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 HB171 
G348c 
v.7 

THE LIBRARY OF 
THE UNIVERSITY OF GEORGIA 

 THE COMPLETE WORKS 
OF HENRY GEORGE 

• 

THE SCIENCE OF 
POLITICAL ECONOMY 

BOOKS III TO V 

NEW YORK: DOUBLED AY 
PAGE & COMPANY 3 1904 

 v.n 

Copyright, 1897, by 
ANNIE C. GEOEQB 

 BOOK in. 

THE PEODUCTION OF WEALTH 

 CONTENTS OP BOOK DDL 

THE PRODUCTION OP WEALTH. 

CHAPTER I. 
THE MEANING OF PRODUCTION. 

SHOWING THE MEANING AND PROPER USE OP PRODUCTION. 

PAGE 

Production a drawing forth of what before exists—Its difference 
from creation—Production other than of wealth—Includes 
all stages of bringing to be—Mistakes as to it . . . 323 

CHAPTER n. 
THE THREE MODES OF PRODUCTION. 

SHOWING THE COMMON CHARACTER, YET DIFFERENT MODES 
OP PRODUCTION. 

Production involves change, brought about by conscious will— 
Its three modes: (1) adapting, (2) growing, (3) exchanging— 
This the natural order of these modes ..... 327 

CHAPTER HI. 
POPULATION AND SUBSISTENCE. 

SHOWING THAT THE THEORY OP A TENDENCY IN POPULATION TO 
INCREASE PASTER THAN SUBSISTENCE HAS PREVIOUSLY BEEN 
EXAMINED AND CONDEMNED. 

The Malthusian theory—Discussed in " Progress and Poverty". 333 

317 

 318 CONTENTS OP BOOK JH. 

CHAPTER IV. 

THE ALLEGED LAW OF DIMINISHING KETUENS 
IN AGRICULTURE. 

SHOWING WHAT THIS ALLEGED LAW IS. 

PAGE 

John Stuart Mill quoted as to the importance, relations and 
nature of this law—The reductio ad absurdum by which it 
is proved—Contention that it is a misapprehension of the uni 
versal law of space ......... 335 

CHAPTER V. 
OF SPACE AND TIME. 

SHOWING THAT HUMAN REASOK IS ONE, AND SO PAR AS IT 
CAN GO HAY BE BELIED ON. 

Purpose of this work—Of metaphysics—Danger of thinking of 
words as things—Space and time not conceptions of things, 
but of relations of things—They cannot, therefore, have 
independent beginning or ending—The verbal habit which 
favors this idea—How favored by poets and by religious 
teachers—How favored by p_hilosophers—Of Kant—Of Scho 
penhauer—Mysteries and antinomies that are really confusions 
in the meaning of words—Human reason and the eternal reason 
—Philosophers who are really word-jugglers . . . .339 

CHAPTER VL 

CONFUSION OF THE SPACIAL LAW WITH AGRI 
CULTURE. 

SHOWING THE GENESIS OP THIS CONFUSION. 

What space is—The place to which man is confined—Extension 
a part of the concept, land—Perception is by contrast—Man's 
first use of land is by the mode of adapting—His second, and 
for a long time most important, use is by growing—The third, 
on which civilization is now entering, is exchanging—Political 
economy began in the second, and growing still attracts most 
attention—The truth and error of the Physiocrats—The suc 
cessors of Smith, while avoiding the error of the Physiocrats, 
also ignored their truth; and with their acceptance of the Mal- 
thusian theory, and Ricardo's explanation of rent as relating 
to agricultural land, they fell into, and have continued the 
habit of treating land and rent as agricultural—Difficulty of 
the single tax in the United States . . . . . .351 

 CONTENTS OF BOOK El 319 

CHAPTER VII. 
THE RELATION OP SPACE IN PRODUCTION. 

SHOWING TEAT SPACE HAS RELATION TO ALL MODES OF 
PRODUCTION. 

PAG« 

Hatter being material, space must have relation to all produc 
tion — This relation readily seen in agriculture — The concen 
tration of labor in agriculture tends up to a certain point to 
increase and then to diminish production — But it is a mis 
apprehension to attribute this law to agriculture or to the 
mode of growing — It holds in all modes and sub-divisions of 
these modes — Instances : of the production of brick, of the mere 
storage of brick — Man himself requires space — The division of 
labor as requiring space — Intensive and extensive use of land 357 

CHAPTER 
THE RELATION OP TIME IN PRODUCTION. 

SHOWING TEAT ALL MODES OF PRODUCTION BAVE RELATION 
TO TIME. 

Difference between apprehensions of space and time, the one 
objective, the other subjective— Of spirits and of creation — 
All production requires time — The concentration of labor in 
time ............ 365 

CHAPTER K. 
COOPERATION— ITS TWO WAYS. 

SHOWING THE TWO WAYS OF COOPERATION. 

Cooperation is the union of individual powers in the attainment 
of common ends — Its ways and their analogues : (1) the com 
bination of effort ; (2) the separation of effort — Illustrations : 
of building houses, of joint-stock companies, etc. — Of sailing a 
boat — The priuciple shown in naval architecture — The Erie 
Canal — The baking of bread — Production requires conscious 
thought—The same principle in mental effort — What is on 
the one side separation is on the other concentration — Extent 
of concentration and specialization of work in modern civiliza 
tion — The principle of the machine — Beginning and increase 
of division of labor— Adam Smith's three heads— A better 
analysis. ........... 371 

 320 CONTENTS OP BOOK HI. 

CHAPTER X. 
COOPERATION—ITS TWO KINDS. 

SHOWING THE TWO KINDS OP COOPERATION, AND HOW THE 
POWER OP THE ONE GREATLY EXCEEDS THAT OP THE OTHER. 

FAGB 

The kind of cooperation which, as to method of union or how of 
initiation, results from without and may be called directed 
or conscious cooperation—Another proceeding from within 
which may be called spontaneous or unconscious cooperation 
—Types of the two kinds and their analogues—Tacking of a 
full-rigged ship and of a bird—Intelligence that suffices for 
the one impossible for the other—The savage and the ship— 
Unconscious cooperation required in ship-building—Conscious 
cooperation will not suffice for the work of unconscious—The 
fatal defect of socialism—The reason of this is that the power 
of thought is spiritual and cannot be fused as can physical 
force—Of "man power"and "mind power"—Illustration from 
the optician—Impossibility of socialism—Society a Leviathan 
greater than that of Hobbes ....... 382 

CHAPTER XI. 
THE OFFICE OF EXCHANGE IN PRODUCTION. 

SHOWING THAT IN MAN THE LACK OP INSTINCT IS SUPPLIED 
BY THE HIGHER QUALITY OP REASON, WHICH LEADS TO EX 
CHANGE. 

The cooperation of ants and bees is from within and not from 
without; from instinct and not from direction—Man has little 
instinct; but the want supplied by reason—Reason shows 
itself in exchange—This suffices for the unconscious coopera 
tion of the economic body or Greater Leviathan—Of the three 
modes of production, exchanging is the highest—Mistake of 
writers on political economy—The motive of exchange . . 397 

CHAPTER XII. 
OFFICE OF COMPETITION IN PRODUCTION. 

SHOWING THAT COMPETITION BRINGS TRADE, AND CONSE 
QUENTLY SERVICE, TO ITS JUST LEVEL. 

"Competition is the life of trade," an old and true adage—The 
assumption that it is an evil springs from two causes—one 
bad, the other good —The bad cause at the root of protection 
ism—Law of competition a natural law—Competition neces 
sary to civilization ......... 402 

 CONTENTS OP BOOK HI. 321 

CHAPTER 

PAGE 

OF DEMAND AND SUPPLY IN PRODUCTION 404 

CHAPTER XIV. 
ORDER OF THE THREE FACTORS OF PRODUCTION. 

SHOWING THE AGREEMENT OF ALL ECONOMISTS AS TO THE 
NAMES AND ORDER OF THE FACTORS OF PRODUCTION. 

Land and labor necessary elements in production—Union of a 
composite element, capital—Reason for dwelling on this agree 
ment as to order .......... 405 

CHAPTER XV. 
THE FHtST FACTOR OF PRODUCTION—LAND. 

SHOWING THAT LAND IS THE NATURAL OR PASSIVE FACTOR 
IN ALL PRODUCTION. 

The term land—Landowners—Labor the only active factor . 408 

CHAPTER XVI. 
THE SECOND FACTOR OF PRODUCTION—LABOR. 

SHOWING THAT LABOR IS THE HUMAN OR ACTIVE FACTOR 
IN ALL PRODUCTION. 

The term labor—It is the only active factor in producing wealth, 
and by nature spiritual ........ 411 

CHAPTER XVH. 
THE THIRD FACTOR OF PRODUCTION—CAPITAL. 

SHOWING THAT CAPITAL IS NOT A PRIMARY FACTOR, BUT PROCEEDS 
FROM LAND AND LABOR, AND IS A FORM OR USE OF WEALTH. 

Capital is essentially labor raised to a higher power—"Where it 
may, and where it must aid labor—In itself it is helpless . 413 

 CHAPTER I.i 
THE MEANING OF PRODUCTION. 

SHOWING THE MEANING AND PROPER USE OP PRODUCTION. 

Production a drawing forth of what before exists—Its difference from 
creation—Production 'other than of wealth—Includes all stages 
of bringing to be—Mistakes as to it. 

THE word production comes from the Latin, pro, be 
fore, and ducere, to draw, and its literal meaning is 
a drawing forth. 

Production, as a term of political economy, means a 
drawing forth by man; a bringing into existence by the 
power of man. It does not mean creation, the proper 
sense of which is the bringing into existence by a power 
superior to that of man—that power namely which to 
escape negation our reason is compelled to postulate as 
the final cause of all things. 

A solar system, a world with all the substances and 
powers therein contained, soil, water and air, chemical 
affinities, vital forces, the invariable sequences which we 
term natural laws, vegetables and animals in their species 
as they exist irrespective of the modifying influence of 
man, and man himself with his natural powers, needs and 
impulses, we properly speak of as created. How precisely 

i No introduction 01 motto supplied for Book III. in MS,—H. 6,, Ja. 
323 

 324 THE PRODUCTION OF WEALTH. Book III. 

they came to be, and what and whence the originating 
impulse, we cannot tell, and probably in the sphere to 
which we are confined in this life can never know. All 
we can say with certainty, is that they cannot have been 
brought into existence by any power of man; that they 
existed before man was, and constitute the materials and 
forces on which his existence depends and on which and 
from which all his production is based. Since they cannot 
have come from what we call matter alone; nor from what 
we call energy alone; nor yet from any union of these two 
elements alone, they must proceed primarily from that 
originating element that in the largest analysis of the 
world that reason enables us to make we distinguish from 
matter and energy as spirit 

Nothing that is created can therefore in the politico- 
economic sense be said to be produced. Man is not a 
creator; he has no power of originating things, of making 
something out of nothing. He is a producer; that is to 
say a changer, who brings forth by altering what already 
is. All his making of things, his causing things to be, is 
a drawing forth, a modification in place or relation, and in 
accordance with natural laws which he neither originated 
nor altered, of what he finds already in existence. All his 
production has as its substratum what he finds already in 
the world; what exists irrespective of him. This substra 
tum or nexus, the natural or passive factor, on which and 
by which the human or active factor of production acts, 
is in the terminology of political economy called land. 

It is to be noted that when used as a term of political 
economy the word " production" has in some respects a 
narrower, and in some respects a wider, meaning than is 
often, in common use properly enough, attached to it. 
Since the production with which political economy pri 
marily deals is the production of wealth, the economic term 
production refers to that. But it is important to bear in 

 Chap. I. THE MEANING OP PRODUCTION. 325 

mind that the production of wealth is not the only kind of 
production. 

I have alluded to this fact before in Chapter XVIII. of 
Book II. Let me speak of it again. 

I black my boots; I shave my face; I take a violin and 
play on it, or expend effort in learning to do so; I write a 
poem; or observe the habits of bees; or try to make an 
hour pass more agreeably to a sick friend by reading to 
him something which arouses and pleases his higher na 
ture. In such ways I am satisfying wants or gratifying 
desires, cultivating powers or increasing knowledge, either 
for myself or for others. But I am not producing wealth. 
And so, those who in the cooperation of efforts in which 
civilization consists devote themselves to such occupations 
—boot-blacks, barbers, musicians, teachers, investigators, 
surgeons, nurses, poets, priests—do not, strictly speaking, 
take part in the production of wealth. Yet it may be mis 
leading to speak of them as non-producers, without care 
as to what is really meant. Though not producers of 
wealth, they are yet producers, and often producers of the 
highest kind. They are producers of utilities and satisfac 
tions ; and as such are not only producers of that to which 
wealth is but a means, but may indirectly aid in the pro 
duction of wealth itself. 

On the other hand there is something we should note. 

In common speech, the word production is frequently 
used in a sense which distinguishes the first from the later 
stages of wealth-getting; and those engaged in the primary 
extractive or formative processes are often styled pro 
ducers, as distinguished from transporters or exchangers. 
This use of the word production may be convenient 
where we wish to distinguish between separable functions, 
but we must be careful not to import it into our habitual 
use of the economic term. In the economic meaning of 
the term production, the transporter or exchanger, or any 

 326 THE PRODUCTION OF WEALTH. Book III. 

one engaged in any sub-division of those functions, is as 
truly engaged in production as is the primary extractor 
or maker. A newspaper-carrier or the keeper of a news 
stand would for instance in common speech be styled a 
distributor. But in economic terminology he is not a dis 
tributor of wealth, but a producer of wealth. Although 
his part in the process of producing the newspaper to the 
final receiver comes last, not first, he is as much a producer 
as the paper-maker or type-founder, the editor or com 
positor or press-man. 

For the object of production is the satisfaction of 
human desires, that is to say it is consumption; and this 
object is not made capable of attainment, that is to say, 
production is not really complete, until wealth is brought 
to the place where it is to be consumed and put at the dis 
posal of him whose desire it is to satisfy. 

Thus, the production of wealth in political economy in 
cludes transportation and exchange. The distribution of 
wealth, on the other hand, has in economic phraseology no 
relation to transportation or exchange, but refers, as we 
shall see when we come to treat of it, to the division of 
the results of production. 

This fact has been ignored by the great majority of 
professed economists who with few exceptions treat of 
exchange under the head of the distribution of wealth in 
stead of giving it its proper place under the head of the 
production of wealth. 

 CHAPTER II. 
THE THEEE MODES OF PRODUCTION. 

SHOWING THE COMMON CHARACTER, YET DIFFERENT MODES 
OF PRODUCTION. 

Production involves change, brought about by conscious will—Its 
three modes: (1) adapting, (2) growing, (3) exchanging—This the 
natural order of these modes. 

AiL production results from human exertion upon ex 
ternal nature, and consists in the changing in place, 
condition, form or combination of natural materials or 
objects so as to fit them or more nearly fit them for the 
satisfaction of human desires. In all production use is 
made of natural forces or potencies, though in the first 
place, the energy in the human frame is brought under the 
direct control of the conscious human will. 

But production takes place in different ways. If we 
run over in mind as many examples as we can think of in 
which the exertion of labor results in wealth—either in 
those primary or extractive stages of production in which 
what before was not wealth is made to assume the charac 
ter of wealth; or in the later or secondary stages, in which 
an additional value or increment of wealth is attached to 
what has already been given the character of wealth— 
we find that they fall into three categories or modes. 

The first of these three modes of production, for both 
reason and tradition unite in giving it priority, is that in 

327 

 328 THE PRODUCTION OF WEALTH. Book III. 

•which, in the changes he brings about in natural substances 
and objects, man makes use only of those natural forces 
and potencies which we may conceive of as existing or 
manifesting themselves in a world as yet destitute of life; 
or perhaps it might afford a better illustration to say, in 
a world from which the generative or reproductive prin 
ciple of life had just departed, or been by his condition 
rendered unutilizable by man. These would include all 
such natural forces and potencies as gravitation, heat, 
light, electricity, cohesion, chemical attractions and repul 
sions—in short, all the natural forces and relations, that 
are utilized in the production of wealth, below those 
incident to the vital force of generation. 

We can perhaps best imagine such a separation of natural 
forces by picturing to ourselves a Robinson Crusoe thrown 
upon a really desert island or bare sand key, in a ship 
abundantly supplied with marine stores, tools and food so 
dried or preserved as to be incapable of growth or repro 
duction. We might also, if we chose, imagine the ship to 
contain a dog, a goat, or indeed any number of other ani 
mals, provided there was no pairing of the sexes. We 
cannot, in truth, imagine even a bare sand key, in which 
there should be no manifestation of the generative prin 
ciple, in insects and vegetables, if not in the lower forms 
of fish and bird life, but we can readily imagine that our 
Robinson might not understand, or might not find it con 
venient, to avail himself of such manifestations of the 
reproductive principle. Yet without any use of the prin 
ciple by which things may be made to grow and increase, 
such a man would still be able to produce wealth, since 
by changing in place, form or combination what he found 
already in existence in his island or in his ship, he could 
fit them to the satisfaction of his desires. Thus he could 
produce wealth just as De Foe's Robinson Crusoe, whose 
solitary life so many of us have shared in imagination, 

 Chap. II. THE THREE MODES OF PRODUCTION. 329 

produced wealth when he first landed, by bringing desir 
able things from the wrecked ship to the safety of the 
shore before destructive gales came on, and by changing 
the place and form of such of them as were fit for his 
purpose, making himself a cabin, a boat, sails, nets, clothes, 
and so on. In the same way, he could catch fish, kill or 
snare birds, capture turtles, take eggs, and convert the 
food-material at his disposal into more toothsome dishes. 
Thus without growing or breeding anything he could get 
by his labor a living, until death, or the savages, or an 
other ship came. 

For this mode of production, which is mechanical in its 
nature, and consists in the change in place, form, condition 
or combination of what is already in existence, it seems to 
me that the best term is " adapting." 

This is the mode of production of the fisherman, the 
hunter, the miner, the smelter, the refiner, the mechanic, 
the manufacturer, the transporter; and also of the butcher, 
the horse-breaker or animal-trainer, who is not also a 
breeder. We use it when we produce wealth by taking 
coal from the vein and changing its place to the surface 
of the earth; and again when we bring about a further 
increment of wealth by carrying the coal to the place 
where it is to be consumed in the satisfaction of human 
desire. We use this mode of production when we convert 
trees into lumber, or lumber into boards; when we con 
vert wheat into flour, or the juice of the cane or beet into 
sugar; when we separate the metals from the combina 
tions in which they are found in the ores, and when we 
unite them in new combinations that give us desirable 
alloys, such as brass, type-metal, Babbitt metal, aluminum, 
bronze, etc.; or when by the various processes of separat 
ing and re-combining we produce the textile fabrics, and 
convert them again into clothes, sails, bags, etc.; or when 
by bringing their various materials into suitable forms 

 330 THE PEODUCTION OP "WEALTH. Book III. 

and combinations, we construct tools, machines, ships or 
houses. In fact, all that in the narrower sense we usually 
call " making," or, if on a large scale, " manufacturing," is 
brought about by the application of labor in this first mode 
of production—the mode of "adapting." 

In the Northwest, however, they speak sometimes of 
"manufacturing wheat;" in the West of "making hogs," 
and in the South of "making cotton" (the fiber) or "making 
tobacco" (the leaf). But in such local or special sense 
the words manufacturing or making are used as equiva 
lent to producing. The sense is not the same, nor is 
the suggested action in the same mode, as when we prop 
erly speak of flour as being manufactured, or of bacon, 
cotton cloth or cigars being made. Wonderful machines 
are indeed constructed by man's power of adaptation. But 
no extension of this power of adaptation will enable him 
to construct a machine that will feed itself and produce 
its kind. His power of adapting extended infinitely would 
not enable him to manufacture a single wheat-grain that 
would sprout, or to make a hog, a cotton-boll or a tobacco- 
leaf. The tiniest of such things are as much above man's 
power of adapting as is the "making" of a world or the 
" manufacture " of a solar system. 

There is, however, another or second mode of produc 
tion. In this man utilizes the vital or reproductive force 
of nature to aid him in the producing of wealth. By ob 
taining vegetables, cuttings or seeds, and planting them; 
by capturing animals and breeding them, we are enabled 
not merely to produce vegetables and animals in greater 
quantity than Nature spontaneously offers them to our 
taking, but, in many cases, to improve their quality of 
adaptability to our uses. This second mode of production, 
the mode in which we make use of the vital or generative 
power of nature, we shall, I think, best distinguish from 
the first, by calling it " growing." It is the mode of the 

 Chap. II. THE THREE MODES OF PRODUCTION. 331 

farmer, the stock-raiser, the florist, the bee-keeper, and to 
some extent at least of the brewer and distiller. 

And besides the first mode, which we have called " adapt 
ing," and the second mode, which we have called " grow 
ing," there is still a third mode in which, by men living in 
civilization, wealth is produced. In the first mode we 
make use of powers or qualities inherent in all material 
things; in the second we make use of powers or qualities 
inherent in all living things, vegetable or animal. But 
this third mode of production consists in the utilization of 
a power or principle or tendency manifested only in man, 
and belonging to him by virtue of his peculiar gift of 
reason—that of exchanging or trading. 

That it is by and throngh his disposition and power to 
exchange, in which man essentially differs from all other 
animals that human advance goes on, I shall hereafter 
show. Yet not merely is it through exchange that the 
utilization in production of the highest powers both of the 
human factor and the natural factor becomes possible, but 
it seems to me that in itself exchange brings about a per 
ceptible increase in the sum of wealth, and that even if 
we could ignore the manner in which it extends the power 
of the other two modes of production, this constitutes it, 
in itself, a third mode of production. In the Yankee story 
of the two school-boys so cute at a trade that when locked 
in a room they made money by swapping jack-knives, 
there is the exaggeration of a truth. Each of the two 
parties to an exchange aims to get, and as a rule does get, 
something that is more valuable to him than what he 
gives—that is to say, that represents to him a greater 
power of labor to satisfy desire. Thus there is in the 
transaction an actual increase in the sum of wealth, an 
actual production of wealth. A trading-vessel, for in 
stance, penetrating to the Arctic, exchanges fish-hooks, 
harpoons, powder and guns, knives and mirrors, green 

 332 THE PRODUCTION OP WEALTH. Book JIL 

spectacles and mosquito-nets for peltries. Each party to 
the exchange gets in return for what costs it compara 
tively little labor what would cost it a great deal of labor 
to get by either of the other modes of production. Each 
gains by the act. Eliminating transportation, which be 
longs to the first mode of production, the joint wealth of 
both parties, the sum of the wealth of the world, is by the 
exchange itself increased. 

This third mode of production let us call " exchanging." 
It is the mode of the merchant or trader, of the store 
keeper, or as the English who still live in England call him, 
the shopkeeper; and of all accessories, including in large 
measure transporters and their accessories. 

We thus have as the three modes of production: 

(1) ADAPTING; 

(2) GROWING; 

(3) EXCHANGING. 

These modes seem to appear and to assume importance 
in the development of human society much in the order 
here given. They originate from the increase of the de 
sires of men with the increase of the means of satisfying 
them under pressure of the fundamental law of political 
economy, that men seek to satisfy their desires with the 
least exertion. In the primitive stage of human life the 
readiest way of satisfying desires is by adapting to human 
use what is found in existence. In a later and more settled 
stage it is discovered that certain desires can be more 
easily and more fully satisfied by utilizing the principle of 
growth and reproduction, as by cultivating vegetables and 
breeding animals. And in a still later period of develop 
ment, it becomes obvious that certain desires can be better 
and more easily satisfied by exchange, which brings out 
the principle of cooperation more fully and powerfully 
than it could obtain among unexchanging economic units. 

 CHAPTER III. 
POPULATION AND SUBSISTENCE. 

SHOWING THAT THE THEORY OP A TENDENCY IN POPULATION 
TO INCREASE PASTER THAN SUBSISTENCE HAS PREVIOUSLY 
BEEN EXAMINED AND CONDEMNED. 

The Malthusian theory—Discussed in "Progress and Poverty." 

IN proceeding to consider the laws of the production of 
wealth it would be expedient first to consider any nat 
ural law, if such there should be, which would limit the 
operation of man in production. In the Malthusian theory 
the scholastic political economy has held that there is a 
law of nature that produces a tendency in population to 
increase faster than subsistence. This, coming as it did, 
in the formative period of the institution of the science, 
was really the bulwark of the long-accepted political econ 
omy, which gave to the wealthy a comfortable theory for 
putting upon the Originating Spirit the responsibility for 
all the vice, crime and suffering, following from the unjust 
actions of men, that constitute the black spot of our nine 
teenth-century civilization. Falling in with the current 
doctrine that wages are determined by the ratio between 
capital and labor, deriving support from the principle 
brought prominently forward in current discussions of the 
theory of rent, that past a certain point the application of 
capital and labor to land yields a diminishing return, and 

333 

 334 THE PKODUCTION OF "WEALTH. Book III. 

harmonizing with the theory of the development of species 
by selection, it became of the utmost importance, and for 
a long time imposed even upon well-disposed and fair- 
minded men a weight of authority of which they could 
not rid themselves. But in "Progress and Poverty" I 
devoted to it an entire Book, consisting of four chapters. 
In this, with what follows, I so disposed of the theory that 
it is not necessary to go over the reasoning again, but can 
refer to my previous work those who may wish to inquire 
as to the nature, grounds and disproof of that theory. 

As the space of that work did not allow me to go over 
the whole scope of political economy, but only to cover its 
more salient points, it will be well here to examine, what 
I did not do thoroughly in that work, the doctrine of the 
law of diminishing returns in agriculture. Since this doc 
trine has not yet to my knowledge been questioned, it 
will be well to do this thoroughly. 

 CHAPTER IV. 

THE ALLEGED LAW OF DIMINISHING RETURNS 
IN AGRICULTURE. 

SHOWING WHAT THIS ALLEGED LAW IS. 

John Stuart Mill quoted as to the importance, relations and nature 
of this law—The reductio ad alsurdum by which it is proved— 
Contention that it is a misapprehension of the universal law of 
space. 

BEFORE proceeding to the subject of cooperation it is 
necessary to consider, if but to clear the way, what 
is treated in standard economic works since the time of 
Adam Smith as the most important law of production, 
and indeed of political economy as a whole. This is what 
is called " The Law of Diminishing Production," or more 
fully and exactly, " The Law of Diminishing Returns in 
Agriculture." Of it John Stuart Mill ("Principles of 
Political Economy," Book I., Chapter XII., Sec. 2) says: 

This general law of agricultural industry is the most important 
proposition in Political Economy. Were the law different nearly all 
the phenomena of the production and distribution of wealth would 
be other than they are. 

