not be considered
      a necessary evil, but rather as the condition precedent which in
      most cases makes the above advantages of the paper money possible
      for the first time. Compare _Ad. Wagner_, Die russische
      Papierwährung (1868), 22, 24, 33. _Ricardo_, Proposals for an
      economical and sure Currency, 1816, estimated that England, after
      the abolition of the bank restriction, needed twenty million pounds
      sterling. The interest on this amount of capital inclusive of wear
      and tear etc., should be estimated at at least ten percent.; that is
      for the whole kingdom at at least from two and one-half to three
      millions a year. On this _Ricardo_ founded his proposal to base the
      bank notes on gold bars. In its time, the essay: Guineas an
      unnecessary and expensive Incumbrance on Commerce, or the Impolity
      of repealing the Bank-Restriction Bill considered (London, 1802),
      met with great approval.

_  912 Adam Smith_ calls attention to the analogous case in which a
      manufacturer replaces a costly machine by a cheap one, sells the
      former and employs the difference between the old one and the new in
      enlarging his business. (W. of N., II, ch. 2.) When, indeed, all
      nations have introduced the use of paper money, the greater portion
      of the advantages which the one nation was able to obtain by its
      means cease, and the only ultimate result is a depreciation of the
      value of money and of the precious metals. Formerly the advantage
      reaped by the single nation that emitted paper money was greater
      than its share in the depreciation. (_Wolowski_, Enquête de 1865,
      108.)

  913 When E. Seyd calls bank notes more costly than metallic money,
      because the former in England require an outlay for administration
      of 1-½ per cent. per annum, while the wear and tear of metallic
      money amounts to 1 per cent. only in 20 years (Statist. Journal,
      1872, 511), he overlooks the loss in interest and the costs of
      coinage in the latter case.

  914 Related to this is the fact that in France, during the
      assignat-crisis, the large bills of 10,000 francs were harder to get
      rid of than the small ones. (_A. Schmidt’s_ Pariser Zustände, III,
      22.)

  915 The numbering of paper money. A state which should neglect this
      would not only reserve to itself the possibility of an unlimited
      increase, but would surrender all control of its officials charged
      with the emission of the paper money. _Law_, Trade and Money, 162,
      advises that a large money reward should be paid to any one who
      should show the existence of a higher number than allowed by law, or
      of a duplicate number. And indeed, as comptroller-in-chief, he
      caused the _prévôt des marchands_ to be removed, because charged
      with the duty of burning the paper withdrawn from circulation, he
      (the _prévôt_) noticed that the same number reappeared several
      times.

  916 If a traveler wished to pay his inn-keeper in the note of a bank
      entirely unknown in the place, the latter would certainly refuse it.
      If, on the other hand, the traveler were to offer him a silver coin,
      the stamp and inscription of which were not familiar, still it would
      be taken at the value of the metal it contained, after deduction
      made of the costs of testing it, re-coining it, and compensation for
      the trouble caused. Ignored by _Berkeley_, who, indeed, considered
      metallic money nothing but “counters” or tickets (Querist, No. 23,
      26, 441, 475), and who ascribes important advantages to paper
      money,—which by “stamp” and “signature” is made as costly as gold
      (440)—over metallic money (226).

  917 Any person who has witnessed a tax-execution, or sale of property
      for the non-payment of taxes (_Stuerexecution_) will admit that a
      tax receipt is at least as real goods as an umbrella or a glass
      window that protects one from the storm. _Michælis_ considers the
      amount of running payments to the state for duties, taxes etc., as
      the only right basis for full-value paper money. (Berliner
      Vierteljahrsschrift, 1863, III.) Better yet when _Höfken_ advises
      that only as much paper money should be issued as amounted to the
      average balance (_Bestand_) in the national treasury. The tax-basis
      is defended with great warmth by _L. Stein_. Louis XIV., in 1704
      issued paper money bearing 7 per cent. interest, the acceptance of
      which by all the royal officers of the treasury was prohibited!
      (_Dutot_, Réflexions, 863, Daire.) _Law_, Trade and Money (1705)
      ascribes to parcels of land the greatest constancy of value, because
      they cannot be replaced, because they can be neither increased nor
      decreased, and because they help to produce all other goods (p.
      170). While silver cannot but depreciate, they have a prospect but
      to rise (188). Hence _Law_ recommended notes based on parcels of
      land as the best money. (163, 191, 195.) Similarly, _Benjamin
      Franklin_, Modest Inquiry into the Nature and Necessity of a Paper
      Currency: and the Paper Money of Pennsylvania, New York and New
      Jersey was actually based on parcels of land, and was to be
      extinguished by the enfeoffed owners, and the interest paid by them.
      (_Ebeling_, Gesch. und Erdbeschreib, von N. Amerika, III, 621, IV,
      649.)

