The Online Library of Liberty

A project of Liberty Fund, Inc.

• Political Economy
• Part I.: Character and Logical Method of Political Economy.
• Part II.: Production.
• Chapter I.: Land and Natural Agents.
• Chapter II.: Labor.
• Chapter III.: Capital: Its Origin and Office.
• Chapter IV.: The Productive Capability of a Community.
• Part III.: Exchange.
• Chapter I.: The Theory of Value.
• Chapter II.: The Theory of International Exchanges.
• Chapter III.: Money and Its Value.
• Chapter IV.: Money and Its Value—continued—debased Coin: Seigniorage.
• Chapter V.: Inconvertible Paper Money.
• Chapter VI.: Bank Money.
• Chapter VII.: The Reaction of Exchange Upon Production.
• Part IV.: Distribution.
• Chapter I.: The Parties to the Distribution of Wealth.
• Chapter II.: Rent.
• Chapter III.: Interest.
• Chapter IV.: Profits.
• Chapter V.: Wages.
• Chapter VI.: Wages.—continued.
• Chapter VII.: Two Other Shares In Distribution.
• Chapter VIII.: The Reaction of Distribution Upon Production.
• Part V.: Consumption.
• Chapter I.: Subsistence: Population.
• Chapter II.: The Appearance of New Economic Wants.
• Chapter III.: Consumption: the Dynamics of Wealth.
• Part VI.: Some Applications of Economic Principles.
• I.: Usury Laws.
• II.: Industrial Co-operation.
• III.: Political Money.
• IV.: Pauperism.
• V.: The Doctrine of the Wage-fund.
• VI.: The Multiple Or Tabular Standard of Deferred Payments.
• VII.: Trade Unions and Strikes.
• VIII.: The Knights of Labor.
• IX.: Attacks On the Doctrine of Rent.
• X.: The Nationalization of the Land.
• XI.: The Banking Functions.
• XII.: The Present Banking System of the United States.
• XIII.: Foreign Exchanges.
• XIV.: Bi-metallism.
• XV.: The Revenue of the State.
• XVI.: The Principles of Taxation.
• XVII.: Protection Vs. Freedom of Production.
• XVIII.: Socialism.

PART V.

CONSUMPTION.

CHAPTER I.

SUBSISTENCE: POPULATION.

381. What is Consumption?—By the term consumption, in economics, we express the use made of wealth. This does not necessarily imply the destruction of the form or material of the commodities so used, or even the exhaustion of the value which had at some time been imparted to them. In general, however, the use of wealth involves, in a greater or less degree, loss of substance and change of form, with a decline, rapid or slow, in that power in exchange which we call value.

“That almost all that is produced is destroyed, is true; but we can not admit that it is produced for the purpose of being destroyed. It is produced for the purpose of being made use of. Its destruction is an incident to its use; not only not intended, but, as far as possible, avoided.”∗ That destruction may, in exceptional cases, be practically avoided altogether. An intaglio is consumed, in the economic sense, when it finds its place in the British Museum, where it may remain unimpaired through uncounted centuries. Certain hewn stones were consumed, in the economic sense, twenty-five hundred years ago, when they were lifted into their place in a Roman aqueduct. As hewn stones, simply, they had been commodities, having a variety of possible uses. They might have been wrought into the fortifications of the city, or used in building a temple, or an amphitheater, or a private palace. But when once they were applied to a definite use, they were, in the economic sense, consumed. They ceased to be merely hewn stones, to be sold by themselves, and subject indifferently to many uses; they became inseparable parts of something else.

Iron ore is consumed, i. e., applied to the end in view in its production, when thrown into the furnace, and here takes place almost instantaneously not only a great chemical change, but a complete loss of form. The iron bar or plate is in turn consumed, when it is fitted into a bridge, without undergoing any chemical or mechanical change at the time, to be thereafter subject only to slow agencies of decay in the atmosphere, or to effects of attrition which, from one year to another, would be imperceptible.

382. Consumption as a Department of Political Economy.—Why should the economist interest himself, at all, in questions relating to consumption? Why, having traced wealth through its production, distribution and exchange, should he not leave it in the hands of the consumer without further inquiry, satisfied with its having reached the end for which it was created? So have many, indeed most, economists dealt with the uses of wealth, declining to recognize consumption as a department of political economy.

It is, of course, competent to any writer on economics thus to limit the scope of his inquiry; but I can not but deem it a subject of much regret that the fascinations of the mathematical treatment of economic questions, and the ambition to make political economy an exact science, should have led to the practical excision of the whole department of consumption from so many recent works. For, after all, the chief interest of political economy to the ordinary reader, its chief value to the student of history, must be in the explanation it affords of the advance or the decline in the productive power of nations and communities; and it is only in the consumption of wealth that we find the reasons for the rise of some and the fall of others, from age to age.∗ It is in the use made of the existing body of wealth that the wealth of the next generation is determined. It matters far less for the future greatness of a nation what is the sum of its wealth to-day, than what are the habits of its people in the daily consumption of that wealth; to what uses those means are devoted. That wealth may be applied to ends which inspire social ambition, which restrict population within limits consistent with a high per capita production, which increase the efficiency of the laborer and supply instrumentalities for rendering his labor still more productive, or it may be applied to ends which allow the increase of population in the degree that involves poverty, squalor and disease; to ends which debauch the laborer morally and physically, striking at both his power and his disposition to work hard and continuously. When it is remembered that statisticians estimate the wealth of England at only five or six times the amount of its annual production, it will appear of how much more importance, in the large view of a nation's future, is the direction of its expenditures than the absolute amount of its accumulations, at any given time. The completeness with which the French people, through their temperance, frugality and industry, combined with the strict repression of population, made up in a few years the terrific losses and fines of the German war, affords a very striking illustration of the virtue there is in the labor power of a country to replace its capital, if only a right consumption of the annual product be assured.

383. Subsistence.—The primary use of wealth is for subsistence. In the earliest stages of human society, man, like the lower animals, had only one want. Like the lower animals, he gathered his food, whether fish or flesh or nuts or berries, where he chanced to find it, and ate it without preparation. Long, however, before he began to cultivate food, even in the simplest way, he began to cook it. The discovery of fire and its application to the preparation of food, is made by some writers upon primitive society to mark the boundary between the purely savage and the barbarous condition.

Man is the only animal that has attained the capability of preparing food for consumption. All other species are content with the animal or vegetable material. Man, even in the lowest of existent communities, demands for his subsistence something more than the raw material. It must be prepared or manufactured for his uses, though this may be by very rude and simple processes.

384. Clothing and Shelter.—At what stage in the evolution of the human kind, clothing and shelter, other than that furnished by the casual cave or by the foliage of the forest, became a requirement of the theretofore naked man, exposed unsheltered to the storm, we need not inquire. At moderate elevations throughout the zone in which the human race originated, that requirement has never been onerous. The amount of effort there involved in providing the bamboo hut, the wigwam of poles and boughs, or the tent of skins, for protection against the rainy season, and in preparing the scanty garment of pelts or of cloth, demanded by comfort or by the awakened sense of decency, has never been great. Food still remains, in those regions, the one great requirement of human existence.

When, however, mankind spread over higher altitudes or zones further removed from the equator, as tribes were driven up the mountain sides by victorious enemies, or were crowded toward the arctic or antarctic circles by the increasing scarcity of the casual food of the chase, of the fishery, or of the natural forest, the requirement of clothing, of shelter, and last of all, of fuel, came to be of increasing urgency and severity. Within certain limits, however, clothing, shelter and fuel are, in the higher latitudes, interchangeable with food, in the human economy. One of the prime purposes of food being there the maintenance of the warmth of the body, that occasion may, in part, be served indifferently by a certain amount of food, or by clothing of a certain thickness applied to the frame, or by the combustion of a certain amount of fuel within an inclosure, or of a larger amount of fuel in the open air.

