“Progress and Poverty.” General Walker in 1883 became President of the Massachusetts Institute of Technology in Boston. He is also well known as an advocate of bimetallism.
97 Professor of Political and Social Science in Yale College, and author of a “History of American Currency” (1874); “Lectures on the History of Protection in the United States” (1877); “What Social Classes owe to Each Other” (1883). He is a monometallist, and has devoted himself vigorously to the advocacy of free trade. His last book is a study in sociology, not in political economy.
98 He has written “Political Economy” (eighteenth edition, 1883), and also “Introduction to Political Economy,” an elementary work on the same basis as the former.
99 Henry George was born in Philadelphia, 1839, ran away to sea, and in 1857 entered a printing-office in San Francisco. In 1871 he was one of the founders of the “San Francisco Post,” which he gave up in 1875, and received a public office. He first began to agitate his views in a pamphlet entitled “Our Land and Land Policy” (1871), but not until the comparative leisure of his occupation (1875) gave him opportunity did he seriously begin the study which resulted in his “Progress and Poverty.” This volume was begun in the summer of 1877, and finished in the spring of 1879. The sale of the book, it is needless to say, has been phenomenal. He has also applied his doctrine of land to Ireland, in a pamphlet entitled “The Irish Land Question” (1882). His last book is a collection of essays entitled “Social Problems” (1884). His home is now in New York.
102 This is the beginning of Chapter II in the original treatise.
103 This is his “sacrifice,” which corresponds to the exertion of the laborer.
104 See Roscher’s note 1, section 42, for various definitions of capital.
105 General Walker (“Political Economy,” Part II, Chap. iv) adopts the same position, although seemingly inconsistent with his doctrine on the rate of wages. The “rate of wages” is, however, a different thing from the source of a laborer’s subsistence. See Book II, Chapter II, § 2.
106 The opinion mentioned above in the text is that of the believers in over-production, of whom the most distinguished are Mr. Malthus, Dr.
Chalmers, and Sismondi.
108 Edward Atkinson, “Labor and Capital, Allies not Enemies,” p. 60.
110 The functions of money are discussed later in the volume, and it is not proposed to unfold them here.
111 See, for the argument that machinery necessarily injures labor, “Land and Labor,” William Godwin Moody (1883); and for the answer, 112 Edward Atkinson, “Labor and Capital, Allies not Enemies,” p. 33.
113 See book iv, chap. iv.
114 See Mr. Babbage’s “Economy of Machinery and Manufactures.”
116 Constant use of the same muscles, as by gold-beaters or writers, very often produces paralysis.
119 “American Political Economy,” p. 134. See also an article, November, 1879.
121 See also Walker’s “Wages Question,” chap. vi, and Roscher, “Political Economy,” book v, chaps. i, ii, iii.
123 See also Edward Jarvis, “Atlantic Monthly,” 1872, and F. A. Walker, see “Sketch of the History of Political Economy,” p. 16.
124 This is the “preventive check” of Mr. Malthus, while the limitation through war, starvation, etc., is the “positive check.”
125 This is fully confirmed by the inaugural address of Mr. Giffen as President of the London Statistical Society, November 20, 1883, _infra_, book iv, chap. v, § 1. (See the London “Statistical Journal,” 1883.)
127 For tables of relative births and deaths, see “Statesman’s Year-Book,” p. 253.
128 This and the subsequent quotations are taken by Mr. Mill from Rae’s “New Principles of Political Economy.”
130 “Letters from America,” by John Robert Godley, vol. i. p. 42. See Walker.
135 I am indebted to Mr. Atkinson for advanced proofs of the annexed charts. See his paper in the “Journal of the American Agricultural in the supplement of the Boston “Manufacturers’ Gazette,” August 9, 1884, entitled “The Railway, the Farmer, and the Public.” His figures are drawn mainly from Poor’s “Railway Manual.”
136 Cf. Book IV, Chap. I.
138 Cf. Book IV, Chap. I, § 4.
140 Henry George, as well as the Socialists, thinks poverty arises from the injustice of society, and here takes issue with the present teaching. But the question can be better discussed under Distribution.
142 Volume on Population, p. 481.
143 Estimated.
146 For a further discussion of the difference between the motive powers under private property and under Communism, see Mr. Mill’s xxxi).
147 For an exposition of the varying forms of modern state socialism, and that form of it which advocates the nationalization of land (in “Land Nationalization, its Necessity and its Aims”) see a chapter in Henry Fawcett’s last (sixth) edition of his “Manual” (1884). For a general and valuable treatise on Socialism, but one which does not describe schemes much later than Owen’s, see Louis Reybaud’s “Études sur les reformateurs, ou socialistes modernes” (seventh edition, 1864). An excellent bibliography is given, vol. ii, pp. 453-470.