This view of the importance of " the law of diminishing 
returns in agriculture" pervades the standard political 
economies, and is held by the most recent scholastic writers, 
such as Professor Walker of the United States and Pro- 
335 

 336 THE PRODUCTION OF WEALTH. Book III. 

f essor Marshall of England, as by Mill and his predecessors. 
It arises from the relation of this alleged law to current 
apprehensions of the law of rent, and especially from the 
support which it seems to give to the Malthusian doctrine 
that population tends to outrun subsistence—a support 
to which the long acceptance of that doctrine is due. 

Thus, as the necessary consequence of this "law of 
diminishing returns in agriculture," John Stuart Mill in 
Book I., Chapter XIII., Sec. 2, of his " Principles of Politi 
cal Economy," says: 

In all countries -which have passed beyond a rather early stage in 
the progress of agriculture, every increase in the demand for food, 
occasioned by increased population, -will always, unless there is a 
simultaneous improvement in production, diminish the share which 
on a fair division would fall to each individual. . . . Prom this, 
results the important corollary, that the necessity of restraining 
population is not, as many persons believe, peculiar to a condition 
of great inequality of property. A greater number of people cannot, 
in any given state of civilization be collectively so well provided for 
as a smaller. The niggardliness of nature, not the injustice of 
society, is the cause of the penalty attached to overpopulation. An 
unjust distribution of wealth does not even aggravate the evil, but 
at most causes it to be somewhat earlier felt. It is in vain to say, 
that all mouths which the increase of mankind calls into existence 
bring with them hands. The new mouths require as much food as 
the old ones, and the hands do not produce as much. 

As to the law itself, from which such tremendous conse 
quences are confidently deduced—consequences which put 
us to the mental confusion of denying the justice of the 
Creator, and assuming that the Originating Spirit is so 
poor a contriver as to be constantly doing what any mere 
human host would be ashamed to be guilty of, bringing 
more guests to his table than could be fed—it is thus 
stated by Mill: 

After a certain and not very advanced stage in the progress of 
agriculture; as soon, in fact, as mankind have applied to cultivation 

 Chap. IF. OF DIMINISHING EETUENS. 337 

•with any energy, and have brought to it any tolerable tools; from 
that time it is the law of production from the land, that in any given 
state of agricultural skill and knowledge, by increasing the labor, the 
produce is not increased in equal degree; doubling labor does not 
increase the produce; or to express the same thing in other words, 
every increase of produce is obtained by a more than proportional 
increase in the application of labor to the land. 

This law of diminishing returns in agriculture it is 
further explained applies also to mining, and in short to 
all the primary or extractive industries, which give the 
character of wealth to what was not before wealth, but 
not to those secondary or subsequent industries which add 
an additional increase of wealth to what was already 
wealth. Thus since the law of diminishing productiveness 
in agriculture does not apply to tlie secondary industries, 
it is assumed that any increased application of labor (and 
capital) in manufacturing for instance, would continue to 
yield a proportionate and more than proportionate return. 
And as conclusive and axiomatic proof of this law of di 
minishing productiveness in agriculture, it is said that 
were it not for this peculiar law, and were it, on the con 
trary (as it is assumed it would be without it), the fact 
that additional application of labor would result in a pro 
portionately increased production from the same land, 
one single farm would suffice to raise all the agricultural 
produce required to feed the whole population of England, 
of the United States or any other country, or of course, 
of the whole world, by mere increase in the application of 
labor. 

This proposition seems to have been generally accepted 
by professional economists as a valid reductio ad absurdum, 
and to have carried the same weight in the common 
thought as has the similar proposition of the general 
Malthusian doctrine that if increasing population did not 
find increasing difficulty in getting subsistence, mankind 

 338 THE PRODUCTION OF WEALTH. Book IU. 

would in a little while be able only to find standing-room 
on one another's heads. 

But analysis will show that this logical structure, which 
economic writers have deemed so strong and on which 
they have so confidently built, rests upon an utter misap 
prehension ; that there is in truth no special law of dimin 
ishing productiveness applying to agriculture, or to the 
extractive occupations, or to the use of natural agents, 
which are the various ways which the later writers have 
of sometimes stating what the earlier writers called the law 
of diminishing productiveness in agriculture; and that 
what has been misapprehended as a special law of dimin 
ishing returns in agriculture is in reality a general law, 
applying as well to manufacturing and exchanging as to 
agriculture, being in fact nothing less general than the 
spacial law of all material existence and movement—inor 
ganic as well as organic. 

This will appear if we consider the relation of space to 
production. But to do this thoroughly and at the same 
time to clear the way for considerations which may prove 
of importance in other parts of this work, I propose to 
begin by endeavoring to fix the meaning and nature of 
space and time. 

 CHAPTER V. 
OF SPACE AND TIME. 

SHOWING THAT HUMAN REASON IS ONE, AND SO FAR AS IT 
CAN GO MAY BE BELIED ON. 

Purpose of this work—Of metaphysics—Danger of thinking of words 
as things—Space and time not conceptions of things but of rela 
tions of things—They cannot, therefore, have independent begin 
ning or ending—The verbal habit which favors this idea—How 
favored by poets and by religious teachers—How favored by phi 
losophers—Of Kant—Of Schopenhauer—Mysteries and antino 
mies that are really confusions in the meaning of words—Human 
reason and the eternal reason—"Philosophers" who are really 
word-jugglers. 

MY purpose in this work is to explain the science of 
political economy so clearly that it may be under 
stood by any one of common ability who will give to it 
reasonable attention. I wish therefore to avoid, as far 
as possible, everything that savors of metaphysics. For 
metaphysics, which in its proper meaning is the science of 
the relations recognized by human reason, has become in 
the hands of those who have assumed to teach it, a syno 
nym for what cannot be understood, conveying to common 
thought some vague notion of a realm beyond the bounds 
of ordinary reason, into which common sense can venture 
only to shrink helpless and abashed. 

Yet to trace to their root confusions involved in current 
economic teachings and to clear the ground for a coherent 
• 339 

 340 THE PRODUCTION OF WEALTH. SooJcIII. 

political economy, it is necessary to fix the real meaning 
of two conceptions which belong to metaphysics, and which 
are beset by confusions that have not only disturbed the 
teaching of political economy, but of philosophy in the 
higher sense. These conceptions are those of space and 
time. 

All material existence is in space and in time. Hence, 
the production of wealth, which in all its modes consists in 
the bringing about by human exertion of changes in the 
place or relation of material things, so as to fit them for 
the satisfaction of human desire, involves both space and 
time. 

This may seem like a truism—a fact so self-evident as 
not to need statement. But much disquisition has been 
wasted and much confusion caused by the failure of econ 
omists to keep this in mind. Hence, to start from firm 
foundations, we must see clearly what is really meant by 
space and time. Here we come into the very heart of 
metaphysics, at a point where the teachings of what passes 
for the highest philosophy are most perplexed and per 
plexing. 

In asking ourselves what we really mean by space and 
time, we must have a care, for there is a danger that the 
habitual use of words as instruments of thought may lead 
to the error of treating what they express as objects of 
thought, or things, when they really express not things, 
but only the qualities or relations of things. This is one 
of those sources of error which Bacon in his figurative 
classification called Idols of the Forum. Though a word 
is a thing, in the sense that its verbal form may be made 
an object of thought, yet all words are not things in the 
sense of representing to the mind what apart from mere 
verbal form may be made an object of thought. To clothe 
in a form of words which the eye and ear may distinguish 
from other words, yet which in their meaning involve con- 

 Chap. V. OF SPACE AND TIME. 341 

tradictions, is not to make a thing, which in itself, and 
aside from that mere verbal form, can be thought of. To 
give a name to a form of words implying contradictions 
is to give name to what can be thought of only verbally, 
and which in any deeper sense than that is a negation— 
that is to say, a no thing, or nothing. 

Yet this is the trick of much that to-day passes for the 
most profound philosophy, as it was the trick of Plato and 
of much that he put into the mouth of Socrates. To tiy 
it, make up a word signifying opposite qualities, such as 
" lowhigh " or " squareround," or a phrase without think 
able meaning, such as a " fourth dimension of space." In 
this it will be wisest to use a tongue which being foreign 
to the vernacular is suggestive of learning. Latin or 
Greek, has long been used for this purpose, but among 
English-speaking people German will now do as well if not 
better, and those who call themselves Theosophists have 
taken Sanskrit or what they take to be Sanskrit very satis 
factorily. Now, if you have the external associations of 
superior penetration, and will persist for a while in seem 
ing to treat your new word or phrase as if you were really 
making it an object of deep thought, you will soon have 
others persuading themselves to think that they also can 
think of it, until finally, if it get the scholastic vogue, the 
man frank enough to say that he can get no meaning from 
it will be put down as au ignorant fellow whose education 
has been neglected. This is really the same trick as stand 
ing on a street and gazing into the sky, as if you saw 
something unusual there, until a crowd gathers to look 
also. But it has made great reputations in philosophy. 

Now, in truth, when we come to analyze our apprehen 
sions of space and time, we see that they are conceptions, t 
not of things in themselves existing, but of relations which f 
things in themselves existing may hold to each other- 
space being a relation of extension or place between one ( 

y 

 342 THE PRODUCTION OF WEALTH. Book III. 

thing and other things, such as far or near, hither or 
thither; and time being a relation of succession between 
one thing and other things, such as before or after, now 
and then. To think of space we must necessarily think 
of two points in place, aud to make the relation of exten 
sion between them intelligible to our minds, we must also 
think of a third point which may serve as a measure of 
this relation. To think of time we must necessarily think 
of two points in appearance or disappearance, and to make 
this relation of sequence between them intelligible to our 
minds, we must also think of some third point which may 
serve as a measure of this relation. 

Since space and time are thus not existences, but ex 
pressions of the relation to each other of things thought 
of as existing, we cannot conceive of their having begin 
ning or ending, of their creation or annihilation, as apart 
from that of the things whose relation they express. Space 
being a relation of extension between things in place, and 
time a relation of succession between things in order of 
appearance or duration, the two words properly express 
relations which, like the relations of form and number 
with which mathematics deals in its two branches of ge 
ometry and arithmetic, are expressive of actual relation 
wherever the things they relate to have actual existence, 
and of potential relation wherever the things they relate 
to have merely potential existence. We cannot think of a 
when or where in which a whole was not equal to the sum 
of its parts, or will ever cease to be; or in which the lines 
and angles of a square were not, or can ever cease to be, 
equal to each other; or in which the three angles of a 
triangle were not, or can ever cease to be, equal to two 
right angles. Nor yet can we think of a when or where 
in which twice one did not make two, or can ever cease to 
do so; and twice two did not, or will ever cease to, make 
four. In the same way it is utterly impossible for us to 

 Chap. V. OF SPACE AND TIME. 343 

think of a when or where in which space and time could 
begin or could end, as apart from the beginning or ending 
of the things whose relations to each other they express. 
To try to think of space and time without a presumption 
of things whose relations to each other are thus expressed, 
is to try to think of shadow without reference to substance. 
It is to try to think of a no thing, or nothing—a negation 
of thought. 

This is perfectly clear to us when we attach an article 
to the noun and speak of " a space " or " the space," or of 
" a time " or " the time," for in such speech the relation of 
one thing or set of things to another thing or set of things 
is expressed by some such preposition as "from," " before," 
"after" or "when." But when the noun is used without 
the article, and men speak of space by itself and time by 
itself without any word of particularization or preposition 
of relation, the words have by the usage of our English 
tongue the meaning of all space or space in general, or 
all time or time in general. In this case the habit of re 
garding words as denoting things in themselves existing 
is apt to lead us to forget that space and time are but 
names for certain relations in which things stand to each 
other, and to come to regard them as things which in them 
selves, and apart from the things whose relationship they 
express, can become objects of thought. Thus, without 
analyzing the process, we come to accept in our minds the 
naked words as representing some sort of material exis 
tences—vaguely picturing space as a sort of atmosphere or 
ether, in which all things swim, and time an ever-flowing 
current which bears all things on. 

From this mode of mental picturing we are apt to assume 
that both space and time must have had beginning, before 
which there was no space and no time; and must have 
limits, beyond which neither space nor time can be. But 
when we try to think of this beginning or of these limits, 

 344 THE PKODUCTION OP WEALTH. Book III. 

we think of something which for the moment we assume 
to be the first or farthest of existing things. Yet no 
matter how far we may carry this assumption, we at the 
same moment see that it may be carried further still. To 
think of anything as first, involves the possibility of think 
ing of something before that, to which our momentary 
first would become second. To think of an utmost star 
in the material universe, involves the possibility of think 
ing of another star yet further still. 

Thus in the effort to grasp such material conceptions of 
time and space they inevitably elude us. From trying to 
think of what are only names for relations which things 
have to each other as if they were things in themselves, 
we come to a point not merely of confusion, but of nega 
tion—a conflict of absolutely opposing ideas resembling 
that brought about in the minds of the unwary by the 
schoolmen's question as to what would happen did an 
irresistible force meet an immovable body. 

Now, this way of using the nouns space and time 
without an article, as though they mean things in them 
selves existing, has been much favored by the poets, whose 
use of words is necessarily metaphorical and loose. And 
it has been much favored by the teachers of religion, 
whose endeavor to embody spiritual truths tends to poet 
ical expression, and who have been prone in all ages to 
make no distinction between the attribution to the higher 
power of what transcends our knowledge and of what is 
opposed to our reason—assuming the repugnance of human 
reason to accept the contradictions to which they give the 
name of mysteries to be proofs of its weakness. 

Thus the habit of trying to think of space and time as 
things in themselves and not merely relations of things, 
has been embedded in religious literature, and in our most 
susceptible years we hear of beings who know not space 
or time, and of whens and wheres in which space and time 

 Chap. F. OF SPACE AND TIME. 345 

are not. And as the child recoils from the impossible at 
tempt to think of the unthinkable and strives in vain to 
picture a when or where in which space and time have 
not been, or shall cease to be, he is hushed into silence 
by being told that he is impiously trying to measure with 
the shallow plummet of human reason the infinite depths 
of the Divine Mind. 

But the disposition of the theologians to find an insolv- 
able mystery in the contradiction that follows the attempt 
to think of space and time not as relations but as inde 
pendent existences, has been followed or perhaps antici 
pated by philosophers who in the use of meaningless words, 
as though to them they really conveyed coherent ideas, 
have assumed what has passed for superior penetration. 
They (or at least those of them who have looked down 
upon the theologians with contempt) have not, it is true, 
called the inevitable conflict in thought which arises when 
we try mentally to treat of what is really a relation as 
though it were in itself a thing, a divine mystery. But 
they have recognized this conflict as something inherent, 
not in confusion of words, but in the weakness of human 
reason—which human reason they themselves pretend to 
go behind and instruct. 

Kant, whose ponderous incomprehensibility is a striking 
example of what (whether it was before him or because of 
him) seems to have become a peculiarly German facility 
for inventing words handy for philosophic juggling, dig 
nified this point of assumed necessary conflict by calling 
it an " antinomy," which term suggesting in its derivation 
the idea of a conflict of laws, was employed by him to 
mean a self-contradiction or mutual destruction of una 
voidable conclusions of the human reason; a what must 
be thought of, yet cannot be thought of. Thus the word 
antinomy in the scholastic philosophy that has followed 
Kant takes the place of the word mystery in the theo- 

 346 THE PRODUCTION OP WEALTH. Book III. 

logical philosophy, as covering the idea of a necessary 
irreconcilability of hurt.an reason. 

Kant, for instance, tells us that space and time are forms 
of human sensibility, which, as well as I can understand 
him, means that our mental nature imposes upon us the 
wearing of something like colored glasses, so that when 
we consider things they always seem to us to be in space 
and in time; but that this is merely their appearance to 
us, and that" things in themselves," that is, things as they 
really exist outside of our sensibility or apprehension of 
them, or as they would be apprehended by " pure reason " 
(i.e., some reason outside of human reason), are not in 
space and time at all. 

In a passage I have already quoted, the much more 
readable Schopenhauer speaks of the destruction of the 
capacity for thinking which results from the industrious 
study of a logomachy made up by monstrous piecings to 
gether of words which abolish and contradict one another. 
But of this very thing, Schopenhauer himself with all his 
strength and brilliancy is a notable example. His indus 
trious study of Kant had evidently reduced him to that 
state of mind of which he speaks, where " hollow phrases 
count with it for thoughts." His whole philosophy is 
based on Kant's "Critique of Pure Reason," which he 
speaks of as "the most important phenomenon that has 
appeared in philosophy for two thousand years," and a 
thorough understanding of which he declares in the be 
ginning and over and over again to be absolutely neces 
sary to an understanding of his own works. Likening the 
effect of Kant's writings on the mind to which they truly 
speak to that of the operation for cataract on a blind man, 
he adds: 

The aim of my own work may be described by saying that I have 
sought to put into the hands of those upon whom that operation has 
been successfully performed a pair of spectacles suitable to eyes that 

.j 

 Chap. V. OF SPACE AND TIME. 347 

have recovered their sight—spectacles to whose use that operation is 
the absolutely necessary condition. 

And through these spectacles of " The Fourfold Root of 
the Principle of Sufficient Reason " and the chief work to 
which that is preliminary, " The World as Will and Idea," 
Schopenhauer introduces us into what seems to natural 
reason like a sort of philosophic "Alice in Wonderland." 
If I can understand a man who seems to have a peculiar 
gift of lucid expression wherever it is applied to under 
standable things, and whose writings are illumined by 
many acute observations and sagacious reflections, this 
world in which I find myself and which from the outside 
is so immense, so varied, so wonderful, is from the inside, 
nothing but "I, myself"—my idea, my presentment, my 
will; and space and time are only in my seeming, appear 
ances imposed upon me by the forms of my consciousness. 
I behold, for instance, a kitten, which by and by becomes 
a cat and has kittens of its own, and at the same time or 
at different times and places I see or remember to have 
seen many cats—tom-cats, pussy-cats, kitty-cats, black, 
white, gray, mottled and tortoise-shell cats, in different 
stages of age, from little cats whose eyes are not yet opened 
to decrepit cats that have lost their teeth. But in reality, 
on the inside of things as it were, there is only one cat, 
always existent without reference to time and space. This 
eternal cat is the idea of a cat, or cat idea, which is reflected 
in all sorts of guises in the kaleidoscopic facets of my ap 
prehension. And as with cats, so with all things else in 
which this infinite and varied world presents itself to me 
—planets and suns, plants and trees, animals and men, 
matter and forces, phenomena and laws. All that I see, 
hear, touch, taste, smell or otherwise apprehend—all is 
mirage, presentment, delusion. It is all the baseless fab 
ric of a vision, the self-imposed apprehensions of the evil 
dream, containing necessarily more pain than pleasure, in 

 348 THE PRODUCTION OF WEALTH. Book III. 

which what we call life essentially consists; yet which he 
who suffers in it cannot escape by suicide, since that only 
brings him into life again in other form and circumstance; 
but from which the truly wise man must seek relief by 
starving himself to death without wanting to die; or in 
other words by conquering "the will to live," the only 
road to the final goal of annihilation or Nirvana, to which 
all life ultimately tends. 

And this philosophy of negation, this nineteenth-cen 
tury Buddhism without the softening features of its Asiatic 
prototype, that makes us but rats in an everlasting trap, 
and substitutes for God an icy devil, is the outcome of 
the impression made upon a powerful and brilliant but 
morbid mind by " the industrious study of a logomachy 
made up by monstrous piecings together of words which 
abolish and contradict one another," that strives to turn 
human reason as it were inside out and consider in the 
light of what is dubbed "pure reason" the outside-in of 
things. 

The fact is, that this seemingly destructive conflict of 
thought that theologians call a mystery and philosophers 
call an antinomy—and which there must be very many of 
my readers who like myself can remember puzzling over 
in childhood in questionings of what might be beyond the 
limits of space and time, and what was before God was, 
and what might be after space and time had ceased—is not 
in reality a failure of reason, but a confusion in the mean 
ing of words. When we remember that by space and time 
we do not really mean things having existence but certain 
relations to each other of things that have existence, the 
mystery is solved and the antinomy disappears in the 
perception of a verbal confusion—a confusion of the same 
kind as perplexes those who try to think at once of an 
irresistible force and an immovable body, two terms which 
being mutually exclusive cannot together exist. 

 Clmp. r. OF SPACE AND TIME. 349 

There is a riddle about what a boy said, sometimes given 
among young people playing conundrums, which if not 
heard before, is almost certain to make the whole party 
" give it up," after trying all sorts of impossible answers, 
since its true and only possible answer, " The boy lied," is 
so obvious that they do not think of it. 

We may be wise to distrust our knowledge; and, unless 
we have tested them, to distrust what we may call our 
reasonings; but never to distrust reason itself. 

Even when we speak of lunacy or madness or similar 
mental" afflictions as the loss of reason, analysis I think 
will show that it is not reason itself that is lost, but that 
those powers of perception and recollection that belong to 
the physical structure of the mind have become weakened 
or broken or dislocated, so that the things with which the 
reason deals are presented to it imperfectly or in wrong 
place or relation. 

In testing for glasses an optician will put on you lenses 
through which you will see the flame of a candle above or 
below or right or left of its true position, or as two where 
there is only one. It is so with mental diseases. 

And that the powers with which the human reason must 
work are limited and are subject to faults and failures, 
our reason itself teaches us as soon as it begins to examine 
what we find around us and to endeavor to look in upon 
our own consciousness. But human reason is the only 
reason that men can have, and to assume that in so far as 
it can see clearly it does not see truly, is in the man who 
does it not only to assume the possession of a superior to 
human reason, but it is to deny the validity of all thought 
and to reduce the mental world to chaos. As compared 
with the eternal reason which is manifested in the relations 
which we call laws of nature our human reason is clearly 
shallow and narrow; but that it is a perception and recog 
nition of this eternal reason is perhaps the deepest fact of 

 350 THE PEODTJCTION OF WEALTH. Book III. 

our certainty. Not as yet dreaming that this earth which 
seems to our first perceptions to be so firmly fixed could 
be in constant motion, men did not for a long time perceive 
what a closer and wider use of reason now shows to be the 
case, that the earth revolves around the sun, not the sun 
around the earth, and spoke with literal meaning of sunrise 
and sunset. But as to the phenomena of day and night, 
and as to the proximate cause of these phenomena being 
in the relations of sun and earth towards each other, they 
were not deceived. 

As for the philosophers since Kant or before him who 
profess to treat space and time as mere conditions of human 
perception, mental glasses, as it were, that compel us to 
recognize relations that do not in truth exist, they are mere 
jugglers with words, giving names such as " the absolute," 
" the unconditioned," " the unknowable " to what cannot be 
thought of, and then proceeding to treat them as things, 
and to reason with them and from them. 

 CHAPTER VI. 

CONFUSION OF THE SPACIAL LAW WITH 
AGRICULTURE. 

SHOWING THE GENESIS OP THIS CONFUSION. 

What space is—The place to which man is confined—Extension a 
part of the concept "land"—Perception is by contrast—Man's 
first use of land is by the mode of "adapting"—His second, and 
for a long time most important, use is by "growing"—The third, 
on which civilization is now entering, is "exchanging"—Political 
economy began in the second, and "growing" still attracts most 
attention—The truth and error of the Physiocrats—The succes 
sors of Smith, while avoiding the error of the Physiocrats, also 
ignored their truth; and with their acceptance of the Malthusian 
theory, and Eicardo's explanation of rent as relating to agricul 
tural land, they fell into, and have continued the habit of treating 
land and rent as agricultural—Difficulty of the single tax in the 
United States. 

THE laws of our physical being, to which I have already 
called attention (Book I., Chapter II.), confine us 
within narrow limits to that part of the superficies of our 
sphere where the ocean of air enveloping it meets the solid 
surface. We may venture temporarily a little below the 
solid surface, in caves and vaults and shafts and tunnels; 
and a little above it, on trees, or towers, or in balloons or 
aerial machines, if such be yet constructed; but with 
these temporary aerial extensions of our habitat, which of 
themselves require not only a preliminary but a recurring 
use of the solid surface of the earth, it is to that solid 

351 

 352 THE PKODUCTION. OF WEALTH. Book III. 

surface that our material existence and material produc 
tion are confined. Physically we are air-breathing, light- 
requiring land animals, who for our existence and all our 
production require place on the dry surface of our globe. 
And the fundamental perception of the concept land— 
whether in the wider use of the word as that term of 
political economy signifying all that external nature offers 
to the use of man, or in the narrower sense which the word 
usually bears in common speech, where it signifies the 
solid surface of the earth—is that of extension; that of 
affording standing-place or room. 

But a fundamental perception is not always a first per 
ception. Weight is a fundamental perception of air. 
But we realize this only by the exertion of reason, and 
long generations of men have lived, feeling the weight of 
air on every part of their bodies during every second of 
their lives from birth to death, without ever realizing that 
air has weight. Perception is by contrast. What we 
always perceive neither attracts attention nor excites 
memory until brought into contrast with non-perception. 

Even in the now short Atlantic trip the passenger be 
comes so accustomed to the constant throb of the engines 
as not to notice it, but is aroused by the silence when it 
stops. The visitor in a nail-mill is so deafened that speech 
seems impossible; but the men working there are said to 
talk to each other without difficulty and to find conversa 
tion hard when they get again into the comparative silence 
of the street. In later years, I have at times " supped with 
Lucullus," without recalling what he gave me to eat, 
whereas I remember to this day the ham and eggs of my 
first breakfast on a canal-packet drawn by horses that 
actually trotted; how sweet hard-tack, munched in the 
middle watch while the sails slept in the trade-wind, has 
tasted; what a dish for a prince was sea-pie on the rare 

 Chap. VI. CONFUSION OF THE SPACIAL LAW. 353 

occasions when a pig had been killed or a porpoise har 
pooned ; and how good was the plum-duff that came to the 
forecastle only on Sundays and great holidays. I remember 
as though it were an hour ago, that talking to myself 
rather than to him, I said to a Yorkshire sailor on my first 
voyage, "I wish I were home, to get a piece of pie." I 
recall his expression and tone, for they shamed me, as he 
quietly said, " Are you sure you would find a piece of pie 
there?" Thoughtless as the French princess who asked 
why the people who were crying for bread did not try 
cake, "Home" was associated in my mind with pie of 
some sort—apple or peach or sweet potato or cranberry 
or mince—to be had for the taking, and I did not for the 
moment realize that in many homes pie was as rare a 
luxury as plums in our sea-duff. 