And here, as on the ten thousand occasions of a higher civilization, it is found that the greatest economy resides in the largest capitalization of labor. A dress of skins, which may have cost the effort of a week, will, during the time it lasts, more than replace, for purposes of warmth, food which would have required the efforts of many months. A hut which may have been a season in building, may save more in the food required for health and comfort, during the lifetime of the builder, than could have been obtained by the hunting or the fishing of years.

385. Now let us suppose that, within some geographical division, the conditions of production are such that each adult male is able by steady labor to secure for himself considerably more, in the way of food, clothing, shelter and fuel, than is required for his own subsistence in health and strength to labor and in physical comfort, meaning, by this last, not much, only a freedom from pain and discomfort. It does not matter, whether the laboring population under consideration obtain the means of subsistence, as hunters, as fishermen, as herdsmen, or as agriculturists. The question we have to ask is, what will these laborers do with the wealth they produce, after the strict needs of subsistence are met; how will they consume it?

386. The Wife.—In the first instance, it may be assumed that each laborer will undertake the support of one adult female, and this, not out of charity, or compassion, not by the force of any legal arrangement, not with any reference to the continuance of the tribe, but in obedience to a natural instinct second only, in the demand it makes upon men, to the craving for food. The latter satisfied, the former asserts itself, irrepressibly, among all classes and conditions of men, in all states of human society.

The woman with whose subsistence the laborer's income or annual production of wealth thus becomes charged, will, in greater or less degree, add to the means of the family thus formed. She will spin and weave, fashioning the fibrous materials which the man has gathered, into garments, blankets, and nets. She will, in various ways, prepare the flesh, the fish, or the vegetable food, which the head of the family supplies, rendering it more palatable, more nutritious, more wholesome, or less perishable, according to the nature of the subject matter. She will bring water from the spring or brook. She will keep the hut or tent in a certain order and decency.

While, thus, the female, in an early stage of industrial society, adds something to the family means, both by what she makes and by what she saves from waste, we may assume that, speaking broadly, she does not produce as much as she consumes. The margin of subsistence which the hunter, the fisherman, the herdsman, the tiller of the soil enjoys, is smaller after he has taken a wife than before. Nor is the contribution made by the wife to the joint revenue of the family in any degree a determining cause of the formation of the family.

We have, thus, the two earliest forms of the consumption of wealth, first, in the sustentation of the individual laborer, and secondly, in the maintenance of the wife. Let us suppose, for the further purposes of this discussion, that the production by the head of the family, increased by the wife's contribution, amounts to three and a half times what is necessary to support one adult person in health and strength to labor, and in physical comfort, according to the definition of that term already given. We have, then, to be deducted from this amount the subsistence of both husband and wife.

387. The Child.—Now, we have to note the third great form of consumption, in the order of nature. The association of husband and wife is followed, in the vast majority of cases, by offspring. Races that are comparatively infertile, for what reason physiology can not say with confidence, are known to history, and some such are to-day in occupation of portions of the earth's surface; while, among prolific races, are here and there found individuals who are sterile, from causes which physiology is equally unprepared to explain. The proportion of these exceptional cases among laboring populations is very small. We may, therefore, disregard them in our argument.

The appearance of the child makes a new and imperative demand upon the revenue of the family. In the immediate instance, it diminishes the ability of the mother to render her accustomed services in the household and reduces her contribution to the joint income. Then and afterwards, for a long time, it causes a steady draft upon the resources of the father in the way of food and clothing.

The demand thus made upon the family income is, within the limits of the father's ability, met, in general, fully and even cheerfully. It is not in obedience to the requirements of law, or because of any patriotic desire to make good the numbers of the community, or contribute to the strength of the state, or, on the other hand, from the consideration that these babes may, after the lapse of years, themselves become producers, and possibly, in time, become his support in his old age, that the father unquestioningly gives up to his children that margin of subsistence, which, as a married man without children, he might have enjoyed. It is in obedience to a purely individual feeling, of an instinctive character, so generally planted in the human mind that, in spite of instances of parental neglect or cruelty, we may speak of it as universal.

Here we have the third form in which wealth is consumed. It will be remembered that, thus far, we have supposed nothing to be done with the wealth produced in the primitive community which has for its object display, luxury, or even the gratification of appetite beyond the actual requirements of subsistence. That wealth is applied to the support, first of the productive laborer, secondly, of the wife, taken in obedience to a natural craving which may be termed a universal instinct of mankind, and, thirdly, of the children springing from that union.

388. Children in Excess.—Let us suppose that, with three children, of various ages, the subsistence which can be provided by the head of the family is fully taken up. These five persons, male and female, old and young, consume all that can be produced, which we have assumed to be equal to the sustentation of three and a half adults. If, now, other children are to appear to claim a support at the hands of the husband and father, what will be the result? Clearly, a reduction in the standard of living. There will no longer be food, clothing, shelter and fuel adequate to maintain each and every member in health and strength, and without pain or discomfort resulting from deprivation of things needful. The new-comers will, indeed, under the impulse of the parental instinct, be admitted to an equal participation in the family income; but the share of each member of the family will be diminished. The pinch may come earliest and most severely at one point rather than another; food may be denied, or fuel, or clothing, or shelter, according to circumstances; but, in one way or another, something less than what is necessary to maintain the members of the family in health and strength and comfort, is supplied. Of this the effects may be grouped in three forms: first, the reduction of vital force and labor power; secondly, the diminution, perhaps the disappearance, of the subsistence fund heretofore laid up against the occurrence of bad seasons or the disability of the head of the family through accident or sickness, thirdly, the generation of infirmities and diseases of a transmissible character.

389. The Effort of Nature to Restore Equilibrium.—Now let us, further, suppose this increase in the number of children beyond the limits of subsistence to have taken place uniformly throughout the tribe, but to have taken place once for all, not from a persistent but from a purely transient cause: will there be any effort of nature to restore the condition of general health, strength and comfort, which has been for the time lost?

It is, indeed, true that nature will make an effort, first, through disease, which will have a greater destructive power upon an ill-sustained than upon a well-sustained community, especially in the case of children and of the aged; secondly, through an impairment of the reproductive power of the adult; and, thirdly, through famine breaking upon a population whose store laid up against drought or flood or fire or the ravages of insects, has been, once for all, eaten up. But this effort of nature will be unequal to the work to be done. The history of a thousand tribes shows that there is not sufficient force in famine or disease to prevent the permanent reduction of a community, through excess of numbers, from a condition of physical well-being to one of inadequate subsistence with consequent impairment of vital force and labor power.

390. Solidarity of the Family.—Of late years, with the growing interest in biological investigation, there has been manifested a disposition, in certain quarters, to glorify privation and famine, as agents in the uplifting of the human condition, the doctrine of the “survival of the fittest” being applied to societies of men without due consideration of a most important difference existing between men and other species of animals.

