William James Ashley’s Bibliographical Appendix to John Stuart Mill’s Principles of Political Economy

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Source: Appendix to J.S. Mill's Principles of Political Economy with some of their Applications to Social Philosophy, ed. William James Ashley (London: Longmans, Green and Co., 1909, 7th ed.).


prepared by sir william ashley in 1909

For the history of economic investigation and discussion since the publication of Mill's Principles in 1848, the only general work to which reference can be made in English is Palgrave's Dictionary of Political Economy (1894–1908), which contains many useful articles under the headings of the various subjects and authors. Readers of French will obtain some assistance from Block, Les Progrès de la Science Économique depuis Adam Smith (1890), representing the strictest school of French orthodoxy, and from Gide and Rist, Histoire des Doctrines Économiques (1909), written from a more modern point of view. Readers of German will naturally refer to Conrad's Handwörterbuch der Staatswissenachaften, of which the third and enlarged edition is now being issued; and they will find a number of valuable reviews of the course of discussion of the several main topics in the series of monographs brought together under the title Die Entwicklung der deutschen Volkswirthschaftslehre im neunzehnten Jahrhundert (1908).


The Mercantile System (p. 6)

Mill's account is based on that of Adam Smith, Wealth of Nations, bk. iv. ch. i. Much investigation has subsequently taken place into mercantilist literature and policy, some results of which may be seen in Roscher, Geschichte der National-Ökonomik in Deutschland (1874), § 57, closely followed (with a Positivist colouring) by Ingram, History of Political Economy (1888); in Schmoller, The Mercantile System and its Historical Significance (1884; Eng. trans. 1896), and Grundriss der Allgemeinen Volkswirthschaftslehre (1900), i. § 39 (in French trans., Principes d'Économie Politique (1905–1908), i. § 39); in Cunningham, Growth of English Industry and Commerce, vol. ii. pt. i., The Mercantile System (1903); and in Unwin, Industrial Organisation in the Sixteenth and Seventeenth Centuries (1904). One of the most significant of English mercantilist writings, Mun's England's Treasure by Forraign Trade (1664), has been recently republished (1895).


The Definition of Wealth (p. 9)

Mill's definition has been criticised, from very different points of view, by Jevons, Principles of Economics (posthumously published, 1905), p. 14; Nicholson, Principles of Political Economy, i. (1893), Introduction; and Ruskin, Unto this Last (1862), Preface, and Munera Pulveris (1863), Preface. For a recent classification of “desirable things,” see Marshall, Principles of Economics (1890; 5th ed. 1907), bk. ii. ch. 2. Sidgwick, Principles of Political Economy (1883), bk. i. ch. ii., points out that, though in England “Wealth” has commonly been regarded as the most fundamental conception in Political Economy, it has also been commonly held that it should be defined by the characteristic of possessing “Value,” so that it would seem more logical “to begin by attempting to get a precise conception of this characteristic.” For difficulties attaching to “Richesse,” as the French equivalent of “Wealth,” see Gide, Cours d'Économie Politique (1909), p. 47. [By the earlier French economic writers, however, the term was used in the plural, as in Turgot's Réflexions sur Formation et la Distribution des Richesses (1770: trans. by Ashley, 1898).]

The German language possesses no one inclusive term like “Wealth”; and German economists have long been accustomed to begin with the definition of “goods” (Guter) and, in consequence, of “a good” (Gut)—enjoying, in the use of the latter term, an advantage not available in current English speech. For characteristic examples reference may be made to Wagner, Lehrbuch der Politischen Oekonomie, Grundlagen (3rd ed. 1892), I, bk. ii. ch. i.; or Conrad, Grundriss zum Studium der Politischen Oekonomie (6th ed. 1907), § 5. The phrases “goods,” “economic goods,” “an economic good,” and so on, have of late years made their way into English and still more into American economic writings; see, for instance, Marshall (as above), and Clark, Essentials of Economic Theory (1907), ch. 2; and cf. Pierson, Principles of Economics (Eng. trans. 1902), pt. i. ch. i.


The Types of Society (p. 20)

Mill's brief sketch of the general economic development of humanity is a masterly one. But since his time there has been a vast amount of work done, especially in Germany, in the field of economic history. The best introduction to the subject is now Schmoller's Grundriss, bk. ii. (occupying the second volume of the French trans., Principes). A very suggestive treatment of certain aspects of the subject is presented in a brief compass in Bücher, Entstehung der Volkswirthschaft (Eng. trans. under the title Industrial Evolution, N. Y. 1901); which receives some necessary correction and is supplemented in important respects by Meyer, Die wirthschaftliche Entwickelung des Alterthums, Vortrag, 1895, and Die Sklaverei im Alterthum, Vortrag, 1898; and by v. Below, Über Theorien der wirthschaftlichen Entwicklung der Völker, in Historische Zeitschrift, lxxxvi. (N. F. 1.). The best general work in English is Cunningham's Western Civilisation in its Economic Aspects; Ancient Times (1898), Mediaeval and Modern Times (1900). Seligman, Principles of Economics (1905), part ii. bks. ii. and iii., brings together a great many instructive apercus in a short compass.


Productive and Unproductive Labour (p. 53)

The distinction was taken from Adam Smith, Wealth of Nations, bk. ii. ch. 3, who derived the words themselves from the French Physiocrats, though he used them in a different sense. It has been criticised by Jevons, Principles, ch. xviii., and Cancan, History of the Theories of Production and Distribution (1893), ch. i. § 7; and it is now but little used. Cf. Marshall, bk. ii. ch. 3.


The Definition of Capital (p. 62)

A good introduction to the large contentious literature on this subject is Schmoller, Grundriss, ii. § 182 c (in the French trans. Principes, iii. pp. 409 seq.); which makes use of the material collected in Böhm-Bawerk, The Positive Theory of Capital (Eng. trans. 1891), bk. i. ch. 3. As Wagner, Grundlagen, § 129, has pointed out, the conception of capital is twofold—economical and historical (cf. Gide, Cours, bk. i. ch. 3); the latter aspect was emphasised by Lassalle in his proposition that “Capital is a historical category.” An account in English of the history of the conception will be found in Marshall, i. App. E, and in Taussig, Wages and Capital (N. Y. 1896), ch. 2. Clark, Distribution of Wealth (1902), ch. 9, distinguishes between “Capital” and “Capital Goods.” Fisher, The Nature of Capital and Income (1906), defines Capital as “a stock of wealth existing at a moment of time,”—which would seem to identify Capital with Wealth generally; while Gibson, Human Economics (1909), defines Capital from the business point of view as “everything in which an individual or group has a legal estate and for which there is a buyer's valuation.”


Fundamental Propositions on Capital (p. 90)

For destructive criticism of these propositions see Jevons, Principles, ch. xxiv.; Sidgwick Principles, bk. i. ch. 5, note; and Nicholson, Principles, i. pp. 98 seq. The first and fourth of them, as stated by Mill, are only other aspects of his Wages Fund doctrine, and, according to Marshall, Principles, i. App. J, “express his meaning badly.”


Division and Combination of Labour (p. 131)

This subject, when further examined, widens out into the two far larger topics of economic differentiation and co-operation, which are themselves to a large extent but different aspects of the same process. In this sense it is philosophically treated with a great command of the results of recent investigations, in Schmoller, Grundriss, i. §§ 113 seq. (in Fr. trans. Principes, ii. pp. 248 seq.).


Large and Small Farming (p. 154)

On this problem, so far as England is concerned, it has to be remembered: (1) that the substitution of large for small farming in the eighteenth and early nineteenth centuries was closely associated with the movement for the enclosure of the “open” or intermixed fields; see hereon, Slater, The English Peasantry and the Enclosure of Common Fields (1907), and Hasbach, A History of the English Agricultural Labourer (Eng. trans. 1908); and (2) that the position of affairs has been greatly affected since Mill wrote by the shock to “cereal farming” caused by the influx of cheap American grain in the eighties: hereon, see Levy, Entstehung and Rückgang des landwirthschaftlichen Grossbetriebes in England (1904). Materials for an opinion on the economic prospects of small farming in England are to be found in Lawes and Gilbert, Allotments and Small Holdings, in Journal of the Royal Agric. Soc., vol. iii. 3rd series (1892); in the Report of a Departmental Committee on Small Holdings (1906); and in Jebb, The Small Holdings of England (1907). They are evidently bound up to some extent with the prospects of agricultural co-operation (in the purchase of fertilisers, the sale of produce, &c.), of which an account is given in Pratt, The Organisation of Agriculture (1905), and in the publications of the Agricultural Organisation Society. A general comparison of Large and Small Farming following, criticising, and supplementing that of Mill is presented by Nicholson, Principles, i. (1893) bk. i. ch. 9.


