The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Prefatory Letter to Mr. Fisher Unwin
• Preface the Laws of Nature
• I. The Motive of Human Activity.
• II. The Natural Law of the Economy of Power, Or the Law of Least Expenditure.
• III. The Natural Law of Competition For a Subsistence.
• IV. The Natural Law of Value.
• Part I the State of War
• Chapter I Formation of Primitive Communities and the Conditions Necessary to Their Existence
• Part I: Chapter Ii Competition Between Primitive Communities and Its Results
• Part I: Chapter Iii Competition Between States In Process of Civilisation
• Part I: Chapter Iv Decline of Destructive Competition
• Part I: Chapter V Why the State of War Continues When It No Longer Fulfils a Purpose
• Part I: Chapter Vi Consequences of the Perpetuation of the State of War
• Part Ii the State of Peace
• Chapter I the Collective Guarantee of the Security of Nations
• Part II: Chapter Ii the Free Constitution of Nationality
• Part II: Chapter Iii Free Constitution of Governments and Their Natural Functions
• Part II: Chapter Iv Free Constitution of Governments and Their Natural Functions (continued)
• Part II: Chapter V Free Constitution of Governments and Their Natural Functions (continued)
• Part II: Chapter Vi Subjection and Sovereignty of the Individual
• Part II: Chapter Vii Impost and Contribution
• Part II: Chapter Viii Production of Articles of Naturally Individual Consumption
• Part II: Chapter Ix Equilibrium of Production and Consumption
• Part II: Chapter X Distribution of Products and the Share of Capital In the Proceeds of Production
• Part II: Chapter Xi Distribution of Products and the Share of Labour In the Proceeds of Production
• Part II: Chapter Xii the Problem of Population
• Part II: Chapter Xiii Consumption
• Part II: Chapter Xiv the Expansion of Civilisation
• Part II: Chapter Xv Summary and Conclusion
• Part Iii
• Note a the Czar and Disarmament
• Part III: Note B Syndicates Restricting Competition, Or "trusts"
• Part III: Note C Effects of Industrial Progress On the Sphere of Production
• Part III: Note D Costs and Profits of State Colonisation
• Part III: Note E the Economic and Socialist Conceptions of the Society of the Future
• By Edward Atkinson, Ll.d., Ph.d. I

PART III

Notes

Note A
The Czar and Disarmament

The Czar's manifesto in favour of international disarmament affords clear proof that kings themselves are feeling the disastrous consequences of the continued State of War. On August 12—new style, August 24—1898, Count Mouravieff, by order of the Emperor, handed a copy of the following Note to the representative of every Power accredited to the Court of St. Petersburg:—

"A universal peace, and a reduction of the present intolerable burdens imposed on all nations by the excessive armaments of to-day, is the ideal towards which every government should strive.

"The magnanimous and humanitarian views of His Majesty the Emperor, my august master, are entirely devoted to this cause, convinced that such a measure involves the most essential interests and the legitimate aspirations of every Power. The Imperial Government believes the present moment to be very favourable for an international inquiry into the most effective means of assuring the real and durable peace of all nations, and, in particular, for placing limits upon the progressive enlargement of present armaments.

"The past twenty years have seen a particular and general movement towards the ideal of a universal peace. Maintenance of peace has been the first object of international policy. The Great Powers have concluded alliances for this purpose, and the better assurance of permanent peace has initiated hitherto undreamed-of developments in the armed power of nations, which shrink from no sacrifice in order to enlarge their forces.

"None of these efforts have, hitherto, brought the desired solution. The unceasing increase in financial burdens is threatening the very roots of public prosperity. The intellectual and physical potentialities of the peoples, of labour and capital, are for the most part diverted from their natural channels and unproductively consumed. Millions of pounds are spent on engines of warfare which to-day regards as irresistible, but which a single new discovery will to-morrow render valueless. National culture, economic progress, and the production of wealth, are paralysed or miscarry; every advance in the armaments of the Powers ministers less and less to the purpose for which they were created.

"Economic crises, largely due to a system which arms the nations cap-à-pié, and to the continual dangers inseparable from such accumulation of warlike material, transform the armed peace of to-day into a burden so overwhelming that the nations support it with daily increasing difficulty. An indefinite prolongation of this system must, therefore, inevitably bring about that cataclysm for whose prevention it was designed, and the mere thought of whose horrors makes every mind shudder. To set a final term on these armaments, and to discover a means of preventing calamities that threaten the entire world, is the supreme duty of every modern State.

"Filled with these feelings, His Majesty deigns to command me to propose a Conference, on the subject of this grave problem, between all governments having representatives accredited to the Imperial Court.

"This Conference should, by God's help, be of fortunate omen for the opening century. It would weld into one powerful unity the efforts of all those States which sincerely seek the triumph of the grand ideal of universal peace, despite every trouble and discard.

"At the same time it should also cement their efforts by a common consecration to those principles of equity and of right on which the security of States and the well-being of nations repose."

Count Mouravieff likewise addressed the following circular, under date December 30, 1898—January 13, 1899, new style—to the representatives of the Powers at St. Petersburg, summarising the points suggested for consideration at the Conference:—

"When, last August, my august master commanded me to propose to the governments, represented at the Court of St. Petersburg, a Conference to inquire into the most efficacious means of assuring the benefits of a real and durable peace to all nations, and, more especially, of placing a term on the present progressive augmentation of armaments, nothing seemed to be opposed to a more or less early realisation of this project.

"The eager response of almost every Power to the suggestion of the Imperial Government could not fail to justify this belief. Very conscious of the sympathetic terms, in which most governments couched their reply, the Imperial Cabinet, at the same time, experienced lively satisfaction from the warn testimonies of sympathy addressed to it from every side, and still continuing to arrive, by every social rank and from every quarter of the world.