It is the solidarity of the family which prevents the law of the survival of the fittest from exerting that power in raising the standard of size and strength and functional vigor among men, which it exerts throughout the vegetable and the animal kingdoms, generally. In the vegetable kingdom I suppose there are no traces of this solidarity of parent and offspring, although not being a botanist I can not speak with assurance. In the animal kingdom, exclusive of man, the solidarity of the family exists, indeed, but to a limited extent only, and for a brief period. The mother protects and nourishes her offspring most sedulously and devotedly; drains her life-blood for its support, and will die in its defense; but, in general, when the offspring is weaned the connection is broken. The lives become separated. The young must thereafter be their own providers and protectors. Mother and child become competitors for food in the same field or forest; may even tear and kill one another in the struggle for existence. Thus the principle of survival obtains leave to operate. If the conditions of existence become hard, if subsistence is inadequate, the weak, the deformed, the sick, are run over, trampled on, killed out, while the fittest survive, acquire all the nourishment which is to be had, grow continually larger and stronger, breed only among themselves, and thus the standard of size and strength rises from generation to generation.

With man, however, the conditions of the struggle for existence are greatly changed. Generally speaking, that struggle is between families as units, not between individuals. Within the family, the young and old, the weak and the strong, male and female, are bound together by natural instincts, which are too strong for pain, for hunger, for death itself. If want or famine pinch, all suffer together. So far as any preference is given, it is to the younger and the weaker. The parent denies himself that the cries of the child may be hushed. If one member of the family fall sick, instead of being neglected, or even trampled on, as among the lower orders of animals, he commands the tenderest care of all. This, clearly, is not a condition under which the principle of “the survival of the fittest,” however fierce may be “the struggle for existence,” can operate among men, to raise the standard of size and strength and functional vigor. Instead of the natural elimination of the weakest and the worst, it is here the best who, from sexual or parental love, bare their breasts to receive the blows of fortune.

391. The Capabilities of the Procreative Force.—We have thus far inquired respecting the effects of an increase of the number of children in any community beyond the limits of subsistence, assuming for the moment the increase to be due to purely transient and adventitious causes. How is it as to the degree of activity and persistence in the procreative force, in the presence of a threatened reduction in the standard of living below the point of health, strength and freedom from discomfort?

But, first, of the reproductive capability of mankind. It is evident that the mere fact of children being born to parents does not, of itself, insure or threaten any increase of numbers from generation to generation. With the limits set to human life, reproduction in a certain degree may be only sufficient to make good the loss by death. It may be even less than is necessary to this end. Hence we must inquire what is the normal relation between births and deaths.

In his celebrated treatise on “Population,” Mr. Malthus assumed a birth rate sufficient to yield, in spite of occasional celibacy and exceptional sterility, in excess of four children to a family. There is reason to believe that in any colony of European blood, planted on new land, of reasonably salubrious quality, within the temperate zone, this rate of increase would be reached, and, in the majority of cases, exceeded. That rate of reproduction alone, however, would be sufficient to secure an appreciable increase of each generation over the one preceding, were the facts of infant and of adult mortality but moderately favorable to the growth of population.

392. Geometrical Progression.—Now, if we may assume for the members of successive generations an undiminished degree of fecundity, we have here all the conditions of a geometrical progression. And the possibilities of geometrical progression, when persisted in for a long time, become simply tremendous, whether in population, in wealth, or in any other direction.

What is the characteristic of geometrical, as contrasted with arithmetical, increase? It is that, in the former case, the increase itself increases: the fecundity of the original stock is transmitted through all that is successively derived from it. Thus, to take a series of ten terms, we might have

Arithmetical: 2, 4, 6, 8, 10, 12, 14, 16, 18, 20.

Geometrical: 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024.

Here, in the arithmetical series, the difference between the ninth and tenth terms is the same as that between the first and second, viz., 2. In the geometrical series, the difference between the first and second terms is, also, 2; while, between the ninth and the tenth, it is 512. It would require more than five hundred terms to carry the arithmetical series to the point which, in the geometrical series, is reached in ten terms. It would require more than a million terms to carry the former series to the point reached by the latter in twenty-one terms; a thousand million terms to carry the former series to the point reached by the latter in thirty-one terms.

These tremendous leaps in the geometrical series, are due to the fact that the increase between the first and second terms becomes itself the cause of a proportional increase between the second and third terms; which increase, in turn, becomes the cause of corresponding increase between the third and fourth, and so on to the end. Whereas, of the arithmetical series we may say that the entire increase comes out of the original stock, which continues to propagate at a constant rate, while all the successive increments so produced remain barren.

393. Population Increases by Geometrical Progression.—Now it is according to the former and not the latter law, that population increases; and as we said, the consequences of a persistence in a geometrical ratio, through a considerable period of time, are simply tremendous. “The elephant,” says Mr. Darwin, “is reckoned the slowest breeder of all known animals, and I have taken some pains to estimate its probable minimum rate of natural increase. It will be safest to assume that it begins breeding when thirty years old, and goes on breeding till ninety years, bringing forth six young in the interval, and surviving till one hundred years old; if this be so, after a period of from seven hundred and forty to seven hundred and fifty years, there would be alive nearly nineteen million elephants descended from the first pair!“

Man, though a slow breeder, as compared with many of the lower animals, has a rate of reproduction far exceeding that of the elephant. Population has shown the capability, over a vast extent of territory, on more than one continent and through considerable periods of time, of doubling once in twenty-five years. With this capability we may say that, if “neither evil, nor the fear of evil” checked the population of the United States, it would, in a century and a-half, amount to three thousand two hundred millions. Of course this consummation could never be reached. Such a population would be impossible under the conditions of human existence.

394. The Persistence of the Procreative Force.—Such being the capabilities of the procreative force, when operating unrestrained, let us inquire what virtue there is in the fear of a reduction of the standard of living below the point of health and physical comfort, to check population at that line.

It is commonly assumed, in discussions relating to wages, that the laboring class will more and more withhold their increase as the conditions of life become harder and harder; and that any economic injuries which they may suffer, from whatever cause, will, in the order of nature, be in this way repaired. Instead of it being true, however, that the laboring class tend thus to resist and resent any lowering of the standard of subsistence, the fact is that never is the procreative force more active than when the conditions of life become meager and squalid; when the reserve of the summer against the winter, of the good year against the bad, is swept away by the clamorous necessities of to-day; when alike enjoyment of the present and hope for the future are at their lowest point. Never had the marrying age been earlier, or christenings more frequent in Ireland than when, just upon the verge of the great famine, Earl Devon's Commission, in 1844, thus described the condition of the peasantry: “In many districts, their daily food is the potato; their only beverage, water; their cabins are seldom a protection against the weather; a bed or a blanket is a rare luxury; and, in nearly all, their pig and manure heap constitute their only property.”

The state of the population of India and China affords a conclusive proof that there is not sufficient virtue in economic forces to keep population above the plane of extreme misery, if once it falls below the plane of comfort and decency. On the contrary, a moral weakness or recklessness is induced which tends strongly and swiftly to carry population to the point of industrial distress. Then, indeed, famine makes its appearance, as periodically in India, to set bounds to increase of numbers; but, for the reasons that have been stated, this force does not operate, as in the animal kingdom exclusive of man, to cut off only the least active, aggressive, intelligent, or self-reliant. The effect of famine, and of the diseases generated by famine, operating upon population across the barrier imposed by the solidarity of the family, is to lower the physical tone, to tamt the blood, and weaken the will-power of the entire body, making it increasingly difficult, from generation to generation, to restore the lost conditions of economic well-being.

CHAPTER II.

THE APPEARANCE OF NEW ECONOMIC WANTS.