_  918 F. Renonard de Ste Croix_, Voyage aux Indes orientales (1810), I,
      32, describes a species of paper money based on parcels of land
      which had lost 40 per cent. of its nominal value, although the
      holders of them were invested with the fief at only one-half their
      value. The French _mandats territoriaux_ of 1796, declined in five
      months to 5 per cent. of their nominal value, although they
      contained the provision that the holders might, without public sale
      (_Auction_), have a certain amount of the national estates allotted
      to them in exchange for the _mandats_. The assignats were still more
      defective after their redemption (at the _Caisse de
      l’extraordinaire_), which was at first intended, and their drawing
      of interest were not fulfilled. Leaving the tax-basis out of
      consideration, the notes might, at the sale of the national estates,
      be brought in as means of payment: a thing which would not have been
      inoperative, provided the amount of the paper money had been
      strictly limited to the price of the pieces of land estimated in
      money. On the 1st of April, 1790, 400,000,000 francs in assignats
      were issued, and in September, 800,000,000 more, both together about
      equal to the secularized property of the church. (_Ad. Schmidt_,
      Pariser Zustände, II, 97.) But as afterwards all proportion between
      these two magnitudes ceased, or rather as up to January 1, 1793,
      3,626,000,000 assignats were issued; up to September, 1794, over
      8,800,000,000; up to September, 1795, 19,700,000,000; and finally up
      to September, 1796, 45,578,000,000 francs, of which perhaps
      6,500,000 were either burned or demonetized, the price of the
      national estates on lands must naturally have risen as vastly as the
      assignats declined.

  919 The paper money issued by Colbert’s successor, Chamillard, soon lost
      on account of its too great amount, 25 per cent. of its value, spite
      of the fact that it bore interest, and that ¼ of all payments to
      private persons had to be made in it. (_Forbonnais_, Recherches et
      Considérations, II, 182.) When the people of the United States, in
      1775, issued paper money, it did not decline in value up to the end
      of 1776, so long as the amount did not exceed $20,000,000, as it was
      considered a matter of honor to take it at par. Afterwards, when the
      amount issued continued to increase, not even the law that a refusal
      to accept it, or insisting on taking it below par, should be
      punished with the loss of the commodity, and that the guilty party
      should be declared a national enemy, could keep it from declining in
      value; so that in May, 1871, a dollar in specie was worth $200.5 in
      paper. Compare _Franklin_, Works, ed. Sparks, II, 421, VIII, 328,
      505.

      France, during the Reign of Terror, on the 2d day of April 1793,
      threatened the claiming of a discount in the taking of assignats
      with six years’ confinement in chains, and on the 1st day of August,
      on Couthon’s motion, with twenty years’ confinement. In addition to
      this, maximum prices for the principal necessities of life were
      fixed and the exceeding of them was punished by severe penalties;
      and in France, and still more in the neighboring conquered
      countries, there were many persons who preferred to take assignats
      instead of payment rather than permit themselves to be robbed by
      requisitions. And yet on the 4th of June, 1796, one franc in specie
      exchanged for 800 francs assignats. Compare _Büsch_, Geldumlauf, III
      (§ 58 ff., _d’Ivernois_, Etat. des Finances Française, 1796).

  920 The Prussian treasury notes of 1806, by virtue of a decree published
      in 1807, were to be taken by all at a rate of exchange to be
      officially published from time to time. Between December 1, 1807,
      and February 28, 1809, the highest “normal course of exchange” was
      71, and the lowest 27 per cent. In January, 1815, a refusal to take
      them at par, except in certain cases, was threatened with from 500
      to 1,000 thalers of a money-fine or from 6 to 12 months’
      imprisonment. But indeed, in December, 1812, of 8,000,000 thalers,
      there were only 731,625 still circulating. Compare § 7 of the decree
      of the 19th of January, 1813. In April, 1815, it was ordered that
      the half of all taxes should be paid in such notes, or that if not,
      8-½ per cent, should be added as a penalty. This penalty, reduced in
      1827 to 1 silver groschen, was not formally abolished even in 1870,
      although it had long fallen into disuetude. There was a run of the
      owners of the notes in 1830, for redemption, and again in 1841 and
      1848; in 1848 to the extent of at most 40,000 thalers in one day,
      and altogether not over 100,000 thalers. (_Bergius_, in the Tübinger
      Zeitschr., 1870, 226 ff.) About 1846, it was estimated that scarcely
      1/250 a year of Prussian paper money was presented for redemption,
      while ⅓ of the state receipts came in in the shape of paper money.
      (_Rau_, Archiv., V, 125, 207.) The Saxon treasury notes never lost
      over 2 per cent., although the state treasury redeemed them up to
      1804 only at an _agio_ of 9 _pfennigs_ per thaler, and afterwards of
      1 _pfennig_.