Thus, while the fundamental quality of land is that of 
furnishing to men place on which they may stand or move, 
or rest things on, this is not the quality first noticed. As 
settlers in a wooded country, where every foot of land 
must be cleared for use, come to regard trees as a nuisance 
to be got rid of, rather than as the source of value that 
in the progress of civilization they afterwards become, so 
in that rude stage of social development which we are 
accustomed to think of as the primary condition of man 
kind, where the mode of expending labor in production 
which most attracts attention is that we have called 
" adapting," land would be esteemed rich or poor accord 
ing to its capacity of yielding to labor expended in this 
first mode, the fruits of the chase. 

In the next higher stage of social development, in which 
that second mode of production, which we have called 
"growing," begins to assume most importance in social 
life, that quality of land which generally and strongly 
attracts attention is that which makes it useful in agri- 

 354 THE PRODUCTION OF WEALTH. Book III. 

culture, and land would be esteemed rich or poor accord 
ing to its capacity for yielding to labor expended in the 
breeding of animals and raising of crops. 

But in the still higher stage of social development which 
what we now call the civilized world is entering, attention 
begins to be largely given to the third mode of production, 
which we have called " exchanging," and land comes to be 
considered rich or poor according to its capacity of yield 
ing to labor expended in trading. This is already the case 
in our great cities, where enormous value attaches to land, 
not because of its capacity to provide wild animals to the 
hunter, nor yet because of its capacity to yield rich crops 
to the grower, but because of its proximity to centers of 
exchange. 

That the development of our modern economy began in 
what was still mainly the second stage of social develop 
ment, when the use of land was usually regarded from the 
agricultural point of view, is it seems to me, the explanation 
of an otherwise curious way of thinking about land that 
has pervaded economic literature since the time of the 
Physiocrats, and that still continues to pervade the scho 
lastic political economy—a way of thinking that leads 
economic writers to treat land as though it were merely a 
place or substance on which vegetables and grain may be 
grown and cattle bred. 

The followers of Quesnay saw that there is in the aggre 
gate production of wealth in civilization an unearned in 
crement—an element which cannot be attributed to the 
earnings of labor or capital—and they gave to this incre 
ment of wealth, unearned so far as individuals are con 
cerned, the name of product net or surplus product. They 
rightly traced this unearned or surplus product to land, 
seeing that it constituted to the owners of land an income 
or return which remained to them after all expenditure 
of labor and investment of capital in production had been 

 Cliaj). VI. CONFUSION OF THE SPACIAL LAW. 355 

paid for. But they fell into error in assuming that what 
was indeed in their time and place the most striking and 
prominent use of land in production, that of agriculture, 
was its only use. And finding in agriculture, which falls 
into that second mode of production I have denominated 
" growing," the use of a power of nature, the genninative 
principle, essentially different from the powers utilized in 
that first mode of production I have denominated " adapt 
ing," they, without looking further, jumped to the con 
clusion that the unearned increment of wealth or surplus 
net sprang from the utilization of this principle. Hence 
they deemed agriculture the only productive occupation, 
and insisted in spite of the absurdity of it that manufac 
tures and commerce added nothing to the sum of wealth 
above what they took from it, and that the agriculturist 
or cultivator was the only real producer. 

This weakness in the thinking of the Physiocrats and 
the erroneous terminology that it led them to use, finally 
discredited their true apprehensions and noble teachings, 
unpalatable as they necessarily were to the powerful 
interests who seemingly profit by social injustice, until 
the rise with the publication of "Progress and Poverty" 
of the new Physiocrats, the modern Single Taxers as they 
now call themselves and are being called. 

But the economists who succeeded Adam Smith, while 
they avoided the error into which the Physiocrats had 
fallen, avoided as well the great truth of which this had 
been an erroneous apprehension, and greedily accepting 
the excuse which the Malthusian theory offered for putting 
upon the laws of God the responsibility for the misery and 
vice that flow from poverty, they fell into and have con 
tinued the habit of regarding land solely from the agri 
cultural point of view, thus converting what is really the 
spacial law of all production into an alleged law of dimin 
ishing production in agriculture. Even Kicardo, who 

 356 THE PRODUCTION OF WEALTH. Book III. 

truly though very narrowly explained the law of rent, 
shows in all his arguments and illustrations an inability 
to free himself from thinking of land as relating only to 
agriculture, and of rent only as agricultural rent. And 
although in England the relative importance of agriculture 
has during all this century steadily and rapidly declined, 
the habit of thinking of land as a place or substance for 
agricultural operations is still kept up. Not merely is the 
law of diminishing production in agriculture still taught 
as a special law of nature in the latest works treated as 
authoritative in colleges and tmiversities, but in speaking 
of land and of rent, most English writers will be found to 
have really in mind agricultural land or agricultural rent. 
What is true of England is true of the United States 
except so far as the influence of the single tax has been 
felt. But the greatest difficulty which the single tax prop 
aganda meets in the United States is the wide-spread 
idea, sedulously fostered by those who should know better, 
that non-agricultural workers have no interest in the land 
question and that concentrating taxes on land values 
means increasing the taxes of farmers. To fostering this 
fallacy all the efforts of the accredited organs of education 
are directed. 

 CHAPTER VII. 
THE RELATION OF SPACE IN PRODUCTION. 

SHOWING THAT SPACE HAS RELATION TO ALL 
MODES OP PRODUCTION. 

Matter being material, space must have relation to all production— 
This relation readily seen in agriculture—The concentration of 
labor in agriculture tends up to a certain point to increase and 
then to diminish production—But it is a misapprehension to attrib 
ute this law to agriculture or to the mode of "growing"—It 
holds in all modes and sub-divisions of these modes—Instances: 
of the production of brick, of the mere storage of brick—Man 
himself requires space—The division of labor as requiring space 
—Intensive and extensive use of land. 

PRODUCTION in political economy means the produc 
tion of wealth. Wealth, as we have seen, consists in 
material substances so modified by human labor as to fit 
them for the satisfaction of human desires. Space, there 
fore, which has relation to all matter, must have relation 
to all production. 

This relation of space to all production may be readily 
seen in agriculture, which is included in that mode of 
production we have called "growing." In this, the con 
centration of labor in space tends up to a certain point to 
increase the productiveness of labor; but the point of 
greatest productiveness attained, any further concentration 
of labor would tend to decrease productiveness. Thus, if 
a Robinson Crusoe, having a whole island on which to 

357 

 358 THE PRODUCTION OF WEALTH. Book III. 

expend his labor, were to plant potatoes, each cutting a 
hundred yards apart from every other cutting, he would 
necessarily waste so much labor in planting, cultivating 
and gathering the crop that the return compared with his 
exertion would be very small. He would get a much larger 
return were he to concentrate his labor by planting his 
potatoes closer; and this increase would continue as he 
continued to exert his labor in lesser space, until his plants 
became too crowded, and the growth of one would lessen 
or prevent that of another. While if he continued the 
experiment so far as to put all his cuttings in one spot he 
would get no greater return than he might have had from 
the planting of one, and perhaps no return at all. 

This spacial law of production holds good of course in 
labor exerted conjointly, as in labor exerted individually. 
On a given area, the application of labor to the growth of 
a crop or the breeding of animals may sometimes be 
increased with advantage, the exertion of two men pro 
ducing more than twice as much as the exertion of one 
man; that of four men, more than twice as much as the 
exertion of two; and so on. But this increase of produc 
tion with increased application of labor to any given area 
cannot go on indefinitely. A point is reached at which 
the further application of labor in the given area, though 
it may for a time result in a greater aggregate production, 
yields a less proportionate production, and finally a point 
is reached where the further application of labor ceases 
even to increase the aggregate result. 

It is misapprehended appreciation of this law in so far 
as it applies to agricultural production, which has led to 
the formulation and maintenance in economic teaching of 
what is called " the law of diminishing productiveness in 
agriculture." But the law is not peculiar to agriculture 
nor to the second mode of production which I have called 
" growing." It is true that this mode of production con- 

 Chap.m. BELATION OF SPACE IN PRODUCTION. 359 

sists in the utilization in aid of labor of the power of 
reproduction which characterizes life, and that living 
things in their growth and expansion require more space 
than things destitute of life. The plants that we grow 
require space below the surface of the ground in which to 
expand their roots and drink in certain constituents, and 
space above the surface in which to expand their leaves 
and drink in air and light. And the animals that we breed 
require space for their necessary movements. But though 
the spacial requirements of living things may be relatively 
greater than those of things not living, they are no less 
absolute in the one case than in the other. That two 
material things cannot exist in the same space is no more 
true of brutes than of beets, nor of beets than of bricks. 

In every form or sub-division of its three modes the 
exertion of human labor in the production of wealth 
requires space; not merely standing or resting space, but 
moving space—space for the movements of the human 
body and its organs, space for the storage and changing 
in place of materials and tools and products. This is as 
true of the tailor, the carpenter, the machinist, the mer 
chant or the clerk, as of the farmer or stock-grower, or of 
the fisherman or miner. One occupation may require 
more elbow-room or tool-room or storage-room than 
another, but they all alike require space, and so must come 
to a point where any gain from concentrating labor in 
space ceases, and further concentration results in a pro 
portionate lessening of product, and finally in an absolute 
decline. The same law, first of increasing and then of 
diminishing returns, from the concentration of labor in 
space, which the first exponents of the doctrine of dimin 
ishing returns in agriculture say is peculiar to that occu 
pation, and its latter exponents say obtains in agriculture, 
and in the extraction of limited natural agents, such as 
coal, shows itself in all modes of production, and must 

 360 THE PRODUCTION OP WEALTH. Book III. 

continue to do so, even did we discover some means of 
producing wealth by solidifying atmospheric air or an all- 
pervading ether, which some modern scientists suppose. 
For this alleged " law of diminishing returns in agricul 
ture " is nothing more nor less than the spacial law of 
material existence, the reversal or denial of which is abso 
lutely unthinkable. 

To see this, let us take a form of production widely 
differing from that of agriculture—the production of brick. 
Brick is usually made from clay, but can be made from other 
inorganic substances, such as shale, coal-dust, marble-dust, 
slag, etc., and no part of its production involves any use of 
the principle of increase that characterizes life. Nor can 
any of the substances used in brickmaking be considered 
as limited natural substances or agents by any classification 
that would not destroy the distinction by including the 
whole earth itself as a limited natural agent. The produc 
tion of brick is clearly one of the forms of production 
which those who uphold the doctrine of "diminishing 
returns in agriculture," or in its extension to the doctrine 
of "diminishing returns in the use of limited natural 
agents," would consider a f orm of production that can be 
continued indefinitely by the increased application of labor 
without diminishing returns. 

Yet we have only to think of it to see that what is called 
the law of diminishing returns in agriculture applies to 
the making of brick as fully as to the growing of beets. 
A single man engaged in making a thousand bricks would 
greatly waste labor if he were to diffuse his exertions over 
a square mile or a square acre, digging and burning the 
clay for one brick here, and for another some distance 
apart. His exertion would yield a much larger return 
if more closely concentrated in space. But there is a 
point in this concentration in space where the increase 
of exertion will begin to diminish its proportionate yield. 

 Chap.VII. RELATION OF SPACE IN PRODUCTION. 361 

In the same superficial area required for the production of 
one brick, two bricks may be produced to advantage. But 
this concentration of labor in space cannot be continued 
indefinitely without diminishing the return and finally 
bringing production to a stop. To get the clay for a 
thousand bricks without use of more surface of the earth 
than is required to get the clay for one brick, would involve, 
even if it were possible at all, an enormous loss in the 
productiveness of the labor. And so if an attempt were 
made to put a thousand men to work in making brick on 
an area in which two men might work with advantage, 
the result would be not merely that the exertion of the 
thousand men could not produce five hundred times as 
much as the exertion of two men, but that it would produce 
nothing at all. Men so crowded would prevent each other 
from working. 

Or let us take that part of the production of bricks that 
of all parts requires least space—that which consists merely 
in the storage of bricks after they are made, so as to have 
them in readiness when required. 

Two bricks must occupy twice as much cubical space as 
one brick. But if placed one on top of the other, the two 
require for resting-place no more superficial area than the 
one; while, as it requires on the part of a man of ordinary 
powers practically no more exertion to lay down or take 
up two bricks on the same surface than to lay down or 
take up one, there would be a greater gain in the produc 
tiveness of labor so applied to the storage of brick than if 
applied to the storing of brick side by side on the surface 
of the ground. But this economy in the storage of brick 
could not be continued indefinitely. Though two bricks 
may be rested one on top of the other without any more 
use of superficial area than is required for the resting of 
one brick, this is not true of a thousand bricks, nor even 
of a hundred. Much less than a hundred bricks so placed 

 362 THE PRODUCTION OF WEALTH. Book III. 

as to rest upon the superficies required for the resting of 
one brick would become so unstable as to fall with the 
slightest jar or breeze. Before ten or even half a dozen 
bricks had been rested one on top of another it would 
become evident that any further extension of the perpen 
dicular would require a further extension of base. And 
even with such extension of base as would permit of per 
pendicular solidity, a point would finally be reached 
where, even if the surface continued solid, the weight of 
the upper bricks would crush the lower bricks to powder. 
Thus it is no more possible indefinitely to store bricks on 
a given area than on a given area indefinitely to grow 
beets. 

Up to a point, moreover, which is about waist-high for 
an ordinary man, it requires less exertion to place or take 
from place the last brick than the first brick, or in other 
words, labor at this point is more productive. But this 
point of greatest productiveness reached, the productive 
ness of labor begins to decline with the further application 
of labor on the same area, until the point of no return or 
non-productiveness is reached. The reaching of this point 
of no return to the further application of labor in the 
storing of bricks on a given area may be delayed by the 
invention and use of such labor-saving devices as the 
wheelbarrow and steam-engine, but it cannot be prevented. 
There is a point in the application of labor to the storage 
of bricks on any given area, whether a square foot or a 
square mile, where the application of successive " doses of 
labor" (to use the phrase of the writers who have most 
elaborately dwelt on this assumed "law of diminishing 
productiveness in agriculture") must cease to yield pro 
portionate returns, and finally where they must cease to 
yield any return. 

Thus the law of diminishing returns which has been 
held as peculiar to agriculture is as fully shown in the 

 >.riT. RELATION OF SPACE IN PRODUCTION. 363 

mere storage of bricks as it is in the growing of crops or 
the breeding of animals. It is quite as true that all the 
bricks now needed in the three kingdoms could not be 
stored on a single square ysird, as it is that all the food 
needed in the three kingdoms could not be grown on a 
single acre. The point of greatest efficiency or maximum 
productiveness in the application of labor to land exists in 
all modes and all forms of production. It results in fact 
from nothing more nor less than the universal law or 
condition that all material existence, and consequently all 
production of wealth, requires space. 

Nor has the spacial requirement of production merely 
regard to the material object of production; it has regard 
as well to the producer—to labor itself. Man himself is 
a material being requiring space for his existence even 
when in the most passive condition, and still more space for 
the movements necessary to the continuous maintenance 
of life and the exertion of his powers in the production of 
wealth. For an hour or two men may, as in listening to 
a speech or looking at a spectacle, remain crowded together 
in a space which gives them little more than standing-room. 
But to bring a few more into such a crowd would mean 
illness, death, panic. Nor in such narrow space as men 
may for a while safely stand, could life be maintained for 
twenty-four hours, still less any mode of producing wealth 
be carried on. 

The division of labor permits the concentration of work 
ers whose particular parts in production require compara 
tively little space, and by building houses one story above 
another in our cities we economize superficial area in fur 
nishing dwelling and working places in much the same way 
as by storing bricks one upon another. Improvements in 
the manufacture of steel and in the utilization of steam and 
electricity have much increased the height to which such 
structures can be carried, and we already have in our 

 364 THE PRODUCTION OF WEALTH. Book III. 

large American cities buildings of over twenty stories in 
which production of some sort is carried on. But though 
the requirement of superficial area may thus be pressed 
back a little by making use of cubical area (and in the 
tallest buildings of New York and Chicago rent is estimated 
in cubic not in square feet) this is only possible to a slight 
degree. The intensive use of land shown in the twenty- 
story building is in fact made possible by the extensive 
use of land brought about by improvements in transpor 
tation, and every one of these monstrous buildings erected 
lessens the availability of adjoining land for similar 
purposes. 

 CHAPTER VIII. 
THE RELATION OF TIME IN PRODUCTION. 

SHOWING THAT ALL MODES OF PRODUCTION HAVE 
RELATION TO TIME. 

Difference between apprehensions of space and time, the one objec 
tive, the other subjective—Of spirits and of creation—All pro 
duction requires time—The concentration of labor in time. 

AS space is the relation of things in extension, so time 
J\. is the relation of things in sequence. 

But time, the relation of sequence, seems when we think 
of it, to be, so to speak, wider than space, the relation of 
extension. That is to say, space is a quality or affection 
of what we call matter; and while we conceive of imma 
terial things which having no extension have no relation 
in space, we cannot conceive of even immaterial things as 
having no relation in sequence. 

Our apprehension of space is through our senses, the 
direct impressions of which are uncertain and misleading, 
but which we habitually verify and correct and give some 
sort of exactness to, through other impressions of our 
senses. Our first and simplest measure of space is in the 
impression of relative distance produced through the sight, 
or in the feeling of exertion required to move ourselves or 
some other object from point to point, as by paces or 
stone's throw or bow-shot; and these give way to more 

365 

 366 THE PRODUCTION OP WEALTH. Book III. 

exact measurements, such as by lines, inches, feet, miles, 
diameters of the earth or of the earth's orbit. Deprived 
of the senses, which make us cognizant of matter, it is 
impossible to see how we could have any impression or 
idea of space. 

Our impression of time, however, is not primarily 
through our senses. Though we correct and verify and 
give some exactness to it through them, there is a purely 
subjective apprehension of time in our own mental impres 
sions or thoughts, which do not come all at once, but 
proceed or succeed one another, having to each other a 
relation of sequence. It is through this succession of 
mental impressions that we are in the first place and directly 
conscious of time. But while our direct consciousness of 
space must vary widely, our direct impressions of time are 
more variable still, since they depend upon the rapidity 
and intensity of mental impressions. We may seem to 
have lived through years in the intense activity of a vivid 
dream, and to be utterly unconscious of the passage of 
time in a sound sleep. And while we can conceive the 
impression of space to be very different on the part of a 
sloth and that of a greyhound, it may be that the brief 
day of an animalcule may seem as long to it as does a 
century of life to the larger elephant. 

But the reason of man enables him to obtain more exact 
measures of sequence from the uniformities of natural 
phenomena, such as days or years, moons or seasons, and 
from the regularity of mechanical movement as by sand 
glasses or dials, or by clocks or watches. 

Time seems indeed to be necessary to and in some degree 
coincident with all perceptions of space. But space does 
not seem necessary to time. That is to say, we seem to be 
able to imagine an immaterial being, or pure intelligence, 
not limited by or having necessary consciousness of 
relations of extension, and this is the way in which we 

 Chap.rUI. RELATION OF TIME IN PRODUCTION. 367 

usually think of unembodied spirits, such as angels or 
devils; and of disembodied spirits, such as ghosts. But 
we cannot really think thus of them with regard to relations 
of sequence. We can indeed think of them as knowing 
nothing and regarding nothing of our measures of time— 
of a day being to them as a thousand years, or a thousand 
years as a day, for that these measures are only relative 
we can see for ourselves. But we can also see that in the 
realm of spirit there is and must be the same relation of 
preceding and succeeding, of coming before and coming 
after, as in the realm of matter; and that this relation of 
sequence or time is really clearer and closer to that in us 
which we must think of as our immaterial part than is 
that of extension or space to our physical parts. 

We usually think of creation, the bringing into existence 
by a power superior to and anterior to that of man, as 
taking place at once as by the Divine fiat: " God said, Let 
there be light: and there was light." But it would seem 
on analysis, that in this way of thinking we are considering 
rather the mental action which we conceive of as in itself 
immaterial—which our experience so far as it goes, and 
our reason so far as it can reach, teach us must lie back 
of all material expression—than of the material expres 
sion itself. All speculations and theories of the origin 
of the cosmos, all religions which are their popular ex 
pression, conceive of the appearance of material phenom 
ena as in order or sequence, and consequently in time. 
Save in its childlike measurement of time by days, the 
ancient Hebrew account of the genesis of the material 
world recognizes this necessary order or sequence as 
fully as do modern scientists, for whose almost as vague 
measurements millenniums are too short. And so far as 
we can see, thought itself is in sequence and requires time, 
and its continued exertion brings about weariness. It, at 
any rate, seems to me that if we consider the essential and 

 568 THE PEODUCTION OP WEALTH. Sooklll. 

not merely the crude expression of the Hebrew scripture 
that in six days God created the heavens and the earth 
and rested on the seventh, it may embody a deep truth— 
the truth that exertion, mental as physical, requires a 
season of rest. 

But, all such speculations aside, it is certain that all 
production of wealth takes place in sequence and requires 
time. The tree must be felled before it can be hewn or 
sawed into lumber; lumber must be seasoned before it can 
be used in building or wrought into the manifold articles 
made of wood. Ore must be taken from the vein before 
it can be smelted into iron, or from that form turned into 
steel or any of the manifold articles which by subsequent 
processes are made from iron or steel. Seeds must be 
planted before they can germinate; there must be a 
considerable interval of time before the young shoots can 
show themselves above the ground; then a longer interval 
before they can grow and ripen and produce after their 
order; grain must be harvested and ground before it can 
be converted into meal or flour or changed by labor from 
that form into other forms which gratify desire, all of 
which, like fermenting and baking, require time. So, in 
exchanging, time is required even for the concurrence 
and expression of human wills which result in the agree 
ment to exchange, and still more time for the actual 
transference of things which completes the exchange. In 
short, time is a necessary element or condition in all 
exertion of labor in production. 

Now, from this necessary element or condition of all 
production, time, there result consequences similar to those 
which result from the necessary element or condition of 
all production, space. That is to say, there is a law 
governing and limiting the concentration of labor in time, 
as there is a law governing and limiting the concentration 
of labor in space. Thus there is in all forms of production 

 Chap.rill. EELATION OF TIME IN PEODTJCTION. 36fi 

a point at which the concentration of labor in time gives 
the largest proportionate result; after which the further 
concentration of labor in time tends to a diminution of 
proportionate result, and finally to prevent result. 

Thus there is a certain degree of concentration of labor 
in time (intensity of exertion), by which the individual can 
in any productive occupation accomplish on the whole the 
largest result. But if a man work harder than this, 
endeavoring to concentrate more exertion in a shorter 
time, it will be to the relative and finally to the absolute 
loss of productiveness—a principle which gives its point 
to the fable of the hare and the tortoise. 

And so, if I go to a builder and say to him, " In what 
time and at what price will you build me such and such a 
house ? " he would, after thinking, name a time, and a price 
based on it. This specification of time would be essential, 
and would involve a certain concentration of labor in time 
as the point of largest return or least cost. This I would 
soon find if, not quarreling with the price, I ask him largely 
to lessen the time. If I be a man like Beckf ord—the author 
of "Vathek," for whom Fonthill was built by relays of 
workmen, who lighted up the night with huge fires—a 
man to whom cost is nothing and time everything, I might 
get the builder somewhat to reduce the time in which he 
would agree, under bond, to build the house; but only by 
greatly increasing the price, until finally a point would 
be reached where he would not consent to build the house 
in less time no matter at what price. He would say: 
" Although I get bricks already made, and boards already 
planed, and stairs and doors, and sashes and blinds, and 
whatever else may be obtained from the mill, and no 
matter how many men I put on and how much I disregard 
economy, the building of a house requires time. Cellar 
cannot be dug and foundations raised, and walls built and 
floors laid, and roof put on, and partitioning and plastering, 

 370 THE PEODUCTION OF WEALTH. Book III. 

and plumbing, and painting and papering be done all at 
once, but only one after another, and at the cost of time 
as well as labor. The thing is impossible." 

And so, although the concentration of labor in agricul 
ture may with decreasing efficiency hasten beyond the 
normal point the maturity of vegetables or fruit or even 
of animals, yet the point of absolute non-productiveness 
of further applications of labor is soon reached, and no 
amount of human exertion applied in any way we have yet 
discovered could bring wheat from the seed to the ear, or 
the chick from the egg to the laying hen, in a week. 

The importance in political economy of this principle 
that all production of wealth requires time as well as labor 
we shall see later on; but the principle that time is a 
necessary element in all production we must take into 
account from the very first. 

 CHAPTER IX. 
COOPERATION-ITS TWO WAYS. 

SHOWING THE TWO WAYS OF COOPERATION. 

Cooperation is the union of individual powers in the attainment of 
common ends—Its ways and their analogues: (1) the combination 
of effort; (2) the separation of effort—Illustrations: of building 
houses, of joint-stock companies, etc.—Of sailing a boat—The 
principle shown in naval architecture—The Erie Canal—The bak 
ing of bread—Production requires conscious thought—The same 
principle in mental effort—What is on the one side separation is 
on the other concentration—Extent of concentration and speciali 
zation of work in modern civilization—The principle of the ma 
chine—Beginning and increase of division of labor—Adam 
Smith's three heads—A better analysis. 

/COOPERATION means joint action; the union of 
\J efforts to a common end. In recent economic writings 
the word has been so much used in a narrower sense that 
its meaning in political economy is given in the latest 
American dictionary (the Standard) as "a union of 
laborers or small capitalists for the purpose of advanta 
geously manufacturing, buying and selling goods, and 
of pursuing other modes of mutual benefit; also, loosely, 
profit-sharing." 

This is a degradation of a word that ought not to be 
acquiesced in, either in the interests of the English language 
or in the interests of political economy, and at the risk of 
being misunderstood by those who have become accus- 

371 

 372 THE PRODUCTION OP WEALTH. Book III. 

tomed to associate it with trivial schemes of profit-sharing 
or namby-pamby " reconciliations " of capital and labor, I 
shall use it as an economic term in its full meaning— 
understanding by cooperation that union of individual 
powers in the attainment of common ends which, as already 
said (Book I., Chapter V.), is the means whereby the 
enormous increase of man's power that characterizes 
civilization is secured. 

All increase in the productive power of man over that 
with which nature endows the individual comes from the 
cooperation of individuals. But there are two ways in 
which this cooperation may take place. 

1. By the combination of effort. In this way, indi 
viduals may accomplish what exceeds the full power of the 
individual. 

2. By the separation of effort. In this way, the indi 
vidual may accomplish for more than one what does not 
require the full power of the individual. 

This first way of cooperation may be styled the com 
bination of labor, though perhaps the most distinctive term 
that could be used for it would be, the multiplication of 
labor, since the second way is well known by the term 
Adam Smith adopted for it, " the division of labor." 