395. An Ascending Scale of Personal Consumption.—We have thus far dwelt on the effects of an increase of numbers beyond the limits of subsistence, as the latter are determined by the law of diminishing returns in agriculture. We have seen, that since the procreative force increases rather than diminishes in the face of poverty and squalor, there is no natural resting-place for population, if once it passes below the plane of ample subsistence, until it reaches the point where it meets the “positive checks” of famine and disease and, it may be added, of war.∗ This principle of population, to which we give the name, Malthusianism, was first clearly enunciated and fully illustrated by Mr. Malthus, in the last year of the last century, although intimated in the writings of earlier economists, especially of the Italian Ortes.

Let us now consider the relations of subsistence and population, on an ascending scale of personal consumption. We have seen that population will go on increasing as fast and as far as food is provided to support it, all increase of wealth surely taking the form of an increase of numbers, unless other and more imperative demands are made upon the income of the family. But let us suppose that, at the point where a competent subsistence is provided to maintain the whole population in health and strength to labor, and in freedom from all discomfort resulting from privation of things absolutely necessary, the want of something beyond this comes to be strongly felt by the individual members of the community.†

396. Diversity of Early Economic Desires.—What that want may be does not matter for the purposes of the present discussion; and, indeed, it would not be likely to be the same in the case of all communities. In one, the first want felt, after the absolute requirements for the support of life and laboring power are satisfied, is of ornament and decoration. Even when men are hardly covered from the cold and scantily nourished, the passion for display makes its appearance in forms that are ludicrous enough to the eye of the civilized man, but which have a most serious meaning to the barbarian and engross his faculties as completely as widely different objects do the faculties of the Parisian. In another community, the first want felt after the claims of immediate bare subsistence are met, is of a store for the future and a provision against the caprices of the seasons and the casualties of life. Just as the ant—the ant of fable, at least, if not of the naturalist—differs from the butterfly, so have certain tribes of men, in the earliest condition to which we can trace them, differed from others in this respect of care for the coming time. The first want emerging in the life of another community may be of wealth to be expended in worship and in honor of the national or local deity. Millions of men may consent to live squalidly that a few temples may shine like the sun, their altars smoke with unending sacrifices, their priests walk resplendent with embroidered and jeweled vestments. In still other communities, the new want may take the form of a love, no longer of ornament, but of comely dress, or of desire for a diversified diet, or of a taste for leisure, or of a craving for some costly drug or drink, like the opium of the East Indian and the Chinaman or the fire-water of the North American Indian.

Writers on economics have, indeed, endeavored to establish something like an order of natural succession for the various wants emerging in human experience: thus Prof. Senior says that man's “first object is to vary his food;” “the next desire is variety of dress;” “last comes the desire to build, to ornament and to furnish;” I deem it, however, more consonant with what is known of communities having only a small margin of living, to hold that the appearance of economic desires, beyond the need of bare subsistence, is governed by the moral and social characteristics of each race or tribe of men.

397. Economic Wants Antagonize the Procreative Force.—Whatever be the passion or desire which is first developed in the mind of any community, it makes a demand upon the existing body of goods, or upon the current production of wealth, which at once antagonizes the strong and urgent disposition, which has been indicated, to the consumption of wealth in the support of an increasing population. The newly awakened passion or desire can not be gratified out of the existing fund of wealth, unless the procreative force receive a check. Whether this shall be done or not, is a question upon the answer to which depends the whole economic future of the community.

Any economic want may act in restraint of population in one or more of three ways: first, by diminishing the numbers of the marrying class, inducing celibacy among those who do not find the way to obtain an income adequate to the support of a family; secondly, by procrastinating marriage; and thirdly, by diminishing the birth-rate within the married state. The forces which operate in restraint of population may take any one of these three ways, or take them all, in which latter case the reduction of the ratio of increase will be very marked. If for example, the number of married pairs in a given community were brought down from 100 to 80, by the spread of celibacy; if, through later marriages, the child-bearing period for each married pair were reduced from twenty years to fifteen, and if the interval between births were extended from two years to three, the number of children born under the latter state of things would be, to the number born under the former state, as 40 to 100.

398. A Diversified Diet.—Whatever be the want most commonly felt, after the requirements of mere subsistence are met, there can, I think, be no question that the want which has been efficient on the largest scale, at once in promoting labor for its gratification, and in restricting the increase of population, is the craving for a diversified diet. Once let the traditional sole diet of the barbarian, be it fish, or flesh, or grain, be crossed with some other species of food, exciting thus the pleasure which resides in variety, and an economic force has been introduced into the life of the community which is capable of producing mighty results.

Without claiming to speak with authority as a student of sociology, I should say that this has been the lever by which more tribes and races of men have been raised and kept, one degree, at least, above the condition of a population pressing all the time, at all points, upon the limits of subsistence, than by any other.

A diversified diet, although doubtless it contributes, in a degree, to health and vigor, is yet a pure luxury in the sense that it is never sought on the former account, but wholly because of the gratification of appetite thereby secured. It will seem strange to those who have not studied the question of population, that an appetite for objects of luxury should be spoken of as having greater power to overcome the disposition to indolence and the disposition to excessive procreation, than the fear of privation and actual misery. Yet so it is; and as we go up the scale of human wants and desires, as viewed by the moralist, we shall find that, in general, the higher the want or desire, ethically considered, the stronger it proves to be. Mere sentiments, involving no gratification to any bodily sense, impel men to exertions the most painful and protracted, and hold in check the most masterful passion of the human kind, that passion which defies abject physical want and laughs in the face of famine and pestilence.

399. Decencies.—Of narrower range in its application to tribes and races of men than the desire of a diversified diet, but of greater intensity and persistency within that range, is the desire of what we may call decencies, meaning thereby those things which are prescribed or required by public opinion. It is evident that the term decencies, in economics, must have a very various application to different communities and to different classes within the same community.

“The question whether a given commodity is to be considered as a decency or a luxury, is obviously one to which no answer can be given, unless the place, the time and the rank of the individual using it be specified. The dress which in England was only decent a hundred years ago, would be almost extravagant now; while the house and furniture which now would afford merely decent accommodations to a gentleman, would then have been luxurious for a peer.

“The causes which entitle a commodity to be called a necessary, are more permanent and more general. They depend partly upon the habits in which the individual in question has been brought up, partly on the nature of his occupation, on the lightness or severity of the labors and hardships that he has to undergo, and partly on the climate in which he lives.

“Shoes are necessaries to all the inhabitants of England. Our habits are such that there is not an individual whose health would not suffer from the want of them. To the lowest class of the inhabitants of Scotland they are luxuries. Custom enables them to go barefoot without inconvenience and without degradation. When a Scotchman rises from the lowest to the middling classes of society, they become to him decencies. He wears them to preserve, not his feet, but his station in life. To the highest class, who have been accustomed to them from infancy, they are as much necessaries as they are to all classes in England.

“To the highest classes in Turkey, wine is a luxury, and tobacco a decency. In Europe, it is the reverse. The Turk drinks and the European smokes, not in obedience but in opposition both to the rules of health and to the forms of society. But wine in Europe and the pipe in Turkey are among the refreshments to which a guest is entitled, and which it would be as indecent to refuse in the one country as to offer in the other.