"Despite the great current of opinion favouring the idea of a general pacification, the aspect of the political horizon has sensibly changed. Several Powers have lately increased their armaments, vying with one another in the development of their military power, a situation the uncertainty of which might well cause inquiry as to whether the Powers find the present moment opportune for an international discussion of the ideas set forth in the circular of August 12th.

"Continuing to hope that the elements of trouble clouding the political horizon will soon give place to dispositions of a calmer kind, and such as will be favourable to the success of the projected conference, the Imperial Government is of opinion that an immediate exchange of preliminary ideas in this sense can be undertaken between the Powers, and an inquiry initiated without delay into the means of limiting the present augmentation of military and naval armaments—a question evidently becoming more and more urgent in view of recent developments in the line of these armaments—and to prepare a way for the discussion of questions touching the possibility of substituting the pacific action of international diplomacy for the arbitrament of force.

"In the event of the Powers considering the present moment favourable for calling a Conference on this basis, it will certainly be useful to have some understanding between the Cabinets as to the programme to be submitted for discussion. The subjects to be submitted for international discussion at the Conference may be outlined as follows:—

"1. Agreement establishing a fixed term during which any augmentation of armaments, by sea or on land, shall be forbidden, and likewise any increase of the appropriations devoted thereto: a general discussion as to possible future measures whereby these armaments and budgets may hereafter be reduced.

"2. Agreement forbidding the introduction, for army or navy, of new firearms of whatever kind, or of powders of higher power than those already in use, whether for guns or small arms.

"3. Restrictions on the use, in wars by land, of such high explosives as are already employed, and prohibition on the discharge of projectiles or explosives of any kind from balloons or similar machines.

"4. Prohibition on the use, in naval wars, of submarine torpedo boats, divers, or any destructive engines of such nature, and an undertaking to construct no new rams.

"5. Application to naval wars of the stipulations of the Geneva Convention of 1864, on the basis of the additional articles of 1868.

"6. Neutralisation, under the same head, of vessels or boats rescuing the shipwrecked, whether during or after a naval engagement.

"7. Revision of the declaration of the uses and customs of war drawn up by the Conference of Brussels in 1874, but unratified to the present date.

"8. Acceptance in principle of the custom of good offices, mediation, and optional arbitration, in suitable cases, with the intention of avoiding armed conflict between nations; agreement as to the methods of applying these principles and establishing a uniform system for all such cases.

"Always understanding that all question of the political relations of States, the present status as established by treaty, and also, in general, all questions not directly included in the programme adopted by the Cabinets, will be entirely excluded from the deliberations of the Conference.

"In addressing to you, Sir, this request that you will take the sense of your government on the subject of this communication, I beg to add that in the interests of the great cause so near to his heart, my august master, His Imperial Majesty, considers that the Conference should not sit in the capital of one of the Great Powers—centres of so many political interests which might prejudice deliberations upon a theme commanding the equal interest of every country."

Following this Note, the Official Messenger published a highly statistical article enumerating the military forces of all the Powers.

"The forces of Russia are more considerable than those of any other European country. Her peace establishment, with an annual conscription of 280,000 men, exceeds 1,000,000 men. On a mobilisation, Russia can take the field with 2,500,000 men, excluding a reserve and militia which totals to 6,947,000. Russia, therefore, disposes of nearly 9,000,000 trained soldiers. France stands second with a permanency of 589,000, and a war footing of 2,500,000. Her total, reserves included, is 4,370,000. The German army, whose organisation is especially perfect, has a peace effective of 585,000, and can mobilise 2,230,000 within ten days. Including reserves, Germany can take the field with 4,300,000 trained men of all arms.

"The permanent forces of Austria-Hungary stand at 365,000, rising 2,500,000 on mobilisation, or, including reserves, 4,000,000 combatants. Italy's establishment of 174,000 is transformable into a force of 1,473,000, plus 727,000 reservists—2,200,000 in all. Great Britain stands last on the list with the comparatively small figure of 220,000, or, with the volunteers and militia, a maximum total of 720,000.

"Figures give but a partial idea of the power of the European armies, for it is hard to grasp the real meaning of a million soldiers. It is easy to say that Russia can put 7,000,000 men in the field in time of war, but an enumeration would be difficult, the work of several months. As giving some idea of the accidents of these immense numbers, the French army, extended in line formation, would cover a distance of 520 kilometres (some 325 miles), that of Germany 510 kilometres 318¾ miles), Austria-Hungary 460 kilometres (287&frac12 miles), and Italy 230 kilometres (143¾ miles).

"Europe is, in short, a vast camp, and every European spends a part of his life in barracks. The relative proportion of military to civil population are: in France 11 per cent.; Germany 8½ per cent., or 11 per cent. of the males; Austria-Hungary a trifle over 9 per cent; Italy one-seventh of the male population. The proportion in Russia is 2½ per cent. of the total population.

"The open spaces of Paris cover 7,802 hectares (19,278¾ acres)—exactly one-quarter of the free area of London. The combined forces of the five chief Powers would occupy twice the acreage of London's open spaces, and eight times those of Paris. The combined reservists of these Powers would require room equal to the entire open ground of London, and four times the open spaces of Paris. To review the armies of the five chief Continental Powers it would be necessary to provide a space equal to twenty times the entire superficial area of the City of Paris.

"The permanent forces of Europe number 4,250,000 men, on mobilisation 16,410,000, or, with all reserves, 34,000,000. In column of line this colossal army would stretch from Paris to St. Petersburg, and would represent 10 per cent. of the aggregate, or 20 per cent. of the combined male, population of the Continent.

"The armies of Asia—ignoring petty States—total 500,000 on a peace footing. The Chinese army is not capable of any accurate estimate, but is supposed to stand at nearly 1,200,000, many of whom are merely armed with bows and arrows. Japan, on the contrary, is admirably organised and armed. The indigenous forces of Africa do not number more than 250,000.