148 Pierre Joseph Proudhon (born 1809) made a well-known attack on private property in his “Qu’est-ce que la Propriété,” “What is Property?” (1840). His answer was, “It is robbery.” See also Ely, 149 Louis Blanc (born 1813, died 1882). His chief book, the “Organization of Labor,” appeared in 1840, in the columns of the “Revue du Progrès.”
150 Karl Marx (born 1818, died 1883) published “The Criticism of Political Economy” (1859); and an extension of the same book under the new title of “Capital” (1867), of which only the first volume has appeared, on “The Process of the Production of Capital.” This was again enlarged in 1872 to 822 pages. A large part of the work is filled with extracts from parliamentary reports on the condition of English workmen. Before the Revolution of 1848 he edited a communistic journal, and was obliged to leave the country afterward, by which he was led to London. He was an able writer on history and politics. Marx was assisted by Friedrich Engels, who wrote “The Condition of the Working Classes in England” (1845). See Ely, ibid., chap. x.
151 Born 1825, the son of a rich Jewish merchant. In philosophy and jurisprudence he won the praise of Humboldt and Boeckh. But vanity and wild ambition checked the success due to great abilities and energy of character. He was finally shot in a duel in 1864. He appears as the antagonist of Schultze (of Delitzsch), advocating state-help against the self-help of the originator of the People’s Banks.
152 For an account of this society see Theodore D. Woolsey’s “Communism ibid., chap. xi.
153 See New York “Nation,” Nos. 684, 686.
1879, p. 513 (vol. xxxi), and written in 1869.
155 The Count de Saint-Simon served in our Revolutionary War in the French army, while very young, and ended a life of misfortune and poverty in 1825, a month after the publication of his “Nouveau and Reybaud, ibid.
156 This experiment when put on trial in France first brought up the question of the legal justice of giving an absolute right to inherited property, and numbered among its disciples the economists, Michel Chevalier and Adolphe Blanqui, and the philosopher, Auguste Comte.
157 Fourier was born at Besançon in 1772. He wrote the “Theory of the Four Movements” (1808); “A Treatise on Domestic and Agricultural 1837. See Ely, ibid., p. 81; Victor Considérant’s “La Destinée Sociale” (fourth edition, 1851); and Reybaud, ibid.
158 Robert Owen (father of Robert Dale Owen), born 1771, in 1799 was engaged in the famous New Lanark Mills, of which Jeremy Bentham was one of the partners. In 1825 he purchased Harmony, in Indiana, from Mr. Rapp. He believed in a full community of property; that the Government should employ the surplus of labor for which there was no demand; and that, until the members became fully trained, affairs should be managed by one head (as in Saint-Simonism).
159 For Brook Farm, see Noyes’s “History of American Socialism,” chapter xi, and the life of “George Ripley,” by O. B. Frothingham (1882). In general, also, for American experiments see Charles Nordhoff’s “The Communistic Societies of the United States”; W. A. Hinds’s “American 160 The extracts in large type in this section are taken from Mr. Mill’s beginning of a larger work begun in 1869, and given to the public since his death. They are of interest because they give his conclusions twenty years after his “Political Economy” was written.
165 Counting six days to a week and four weeks to a month.
167 Mr. Thornton replied to Mr. Cairnes (“Nineteenth Century,” August, 1879). A succinct statement of the condition of the wages-fund controversy has been made by Henry Sidgwick, “Fortnightly Review,” 168 He advanced the same view in the “North American Review,” vol. cxx, January, 1875. In his “Political Economy” (1883) he advances a more extensive theory of distribution. See “Atlantic Monthly,” July, 1883, p. 129.
170 This proposition needs to be kept in mind for the future discussion of the cost of production of food and its relation to cost of labor.
Book II, Chap. V, § 5.
171 Mr. Carey takes this ground.
172 See the explanation of an economic law, Book II, Chap. II, § 1.
173 “Constitutional History of England,” vol. ii, p. 563. See also Nicholls’s “History of the Poor Laws,” vol. ii, p. 303.
174 For further discussion of the advantages of small holdings, see Book IV, Chap. V, § 2.
176 See Young, “Labor in Europe.”
179 The reader is advised to consider, in connection with this, the former discussion on the relation between wages and the price of food (pp. 185, 186).
187 For other writers opposed to the doctrine of Rent as maintained by Ricardo and Mill, see Bonamy Price, “Practical Political Economy,” chap. x; McLeod, “Principles of Economic Philosophy,” chap. x; and J. E. T. Rogers, “Manual of Political Economy,” chap. xii.