“A carriage is a decency to a woman of fashion, a necessary to a physician, and a luxury to a tradesman.”∗

400. The Desire of Decencies the Great Preventive Check to Population.—Whatever dignity the moralist may assign to the disposition to conform to the prevailing sentiments of the community, the economist must recognize this as the most effective motive which operates either to urge men to labor for the production of wealth, or to check the increase of population after the condition of “diminishing returns” has been reached. It is in the latter respect that we have here especially to do with it. “The great preventive check,” says the wise economist so oft quoted in this chapter, “is the fear of losing decencies.” If by this is to be understood the check which is of greatest potency where it operates at all, the remark is perfectly just. But, in fact, it is only in few communities that this cause operates with sufficient force to restrict population within the limits of the highest per capita production. In England, among the working classes reproduction has gone on with the least possible regard to its effect upon the standard of living. In France, on the other hand, even the peasantry are so fully alive to the inexpediency of a rapid multiplication, and are so temperate and prudent, that the excess of births over deaths has been reduced to a minimum. In the States of the American Union, the increase of population was, until recently, everywhere encouraged by the fact that the country had not reached the condition of diminishing returns, but, on the contrary, as is always the case before that condition is reached, foreign immigration and native growth in numbers alike added to the power and wealth of the several communities. Within the past twenty-five years, the rate of natural increase in the Northeastern States has encountered a decided check, due to the rising standard of living in communities whose productive capabilities are already fully developed.

401. Influence of a Popular Tenure of the Soil Upon Population.—There can be no question that the influence exerted upon population by a popular tenure of the soil is very conservative. The reasons therefor are thus stated by M. Sismondi:

“In the countries in which cultivation by small proprietors still continues, population increases regularly and rapidly until it has attained its natural limits: that is to say, inheritances continue to be divided and subdivided among several sons as long as, by an increase of labor, each family can extract an equal income from a smaller portion of land. A father who possessed a vast extent of natural pasture, divides it among his sons, and they turn it into fields and meadows; his sons divide it among their sons, who abolish fallows; each improvement in agricultural knowledge admits of another step in the subdivision of property.

“But there is no danger that the proprietor will bring up children to make beggars of them.

“He knows exactly what inheritance he has to leave them; he knows that the law∗ will divide it equally among them; he sees the limits beyond which partition would make them descend from the rank which he himself has filled; and a just family pride, common to the peasant and the prince, makes him abstain from summoning into life children for whom he can not properly provide. If more are born, at least they do not marry, or they agree among themselves which of the several brothers shall perpetuate the family.”

The power of population strictly to limit itself, under the impulse to preserve family estates from undue subdivision, by the means adverted to in the closing sentence of the paragraph quoted, is strikingly illustrated by Prof. Cliffe Leslie in the facts which he adduces regarding the population of Auvergne, in France. In the mountains, it appears, the people cling with remarkable tenacity to the conservation of the inheritance unbroken. The daughters willingly consent to take vows and renounce all part in the common estate; or, if they contract marriage, agree to leave to the head of the family their individual shares of the inheritance. It is the same with the sons, of whom some become priests; others emigrate, consenting never to claim any part of the property. One of the sons remains at home, working with the father and mother, and becomes in time the proprietor of the ancestral estate. Thus the principle of equal partition, established by law, is eluded by the connivance of the family, it seldom occurring that the other children assert their claims, so fully accepted is this usage in the manners of the mountains.

Prof. Leslie, after giving the foregoing as the substance of an official report, adds: “The renunciation by the emigrants of their share in the family property certainly shows, if not an extraordinary imperviousness to new ideas, an extraordinary tenacity of old ones; and, in particular, of two ideas which are among the oldest in human society—subordination to the male head of the family, and conservation of the family property unbroken.”

From the London Times,∗ I take the following testimony to the influence of an extensive ownership of land in antagonizing the procreative force, and in winning for improved living, comfort, luxury, and security of condition, what would otherwise be usurped and wasted upon increase of population, with resulting squalor and poverty:

“Over the greater part of France the standard of comfort and well-being has been increasing ever since the termination of the great war, in 1815. The country had been so drained and impoverished by the wars of Napoleon and by a century and a half of bad government, that the general misery of the population was indescribable, and the poverty even of the landed proprietors and middle classes was very great. … For many years comfort and well-being, and even luxury, have made their way into the households of all classes in France. The standard of living has risen enormously. The habits of saving and thrift have not been neglected. In the art of managing and regularizing their lives, the French people are unrivaled and the object of every family is to live well and to save, at the same time, so as to be able to leave their sons and daughters in as good a position as themselves, at all events, and in a better, if possible. … Among people with such habits and such views of life, the risk and expenditure attendant upon a large family are naturally regarded with horror. ‘Since two or three children give us sufficient enjoyment of the pleasures of paternity, why,’ the greater number of Frenchmen argue, ‘should we have more? With two or three children we can live comfortably, and save sufficient to leave our children as well off as ourselves; a greater number would involve curtailment of enjoyments both for ourselves and our children.’”

402. Attacks Upon the Doctrine of Malthus.—The views respecting the relations of population and subsistence contained in the foregoing paragraphs are essentially those which are known as Malthusian. Mr. Malthus unquestionably committed some errors of statement and faults of reasoning in his original enunciation of the principles of population, as is likely to be the case on the first promulgation of great economic or social laws; and during his whole life he was closely followed by criticism and abuse. Since Mr. Malthus' death has taken all personal interest out of the controversy over the principles of population, and Malthusianism has come to be merely a name for a body of doctrine, the views here presented have been a butt for the headless arrows of beginners in economics and of sundry sentimental sociologists.

Meanwhile the doctrine (1) that there resides in nearly all races and tribes of men a strong, urgent, persistent disposition to carry the increase of population beyond the limits of adequate subsistence; (2) that very few, even among the noblest of modern communities, have shown the capability to check reproduction at the line of the highest per capita production of food, clothing, shelter and fuel; (3) that, if this line be once over-passed, the procreative force proceeds thereafter with augmented force; (4) that, if the desire of luxuries and decencies does not prevail to stop the increase of population, the fear of losing necessaries, and even the actual experience of privation and suffering almost certainly will fail to do so; (5) that, through the dominion of this imperious instinct, nearly all the communities of men are under the constant imminence of being swept away into misery, squalor and disease, this doctrine which we term Malthusianism has stood unshattered, impregnable, amid all the controversy that has raged around it.

403. Prof. Senior's Statement.—I can not forbear again to quote this eminently wise economist, to whose criticisms, indeed, Mr. Malthus owed the correction of some of the faults of his original statement of the principles of population. Prof. Senior says:

“Although we believe that, as civilization advances, the pressure of population upon subsistence is a decreasing evil, we are far from denying the prevalence of this pressure in all long settled countries: indeed, in all countries except those which are the seats of colonies applying the knowledge of an old country to an unoccupied territory.

“We believe that there are few portions of Europe the inhabitants of which would not be richer if their numbers were fewer, and would not be richer hereafter if they were now to retard the rate at which their population is increasing.”

CHAPTER III.

CONSUMPTION: THE DYNAMICS OF WEALTH.

404. The Potato Philosophy of Wages.—We have, thus far, spoken of economic wants, mainly in their effects as retarding the increase of numbers. Until an adequate check, of a sufficiently persistent character, has been secured here, the economist who fully appreciates the consequences of over-population can hardly fail to recognize almost every economic want, whatever its origin or its object, and however little either may be approved by the moralist or physiologist, as being better than none.

It has been from this point of view, that the English writers have insisted so strongly that cheap food is a thing to be deprecated.

Thus Mr. J. R. McCulloch says:—“When the standard of natural or necessary wages is high—when wheat and beef, for example, form the principal part of the food of the laborer, and porter and beer the principal part of his drink, he can bear to retrench in a season of scarcity. Such a man has room to fall; he can resort to cheaper sorts of food—to barley, oats, rice and potatoes. But he who is habitually fed on the cheapest food has nothing to resort to, when deprived of it. Laborers placed in this situation are absolutely cut off from every resource. You can take from an Englishman; but you can not take from an Irishman. The latter is already so low, he can fall no lower; he is placed on the very verge of existence; his wages, being regulated by the price of potatoes,∗ will not buy wheat, or barley, or oats; and whenever, therefore, the supply of potatoes fails, it is next to impossible that he should escape falling a sacrifice to famine.”