  921 Those entitled to make money claims are either compelled to accept
      the paper money at its nominal value or only at its current value
      for the time being. In the latter instance, the unjust compulsion is
      much smaller, but at the same time the whole expedient is much less
      productive to the state; and hence the former is the more usual. It
      was provided in Austria on the 22d of May and the 2d of June, 1848,
      that the former should be the rule, and that the latter should
      govern in cases in which gold or foreign silver had been stipulated
      for. (_Höfken_, Oesterreichs Finanzprobleme, p. 53.) On the 7th of
      February, 1856, it was permitted to contract by express promise for
      loans in the metallic currency of the country, both for the interest
      and the repayment of the principal. Hence a species of
      parallel-currency. If it be made entirely impossible for private
      individuals to protect themselves against the compulsory circulation
      of paper money, the more prudent are forced to send their capital
      into foreign countries, which operates very disadvantageously to
      poor countries especially. (_Wagner_, Tübing. Zeitschr., 1863, 441.)

  922 Thus, for instance, the Frederick coins, and for a time the French
      assignats were helped by the popular enthusiasm, while Gustavus
      III., of Sweden, could give little value to his paper. (_v.
      Struensee_, Abh., III, 577.) In France, in 1796, 2,400,000,000
      _mandats_ were issued instead of all the outstanding assignats; that
      is, as many as there were assignats at the close of the year 1792.
      And yet the latter were then only 25 per cent. below par; the
      former, before one month had elapsed, 80, and in nine months, almost
      98 per cent. below par. (_St Chamans_, Nouvelle Essai sur la
      Richesse des Nations, p. 150. _A. Schmidt_, Parisier Zustände, III,
      121 ff.) In Austria, in 1811, the volume of paper money was
      contracted, but in a manner so violent and destructive of credit
      that its rate of exchange did not rise in consequence. (Tub.
      Zeitschr., 1763, 1874.) After 1848, also, the rate of exchange of
      Austrian paper money was much more perceptibly influenced by the
      variations in the political state of affairs than by the changes in
      its volume. (Tub. Zeitschr., 1856, 129.) In the summer and winter of
      1866, about 650,000,000 paper rubles circulated, with scarcely any
      increase or decrease; and yet the ratio of exchange was, during a
      part of the summer, 66, and in winter, 84 per cent. of the silver
      value of the ruble. (_Wagner_, Russ. Papierwährung, 74.) Instances
      in which the increase in the price of commodities began to be more
      general only after the volume of paper money had decreased; in
      Austria, in 1851 and 1866; in Russia, in 1857 (loc. cit).

  923 Then precious metal money becomes a commodity of which great stores
      may be collected in the country itself, at the banks, but chiefly
      for foreign trade. It is said that Austrian business men in 1860 and
      the following years invested “hoards” to the amount of several
      hundred million florins in exchange on metallic-currency countries.
      (Tüb. Zeitschr., 422.) Good paper money will never drive out the
      whole supply of cash money out of a country, because a good portion
      must always be kept for purposes of redemption; depreciated paper
      money operates much farther in this direction. Even the exportation
      of small change may become a profitable speculation as soon as the
      amount of depreciation of paper money exceeds the seigniorage. Then
      usually small change of a worse kind is stamped, as, for instance,
      in Austria, copper instead of silver; and in 1860, 12 millions
      florins of paper small change. Here the exportation of the better
      money is not a consequence, but the motive to the manufacturing of
      the worse.

  924 During the assignat-period it could happen that a land owner, after
      the term for which he had farmed out his land, might be compelled to
      surrender it to the farmers, for the reason that the taxes,
      requisitions, etc., paid by the farmers, amounted to more than the
      farm rent. In the case of the former, the calculation was based on
      the recent depreciated value of the assignats; in the case of the
      latter, on the higher value the assignats had at the moment that the
      contract was concluded. (_Büsch_, Geldumlauf, III, 62.) A writer in
      the Revue des deux Mondes, April 15, 1865, thinks that one reason
      why the American civil war was so popular in the northwest was
      because the paper money issued during the rebellion made it easy for
      that part of the country to pay off the mortgage-debts which had
      burthened it since 1848. Even of the two law catastrophes, _Duclos_,
      in his memoirs, remarks that they produced a great admixture of
      those who had been formerly separated by differences of class and
      wiped out the previous ideas of decorum, fitness, etc.