Population (p. 162)

In the writings of no contemporary economist, in Great Britain or abroad, does the idea that population is constantly tending to press upon the means of subsistence occupy the same conspicuous and primary place as it does with Mill. The treatment of the subject by Marshall, Principles, bk. iv. chs. 4, 13, and bk. vi. ch. 13, is characteristic of the general present attitude. Attention is coming to be directed more and more to those defects in the present industrial organisation which create a body of permanently underemployed as well as temporarily unemployed, even where the growth of population is evidently not outstripping the means of employment: hereon see Beveridge, Unemployment (1909), p. 6 and passim. The understanding of the exact teaching of Malthus, and of the differences between the first edition of the Essay (1798) and the second (1803), has been facilitated by the publication of Parallel Chapters from the First and Second Editions of an Essay on the Principle of Population (1895).


The Law of Diminishing Return (p. 188)

Careful restatements in general accord with Mill's teaching are to be found in Marshall, Principles, i. bk. iv. ch. 3; and Nicholson, Principles, bk. i. ch. 10. For the results of the Rothamsted experiments, showing that “beyond a certain point the increase of crop is not in proportion to the increase in the amount of manure applied,” see Lawes, Is Higher Farming a Remedy for Lower Prices? Lecture (1879); and Hall, The Book of the Rothamsted Experiments (1905). The extent to which the formula of diminishing returns covers the facts of agricultural development is discussed by Schmoller, Grundriss, ii. § 233 (Principes, iv. pp. 427 seq.). But while Mill and the older theoretic writers distinguished between the law of diminishing return in agriculture and the fact (by some called the law) of increasing return in manufacture (cf. Marshall, Principles, bk. iv. ch. 13, § 2), and writers of the historical school tend to minimise the effect of the law of diminishing return even in agriculture, some more recent theoretic writers go in the other direction and declare that the law of diminishing return is universal and applies to production of all kinds. For the sense in which they use such language, see Clark, Distribution of Wealth, p. 208, and Seligman, Principles, § 88.


Mill's Earlier and Later Writings on Socialism (p. 204)

Mill's account in the Preface to the 3rd edition of the nature of the alterations there made, scarcely give an adequate impression of the change of tone on his part between 1848 and 1852. The total impression produced by the argument of 1848 is that “Socialism” was probably undesirable and impracticable. Thus the difficulty of apportioning labour among the members of the community, which was met in 1852 by an expression of the hope that “human intelligence would not be inadequate” to deal with it, had called forth in 1848 the following remarks:

“In the existing system of industry these things do adjust themselves with some, though but a distant, approach to fairness. If one kind of work is harder or more disagreeable than another, or requires a longer practice, it is better paid, simply because there are fewer competitors for it; and an individual generally finds that he can earn most by doing the thing which he is fittest for. I admit that this self-adjusting machinery does not touch some of the grossest of the existing inequalities of remuneration, and in particular the unjust advantage possessed by almost the commonest mental over almost the hardest and most disagreeable bodily labour. Employments which require any kind of technical education, however simple, have hitherto been the subject of a real monopoly as against the mass. But as popular instruction advances, this monopoly is already becoming less complete, and every increase of prudence and foresight among the people encroaches upon it more and more.”

And the argument concluded thus:

“I believe that the condition of the operatives in a well-regulated manufactory, with a great reduction of the hours of labour and a considerable variety of the kind of it, is very like what the condition of all would be in a Socialist community. I believe that the majority would not exert themselves for any thing beyond this, and that unless they did, nobody else would; and that on this basis human life would settle itself into one invariable round. But to maintain even this state, the limitation of the propagative powers of the community must be as much a matter of public regulation as everything else; since under the supposed arrangements prudential restraint would no longer exist. Now, if we suppose an equal degree of regulation to take place under the present system, either compulsorily, or, what would be so much preferable, voluntarily; a condition at least equal to what the Socialist system offers to all would fall to the lot of the least fortunate, by the mere action of the competitive principle. Whatever of pecuniary means or freedom of action any one obtained beyond this, would be so much to be counted in favour of the competitive system.”

It is true that, in the next section, he went on to say:

“These arguments, to my mind conclusive against Communism, are not applicable to St. Simonism... St. Simonism does not contemplate an equal, but an unequal, division of the produce.”

But he judged the assumption on which it rested “almost too chimerical to be reasoned against”; and began the next section thus:

“There has never been imagined any mode of distributing the produce of industry, so well adapted to the requirements of human nature on the whole, as that of letting the share of each individual (not in a state of bodily or mental incapacity) depend in the main on that individual's own energies and exertions, and on such furtherance as may be obtained from the voluntary good offices of others. It is not the subversion of the system of individual property that should be aimed at, but the improvement of it.”

In the 3rd edition, it should be noted, the treatment of the subject is affected not only by a modification of personal opinion, but also by the insertion, which had taken place in the 2nd edition, of the account of Fourierism.

In 1869 Mill formed the design of writing a book on Socialism; and after his death the first rough drafts of the work were published by his step-daughter, Miss Helen Taylor, in the Fortnightly Review for February, March, and April 1879. These articles indicate a reversion on Mill's part to an attitude resembling more closely perhaps his state of mind in 1848 than that in 1852. It must be remembered that his criticisms bore primarily upon the Socialist literature of his own time (1869). His treatment of the subject was so carefully balanced that there is a certain risk of giving an unfair impression of the general effect of the argument by the selection of a few passages. The following passages, taken in conjunction with the chapters in the Principles, will, however, indicate with sufficient clearness his general point of view.

After an Introduction on the importance of the subject, Mill begins by setting forth at length the Socialist objections to the present order of society, and by recognising the large element of truth in them.

“But the strongest case is susceptible of exaggeration; and it will have been evident to many readers, even from the passages I have quoted, that such exaggeration is not wanting in the representations of the ablest and most candid Socialists. Though much of their allegations is unanswerable, not a little is the result of errors in political economy; by which, let me say once for all, I do not mean the rejection of any practical rules of policy which have been laid down by political economists: I mean ignorance of economic facts, and of the causes by which the economic phenomena of society as it is, are actually determined.

“In the first place, it is unhappily true that the wages of ordinary labour in all the countries of Europe are wretchedly insufficient to supply the physical and moral necessities of the population in any tolerable measure. But when it is further alleged that even this insufficient remuneration has a tendency to diminish; that there is, in the words of M. Louis Blanc, une baisse continue des salaires; the assertion is in opposition to all accurate information, and to many notorious facts. It has yet to be proved that there is any country in the civilised world where the ordinary wages of labour, estimated either in money or in articles of consumption, are declining; while in many they are, on the whole, on the increase; and an increase which is becoming not slower, but more rapid.”

The following passage supplements the chapter in the Principles on the theory of Profit:

“Another point on which there is much misapprehension on the part of Socialists, as well as of Trades Unionists and other partisans of Labour against Capital, relates to the proportions in which the produce of the country is really shared, and the amount of what is actually diverted from those who produce it, to enrich other persons.... With respect to capital employed in business, there is in the popular notions a great deal of illusion. When, for instance, a capitalist invests £20,000 in his business and draws from it an income of suppose £2000 a year, the common impression is as if he was the beneficial owner both of the £20,000 and the £2000, while the labourers own nothing but their wages. The truth, however, is that he only obtains the two thousand pounds on condition of applying no part of the £20,000 to his own use. He has the legal control over it, and might squander it if he chose, but if he did he would not have the £2000 a year also. As long as he derives an income from his capital he has not the option of withholding it from the use of others. As much of his invested capital as consists of buildings, machinery and other instruments of production, is applied to production and is not applicable to the support or enjoyment of any one. What is so applicable (including what is laid out in keeping up or renewing the buildings and instruments) is paid away to labourers, forming their remuneration and their share in the division of the produce. For all personal purposes they have the capital and he has but the profits, which it only yields to him on condition that the capital itself is employed in satisfying, not his own wants, but those of labourers. The proportion which the profits of capital usually bear to the capital itself (or rather to the circulating portion of it) is the ratio which the capitalist's share of the produce bears to the aggregate share of the labourers. Even as his own share a small part only belongs to him as the owner of capital. The portion of the produce which falls to capital merely as capital is measured by the interest of money, since that is all that the owner of capital obtains when he contributes nothing to production except the capital itself. Now the interest of capital in the public funds, which are considered to be the best security, is at the present prices (which have not varied much for many years) about three and one-third per cent. Even in this investment there is some little risk—risk of repudiation, risk of being obliged to sell out at a low price in some commercial crisis.