"Compared with European figures, those of the New World are inconsiderable. Mexico disposes of 120,000; Brazil of 28,000 troops and 20,000 gendarmes. The peace establishment of the United States is 25,000, but can be very largely increased in case of need. The Argentine Republic maintains 120,000, Canada 2,000 English troops, 1,000 Canadians, and 35,000 militiamen.

"The permanent establishment of the world is 5,250,000 always under arms.

"The cost of these enormous forces is as follows:—

"The price per head stands, in order of cost:—

"Every citizen of Russia pays 6 francs = 5s.; of Italy about 9 francs = 7s. 6d.; of Austria-Hungary 10 francs = 8s. 4d.; of Great Britain 12 francs = 10s.; of Germany 13 francs = 10s. 10d.; of France 18.25 francs = 15s. 3d.

"The actual military budget of Denmark is not more than 5,750,000 francs = £230,000, but, even so, is an enormous burden for so small a country. If the nations of Europe are constantly face to face with increased debts, the prime cause of their situation is a continually growing military establishment.

"It is possible to base some idea of the actual potential costs of the next war on the above figures. The last Chino-Japanese war involved an expenditure of 1,250,000,000 francs = £50,000,000. A European war must cost at least Frs. 6,000,000,000 = £240,000,000, with no allowance for incalculable loss in men and material. Germany maintains a permanent war-chest at Spandau of Frs. 450,000,000 = £18,000,000—a sum which would be no more than a drop in the ocean."

The Official Messenger closed its article thus:—

"By no possibility could expenditure on this colossal scale be productive. It exhausts the sources of national revenues, increases taxation, paralyses the action of the national finances and commerce, and arrests the general well-being. The best minds of all countries and all ages have sought a means of assuring peace without recourse to constantly increasing armaments—by, that is, principles of right and equity, operating through the channel of arbitration, to finally end this barbarous theory which identifies the course of civilisation with every chance improvement—and they are incessant—in the means and methods of destruction."

The issues of la Revue Statistique for September 11 and 18, 1898, give the following tables of the world's war budget—naval and military.

The Czar's Note—(vide the author's paper in Le Journal des Economistes, September 15, 1898)—a Note that might have been written by a disciple of Cobden, came as a surprise, partaking of the disagreeable, to Europe. The noble ruler who inspired it was certainly landed, his intentions praised for their undoubted generosity, but he was clearly given to understand that the project was quite Utopian. Yet it would, without doubt, be fair argument to stigmatise as Utopian the idea that Europe can continue to support the overwhelming burden of her incessantly growing armaments, and the no less ruinous imposts which they necessitate. It is credible that the working classes, bearing what is practically the entire onus of this blood tax, while the ruling class does not bear a third at most, will one day rise against the monstrous injustice, and that militaryism is the direct road to socialism. But the eyesight of professional politicians is short, and all things beyond their horizon are naturally chimerical.

Still, and even though the Czar's ideal proved barren of results, his action brought this problem into a publicity so great that it can never again pass into oblivion until, and unless, it cease to exist, being accomplished. And we may, in this respect, recall that the "League of Neutrals" owed its inception to another Russian sovereign, Catherine II.—a league which signally advanced the Law of Nations by establishing the maxim that "the flag covers the cargo." Another predecessor of Nicholas II., Alexander I., laid Europe under an obligation by promoting the "Holy Alliance" which initiated thirty years of peace. Nor is there any reason why this example should not bear further fruit, a similar league being constituted on the broader basis of an alliance between all the Continental States, small and large alike.

Part III

Note B
Syndicates Restricting Competition, or "Trusts"

(written 1899-1900)

The New York Journal of Commerce recently estimated the capital engaged in "Trusts," at $3,500,000,000, or about 50 per cent. of the entire capital of the United States. The books "Autour du Monde Milliardaire Américain," by MM. Johanez, and "Les Industries Monopolisées—(Trusts)—aux Etats Unis," by M. Paul de Rousiers, agree in identifying the chief cause of the erection and multiplication of these monopolies with the protectionist tariff maintained by the United States.

"A champion of Trusts, Mr. Gunton," writes M. Paul de Rousiers, "argues in his 'Economic and Social Aspects of Trusts' that trusts do not destroy potential competition—that is, the possibility of competition. No one, for example, hinders a man from offering the American public better oil than that of the Standard Oil Company and at a lower rate. This is, however, untrue, for the protectionist tariff closes the American markets to outside competition in such a way that potential competition is non-existent. Many refiners, were it not for the tariff, could retail better and cheaper sugar than that of the Sugar Trust. Nor is this the sole result of these tariffs, for, besides closing the market to direct competition, they shut out those goods which could indirectly affect Trust products. The Standard Oil Trust's monopoly would be threatened by the discovery of an illuminant costing less than petroleum, but a product competing with sugar in its own province could be shut out by a new duty. The process can be seen in action in every protectionist country. Provence protects its oil by imposing a duty on earth-nuts, and Normandy protects butter by taxing margarine.

"...This much is, however, true. Although, dealing in a market protected by duties, the Trusts cannot hold prices at more than a certain premium above that which would maintain were the markets subject to the free action of the law of competition."

M. Paul de Rousiers proposes the following remedies against the Trusts:—

"Directly the formation of Trusts is not induced by the natural action of economic forces; as soon as they depend on artificial protection, the most effective method of attack is to simply reduce the number and force of these protective accidents to the greatest possible extent. We can attack artificial conditions, but are impotent when opposing natural conditions. It is, therefore, not only more profitable, but likewise more easy, to attack artifice rather than nature.

"America has hitherto pursued the exactly reverse method, blaming economic forces tending to concentrate industry, and joining issue by means of anti-Trust legislation, a series of entirely artificial measures. Thus there is to be no understanding between competing companies, no agreement as to rates between railway companies, &c. The results have been pitiful—a violent restriction of fruitful initiative, and no sort of guarantee to the public against the Trust operations of private undertakings. The American courts have given their opinion that this class of legislation is entirely unserviceable. It does not touch the root of the evil, enlarges, in place of restraining, artificial conditions, and finally regulates and complicates matters whose supreme needs are simplification and the removal of restrictions.