The one, the combination of labor, is analogous to the 
application in mechanics of that principle of the lever by 
which larger masses are moved in shorter distance or 
longer time, as in the crowbar. The other, the division of 
labor, is analogous to the application of that principle of 
the lever by which smaller masses are moved in longer 
distance or shorter time, as in the oar. 

To illustrate: The first way of cooperation, the com 
bination of labor, enables a number of men to remove a 
rock or to raise a log that would be too heavy for them 
separately. In this way men conjoin themselves, as it 
were, into one stronger man. 

 Chap. IX. COOPERATION-ITS TWO WAYS. 373 

Or to take an example so common in the early days of 
American settlement that " log-rolling " has become a term 
for legislative combination: Tom, Dick, Harry and Jim 
are building near each other their rude houses in the 
clearings. Each hews his own trees, but the logs are too 
heavy for one man to get into place. So the four unite 
their efforts, first rolling one man's logs into place and 
then another's, until the logs of all four having been placed, 
the result is the same as if each had been enabled to 
concentrate into one time the force he could exert in four 
different times. Examples of the same principle in a 
more elaborate state of society are to be found in the 
formation of joint-stock companies—the union of many 
small capitals to accomplish works such as the building of 
railroads, the construction of steamships, the erection of 
factories, etc., which require greater capitals than are 
possessed by one man. 

But while great advantages result from the ability of 
individuals, by the combination of labor, to concentrate 
themselves as it were into one larger man, there are other 
times and other things in which an individual could 
accomplish more if he could divide himself, as it were, 
into a number of smaller men. 

Thus in sailing a boat, one man of extraordinary strength 
would be equal to two men of half his strength only in 
such exertions as rowing, hoisting the heavier sails, or the 
like. In other things, two men of ordinary strength would 
be able to do far more than the one man of double strength, 
since where he would have to stop one thing to do another, 
they could do both things at once. Thus while he would 
have to anchor in order to rest, they could move on without 
stopping, one sailing the boat while the other slept. There 
was a King Alphonso of Castile, celebrated by Emerson, 
who wished that men could be concentrated nine into one. 
But the loss of available power that would thus result 

 374 THE PRODUCTION OF WEALTH. Book III. 

would soon be seen. How often now when beset by calls 
or duties which require, not so much strength as time, 
does the thought occur, " I wish I could divide myself into 
half a dozen." What the division of labor does, is to permit 
men, as it were, so to divide themselves, thus enormously 
increasing their total effectiveness. 

To illustrate from the example used before: While at 
times Tom, Dick, Harry and Jim might each wish to move 
logs, at other times they might each need to get something 
from a village distant two days' journey. To satisfy this 
need individually would thus require two days' effort on 
the part of each. But if Tom alone goes, performing the 
errands for all, and the others each do half a day's work 
for him, the result is that all get at the expense of half a 
day's effort on the part of each what otherwise would have 
required two days' effort. 

It is in this manner that the second way of cooperation, 
the separation of effort, or to continue the term adopted by 
Adam Smith and sanctioned by long usage, the division of 
labor, saves labor; that is to say, permits the accomplish 
ment of equal results with less exertion, or of larger results 
with equal exertion. But out of this primary saving of 
exertion arise other savings of exertion. 

Let me illustrate from a domain outside of political 
economy the general principle from which these gains 
proceed. Nothing, perhaps, better shows the flexibility of 
the human mind than naval architecture. Yet, from the 
rude canoe to the monster ironclad, in all the endless 
variety of form that men have given to vessels intended 
to be propelled through the water, one principle always 
obtains. We always make such vessels longer than they 
are broad. Why is it that we do so ? It is that a vessel 
moving through the water has two main points of resistance 
to overcome—(1) the displacement of the water at her bow, 
the resistance to which is shown by the ripple or wave that 

 Chap. IX.' COOPERATION-ITS TWO WATS. 375 

arises there, and (2) the replacement of the water at her 
stern, the resistance to which is shown by the suction or 
wake or " dead water" that she drags after her. In addition 
she must also overcome skin friction, shown, if one looks 
over the side of a vessel moving in smooth water, by the 
thin line of "dead water" or small ripples at her sides. 
But this, area for area, is slight as compared with the 
force required for displacement and replacement. 

When the Erie Canal was first built its locks were 
constructed to accommodate boats of a certain length. 
The enlargement of these locks so as to admit boats of 
double that length is now going on, but is not yet entirely 
completed, so that to pass through the entire canal, boats 
of the shorter length must still be used. Each of these 
boats is usually pulled by two horses or mules. But 
whoever passes over the railroads that parallel this great 
waterway will notice that for much of the distance the 
boats are now run in pairs, the bow of one boat being 
fastened to the stern of its predecessor, and that instead 
of four horses for the two boats only three are used. 
What makes this economy possible is that the displacement 
for the two boats is mainly borne by the first boat, and 
the replacement for the two is mainly borne by the second 
boat. As the additional force required to move two boats 
instead of one is thus not much more than the additional 
skin friction, three animals suffice instead of four. If the 
boats were so constructed as to fit closely together the 
economy would be still greater. 

Now, what we do in building a vessel is virtually to 
place one cross-section behind another cross-section so 
that the whole may be moved with no more resistance of 
displacement and replacement than would be required to 
move any one cross-section. The principle is the same as 
that which would prompt us if we had to carry two bodies 
through a wall, to carry the second through the hole that 

 376 THE PRODUCTION OP WEALTH. Book III. 

it would be necessary to make for the first, instead of 
making another hole. In addition to this the increase of 
length without increase of width which results virtually 
from the placing of the cross-sections behind each other, 
permits the graduation or sharpening of entrance and 
egress, thus allowing displacement and replacement to be 
effected in longer times or more gradually, and with les 
sened resistance; although the fact that resisting surface 
does not increase proportionately to increase in cubical 
capacity, enables the large vessel to outstrip the small 
vessel with the same proportionate expenditure of power, 
even if built on the same lines. 

Now these principles, or rather this principle, for at 
bottom they are one, have their analogues in our making 
of things. Just as ten thousand tons can be transported 
in one vessel at much greater speed or with much less 
expenditure of power than in ten thousand vessels of one 
ton each, so can production be facilitated and economized 
by doing together things of like kind that are to be done. 

Take for instance the baking of bread. To bake a loaf 
of bread requires the application of a certain amount of 
heat for a certain time to a certain amount of dough. To 
heat an oven to this point requires a certain expenditure 
of fuel; to maintain it for this time a certain other 
expenditure of fuel; and a certain expenditure of fuel is 
lost in the cooling of the oven after the bread is baked. 
To bake one loaf of bread in an ordinary oven thus 
requires a much greater relative expenditure of fuel than 
is required to bake at one time as many loaves as the oven 
will hold; and a larger oven will bake more loaves with a 
proportionately less expenditure of fuel than a smaller 
one, since the loss of heat that escapes from the work of 
baking is relatively less; and if one batch of bread is 
succeeded by another batch without suffering the oven to 
cool, another great relative saving is made. So that the 

 Chip. IX. COOPERATION-ITS TWO WAYS. 377 

concentration of the work of baking bread effects a great 
saving of labor in the item of fuel alone. And it is so 
with other items. 

The saving thus made by the concentration of work 
arises not only from physical laws but from mental laws 
as well. All our doing or accomplishing of things, except 
those that may be referred to instinct, require in the first 
place the exertion of conscious thought. We see this in 
the child as it learns to walk, to talk, to read and write. 
We see this as adults when we begin to do things new to 
us, as to speak a foreign tongue, to write shorthand, or 
use a typewriter or a bicycle. But as we do the same 
things again and again, the mental exertion becomes less 
and less, until we come to do them automatically and 
without consciously thinking of how we do them. 

Now the result of what regarded from the standpoint 
of the whole or industrial organism is the separation of 
effort or division of labor in the production of wealth, 
is that the individual does fewer things but does them 
oftener. It is thus from the standpoint of the individual 
the concentration of effort or of labor, and so from the 
standpoint of the things to be done it involves a similar 
concentration in place and time, thus securing the saving 
of effort or increased efficiency of exertion which, to recur 
to our illustration, comes from doing one thing behind 
another and on a large instead of on a small scale. 

Thus, when instead of each individual or each family 
endeavoring to hunt, fish, obtain vegetables, build habita 
tions and make clothing or tools, for the satisfaction of 
their own needs, some devote themselves to doing one 
thing and some to doing another of the things required 
for the satisfaction of the general needs, what is the 
separation of function from the standpoint of the all or 
industrial whole is the concentration of function in its 
units, and special trades and vocations are developed. 

 378 THE PRODUCTION OF WEALTH. Book III. 

And as the social organism grows by increase in numbers 
or the widening of the circle of exchanges, or both, this 
differentiation of function between its units tends con 
stantly to increase, augmenting the efficiency of the 
productive powers of man to a degree to which we can 
assign no limits, and of which the marvelous increase in 
productive power which so strikingly characterizes our 
modern civilization affords but a faint forecast. 

In civilized society where the division of labor has been 
carried to great lengths, we are so used to it that it is hard 
to realize how much we owe to it, and how utterly different 
our life would be without it. But as one tries to think to 
what we should be reduced without -division of labor, he 
will see how large is the part it plays in the production of 
wealth—so large, indeed, that without it man as we know 
him could not exist. Take for instance the providing of 
clothing. If each one had to make his own clothing from 
the raw material, he could get nothing better than leaves 
or skins. Even with all the advantages which the division 
of labor gives in the making of cloth, of needles, thread, 
buttons, etc., let any one unused to it set himself to the 
making of a garment. He will soon realize how hard it 
is to make the first one; how much easier and better the 
second is made than the first, the third than the second, 
and so on, until the process ceases to require thought and 
becomes automatic. When by means of the division of 
labor, the making of clothing is so far concentrated that 
the clothing for some dozens or scores of men can be made 
together, then individuals can devote themselves solely to 
the making of clothes, with greatly increased economy. 
As the concentration of clothes-making proceeds further, 
and the making of clothes for hundreds, thousands, tens 
of thousands, and even hundreds of thousands of indi 
viduals is by the development of the ready-made clothing 
industry brought together, greater and greater economies 

 Chap. IX. COOPERATION-ITS TWO WAYS. 379 

become possible. Separate individuals devote themselves 
to the making of particular garments, and then to the 
making of particular parts or to particular processes. 
Instead of one tailor cutting out a garment with a pair 
of shears and then proceeding to make it in all its parts, 
cutters who do nothing else cut out scores of garments at 
once with great knives; the operations of basting, lining, 
buttonholing, etc., are performed by different people who 
devote themselves to doing these things alone, and whose 
work is aided by powerful machines, the use of which 
becomes possible with the larger scale and greater 
continuity of employment this concentration permits. 

It is this concentration and specialization of work, with 
the division of labor, that brings about the development of 
labor-saving machinery of all kinds. The essential quality 
of the machine is its adaptation for the doing of certain 
special things. The human body considered as a machine 
is of all machines that which is best adapted for the doing 
of the greatest variety of things. But for doing only one 
thing, for the increase of quantity at the expense of variety, 
man is able to make machines which within a narrow 
range are far superior to the tools nature gives him. And 
the same principle governs the employment of forces other 
than the force he can command in his muscles. The 
utilization of winds and tides and currents and falling 
streams, of steam and of electricity, and chemical attrac 
tions and repulsions, is dependent on this concentration. 

Thus the division of labor involves and proceeds from 
the concentration of effort for the satisfaction of desires. 
It begins when there are two individuals who cooperate; 
it increases and becomes productive of greater and greater 
economies with the increase of the number who thus 
cooperate. 

Adam Smith, who begins his " Wealth of Nations" by 
considering how cooperation increases the productive 

 380 THE PRODUCTION OF WEALTH. Book III. 

powers of mankind, which he styles "the division of 
labor," refers to the economy which it produces under 
three heads: 

1. The increased dexterity of workmen. 

2. The saving of time by the greater continuity of 
employment. 

3. The economy effected by the use of machinery. 

But on a larger and fuller survey we may perhaps best 
analyze the advantages that result from the cooperation 
of labor as follows: 

A. The combination of labor permits a number of 
individuals by direct union of their powers to accomplish 
what severally would be impossible. 

B. The division of labor, with the concentration and 
cooperation it involves, permits the doing for many (or a 
larger number) of what may with a less expenditure be 
done by one (or by a smaller number): 

1. By the saving of time and effort, as in the preceding 
illustration, where one man goes on a journey which to 
accomplish severally four men would have to make. 

2. By utilizing the differing powers of individuals, as 
where those who excel in physical strength devote them 
selves to things requiring physical strength, while those 
who are inferior in physical strength do the things which 
require less physical strength, but for which they are 
otherwise just as capable, thus producing the same net 
results as would a bringing up of all to the highest level 
of physical strength; or where those who excel in other 
qualities do the things for which such qualities are best 
adapted, thus practically bringing up the level of the 
accomplishment of all to that of the highest qualities of 
each. 

3. By increasing skill, consequent upon those who do a 
larger amount of that same kind of work being able to 
acquire facility in it. 

 Chap. IX. COOPEBATION-ITS TWO WAYS. 381 

4. By accumulating knowledge. The same tendency 
which increases the incommunicable knowledge called 
skill, also tends to increase the communicable knowledge 
properly so called, which consists in a knowing of the 
relations of things to other external things, and which 
constitutes a possession of the economic body or Greater 
Leviathan, transferable by writing or similar means. 

5. By utilizing the advantages of doing things on a 
large scale instead of on a small scale, and of doing them 
successively instead of separately. 

6. By utilizing the natural forces, and by the invention 
and use of machines and of improved processes, for the 
use of which the large scale of production gives advan 
tages. 

 CHAPTER X. 
COOPERATION-ITS TWO KINDS. 

SHOWING THE TWO KINDS OP COOPERATION, AND HOW THE 
POWER OP THE ONE GREATLY EXCEEDS THAT OP THE 
OTHER. 

The kind of cooperation •which, as to method of union or how of 
initiation, results from without and may be called directed or con 
scious cooperation—Another proceeding from within which may 
be called spontaneous or unconscious cooperation—Types of the 
two kinds and their analogues—Tacking of a full-rigged ship and 
of a bird—Intelligence that suffices for the one impossible for the 
other—The savage and the ship—Unconscious cooperation re 
quired in ship-building—Conscious cooperation will not suffice for 
the work of unconscious—The fatal defect of socialism—The 
reason of this is that the power of thought is spiritual and cannot 
be fused as can physical force—Of "man power" and "mind 
power"—Illustration from the optician—Impossibility of social 
ism—Society a Leviathan greater than that of Hobbes. 

WE have seen that there are two ways or modes in 
which cooperation increases productive power. If 
we ask how cooperation is itself brought about, we see 
that there is in this also a distinction, and that cooperation 
is of two essentially different kinds. The line of distinc 
tion as to what I have called the ways of cooperation, and 
have in the last chapter considered, is as to the method of 
action or how of accomplishment; the line of distinction 
as to what I shall call the kinds of cooperation, and am 

382 

 Cliap.X. CO5PEKATION-ITS TWO KINDS. 383 

about in this chapter to consider, is as to the method of 
union or how of initiative. 

There is one kind of cooperation, proceeding as it were 
from without, which results from the conscious direction 
of a controlling will to a definite end. This we may call 
directed or conscious cooperation. There is another kind 
of cooperation, proceeding as it were from within, which 
results from a correlation in the actions of independent 
wills, each seeking but its own immediate purpose, and 
careless, if not indeed ignorant, of the general result. This 
we may call spontaneous or unconscious cooperation. 

The movement of a great army is a good type of 
cooperation of one kind. Here the actions of many 
individuals are subordinated to and directed by one 
conscious will, they becoming, as it were, its body and 
executing its thought. The providing of a great city 
with all the manifold things which are constantly needed 
by its inhabitants is a good type of cooperation of the 
other kind. This kind of cooperation is far wider, far 
finer, far more strongly and delicately organized, than the 
kind of cooperation involved in the movements of an 
army, yet it is brought about not by subordination to the 
direction of one conscious will, which knows the general 
result at which it aims; but by the correlation of actions 
originating in many independent wills, each aiming at its 
own small purpose without care for or thought of the 
general result. 

The one kind of cooperation seems to have its analogue 
in those related movements of our body which we are able 
consciously to direct. The other kind of cooperation 
seems to have its analogue in the correlation of the 
innumerable movements, of which we are unconscious, 
that maintain the bodily frame—motions which in their 
complexity, delicacy and precision far transcend our 
powers of conscious direction, yet by whose perfect 

 384= THE PRODUCTION OF WEALTH. Book III. 

adjustment to each other and to the purpose of the whole 
that cooperation of part and function that makes up the 
human body and keeps it in life and vigor is brought 
about and supported. 

A beautiful instance of cooperation of the first kind is 
furnished by the tacking of a square-rigged ship under 
full sail. The noble vessel, bending gracefully to the 
breeze, under her cloud of canvas, comes driving along, 
cleaving white furrows at her bow and leaving a yeasty 
wake at her stern. Suddenly her jibs fly free and her 
spanker flattens, as she curves towards the wind; her 
foreyards round in and their sails begin to shake, and at 
length, as what were their weather braces are hauled 
taut, to fill on the other side. The after sails that at first 
held the wind as before, begin in their turn to spill; then 
their yards are shifted, and they too take the wind on a 
different side; and with every sheet and tack in its new 
place the vessel gathering again her deadened headway, 
begins to drive the foam from her bow as she bends on the 
other side to cut her way in a new direction. So har 
monious are her movements, so seemingly instinct with 
life, that the savage who sees for the first time such a 
vessel beating along the coast might take her for a great 
bird, changing its direction with the movement of its 
wings as do sea-gull and albatross. 

And between ship and bird there are certain resem 
blances. Both are structures in which various parts are 
combined into a related whole and distinct motions are 
con-elated in harmonious action. And in both movement 
is produced by the varying angles at which flat surfaces 
are by a mechanism of joints and ligaments exposed to 
the impact of air. In a bird, however, the parts in their 
motions obey instinctively and unconsciously the prompt 
ings of the conscious will. But in the ship the motions of 
the parts are produced by the distinct action of a number 

 Chap. X. COOPERATION-ITS TWO KINDS. 385 

of conscious wills, ranging from one or two dozen in a 
merchant vessel to several hundred in an old-fashioned 
ship of war. Their cooperation is produced, not in 
stinctively and unconsciously, but by intelligent obedience 
to the intelligent orders of one directing will, which 
prescribes to every man his place and function, directing 
when, how, and by whom, each motion shall be made. 
The bird veers, because when it wills to veer, nerve and 
tendon directly respond with the necessary motions. The 
ship tacks because the separate wills that manage her 
rudder and sails consciously obey the successive commands 
which prescribe each of the necessary motions from the 
first order, " Full for stays!» to the last, " Belay all!" A 
series of intelligent directions, consciously obeyed by those 
to whom they are addressed, bring about and correlate the 
movements of the parts. 

Nor could the maneuvers of a ship be carried on without 
such intelligent direction. Any attempt to substitute 
independent action, no matter how willing, for responsive 
obedience to intelligent direction would be certain ere 
long to result as in the traditional coasting schooner, 
•manned by two—captain and mate—where the captain 
who was steering, irritated by some gratuitous advice of 
the mate who was tending jib-sheets, yelled out to him, 
" You run your end of this schooner and I'll run mine!" 
Whereupon there was a rattle of chain at the bow, and the 
mate yelled back, " Captain, I've anchored my end of this 
schooner; you can run your end where you choose!" 

Now, much of the cooperation of man in producing 
social effects is of the nature of that by which a ship is 
sailed. It involves the delegation to individuals of the 
power of arranging and directing what others shall do, 
thus securing for the general action the advantages of 
one managing and correlating intelligence. But while 
cooperation of this kind is indispensable to producing 

 386 THE PBODUCTION OF WEALTH. Book III. 

certain results by conjoined action, it is helpless or all but 
helpless to bring about certain other results involving a 
longer series and more complicated and delicate actions 
and adjustments. 

To continue our illustration: The bird structurally is 
a machine as the ship is a machine, which the conscious 
will of the bird, controlling certain voluntary movements, 
causes to rise or fall, to sweep in this direction or in that, 
to be carried with the gale or to tack in its teeth, in short 
to execute all the movements, sometimes swift and some 
times slow, but nearly always graceful, of which this bird 
machine is capable. But the conscious will that controls 
the voluntary motions of the bird; the intelligence that is 
the captain of this aerial craft, will not account for the 
machine itself; for its consummate arrangements and 
adjustments and adaptions. These not merely infinitely 
transcend the intelligence of the bird, but of the highest 
human intelligence. The union of lightness with strength, 
of rigidity with flexibility, of grace with power; the appro 
priateness of material, the connection and relation of parts, 
the economies of space and energy and function, the 
applications of what are to us the most complex and 
recondite of physical laws, make the bird as a machine, as 
far superior to the best and highest machines of man's 
construction, as the paintings of the great master are to 
the rude slate-drawings of the prattling child. 

The bird is not a construction as man's machines are 
constructions. It was not built, but grew. Its first 
tangible form, as far as we can trace it, was a limy envelop 
containing a substance called the yolk, swimming in a 
sticky fluid, the white. Under certain conditions and 
without external influence except that of gentle and 
continued heat, the molecules of the contained substance 
began, by some influence from within, and seemingly, of 
themselves, to range themselves into cells, and cells to 

 Chap. X. COOPERATION—ITS TWO KINDS. 387 

form into tissue and bone, and turning in related order 
into heart and lungs, backbone and head, stomach and 
bowels, brain and nerve, wings and feet, skin and feathers, 
until at length a tiny living thing pecked its way out, 
leaving an empty shell, and with a little eating and sleeping, 
a little hardening of gristle and lengthening of feathers, 
the " it" of it, the new captain of the new air-ship, began 
to try rudder and sails and paddles, until having " learned 
the ropes," and got accustomed to the measurement of 
distance and the " feel" of motion, it started off boldly to 
skim and to soar, to get food and digest it, to live its life 
and propagate its kind. 

The veriest savages must at times ponder over the 
mystery of the egg, as we civilized men at times ponder 
over the mystery of common things—for to them as to us 
it would be an insoluble mystery. But it is the ship, 
not the bird, that would most excite their wonder and 
admiration, for the savage would see in the ship as soon 
as he came close to it, not a thing that grew, but a thing 
that was made—a higher expression of the same power 
which he himself exercises in his own rude constructions. 
He would see in it, when he came to look closely, but a 
vastly greater and better canoe, and would wonder and 
admire as he who has begun to paint stands in wonder and 
admiration before the picture of a master, which one who 
knew nothing of the difficulties of the art would pass with 
little notice. As the savage would understand the kind of 
cooperation called into play in the managing of a vessel, 
so would he attribute the building of the vessel to coopera 
tion of the same kind. Since a larger canoe than one man 
can build may be built by the same man if he can unite 
the exertions of others in cutting, rolling, hewing and 
hollowing a great log, so would it seem to our savage that 
it was in this way that the ship of civilization was built. 
And the admiration which the ship would excite in him 

 388 THE PRODUCTION OF WEALTH. Book III. 

would be an admiration of the men who sailed it, whom 
he would naturally take to be the men who built it, or at 
least to be men who could build it. The superiority of 
the ship to the rude canoes with which he was familiar he 
would attribute to superiority of their personal qualities 
—their greater knowledge and skill and power. They 
would indeed seem to him at first as very gods. 

Yet the savage would be wrong. The superiority of the 
ship does not indicate the superiority of individual men. 
If driven ashore with the loss of their ship and all its 
contents, these men would be more helpless than so many 
of his own people, and would find it more difficult to make 
even a canoe. Even if they had saved tools and stores, it 
would be only after long toil that they could succeed in 
building some rude, small craft unfitted for a long voyage 
and rough weather, and not in any respect comparable with 
their ship. For a modern ship is rather a growth than a 
direct construction in that as between the kind of coopera 
tion required for its production and that which suffices for 
that of a canoe, there is a difference which suggests some 
thing not altogether unlike the difference between a work 
of nature and a work of man. 

The cooperation required in the making of a large 
canoe or in the sailing of a ship is exceedingly simple 
as compared to that involved in the construction and 
equipment of a well-found, first-class ship. The actual 
putting together, according to the plans of the naval 
architect, of the separate parts and materials which com 
pose such a ship, would require, after they had been 
assembled, some directed cooperation. But if cooperation 
of this kind could suffice for even putting the parts 
together after they had been made and assembled, how 
could it suffice for making those various parts from the 
forms in which nature offers their material, and assembling 
them in the place where they were to be put together? 

 . COOPERATION-ITS TWO KINDS. 389 

Consider the timbers, the planks, the spars; the iron and 
steel of various kinds and forms; the copper, the brass, 
the bolts, screws, spikes, chains; the ropes, of steel and 
hemp and cotton; the canvas of various textures; the 
blocks and winches and windlasses; the pumps, the boats, 
the sextants, the chronometers, the spy-glasses and patent 
logs, the barometers and thermometers, charts, nautical 
almanacs, rockets and colored lights; food, clothing, tools, 
medicines and furniture, and all the various things, which 
it would be tiresome fully to specify, that go to the con 
struction and furnishing of a first-class sailing-ship of 
modern type, to say nothing of the still greater complexity 
of the first-class steamer. Directed cooperation never did, 
and I do not think in the nature of things it ever could, 
make and assemble such a variety of products, involving 
as many of them do the use of costly machinery and 
consummate skill, and the existence of subsidiary products 
and processes. 

When a ship-builder receives an order for such a ship 
as this he does not send men into the forest, some to cut 
oak, others to cut yellow pine, others to cut white pine, 
others to cut hickory and others still to cut ash and lig- 
num-vitse; he does not direct some to mine iron ore, and 
others copper ore, and others lead ore, and others still to 
dig the coal with which these ores are to be smelted, and 
the fire-clay for the smelting-vessels; some to plant hemp, 
and some to plant cotton, and others to breed silkworms; 
some to make glass, others to kill beasts for their hides 
and tallow, some to get pitch and rosin, oil, paint, paper, 
felt and mercury. Nor does he attempt to direct the 
manifold operations by which these raw materials are to 
be brought into the required forms and combinations, and 
assembled in the place where the ship is to be built. Such 
a task would transcend the wisdom and power of a Solomon. 
What he does is to avail himself of the resources of a high 

 390 THE PRODUCTION OP WEALTH. Book III. 

civilization, for without that he would be helpless, and to 
make use for his purpose of the unconscious cooperation 
by which without his direction, or any general direction, 
the efforts of many men, working in many different places 
and in occupations which cover almost the whole field of 
a minutely diversified industry, each animated solely by 
the effort to obtain the satisfaction of his personal desires 
in what to him is the easiest way, have brought together 
the materials and productions needed for the putting 
together of such a ship. 