“Estimating these risks at one-third per cent., the remaining three per cent. may be considered as the remuneration of capital, apart from insurance against loss. On the security of a mortgage four per cent. is generally obtained, but in this transaction there are considerably greater risks—the uncertainty of titles to land under our bad system of law; the chance of having to realise the security at a great cost in law charges; and liability to delay in the receipt of the interest, even when the principal is safe. When mere money independently of exertion yields a larger income, as it sometimes does, for example, by shares in railway or other companies, the surplus is hardly ever an equivalent for the risk of losing the whole, or part, of the capital by mismanagement, as in the case of the Brighton Railway, the dividend of which, after having been six per cent. per annum, sunk to from nothing to one and one-half per cent., and shares which had been bought at 120 could not be sold for more than 43.... Of the profits, therefore, which a manufacturer or other person in business obtains from his capital no more than about three per cent. can be set down to the capital itself. If he were able and willing to give up the whole of this to his labourers, who already share among them the whole of his capital as it is annually reproduced from year to year, the addition to their weekly wages would be inconsiderable. Of what he obtains beyond three per cent. a great part is insurance against the manifold losses he is exposed to, and cannot safely be applied to his own use, but requires to be kept in reserve to cover those losses when they occur. The remainder is properly the remuneration of his skill and industry—the wages of his labour of superintendence. No doubt if he is very successful in business these wages of his are extremely liberal, and quite out of proportion to what the same skill and industry would command if offered for hire. But on the other hand he runs a worse risk than that of being out of employment: that of doing the work without earning anything by it, of having the labour and anxiety, without the wages. I do not say that the drawbacks balance the privileges, or that he derives no advantage from the position that makes him a capitalist and employer of labour, instead of a skilled superintendent letting out his service to others; but the amount of his advantage must not be estimated by the great prizes alone. If we subtract from the gains of some the losses of others and deduct from the balance a fair compensation for the anxiety, skill and labour of both, grounded on the market price of skilled superintendence, what remains will be, no doubt, considerable, but yet, when compared to the entire capital of the country, annually reproduced and dispensed in wages, it is very much smaller than it appears to the popular imagination; and were the whole of it added to the share of the labourers it would make a less addition to their share than would be made by any important invention in machinery, or by the suppression of unnecessary distributers and other ‘parasites of industry.’...

“It seemed desirable to begin the discussion of the Socialist question by these remarks in abatement of Socialist exaggerations, in order that the true issues between Socialism and the existing state of society might be correctly conceived. The present system is not, as many Socialists believe, hurrying us into a state of general indigence and slavery from which only Socialism can save us. The evils and injustices suffered under the present system are great, but they are not increasing; on the contrary, the general tendency is toward their slow diminution.”

Mill then opens his statement of the objections to Socialism with the following classification, which illustrates the extent to which Socialist propaganda has changed its character since 1869:

“Among those who call themselves Socialists, two kinds of persons may be distinguished. There are, in the first place, those whose plans for a new order of society—in which private property and individual competition are to be superseded and other motives to action substituted—are on the scale of a village community or township, and would be applied to an entire country by the multiplication of such self-acting units; of this character are the systems of Owen and Fourier, and the more thoughtful and philosophic Socialists generally. The other class, who are more a product of the continent than of Great Britain and may be called the revolutionary Socialists, propose to themselves a much bolder stroke. Their scheme is the management of the whole productive resources of the country by one central authority, the general government.”

Remarking that:

“the peculiarities, however, of the revolutionary form of Socialism will be most conveniently examined after the considerations common to both the forms have been duly weighed,”

he begins by pointing out that:

“the distinctive feature of Socialism is not that all things are in common, but that production is only carried on upon the common account, and that the instruments of production are held as common property.”


“The question to be considered is, whether this joint management is likely to be as efficient and successful as the managements of private industry by private capital. And this question has to be considered in a double aspect: the efficiency of the directing mind, or minds, and that of the simple workpeople.”

He discusses this, first in relation to the form of Socialism which he calls

“simple communism, i.e. equal division of the produce among all the sharers, or, according to M. Louis Blanc's still higher standard of justice, apportionment of it according to difference of need, but without making any difference of reward according to the nature of the duty nor according to the supposed merits or services of the individual,”

with the conclusion that its success would depend upon a moral education for which mankind could only be effectually trained by communistic association:

“It is for Communism, then, to prove, by practical experiment its power of giving this training. Experiments alone can show whether there is as yet in any portion of the population a sufficiently high level of moral cultivation to make Communism succeed, and to give the next generation among themselves the education necessary to keep up that high level permanently. If Communist associations show that they can be durable and prosperous, they will multiply, and will probably be adopted by successive portions of the population of the more advanced countries as they become morally fitted for that mode of life.”

And, going on then to “those other forms of Socialism which recognise the difficulties of Communism and contrive means to surmount them,” of which the principal was Fourierism, he gives reasons for the opinion that, for them, “practical trial” is no less necessary. He then goes on to the other main division:

“The various schemes for managing the productive resources of the country by public instead of private agency... are at present workabie only by the élite of mankind, and have yet to prove their power of training mankind at large to the state of improvement which they presuppose. Far more, of course, may this be said of the more ambitious plan which aims at taking possession of the whole land and capital of the country, and beginning at once to administer it on the public account. Apart from all consideration of injustice to the present possessors, the very idea of conducting the whole industry of a country by direction from a single centre is so obviously chimerical that nobody ventures to propose any mode in which it should be done.”

Mill's argument with regard to the second or “revolutionary” type of Socialism is accordingly based upon the difficulty of “the problem of management.” And his final conclusion is thus expressed:

“The preceding considerations appear sufficient to show that an entire renovation of the social fabric, such as is contemplated by Socialism, establishing the economic constitution of society upon an entirely new basis, other than that of private property and competition, however valuable as an ideal, and even as a prophecy of ultimate possibilities, is not available as a present resource, since it requires from those who are to carry on the new order of things qualities both moral and intellectual, which require to be tested in all, and to be created in most; and this cannot be done by an Act of Parliament, but must be, on the most favourable supposition, a work of considerable time. For a long period to come the principle of individual property will be in possession of the field; and even if in any country a popular movement were to place Socialists at the head of a revolutionary government, in however many ways they may violate private property the institution itself would survive, and would either be accepted by them or brought back by their expulsion, for the plain reason that people will not lose their hold of what is at present their sole reliance for subsistence and security until a substitute for it has been got into working order. Even those, if any, who have shared among themselves what was the property of others would desire to keep what they had acquired, and to give back to property in the new hands the sacredness which they had not recognised in the old.

“But though, for these reasons, individual property has presumably a long term before it, if only of provisional existence, we are not, therefore, to conclude that it must exist during that whole term unmodified, or that all the rights now regarded as appertaining to property belong to it inherently, and must endure while it endures. On the contrary, it is both the duty and the interest of those who derive the most direct benefit from the laws of property to give impartial consideration to all proposals for rendering those laws in any way less onerous to the majority....

“One of the mistakes oftenest committed, and which are the source of the greatest practical errors in human affairs, is that of supposing that the same name always stands for the same aggregation of ideas. No word has been the subject of more of this kind of misunderstanding than the word property. It denotes, in every state of society, the largest power of exclusive use or exclusive control over things (and sometimes, unfortunately, over persons) which the law accords, or which custom in that state of society recognises; but these powers of exclusive use and control are very various and differ greatly in different countries and in different states of society.”