"Even those Trusts, which demand control as dealing with public services, have been left untouched and undistinguished from others, whence further confusion of public and private interests.

"Trusts, dealing in public services, will completely disappear so soon as American administration contrives to resume a normal control of the interests with whose care it is invested. Those dealing with private industry will—with one or two exceptions—disappear when the same powers learn to refrain from interference with the natural conditions of industry and commerce, especially to cease from all protectionist legislation.

"Then, and only then, will the United States share in the knowledge, long since achieved by England, that competition is no menace to industrial concentration."

Part III

Note C
Effects of Industrial Progress on the Sphere of Production

In a paper in the Forum of April, 1898, Mr. W. T. Harris asks, "Is there really work for all?" To solve this problem he proceeds to quote statistics, showing the changes which have occurred in the different classes of occupation during a twenty years' period in the United States.

This table shows that about 100 persons per thousand have forsaken the primitive occupations (Class I.) favouring the remainder in the following proportions: Personal service, 7 per cent.; professions, 12 percent.; manufactures, 27 per cent.; trades and commerce, 48 per cent. Yet, so much have the methods of culture and the machinery employed been perfected that the national output of agricultural produce continues to more than meet all demands. This discovery leads Mr. Harris to suppose that, granting such an advance in machinery and methods as to render the manual labour—the "drudgery"—of one man per cent. sufficient for all demands in the care and operation of the agents of agricultural produce—clothing, victual, and shelter—the remaining 99 per cent. would still find a higher class of occupation. As a collateral argument, he adduces the statement that in the twenty years 1870-1890 the number of journalists per million of population has advanced from 424 to 963; of photographers from 608 to 880; and of piano-tuners in similar proportion.25

Part III

Note D
Costs and Profits of State Colonisation

The majority of the European States allege industrial and commercial considerations, the need of new markets, to support their conquest and annexation of territory belonging to so-called inferior races. The intention is sufficiently praise-worthy, but involves a question of the cost and profit derived from these undertakings. Now it is an unfortunate fact that Spain was ruined by her colonial aspirations, and few recent programmes of the same kind have improved the financial position or augmented the wealth either of conqueror or conquered. The manufacturer or merchant, who spent ten thousand a year in trade incidentals in order to sell ten thousand pounds' worth of goods, would be justly regarded as wanting in sanity, and his family would rightly place him under restraint, at least remove him from the control of a business. State colonisation is, meanwhile, conducted on this futile basis, as will be evident from a glance at the following figures from an article by M. Paul Louis in the Indépendance Belge:—

Figures of the Cost of French Colonies.—5,000,000 francs in 1820; 7,000,000 in 1830; 20,000,000 in 1850; 21,000,000 in 1860; 26,000,000 in 1870.

The year 1880 marks the eve of great expansion in Asia and Africa, and the budget leaps to 32,000,000, rising to 59,000,000 in 1890. The Soudan, Dahomey, and Madagascar, soon proceed to double it, so that it reaches 86,000,000 in 1892. The relative decline to 89,000,000 in 1896 is fictitious and only apparent, for loans and supplementary estimates of this year raise it to a final 100,000,000, and 102,000,000 in 1897. The estimates for 1898-1899 were respectively 81,000,000 and 86,000,000, but the figures are purely nominal and were largely overspent.

The colonial balance of France in these last years stands thus, and this without taking any account of Algeria:—

This statement ignores the costs of conquest and of the initial settlement!

The same article continues: "The major portion of this task has no doubt been achieved in certain cases, but in many of the more important it is only begun. The simple period of conquest necessitated 284,000,000 for Cochin China; 269,000,000 for Tonkin; the Soudan claimed at least 200,000,000 between 1881 and 1898; Madagascar devoured 150,000,000. Between 1892 and 1898 Dahomey added from 70,000,000 to 75,000,000.

"It is probably understating, rather than magnifying, the figure, if we assert that the Third Republic, by embarking on a series of grand conquests, has cost France at least 1,500,000,000 francs (£60,000,000)."

The cost of Algeria up to the year 1898 was more than 4,000,000,000 francs or £160,000,000, and the annual deficit, which is met by the French taxpayer, varies between 20,000,000 and 30,000,000 francs—an average of £1,000,000. And there is yet another account to be met. The protectionist party subjected the French Colonies to the same tariffs as France, thus closing markets which were becoming highly profitable to other countries, England in particular. Ill-feeling was thus engendered—a feeling embittered by, if it did not occasion, the Fashoda incident, and the cause of inevitable extra expenditure on account of the army and navy. The colonies of France are bought at an entirely exorbitant price, and it is quite maintainable that the slight enlargement of markets which they secure is more than countervailed by the consequent loss in the world's markets. The colonies take a few imports, attract a very few colonists, and afford an immense field for the multiplication of officials. The Reporter of the Colonial Budget in the Senate adduced the following figures, which are not without interest in this regard:—

Colonisation, conducted on this principle, is simply State-protection of the official at the expense of the remainder of the State.

The apologists of this system acknowledge that colonies are costly both to obtain and to maintain, but they cite the example of England to prove the future greatness and wealth to be acquired by their aid. England, say these men, has acquired most of her wealth and power by this means. This is the view of the Greater Britain party, headed by Mr. Chamberlain, in that country, but it is by no means the view of the free traders. The eminent writer Lord Farrer, in an article in the Contemporary Review, gives a moderate and conservative estimate of British colonial trade. The foreign trade of England in 1895 was valued at £643,000,000, of which only 25.8 per cent., just a quarter, went to her colonies—£166,000,000. Most of this colonial trade went to colonies, or possessions, such as India, New Zealand, and Australia, which give no sort of tariff preference to England. Indeed it is Canada alone, of all English possessions, which gives such a preference, and that only of late years. It is therefore probable that, were England to lose her empire to-morrow, her colonial trade would suffer little if any diminution. The loss might injure national pride, certainly that of the jingo, but it would reduce the costs of production and so secure an actual profit to English industry.