He buys of various dealers in such things, knees, beams, 
planking, spars, sails, cables, ropes, boats, lanterns, flags, 
nautical instruments, pumps, stoves; and he probably 
contracts for various parts of the work of putting together 
the hull, such as calking, sheathing, painting, etc.; of 
making the sails and rigging the spars. And each of 
these separate branches of collation and production will 
be found on inquiry to reach out and ramify into other 
branches having necessary relations with still other 
branches. So far from any lifetime sufficing to acquire, 
or any single brain being able to hold, the varied know 
ledge that goes to the building and equipping of a mod 
ern sailing-ship, already becoming antiquated by the still 
more complex steamer, I doubt if the best-informed man 
on such subjects, even though he took a twelvemonth to 
study up, could give even the names of the various sepa 
rate divisions of labor involved. 

A modern ship, like a modern railway, is a product 
of modern civilization; of that correlation of individual 
efforts in which what we call civilization essentially con 
sists; of that unconscious cooperation which does not 
come by personal direction, as it were from without, but 
grows, as it were from within, by the relation of the 
efforts of individuals, each seeking the satisfaction of 
individual desires. A mere master of men, though he 

 Chap. X. COOPERATION-ITS TWO KINDS. 391 

might command the services of millions, could not make 
such a ship unless in a civilization prepared for it. A 
Pharaoh that built pyramids, a Genghis Khan who raised 
mounds of skulls, an Alexander, a Caesar, or even a 
Henry VIII. could not do it. 

The kind of cooperation which I have illustrated by 
the tacking of a ship is a very simple matter. It could be 
readily taught, the difficulties of language aside, to Malays, 
or Somalis, or Hindus, or Chinamen, or to the men who 
manned the Roman galleys or the viking ships. But that 
kind of cooperation which is involved in the making of 
such a ship is a much deeper and more complex matter. 
It is beyond the power of conscious direction to order or 
bring about. It can no more be advanced or improved 
by any exertion of the power of directing the conscious 
actions of men than the conscious will of the individual 
can add a cubit to his stature. The only thing that 
conscious direction can do to aid it is to let it alone; to 
give it freedom to grow, leaving men free to seek the 
gratification of their own desires in the ways that to them 
seem best. To attempt to apply that kind of cooperation 
which requires direction from without to the work proper 
for that kind of cooperation which requires direction from 
within, is like asking the carpenter who can build a 
chicken-house to build a chicken also. 

This is the fatal defect of all forms of socialism—the 
reason of the fact, which all observation shows, that any 
attempt to carry conscious regulation and direction beyond 
the narrow sphere of social life in which it is necessary, 
inevitably works injury, hindering even what it is intended 
to help. 

And the rationale of this great fact may, I think, at least 
in some measure, be perceived when we consider that the 
originating element in all production is thought or intel 
ligence, the spiritual not the material. This spiritual 

 392 THE PRODUCTION OF WEALTH. Book III. 

element, this intelligence or thought power as it appears 
in man, cannot be combined or fused as can material force. 

Two men may pull or push twice as much as one man, 
and the physical force of one hundred thousand men 
properly brought to bear will one hundred thousand times 
exceed the physical force of a single man. But intelligence 
cannot be thus aggregated. Two men cannot see twice as 
far as one man, nor a hundred thousand determine one 
hundred thousand times as well. If it be true that " In a 
multitude of counselors there is wisdom," it is only in the 
sense that in a large comparison of views and opinions 
eccentricities and aberrations are likely to be eliminated. 
But in this elimination the qualities necessary for superior 
judgment and prompt direction are also lost. No one ever 
said, " In a multitude of generals there is victory." On 
the contrary the adage is, " One poor general is better than 
two good ones." 

In the first kind of cooperation, as for example, when 
ten men pull on the same rope in the same way in obedience 
to the direction of one man, there is a utilization of the 
physical force of ten at the direction of the mental force 
of one. But there is at the same time a loss or rather 
non-utilization of the mental force of ten. The result can 
be no greater than if the ten men who are pulling were for 
the time utterly devoid of intelligence—mere automata. 
And we can readily conceive of such extensions in the 
applications of machinery to the utilization of natural 
physical forces that the captain of a ship might by touching 
an electrical keyboard, so give responsive motion to rudder, 
sheets and braces, as to tack ship without a crew, which 
would be a long approach in the mechanism of a ship to 
the mechanism of a bird. 

But in the kind of cooperation that I have called 
spontaneous, where the direction comes from within, what 
is utilized in production is not merely the sum of the 

 Chap. X. COOPEKATION-ITS TWO KINDS. 393 

physical power of the units, but the sum of their intelli 
gence. If I may be permitted to use for a moment the 
term "man power" and symbol M as expressing the 
physical force which one individual can exert, and the 
term "mind power" and symbol M' as suggesting quanti 
tatively the individual power of intelligence or thought, 
the best possible result of the exertion of one hundred 
thousand men in cooperation of the first kind would be 
100,000 man power x 1 mind power or 100,000 MM'; 
while of the same number of men employed in the second 
kind of cooperation it would be 100,000 man power x 
100,000 mind power or 10,000,000,000 MM'. 

The illustration is clumsy, but it may serve to suggest 
the enormous difference which we see developed in the 
two kinds of cooperation, and which as it seems to me 
arises at least in important part from the fact that while 
in the second kind of cooperation the sum of intelligence 
utilized is that of the whole of the cooperating units, in 
the first kind of cooperation it is only that of a very small 
part. 

In other words it is only in independent action that the 
full powers of the man may be utilized. The subordination 
of one human will to another human will, while it may in 
certain ways secure unity of action, must always where 
intelligence is needed, involve loss of productive power. 
This we see exemplified in slavery and where governments 
have undertaken (as is the tendency of all government) 
unduly to limit the freedom of the individual. But where 
unity of effort, or rather combination of effort, can be 
secured while leaving full freedom to the individual, the 
whole of productive power may still be utilized and the 
result be immeasurably greater. 

The hardening of muscular tissue, which comes to us as 
the years of our lives go by, has deprived the delicate 
mechanism which once adequately moved the lenses of my 

 394 THE PRODUCTION OF WEALTH. Book III. 

eyes of what opticians call their power of accommodation, 
so that to my natural sight printed pages that I once read 
comfortably are now indistinguishably confused. By 
piercing a small pinhole in a piece of cardboard and 
holding it close to one of my eyes, while I shut the other, 
I can cut off from my vision so many of the rays of light 
that the few which reach my retina do not interfere with 
each other, and I can thus see the same printed page for 
a few moments distinctly. But this is by the sacrifice of 
otherwise available rays of light. Now by means of a 
properly ground pair of spectacles which deflect so as to 
utilize for the eyes the interfering rays of light I can use 
them all. 

To attempt in social affairs to secure by cooperation of 
the first kind that alignment of effort which by natural 
law belongs to cooperation of the second kind, is like 
attempting to secure by cardboard and pinholes the 
definiteness of vision that can be far better secured by 
spectacles. Such is the attempt of what is properly called 
socialism. 

Imagine an aggregation of men in which it was attempted 
to secure by the external direction involved in socialistic 
theories that division of labor which grows up naturally 
in society where men are left free. For the intelligent 
direction thus required an individual man or individual 
men must be selected, for even if there be angels and 
archangels in the world that is invisible to us, they are 
not at our command. 

Taking no note of the difficulties which universal ex 
perience shows always to attend the choice of the de 
positaries of power, and ignoring the inevitable tendency 
to tyranny and oppression, of command over the actions 
of others, simply consider, even if the very wisest and best 
of men were selected for such purposes, the task that would 
be put upon them in the ordering of the when, where, how 

 Chap.X. COOPERATION-ITS TWO KINDS. 395 

and by whom that would be involved in the intelligent 
direction and supervision of the almost infinitely complex 
and constantly changing relations and adjustments in 
volved in such division of labor as goes on in a civilized 
community. The task transcends the power of human 
intelligence at its very highest. It is evidently as much 
beyond the ability of conscious direction as the correlation 
of the processes that maintain the human body in health 
and vigor is beyond it. 

Aristotle, Julius Cassar, Shakespeare, Newton, may be 
fairly taken as examples of high-water mark in the powers 
of the human mind. Could any of them, had the control 
of the processes that maintain the individual organism 
been relegated to his conscious intelligence, have kept life 
in his body a single minute? Newton, so the tradition 
runs, stopped his tobacco-bowl with his lady's finger. 
What would have become of Newton's heart if the ordering 
of its beats had been devolved on Newton's mind ? 

This mind of ours, this conscious intelligence that 
perceives, compares, judges and wills, wondrous and far- 
reaching as are its powers, is like the eye that may look 
to far-off suns and milky ways, but cannot see its own 
mechanism. This body of ours in which our mind is 
cased, this infinitely complex and delicate machine through 
which that which feels and thinks becomes conscious of 
the external world, and its will is transmuted into motion, 
exists only by virtue of unconscious intelligence which 
works while conscious intelligence rests; which is on guard 
while it sleeps; which wills without its concurrence and 
plans without its contriving, of which it has almost no 
direct knowledge and over which it has almost no direct 
control. 

And so it is the spontaneous, unconscious cooperation 
of individuals which, going on in the industrial body, 
the Greater Leviathan than that of Hobbes, conjoins 

 396 THE PRODUCTION OF WEALTH. Book III. 

individual efforts in the production of wealth, to the 
enormous increase in productive power, and distributes 
the product among the units of which it is composed. It 
is the nature and laws of such cooperation that it is the 
primary province of political economy to ascertain. 

 CHAPTER XL 
THE OFFICE OF EXCHANGE IN PRODUCTION. 

SHOWING THAT IN MAN THE LACK OF INSTINCT IS SUPPLIED 
BY THE HIGHER QUALITY OF REASON, WHICH LEADS TO 
EXCHANGE. 

The coSperation of ants and bees is from within and not from with 
out ; from instinct and not from direction—Man has little instinct; 
but the want supplied by reason—Keason shows itself in exchange 

—This suffices for the unconscious cooperation of the economic body 
or Greater Leviathan—Of the three modes of production, "ex 
changing " is the highest—Mistake of writers on political economy 

—The motive of exchange. 

IT is a curious fact, having in it suggestions that it 
would lead beyond our purpose to follow, that the living 
things that come nearest to the social organization of man 
are not those to whom we are structurally most allied, but 
those belonging to a widely separated genus, that of insects. 
The cooperation by which ants and bees build houses and 
construct public works, procure and store food, make 
provision for future needs, rear their young, meet the 
assaults of enemies and confront general dangers, gives 
to their social life a striking superficial likeness to that of 
human societies, and brings them in this apparently far 
closer to us than are animals to whom we are structurally 
more akin. 

397 

 398 THE PRODUCTION OF WEALTH. Book III. 

The cooperation by which the social life of such insects 
is carried on seems at first glance to be of the kind I have 
called directed cooperation, in which correlation in the 
efforts of individual units is brought about, as it were 
from without, by such subordination of some of the units 
to other units as secures conscious obedience in response 
to intelligent direction. The republican monarchy of the 
bees has its queen, its drones, its workers; the ants range 
themselves for march, for battle, or for work, in militant 
or industrial armies. 

Yet closer observation shows that this is more in seeming 
than in fact, and that the great agency in the correlation 
of effort which the insects show is something which 
impresses the units not from without but from within 
their own nature, the force or power or impulse that we 
call instinct, which operating directly on the individual 
unit, brings each, as it were, of its own volition, to its 
proper place and function with relation to the whole, in 
somethingof the same way in which the vital or germinative 
force operates within the egg-shell to bring the separate 
cells into relations that result in the living bird. 

Now of this power or impulse that we call instinct 
conscious man has little. While the involuntary and 
unconscious functions of his bodily frame may be ordered 
and maintained by it or something akin to it, and while 
it may in the same way furnish the sub-stratum of what 
we may call his mental frame, yet instinct, so strong in 
the orders of life below him, seems with man to fade and 
withdraw as the higher power of reason assumes control. 
What of instinct he retains would not suffice even for such 
social constructions as those of ants or bees or beavers. 
But reason, which in him has superseded instinct, brings 
a new and seemingly illimitable power of uniting and 
correlating individual efforts, by enabling and disposing 
him to exchange with his fellows. The act of exchange is 

 Chap. XI. OFFICE OF EXCHANGE IN PRODUCTION. 399 

that of deliberately parting with one thing for the purpose 
and as a means of getting another thing. It is an act 
that involves foresight, calculation, judgment—qualities 
in which reason differs from instinct. 

All living things that we know of cooperate in some 
kind and to some degree. So far as we can see, nothing 
that lives can live in and for itself alone. But man is the 
only one who cooperates by exchanging, and he may be 
distinguished from all the numberless tribes that with him 
tenant the earth as the exchanging animal. Of them all 
he is the only one who seeks to obtain one thing by giving 
another. A dog may prefer a big bone to a little bone, 
and where it cannot hold on to both, may keep one in 
preference to the other. But no dog or other animal will 
deliberately and voluntarily give up one desirable thing 
for another desirable thing. When between two desired 
things the question "Which?" is put to it, its answer is 
always the answer of the child, " Both," until it is forced 
to leave the one in order to hold the other. No other 
animal uses bait to attract its prey; no other animal plants 
edible seeds that it may gather the produce. No other 
animal gives another what it itself would like to have in 
order to receive in return what it likes better. But such 
acts come naturally to man with his maturity, and are of 
his distinguishing principle. 

Exchange is the great agency by which what I have 
called the spontaneous or unconscious cooperation of men 
in the production of wealth is brought about, and economic 
units are welded into that social organism which is the 
Greater Leviathan. To this economic body, this Greater 
Leviathan, into which it builds the economic units, it is 
what the nerves or perhaps the ganglions are to the 
individual body. Or, to make use of another illustration, 
it is to our material desires and powers of satisfying them 
what the switchboard of a telegraph or telephone or other 

 400 THE PRODUCTION OP WEALTH. Book III. 

electric system is to that system, a means by which exer 
tion of one kind in one place may be transmuted into sat 
isfaction of another kind in another place, and thus the 
efforts of individual units be conjoined and correlated so 
as to yield satisfactions in most useful place and form, and 
to an amount enormously exceeding what otherwise would 
be possible. 

Of the three modes of production which I have distin 
guished as adapting, growing and exchanging, the last is 
that by which alone the higher applications of the modes 
of adapting and growing are made available. Were it not 
for exchange the cooperation of individuals in the produc 
tion of wealth could go no further than it might be carried 
by the natural instincts that operate in the formation of 
the family, or by that kind of cooperation in which indi 
vidual wills are made subordinate to another individual 
will. These it is evident would not suffice for the lowest 
stage of civilization. For not only does slavery itself, 
which requires that the slaves shall be fed and clothed, 
involve some sort of exchange, though a very inadequate 
one, but the labor of slaves must be supplemented by 
exchange to permit the slave-owner to enjoy any more 
than the rudest satisfactions. It was only by exchanging 
the produce of their labor that the American slave-owner 
could provide himself with more than his slaves themselves 
could obtain from his own plantation, and a slave-based 
society in which there was no exchanging could hardly 
carry the arts further than the construction of the rudest 
huts and tools. When we speak of pyramids and canals 
being constructed by enforced labor we are forgetting the 
great amount of exchanging which was involved in such 
work. 

Many if not most of the writers on political economy 
have treated exchange as a part of distribution. On the 
contrary, it properly belongs to production. It is by 

 '. XI. OFFICE OF EXCHANGE IN PRODUCTION. 401 

exchange and through exchange that man obtains and is 
able to exert the power of cooperation which with the 
advance of civilization so enormously increases his ability 
to produce wealth. 

The motive of exchange is the primary postulate of 
political economy, the universal fact that men seek to 
gratify their desires with the least exertion. This leads 
men by a universal impulse to seek to gratify their desires 
by exchange wherever they can thus obtain the gratification 
of desire with less exertion than in any other way; and 
by virtue of the natural laws, both physical and mental, 
explained in Chapter II. of this Book, this is from the very 
origin of human society, and increasingly with its advance, 
the easiest way of procuring the satisfaction of the greatest 
number of desires. 

And in addition to the laws already explained there is 
another law or condition of nature related to man which 
is taken advantage of to the enormous increase of pro 
ductive power in exchange.1 

1 A note, "Leave six pages," writtenin pencil, appears on the last page of this 
chapter In the MS. The Indications are that it was intended not for this, lint for 
the next succeeding chapter, which was left unfinished.—H. O., JB. 

 CHAPTER XII. 
OFFICE OF COMPETITION IN PRODUCTION. 

SHOWING THAT COMPETITION BRINGS TRADE, AND CONSE 
QUENTLY SERVICE, TO ITS JUST LEVEL. 

["Competition is the life of trade" an old and true adage—The as 
sumption that it is an evil springs from two causes—one bad, the 
other good—The bad cause at the root of protectionism—Law of 
competition a natural law—Competition necessary to civilization.]1 

r I THAT " competition is the life of trade," is an old and 
_L true adage. But in current thought and current 
literature there is so much assumption that competition is 
an evil that it is worth while to examine at some length 
its cause and office in the production of wealth. 

Much of this assumption that competition is an evil and 
a wrong that should be restricted and indeed abolished in 
the higher interests of society springs from the desire of 
men unduly to profit at the expense of their fellows by 
distorting natural laws of the distribution of wealth. This 
is true of the form of socialism which was known in the 
time of Adam Smith as the mercantile system or theory, 
and which still exists with but little diminished strength 
under the general name of protectionism. Much of it 
again has a nobler origin, coming from a righteous in- 

1 No summary of this chapter appears in the MS. The summary here presented 
and inclosed by brackets is supplied for the reader's convenience.—H. G., JB. 

402 

 Chap. XII. OFFICE OF COMPETITION IN PRODUCTION. 4O3 

dignation with the monstrous inequalities in the existing 
distribution of wealth throughout the civilized world, 
coupled with a mistaken assumption that these inequalities 
are due to competition. 

I do not propose here to treat either of protectionism or 
socialism proper, my purpose being not that of controversy 
or refutation, but merely that of discovering and explaining 
the natural laws with which the science of political economy 
is concerned. But the law of competition is one of these 
natural laws, without an understanding of which we 
cannot fully understand the economy or system by which 
that Intelligence to which we must refer the origin and 
existence of the world has provided that the advance of 
mankind in civilization should be an advance towards the 
general enjoyment of literally boundless wealth. 

The competition of men with their fellows in the pro 
duction of wealth has its origin in the impulse to satisfy 
desires with the least expenditure of exertion. 

Competition is indeed the life of trade, in a deeper sense 
than that it is a mere facilitator of trade. It is the life of 
trade in the sense that its spirit or impulse is the spirit or 
impulse of trade or exchange. 

 CHAPTER XIII. 
OF DEMAND AND SUPPLY IN PRODUCTION.1 

1 No more than the title of this chapter was written. The reader will find the 
Bnbject of demand and supply in production treated in " Progress and Poverty " 
and in " Social Problems."—H. G., JB. 

404 

 CHAPTER XIV. 

ORDER OF THE THREE FACTORS OF PRODUC 
TION. 

SHOWING THE AGREEMENT OP ALL ECONOMISTS AS TO THE 
NAMES AND ORDER OP THE FACTORS OP PRODUCTION. 

Land and labor necessary elements in production—Union of a com 
posite element, capital—Reason for dwelling on this agreement as 
to order. 

LL economists give the factors of production as 
three—land, labor and capital. And without ex 
ception that I know of, they name them in this order. 
This, indeed, is the natural order; the order of their 
appearance. The world, so far as political economy takes 
cognizance of it, began with land. Reason tells us that 
land, with all its powers and potentialities, including even 
all vegetable and animal life, existed before man was, and 
must have existed before he could be. But whether still 
"formless and void," or already instinct with the lower 
forms of life, so long as there was in the world only the 
economic element land, production in the economic sense 
could not be, and there was no wealth. When man 
appeared, and the economic element labor was united to 
the economic element land, production began, and its 
product, wealth, resulted. At length (for in the myths 
and poems in which mankind have expressed all the 
wisest could tell of our far beginnings they have always 

405 

 406 THE PRODUCTION OF WEALTH. Book III. 

loved to picture a golden age devoid of care), or more 
probably almost immediately (for the very first of our 
race must have possessed that reason which is the 
distinguishing quality of man), the greater power that 
could be gained by using wealth in aid of labor was seen, 
and a third factor of production, capital, appeared. 

But between this third factor and the two factors which 
precede it, a difference in nature and importance is to be 
noted. Land and labor are original and necessary factors. 
They cannot be resolved into each other, and they are 
indispensable to production, being necessary to production 
in all its modes. But capital is not an original factor. 
It is a compound or derivative factor, resulting from the 
union of the two original factors, land and labor, and 
being resolvable on final analysis into a form of the active 
factor, labor. It is not indispensable to production, 
being necessary, as before explained, not in aZZ modes of 
production, but only in some modes. Nevertheless, »the 
part that it bears in production is so separable, and the 
convenience that is served by distinguishing it from 
the original factors is so great, that it has been properly 
recognized by the earliest and by all subsequent writers 
in political economy as a separate factor; and the three 
elements by whose union wealth is produced in the civilized 
state are given by the names and in the order of (1) land, 
(2) labor, and (3) capital. 

It may seem to the reader superfluous that I should lay 
such stress upon the order of the three factors of production, 
for it is not more self-evident that the mother must precede 
the child than that land must precede labor, and that labor 
must precede capital. But I dwell upon this question of 
order because it is the key to confusions which have 
brought the teaching of the science of political economy 
to absurdity and stultification. Such of these writers as 
have condescended to make any definitions of the terms 

 Chap.Xir. THREE FACTORS OF PRODUCTION. 407 

they use have indeed in these definitions recognized the 
natural order of the three factors of production. But 
whoever will follow them will see that without seeming 
conscious of it themselves they soon slip into a reversal of 
this order, and, literally making the last first, proceed to 
assume that capital is the prime factor in production. So 
cialism, which gives such undue prominence to capital and 
yet is so completely at sea as to the real nature and func 
tions of capital has the root of its absurdities in the teach 
ings of the scholastic economists. 

But the results of this confusion as to the nature and 
order of the factors of production will be more fully treated 
when we come to consider the distribution of wealth. All 
that it is necessary to do here is to point out the true order 
of the factors of production and to make clear what they 
are. Let us proceed to consider them one by one. 

 CHAPTER XV. 
THE FIRST FACTOR OF PRODUCTION-LAND. 

SHOWING THAT LAND IS THE NATURAL OR PASSIVE FACTOR 
IN ALL PRODUCTION. 

The term "land"— "Landowners"—Labor the only active factor. 

MAN produces by drawing from nature. Land, in 
political economy, is the term for that from which 
he draws—for that which must exist before he himself can 
exist. In other words, the term land in political economy 
means the natural or passive element in production, and 
includes the whole external world accessible to man, with 
all its powers, qualities and products, except perhaps those 
portions of it which are for the time included in man's 
body or in his products, and which therefore temporarily 
belong to the categories, man and wealth, passing again 
in their re-absorption by nature into the category, land. 

The original and ordinary meaning of the word, land, 
is that of dry superficies of the earth as distinguished from 
water or air. But man, as distinguished from the denizens 
of the water or the air, is primarily a land animal The 
dry surface of the earth is his habitat, from which alone 
he can venture upon or make use of any other element, or 
obtain access to any other material thing or potency. 
Thus, as a law term, land means not merely the dry 
superficies of the earth, but all that is above and all that 

408 

 Chap. XV. FIRST FACTOR OF PRODUCTION—LAND. 409 

may be below it, from zenith to nadir. For the same 
reason the word land receives like extension of meaning 
when used as a term of political economy, and comprises 
all having material form that man has received or can 
receive from nature, that is to say, from God. 

Thus the term "land" in political economy means the 
natural or passive factor, on which and by or through 
which labor produces, and can alone produce. 

But that land is only a passive factor in production 
must be carefully kept in mind. It is a thing, but not a 
person, and though the tendency to personification leads 
not merely in poetry but in common speech to the use of 
phrases which attribute sentiment and action to land, it is 
important to remember that when we speak of a smiling, 
a sullen, or an angry landscape, of a generous or a niggard 
land, of the earth giving or the earth receiving, or rewarding 
or denying, or of nature tempting or forbidding, aiding or 
preventing, we are merely using figures of speech more 
forcibly or more gracefully to express our own feelings by 
reflection from inanimate objects. In the production of 
wealth land cannot act; it can only be acted upon. Man 
alone is the actor. 

Nor is this principle changed or avoided when we use 
the word land as expressive of the people who own land. 
Landowners, as landowners, are as purely passive in 
production as land itself; they take no part in production 
whatever. When Arthur Young spoke of the " magic of 
property turning sands to gold" he was using a figure 
of speech. What he meant to say was that the effect of 
security in the enjoyment of the produce of labor on land 
was to induce men to exert that labor with more assiduity 
and intelligence, and thus to increase the produce. Land 
cannot know whether men regard it as property or not, 
nor does that fact in any degree affect its powers. Sand 
is sand and gold is gold, and the rain falls and the sun 

 410 THE PRODUCTION OP WEALTH. Book III. 

shines, as little affected by the moral considerations that 
men recognize as the telegraph-wire is affected by the 
meaning of the messages that pass through it, or as the 
rock is affected by the twitter of the birds that fly over it. 

I speak of this because although their definition of land 
as a factor in production is precisely that which I have 
given, there is to be found in the accepted treatises on 
political economy a constant tendency to the assumption 
that landowners, through their ownership of land, con 
tribute to production. 

That the persons whom we call landowners may con 
tribute their labor or their capital to production is of 
course true, but that they should contribute to production 
as landowners, and by virtue of that ownership, is as 
ridiculously impossible as that the belief of a lunatic in 
his ownership of the moon should be the cause of her 
brilliancy. 

We could not if we would, and should not if we could, 
utterly eschew metaphors; but in political economy we 
must be always careful to hold them at their true meaning. 

 CHAPTER XVI. 
THE SECOND FACTOR OF PRODUCTION—LABOR. 

SHOWING THAT LABOR IS THE HUMAN OE ACTIVE FACTOR 
IN ALL PRODUCTION. 

The term labor—It is the only active factor in producing wealth, 
and by nature spiritual. 

A ili human actions, or at least all conscious human 
actions, have their source in desire and their end or 
aim in the satisfaction of desire. The intermediary action 
by which desire secures its aim in satisfaction, is exertion. 
The economic term for this exertion is labor. It is the 
active, and from the human standpoint, the primary or 
initiative, factor in all production—that which being 
applied to land brings about all the changes conducive to 
the satisfaction of desire that it is possible for man to 
make in the material world. 