And, after some historical illustrations of this proposition, he concludes:

“When, therefore, it is maintained, rightly or wrongly, that some change or modification in the powers exercised over things by the persons legally recognised as their proprietors would be beneficial to the public and conducive to the general improvement, it is no good answer to this merely to say that the supposed change conflicts with the idea of property. The idea of property is not some one thing identical throughout history and incapable of alteration, but is variable like all other creations of the human mind; at any given time it is a brief expression denoting the rights over things conferred by the law or custom of some given society at that time; but neither on this point nor on any other has the law and custom of a given time and place a claim to be stereotyped for ever. A proposed reform in laws or customs is not necessarily objectionable because its adoption would imply, not the adaptation of all human affairs to the existing idea of property, but the adaptation of the existing ideas of property to the growth and improvement of human affairs. This is said without prejudice to the equitable claim of proprietors to be compensated by the state for such legal rights of a proprietary nature as they may be dispossessed of for the public advantage.”


The Later History of Socialism (p. 217)

It will be observed that the socialistic writings commented on by Mill were all of French origin and were none of them subsequent to 1869, the date of Mill's articles on Socialism referred to under Appendix K. The Socialism which has been of most influence in later years has been of German origin, and must be studied in the writings of its chief exponents, Karl Marx, Ferdinand Lassalle, Rodbertus, and Friedrich Engels. The most notable in this connexion of those of Lassalle were Arbeiterprogramm (1862: Eng. trans. as The Working Man's Programme), and Herr Bastiat Schulze von Delitzsch der ökonomische Julian (1864: French trans. by Malon as Capital et Travail); of Rodbertus, Zur Beleuchtung der Sozialen Frage (1875; containing a new edition of Soziale Briefe an v. Kirchmann, 1850), and Die Handelskrisen (1858: Eng. trans. as Overproduction and Crises, 1898); and of Engels (in conjunction with Marx), Manifest der Kommunistischen Partei (1848: Eng. trans. revised by Engels 1888), and, alone, Die Entwickelung der Sozialismus von der Utopie zur Wissenschaft (1882: Eng. trans. as Socialism, Utopian and Scientific), and Introductions to Marx's Capital. But of most importance for the theoretic formulation of Socialism have been the writings of Marx (1818–1883): Zur Kritik der politischen Oekonomie (1859), and, above all, Das Kapital (i. 1867: Eng. trans. Capital, 1887; ii. 1893; iii. 1894. An English abstract of the 1st vol. by Aveling appeared in 1891 as The Student's Marx). Fundamental ideas in the writings of Marx were those of Surplus-Value, of Class War, of the Concentration of Wealth, and of the Materialist Interpretation of History. The extent to which these particular teachings have been abandoned by those younger German socialists known as “Revisionists” may be gathered from Bernstein, Die Voraussetzungen der Sozialismus (1899: Eng. trans. as Evolutionary Socialism, 1909).

Among useful books on the history of Socialism in general, and of German socialism in particular, may be mentioned: Laveleye, Le Socialisme Contemporain (1881: Eng. trans. 1885); Ely, French and German Socialism (1885); Gonner, The Social Philosophy of Rodbertus (1900); Rae, Contemporary Socialism (3rd ed. 1901); Brooks, The Social Unrest (1903); Kirkup, A History of Socialism (3rd ed. 1906); Ensor, Modern Socialism (2nd ed. 1907),—a most useful collection of typical documents and speeches from all the leading countries of Europe; and Herkner, Die Arbeiterfrage (5th ed. 1908).

English socialism has pursued in some respects a line of development of its own; and it may be studied in Fabian Essays in Socialism (1889: Reprint, with a significant preface, 1908); various Fabian Tracts, especially Shaw, The Fabian Society (1892); Macdonald, Socialism and Society (1905); Wells, New Worlds for Old (1908); and Villiers, The Socialist Movement in England (1908).

Two popular works which have had a very large circulation are, in America, Bellamy, Looking Backward (1890), and in England, Blatchford, Merrie England (1894).

For French socialism see Jaurès, Studies in Socialism (Eng. trans. 1906); Lavy, L'Oeuvre de Millerand (1902); and Millerand, Travail et Travailleurs (1908); for the recent developments of “Revolutionary Syndicalism,” Gide and Rist, Histoire des Doctrines Économiques (1909); and for Belgian socialism, Destrée and Vandervelde, Le Socialisme en Belgique (1903).

Among criticisms of socialism in various forms and aspects may be singled out Herbert Spencer, The Man v. The State (1884); Courtney The Difficulties of Socialism, in Econ. Journal, i. (1891); Schäffle, The Impossibility of Social Democracy (Eng. trans. 1892); Richter, Pictures of the Socialistic Future (Eng. trans. 1893); Devas, Political Economy (2nd ed. 1901), bk. ii. ch. 7; Strachey, Problems and Perils of Socialism (1908); and Mallock, A Critical Examination of Socialism (1909). An individualist position is ably maintained in the writings of Helen Bosanquet, especially The Strength of the People (1902).


Indian Tenures (p. 328)

The whole subject must now be studied in the works of the late B. H. Baden-Powell, and especially in the three massive volumes The Land Systems of British India (1892), and the brief text-book based upon that work, Land Revenue in British India (1894). See also his Indian Village Community (1896), and the more popular Village Communities in India (1899); and on the special subject of the Origin of Zamindari Estates in Bengal, his article under that title in the (Harvard) Quarterly Journal of Economics, xi. (Oct. 1896).


Irish Agrarian Development (p. 342)

The Irish Land Act of 1870 marked the beginning of an attempt to solve the agrarian problem in accordance with the principle popularly described as “dual ownership,” by giving the tenants a right to “compensation for disturbance.” The great Land Act of 1881 carried the process much further by accepting the proposals known as “the three F's” (fair rents, free sale of tenants' interests, and fixed tenure), and establishing a Land Court to fix “judicial rents” for a term of years. By the Land Act of 1903, however, a new departure was made; and machinery was provided for the voluntary transference to the tenants of the land still in the hands of the landlords, on terms attractive to both parties. This measure and the subsequent amending and supplementary Acts will probably, in no long time, bring about the establishment of a system of peasant proprietorship over a great part of Ireland. It should be added that there has of recent years been a rapid growth among Irish farmers of various forms of co-operation. For a brief account of the Act of 1881 and of its relation to contemporary Nationalism, see Low and Sanders, Political History of England during the reign of Victoria (1907). The least biassed accounts of Irish agrarian history during the last forty years are perhaps to be found in a brief work by a German economist, Dr. Bonn, Modern Ireland and her Agrarian Problem (Eng. trans. 1906), and in Bastable's articles in the (Harvard) Quarterly Journal of Economics, xviii. (Nov. 1903), and in the Economic Journal, xix. (March 1909). On the movement towards co-operation among farmers, see Plunkett, Ireland in the New Century (1903), part ii. The details of the history are best looked for in the reports of Royal Commissions and similar documents, such as the Report of the Royal Commission of 1880–1, and of the Royal Commission of 1886–7, the Report of the Select Committee of the House of Commons of 1894 (“Morley's Committee”), and the Report of the Royal Commission of 1897–8 (“Fry's Commission”), together with a Report by Mr. W. F. Bailey, Legal Assistant-Commissioner, of an Inquiry into the Present Condition of Tenant Purchasers (1903). the Reports of the Irish Agricultural Organisation Society (from 1895), and of the Irish Department of Agriculture and Technical Instruction (from 1901). See also Coyne, Ireland, Industrial and Commercial (pub. by Irish Dep. of Agriculture, 1902), and for the text of the Acts, Cherry and Barton, Irish Land Law.


The Wages Fund Doctrine (p. 344)

This doctrine was formally abandoned by Mill himself in the course of a review of Thornton's Labour in the Fortnightly Review for May 1869, reprinted in his Dissertations and Discussions, iv. The central passages of this article are as follows (Dissertations, iv. pp. 42 seq.):

“It will be said that... supply and demand do entirely govern the price obtained for labour. The demand for labour consists of the whole circulating capital of the country, including what is paid in wages for unproductive labour. The supply is the whole labouring population. If the supply is in excess of what the capital can at present employ, wages must fall. If the labourers are all employed, and there is a surplus of capital still unused, wages will rise. This series of deductions is generally received as incontrovertible. They are found, I presume, in every systematic treatise on political economy, my own certainly included. I must plead guilty to having, along with the world in general, accepted the theory without the qualifications and limitations necessary to make it admissible.