  925 During the time that the clipping of the coin was practiced, it is
      scarcely possible to show that money was debased below 11 per cent.
      of what its value should have been. See, on the other hand, § 3. In
      Austria, in 1810, a person had to give 1,200 florins in paper money
      for 100 florins in silver. (Tüb. Zeitschr., 1861, 593.) In North
      America, in 1781, it took $280 in paper to purchase $1 in silver.
      (_Ebeling_, Gesch. und Erdbeschreib., von N.A., 1856, III, 580; IV,
      440; V, 437.) During the American civil war, the paper money of the
      Southern States declined to ½ (December, 1863) and even to 1/35
      (October, 1864) of its nominal value. Compare _Hock_, Finanzen der
      V. Staaten, 514 ff. Observed even by _Storch_, Handbuch, _Rau’s_
      translation, III, 141 ff. (See, on the other hand, _C. King_,
      Thoughts, p. 113.) In Paris in July, 1795, the greater number of
      commodities estimated in assignats were worth as much as if the rate
      of exchange of the latter was 6-14 per cent. of their nominal value,
      while it actually amounted to only 3-½ per cent.

  926 Where an _agio_ of exchange of metallic money as compared with paper
      is prohibited, the decline of the latter will manifest itself not
      only in foreign rates of exchange, but also in the price of bars of
      the precious metals.

  927 The changes of the agio or premium depend mainly on the supply and
      demand of the precious metals, that is, on the extent and intensity
      of the business transactions which have to be made in these metals
      themselves. (_Wagner,_ Russ. Papierw., 87.) Hence, for short periods
      of time, it may be said in a paper currency country, that business
      transactions based on cash money have a great element of variation
      in them. (_Wagner_ in _Bluntschli’s_ Staats-wörterbuch, III, 971.)
      The purchase and lease-hold prices of fixed capital, of houses, for
      instance, rise much less because most people look upon the distress
      as transitory, and of short duration. (_A. Walker_, Sc. of W., 133.)
      In Austria in 1859, the rise of the agio of exchange of silver from
      par to 40 per cent., and its subsequent fall within 7 months to 20
      per cent., left the price of coin almost entirely unaffected. (_A.
      Wagner_, Gött. Anz., 1860, 114.) That country people in general
      suffer more from a bad paper currency than the towns people and
      inhabitants of cities, see _Bonamy Price_, Currency and Banking,
      175, seq. In the northern states of the American union, in 1864, 12
      home kinds of commodities had risen 148 per cent., 7 foreign kinds
      of commodities, 164 per cent., and 7 which could be obtained only
      from the southern states, 353 per cent. (_v. Hock_, 186 seq.) As too
      great issues of paper money are so frequently made on account of
      war, it is comparatively easy to understand why it is that articles
      for which war creates a demand should rise in price very soon and
      very high; while the very opposite happens in times of
      taxation-distress, in the case of a great many articles of luxury,
      which can readily be dispensed with. _Büsch_ remarks (Werke, VII,
      91), that retail dealers frequently raise their prices in order not
      to be obliged to pay out so many small coins as change for the paper
      dollar.

  928 Compare _Hufeland_, N. Grundlegung, II, 241. Self-seeking
      undertakers (_Unternehmer_ = men of enterprise) have, on this
      account, both in Austria and Russia (_Wagner_, Russ. P.W., 105), but
      more so in North America (_v. Hock_, 556 ff.), opposed measures
      intended to restore values (_Valuta_), on the ground that they were
      anti-national. Even _Sperausky_ experienced this in 1809, when he
      published very correct ideas on paper money, while in the “fairy”
      times of Catherine II., no one even thought that state paper money
      is a state debt. (_Bernhardi_, Russ. Geschichte, II, 2, 636.) One of
      the principal representatives of this course is _H. C. Carey_, Our
      Resources (1866), and in the New York Herald, 1865. On the other
      hand, _Faucher_ rightly calls the more active exportation of
      countries, with a bad paper currency, an exportation of barbarous
      nations, the commerce of misery, to which any price paid in metal or
      in any higher-standing product of civilization is acceptable.
      (Vierteljahrsschrift, 1868, IV, 167.) The nation in the aggregate
      loses in international trade for the simple reason that its foreign
      creditors will accept its paper money at most at its current rate of
      exchange against specie, while foreign debtors force it upon the
      nation at its nominal value.