In political economy there is no other term for this 
exertion than labor. That is to say, the term labor 
includes all human exertion in the production of wealth, 
whatever its mode. In common parlance we often speak 
of brain labor and hand labor as though they were entirely 
distinct kinds of exertion, and labor is often spoken of as 
though it involved only muscular exertion. But in reality 
any form of labor, that is to say, any form of human 
exertion in the production of wealth above that which 

411 

 412 THE PRODUCTION OP WEALTH. Book III. 

cattle may be applied to doing, requires the human brain 
as truly as the human hand, and would be impossible 
without the exercise of mental faculties on the part of the 
laborer. 

Labor in fact is only physical in external form. In its 
origin it is mental or on strict analysis spiritual. It is 
indeed the point at which, or the means by which, the 
spiritual element which is in man, the Ego, or essential, 
begins to exert its control on matter and motion, and to 
modify the material world to its desires. 

As hind is the natural or passive factor in all production, 
so labor is the human or active factor. As such, it is the 
initiatory factor. All production results from the action 
of labor on land, and hence it is truly said that labor is 
the producer of all wealth. 

 CHAPTER XVII. 
THE THIRD FACTOR OF PRODUCTION—CAPITAL. 

SHOWING THAT CAPITAL IS NOT A PRIMARY FACTOR, BUT 
PROCEEDS FROM LAND AND LABOR, AND IS A FORM OR 
USE OF WEALTH. 

Capital is essentially labor raised to a higher power—Where it may, 
and where it must aid labor—In itself it is helpless. 

THE primary factors of production are labor and land, 
and from their union all production comes. Their 
concrete product is wealth, which is land modified by labor 
so as to fit it or better fit it for the satisfaction of human 
desires. What is usually distinguished as the third factor 
of production, capital, is, as we have seen, a form or use 
of wealth. 

Capital, which is not in itself a distinguishable element, 
but which it must always be kept in mind consists of wealth 
applied to the aid of labor in further production, is not a 
primary factor. There can be production without it, and 
there must have been production without it, or it could 
not in the first place have appeared. It is a secondary 
and compound factor, coming after and resulting from the 
union of labor and land in the production of wealth. It 
is in essence labor raised by a second union with land to 
a third or higher power. But it is to civilized life so 
necessary and important as to be rightfully accorded in 

413 

 414= THE PRODUCTION OP WEALTH. Book in. 

political economy the place of a third factor in production. 
Without the use of capital man could raise himself but 
little above the level of the animals. 

I have already, in Chapter II. of this Book, generalized 
the various modes of production into three, adapting, 
growing and exchanging. Now in the first of these modes, 
which I have called adapting, the changing of natural 
products either in form or in place so as to fit them for 
the satisfaction of human desires, capital may aid labor, 
and in the higher forms of this mode must aid labor. 
But it is not absolutely necessary, to the lower forms at 
least. Some of the smaller and less powerful animals 
might be taken and the natural fruits and vegetables 
obtained, some rude shelter and clothing produced, and 
even some rude forms of wealth adapted from the mineral 
world, without the application of capital. 

But in the second and third of these modes, those namely 
of growing and exchanging, capital must aid labor, or is 
indispensable. For there can be no cultivation of plants 
or breeding of animals, unless vegetables or animals 
previously brought into the category of wealth are devoted 
not to the consumption that gives direct satisfaction to 
desire, but to the production of more wealth; and there 
can be no exchanging of wealth until some wealth is 
applied by its owners, not to consumption, but to exchange 
for other wealth or for services. 

It is to be observed that capital of itself can do nothing. 
It is always a subsidiary, never an initiatory factor. The 
initiatory factor is always labor. That is to say, in the 
production of wealth labor always uses capital, is never 
used by capital. This is not merely literally true, when 
by the term capital we mean the thing capital It is also 
true when we personify the term and mean by it not the 
thing capital, but the men who are possessed of capital 
The capitalist pure and simple, the man who merely controls 

 Chap. XVII. THE THIRD FACTOR—CAPITAL. 416 

capital, has in his hands the power of assisting labor to 
produce. But purely as capitalist he cannot exercise that 
power. It can be exercised only by labor. To utilize it 
he must himself exercise at least some of the functions of 
labor, or he must put his capital, on some terms, at the use 
of those who do. 

I speak of this because it is the habit, not only of 
common speech but of many writers on political economy, 
to speak as though capital were the initiatory factor in 
production, and as if capital or capitalists employed labor; 
whereas in fact, no matter what the form of the arrange 
ment for the use of capital, it is always labor that starts 
production and is aided by capital; never capital that 
starts production and is aided by labor. 

It cannot be too clearly kept in mind that labor is the 
only producer either of wealth or of capital. Appropriation 
can produce nothing. Its sole power is that of affecting 
distribution under penalty of preventing production. This 
may put wealth or capital in the hands of the appropriator, 
by taking it from others; but can never bring it into 
existence. 

 BOOK IV. 

THE DISTRIBUTION OF WEALTH 

 For " Mars is a tyrant," as Timotheus ex 
presses it; but justice, according to Pindar, 
"is the rightful sovereign of the world." 
The things which Homer tells us kings 
receive from Jove are not machines for 
taking towns or ships with brazen beaks, 
but law and justice; these they are to 
guard and cultivate. And it is not the 
most warlike, the most violent and san 
guinary, but the justest of princes, whom 
he calls the disciple of Jupiter.— Plutarch, 
Demetrius. 

 CONTENTS OF BOOK IV. 

THE DISTRIBUTION OP "WEALTH. 

PAGE 

INTRODUCTION TO BOOK IV. . . . . . .421 

CHAPTKR I. 
THE MEANING OF DISTRIBUTION. 

SHOWING THE MEANING AND USES OP THE WORD DISTRIBUTION; 
THE PLACE AND MEANING OP THE ECONOMIC TERM; AND THAT 
IT IS CONCERNED ONLY WITH NATURAL LAWS. 

Derivation and uses of the word—Exchange, consumption and 
taxation not proper divisions of political economy—Need of a 
consideration of distribution—It is the continuation and end 
of what begins in production, and thus the final division of 
political economy—The meaning usually assigned to distribu 
tion as an economic term, and its true meaning . . . 423 

CHAPTER II. 
THE NATURE OF DISTRIBUTION. 

SHOWING THE FALLACY OF THE CONTENTION THAT DISTRIBUTION 
IS A MATTER OP HUMAN LAW; THAT THE NATURAL LAWS OP 
DISTRIBUTION ARE MANIFEST NOT ON WEALTH ALREADY PRO 
DUCED, BUT ON SUBSEQUENT PRODUCTION ; AND THAT THEY ARE 
MORAL LAWS. 

John Stuart Mill's argument that distribution is a matter of hu 
man law—Its evidence of the unscientific character of the 
scholastic economy—The fallacy it involves and the confusion 
it shows—Illustration from Bedouin and from civilized society 
—Natural laws of distribution do not act upon wealth already 
produced, but on future production—Reason of this—Illustra 
tion of siphon and analogy of blood ..... 430 

419 

 420 CONTENTS OF BOOK IV. 

CHAPTER HI. 

THE COMMON PERCEPTION OF NATURAL LAW IN 
DISTRIBUTION. 

SHOWING THE COMMON AND INERADICABLE PERCEPTION OF 

NATURAL LAWS OF DISTRIBUTION. TAOM 

Mill's Admission of natural law in his argument that distribution 
is a matter of human law—Sequence and consequence— Human 
will and the will manifest in nature—Inflexibility of natural 
laws of distribution—Human will powerless to affect distribu 
tion—This shown by attempts to affect distribution through 
restriction of production—Mill's confusion and his high char 
acter ........... 440 

CHAPTER IV. 

THE REAL DIFFERENCE BETWEEN LAWS OF 
PRODUCTION AND OF DISTRIBUTION. 

SHOWING THAT DISTRIBUTION HAS REFERENCE TO ETHICS, 
WHILE PRODUCTION HAS NOT. 

The laws of production are physical laws; the laws of distribu 
tion moral laws, concerned only with spirit—This the reason 
why the immutable character of the laws of distribution is more 
quickly and clearly recognized ...... 450 

CHAPTER V. 
OF PROPERTY. 

SHOWING THAT PROPERTY DEPENDS UPON NATURAL LAW. 

The law of distribution must be the law which determines owner 
ship—John Stuart Mill recognizes this; but extending his error, 
treats property as a matter of human institution solely—His 
assertion quoted and examined—His utilitarianism—His 
further contradictions ........ 454 

CHAPTER VI. 
CAUSE OF CONFUSION AS TO PROPERTY. 

SHOWING WHY AND HOW POLITICAL ECONOMISTS FELL INTO 
SUCH CONFUSIONS WITH REGARD TO PROPERTY. 

Mill blinded by the pre-assumption that land is property—He all 
but states later the true principle of property, but recovers by 
substituting in place of the economic term " land," the word in 
its colloquial use—The different senses of the word illustrated 
from the shore of New York harbor—Mill attempts to justify 
property in land, but succeeds only in justifying property in 
wealth ........... 460 

 INTRODUCTION TO BOOK IV. 

IN accordance with the earlier usage I have planned 
the division of political economy for purposes of in 
vestigation into three grand divisions: I.—The nature of 
wealth. II.—The laws of production. III.—The laws of 
distribution. Having passed through the first two grand 
divisions, having seen the nature of wealth and the laws of 
its production, we proceed now to the laws of distribution. 
In the branch of political economy to which we now 
turn lies the heart of all economic controversies. For all 
disputes as to the nature of wealth and all disputes as to 
the production of wealth will be found at last to have their 
real ground in the distribution of wealth. Hence, this, as 
we shall find, is the part of political economy most beset 
with confusions. But if we move carefully, making sure 
as we go of the meaning of the words we use, we shall 
find no real difficulty. 

 CHAPTER I 
THE MEANING OP DISTRIBUTION. 

SHOWING THE MEANING AND USES OF THE WORD DISTRIBU 
TION ; THE PLACE AND MEANING OP THE ECONOMIC TERM; 
AND THAT IT IS CONCERNED ONLY WITH NATURAL LAWS. 

Derivation and uses of the word—Exchange, consumption and taxation 
not proper divisions of political economy—Need of a consideration 
of distribution—It is the continuation and end of what begins in 
production, and thus the final division of political economy—The 
meaning usually assigned to distribution as an economic term, and 
its true meaning. 

THE word distribution comes from the Latin, dis, 
asunder, and tribuo, to give, or tribuere, to allot. 

The common meaning of distribution differs from that 
of division by including with the idea of a separation into 
parts the idea of an apportionment or allotment of these 
parts, and is that of a division into or a division among. 

Thus the distribution of work, or duty, or function is 
the assignment to each cooperator of a separate part in 
securing an aggregate result; the distribution of food, or 
alms, or of a trust fund, involves the allotment of a proper 
portion of the whole to each of the beneficiaries; the 
distribution of gas, or water, or heat, or electricity, through 
a building or city, means the causing of a flow to each 
part of its proper quota; the distribution of rocks, plants 
or animals over the globe involves the idea of causes or 

423 

 424 THE DISTRIBUTION OP WEALTH. Book IV. 

laws which have brought them to the places where they 
are found; the distribution of weight or strain in a building 
or structure involves the idea of a division of the aggregate 
mass or pressure among the various parts; distribution in 
logic is the application of a term to all members of a class 
taken separately, so that what is affirmed or denied of 
the whole is not merely affirmed or denied of them all 
collectively, but of each considered independently; the 
distribution of things into categories, or species, or genera, 
in the sciences is the cataloguing of them with reference 
to their likeness or unlikeness in certain respects of form, 
origin or quality. 

What is called the distribution of mail in a post-office is 
the reverse, or complement, of what is called the collection 
of mail. It consists of the separation into pouches or bags 
according to the common destination of the mail matter 
brought in for transmission, or of a similar separation of 
the mail matter received for delivery. 

What is called the distribution of type in a printing-office 
is the reverse, or the complement, of what is called the 
composition of type. In composition the printer places 
into a "stick" the letters and spaces in the sequence 
that forms words. One line composed and "justified" by 
such changes in spacing as bring it to the exact " measure," 
he proceeds to compose another line. When his stick 
contains as many lines as it will conveniently hold he 
" empties " it on a " galley," from which this " matter " is 
finally " imposed " in a " form." As many impressions as 
are desired having been made from the " form " upon paper 
(or upon a " matrix " if any process of stereotyping is used), 
what until put to its destined use of printing was " live 
matter" becomes in the terminology of the printing-office 
" dead matter," and that the movable types may be used 
again in composition the printer proceeds to distribute 
them. If the matter has been thrown into "pi" by an 

 Chap. I. THE MEANING OF DISTRIBUTION. 425 

accident which disarranges the order of the letters in 
words, "distribution" is a very tedious operation, since 
each letter has to be separately noted. But if not, the 
compositor, now become distributor, takes in his left hand 
so that he can read as much of the " dead matter" as he 
can conveniently hold, and beginning at the right end of 
the upper line lifts with the forefinger and thumb of his 
right hand a word or words, reading with a quick glance 
as he does so, and moving his hand over the case, releases 
each letter or space or " quad " (blank) over its appropriate 
box, from which they may be readily taken for renewed 
composition. 

This is the system of composing and distributing type 
in use from the time of Gutenberg to the present day. 
But printing-machines are now (1896) rapidly beginning 
to supersede hand-work. In these, composition takes place 
by touches on a keyboard, like that of a typewriter. In 
the type-using machines the touch on a key brings the 
letter into place, justification is made afterwards by hand, 
and distribution is accomplished by revolving the type 
around a cylinder where by nicks on its body it is carried 
to its appropriate receptacle. In the type-casting machines, 
each type is cast as the key is touched, and instead of being 
distributed is re-melted. In the line-making machines, or 
linotypes, the composition is of movable matrices, the line 
is automatically justified by wedges which increase or 
diminish the space between the words, and is cast on the 
face of a " slug " by a jet of molten metal. In these there 
is no distribution; the slugs when no longer needed being 
thrown into the melting-pot. 

As has already been observed, the distribution of wealth 
in political economy does not include transportation and 
exchange, as most of the standard economic writers 
assume. Nor yet is there any logical reason for treating 
exchange as a separate department in political economy, as 

 426 THE DISTRIBUTION OF WEALTH. Book IV. 

is done by those writers who define political economy as 
the science which teaches of the laws which regulate the 
production, distribution and exchange of wealth, or as 
they sometimes phrase it, of the production, exchange and 
distribution of wealth. Transportation and exchange are 
properly included in production, being a part of the 
process in which natural objects are by the exertion of 
human labor better fitted to satisfy the desires of man. 

Nor yet again is there any logical reason in the division 
of the field of the science of political economy for following 
that department which treats of the distribution of wealth 
with other departments treating of the consumption of 
wealth or of taxation, as is done by some of the minor and 
more recent writers. Taxation is a matter of human law, 
while the proper subject of science is natural law. Nor 
does the science of political economy concern itself with 
consumption. It is finished and done—the purpose for 
which production began is concluded when it reaches 
distribution. 

The need of a consideration of the distribution of wealth 
in political economy comes from the cooperative character 
of the production of wealth in civilization. In the rudest 
state of humanity, where production is carried on by 
isolated human units, the product of each unit would in 
the act of production come into possession of that unit, 
and there would be no distribution of wealth and no need 
for considering it.* But in that higher state of humanity 
where separate units, each moved to action by the motive 
of satisfying its individual desires, cooperate to produc 
tion, there necessarily arises when the product has been 
obtained, the question of its distribution. 

Distribution is in fact a continuation of production—the 
latter part of the same process of which production is the 

* Book I., Chapter L 

 Chap. I. THE MEANING OF DISTRIBUTION. 427 

first part. For the desire which prompts to exertion in 
production is the desire for satisfaction, and distribution 
is the process by which what is brought into being by 
production is carried to the point where it yields satisfaction 
to desire—which point is the end and aim of production. 

In a logical division of the field of political economy, 
that which relates to the distribution of wealth is the final 
part. For the beginning of all the actions and movements 
which political economy is called on to consider is in 
human desire. And their end and aim is the satisfaction of 
that desire. When this is reached political economy is 
finished, and this is reached with the distribution of wealth. 
With what becomes of wealth after it is distributed polit 
ical economy has nothing whatever to do. It can take 
any further account of it only should it be reentered in 
the field of political economy as capital, and then only as 
an original and independent entry. What men choose to 
do with the wealth that is distributed to them may be of 
concern to them as individuals, or it may be of concern to 
the society of which they are a part, but it is of no concern 
to political economy. The branches of knowledge that 
consider the ultimate disposition of wealth may be 
instructive or useful. But they are not included in political 
economy, which does not embrace all knowledge or any 
knowledge, but has as a separate science a clear and well- 
defined field of its own. 

If, moved by a desire for potatoes, I dig, or plant, or 
weed, or gather them, or as a member of the great 
cooperative association, the body economic, in which 
civilization consists, I saw or plane, or fish or hunt, or 
play the fiddle, or preach sermons for the satisfaction of 
other people who in return will give me potatoes or the 
means of getting potatoes, the whole transaction originat 
ing in my desire for potatoes is finished when I get the 
potatoes, or rather when they are put at my disposal at 

 428 THE DISTEIBUTION OF WEALTH. Book IV. 

the place contemplated in my desire. Whether I then 
choose to boil, bake, roast or fry them, to throw them at 
dogs or to feed them to hogs, to plant them as seed, or to 
let them decay; to trade them off for other food or other 
satisfactions, or to transfer them to some one else as a 
free gift or under promise that by and by he will give me 
other potatoes or other satisfactions, is something outside 
of and beyond the series of transactions which originating 
in my desire for potatoes was ended and finished in my 
getting potatoes. 

As a term of political economy, distribution is usually 
said to mean the division of the results of production 
among the persons or classes of persons who have 
contributed to production. But this as we shall see is 
misleading, its real meaning being the division into 
categories corresponding to the categories or factors of 
production. 

In entering on this branch of our inquiry, it will be 
well to recall what, in Book I., I have dwelt upon at length, 
and what is here particularly needful to keep in mind, that 
the laws which it is the proper purpose of political economy 
to discover are not human laws, but natural laws. From 
this it follows that our inquiry into the laws of the 
distribution of wealth is not an inquiry into the municipal 
laws or human enactments which either here and now, or 
in any other time and place, prescribe or have prescribed 
how wealth shall be divided among men. With them we 
have no concern, unless it may be for purposes of illus 
tration. What we have to seek are those laws of the 
distribution of wealth which belong to the natural order— 
laws which are a part of that system or arrangement which 
constitutes the social organism or body economic, as 
distinguished from the body politic or state, the Greater 
Leviathan that makes its appearance with civilization and 
develops with its advance. These natural laws are in all 

 Chap. 1. THE MEANING OF DISTRIBUTION. 429 

times and places the same, and though they may be crossed 
by human enactment, can never be annulled or swerved 
by it. 

It is more needful to call this to mind, because in what 
have passed for systematic treatises on political economy 
the fact that it is with natural laws, not human laws, that 
the science of political economy is concerned, has in treat 
ing of the distribution of wealth been utterly ignored, 
and even flatly denied. 

 CHAPTER II. 
THE NATURE OP DISTRIBUTION. 

SHOWING THE FALLACY OP THE CONTENTION THAT 
DISTRIBUTION IS A MATTER OF HUMAN LAW; THAT 
THE NATURAL LAWS OF DISTRIBUTION ARE MANIFEST 
NOT ON WEALTH ALREADY PRODUCED, BUT ON SUBSE 
QUENT PRODUCTION; AND THAT THEY ARE MORAL LAWS. 

John Stuart Mill's argument that distribution is a matter of human 
law—Its evidence of the unscientific character of the scholastic 
economy—The fallacy it involves and the confusion it shows- 
Illustration from Bedouin and from civilized society—Natural laws 
of distribution do not act upon wealth already produced, but on 
future production—Beason of this—Illustration of siphon and 
analogy of blood. 

MILL'S "Principles of Political Economy "is, I think, 
even at the present day entitled to the rank of the 
best and most systematic exposition of the scholastically 
accepted political economy yet written, and as I wish to 
present in their very strongest form the opinions that I 
shall controvert, I quote from it the argument from which 
it is assumed that the laws of distribution with which polit 
ical economy has to deal are human laws. Mill opens 
with this argument the second grand division of his work, 
Book II., entitled " Distribution," which follows his intro 
ductory and the thirteen chapters devoted to "Produc 
tion," and thus states the fundamental principle on which 
he endeavors to conduct his whole inquiry into distribu- 

430 

 Chap. II. THE NATURE OF DISTRIBUTION. 431 

tion, the principle that distribution is a matter of human 
institution solely: 

The principles which have been set forth in the first part of this 
treatise, are, in certain respects, strongly distinguished from those, 
on the consideration of which we are now about to enter. The laws 
and conditions of the production of wealth, partake of the character 
of physical truths. There is nothing optional or arbitrary in them. 
Whatever mankind produce, must be produced in the modes, and 
under the conditions, imposed by the constitution of external things, 
and by the inherent properties of their own bodily and mental struc 
ture. . . . 

But it is not BO with the Distribution of Wealth. That is a matter 
of human institution solely. The things once there, mankind, indi 
vidually or collectively can do with them as they like. They can 
place them at the disposal of whomsoever they please, and on what 
ever terms. Further, in the social state, in every state except total 
solitude, any disposal whatever of them can only take place by the 
consent of society, or rather of those who dispose of its active force. 
Even what a person has produced by his individual toil, unaided by 
any one, he cannot keep, unless by the permission of society. Not 
only can society take it from him, but individuals could and would 
take it from him, if society only remained passive; if it did not either 
interfere en masse, or employ and pay people for the purpose of pre 
venting him from being disturbed in the possession. The distribution 
of wealth, therefore, depends on the laws and customs of society. 
The rules by which it is determined, are what the opinions and feel 
ings of the ruling portion of the community make them, and are very 
different in different ages and countries; and might be still more 
different, if mankind so chose. 

The opinions and feelings of mankind, doubtless, are not a matter 
of chance. They are consequences of the fundamental laws of human 
nature, combined with the existing state of knowledge and experience, 
and the existing condition of social institutions and intellectual and 
moral culture. But the laws of the generation of human opinions 
are not within our present subject. They are part of the general 
theory of human progress, a far larger and more difficult subject of 
inquiry than political economy. We have here to consider, not the 
causes, but the consequences, of the rules according to which wealth 
may be distributed. Those, at least, are as little arbitrary, and have 
as much the character of physical laws, as the laws of production. 
Human beings can control their own acts, but not the consequences 

 432 THE DISTRIBUTION OF WEALTH. BoolcIV. 

of their acts either to themselves or to others. Society can subject 
the distribution of wealth to whatever rules it thinks best; but what 
practical results will flow from the operation of those rules, must be 
discovered, like any other physical or mental truths, by observation 
and reasoning. 

We proceed, then, to the consideration of the different modes of 
distributing the produce of land and labor which have been adopted 
in practice or may be conceived in theory.* 

In all the dreary waste of economic treatises that I have 
plodded through, this, by a man I greatly esteem, is the 
best attempt that I know of to explain what is really meant 
in political economy by laws of distribution. And it is no 
small evidence of Mill's superiority to those who since the 
time of Adam Smith had preceded him, and to those who 
since his own time have followed hi™, in treatises which 
bear the stamp of authority in our schools and colleges, 
that he should feel it incumbent on hi™ even to attempt 
this explanation. But this attempt brings into clear relief 
the unscientific character of what had passed and yet still 
passes as expositions of the science of political economy. 
In it we are deliberately told that the laws which it is the 
object of political economy to discover, are, in the first 
part of its inquiries, natural laws, but that in the later and 
practically more important part of those inquiries, they 
are human laws! Political economy of this sort is as 
incongruous as the image that troubled Nebuchadnezzar, 
with its head of fine gold and its feet part of iron and part 
of clay, for in the first part its subject-matter is natural 
law, and in the last and practically more important, it is 
human law. 

Let us examine this argument carefully, for it is made 
on behalf of the current political economy by a man who 
from his twelfth year had been carefully trained in 
systematic logic and who before he wrote this had won 

* Book H., Chapter L, Sec. 1, "Principles of Political Economy." 

 Chap. II. THE NATURE OF DISTRIBUTION. 433 

the highest reputation as a logician, by a great work on 
systematic logic, that is repeated and accepted to this day 
by professors of political economy in universities and 
colleges that make systematic logic a part of their curri 
culum. 

To make this examination is to see that the plausibility 
of the argument comes from the leading proposition—" The 
things once there, mankind individually or collectively can 
do with them as they like." It is evidently this that in 
the mind of Mill himself and in the minds of the professors 
and students who have since gone over his " Principles of 
Political Economy," has seemed to prove beyond perad- 
venture that though the laws of production maybe natural 
laws, the laws of distribution are human laws. For in 
itself this proposition is a self-evident truth. Nothing, 
indeed, can be clearer than that "the things once there, 
mankind individually or collectively can do with them as 
they like "—that is to say, wealth once produced, human 
law may distribute it as human will may ordain. 

Yet while this proposition that things once there mankind 
can do with them as they like, is in itself irrefutable, the 
argument in which it is introduced is an egregious instance 
of the fallacy called by the logicians petitio principii, or 
begging the question. The question that Mill is arguing 
is whether what is called in political economy the distri 
bution of wealth is a matter of natural law or a matter of 
human law, and what he does is to cite the fact that in 
what is called in human law the distribution of wealth, 
mankind can do as they like, and assume from that that 
the distribution of wealth in the economic sense of the 
term is a matter of human law—"a matter of human 
institution solely." 

Such a fallacy could not have been proposed by Mill, 
himself a trained logician, nor could it have passed current 
with the trained logicians who since bis time, leaving 

 434 THE DISTKIBUTION OF WEALTH. Book IV. 

their logic behind them, have written treatises on political 
economy, had it not been for the fact that in the scholastic 
political economy the real nature of the distribution of 
•wealth has been slurred over and the question of what 
natural laws may have to do with it utterly ignored. Let 
us endeavor to settle this: 

The original meaning of the word distribution is that of 
a division into or among. Distribution is thus an action, 
presupposing an exertion of will, and involving a power 
of giving that will effect. Now as to things already there, 
that is to say with wealth that has been already produced, 
it is perfectly clear that their division or distribution 
among men is determined entirely by human will backed 
by human force. With such a distribution nature is not 
concerned and in it she takes no part. Things already 
there, wealth already produced, belong to nature only in 
what logicians would call their accident, matter. But 
while still subject to material laws, such as the law of 
gravitation, who shall possess or enjoy them is a matter 
purely of human will and force. Mankind can place them 
at the disposal of whomsoever they please and on whatever 
terms. 