189 “Theory and Practice of Banking,” vol. i, p. 13. Cf. Cairnes, 200 “Theory of Political Economy,” pp. 82-91. See Cairnes, ibid., pp.
17-19.
207 Although here using demand in its proper sense, a little later Mr.
Mill defines it as the “quantity demanded.” As he again uses it in the proper sense in discussing excess of money (Book III, Chap. V), supply (Book III, Chap. XI), and foreign trade (Book III, Chap.
XIV), I have omitted from his present exposition his evidently inconsistent use of the word.
210 See his chapter on “Natural and Market Price,” book i, chap. vii.
and makes it the pivotal part of his whole theory of distribution among laborers, capitalists, and landlords.
220 “Money and the Mechanism of Exchange,” chap. iii.
224 The substance of Mr. Mill’s former chapter, XV (Book III), is here inserted in its direct connection with the functions of money.
(1805), Joseph Lowe (1822), and G. Poulett Scrope (1833), proposed this scheme. See Jevons, “Money and the Mechanism of Exchange,” chap. xxv.
227 “A Serious Fall in the Value of Gold” (1863).
228 F. A. Walker defines the demand for money as “the occasion for the use of money in effecting exchanges; in other words, it is the the supply of money as “the money-force available to do the money-work which the demand for money indicates as required to be done, in the given community, at the given time. The supply of money is measured by...the amount of money and the rapidity of 229 Jevons, “Money and the Mechanism of Exchange,” pp. 336, 339.
Ergänzungsheft, No. 57.
231 See Jevons’s “A Serious Fall in the Value of Gold.”
232 In his book “De la Baisse probable de l’Or” (1859). See also Cairnes’s “Essays.” For authorities on the new gold, see Robinson’s Documents of United States, 1848, I, 1; Westgarth’s “Colony of Victoria,” pp. 122, 315; Wood, “Sixteen Months in the Gold “Money,” part i, chaps. vii, viii. For the probable effects, see “Question de l’Or.” As to how far the value of gold was lowered, 233 “Report of the House of Commons on Depreciation of Silver,” 1876, p.
v.
234 See Macaulay, “History of England,” chap. xxi.
239 Director of the Mint, Report, 1883, p. 49, and Linderman, ibid., p.
173.
241 See “International Review,” September, 1876; and for some further explanation of banks, see “Atlantic Monthly,” 1882, pp. 196, 695, 696.
Walker’s “Money” for much valuable material.
248 For John Law’s famous scheme (1718-1720) in France, called the “Mississippi Bubble,” the best authority is Levasseur’s “Système de (1767); and McLeod’s “Dictionary of Political Economy,” article on 249 For the best brief account of the issues of assignats, see President “History of the French Revolution,” vol. ii, p. 606.
250 See “Some Account of the Bills of Credit or Paper Money of Rhode Island, 1710-1786,” in “Rhode Island Historical Tracts,” No. 8 251 See Felt’s “History of Massachusetts Currency.” Consult also Minot, Hutchinson, and Gouge. Walker, “Money,” and Sumner, “History of American Currency,” have given considerable accounts of paper experiments in the United States, and should be well studied.
during and since the war to 1879; Spaulding’s “Financial History of “Chapters of Erie,” by H. Adams and F. A. Walker; and the voluminous pages of the “Congressional Globe.” For the decisions in the 1871-1872, pp. 752, 780. A collection of statutes affecting United States finance, especially since 1860, has been made in a small pamphlet, by Professor C. F. Dunbar (published by Sever, Cambridge, Massachusetts).
254 Report of 1861.
255 Mr. Malthus, Dr. Chalmers, M. de Sismondi, and various minor writers. It is especially likely that, in times of commercial depression, the journals of the day will contain arguments to show a general over-production.
256 Book IV, Chap. II.
257 This is practically the argument of a little book, “Excessive Saving a Cause of Commercial Distress” (1884), by Uriel H. Crocker.
258 Book III, Chap. II, § 4.
260 “Essays on some Unsettled Questions of Political Economy,” Essay I.
261 I at one time believed Mr. Ricardo to have been the sole author of the doctrine now universally received by political economists, on the nature and measure of the benefit which a country derives from foreign trade. But Colonel Torrens, by the republication of one of his early writings, “The Economists refuted,” has established at least a joint claim with Mr. Ricardo to the origination of the doctrine, and an exclusive one to its earliest publication.—MILL.
262 I have in this illustration retained almost the exact words quoted by Mr. Mill from his father’s book, James Mill’s “Elements of Political Economy,” but altered it by changing the trade from Poland to the United States, and by speaking of iron instead of cloth.