  929 The different provinces also of a large empire may have very
      different degrees of depreciation of the same paper money. Thus, in
      the interior of Russia its rate of exchange against specie had for a
      long time not declined beyond 50 per cent. of its nominal value;
      while the foreign rate of exchange supposed a decline to 33-⅓ per
      cent. (_Cancrin_, Weltreichthum, 68.)

  930 An enhancement of duties, taxes (_Abgaben_) etc., will seldom be
      able to progress in the same measure as the paper money sinks; in
      any case, a law would be necessary to effect this, which, however,
      comes always later than the decline. (_Sismondi_, Du Papier Monnaie,
      27.)

_  931 Wagner_, Russische Papierwährung, 142, estimates that the Crimean
      war depreciated the average current rate of exchange of Russian
      paper money by 11.1 per cent., the Italian war of 1859 by 14.5 per
      cent., the German war of 1866 by 19.4 per cent., spite of the fact
      that Russia did not participate directly in the last two wars.

  932 The more than forty-five milliards French assignats, estimated at
      their rates current, really produced to the state only about six
      milliards. (_Gentz_, Histor. Journ., 1800, II, 317, after
      _Lecoulteux_.)

  933 Very well explained by _H. Thornton_, Paper Credit of Great Britain,
      ch. 10. As to how, in Austria, the paper-money crisis contributed to
      bring the rigid national resources into a molten state, and to shake
      off the national inertia by the feeling of insecurity, see _Buquoy_,
      Theorie d. Wirthschaft, 1816, 347 ff. _Schäffle_, System, 3 aufl.,
      254 seq., thinks that if Austria should first adjust its values, and
      then, in case of another war, have recourse to a second
      depreciation, the disastrous disturbances of its national economy
      consequent herein would be produced twice instead of once, and not
      without reason.

  934 The Prussian treasury-bills stood, in June, 1809, at 36 per cent. of
      their nominal value; June, 1810, 84-½ per cent.; January, 1812,
      13-½; December, 1812, 44-½; June, 1813, 26-½; July, 1813, 24-½;
      December 31, 1813, 49-½; January, 1815, 88; January 5, 1816, 99 per
      cent. Austrian paper money expressed in terms of metallic money,
      amounted, on an average, between 1849 and 1855, to 292,000,000
      florins: but at certain moments, it fluctuated from 231,000,000 to
      337,000,000. (Tübing. Zeitschr., 1856, 124.) The agio of silver
      fluctuated during the _Bancozettel_ (bank-billets, a species of
      Austrian paper money) period from one day to another on Change 40
      and even 100 per cent.: thus, on the news of Napoleon’s entry into
      Paris, between the 25th of March and the 4th of April, from 330 to
      440; on the receipt of the news of the result of the battle of
      Waterloo, in three days, from 458 to 412; after Napoleon’s
      abdication, from 412 to 320. (_Gentz_, Werke, V, 62.) _Huskisson_
      rightly calls a depreciated paper currency a much worse thing than
      clipped coin: the clipping of the coin is, so to speak, one great
      blow after which people can again calculate with certainty; but bad
      paper money is one continual fluctuation.

  935 “The only difference here is that it is not left to individuals to
      say whether they will join in the game or not.” (_Helferich._)

  936 During the later assignat-period every house was full of
      commodities, every pocket of samples; every “exquisite” and every
      lady was a merchant, because no one had any further confidence in
      the money. People had retrograded to the barbarous condition of
      trade by barter. (_Goncourt_, Histoire de la Société française
      pendant le Directoire, 1854.) The French constitution of 1795 fixed
      the salaries of members of the Directory at the value of 50,000
      _myriogrammes_ of wheat (art. 173, 68). In Delaware, while the
      depreciation of paper money lasted, farm rent was usually required
      to be paid in produce. (_Ebeling_, V, 37.)

  937 “Of all contrivances for cheating mankind, none has been more
      effectual than that which deludes them with paper money.” (_D.
      Webster._) The American Secretary of the Treasury, _McCulloch_,
      says, in the report of December 7, 1868, of the legal tender notes:
      “there can be no doubt that these acts have tended to blunt and
      deaden the public conscience, and they are chargeable in no small
      degree with the demoralization which so generally prevails.”
      _Niebuhr_ attributes the decline of old Spanish honesty which was
      formerly so much relied on in all great money centers, principally
      to the _vales_. (Nichtphilol. Nachlass, 489.)