The actual colonial budget of the British Empire is not large, being little more than half that of France, but her enormous expenditure on the army and navy is largely due to the demands of colonies scattered over every portion of the globe. It is the cost of protecting these colonies which causes an appreciation in British production and handicaps her as a competitor on those world's markets which are ruled by the pure laws of competition. Militaryism, protectionism, bureaucracy, and colonialism, are the order of to-day, but their very excesses are already hastening the inevitable approach of their end.26

Part III

Note E
The Economic and Socialist Conceptions of the Society of the Future

The political and economic organisation of society has, hitherto, varied according to the mental equipment of the individual, the risks of destruction threatening each society, the comparative development of production—the conditions of existence, in fine. These conditions have been profoundly modified, particularly during the last century, by the progress which has transformed the arts of production and destruction, until a political and economic organisation suitable to the past is no longer adapted to modern needs. This lack of adaptability may be considered as the first cause of modern socialist propaganda, since it has precipitated a crisis whose effects have chiefly fallen on the class which subsists on the product of its daily toil. More, it has produced the systems of social reorganisation preached by Saint Simon, Fourier, Karl Marx, and a host of Dei minores.* However numerous, these systems all have one common point—they ignore the operation of those laws of nature, which have determined human progress in the past and will continue to do so until the end. Were these propagandists to confine themselves to theory little harm would result, but they generally endeavour to impose their ideas on society by, first of all, seizing that sovereign power which is the attribute of government. Those who are ardent attempt to do this by purely revolutionary means; the more moderate or timid by more or less legal methods. But government alone can reform society, and that by breaking down all resistance.

Nowise denying the evils, disorders, and instability, following this crisis in the course of progress, the economist, who seeks to find the remedy, must battle with the false doctrines of the socialist invader. The struggle has benefited either party. It has given the economists an opportunity for a closer examination of the ills which afflict the "most numerous and poorest class"—to quote Saint Simon—with the result that they have been able to attribute them to the proper cause. The socialist, on the other hand, having begun by ignoring economics and, indeed, every moral science, has learnt the necessity of studying them. However inadequate the scientific spirit in which these men approached the subject, they have learned to dissociate socialism from some of its most gross errors, and a certain number have even forsaken the primitive idea of their creed—that the State must reconstitute and even absorb society. So far advanced from their first position are the more enlightened socialists, that it does not seem idle to hope that further and more profound study will result in an alliance between the leaders of the movement and the professor of political economy proper.

It was in this hope that, fifty years ago, the present author addressed the following appeal to all sincere socialists:—

"Economist and socialist, we may be adversaries, but our ideal and purpose is one. We seek a society in which there will be no stint in the production of all that is needful, whether to support or to embellish human existence. We seek a society where the distribution of these products between their creators will accord with the dictates of pure justice. We seek—in one word—an ideal that may be stated in two words, Justice and Plenty!

"None among you will deny this truth, and, if we say that we seek by different paths, that is the sum of our difference. Your way lies along the obscure and hitherto unexplored defile of the organisation of labour, ours down the broad, well-trodden highway of liberty. Both, we seek to lead a hesitating and halting society, nations looking—but in vain—towards the horizon in hopes of a new column of light to lead them by the way whereon it guided the slaves of Pharaoh to a Land of Promise.

"Now, you proscribe the freedom of labour and curse political economy. Will you continue to do this, or will you rally frankly to our flag, and employ all the precious endowment of your nature—your physical and intellectual powers, to achieve the triumph of our common hope, the cause of liberty? For we can prove that our cause is common. We can prove that all the ills which you ascribe to liberty—or, to use an absolutely equivalent expression, to free competition—do not originate in liberty, but in monopoly and restriction. We can prove that a society truly free—a society relieved from all restriction, all barriers, unique as will be such a society in all the course of history—will be exempt from most of the ills, as we suffer them to-day. We can prove that the organisation of such a society will be the most just, the best, and the most favourable to the production and distribution of wealth, that is attainable by mortal man.

"When we prove all this—and we can do so—I cannot think that you will hesitate as to your choice. Certified that you mistake the true origin of the ills which afflict society, and the remedies for those ills—certified that the truth is on our side and far from yours—no petty vanity, partisanship of propaganda or system, will retain you on the shores of error. Your hearts will no doubt be sad. You will bid a regretful adieu to the dreams which have enchanted your minds, dreams on which you were nurtured and in which you went astray. But in the end you will overpass their vain though lovely imaginations, and, surmounting your natural repugnance, you will come to us. And we—by God, we will do likewise, can you lighten our feeble intelligences with but one gleam of that true light which shone on Saint Paul: can you show us that the truth is with socialism, and not with political economy. We uphold our system, but only as we believe it the true and the just. Prove us, then, that our gods are feeble idols of wood and stone, and we burn them; leave, with no reservation, the altars of our adoration, rejecting the accepted return to the rejected, and worship whence we beforetime went forth.

"One with the other, we stand above the prejudice of party, taking that term at its narrowest. The sphere of our sight is broader, the lift of our wings too great. Truth, justice, the true utility—these be our immortal guides through the obscure circles of mortal knowledge! Humanity—she is our Beatrice!..."27

This appeal, brimming as it is with the naïve confidence of youth, is shown premature in the event. But if none gave ear to it, stillborn in a time unripe, it may yet find hearers. And socialism, allied to the economist, may yet, is that alliance, surmount the barriers of egoistic and blind self-interests, barriers outworn yet clinging about the neck of a transformation which is essential if the political and economic organisation of society is to adapt itself to the changed conditions of the Societies of To-morrow.