“The theory rests on what may be called the doctrine of the wages fund. There is supposed to be, at any given instant, a sum of wealth, which is unconditionally devoted to the payment of wages of labour. This sum is not regarded as unalterable, for it is augmented by saving, and increases with the progress of wealth; but it is reasoned upon as at any given moment a predetermined amount. More than that amount it is assumed that the wages-receiving class cannot possibly divide among them; that amount, and no less, they cannot but obtain. So that, the sum to be divided being fixed, the wages of each depend solely on the divisor, the number of participants....

“But is there such a thing as a wages-fund, in the sense here implied? Exists there any fixed amount which, and neither more nor less than which, is destined to be expended in wages?

“Of course there is an impassable limit to the amount which can be so expended; it cannot exceed the aggregate means of the employing classes. It cannot come up to those means; for the employers have also to maintain themselves and their families. But, short of this limit, it is not, in any sense of the word, a fixed amount.

“In the common theory, the order of ideas is this: The capitalist's pecuniary means consist of two parts—his capital, and his profits or income. His capital is what he starts with at the beginning of the year, or when he commences some round of business operations; his income he does not receive until the end of the year, or until the round of operations it completed. His capital, except such part as is fixed in buildings and machinery, or laid out in materials, is what he has got to pay wages with. He cannot pay them out of his income, for he has not yet received it. When he does receive it, he may lay by a portion to add to his capital, and as such it will become part of next year's wages-fund, but has nothing to do with this year's.

“This distinction, however, between the relation of the capitalist to his capital, and his relation to his income is wholly imaginary. He starts at the commencement with the whole of his accumulated means, all of which is potentially capital: and out of this he advances his personal and family expenses, exactly as he advances the wages of his labourers.... If we choose to call the whole of what he possesses applicable to the payment of wages, the wages-fund, that fund is co-extensive with the whole proceeds of his business, after keeping up his machinery, buildings and materials, and feeding his family; and it is expended jointly upon himself and his labourers. The less he expends on the one, the more may be expended on the other, and vice versâ. The price of labour, instead of being determined by the division of the proceeds between the employer and the labourers, determines it. If he gets his labour cheaper, he can afford to spend more upon himself. If he has to pay more for labour, the additional payment comes out of his own income; perhaps from the part which he would have saved and added to capital, thus anticipating his voluntary economy by a compulsory one; perhaps from what he would have expended on his private wants or pleasures. There is no law of nature making it inherently impossible for wages to rise to the point of absorbing not only the funds which he had intended to devote to carrying on his business, but the whole of what he allows for his private expenses, beyond the necessaries of life. The real limit to the rise is the practical consideration, how much would ruin him or drive him to abandon the business: not the inexorable limits of the wages-fund.

“In short, there is abstractedly available for the payment of wages, before an absolute limit is reached, not only the employer's capital, but the whole of what can possibly be retrenched from his personal expenditure: and the law of wages, on the side of demand, amounts only to the obvious proposition that the employers cannot pay away in wages what they have not got. On the side of supply, the law as laid down by economists remains intact. The more numerous the competitors for employment, the lower, caeteris paribus, will wages be....

“But though the population principle and its consequences are in no way touched by anything that Mr. Thornton has advanced, in another of its bearings the labour question, considered as one of mere economics, assumes a materially changed aspect. The doctrine hitherto taught by all or most economists (including myself), which denied it to be possible that trade combinations can raise wages, or which limited their operations in that respect to the somewhat earlier attainment of a rise which the competition of the market would have produced without them,—this doctrine is deprived of its scientific foundation, and must be thrown aside. The right and wrong of the proceedings of Trade Unions becomes a common question of prudence and social duty, not one which is peremptorily decided by unbending necessities of political economy.”

In spite of the remonstrances of Cairnes, and his attempt to restate the Wages Fund doctrine in a more satisfactory form, in his Leading Principles, part ii. ch. 1, it may be said to be abandoned now by all economists, at any rate in the form in which it was stated by Mill. For a criticism of Mill's retractation, and a statement of a sense in which it may still be allowable to speak of a Wages Fund, see Taussig, Wages and Capital, an Examination of the Wages Fund Doctrine (N. Y. 1896), especially part ii. ch. 11. And see Sidgwick Principles, bk. ii. ch. 8, § 2; Marshall, Principles, i. App. J: The Doctrine of the Wages Fund; and Nicholson, Principles, bk. ii. ch. 10, § 8.


The Movement of Population (p. 360)

The rate of growth of the population of the several parts of the United Kingdom is shown by the following table:

The factors in the increase of population are evidently (1) migration, (2) the “natural increase” of population, i.e. the excess of births over deaths. The annual natural increase has fallen in England and Wales from 14.5 per 1000 of the population for the period 1876–1880, to 12.1 in 1901–1905, in consequence of the fact that though the death-rate fell from 20.8 to 16 per thousand, the birth-rate fell from 35.3 to 28.1. The birth-rate in England and Wales, for the period since the Civil Registration Act of 1837, reached its maximum in the period 1870–1876, and has since shown a material decline.

The extent of this decline is shown in the next table:


Period. Average Annual Crude
Birth-rate per 1000 of
Total Population.
Average Annual Corrected
Birth-rate per 1000 of
Female Population
aged 15–45 years.
1876–1880.... 35.3 153.3
1881–1885.... 33.5 144.3
1886–1890.... 31.4 133.4
1891–1895.... 30.5 126.8
1896–1900.... 29.3 118.8
1901–1905.... 28.1 112.5
1906...... 27.1 108.3
1907...... 26.3 105.1

As regards the decline in the birth-rate generally, the Registrar-General observes:

“There are sufficient grounds for stating that during the past 30 years approximately 14 per cent. of the decline in the birth-rate (based on the proportion of births to the female population aged 15–45 years) is due to the decrease in the proportion of married women in the female population of conceptive ages, and that over 7 per cent. is due to the decrease of illegitimacy. With regard to the remaining 79 per cent. of the decrease, although some of the reduced fertility may be ascribed to changes in the age constitution of married women, there can be little doubt that much of it is due to deliberate restriction of child-bearing.”

The decline in the birth-rate, whatever may be its cause, is a feature common to the birth statistics of most European countries. The statistics may be studied in the General Report on the Census of 1901, and in the Annual Reports of the Registrar-General. The figures are conveniently collected in the Blue-book, Public Health and Social Conditions, prepared by the Local Government Board (1909). The most detailed statistical analysis of the facts is to be found in a paper by Newsholme and Stevenson, and another by Yule, in the Journal of the Royal Statistical Society (March 1906).


Profits (p. 421)

The most powerful impulse to fresh discussion of the nature of profits was given by the late General Walker, in the emphasis laid by him on “the function of the entrepreneur,” and his view that “profits are a species of the same genus as rent,” and “do not form a part of the price of manufactured products”; see his Wages Question (1876), ch. 14, and Political Economy (1883). In this discussion it has become usual to distinguish more sharply than the earlier writers between Interest and “pure” or “net” Profits; and there is now a large literature on both these topics. As to Interest, much influence has been exerted by the doctrine of the Austrian writer, Böhm-Bawerk, which explains interest as “a premium on present as against future things”; see Böhm-Bawerk, Capital and Interest (Eng. trans. 1890), and Positive Theory of Capital (Eng. trans. 1891). Of the writings this has called forth it may be sufficient to refer to Pierson, Principles of Economics (Eng. trans. 1902), part i. ch. 4, § 5, and to Cassel, The Nature and Necessity of Interest (1903).

On Profit, recent writings are largely influenced by the conceptions of (1) a “quasi-rent,” (2) “the marginal entrepreneur,” and (3) “long and short periods.” The present state of the discussion may be seen in Marshall, Principles, bk. vi. chs. 6–8; Clark, Essentials of Economic Theory (1907), pp. 117 seq.; Seager, Introduction to Economics (3rd ed. 1906), ch. 10; and in Conrad's Grundriss, § 84, and Gide's Cours, pp. 674 seq. The treatment of the subject by Schmoller, Grundriss, §§ 231–2 (Principes, vol. iv.), will be found illuminating. The “tendency” of profits and wages to an equality has been commented upon frequently by Cliffe Leslie, as in his articles on The Political Economy of Adam Smith and On the Philosophical Method of Political Economy, reprinted in his Essays (1879).


Rent (p. 434)

Criticisms of the Ricardian doctrine of rent, or of its formulation, are to be found in Sidgwick, Principles, bk. ii. ch. 8, and in Nicholson, Principles, vol. i. bk. ii. ch. 14; and it is restated in Pierson, Principles, pt. i. ch. 2, and in Marshall, Principles, bk. vi. ch. 9.