Thus, distribution in this sense, the distribution of things 
already in existence, is indeed a matter solely of human 
will and power. If I would know the law of distribution 
in this sense of human law, I cannot look to political 
economy, but where settled institutions have not grown 
up or are discarded, must look to the will of the strongest. 
Where in civilized society it is human institutions that 
decide among whom wealth shall be divided, as for 
instance in case of an insolvent, in case of the estate of 
a deceased person, or in case of controverted ownership, 
the municipal law governing such distribution is to be 
found recorded in written or printed statutes, in the 
decisions of judges or in traditions of common use and 

 Chap. II. THE NATURE OP DISTRIBUTION. 436 

wont. It is in cases of dispute authoritatively expounded 
by courts, and is carried into effect by sheriffs or constables 
or other officials having at their back the coercive power 
of the state, with its sanctions of seizure of property and 
person, fine, imprisonment and death. 

But from its very rudest expression, where what obtains 
is 

"The good old rule, 
...... the simple plan, 

That they should take who have the power, 
And they should keep who can," 

to societies where the most elaborate machinery for declar 
ing and enforcing human laws of distribution exists, such 
laws of distribution always are and always must be based 
upon human will and human force. 

How then can we talk of natural laws of distribution T 
Laws of nature are not written or printed, or carved on 
pillars of stone or brass. They have no parliaments, or 
legislatures, or congresses to enact them, no judges to 
declare them, no constables to enforce them. What then 
can we really mean by natural laws of the distribution of 
wealth T What is the mode or method by which without 
human agency wealth may be said to be distributed by 
natural law, and without human agency, among individuals 
or classes of individuals T Here is the difficulty that not 
having been cleared up in economic works has given 
plausibility to the assumption into which the scholastic 
economy has fallen in assuming that the only laws of 
distribution with which political economy can deal are not 
natural laws at all, but only human laws—an assumption 
that must bring any science of political economy to an end 
with production. 

Laws of nature, as was explained in the first part of this 
work (Book I., Chapter VIII.), are the names which we 
give to the invariable uniformities of coexistence and 

 436 THE DISTRIBUTION OF WEALTH. Book IV. 

sequence which we find in external things, and which we 
call laws of nature because our reason apprehends in them 
the evidence of an originating will, preceding and superior 
to human will. Let us call in the aid of that most potent 
instrument of political economy, imaginative experiment, 
to see if we do not find evidences of such laws of nature, 
the only laws with which a true science of political economy 
can deal, in the matter of the distribution of wealth: 

A shifting of desert sands reveals to a roving tribe 
wealth produced in a long dead civilization—rings, coins, 
bracelets, precious stones and delicately carved marbles. 
The things are there. They have been produced. The 
tribesmen individually or collectively can do with them as 
they like—can place them at the disposal of whomsoever 
they please, and on whatever terms. Nature will not 
interfere. The desert sand and desert sky, the winds that 
sweep across it, the sun and moon and stars that look 
down on it, the living things that prowl or crawl over it, 
will make no remonstrance whatever the tribesmen may 
choose to do with this wealth that is there—that has 
already centuries ago been produced. 

But things freshly produced this day or this minute are 
as truly here as things produced centuries ago. Why 
should not mankind individually or collectively do with 
them also as they like; place them at the disposal of 
whomsoever they please and on whatever terms they 
choose? They could do so with no more remonstrance 
from the things themselves or from external nature than 
would attend the rifling of Egyptian tombs by Bedouins. 
Why should not civilized men rifle the products of farm or 
mine or mill as soon as they appear? Human law inter 
poses no objection to such collective action, for human 
law is but an expression of collective human will, and 
changes or ceases with the changes in that will. Natural 
law, so far as it is comprehended in what we call physical 

 Chap. II. THE NATURE OF DISTRIBUTION. 437 

law, interposes no objection—the laws of matter and energy 
in all their forms and combinations pay no heed whatever 
to human ownership. 

Yet it needs no economist to tell us that if in any country 
the products of a living civilization were treated as the 
Bedouins treat the products of a dead civilization, the 
swift result would be fatal to that civilization—would be 
poverty, famine and death to the people individually and 
collectively. This result would come utterly irrespective 
of human law. It would make no difference whether the 
appropriation of "things once there" without regard to 
the will of the producer were in defiance of human law or 
under the sanctions of human law; the result would be 
the same. The moment producers saw that what they 
produced might be taken from them without their consent, 
production would cease and starvation begin. Clearly 
then, this inevitable result is not a consequence of human 
law, but a consequence of natural law. Not a consequence 
of the natural laws of matter and motion, but a consequence 
of natural laws of a different kind—laws no less immutable 
than the natural laws of matter and motion. 

For natural law is not all comprehended in what we call 
physical law. Besides the laws of nature which relate to 
matter and energy, there are also laws of nature that relate 
to spirit, to thought and will. And should we treat the 
present products of farm or mine or mill or factory as we 
may treat the products of a dead civilization, we shall feel 
the remonstrance of an immutable law of nature wherever 
we come in conflict with the moral law. This is not to say 
that any division of wealth that mankind individually or 
collectively may choose to make will be interfered with or 
prevented. Things once here, once in existence in the 
present, are absolutely in the control of the men of the 
present, and "they can place them at the disposal of 
whomsoever they please and on whatever terms." Any 

 438 THE DISTRIBUTION OF WEALTH. Book IV. 

remonstrance of the moral law of nature to their action 
will not show itself in, or in relation to, these identical 
things. But it will show itself in the future—in checking 
or preventing the production of such things. Things once 
produced are then and there already in existence, and may 
be distributed as mankind may will. But the things on 
which the natural laws of distribution exert their control 
are not things already produced, but things which are 
being, or are yet to be, produced. 

In other words, production in political economy is not 
to be conceived of as something which goes on for a while 
and then stops, when its product wealth has been brought 
into being; nor is it to be conceived of as something related 
only to a production that is finished and done. Both 
production and distribution are properly conceived of as 
continuous, resembling not the drawing of water in a 
bucket but the drawing of water through a pipe—or better 
still, in the conveyance of water over an elevation by 
means of a bent pipe or siphon, of which the shorter arm 
may stand for production and the longer for distribution. 
It is in our power to tap this longer arm of the pipe at 
any point below the highest, and take what water is already 
there. But the moment we do so, the continuity of the 
stream is at an end, and the water will cease to flow. 

Production and distribution are in fact not separate 
things, but two mentally distinguishable parts of one 
thing—the exertion of human labor in the satisfaction of 
human desire. Though materially distinguishable, they are 
as closely related as the two arms of the siphon. And as it 
is the outflow of water at the longer end of the siphon that is 
the cause of the inflow of water at the shorter end, so it is 
that distribution is really the cause of production, not 
production the cause of distribution. In the ordinary 
course, things are not distributed because they have been 
produced, but are produced in order that they may be 

 Chap. II. THE NATURE OP DISTRIBUTION. 439 

distributed. Thus interference with the distribution of 
wealth is interference with the production of wealth, and 
shows its effect in lessened production. 

To use again the analogy supplied by our material 
frames. Blood stands in the same relation to the physical 
body that wealth does to the social body, distributing 
throughout all parts of the physical frame potentialities 
akin to those which wealth carries through the social 
frame. But though the organs that distribute this vital 
current are different from the organs that produce it, their 
relations are so intimate that seriously to interfere with 
the distribution of the blood is necessarily to interfere 
with its production. Should we say of the blood that 
passes into the great pumping station, the heart, " It has 
been produced; it is here, and we may do with it as we 
please!" and acting on the word, divert it from its course 
through the organs of distribution—at once the great 
pump ceases to beat and the organs that produce blood 
lose their power and begin to decompose. 

And as to pierce the heart and divert the blood that has 
been produced from the natural course of its distribution 
is to bring about the death of the physical organism most 
swiftly and certainly, so to interfere with the natural laws 
of the distribution of wealth is to bring about a like death 
of the social organism. If we seek for the reason of ruined 
cities and dead civilizations we shall find it in this. 

 CHAPTER III. 

THE COMMON PERCEPTION OF NATURAL 
LAW IN DISTRIBUTION. 

SHOWING THE COMMON AND INERADICABLE PERCEPTION OF 
NATURAL LAWS OF DISTRIBUTION. 

Mill's admission of natural law in his argument that distribution 
is a matter of human law—Sequence and consequence—Human 
will and the will manifest in nature—Inflexibility of natural laws 
of distribution—Human will powerless to affect distribution— 
This shown by attempts to affect distribution through restriction 
of production—Mill's confusion and his high character. 

IT would seem impossible for a man of the logical 
acumen and training of John Stuart Mill to accept 
in deference to preconceived opinion, and to justify by such 
a transparent fallacy, such an incongruous conclusion 
as that while the laws of political economy relating to 
production are natural laws, the laws relating to distribu 
tion are human laws, without at least a glance towards the 
truth. And such a sidelong glance we find in the latter 
part of the argument which in the last chapter was given 
in full. 

To bring this more clearly into view let me print it 
again, supplying the elisions in brackets, and emphasizing 
with italics words to which I would direct special attention: 

We have here [in political economy] to consider, not the causes, 
but the consequences, of the [human] rules according to which wealth 

440 

 Chap. III. NATURAL LAW IN DISTBIBTJTION. 441 

may be distributed. Those [consequences], at least, are as little 
arbitrary, and have as much the character of physical laws, as the 
laws of production. Human beings can control their own acts, but 
not the consequences of their acts either to themselves or to others. 
Society can subject the distribution of wealth to whatever rules it 
thinks best; but what practical results will flow from the operation of 
those rules, must be discovered, like any other physical or mental 
truths, by observation and reasoning. 

Here we have, what would hardly be expected from the 
author of " Mill's System of Logic," an example of that 
improper use of the word consequence where sequence is 
really meant, which I referred to in Chapter VIII. of 
Book I. 

To recall what was there said: A sequence is that which 
follows. To say that one thing is a sequence of another 
is to say that it has to its antecedent a relation of succession 
or coming after, but is not necessarily to say that this 
relation is invariable or causal. But a consequence is that 
which f ollows/rowt. To say that one thing is a consequence 
of another is really to say that it has to its antecedent not 
merely a relation of succession, but of invariable succes 
sion—the relation namely of effect to cause. 

Our disposition to prefer the stronger word leads in 
common speech to the frequent use of consequence where 
merely sequence is really meant, or to speak of a result as 
the consequence of what we know can be only one of the 
causal elements in bringing it about. If a boy break a 
window-pane in throwing a stone at a cat, or a man is 
drowned in going in to swim, we are apt to speak of the 
one thing as a consequence of the other, though we know 
that stones are constantly thrown at cats without break 
ing windows and that men go in to swim without being 
drowned, and that the result in the particular case was not 
due to the human action alone, but to the concurrence with 
it of other causes, such as the force and direction of wind 
or tide, the attraction of gravitation, etc. This tendency 

 442 THE DISTRIBUTION OP WEALTH. Book IV. 

to a loose use of the word consequence is of little or no 
moment in common speech, where what is really meant is 
well understood; but it becomes a fatal source of confusion 
in philosophical writing, where exactness is necessary, not 
merely that the writer be understood by the reader, but 
that he may really understand himself. 

Now, what are the things which Mill here speaks of as 
consequences of human rules according to which wealth 
may be distributed: the things which (and not the causes 
of the human rules) we have, he says, to consider in 
political economy, and which he tells us have as much the 
character of physical laws as the laws of production, and 
"must be discovered, like any other physical or mental 
truths, by observation and reasoning " ? They follow, and 
are thus sequences of human action, or as Mill subsequently 
speaks of them," practical results," appearing as invariable 
uniformities in the actual outcome of man's efforts to 
regulate the distribution of wealth. But though sequences 
they clearly are not con-sequences of human action. To 
say that human beings can control their own acts but not 
what follows from those acts would be to deny the laws of 
causation. Since these invariable uniformities appearing 
in the practical results or sequences of man's action cannot 
be related as effects to man's action as cause, they are not 
properly con-sequences of man's action, but con-sequences 
of something independent of man's action. 

The truth that Mill vaguely perceives and confusedly 
states in these sentences is in direct contradiction of his 
assertion that the distribution of wealth is a matter of 
human institution solely. It is, that the distribution of 
wealth is not a matter of human institution solely, and 
does not depend upon the laws and customs of society 
alone; that though human beings may control their own 
acts towards the distribution of wealth, and frame for 
their action such laws as the rilling portion of the 

 Chap. III. NATURAL LAW IN DISTSffiUTION. 443 

community may wish, yet the practical results will not 
depend on this human action alone, but on that as 
combined with and dominated by another more permanent 
and powerful element—a something independent of human 
action that modifies the practical results of human action 
towards the distribution of wealth, as gravitation modifies 
the flight of a cannon ball. 

Now these invariable sequences which come out in the 
practical results of man's action, and which we know only 
as effects, and cannot relate to man's action as cause, we 
are compelled by the mental necessity which demands a 
cause for every effect to refer to a causal antecedent in 
the nature of things, which, as explained in Book I., we 
call a law of nature. That is to say, invariable uniformities, 
modifying the effects of all human action, such as Mill 
confusedly recognizes in these sentences, are precisely 
what, apprehending them as manifestations of a higher 
than human will, we style laws of nature, or natural laws. 

Mill's own definition of a law of nature ("System of 
Logic," Book III., Chapter IV.) is a uniformity in the 
course of nature, ascertained by what is regarded as a 
sufficient induction, and reduced to its most simple 
expression. Thus if observation and reasoning discover 
in the actual phenomena or practical results of man's 
action in the distribution of wealth uniformities which 
swerve or destroy the effect of human action not in exact 
conformity with them, these are the natural laws of 
distribution as clearly as similar sequences or uniformities 
which observation and reasoning discover in the phe 
nomena of production are the natural laws of production. 
And what Mill is vaguely thinking of and confusedly 
writing about are clearly the very natural laws of distri 
bution which he says do not exist. 

In truth, the distribution of wealth is no more " a matter 
of human institution solely" than is the production of 

 444 THE DISTRIBUTION OP WEALTH. Boole IV. 

wealth. That human beings can control their own acts is 
true in one case as in the other, only in the same sense 
and to the same degree. Our will is free. But human 
will can only affect external nature by taking advantage 
of natural laws, which in the very name we give them 
carry the implication of a higher and more constant will. 
A boy may throw a stone or an artilleryman fire a cannon 
ball at the moon. If the result depended solely on the 
human action, both ball and stone would reach the moon. 
But the governance of natural law—without conformity 
to which even such action as throwing a stone or firing 
a cannon ball cannot take place—continuing to modify 
results, brings both to the ground again, the one in a few 
feet and the other in a few thousand feet. 

And the natural laws which political economy discovers, 
whether we call them laws of production or laws of 
distribution, have the same proof, the same sanction and 
the same constancy as the physical laws. Human laws 
change, but the natural laws remain, the same yesterday, 
to-day and to-morrow, world without end; manifestations 
to us of a will that though we cannot obtain direct know 
ledge of it through the senses,we can yet see never slumbers 
nor sleeps and knows not change in jot or tittle. 

If I can prove that this inflexibility to human effort is 
characteristic of the laws of distribution that political 
economy seeks to discover, I have proved finally and 
conclusively that the laws of distribution are not human 
laws, but natural laws. To do this it is only necessary 
to appeal to facts of common knowledge. 

Now the three great laws of distribution, as recognized 
by all economists, though they are sometimes placed in 
different order, are the law of wages, the law of interest 
and the law of rent. Into these three elements or factors, 
the entire result of production is by natural law distributed. 
Now I do not of course mean to say that human law may 

 Chap. III. NATURAL LAW IN DISTRIBUTION. 445 

not take from the part which under the natural law of 
distribution might be enjoyed by one man or set of men 
and give it to another, for as I have already said all 
wealth or any wealth from the moment it is produced is 
entirely at the disposition of human law, and mankind 
can do with it as they please. What I mean to say is that 
human law is utterly powerless directly to alter distribu 
tion, so that the laborer as laborer will get more wages or 
less wages, the capitalist as capitalist more interest or less 
interest, or the landowner as landowner more rent or less 
rent, or in any way alter the conditions of distribution 
fixed by natural law under existing industrial conditions. 
This has been tried again and again by the strongest 
governments, and is to some extent still being tried, but 
always unavailingly. 

In England, as in other countries, there have been at 
various times attempts to regulate wages by law, sometimes 
to decrease them and sometimes to increase them below 
or above the level fixed at the time by natural law. But 
it was found that in the one case no law could prevent the 
laborer from asking and the employer from paying more 
than this legal rate when the natural law, or as we usually 
say the equation of demand and supply, made wages higher, 
and that no law, even when backed by grants in aid of 
wages, as was done in England during the beginning of 
this century, could in the opposite case keep wages at a 
higher rate. So it has proved with interest. There have 
been numberless attempts to keep down interest, and the 
State of New York retains to this day on her statute-book 
a law limiting, though with considerable holes, the rate of 
interest to six per cent. But such laws never have suc 
ceeded and do not now succeed in keeping interest below 
the natural rate. Lenders receive and borrowers pay that 
rate in the form of sales, premiums, discounts and bonuses, 
where the law forbids them to do it openly. So, too, in 

 446 THE DISTRIBUTION OP WEALTH. Book IV. 

the case of rent. The British Parliament has recently at 
tempted to reduce agricultural rent in certain cases in Ire 
land by instituting officials with power to fix " fair rents "— 
what should be paid by the tenant to the landlord. They 
have in many cases cut down the income of certain of the 
landlords, but they have not lessened rent. They have 
merely divided what before went to the landlord between 
him and the existing tenant, and a new tenant must pay, 
part in rent to the landlord and part in tenant right to the 
existing tenant, as much for the use of the land as it would 
have commanded if this attempt to reduce rent had not 
been made. 

And so it has been with attempts of human law to fix 
and regulate prices, which involve the same great laws of 
distribution in combined forms. Human law is always 
potent to do as mankind will with what has been produced, 
but it cannot directly affect distribution. That it can 
reach only through production. 

Nothing indeed could be more inconsistent with common 
perceptions than this notion into which the scholastic 
economists have fallen, that the distribution of wealth is 
less a matter of natural law than the production of wealth. 
The fact is (the reason of the fact will be considered 
hereafter) that the common perceptions of men recognize 
the immutability of the natural laws of distribution more 
quickly and more certainly than of the natural laws of 
production. If we look over the legislation by which the 
ruling portion of our communities have striven to affect 
the distribution of wealth, we shall find that (as if conscious 
of its hopelessness) they have seldom if ever tried directly 
to affect the distribution of wealth; but have tried to affect 
distribution indirectly through production. 

An English Elizabeth or James wishes to alter the 
practical outcome of the distribution of wealth in favor 
of an Essex or Villiers, and to accomplish this imposes 

 Chap. III. NATUBAL LAW IN DISTBIBUTION. 447 

restrictions upon the production of gold lace or playing 
cards. A Russian Czar desires to alter the distribution of 
wealth in favor of one of his boyars, and seeks that end 
by making a tract of land the property of his favorite and 
forbidding peasants to leave it, thus preventing them from 
engaging in production except on his terms. Or, to come 
nearer the present in time and place, a Carnegie or a 
Wharton wishes to alter distribution in his favor so largely 
that he may play at building libraries and endowing 
schools of political economy (?); he seeks his end by getting 
Congress to restrict the production of iron, steel or nickel, 
by imposing a duty upon importation. 

But it is not alone in the sentences I have reprinted 
that Mill shows an undefined consciousness that the laws 
of the distribution of wealth which it is the proper business 
of political economy to discover are natural laws, not 
human laws. Though he does not retract his statement 
that " the distribution of wealth depends on the laws and 
customs of society," and formally proceeds "to the con 
sideration of the different modes of distributing the produce 
of land and labor which have been adopted in practice or 
may be conceived in theory," yet we find him afterwards 
(Book II., Chapter HI., Sec. 1) speaking of laws according 
to which " the produce distributes itself by the spontaneous 
action of the interests of those concerned." If there be 
laws according to which produce distributes itself, they 
certainly cannot be human laws. King Canute, we are 
told, once tried by edict to turn back the tide; but who 
has ever dreamed that produce, whether houses or metals 
or wheat or hay, or even pigs or sheep, could by ukase or 
irade, act of Parliament or resolution of Congress, be made 
to distribute itself? 

The truth is that in the long discussion of the distribution 
of wealth, which in John Stuart Mill's "Principles of 
Political Economy" succeeds to what I have quoted, he 

 448 THE DISTEIBUTION OF WEALTH. Book IV. 

neither follows what he formally states, that distribution 
is a matter of human institution solely, and depends on 
the laws and customs of society; nor yet does he follow 
what he confusedly admits, that it is a matter of natural 
law. Passing to a consideration of the origin of private 
property in human law, and beginning with Communism 
and Socialism, the Moravians, the Rappists, the followers 
of Louis Blanc and Cabet, St. Simonism and Fourierism, 
he rambles along, mixing what properly belongs to the sci 
ence of political economy with discussions of competition 
and custom, slavery, peasant proprietors, metayers, cot 
tiers, the means of abolishing cottier tenancy and popular 
remedies for low wages, without either clearly giving the 
laws of distribution or saying what they are. And the 
reader who wishes to discover what the ablest and most 
systematic of scholastic economists takes to be the laws of 
distribution of wealth must after going through this mass 
of dissertation keep on through some forty chapters or 
600 pages more, and finally fish them out for himself— 
only to find when he gets them or thinks that he gets 
them, that they do not correlate with each other. 

As I have said, I only speak of John Stuart Mill as the 
best example of what has passed as the scientific exposi 
tion of political economy. The same absence of a really 
scientific method—that is to say the same want of order 
and precision—will be found in the treatment of distribu 
tion in all the treatises of the school of economists, now 
called the Classical school, of which Mill may be deemed 
the culmination. And it is to be found in even worse 
degree in the so-called Historical and Austrian schools 
which have within recent years succeeded the school of 
Mill in all our great universities. They are indeed so far 
behind the predecessors at whom they affect to sneer, that 
they make no attempt even at order and precision. Who- 

 Chap. III. NATURAL LAW IN DISTRIBUTION. 449 

ever would have an economic contrast suggested to him 
like that of Hamlet's "Hyperion to a Satyr," let him 
compare John Stuart Mill's "Principles of Political 
Economy" with the most pretentious of recent "Prin 
ciples of Economics." 

 CHAPTER IV. 

THE REAL DIFFERENCE BETWEEN LAWS OF 
PRODUCTION AND OF DISTRIBUTION. 

SHOWING THAT DISTRIBUTION HAS REFERENCE TO ETHICS, 
WHILE PRODUCTION HAS NOT. 

The laws of production are physical laws; the laws of distribution 
moral laws, concerned only with spirit—This the reason why the 
immutable character of the laws of distribution is more quickly 
and clearly recognized. 

MILL is clearly wrong in the distinction which he seeks 
to draw between the production of wealth and the 
distribution of wealth with regard to the kind of laws 
which it is the proper business of these departments of 
political economy to discover. 

But there is an important difference between them 
which, although he has failed to distinguish it, probably 
lies in vague way at the bottom of the notion that the laws 
of production and the laws of distribution are different 
kinds of laws. It is, that the branch of the science which 
treats of the distribution of wealth is that in which the 
relations of political economy to ethics are clearer and 
closer than in that branch which treats of production. 

In short, the distinction between the laws of production 
and the laws of distribution is not, as is erroneously taught 
in the scholastic political economy, that the one set of laws 

450 

 Cliap. ir. PHYSICAL LAWS AND MORAL LAWS. 461 

are natural laws, and the other human laws. Both sets 
of laws are laws of nature. The real distinction is pointed 
out in the last chapter, that the natural laws of production 
are physical laws and the natural laws of distribution are 
moral laws. And it is this that enables us to see in 
political economy more clearly than in any other science, 
that the government of the universe is a moral government, 
having its foundation in justice. Of, to put this idea into 
terms that fit it for the simplest comprehension, that the 
Lord our God is a just God. 

In considering the production of wealth we are con 
cerned with natural laws of which we can only ask what 
is, without venturing to raise the question of what ought 
to be. Even if we can imagine a world in which beings 
like ourselves could maintain an existence and satisfy 
their material desires in any other, way than by the 
application of labor to land under relations of uniform 
sequence not substantially different from those invariable 
sequences of matter and motion and life and being which 
we denominate physical laws, we cannot venture to apply 
to these physical laws, of which we can primarily say only 
that they exist, any idea of ought. Even in matters as to 
which we can imagine considerable differences between 
the physical uniformities that we observe in this world 
and those that might exist in a world in other respects 
resembling this—such for instance as might be brought 
about by a change in the distance of our earth from the 
sun, or in the inclination of its axis to the ecliptic, or in 
the density of its atmospheric envelop; or even by a 
change in such uniformities as seem to us to involve 
exceptions to a more general uniformity, like that exception 
to the general law of the contraction of water in cooling 
which causes it at the freezing-point to expand—there is 
nothing that has any reference to right or justice, or that 
arouses in us any perception of ought or duty. 

 4B2 THE DISTEIBUTION OP WEALTH. Sook IV. 

For the perception of right or justice, the recognition 
of ought or duty, has no connection with or relation to two 
of the three elements or categories into which we may by 
analysis resolve the world as it is presented in conscious 
ness to our reasoning faculties. That is to say, right or 
justice, ought or duty, do not and cannot have any relation 
either to matter or to energy, but only to spirit. They 
presuppose conscious will, and cannot be extended beyond 
the limits in which we recognize or assume a will having 
freedom to act. 

Thus is it that in considering the nature of wealth or 
the production of wealth we come into no direct and 
necessary contact with the ethical idea, the idea of right 
or justice. It is only when and as we endeavor to pierce 
behind the invariable uniformities of matter and motion 
to which we give the name of laws of nature and recognize 
them in our thought as manifestations of an originating 
or creative spirit, for which our common name is God, in 
its dealing with other, and though inferior, essentially 
spiritual beings, that the idea of right or justice can have 
any place in that branch of political economy which deals 
•with the nature of wealth or the laws of its production. 

But the moment we turn from a consideration of the 
laws of the production of wealth to a consideration of the 
laws of the distribution of wealth the idea of ought or 
duty becomes primary. All consideration of distribution 
involves the ethical principle; is necessarily a considera 
tion of ought or duty—a consideration in which the idea 
of right or justice is from the very first involved. And 
this idea cannot be truly conceived of as having limits or 
being subject to change, for it is an idea or relation, like 
the idea of a square or of a circle or of parallel lines, which 
must be the same in any other world, no matter how far 
separated in space or time, as in this world. It is not 
without reason that in our colloquial use of the words we 

 Chap. IV. PHYSICAL LAWS AND MOKAL LAWS. 453 

speak of a just man as " a square man" or " a straight 
man." As Montesquieu says: 

Justice is a relation of congruity which really subsists between 
two things. This relation is always the same, whatever being con 
siders it, whether it be God, or an angel, or lastly a man. 