Appendix, by Edward Atkinson
The Cost to the United States of War and of Preparation for War from 1898 to 1904.

The Cost to the United States of War and of Preparation for War, from 1898 to 1904, Seven Fiscal Years Ending June 30, One Thousand Million Dollars. Statements Compiled, Computed, and Proved from the Official Reports of the Government, together with a Statement Showing the Relative Taxation of Great Britain, France, and Germany as Compared with that of the United States.

By Edward Atkinson, LL.D., Ph.D.
I

The following tables, compiled by Mr. Edward Atkinson, are inserted, with the permission of the compiler, as an appendix.

These statistics of the cost of war and of preparation for war, so effectively summarized by the Boston publicist, constitute, in the opinion of the publishers, an impressive commentary on the general conclusions and predictions of M. Molinari's treatise.

The cost of war and warfare from 1898 to 1903 inclusive has been over nine hundred million dollars ($900,000,000). The cost of the war with Spain and of the warfare upon the people of the Philippine Islands to the end of the last fiscal year, Jun. 30, 1903, had been over eight hundred and fifty million dollars ($850,000,000),—an addition in that fiscal year to the precious charge upon the taxpayers of this country of not less than one hundred and fifty million dollars ($150,000,000). This charge is increasing rather than diminishing. At the end of the present calendar year, December 31, 1903, we shall have expended in war and warfare not less than nine hundred and twenty million dollars ($920,000,000), which sum will be slightly in excess of the outstanding bonded debt of the United States bearing interest. Of this sum about three hundred million dollars ($300,000,000) is commonly assigned to the cost of the war with Spain. There is no exact data outside the government accounts by which this can be apportioned.

Over six hundred million dollars ($600,000,000) may be charged by taxpayers to the effort to deprive the people of the Philippine Islands of their liberty. The excess of the expenditures of this country, due to the warfare in the Philippine Islands, with the cost of the increase in the regular army and other expenditures engendered by militarism during the fiscal year ending June 30, 1903, varied but a fraction from two dollars ($2) per head of the population.

By dealing with the official figures for the year ending June 30, 1903, we may find the exact direction of the waste of taxpayers' money in one more year of oppression in the Philippines, of the refusal of liberty, and of futile efforts to redress wrongs previous committed.

The conduct of the work of imposing a form of government upon these people without their consent has been administered by able and upright men who have used their utmost effort to overcome the evil inherent in the conditions. The pretext of developing commerce by holding dominion over these islands has ceased to impose upon intelligent people. All that we import from the Philippines we may continue to import, whoever holds them,—the principal article, hemp, being free of duty. Our insignificant exports have fallen off with the withdrawal of a part of the troops and with the increasing disability on the part of the inhabitants to buy even articles of necessity, such being the poverty and distress which our rule has brought upon them. The proof of those statements is submitted in the subsequent form, all the figures being derived from the official reports of the government.

For twenty years, from June 30, 1878, to June 30, 1898, covering the administrations of Hayes, Arthur, Cleveland (first), Harrison, and Cleveland (second), the average annual expenditures on the different branches of the government service per capita were as follows:

The expenditures in five years of war and warfare under Presidents McKinley and Roosevelt were as follows (annual average):

During the last fiscal year, ending June 30th, the expenditures have been as follows (during a year of so-called peace):

An excess over the normal of twenty years of peace, order, and industry of one dollar and thirty-five rents ($1.35) per head.

But this does not show the whole case. During the twenty years prior to the Spanish war the cost of pensions and interest was two dollars and fifty two cents ($2.52) per head. Had it not been for debts incurred and pensions to so-called Spanish war veterans, these charges, which had been reduced to two dollars and eight cents ($2.08) per head, would not have exceeded one dollar and eighty-eight cents ($1.88) in the last fiscal year, the falling in of pensions through lapse of time now moving on with accelerating speed.

These differences per head may seem to be of trifling importance, but when computed on the population of June 30, 1903, the customary factor by which expenditures are distributed by the Treasury Department,

The present tendency is to increase rather than to diminish, and when the expenditures of the present six months ending December 31, 1903 are audited, the proof will be complete that the cost of the war with Spain, which a strong administration would have avoided, and the "criminal aggression" upon the people of the Philippine Islands, which a weak administration brought upon the country, will have cost the taxpayers nine hundred and twenty million dollars ($920,000,000), a sum slightly larger than the entire bonded debt of the United States, bearing interest, now outstanding.

The pretext of expansion of commerce in the East in justification of closing the door to trade in the Philippine Islands to other nations, while strenuously urging the open door in China and other parts of Asia, has been exposed and now excites only derision. In the computation of the cost of war and warfare to June 30, 1902, it proved that we had been paying for five years one dollar and five cents ($1.05) per head of our population to secure an export which amounted to six and one half (6½) cents per head, on which there might have been a profit to some one at the rate of one cent per head of the whole population. The figures of the last year are even more grotesque. The cost of criminal aggression in the Philippine Islands during the fiscal year ending June 30, 1903, was not less than one dollar and a quarter ($1.25) per head, after making any allowance that any reasonable man could make for the alleged necessity of increasing the army of the United States and building battle-ships to meet other contingencies. The exports from the United States to the Philippine Islands have fallen off to less than five cents per head of our population: had there been a profit equal to one cent on the five cents they would not have fallen off.

We are still wasting the lives and health of American soldiers and continuing to bring poverty and want upon the people of the Philippine Islands under the pretence of "benevolent assimilation."

The effort to suppress the evidenoe of torture, devastation, and ruin brought upon the people of these islands has failed, the facts of "criminal aggression" have been proved. In this statement the cost in money to the taxpayers of the United States is now submitted.