The Theory of Value (p. 482)

It is on this subject—as to which Mill remarked, in 1848, that “happily there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete” (p. 436)—that theoretic discussion has mainly turned during the last four decades, owing chiefly to the writings of Jevons, of Menger and the other representatives of the Austrian school, and of Clark and his American followers. The characteristic of all these writers is to approach the problem from the side of demand, and to find the key to value in Final or Marginal Utility (Grenznutz). The best introduction to the discussion is through Jevons, Theory of Political Economy (1871; 2nd ed. revised, 1879), chs. 3 and 4; and through Bonar's article on The Austrian Economists in the (Harvard) Quarterly Journal of Economics, iii. (Oct. 1888); and Smart, An Introduction to the Theory of Value on the lines of Menger, Wieser and Böhm-Bawerk (1891). Wieser's Natural Value (Eng. trans. 1893) attempts to apply the doctrine to the whole problem of Distribution. For the present state of the discussion see Marshall, Principles, i. bk. v.; Clark, Essentials, chs. 6 and 7; and Schmoller, Grundriss, §§ 171–2 (in French, Principes, vol. iii.).

Mill's doctrine of Cost of Production was attacked by Cairnes in his Some Leading Principles of Political Economy newly expounded (1874), soon after Mill's death. See hereon Marshall in Fortnightly Review (April 1876), and Principles, book v. ch. 3, § 2. Cairnes contributed an important consideration to the discussion by the emphasis which he laid on “Non-competing Groups.”


The Value of Money (p. 506)

For other expositions of “the Quantity Theory of Prices,” see Walker, Money (1878), chs. 3–8; and Nicholson, Money and Monetary Problems (1888; 4th ed. 1897), chs. 5–7. For a criticism, see Scott, Money and Banking (N. Y. 1903), ch. 4. An attempt to test the doctrine statistically is made by Kemmerer, Money and Credit Instruments in their relation to General Prices (N. Y. 1907). For the sense of “money” in modern business, see Withers, The Meaning of Money (1909).


Bimetallism (p. 510)

For the main points of the controversy on this subject, which had hardly begun when Mill wrote in 1848, see Jevons, Money (1875), ch. 12 (with his acceptance of the view of the “compensatory action” of a double standard system); Gibbs and Grenfell, The Bimetallic Controversy (1886),—a collection of pamphlets, speeches, &c., on both sides; Nicholson, Money and Monetary Problems; Walker, International Bimetallism (1896); Darwin, Bimetallism (1898); and Carlile, The Evolution of Modern Money (1901). An extreme monometallist position is represented in Giffen, Case against Bimetallism (1892).


International Values (p. 606)

The Ricardian doctrine, followed and carried further by Mill, has hitherto remained the almost exclusive possession of English economists. It has been expounded by Cairnes, Leading Principles, part iii. ch. 3, and by Bastable, Theory of International Trade (2nd ed. 1897). It has been objected to from two diametrically opposite points of view. Transferability of capital and labour, it has been argued, is true of international trade as well as of domestic, so that no separate theory is necessary for the determination of international values; e.g. Hobson, International Trade (1904). On the other hand it has been asserted that such a transferability is true neither of domestic nor of international trade, and that therefore it is necessary to reject both the Ricardian doctrine of home values and the Ricardian doctrine of international values; e.g. Cliffe Leslie, Essays in Political and Moral Philosophy (1879), Preface. A different theory has been put forward by Sidgwick, Principles, bk. ii. ch. 3. A mathematical treatment of the whole subject, with a criticism of all the leading writers, will be found in a series of articles by Edgeworth on The Theory of International Values in the Economic Journal, vol. iv. (1894). Bastable and Edgeworth, while admiring and accepting Mill's first statement of the theory (ch. 18, §§ 1–5), agree in regarding “the superstructure of later date” (§§ 6–8) as “laborious and confusing.”


The Regulation of Currency (p. 677)

The question of the effect of the Bank Charter Act has lost much of its importance in consequence of the growing use of cheques. These cheques are now largely drawn not against actual deposits but against banking credits; so that banks, while abandoning more and more the issue of notes, “manufacture money” on a vast scale in another way. Hereon see Withers, Meaningof Money, chs. 3 and 5. On the effect of an increase in the supply of gold, see Walker, Money, pt. i. ch. 4, and Withers, ch. 1.


Prices in the Nineteenth Century (p. 704)

The actual movement of prices has been much investigated since the time of Mill; and attempts, in large measure successful, have been made by Jevons and others to reduce the statement of it to precision by the use of Index Numbers. On the theory and practice of Index Numbers, see article by Edgeworth, s. v., in Palgrave's Dictionary of Political Economy, vol. ii.; Fountain's Memorandum in Report on Wholesale and Retail Prices (Board of Trade, 1903); and the article of Flux in (Harvard) Quarterly Journal of Economics (Aug. 1907).

The following table, taken from the Blue-book of the Local Government Board on Public Health and Social Conditions (1909), presents the conclusions of Sauerbeck as to prices, and of Bowley as to wages, in a form convenient for comparison.


[The wages and prices in 1850 being taken as 100 ; wages and prices in other
years in percentages of 1850 figures.]

Year. Index Numbas of Year. Index Number of
Prices. Wages. Prices. Wages.
1850 100 100
1895 80·5 159·2
1855 131·2 1896 79·2 160·7
1897 80·5 162·3
1860 128·6 119·2 1898 83·1 166·5
1899 88·3 170·4
1865 131·2 127·5
1900 97·4 178·7
1870 124·7 134·1 1901 90·9 177·0
1902 89·6 174·7
1875 124·7 161·4 1903 89·6 173·7
1904 90·9 172·8
1880 114·3 148·8
1905 93·5 173·3
1885 93·5 149·6 1906 100·0 175·7
1907 103·9 181·7
1890 93·5 161·7

NOTE.—The Index Numbers here given have been calculated as regards Wages for the years to 1873 on the averages ascertained by Mr. Bowley—see the Economic Journal (Dec. 1898) and the Journal of the Royal Statistical Society (Dec. 1899)—and for later years on the percentages in the 12th Abstract of Labour Statistics of the United Kingdom (1906–7), p. 54. As regards Prices, the Numbers are based on the Index Numbers calculated by Mr. Sauerbeck—see Report on Wholesale and Retail Prices (1903), p. 451, and particulars in the Journal of the Royal Statistical Society (March 1908).

With this may be compared the calculation of the Board of Trade, taking the level of 1900 as 100, as given in the Twelfth Abstract of Labour Statistics (1908), p. 80.


Year. Index
Year. Index
Year. Index
Year. Index
1871 136.0 1881 127.3 1891 107.4 1901 96.9
1872 145.8 1882 128.4 1892 101.8 1902 96.5
1873 152.7 1883 126.8 1893 100.0 1903 96.9
1874 148.1 1884 114.7 1894 94.2 1904 98.3
1875 141.4 1885 107.7 1895 91.0 1905 97.6
1876 138.0 1886 101.6 1896 88.2 1906 100.5
1877 141.6 1887 99.6 1897 90.1 1907 105.7
1878 132.6 1888 102.7 1898 93.2
1879 126.6 1889 104.0 1899 92.3
1880 129.6 1890 104.0 1900 100.0

Before making use of these figures it must be remembered that they indicate the movement of wholesale prices; and attention would need also to be paid to the selection of commodities and the method of “weighting.”

To the Report on Wholesale and Retail Prices (1903) and to the “First Fiscal Blue-book” (British and Foreign Trade and Industry, Memoranda, &c., 1903) is prefixed as Frontispiece a chart combining the Index Numbers of Jevons for 1801–1846, of Sauerbeck for 1846–1871, and of the Board of Trade itself for 1871–1902; and so giving in one view the course of prices, so far as those materials indicate it, for the whole period 1801–1902.

As to Retail Prices, calculations will be found in the First “Fiscal Blue-book,” p. 215, and in the Second (British and Foreign Trade and Industry, Second Series, 1904), as to changes in the Average Retail Price of Workmen's Food in large towns in Great Britain during recent decades, as well as of the other principal items of the workman's budget, viz. rent, clothing, fuel, and light, during a quarter of a century. A considerable fall in food prices and a slight fall in the price of clothing since 1880 were in part counterbalanced by a rise in rents and, in the latter years, in fuel; with the result indicated below (Second Series, p. 32):

Statement showing Estimated Changes in Cost of Living of the Working Classes, based on Cost of Food, Rent, Clothing, Fuel, and Light, in a series of averages for quinquennial periods. (Cost in the year 1900=100.)