264 For a fuller discussion of this question see Cairnes, “Leading 268 I have changed the illustration from England to the United States in this example.
269 Book III, Chap. II, § 4.
272 This substitution has been made for Brazil.
273 See close of last chapter.
274 I have also changed the illustrations in this chapter so as to apply to the United States.
275 The examples in this and the next section have been altered so as to apply to the United States.
276 I have changed the names of the countries in the illustrations contained in this chapter, but have not further altered the language beyond the occasional change of a pronoun.
277 The subjoined extract from the separate essay [“Some Unsettled Questions of Political Economy”] previously referred to will give some assistance in following the course of the phenomena. It is adapted to the imaginary case used for illustration throughout that essay, the case of a trade between England and Germany in cloth and linen.
“We may, at first, make whatever supposition we will with respect to the value of money. Let us suppose, therefore, that, before the opening of the trade, the price of cloth is the same in both countries, namely, six shillings per yard. As ten yards of cloth were supposed to exchange in England for fifteen yards of linen, in Germany for twenty, we must suppose that linen is sold in England at four shillings per yard, in Germany at three. Cost of carriage and importer’s profit are left, as before, out of consideration.
“In this state of prices, cloth, it is evident, can not yet be exported from England into Germany; but linen can be imported from Germany into England. It will be so; and, in the first instance, the linen will be paid for in money.
“The efflux of money from England and its influx into Germany will raise money prices in the latter country, and lower them in the former. Linen will rise in Germany above three shillings per yard, and cloth above six shillings. Linen in England, being imported from Germany, will (since cost of carriage is not reckoned) sink to the same price as in that country, while cloth will fall below six shillings. As soon as the price of cloth is lower in England than in Germany, it will begin to be exported, and the price of cloth in Germany will fall to what it is in England. As long as the cloth exported does not suffice to pay for the linen imported, money will continue to flow from England into Germany, and prices generally will continue to fall in England and rise in Germany.
“By the fall, however, of cloth in England, cloth will fall in Germany also, and the demand for it will increase. By the rise of linen in Germany, linen must rise in England also, and the demand for it will diminish. As cloth fell in price and linen rose, there would be some particular price of both articles at which the cloth exported and the linen imported would exactly pay for each other. At this point prices would remain, because money would then cease to move out of England into Germany. What this point might be would entirely depend upon the circumstances and inclinations of the purchasers on both sides. If the fall of cloth did not much increase the demand for it in Germany, and the rise of linen did not diminish very rapidly the demand for it in England, much money must pass before the equilibrium is restored; cloth would fall very much, and linen would rise, until England, perhaps, had to pay nearly as much for it as when she produced it for herself. But, if, on the contrary, the fall of cloth caused a very rapid increase of the demand for it in Germany, and the rise of linen in Germany reduced very rapidly the demand in England from what it was under the influence of the first cheapness produced by the opening of the trade, the cloth would very soon suffice to pay for the linen, little money would pass between the two countries, and England would derive a large portion of the benefit of the trade. We have thus arrived at precisely the same conclusion, in supposing the employment of money, which we found to hold under the supposition of barter.
“In what shape the benefit accrues to the two nations from the trade is clear enough. Germany, before the commencement of the trade, paid six shillings per yard for broadcloth; she now obtains it at a lower price. This, however, is not the whole of her advantage. As the money-prices of all her other commodities have risen, the money-incomes of all her producers have increased. This is no advantage to them in buying from each other, because the price of what they buy has risen in the same ratio with their means of paying for it: but it is an advantage to them in buying anything which has not risen, and, still more, anything which has fallen. They, therefore, benefit as consumers of cloth, not merely to the extent to which cloth has fallen, but also to the extent to which other prices have risen. Suppose that this is one tenth. The same proportion of their money-incomes as before will suffice to supply their other wants; and the remainder, being increased one tenth in amount, will enable them to purchase one tenth more cloth than before, even though cloth had not fallen: but it has fallen; so that they are doubly gainers. They purchase the same quantity with less money, and have more to expend upon their other wants.
“In England, on the contrary, general money-prices have fallen.
Linen, however, has fallen more than the rest, having been lowered in price by importation from a country where it was cheaper; whereas the others have fallen only from the consequent efflux of money.
Notwithstanding, therefore, the general fall of money-prices, the English producers will be exactly as they were in all other respects, while they will gain as purchasers of linen.