COMPUTATION TO JUNE 30, 1904
(Extended on Government Estimates, to June 30, 1905)

The cost of war and warfare to June 30, 1904, computed from the expenditures for six months from June 30 to December 31, 1903, and completed by estimate to the end of the fiscal year, June 30, 1904, for seven years will be not less than $1,000,000,000. Extended by estimates submitted by the Secretary of the Treasury to June 30, 1905.

In my first analysis of the cost of war and warfare, July 4, 1902, it was proved that the average expenditures per head of population for twenty years antecedent to the Spanish war had been five dollars per head as follows:

In this period and included in this average is the cost of what was called "the new navy" which destroyed the Spanish fleets.

In the subsequent five a years of war and warfare under McKinley and Roosevelt it was proved that the average expenditures per capita had been $6.61.

It was proved that the cost of war and warfare up to that date had been at the excess over $700,000,000.

In October, 1903, I prepared a second statement, extending the figures by estimate to December 31, 1903, in which it was proved that the cost of war and warfare to that date would be over $900,000,000.

The estimates used in that treatise have been more than justified by the official statements of the Secretary of the Treasury in his computations of the expenditures to June 30, 1904, by which it appears that the average, per head, of the present year will be $6.29.

It also appears that the estimates presented by the Departments for the fiscal year ending June 30, 1905, if not exceeded, will be $6.76.

The actual difference between the normal rate previous to the Spanish war and the average of $6.58 for seven years of active and passive war and warfare would be, per head, $1.58.

But during the eight years of Harrison and Cleveland, the cost of pensions and interest was, per head, $2.50.

In the fiscal year ending June 30, 1903, pensions and interest were less, per head, than $2.00. Reduction, 50 cents.

Both charges are now rapidly diminishing and the normal cost of government, without war and warfare, in 1903 and 1904, estimated at $6.29, would not have exceeded $4.29 on a basis of peace, order, industry, and good government, economically administered.

The cost of passive war and warfare is now over two dollars per head now being assessed on nearly 82,000,000 people, or over $160,000,000.

On the 30th of June, 1904, the cost of war and warfare, active and passive, will have been $1,000,000,000, and even if the appropriations for the year 1905 are not exceeded at the end of that fiscal year it will have been nearly $1,200,000,000.

We may take off $100,000,000 for expenditures now being made for a useful purpose which were not made before the Spanish war, such as Irrigation, National Parks, the expansion of the Department of Agriculture, and the possibility that the Consular Service may be reorganized, with suitable compensation to competent men.

And that before June 30, 1904, the total will stand at not less than $1,000,000,000.

It is also proved that unless the spirit of aggressive militarism can be stopped—which now costs two dollars ($2) per head—it will be over two dollars and a half ($2.50) in the fiscal year ending June 30, 1905, with a constant tendency to increase as time goes on.

In order to fix the relative increase in these charges, we may compare the different departments under the administration of President Harrison and those of the last fiscal year under President Roosevelt.

We may next compare the average in President Cleveland's first term with the expenditures of the present fiscal year ending June 30, 1904.

The average expenditures of 1903 and 1904 have been $6.29. The estimates of 1905 come to $6.76.

Had these expenditures and estimates been free of the cost of continued aggression in the Philippine Islands, of the proposed defensive works in the harbors of the Pacific, and the waste upon battle-ships and other killing instruments which form a necessary part of the policy of imperialism and oversea-expansion, the entire cost of the Civil, Military, and Naval Establishments, Interest, Pensions, Irrigation, Forest Reservations, and support to Agricultural Science could not exceed $4.30 in the present fiscal year, and might even be less in the next.

At every point and by every method that these accounts can be analyzed and fairly stated it is proved that the cost of war and warfare has been, is, and will be over two dollars ($2) per head on a population now about 82,000,000 and rapidly increasing.

The taxpayers of the United States are now payng the penalty for the feeble administration that brought us into this condition and the forcible, feeble administration that as yet fails to get us out, at this rate of two dollars ($2) per head, or ten dollars ($10) per family, or over $160,000,000 per year, tending to increase.

If it is assumed that the liberation of Cuba from oppression could not have been brought about without the Spanish war, commonly computed at $300,000,000, then the following estimates may be modified.

If the Spanish war is proved not to have been necessary, then it is proved that with this waste of six years of war and criminal aggression, $1,000,000,000, the whole bonded debt of the United States might have been paid, with a large premium for the purchase of bonds not yet matured.

It may be estimated that, had this money been spent for any useful purpose, many measures now contemplated might have been partially or wholly carried out.

Had we expended in the seven years $200,000,000 on the improvement of rivers and harbors, how much more would remain to be done?

Had we expended $200,000,000 on the irrigation of arid lands, how much would remain unproductive?

Had we made up to the Southern States, for purposes of common education, a sum a little more than equal to that which the Western States have derived from the public lands which Southern States surrendered to the Nation, which sum is about $65,000,000, by assigning aid to them of $100,000,000, what would be their present condition in the abatement of illiteracy?

Had we appropriated only so much money as may be necessary to construct cruisers for the protection of commerce, such cruisers being necessary so long as predatory nations threaten it, might we not have saved $100,000,000?

What could we have done with the other $400,000,000, which we shall have worse than wasted before the end of the present year, except to have remitted useless and oppressive, obstructive taxes?

Or if the war with Spain is deemed one that could not have been avoided, of which the common estimate of cost is $300,000,000, should we not still have had a surplus of $100,000,000 to be applied to the reduction of taxation?

When the cost of our national government is again reduced to the average of twenty years before the Spanish war—of five dollars ($5) per head, less at least one dollar ($1) per head, or to four dollars ($4), for falling in of pensions and interest as it soon may be when the waste of militarism is stopped—what nation can compete with us in the productive pursuits of peace or in the expansion our commerce with the world?

If such are the proved conditions, then what does it cost each State or Territory at two dollars ($2) per head on the population of the census year 1900, plus two dollars ($2) per head on the subsequent increase—the actual cost being more and increasing?