  938 This calls to our mind the impersonal mass-crimes to which our own
      times so frightfully incline, when many a man who would recoil in
      horror from an ordinary act of pocket-picking or from manslaughter
      with intent to commit larceny, robs thousands in cold blood by means
      of a swindling enterprise, or, for the sake of a fraudulent
      insurance, destroys the lives of a whole ship’s crew.

  939 Saxon loans of two million thalers treasury notes (_Kassenbillets_),
      August, 1813, which were then to bear interest in silver and to be
      paid in silver. The purchase of the precious metals, or loans made
      by the state in foreign countries, with the intention of redeeming
      paper money, effect the same end at a much greater cost. (_Peschel_,
      D. Vierteljahrsschrift, 1858, III, 254.) If the currency consists of
      bank notes endowed by the state with compulsory circulation and an
      irredeemable character, such a metallic loan made in order to
      reimburse the bank for a loan to the state in depreciated notes is a
      gift made to the bank without reason; and the metallic money brought
      into the country flows back into foreign parts when the bank
      restriction is removed, because it, together with the appreciated
      notes, creates a too abundant circulation.

  940 Although in England the suspension of the redemption of notes had
      lasted from 1797 to 1819, depreciation of notes during the greater
      part of this time either did not occur at all (Summer of 1797 to
      1799, 1802 ff.) or was very small; and even during the last five war
      years, it did not amount to much over 30 per cent. About 1817, the
      notes of themselves again rose to par, and had lost but little
      during the following years, in consequence of the great loans of the
      continental powers in the English market. Under such circumstances,
      the repeated promise of the state to make the notes redeemable at
      their full nominal value was certainly a cogent reason for the
      Peel’s Act of 1819. In favor hereof are especially _Tooke_, Hist. of
      Prices, II, p. 60 ff., and _J. S. Mill_, Principles, III, ch. 13.
      Opposed to it, the so-called Birmingham-Atwood school and also _Lord
      Ashburton_, in his statement before the Agricultural Committee,
      1836. But according to _Rob. Muschet_, Tables, exhibiting the Gain
      and Loss to the Bondholders arising from the Fluctuations in the
      Value of the Currency (1826), the state creditors, on the whole,
      lost more by the depreciation of the notes than they gained by their
      subsequent rise. _Ad. Wagner_ also is decidedly in favor of the
      course A.

  941 This has occurred not unfrequently in the case of the paper money of
      subdued revolt: thus, for instance, the Hungarian of 1849; in the
      case of the Southern Confederacy. But the assignats, too, came to
      this end, although, according to _Büsch_ (Werke IX, 526), the
      intentions of the country at first were good; and in Austria, in
      1810, many prophecies looking in this direction were made. (Per
      contra _Rehberg_, Sämmtl. Schriften. IV, 334.) Not very differently
      did it fare with the Swedish coin-tokens (_Münzzeichen_) of Charles
      XII, which were altered 7 times between 1715 and 1718; and where
      besides, the tokens called in in a much too short space of time were
      transformed into small change coins 1/32 their value hitherto.
      (_Brückner_ in _Hildebrand’s_ Jahrb. 1864, I, 161, ff.)

  942 Thus it was, for instance, in Austria, in 1811 and 1820, at 1/5 and
      2/5 of the nominal value, in 1799 in the United States, in 1813 in
      Denmark with the currency notes (_Courantzettel_), in 1816 in Norway
      with the royal bank dollar notes, in Sweden in 1814 with the bank
      notes (_Bancozetteln_) at 37-½ per cent., in 1839 in Russia with the
      _bankassignationen_, at 2/7 of their nominal value. Of theoretical
      writers this course is recommended among others by _Jacob_,
      Staatsfinanzwissenschaft, § 980 ff.; _Nebenius_, Œff. Credit, 2
      Aufl., ff.; Deutsche Vierteljahrsschrift, 1841, I, 65; _Rau_,
      Lehrbuch, III, § 528; _Helferich_, Tüb. Ztschr., 1856, 435 ff.
      According to _v. Rotteck_, Lehrbuch, IV 402, it may be assumed that
      paper money is spread among the people of a country in proportion to
      their resources: which is also the hypothesis on which all direct
      taxation is based. Hence the gradual depreciation of paper money
      operates like the imposition of a tax and the _reduction of value_
      (_Deralvirung_) is, so to speak, only the release of the same.
      Besides _Gentz_ (Werke by Schlezier, IV, 58) shows from the example
      of Austria in 1811, that in the case of the taking up of a
      depreciated paper currency it makes a better impression to give 100
      florins in specie for 1,000 florins in paper, than 200 florins in a
      new kind of paper. The holders of the old paper money have now lost
      confidence in all paper currency. Of similar import is the immediate
      abolition of the compulsory circulation of paper money at its
      nominal value (_Prince Smith_ in _Faucher’s_ Vierteljahrsschrift,
      VII, 126 ff.), and the introduction of compulsory circulation in
      accordance with the day’s quotations of the actual value of the
      paper as compared with specie. (_Strache_, Die Valuta in Œsterreich,
      1861; _per contra_, _Ad. Wagner_, Tüb. Zeitschr., 1861, 606 ff.)