And Prof. Thorold Rogers says: “A community which subsists habitually on dear food is in a position of peculiar advantage, when compared with another which lives on cheap food, one for instance, which lives on wheat, as contrasted with another which lives on rice or potatoes; and this, quite apart from the prudence or incautiousness of the people.”

405. Better Things Than Dear Food.—Clearly, the basis of this reasoning is the Malthusian doctrine. These economists recognize the strong probability, the almost certainty, that a people will carry their increase closely up to the limits of subsistence according to the kind of food they use, whatever that may be. If it be the lowest and cheapest, like rice in India and potatoes in Ireland, the failure of the crop means starvation, no adequate reserve being expected to be provided, on a sufficient scale, by the population of any country. If the kind of food be higher and dearer, the masses may, in the event of a failure of the crop or crops concerned, fall back for the time upon the lower and the cheaper.

But suppose this danger of an increase of numbers, fast following up subsistence, crowding all the time upon the limits of food, to be once for all passed. Suppose we have a community which will accept the opportunity of living upon cheap food and apply the saving to the permanent enlargement of their capital, or to other forms of enjoyment, to dress, to better lodgings, to luxuries, perhaps to expenditures upon education and culture. What harm, then, would Mr. McCulloch or Prof. Rogers find in cheap food, be it potatoes, or rice, or the Indian corn of America? Surely none. The more is saved from the cost of food, the more can be spent upon making homes ample and comfortable, healthful and decent, the more can be spent upon school-houses and churches, upon books and periodicals, upon literature and music and art. The wife may be let to stay at home and keep the house; the children be given their time, to acquire an education and to secure for themselves a thorough preparation for their work in life.

Let me not be understood as quarreling with this potato philosophy of wages so far as the assumption which underlies it, viz., that population will inevitably keep close up to the limits of subsistence on the kind of food, whatever that may be, which forms the popular diet, is justified by the facts of society, as it very widely is. I only claim that, in any country whose people had shown the capability of setting bounds to the increase of population by the exercise of their own judgment and will, cheap food would become a means of increasing the comforts and luxuries enjoyed by that people in other directions of expenditure, or of enlarging the capital and improving the productive agencies at their command.

406. The Dynamics of Wealth.—As a means of checking the increase of numbers, which otherwise would surely carry population to the point of misery, famine and pestilence, the appearance of almost any economic want must be greeted as a good, without much respect to the origin or object of that want. But the moment the capability of the self-limitation of population is assured, the economist discovers wide differences between the various demands for the consumption of the existing body of wealth, made by the differing appetites and desires of different communities, or of different classes in the same community, as regards the influence of those various forms of consuming wealth upon the power and the disposition to create values in the future.∗

It is here we find the body of economic literature most deficient. We need a new Adam Smith, or another Hume, to write the economics of consumption in which would be found the real Dynamics of Wealth; to trace to their effects upon production the forces which are set in motion by the uses made of wealth; to show how certain forms of consumption clear the mind, strengthen the hand and elevate the aims of the individual economic agent, while promoting that social order and mutual confidence which are favorable conditions for the complete development and harmonious action of the industrial system; how other forms of consumption debase and debauch man as an economic agent, and introduce disorder and waste into the complicated mechanism of the productive agencies. Here is the opportunity for some great moral philosopher, strictly confining himself to the study of the economic effects of these causes, denying himself all regard to purely ethical, political or theological considerations, to write what shall be the most important chapter of political economy, now, alas, almost a blank.

407. Two Popular Fallacies Concerning Consumption.—In a preceding chapter, we discussed the question, how it is that there can be, at any time, with abounding natural resources, unemployed labor power, unemployed capital power, no lack of disposition on the part of the owners of capital to secure a return from the productive use of their property, no lack of disposition on the part of laborers to earn wages by work, and yet an enforced idleness, with resulting poverty and squalor. Two popular explanations of this condition of things are always sure to be offered during the continuance of “hard times,” one of which finds its expression in the sounding phrase, “overproduction,” while the other emphasizes its supposed antagonism to the theory of the over-productionists, by the use of the term “under-consumption.”

A brief reference to the conditions under which wealth is produced, will suffice to show that, like all condensed phrases, each of these large words signifies more than one thing; that, in certain senses, each phrase embodies a great deal of arrant nonsense; that, taken otherwise, each embodies a vital truth; and, finally, that, so far as either means any thing at all, that meaning is exactly identical with what is expressed by the other.

408. Over-production.—All producers are also consumers. Men produce only because they desire to consume. They produce only so much as they desire to consume. Any given producer may, however, desire to realize his enjoyment either now, or at a future time; either in satisfying his own personal wants and appetites, or in satisfying those of friends, children or beneficiaries.

The idea of over-production, therefore, involves the absurdity of supposing that men will labor to produce that which they have not the desire to consume.

But passing over this initial absurdity, we observe in the use of this phrase, a vague notion that the amount of necessaries, comforts, and luxuries, which a community, at any given stage of its progress, is prepared to consume is a definite amount; and that, if the amount produced is somewhat rapidly increased, the capacity for consumption will be outrun, and men will stand, without appetite, before a mass of good things, for which they know no uses and with which they are, for the time, utterly at a loss to deal.

The fallacy of this will sufficiently appear if we ask, not who are the men able and willing to make away with a vastly greater body of wealth than they find themselves in possession of, but who are the men who would not be found willing and able to do this? Is there any mechanic or laborer, receiving wages to the amount of %300 or %500 a year, who could not, and would not gladly, spend %600 or %1,000? Is there any merchant or professional man or man of leisure, with an income of %3,000 or %5,000, or %10,000, who could not easily give account of an income of %6,000, or %10,000, or %20,000? It is absurd to suppose that the limit of consumption can be reached. What with houses and horses, clothes, equipage, and travel, costly viands and drinks, any civilized community could instantly double, quadruple, or decuple its consumption of wealth were the wealth provided.

409. Under-consumption.—In like manner, the phrase, under-consumption, involves an initial absurdity, when applied in explanation of so-called “hard times.” Thus, during the period of 1876–9, it was said that the people of the United States were suffering from under-consumption; yet, not for a long period, if ever, had consumption followed so quickly upon production; had the food earned been so quickly eaten; had the margin of saving been so small, as during the years referred to. A strange term, truly, to apply to such a condition: this under-consumption!

But passing by this initial absurdity, we find that beneath the phrase, under-consumption, lurks the notion that, somehow or other, wealth when once produced is in danger of getting in the way, so that other wealth can not be produced until this be first eaten or drunk or burned up, or by some means gotten rid of. As a matter of fact, there has never been any accumulation of wealth on the earth's surface so great as to impede the further production of wealth, and there is not likely to be. Were men willing to produce wealth without consuming it, they could go on forever. Of course, men will not, in general, produce more than they desire, sooner or later, to consume.