Commercial Cycles (p. 709)

In England there has been no “commercial crisis” since 1866, though crises have continued to make their appearance in the United States, as e.g. in 1893 and 1907. But the alternations of commercial prosperity and depression continue; and the cyclical movement, as Jevons first showed, seems to occupy about ten years. The study of the subject must begin with Jevons' papers (1875–1882) on the Periodicity of Commercial Crises, printed in his Investigations in Currency and Finance (1884). A guide to the history and literature of the subject will be found in Herkner's article Krisen in Conrad's Handwörterbuch der Staatswissenschaften. The relation between Foreign Trade, Bank Rate, Employment, Marriage Rate, Pauperism, &c., for the period 1856–1907 can be conveniently observed in Table IX, and Chart II, “The Pulse of the Nation,” in Beveridge, Unemployment. On American conditions and their connexion with currency questions, see the papers of Seligman and others in The Currency Problem and the Present Financial Situation (N. Y. 1908).


Rents in the Nineteenth Century (p. 724)

According to an estimate of Mr. R. J. Thompson printed in the Journal of the Royal Statistical Society (Dec. 1907) the rent of agricultural land in England and Wales advanced by probably 40 per cent. in the first twenty years of the nineteenth century. After 1820 a period of depression ensued, followed in 1840 by the beginning of an upward movement which continued with little intermission till 1878, when a serious depression again set in. The average rent of agricultural land in 1900 was 34 per cent. below the maximum of 1877, and 13 per cent. below the figure of 1846. The average rent of farm land in 1900 was estimated at about 20s. per acre; subject to charges for repairs, &c., amounting on the average to 35 per cent.; so that the net rent probably averaged 13s. per acre. Estimating expenditure on buildings, fences, drainage, &c., at 12l. per acre, 3½ per cent. on this would amount to 8s. 5d., leaving 4s. 7d. per acre as “economic rent,” in the Ricardian sense of payment for the use of the “original and indestructible powers of the soil.”


Wages in the Nineteenth Century (p. 724)

There was undoubtedly a very large increase both in nominal or money wages and in real wages (i.e. their purchasing power) in the United Kingdom during the course of the century. The subject may be studied in Giffen's paper on The Progress of the Working Classes in the last half-century, reprinted in Essays in Finance (2nd series, 1886; and the first and more important of them more recently in Economic Inquiries and Studies, vol. i.); Webb, Labour in the Longest Reign (Fabian Tract, 1897); Bowley, Wages in the United Kingdom (1900), National Progress (1904), and his articles in the Journal of the R. Statistical Society, and Wood's article on Real Wages and the Standard of Comfort since 1850, in Jour. R. Stat. Soc. (March 1909).

The conclusions arrived at by the last two statisticians for the period since 1850 are thus summarised in the article last quoted, 1900–1904 being taken by Bowley, and 1900–1902 by Wood, as basis, and called 100:

REAL WAGES, 1850–1902.

1850–4 1855–9 1860–4 1865–9 1870–4 1875–9
Bowley .. .. 50 50 50 55 60 65
Wood .. .. 56 54 59 63 69 75
1880–4 1885–9 1890–4 1894–9 1900–2 or 4
Bowley.... 65 75 85 95 100
Wood.... 76 86 92 97 100

Compare also the table in Appendix X above.

The progress in real wages began before 1850; thus, e.g. Bowley's Index Numbers for 1830 and 1840 are 45 and 50 respectively (see National Progress, p. 33); and, for earlier periods, his conclusions are that while during 1790–1810 real wages were falling slowly, during 1810–1830 they were rising slowly (see Appendix (1908) to Palgrave's Dictionary of Political Economy). The general result would seem to be a large rise on the whole between 1810 and 1900, though between 1840 and 1860 and again between 1873 and 1879 wages were almost stationary.

During the century a progress in real wages of substantially the same character took place in other countries. For a comparison by Bowley of the United Kingdom, the United States and France for the period 1844–1891, see Econ. Jour. viii. 488; and for France, 1806–1900, see Gide, Économie Sociale, p. 64.


The Importation of Food (p. 738)

The following figures are given in the Report of the Agricultural Committee (1906) of the Tariff Commission:


Period. Imports
per head.
of Population
fed from
home-grown corn.
Period. Imports
per head.
of Population
fed from home-grown
1831–1835 .119 96.0 1871–1875 1.56 48.0
1836–1840 .267 90.0 1876–1880 1.85 37.2
1841–1845 .308 89.55 1881–1885 2.17 26.4
1846–1850 .644 78.45 1886–1890 2.09 29.0
1851–1855 .755 74.4 1891–1895 2.51 15.2
1856–1860 .837 71.9 1896–1900 2.38 19.1
1861–1865 1.196 59.4 1901–1905 2.54 10.6
1866–1870 1.224 58.4

For other estimates, and for sources of import, see “First Fiscal Blue-book” (British and Foreign Trade and Industry, 1903), p. 108.


The Tendency of Profits to a Minimum (p. 739)

Compare Cliffe Leslie's article on The History and Future of Interest and Profit in the Fortnightly Review (Nov. 1881: reprinted in Essays, 2nd ed.); and Leroy-Beaulieu, Repartition des Richesses (3rd ed. 1888), ch. 8; and for the history of the rate of interest, see Schmoller, Grundriss, § 191 (Principes, vol. iii).


The Subsequent History of Co-Operation (p. 794)

Since Mill wrote, Industrial Co-operation in England has taken the direction mainly of the multiplication of retail stores, deriving their supplies in great measure from a great Wholesale Society: this “Wholesale” producing some of its goods in its own factories and purchasing the rest in the open market. It has not taken the form anticipated by him of self-governing productive associations, providing their own capital. The history of the various movements grouped under the name of Co-operation may be examined in Schloss, Methods of Industrial Remuneration (3rd ed. 1898), chs. 22–24; Potter, The Co-operative Movement (1891); Webb, Industrial Co-operation (1904); Aves, Co-operative Industry (1907); and Fay Co-operation at Home and Abroad (1908). For recent developments in “independent” productive co-operation, see Ashley, Surveys, Historic and Economic (1900), p. 399.


The Subsequent History of Income Tax (pp. 806, 817)

For developments later than the time of Mill, reference should be had to Bastable, Public Finance (3rd ed. 1903), bk. iii. ch. 3 and bk. iv. ch. 4; Hill, The English Income Tax (Publications of the American Economic Association, 1889); Seligman, Progressive Taxation (Am. Econ. Assoc. Quarterly, 2nd ed. 1908); and two recent Reports, one of a Departmental Committee on the present working of the income tax (1905), and one of a Select Committee on Graduation (1906). In the Finance Bill now (1909) before Parliament it is proposed to introduce a super-tax on incomes above a certain point, and give an abatement on incomes below a certain point in respect of every child (up to a specified number) below a certain age.


The Taxation of Land (p. 819)

In the Finance Bill now (1909) before Parliament it is proposed to impose a tax (1) of 20. per cent. on the future Unearned Increment in value of non-agricultural land; (2) of ½d. in the pound of the capital value of “undeveloped” land. The proposed exemption of agricultural land, when compared with Mill's assumption that there was likely to be a constant increase in the value of agricultural land owing to a rise in the price of food due to the growth of population, indicates the effect upon the public mind of the agricultural depression of the last two decades of the nineteenth century. On the general question of the assessment and special taxation of land values, see Report of the Royal Commission on Local Taxation (1901); Fox, The Rating of Land Values (1906); and the Blue-book on Taxation of Land in Foreign Countries (1909).


The Incidence of Taxation (p. 863)

On the whole subject of The Shifting and Incidence of Taxation recourse can now be had to the treatise of Seligman bearing that title (2nd ed. 1899). For the incidence of Death Duties, Rates on Houses and Land, Inhabited House Duty, Taxes on Trade Profits and Taxes on Transfer of Property, see in particular the elaborate replies by “financial and economic experts” in the Blue-book, Memoranda relating to the Classification and Incidence of Imperial and Local Taxes (1899); and on the incidence of Import and Export Duties, see Edgeworth in Economic Journal, iv. pp. 43 seq.