  943 Such measures as were adopted in Austria, in 1811, where a
      “redemption and extinction deputation,” independent of the
      government was established and sworn to prevent a further increase
      of paper money, are not sufficient of themselves alone.

  944 The Code Civil (art. 1895) makes the nominal value entirely
      conclusive; so, also, the Prussian Landrecht (I, § 790): which is to
      proclaim the omnipotence and infallibility of the state power in the
      most ingenuous or else in the most brutal manner. The power given by
      _Puchta_ to metallic value (Pandecten, VII, aufl., § 38) is
      applicable neither to paper money nor to small coin; and it ignores
      entirely that stamped coins and currency money are something
      different from mere metallic commodities and even from metallic
      bars. The Austrian civil law (_bürgerliche Gesetzbuch_) decides in
      favor of the current value (986 seq.): a view which most modern
      jurists since _Savigny_ (Obligationenrecht, I, 404; earlier yet,
      _Hufeland_, Ueber die rechtliche Natur des Geldschulden, 180)
      entertain. But they even fail to recognize that the depreciation,
      for instance, of paper money as compared with specie and general
      decrease of purchasing power are identical only in the case of such
      paper money or reduced coins which have no compulsory circulation.
      (_A. Wagner_, Tüb. Ztschr., 1863, 478 ff.)

  945 Let us suppose that at the moment the state could perform its duty
      to its servants only to the extent of one half. If it should frankly
      admit this, pay one-half in good money and remain in debt for the
      other half, it might subsequently, in better times, make good to
      them or to their heirs what it had now refused; and thus private
      credit, from the disturbance of which the state can only suffer,
      suffer no diminution. Both are quite different when the state
      disguises its insolvency under the mask of apparent full payment in
      paper money which has lost 50 per cent. of its nominal value. In
      opposition to the myth that the assignats saved France, see
      _Levasseur_, in the Acad. des Sc. m. et. p.

  946 It not unfrequently happens that a nation’s paper money has been
      directly or indirectly affected by an unfriendly state. Thus for
      instance, England, in 1794, tolerated an assignat manufactory at
      Lambeth, while Frenchmen imitated English bank notes. (_Archenholz_,
      Aenalen XI, 429.) Napoleon in 1812 issued forged Russian bank notes.
      (_Cancrin_, Œconomie der menschl. Gesellschaft, 136. _Niebuhr_,
      Gesch. der Revolution, II, 314.) When Maria Theresa first wished to
      introduce paper money, Bolza, her minister of finance, in his urgent
      appeal to her to desist from adopting such a measure, foretold the
      subsequent bankruptcy etc. (_Mailath_, Oesterr. Gesch., V., 83.)
      _Adam Smith_ compares gold and silver circulation to a highway
      which, indeed, produces nothing directly. Paper money is an advance
      similar to that which would be produced by the construction of a
      machine adapted to the carriage of persons and goods through the
      air, and which permit the highways hitherto used to be turned into
      meadows, arable land etc. _Ad. Smith_ very strongly emphasizes the
      insecurity of these “Dædalian wings” as compared with the “solid
      ground of gold and silver,” especially in the transitory misfortune
      produced by war. (W. of N., II, p. 78, Bas.) _David Hume_ says of
      all paper media of exchange, that they share all the harmfulness of
      an increase of specie money, enhancement of the price of
      commodities, aggravation of the obstacles to exportation; but that
      they do not share in the useful properties of specie money.
      (Discourses, On Money and on the Balance of Trade.) The younger
      _Mirabeau_ kept Necker from pursuing his plan to issue paper money
      with the words: _du papier monnaie c’est la peste circulante!_
      Inconsistent as Napoleon was in his bank policy (compare _Horn_,
      Bankfreiheit, 304), he always rejected paper money. As in 1805 he
      wrote to the minister of justice: _je ne veut pas de papier
      monnaie_: so, in opposition to the minister of the interior, he in
      1810 compared it to the plague: _le plus grandfléau des nations_.
      (Acad. des Sciences m. et p., 1864, II, 212.) _Sismondi_, too,
      compares paper money to the paper cannons of the Chinese, which
      render a cheap service until the hour of danger comes. (N.
      Principles, II, 107.) Of the banks he says: _les avantages
      aussi-legers les dangers aussi graves_. (Eludes, II. 421).
      _Cancrin_, Œkonomie der menschl. Gesellschaft, 1845, 152 ff., says
      he thinks that possibly it might have been well never to have
      established banks, but that yet the craving for the new is
      preponderately good, it brings inventions and improvements with it.
      Even _Tooke_ considers the insecurity of paper money a disadvantage
      which more than counterbalances its cheapness. (Considerations on
      the State of the Currency, 1829, 85.) On the doubts of _Jefferson_
      and _Gallatin_, see _Wolowski_, Enquête, 170, seq. _Webster_ called
      paper money “the most effectual of inventions to fertilize the rich
      man’s field by the sweat of the poor man’s brow.” _Tout papier
      monnaie par lui même est un mensonage._ (_M. Chevalier_, Cours, III,
      428.) _M. Niebuhr_ calls banks a poison which should be used with
      moderation. (Bankrevolution und Bankreform, 1846, 37.) Compare the
      writers named in § 2.