“The greater the efflux of money required to restore the equilibrium, the greater will be the gain of Germany, both by the fall of cloth and by the rise of her general prices. The less the efflux of money requisite, the greater will be the gain of England; because the price of linen will continue lower, and her general prices will not be reduced so much. It must not, however, be imagined that high money-prices are a good, and low money-prices an evil, in themselves. But, the higher the general money-prices in any country, the greater will be that country’s means of purchasing those commodities, which, being imported from abroad, are independent of the causes which keep prices high at home.”
“In practice, the cloth and the linen would not, as here supposed, be at the same price in England and in Germany: each would be dearer in money-price in the country which imported than in that which produced it, by the amount of the cost of carriage, together with the ordinary profit on the importer’s capital for the average length of time which elapsed before the commodity could be disposed of. But it does not follow that each country pays the cost of carriage of the commodity it imports; for the addition of this item to the price may operate as a greater check to demand on one side than on the other; and the equation of international demand, and consequent equilibrium of payments, may not be maintained. Money would then flow out of one country into the other, until, in the manner already illustrated, the equilibrium was restored: and, when this was effected, one country would be paying more than its own cost of carriage, and the other less.”—MILL.
278 See Book III, Chap. XVIII, § 5, of Mill’s original work.
279 “Principles of Political Economy and Taxation,” third edition, p.
143.
280 For an exceedingly good study on the conditions of our foreign trade down to 1873, and a prophecy of the panic of 1873, see Cairnes, 282 The illustrations in this chapter have also been changed, but only so far as to make them apply to the United States.
283 I am here supposing a state of things in which gold and silver mining are a permanent branch of industry, carried on under known conditions; and not the present state of uncertainty, in which gold-gathering is a game of chance, prosecuted (for the present) in the spirit of an adventure, not in that of a regular industrial pursuit.—MILL. It is, however, worth recalling that gold and silver mining have not been—for large effects on the value of the metals—anything like a permanent branch of industry, but that, in the main, great additions have been obtained suddenly and by chance 284 See Walker, “Money,” Chap. XIX.
286 I do not include in the general loan fund of the country the capitals, large as they sometimes are, which are habitually employed in speculatively buying and selling the public funds and other securities.—MILL.
287 The rate of interest at such crises in New York has several times risen to 400 or 500 per cent per annum.
288 In this illustration I have retained as nearly as possible the form of that given by Mr. Mill for the trade between England and Germany in cloth and linen.
290 Book II, Chap. II, § 3.
292 For a brief bibliography on our own Navigation Laws and the Shipping Question, see Appendix I.
293 Book III, Chap. III, § 1.
_ 294 Supra_, Book III, Chap. II, § 2, and Chap. XX, § 4.
295 Henry George, however, asserts that, “irrespective of the increase of population, the effect of improvements in methods of production and exchange is to increase rent” (“Progress and Poverty,” p. 220).
297 For the distinction between normal and market values, see _supra_, Book III, Chap. II, § 4, and p. 269.
298 Before beginning this discussion the reader is advised to review the relation of profits to cost of labor, and the dependence of the latter on its three factors, Book II, Chap. V, § 5.
299 Book I, Chap. IX 300 Mr. Mill commended, as the most scientific treatment of the subject with which he had met, an “Essay on the Effects of Machinery,” by William Ellis, “Westminster Review,” January, 1826.
301 Although their needs now attract more attention through the extension of newspapers and cheap books, the condition of the laboring-class is certainly better than it was fifty years ago. See Mr. Robert Giffen’s “Progress of the Working-Classes in the Last Half-Century” (1884), referred to in Book IV, Chap. V, § 1.
302 A comparison of Chart No. XVII with Chart No. VI will furnish some means of learning whether the building of railways has gone on faster than is warranted by the increase of our crops (see _supra_, pp. 138).
305 “Progress of the Working-Classes in the Last Half-Century” (1884), page 8.
307 “Progress of the Working-Classes in the Last Half-Century” (1884), being his inaugural address as President of the London Statistical Society, November 20, 1883.
308 1825.
309 1825.
310 Wages per day.
311 Wages per day.
312 Year 1878.
313 These mills have not been able to pay ten per cent regularly, as mentioned in Chart No. XIX, but it has merely been supposed that ten per cent were demanded by capital, in order to show that, for such a dividend, it required a diminishing proportion of the price to meet that estimate.
315 For the influences of small properties in restraining an undue increase of population, see _supra_, p. 119. For a more general account of the benefits arising from such holdings, consult Mill’s original work, Book II, Chaps. VI and VII, and T. E. Cliffe Leslie’s “Land Systems.”
317 Fawcett, “Manual of Political Economy” (last edition), chapter on Co-operation.
318 Giffen, “Progress of the Working-Classes in the Last Half-Century,” p. 19.