The following table will show, the computation being made in round thousands, disregarding fractions, at the average rate of two dollars ($2), it being remarked that the richer States pay more, the poorer States less, because these indirect taxes fall wholly on consumers in proportion to their consumption.

Every family pays its proportion of this tax, which is imposed on beer, tobacco, spirits, fuel, timber, steel, iron, and other metals, clothing, leather, cordwood, sugar, salt, fish, potatoes, and every other article of necessity, comfort, or luxury that is now subjected to a tax or duty.

Indirect taxes are tolerated because those who pay them are not conscious of the burden. They are the resort of rulers who dare not expose their purposes.

The proportion by States and Territories on the census of 1900 is as follows:²⁸

The increase in population from 1900 to 1904 would be 7 per cent. average, or from 1 per cent. in States from which emigrants pass, to 50 per cent, in Oklahoma, to which they come.

Now, if the tax gatherer went to the door of every house or to the dwelling place of every person, demanding two dollars per head in cash or ten dollars from each average family, hold long would this waste of warfare and militarism last?

If this tax of two dollars per head, or over $160,000,000 a year, were assessed directly upon the States according to law, to be collected mainly by a direct tax on property, or by a poll tax, how soon would it be abated? Before a single Congressional term had ended would not this waste be stopped, or every member who refused to stop it be relegated to a position where he could abuse a public trust no more?

With these questions, soon to be answered at the polls, I submit these computations to an anxious public, now constantly seeking for solution, and to sagacious politicians who are vying to save the Nation from farther dishonor and reckless waste on oversea-expansion and imperialism.

II
RELATIVE TAXATION IN THE UNITED KINGDOM, IN FRANCE, AND IN GERMANY, AS COMPARED WITH THE UNITED STATES

From an official statement of the national expenditures of the Republic of France the following computations are derived for the year 1901:

From an official statement of the expenditures of the United Kingdom of Great Britain and Ireland the following computations are derived for the year ending March 31, 1901:

For the year 1902, this burden will be somewhat lessened; but, by comparison with the United States fiscal year ending June 30, 1901, the British rate is $19.18 per head against the United States rate of $6.57, now also lessened.

Having no official statement of the national expenditures of Germany and not reading German, I am unable to unravel the complex accounts of the German empire in the Almanac de Gotha. I compute them on the best information I can get at $12 per head, very largely for military and naval service.

But this is no measure of the burden, as the pay in the German service is miserably insufficient, and in the examination of German family budgets one constantly finds an item, "Support of son in the army."

It will also be remarked that the burden upon our manufacturing competitors is not truly measured in terms of money.

$12, in Germany, falls on a per capita product not over half our own.

$17, in France, on a product not over three fifths.

$11.54 to $13, in the United Kingdom, in time of peace; $19.18 in time of war on a product per capita not over three quarters, if as much.

The Nemesis of the rule of Blood and Iron—of Revanche—of Junkerism and Militarism, hangs like a pall over continental Europe, and the word, "Disarm or Starve" are written upon the battlements on land and on the battle-ships upon the sea.

From a more extensive study of the relative taxation for national purposes in the United Kingdom, France, Germany, Belgium, and the Netherlands, which are our chief competitors in supplying other parts of the world with manufactured goods, and which are also our principal foreign customers (Italy, Austria, and Spain being yet worse off and Russia always on the verge of widespread famine), I have become satisfied that our advantage in immunity from taxation for military purposes and for the payment of interest on their huge debts incurred in previous wars is equivalent to at least five per cent. upon the value of our whole national product, or a sum between $700,000,000 and $800,000,000. In other words, we have a margin of profit of five per cent. on our whole product before our competitors can begin to credit profit on their product. Such a sum is more than the sum of all our State, county, city, or town taxes imposed for the cost of local government. Prodigal and wasteful as we may be in some places and in some directions, yet the whole sum per capita of National, State, county, city, and town taxes in the United States does not exceed the average rate given above for national taxation only in the European states above named, which are in very largest measure expended for military purposes, or interest on war debts.

The capacity of the European continent, without Russia, to support its own population cannot be questioned, yet more with Southern Russia and Asia Minor added; but divided as it is by the prejudices of race, the diversity of language, and by tariff barriers which yield less revenue than the cost of the armed forces necessary to maintain them, the state of Europe seems hopeless. Hence the urgency for the conquest of colonies and for the expansion of foreign commerce and exports. Hence also the fear of the industrial progress of the United States. Under these conditions the effort is being made to unite in a common effort to exclude imports from this country. Were such a union possible, what would be the effect? The cost of living would be enhanced, that increased cost would enter into all their goods which they now export. For a time the price of our food, fibres, and fabrics would be lessened, our farmers would have a narrower market for a time, but our ability to export manufactured goods would be augmented by the consequent reduction in the cost of living.

The power of the continental states of Europe to compete with the United States and Great Britain, welded together as they would then be by their common interest and mutual dependence, would be wholly destroyed.

So long as the armies of the continent of Europe are maintained, and the effort of the maritime states to create and support great navies is continued, their ability to sustain even the present population is diminished, and will continue to is lessened until some great social revolution destroys the classes by whom militarism is maintained.

As the slave power destroyed itself in this country, so will the military caste destroy itself in Europe.

Such seem to me to be the warnings shadowed forth by even a partial study of the figures of comparative taxation so far as I have been able to compute them. I commend this subject of the relative burden of armies, navies, debts, and taxes to all students of social and political science.

[25.]Rouxel, "A Critical Review of the Chief Recent Economic Publications"—Journal des Economistes.

[26.]Journal des Economistes—Yearly Summary for 1898.

[*][The original (1904, G. P. Putnam's Son's), reads "Dii minores".—Econlib Editor]

[27.]Extracted from "l'Utopie de la Liberté"—A Letter to Socialists. Journal des Economistes, June 15, 1848.