Company and Partnership Law (p. 904)

Partnership en commandite, as it is called abroad, is now allowed in the United Kingdom by the Limited Partnerships Act of 1907. This Act makes it possible to create a “limited partnership, wherein one or more persons, called general partners... shall be liable for all debts and obligations of the firm,” and “one or more persons, to be called limited partners, who shall at the time of entering into such partnership contribute thereto a sum as capital... shall not be liable for the obligations of the firm beyond the amount so contributed.” A limited partner must not take part in the management of the business.

The most important development since Mill wrote, however, has been the growth in commercial practice of what came to be known in business language as “private companies,” though organised under the general company law. This form has been increasingly adopted by businesses which wished to combine the advantages of Limited Liability with the advantage of unity and privacy of management belonging to the sole trader or old-fashioned firm. The legality of such arrangements, which were certainly not contemplated by the legislature when it introduced Limited Liability, was finally settled by the decision of the House of Lords in 1896 in the case of Broderip v. Salamon. See hereon Palmer, Private Companies and Syndicates. The conception of a “private company” was finally recognised and defined by the Companies Act of 1907. According to this Act a private company “means a company which by its articles (a) restricts the right to transfer its shares; and (b) limits the number of its members (exclusive of persons who are in the employment of the company) to fifty; and (c) prohibits any invitation to the public to subscribe for shares or debentures.” For the formation of such a company, instead of the seven members formerly required by the Companies Acts, two members will now suffice.


Protection (p. 926)

Mill's general line of argument has been further pursued and applied to contemporary conditions by Cairnes, Leading Principles; Fawcett, Free Trade and Protection (6th ed. 1885); and Farrar, Free Trade and Fair Trade (4th ed. 1887). Criticisms and considerations of other kinds will be found in Sidgwick, Principles of Political Economy, ch. v.; Patten, Economic Basis of Protection (Philadelphia, 1890); Johnson, Protection and Capital, in Political Science Quarterly, xxiii. (N. Y. 1908); Lexis, Handel, in Schönberg's Handbuch der Politischen Oekonomie (4th ed. 1898), vol. ii.; and Schmoller, Grundriss, §§ 253–271 (in Fr. trans.: Principes d'Économie Politique, vol. v.).

Mill's concession in favour of “infant industries” (bk. v. ch. 10, § 1) was much quoted subsequently in America, Australia and Canada. Writing to a correspondent in 1869 (see Letters, ed. Elliot), he expressed an intention to “withdraw” the opinion, and remarked: “Even on this point I continue to think my opinion was well grounded, but experience has shown that protectionism, once introduced, is in danger of perpetuating itself... and I therefore now prefer some other mode of public aid to new industries, though in itself less appropriate”; but in preparing the edition of 1871 he contented himself with the verbal changes indicated on p. 922 n. 1.

Mill makes no reference in his Principles to the writings of Friedrich List, the intellectual founder of the Zollverein, whose ideas have greatly influenced the subsequent commercial policy as well as the economic thought of Germany. Thereon see List's National System of Political Economy (1840, Eng. trans. by Lloyd: new ed. with Introduction by Nicholson, 1904), and Schmoller's article on List in Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1884).

A new stage in the discussion was opened by the grant of Preference to imports from England by the Dominion of Canada in 1897—an example since followed by the other great self-governing Dominions of the British Empire; and by the movement in favour of a policy of reciprocal Preference by the Mother Country, initiated by Mr. Joseph Chamberlain, then Colonial Secretary, in 1903. The most important collections of political speeches on this subject are, on one side, those of Chamberlain, Imperial Union and Tariff Reform (1903); Bonar Law, The Fiscal Question (1908); and Milner, Imperialism and Social Reform (1908); and, on the other Asquith, Trade and the Empire (1903); Haldane, Army Reform and Other Addresses (1907); and Russell Rea, Insular Free Trade (1908). See also Balfour, Economic Notes on Insular Free Trade (1903).

Among the writings called forth by the controversy may be mentioned, of those in favour of some modification of the present tariff policy: Caillard, Imperial Fiscal Reform (1903); Ashley, The Tariff Problem (2nd ed. 1904); Cunningham, The Rise and Decline of the Free Trade Movement (1904) and The Words of the Wise (1906); Graham, Free Trade and the Empire (1904); Palgrave, An Enquiry into the Economic Condition of the Country (1904); Price, Economic Theory and Fiscal Policy, in the Economic Journal, xiv. (Sept. 1904); Compatriots' Club Lectures (1905); Kirkup, Progress and the Fiscal Problem (1905); Welsford, The Strength of Nations (1907); Lethbridge, India and Imperial Preference (1907); and Milner's article on Colonial Policy and Vince's on The Tariff Reform Movement in Palgrave, Dictionary of Political Economy, Appendix (1908).

Among the writings in favour of the present policy may be mentioned: Money, Elements of the Fiscal Problem (1903); Avebury, Essays and Addresses (1903); British Industries under Free Trade, ed. Cox (1903); Labour and Protection, ed. Massingham (1903); Smart, The Return to Protection (1904); Hobson, International Trade (1904); Bowley, National Progress (1904); various papers by Giffen in Economic Enquiries (1904); Brassey, Sixty Years of Progress (new ed. 1906); Pigou, Protective and Preferential Import Duties (1906); The Colonial Conference (Cobden Club, 1907); and Marshall, Memorandum on the Fiscal Policy of International Trade (White Paper, 1908).

Materials, statistical and political, for a judgment will be found in the two “Fiscal Blue-books”—British and Foreign Trade and Industry, Memoranda, &c., 1st series, 1903; 2nd series, 1904; in the Proceedings of the Colonial Conferences of 1887, 1894, 1897, 1902, 1907; and in the Reports and Memoranda of the Tariff Commission, since 1904. Among foreign works bearing upon the problem may be particularly mentioned: Fuchs, The Trade Policy of Great Britain (1893: Eng. trans. 1905); Wagner, Agrar- und Industriestaat (2nd ed. 1902); Schwab, Chamberlain's Handelspolitik, with Preface by Wagner (1905); and Schulze-Gaevernitz, Britischer Imperialismus (1906). On the history of the English Corn Laws, Nicholson's book with that title (1904) should be consulted. Free Trade and the Manchester School, ed. Hirst (1903), is a convenient collection of speeches, &c. of the thirties and forties.


Usury Laws (p. 930.)

The pretty general repeal all over Europe of the old usury laws has been followed since 1878 by a reaction, and a great number of “usury laws” have been passed in Germany, Austria, Hungary, Switzerland, and other countries; as well as for the possessions of the Great Powers outside Europe, as e.g. for the Punjaub, the Soudan, Algiers, &c. For an account and estimate of this movement, see Schmoller, Grundriss, § 189 (Principes, vol. iii.). As to the English “Money-lenders Act” of 1900, see the observations from a point of view identical with that of Mill in Dicey, Law and Public Opinion in England (1905), pp. 33 and 45.


The Factory Acts (p. 759)

See, on the whole subject, Hutchins and Harrison, A History of Factory Legislation (1907). The legislature, after restricting the freedom of contract of adult men in various other ways, began very tentatively in 1893 to regulate their hours of labour by the Act of that year giving power to the Board of Trade to order railway companies to submit revised schedules of hours of duty for their servants: hereon see Bulletin of the U.S. Department of Labour, No. 20 (1899). Since then, by the Miners' Eight Hours Act (1908), it has introduced a “normal day” for a large number of adult men.


The Poor Law (p. 969)

The Report of the Royal Commission on the Poor Law (1909) contains copious and systematically arranged treatises, in the Majority and Minority Reports, and in the supplementary volumes of Reports of special inquiries, on all aspects of the history and practice of the Poor Law since 1834; and will doubtless lead to considerable legislative changes.


The Province or Government (p. 979)

On this subject, in its general philosophical aspects, the most influential English writings since the time of Mill have perhaps been those of Sidgwick, Principles of Political Economy (1883), bk. iii. chs. 3 and 4; and Elements of Politics (1891); and Green, Lectures on the Principles of Political Obligation in Works (1886), vol. ii. See also Ritchie, Natural Rights (1895), and, with regard to certain arguments drawn from modern biology, his Darwinism and Politics (1889).