410. Over-production and under-consumption mean the same thing, and that is under-production. This is, of course, a mere jangle of words, until the phrases are qualified, as they should be. Over-production, as alleged by those who would explain hard times, is partial over-production, production, that is, which has gone on in certain lines, generally under speculative impulses, until it has exceeded the normal, or even, possibly, a highly stimulated demand. This excess of supply in certain lines leads to the accumulation of vast stocks of unsalable goods,∗ which involves partial under-consumption, these stocks melting slowly away through a period extending over months, it may be, years. Meanwhile, general under-production is the result. The bodies of labor and capital which have been called into the over-done branches of industry, can not readily, if at all, be transferred to other branches; they remain where they are, half employed, waiting for the renewal of demand. In the dreary interval, producing little, they have little with which to purchase the products of others, who are consequently compelled to restrict their production proportionally, as was shown in pars. 237–40.

In this way it is we vindicate our paradox that over-production means nothing more or less than under-production, or, for that matter, than under-consumption. There is no over-production possible, except a partial over-production, an over-production in certain lines, which inevitably involves a lowering of the scale of production as a whole: that is, partial over-production involves general under-production.

It is under-production which makes hard times. Over-production, general over-production, is impossible, and, were it to occur, were the creation of wealth to outrun men's capacity to consume, no one would be injured thereby. But under-production is an unmistakable evil. It means less wealth produced, and consequently fewer of the comforts and necessaries of life, on the average, to each member of the community. To large classes it means hunger, cold and squalor; debility, sickness and premature death.

411. The Destruction of Wealth.—We have already adverted to the fact of the extensive destruction of wealth, by accident or by natural causes, as affording an explanation, in part, of the comparatively slow progress of accumulation, even in the states whose land power, labor power and capital power are greatest. We have now to deal with the same fact, in our theory of consumption.

A most stubborn belief appears among the non-agricultural masses of every community where wages or labor or wealth is a topic of familiar discussion, to the effect that the destruction of wealth in some way increases production. Laboring people generally hold to this; our servants believe it religiously, and justify themselves, secretly or openly, for all their breakage and wastage by the plea that it “makes trade good.” Even cultivated persons are not free from an instinctive feeling that the abrupt removal of the existing body of wealth quickens industrial activity and promotes the general welfare, though it may be at the cost, for the time, of individuals.

Frederic Bastiat, in one of his capital little essays, has dealt with this notion so cleverly that there can be no excuse for any writer using his own phrases on this theme.

412. The Broken Pane.—“Have you ever had occasion to witness the fury of the honest burgess, Jacques Bonhomme, when his scapegrace son has broken a pane of glass? If you have, you can not fail to have observed that all the bystanders, were there thirty of them, lay their heads together to offer the unfortunate proprietor this never-failing consolation, that there is good in every misfortune, and that such accidents give a fillip to trade. Every body must live. If no windows were broken, what would become of the glaziers? Now, this formula of condolence contains a theory which it is proper to lay hold of in this very simple case, because it is exactly the same theory which unfortunately governs the greater part of our economic institutions.

“Assuming that it becomes necessary to expend six francs in repairing the damage, if you mean to say that the accident brings in six francs to the glazier, and to that extent encourages his trade, I grant it fairly and frankly, and admit that you reason justly.

“The glazier arrives, does his work, pockets his money, rubs his hands, and blesses the scapegrace son. That is what we see.

“But if, by way of deduction, you come to conclude, as is too often done, that it is a good thing to break windows—that it makes money circulate—and that encouragement to trade in general is the result, I am obliged to cry, halt! Your theory stops at what we see, and takes no account of what we don't see.

We don't see that since our burgess has been obliged to spend his six francs on one thing, he can no longer spend them on another.

We don't see that if he had not this pane to replace, he would have replaced, for example, his shoes, which are down at the heels; or have placed a new book on his shelf. In short, he would have employed his six francs in a way in which he can not now employ them. Let us see, then, how the account stands with trade in general. The pane being broken, the glazier's trade is benefited to the extent of six francs. That is what we see.

If the pane had not been broken, the shoemaker's or some other trade would have been encouraged to the extent of six francs. That is what we don't see. And if we take into account what we don't see, which is a negative fact, as well as what we do see, which is a positive fact, we shall discover that trade in general, or the aggregate of national industry, has no interest, one way or other, whether windows are broken or not.

Let us see, again, how the account stands with Jacques Bonhomme. On the last hypothesis, that of the pane being broken, he spends six francs, and gets neither more nor less than he had before, namely, the use and enjoyment of a pane of glass. On the other hypothesis, namely, that the accident had not happened, he would have expended six francs on shoes, and would have had the enjoyment both of the shoes and of the pane of glass.

Now as the good burgess, Jacques Bonhomme, constitutes a fraction of society at large, we are forced to conclude that society, taken in the aggregate, and after all accounts of labor and enjoyment have been squared, has lost the value of the pane which has been broken.”

413. Destruction sometimes the Removal of Obstruction.—It is, of course, possible to conceive a situation where the destruction of wealth may have the direct effect to secure a larger production of wealth. Thus, a man may occupy a certain water privilege with an antiquated mill, which he can not make up his mind to tear down. To destroy the mill seems to him like waste, or, even if he appreciates the fact that the erection of a new and more commodious structure, with modern appliances, would be true economy, he can not bring himself to incur the initial expense just at this time; he procrastinates in the matter, and so perhaps goes on, year after year, cramped in his operations, perhaps unable even to undertake production in certain lines, for which there is an advantageous opening. Now, in such a case, it might happen that the burning down of the old mill would lead to the immediate erection of a new one which would pay for itself in a short time, and the net result, thereafter, be the substitution of a powerful and efficient agent of production for one that was inadequate and outworn.

Undoubtedly, too, the destruction by fire of the old and crooked parts of certain cities, filled with rookeries and tumbledown houses, almost impassable to traffic and repulsive of aspect, has led to an actual increase of wealth within a short time thereafter. The quarter destroyed may have been long a nuisance and an obstruction to the growth of the city and the development of its trade; but the inertia of property owners, their blindness to their large, their permanent interests, their reluctance to make great capital expenditures, and especially the fact that it was of no use for a single property owner to try to improve the quarter by tearing down his rookeries, so long as the general character of the neighborhood remained what it had been, these causes might have long withstood the needed improvements. The fire comes, resolves all doubts, burns up the accumulated foulness of generations, leaves the ground open to building, and, six months or a year thereafter, a new and elegant quarter has arisen from the ashes. Not all, not by any means the larger part, of this represents the production of wealth in the interval. The greater share represents the transplanting of wealth previously existing. Yet, in addition, there may, as we said, conceivably have been a large creation of values due to the improvement of commercial sites and commercial avenues heretofore neglected.

Such instances of the destruction of wealth leading to a larger production are comparatively rare. In the vast majority of cases, that destruction, however rejoiced over by shallow persons who are influenced only by “what they see,” or by selfish persons who secure an immediate individual advantage from the loss of others, is a public misfortune.

414. Government Expenditure.—On the part of many, perhaps most, persons who favor large government expenditures, the actuating motive is found in the opinion we have already dealt with, that wasteful and even destructive consumption “makes trade good,” “encourages industry,” “raises wages,” etc. To this shallow notion we need pay no further attention. Something which is at least less obviously false is intended in the proposition laid down by more than one economist of reputation, that government expenditures, within moderate limits, are industrially beneficial.