_  947 Avec la liberté un peuple n’a jamais de mauvaises monnaies_ (_F.
      Lenormant_): entirely so, provided _liberté_ be translated “true and
      insured freedom.”

  948 Law’s giddy projects under the regents of Orleans and the assignats
      of the first republic; Austria, Russia and the United States; the
      Danish absolute monarchy, and Sweden, both under Charles XII., and
      its oligarchical times. The history of Rhode Island paper money is
      peculiarly scandalous. All debts had to be paid within two years, or
      to be held invalid, and juries were dispensed with in such cases.
      (_Ebeling_, Gesch. und Erdbeschreib. von N. America, II, 173 ff.)

_  949 Ad. Müller_ compares “cosmopolitan” metallic money to a universal
      language: paper money ties one to the country, as people do not like
      to travel in foreign parts when they understand only their native
      language. As paper money compels subjects to take an interest in the
      state, a state like Austria would act very foolishly if it should
      begin its reorganization by enhancing its depreciated values
      (_Valuta_). (Elemente der Staatskunst, 180, III, 171; II, 339 ff.)
      Even in 1830, he found fault with the Austrian loan for the payment
      of the paper money. (Briefwechsel mit Gentz, 321 seq.) He lauded
      paper money because he claimed it led a country back to the barter
      And service-economy of the middle ages. (Verm. Schriften, I, 59 ff.)
      Similarly, _Gentz_, in his later writings. Compare _Roscher_,
      Gesch., der N. Œk., in Deutschland, II, 762.

  950 Who, for instance, would lay by a paper dollar in the savings bank
      for his godchild? In this respect, too, oriental countries have
      preserved much of the medieval. Concerning the aversion of the
      Egyptians of our day for all paper money, see _Stephan_, Ægypten,
      250 seq. This is all the more surprising since during several months
      after the harvest, there are from 4,000,000 to 8,000,000 piasters in
      specie sent every day from Alexandria by post to private individuals
      in the provinces. In addition to this there is the immense
      difference in the French, English and Austrian coins circulating in
      the country, and which have very different rates in the different
      provinces. It is still worse in Arabia. (_v. Maltzan_, Reise, I,
      27.)

  951 Compare _v. Schlozer_, Anfangsgründe, I, 140 ff. _M. Niebuhr_ (Rau’s
      Archiv. N.F. II, 125) finds paper money best adapted to countries
      without any exchange-trade, but which at the same time require a
      species of money easily computed and easy of transportation
      (Russia); countries whose national economy has an extraordinarily
      rapid growth (the United States); and in unusually solid countries
      (Scotland).

_  952 List_, Nat. System der politischen Œk., I, 394. A private
      individual of small means who should go on his travels without money
      would be subject to all sorts of annoyances; a king or a Rothschild,
      just as soon as he was recognized as such, would find credit
      everywhere. Thus, English businessmen have outstanding claims in all
      parts of the world, which might without any great difficulty be
      called in in the precious metals. The more the division of labor is
      developed, the better may the condition of a nation’s whole economy
      be seen reflected in the course of its banking system and its
      exportation and importation.