This view may be stated in the language of Mr. McCulloch, one of the most careful of the English economists of the last generation:—

“A moderate increase of taxation has the same effect on the habits and industry of a nation that an increase of his family or of his necessary and unavoidable expenses has upon a private individual.…

“But we must be on our guard against an abuse of this doctrine. To render an increase of taxation productive of greater exertions, economy and invention, it should be slowly and gradually brought about, and it should never be carried to such a height as to incapacitate individuals from making the sacrifices it imposes by such an increase of industry and economy as it may be in their power to make, without requiring any very violent change in their habits. The increase of taxation must not be such as to make it impracticable to overcome its influence, or to induce the belief that it is impracticable. Difficulties that are seen to be surmountable sharpen the inventive power and are readily grappled with; but an apparently insurmountable difficulty, or such an excessive weight of taxation as it was deemed impossible to meet, would not stimulate, but destroy exertion. Instead of producing new efforts of ingenuity and economy, it would produce only despair. Whenever taxation becomes so heavy∗ that the produce it takes from individuals can no longer be replaced by fresh efforts, they uniformly cease to be made; the population becomes dispirited, industry is paralyzed and the country rapidly declines.”

And to the same effect Jeremy Bentham writes: “By raising money as other money is raised, by taxes (the amount of which is taken by individuals out of their expenditure on the score of maintenance), government has it in its power to accelerate to an unexampled degree the augmentation of the mass of real wealth.”

415. Such is the claim in behalf of government expenditure. What is to be said of it? Let us proceed by way of an example. Let us take a large population spread over a vast extent of country, like India, which possesses almost illimitable facilities for the improvement of the soil through irrigation, and whose broad spaces demand numerous and extensive lines of artificial communication, by canal or railway. Let it be supposed that the people occupying this country are what the people of India now are, in numbers, in character, in habits of living and of working. Alike under the influence of sexual passion and of religious superstition,† they continually tend to increase up to the limits of subsistence, even to the verge of famine; not only accumulating no capital, but laying by no store for future wants; having neither the genius for organization nor the capacity of self-denial which would be required to initiate the simplest local improvements.

Now, we may imagine such a population ruled by a benevolent, disinterested despot of the highest order of intelligence, a Napoleon devoted to the arts of peace. We may imagine this ruler, by a system of taxation that shall be as just between individuals and as judicious in its seasons and methods as human wisdom can make it, first, drawing from the crops of good years a store against the occurrence of bad harvests; then, by a gradually increasing stringency of exaction, adding to the cost of living in such a way as to discourage the growth of population, while applying the proceeds to great public improvements which enable the food supply of the empire to be readily equalized in the event of local scarcity; which guard the crops against the effects of periodical drought; which afford rapid and cheap passage to the products of inland districts.

And as the productive power of the country increased under such an administration, we can imagine the high-minded ruler, intent on his benevolent purpose, still drawing away from the people, by taxation, all the surplus above the necessary cost of subsistence for the present population, which might otherwise be applied to the increase of population, and, with the means thus acquired, providing capital in its various forms for the use of the frugal and the temperate, perfecting communications, protecting the health and lives of his subjects by sanitary arrangements, and, at last, undertaking the elementary education of the whole body of the people.

All this, it is clear, an absolute ruler of the character indicated might do for his people;∗ and not a little of this many a benevolent and able ruler has done for his people. The “forced frugality,” to use Bentham's phrase, which his taxes have imposed, has at once repressed population and stimulated industry among the existing body of laborers. His wise expenditures upon public works and in public education has sown the seed from which has sprung many a golden harvest.

416. But while we see, thus, what an ideal monarch might do for a people indolent, unambitious, sensual, by applying a portion of the wealth they created to ends more useful, elevating and satisfying than their individual tastes and appetites would have selected, we are forced also to remember how large a part of the wealth raised by taxation has, in all ages, been spent in war, pomp and folly; how strong is the temptation to extravagance and even to corruption in government expenditure; how much of what the people pay the treasury does not receive; how much of what the treasury disburses does not reach its intended object. These considerations are strong enough to justify, in a large degree if not wholly, that unwillingness to intrust to government the consumption of the wealth of the community, much beyond what is necessary to secure domestic tranquillity and the administration of justice between man and man, which is so peculiarly American.

Yet it is possible that this feeling may be carried too far. When one contrasts the highways, the bridges, the streets, the harbors, the breakwaters, the lighthouses, and other aids to transportation and commerce, which government provides, with the best that could reasonably be looked for from individual or associated effort, without the taxing power; when one contrasts our system of public education with the best that voluntary contributions or private munificence ever supplied; when one contrasts the sanitary arrangements for supplying pure air and pure water to our crowded cities with the condition of things which exists where these matters are left to unofficial action; he will find occasion to qualify in no small degree his assent to the proposition that, under a well-ordered constitution, government is only a policeman, to keep people from breaking each other's heads or picking each other's pockets.

[∗]Prof. N. W. Senior.

[∗]The late Prof. Jevons, in the introduction to his “Theory of Political Economy,” after noting the close analogy to the science of Statical Mechanics presented by the Theory of Economy proposed by him, significantly says: “But I believe that Dynamical branches of the science of Economy may remain to be developed, on the consideration of which I have not at all entered.” Elsewhere Prof. Jevons says: “We, first of all, need a theory of the Consumption of Wealth.”

[∗]“It is impossible,” says Senior, “that a positive check so goading and remorseless as famine, should prevail without bringing in her train all the others. Pestilence is her uniform companion, and murder and war are her followers.”

[†]“The much greater number and the longer continuance of his wants,” says Prof. Roscher, “are amongst the most striking differences between man and the brute. While the lower animals have no wants but necessities, and while their aggregate wants, even in the longest series of generations, admit of no qualitative increase, the circle of man's wants is susceptible of indefinite extension. 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.”

[∗]N. W. Senior.

[∗]The law of so-called partible succession, prevailing widely over the western part of Continental Europe.

[∗]January 25, 1883.

[∗]Dr. Travers Twiss states that it was calculated prior to the famine, that two-thirds of the population of Ireland lived wholly on potatoes. Sir Arch. Alison says: “Three times the number of persons can be fed on an acre of potatoes who can be maintained on an acre of wheat in ordinary seasons.”

[∗]When we remember that the expenditure of the people of Great Britain, annually, for alcoholic beverages, reaches the enormous sum of £180,000,000, or %900,000,000, four-fifths, at least, of which is spent in a way that is not only without any beneficial effect, but is positively injurious, a large part of it going to the destruction of moral, intellectual and physical power, we get a rude measure of the force which a wiser consumption of wealth might introduce into the economic life of that country.

[∗]The result is the same if the distorted production of the past has taken the form of an excess of machinery and plant in some lines or in many lines of manufacture, or an excess of the means of transportation.

[∗]I can not forbear to quote the words of Bacon: “The blessing of Judah and Issachar will never meet: that the same people should be both the lion's whelp and the ass between burdens; neither will it be that a people overlaid with taxes should ever become valiant and martial.”

[†]The early marriages of India are attributed to the religious beliefs of the people, as they hold that the welfare of the soul after death depends greatly on the performance of the burial rites by male offspring of the deceased.

[∗]This is, in fact, involved in the theory of the British administration of India. The reasons are well stated in the following paragraph from the Times of 1879:

“In England the remission of taxation is urged with great force, because it is said that taxes remitted will fructify in the pockets of the people. No result of this kind can be expected in India. If the conditions of living are made easier there, as they would be by a remission of taxes, the consequences would not be an improvement in the well-being of the people, but an increase of their numbers. Our duty, therefore, as guardians and governors of the people, charged with the responsibility of keeping alive in times of famine a vast population with no reserved resources of its own, is to save for those who do not save for themselves, to keep a margin of income over expenditure so that we may have in hand a fund upon which to draw in the recurrent periods of distress. This is a leading principle in Indian finance. Whoever forgets this neglects the primary duty of an Indian administrator.”