This I take to be the reason of the fact which in Chapter 
II. of this Book was referred to—that the immutable char 
acter of the laws of distribution is even more quickly and 
clearly recognized than the immutable character of the 
laws of production. Princes, politicians and legislatures 
attempt to influence distribution, but they always try to do 
it, not by aiming at distribution directly but by aiming at 
distribution indirectly, through laws that directly affect 
production. 

 CHAPTER V. 
OF PROPERTY. 

SHOWING THAT PROPERTY DEPENDS UPON NATURAL LAW. 

The law of distribution must be the law which determines ownership 
—John Stuart Mill recognizes this; but extending his error treats 
property ass a matter of human institution solely—His assertion 
quoted and examined—His utilitarianism—His further contra 
dictions. 

SINCE the distribution of wealth is an assignment of 
ownership, the laws of distribution must be the laws 
which determine property in the things produced. Or to 
put it in another way, the principle which gives ownership 
must be the principle which determines the distribution 
of wealth. Thus what we may speak of in political economy 
as the law of property and the law of distribution are not 
merely laws of the same kind, springing from the same 
principle, but are in reality different expressions of the 
same fundamental law. Hence, in considering the origin 
and basis of property we come again to the question, is it 
the law of nature or the laws of man that it is the office of 
the science of political economy to discover? To say that 
the distribution of wealth is " a matter of human enactment 
solely" is to say that property can have no other basis 
than human law; while to admit any basis of property in 
laws of nature is to say that the distribution of wealth is 
a matter of natural law. 

454 

 Chap. V. OF PEOPEETY. 455 

It is another evidence of the superiority of John Stuart 
Mill in logical acumen that he seems to have been the 
only one of the accredited economic writers who has 
recognized this necessary relation between the laws of 
distribution and the origin of property. From the intro 
ductory section of his Book " Distribution," the section I 
have already quoted in full, he proceeds at once to a 
consideration of the origin of property, and indeed the 
first two chapters of the Book are entitled " Of Property." 

But he is consistent in error. The same want of 
discrimination that leads him to treat distribution as a 
matter of human institution solely, leads him to treat 
property as a matter of human institution solely. Hence, 
his consideration of property does not, as it should, help 
him to see the incongruity of the notion that while the 
laws of production are natural laws the laws of distribution 
are human laws; but gives to that error such seeming 
plausibility as one error may give to another. Contra 
dictions and confusions are however as marked in his 
discussion of property as in his discussion of distribution. 

This is shown in the introductory paragraph of his 
treatment of property, Book II., Chapter I., Sec. 2, which 
is as follows. 

Private property, as an institution, did not owe its origin to any of 
those considerations of utility, which plead for the maintenance of it 
when established. Enough is known of rude ages, both from history 
and from analogous states of society in our own time, to show, that tri 
bunals (which always precede laws) were originally established, not 
to determine rights, but to repress violence and terminate quarrels. 
With this object chiefly in view, they naturally enough gave legal 
effect to first occupancy, by treating as the aggressor the person who 
first commenced violence, by turning, or attempting to turn, another 
out of possession. The preservation of the peace, which was the 
original object of civil government, was thus attained; while by 
confirming, to those who already possessed it, even what was not the 
fruit of personal exertion, a guarantee was incidentally given to them 
and others that they would be protected in what was BO. 

 456 THE DISTRIBUTION OF WEALTH. Book IV. 

All this I deny. It is in fact blank contradiction. Let 
the reader look over and consider it. In the first sentence 
we are told that private property did not originate in 
considerations of utility. In the second, that " tribunals 
(which .always precede laws) were originally established, 
not to determine rights, but to repress violence and 
terminate quarrels." In the third, that they did this by 
treating as the aggressor the person who first commenced 
violence. In the fourth, that the preservation of the peace 
was the original object of such tribunals, and that by 
securing possession where there was no right they 
incidentally secured possession where there was right. 

Thus, the first sentence asserts that private property 
did not originate in considerations of utility, and the three 
succeeding sentences that it did. For when all considera 
tion of right is eliminated what remains as a reason for 
the preservation of the peace by the repression of violence 
and the termination of quarrels, if not the consideration 
of utility? What Mill tells us, is that society originally 
acted on the principle of the schoolmaster who says, " If I 
find any fighting I will not stop to ask the right or wrong, 
but will flog the boy who struck the first blow,/or I cannot 
have the school thrown into disorder." If this is not a 
substitution of the principle of utility for the principle of 
right, what is it? And to this contradiction of himself, 
Mill adds that by confirming wrongful possession, society 
incidentally guarantees rightful possession!—something 
in the nature of things as impossible as that two railway 
trains should pass each other on a single track. 

The fact is that Mill in his consideration of property is 
caught in the toils of that utilitarian philosophy which 
seeks to make the principle of expediency take the place 
of the principle of justice. Men can no more do this 
consistently than they can live without breathing, and 
Mill in his very attempt to base the institution of property 

 Chap. V. OF PEOPERTT. 457 

on human law is driven despite himself into recognizing 
the moral law, and into talking of right and wrong, of 
ought and ought not, of just and unjust. Now these are 
terms which imply a natural law of morality. They can 
have no meaning whatever if expediency be the basis of 
property and human law its warrant. 

The contradictions of this paragraph are shown through 
the whole consideration of property it introduces. While 
he strives to treat property as a matter of human institution 
solely, yet over and over again we find Mill forced to 
abandon this position and appeal to something superior 
to human institution—to right or justice. 

Thus, in what follows the paragraph I have quoted, we 
find statements utterly contradictory of the notion that 
property has its origin in expediency and is determined 
by human enactment. 

In the very next section to that in which we are told that 
the origin of property is not in justice but in expediency, 
not in the desire to determine rights, but the desire to 
repress violence, we are told (the italics being mine): 

The social arrangements of modern Europe commenced from a 
distribution of property which was the result, not of just partition, or 
acquisition by industry, but of conquest and violence: and notwith 
standing what industry has been doing for many centuries to modify 
the work of force, the system still retains many and large traces of 
its origin. The laws of property have never yet conformed to the 
principles on which the justification of private property rests. They 
have made property of things which never aught to be made property, 
and absolute property where only a qualified property ought to exist. 

Here we are told that, as a matter of fact, human laws 
of property did not originate in the expediency of repressing 
violence, but in violence itself; that they have never con 
formed to what we can only understand as the natural law 
of property, but have violated that natural law, by treating 
as property things that under it are not property. For to 

 458 THE DISTRIBUTION OP WEALTH. Eookir. 

say that a human law ought to be different from what the 
legislature enacts is to say that there is a natural law by 
which human laws are to be tested. 

What indeed that natural law of property is by which 
all human enactments are to be tested, Mill a little later 
shows himself to be conscious of, for he says: 

Private property, in every defense made of it, is supposed to mean 
the guarantee to individuals of the fruits of their own labor and 
abstinence. 

And this basis of a natural right of property—a right 
which is unaffected by and independent of all human 
enactments—is still further on even more definitely and 
clearly stated: 

The institution of property, when limited to its essential elements, 
consists in the recognition, in each person, of a right to the exclusive 
disposal of what he or she have produced by their own exertions, or 
received, either by gift or by fair agreement, without force or fraud, 
from those who produced it. The foundation of the whole is, the 
right of producers to what they themselves have produced. 

The right of property includes, then, the freedom of acquiring 
by contract. The right of each to what he has produced, implies a 
right to what has been produced by others, if obtained by their free 
consent. 

After thus conceding everything to natural law, Mill 
becomes concerned again for human law, and appeals to 
the "categorical imperative" of Kant, the ought of moral 
law, to give sanction under certain circumstances to 
human law, declaring that: 

Possession which has not been legally questioned within a moder 
ate number of years, ought to be, as by the laws of all nations it is, 
a complete title. 

Then, recognizing for a moment the incongruity of 
making legal possession—that is to say possession by 

 Chap. V. OF PROPERTY. 459 

virtue of human law—equivalent to possession by virtue 
of natural law, he continues: 

It is scarcely needful to remark, that these reasons for not dis 
turbing acts of injustice of old date, cannot apply to unjust systems 
or institutions; since a bad law or usage is not one bad act, in the 
remote past, but a perpetual repetition of bad acts, as long as the law 
or usage lasts. 

Now property, Mill himself has always spoken of as a 
system or institution, which it certainly is. And he has 
just before stated that the existing systems or institutions 
of property have their source in violence and force, and 
therefore are certainly in his own view unjust and bad. 
Hence what he tells us here is in plain English that the 
sanction of prescription cannot be pleaded in defense of 
property condemned by the natural or moral law. This is 
perfectly true, but it is in utter contradiction of the notion 
that property is a matter of human law. 

 CHAPTER VI. 
CAUSE OP CONFUSION AS TO PROPERTY. 

SHOWING WHY AND HOW POLITICAL ECONOMISTS FELL INTO 
SUCH CONFUSIONS WITH REGABD TO PROPERTY. 

Mill blinded by the pie-assumption that land is property—He all but 
states later the true principle of property, but recovers by substi 
tuting in place of the economic term "land," the word in its col 
loquial use—The different senses of the word illustrated from the 
shore of New York harbor—Mill attempts to justify property in 
land, but succeeds only in justifying property in wealth. 

E!T us pause a moment before we go further in our 
examination of Mill's reasoning. What is it that so 
perplexes this trained logician and honestly minded man, 
involving hitn in such utter contradictions and confusions 
when he endeavors to trace the basis of property? It is 
evidently the same thing that has prevented all the 
scholastic economists, both those who preceded and those 
who have succeeded him, from giving any clear and 
consistent statement of the laws of distribution or of the 
origin of property. This is a pre-assumption they cannot 
bring themselves to abandon—the pre-assumption that 
land must be included in the category of property and a 
place found in the laws of distribution for the income of 
landowners. Since natural law can take no cognizance of 
the ownership of land, they are driven in order to support 

460 

 Chap.ri. CAUSE OP CONFUSION AS TO PROPERTY. 461 

this pre-assumption to treat distribution and property as 
matters of human institution solely. 

Mill, who though befogged by his utilitarian philosophy 
is in many respects the superior of all these writers, starts 
on his investigation of distribution and property with the 
same pre-assumption, or, to use our colloquial phrase, 
with the same " string tied to his leg." He had been, as 
they all have been—from the really great Adam Smith to 
the most recent purveyors of economic nonsense in Anglo- 
German jargon—accustomed to regard property in land 
as the most certain, most permanent, most tangible, of all 
property—that which the lawyers call real property, and 
which in common speech, where the unqualified word 
"property" usually means landed property, is recognized 
as the highest expression of ownership. And his logic was 
not strong enough to permit him even at its call to lay 
rude hands upon what to Englishmen of his class and 
time was the most sacred of institutions—what the very 
Ark of the Covenant was to the pious Jew. He did indeed, 
come so near questioning it as to excite the dismay of his 
contemporaries who deemed him a radical of radicals for 
utterances that squint towards the truth. But he always 
draws back from uttering it. 

The real basis of property, the real fundamental law of 
distribution, is so clear that no one who attempts to reason 
can utterly and consistently ignore it. It is the natural 
law which gives the product to the producer. But this 
cannot be made to cover property in land. Hence the 
persistent effort to find the origin of property in human 
law and its base in expediency. It is evident, even where 
Mill speaks of property generally, as he has done in what 
I have to this point commented on, that the real cause of 
his contradictions and confusions is that he has always in 
mind property in land. But the failure of the attempt to 
bring this species of property under the only possible 

 462 THE DISTRIBUTION OP WEALTH. Book IV. 

justification of property, the right of the producer to the 
product, is even more painfully clear when he comes, as 
he does in Chapter II., Sec. 3, specifically to treat of it 

He begins this by another admission of the truth utterly 
inconsistent with the derivation of property from expedi 
ency; saying: 

Nothing is implied in property but the right of each to his (or her) 
own faculties. 

And then after some long disquisitions on bequest and 
inheritance which I will not comment on here lest it might 
divert the reader from the main subject, he continues 
again: 

The essential principle of property being to assure to all persons 
•what they have produced by their labor and accumulated by their 
abstinence, this principle cannot apply to -what is not the produce of 
labor, the raw material of the earth. 

Abstinence is not a doing but a not doing, a refraining 
from consuming. The essential principle of property 
being to assure to all persons what they have produced by 
their labor, this of course includes what having been pro 
duced by labor is afterwards accumulated by abstinence. 
These words " and accumulated by their abstinence " are 
superfluous, having no weight or place in the argument, 
but their introduction is significant of the disposition to 
assume that capital rather than labor is the active factor 
in production. 

But though a little superfluous in phrase, this statement 
is true and clear. In the conflict going on in Mill's mind 
the perception of a basis of property in natural law seems, 
in the admission that the principle of property cannot apply 
to land, to have finally conquered both the notion that its 
basis is in human law and the pre-assumption from which 
the notion comes. 

 Cliap.VI. CAUSE OP CONFUSION AS TO PEOPEETT. 463 

But this is hardly for a moment. In the next sentence, 
not paragraph, and on the very same line in the printed 
page, the pre-assumption that has confused him asserts its 
power and Mill proceeds to argue that the principle of 
property does apply to land. He does this by what is in 
reality, though doubtless unconsciously to him, a juggle 
with words. But as his argument is the stock argument 
of the scholastic economists, I will quote it in full, distin 
guishing by italics the sentence already given: 

Tlte essential principle of property being to assure to all persons what 
fltey have produced by their labor and accumulated by their abstinence, 
this principle cannot apply to what is not the produce of labor, the raw 
material of the earth. If the land derived its productive power wholly 
from nature, and not at all from industry, or if there were any means 
of discriminating what is derived from each source, it not only would 
not be necessary, but it would be the height of injustice, to let the 
gift of nature be engrossed by individuals. The use of the land in 
agriculture must indeed, for the time being, be of necessity exclusive; 
the same person who has plowed and sown must be permitted to 
reap; but the land might be occupied for one season only, as among 
the ancient Germans; or might be periodically redivided as popula 
tion increased: or the State might be the universal landlord, and the 
cultivators tenants under it, either on lease or at will. 

But though land is not the produce of industry, most of its valu 
able qualities are so. Labor is not only requisite for using, but 
almost equally so for fashioning, the instrument. Considerable labor 
is often required at the commencement, to clear the land for cultiva 
tion. In many cases, even when cleared, its productiveness is wholly 
the effect of labor and art. The Bedford Level produced little or 
nothing until artificially drained. The bogs of Ireland, until the 
same thing is done to them, can produce little besides fuel. One of 
the barrenest soils in the world, composed of the material of the 
Goodwin Sands, the Pays de Waes in Flanders, has been so fertilized 
by industry, as to have become one of the most productive in Europe. 
Cultivation also requires buildings and fences, which are wholly the 
produce of labor. The fruits of this industry cannot be reaped in a 
short period. The labor and outlay are immediate, the benefit is 
spread over many years, perhaps over all future time. A holder will 
not incur this labor and outlay when strangers and not himself will 

 464 THE DISTRIBUTION OP WEALTH. Bookir. 

be benefited by it. If he undertakes such improvements, he must 
have a sufficient period before him in which to profit by them; and 
he is in no way so sure of having always a sufficient period as when 
his tenure is perpetual. 

These are the reasons which form the justification in an economi 
cal point of view, of property in land. 

This argument begins by asserting that the principle of 
property cannot apply to land; it ends by asserting that it 
does. The language is loose, for Mill indulges in a practice 
dangerous where exactness is important, the use of para 
phrases for economic terms, such as "raw material of the 
earth" and "gift of nature" for land; "industry" for 
labor, and "valuable qualities"* for useful qualities, or 
productive powers. But carefully to consider these rea 
sons which are held to justify the unjustifiable, is to see 
that their plausibility is brought about by the same way 
that a juggler seems to change a watch into a turnip—the 
substitution of one thing for another thing while attention 
is distracted. In this case the substitution is of one sense 
of a word for another different sense of the same word. 

The word land, as before explained, has two senses. 
One of these is that of the dry and solid superficies of the 
globe as distinguished from water or air, or that of the 
cultivatable matter of the earth as distinguished from 
rock or sand or ice or bog. In this sense we frequently 
speak of "improved land" or "made land." The other, 
the economic sense of the word, is that of the natural or 
passive element in production, including the whole exter 
nal world, with all its powers, qualities and products, as 
distinguished from the human or active element, labor, 
and its sub-element, capital. In this sense we cannot 

* Value in political economy should be restricted to value in 
exchange, and the only sense in which land or other natural objects 
or their qualities may be said to have value in themselves is that of 
value in use. (See Book II., Chapter X.) 

 Chap.VL CAUSE OP CONFUSION AS TO PROPERTY. 466 

speak of " improved land " or " made land." Such phrases 
would involve contradiction in terms. 

Now in the reasoning just quoted Mill slips from one to 
the other of these two senses of the word land, not merely 
in the same connection, but in the same sentence, and 
even as between the noun and its pronoun without notice 
to the reader and seemingly without consciousness on his 
own part. 

The first suggestion of this substitution comes in the 
ifs of the second sentence. If, says Mill, land derived its 
productive power wholly from nature and not at all from 
labor, or if there were any means of discriminating what 
is derived from each source, it would be the height of 
injustice to let land be engrossed by individuals. 

Why these ifst Mill is here writing as a political 
economist, in a work entitled "Principles of Political 
Economy," and for the purpose in this particular place of 
discovering whether there is any justification from an 
economic point of view of property in land. Land, as a 
term of political economy, means that element of productive 
power derived from nature and not at all from labor. It 
has and can have no other meaning. The first principle 
of political economy is the distinction between the produc 
tive power derived wholly from nature, for which its term 
is land, and the productive power derived from human 
exertion, for which its term is labor. Where the reason 
can find no "means of discriminating what is derived 
from each source," political economy becomes impossible, 
and to confuse this discrimination is to abandon political 
economy. 

This is precisely what Mill does, when he goes on in the 
first sentence of the next paragraph to tell us that" though 
land is not the produce of industry, most of its valuable 
qualities are so." He is abandoning political economy 
by dropping in the pronoun the sense in which he uses 

 466 THE DISTRIBUTION OF WEALTH. Book IV. 

the word land in the noun, and falling with seeming 
unconsciousness into the vague sense of common speech. 
When he says that land is not the produce of industry he 
uses the word in the economic sense. But when he says 
that qualities of land are the produce of labor he is using 
the word in that loose ordinary sense in which we speak 
of "improved land" or "made land." For what single 
quality of land in the economic sense of the word is the 
produce of labor? Is it gravitation? Is it extension? 
Is it cohesion? Is it chemical affinities or repulsions? 
Is it the qualities shown in generation and germination 
and growth ? Why, Mill himself in the first chapter of the 
first book of his " Principles of Political Economy " declares 
that the primary power of labor, that by which man can 
alone act on the external world, consists In that power of 
muscular contraction by means of which he can to some 
slight extent move or arrest the motion of matter, adding: 

Labor, then, in the physical world, is always and solely employed in 
putting objects in motion; the properties of matter, the laws of 
nature, do all the rest. 

These properties of matter, these laws of nature which 
when labor changes things in place do all the rest, are 
qualities of land in the economic sense of the word land. 
Mill does not mean that they are ever the produce of 
industry? He cannot mean that. The fact is, that 
abandoning the economic sense of the word land, he resorts 
to that loose colloquial sense of the word in which we 
speak of " improving land" or "making land." And it is 
with illustrations of " improved land " and " made land " 
that he goes on to show how the qualities of land are 
products of labor. 

Let me too do a little illustrating, for the confusions to 
which Mill succumbed are in these closing years of the 

 Cliap.VI. CAUSE OF CONFUSION AS TO PEOPEETY. 467 

century being crammed into the minds of young people 
by a thousand " professors of political economy:" 

I am writing these pages on the shore of Long Island, 
where the Bay of New York contracts to what is called 
the Narrows, nearly opposite the point where our legalized 
robbers, the Custom-House officers, board incoming 
steamers to ask strangers to take their first American 
swear, and where if false oaths really colored the atmo 
sphere the air would be bluer than is the sky on this 
gracious day. I turn from my writing-machine to the 
window, and drink in, with a pleasure that never seems to 
pall, the glorious panorama. 

" What do you see ? " If in ordinary talk I were asked 
this, I should of course say, "I see land and water and 
sky, ships and houses and light clouds, and the sun, 
drawing to its setting, over the low green hills of Staten 
Island, and illuminating all." 

But if the question refer to the terms of political economy, 
I should say, " I see land and wealth." Land, which is the 
natural factor of production; and wealth, which is the 
natural factor so changed by the exertion of the human 
factor, labor, as to fit it for the satisfaction of human de 
sires. For water and clouds, sky and sun, and the stars that 
will appear when the sun is sunk, are, in the terminology 
of political economy, as much land as is the dry surface of 
the earth to which we narrow the meaning of the word in 
ordinary talk. And the window through which I look; 
the flowers in the garden; the planted trees of the orchard; 
the cow that is browsing beneath them; the Shore Road 
under the window; the vessels that lie at anchor near the 
bank, and the little pier that juts out from it; the trans- 
Atlantic liner steaming through the channel; the crowded 
pleasure-steamers passing by; the puffing tug with its line 
of mud-scows; the fort and dwellings on the opposite side 

 468 THE DISTEIBDTION OF WEALTH. Book IV. 

of the Narrows; the lighthouse that will soon begin to 
cast its far-gleaming eye from Sandy Hook; the big 
wooden elephant of Coney Island; and the graceful sweep 
of the Brooklyn Bridge, that may be discovered from a 
little higher up; all alike fall into the economic term 
wealth—land modified by labor so as to afford satisfaction 
to human desires. All in this panorama that was before 
man came here, and would remain were he to go, belongs 
to the economic category land; while all that has been 
produced by labor belongs to the economic category wealth, 
so long as it retains its quality of ministering to human 
desire. 

But on the hither shore, in view from the window, is a 
little rectangular piece of dry surface, evidently reclaimed 
from the line of water by filling in with rocks and earth. 
What is that? In ordinary speech it is land, as distin 
guished from water, and I should intelligibly indicate its 
origin by speaking of it as " made land." But in the 
categories of political economy there is no place for such 
a term as "made land." For the term land refers only 
and exclusively to productive powers derived wholly from 
nature and not at all from industry, and whatever is, and 
in so far as it is, derived from land by the exertion of labor, 
is wealth. This bit of dry surface raised above the level 
of the water by filling in stones and soil, is, in the economic 
category, not land, but wealth. It has land below it and 
around it, and the material of which it is composed has 
been drawn from land; but in itself it is, in the proper 
speech of political economy, wealth; just as truly as the 
ships I behold are not land but wealth, though they too 
have land below them and around them and are composed 
of materials drawn from land. 

Now here is the evident confusion in Mill's thought, 
which he has perplexed by dropping from the terminology 
of political economy to the language of ordinary speech. 

 Chap.n. CAUSE OF CONFUSION AS TO PROPERTY. 469 

The Bedford Level, •which is land that has been drained; 
the cultivatable bog of Ireland, which is land that has had 
a coating of soil put on it; the improved farms he refers 
to, which are land cleared or manured by labor, belong all 
of them to the same economic category as the little piece 
of " made land " visible from my window. In the qualities 
that he is considering in them they are all of them in the 
economic meaning not land at all, but wealth; not the 
free gift of nature, but the toil-earned produce of labor. 
In this, and so far as these qualities go, but no further— 
that is, in so far as they are wealth, not land, they are 
property; not because human agency can add any qualities 
to the natural factor, land; but because of the natural 
law of property, which gives to the producer the ownership 
of what his labor has produced. 

Mill seems to think that he has shown the justification 
of property in land, but the reasons he gives only justify 
property in the produce of labor; thus in his own case 
adding a signal instance of the truth of what he has before 
said that" in every defense made of it, property is supposed 
to mean the guarantee to individuals of the fruits of their 
own labor." 

 BOOK V. 

MONEY—THE MEDIUM OF EXCHANGE AND 
MEASURE OF VALUE 

 CONTENTS OF BOOK V. 

MONET—THE MEDIUM OP EXCHANGE AND 
MEASURE OP VALUE. 

PAOB 

INTEODUCTION TO BOOK V. . . . . . .477 

CHAPTER I. 
CONFUSIONS AS TO MONBY. 

SHOWING THE DIVERGENCE IN COMMON THOUGHT AND AMONG 
ECONOMISTS AS TO MONBY. 

Present confusions as to money—Their cause—How to disen 
tangle them .......... 479 

CHAPTER H. 
THE COMMON UNDERSTANDING OF MONEY. 

SHOWING THAT THE COMMON USE OF MONEY IS TO BUY THINGS 
WITH, AND THAT ITS ESSENTIAL CHARACTER IS NOT IN ITS MA 
TERIAL, BUT IN ITS USE. 

The use of money to exchange for other things—Buying and sell 
ing—Illustration of the travelers—Money not more valuable 
than other things, but more readily exchangeable—Exchanges 
without money—Checks, etc., not money—Different money in 
different countries—But money not made by government fiat— 
D«es not necessarily consist of gold and silver—Or need intrin 
sic value—Ita essential quality and definition .... 482 

473 

 474 CONTENTS OF BOOK V. 

CHAPTER m. 
MEDIUM OP EXCHANGE AND MEASURE OP VALUE. 

SHOWING HOW THE COMMON MEDIUM OP EXCHANGE BECOMES THE 
COMMON MEASURE OF VALUE, AND WHY WE CANNOT FIND A COM 
MON MEASURE IN LABOR. 

PAGE 

Money is most exchanged—Why not measure value by labort 
—Smith's unsatisfactory answer—The true answer—Labor can 
afford no common measure, and commodities are preferably 
taken—Survivals of common measures—Difference in common 
measures does not prevent exchange ..... 495 

CHAPTER IV. 
THE OFFICE OP CREDIT IN EXCHANGES. 

SHOWING THAT THE ADVANCE OP CIVILIZATION ECONOMIZES 
THE TOE OP MONEY. 

Tendency to over-estimate the importance of money—Credit 
existed before the use of money began—And it is now and 
always has been the most important instrument of exchange— 
Illustration of shipwrecked men—Adam Smith's error as to 
barter—Honey's most important use to-day is as a measure of 
value ........... 504 

CHAPTER V. 
THE GENESIS OP MONEY. 

SHOWING THAT THB LAW OP GRATIFYING DESIRES WITH THE 
LEAST EXERTION PROMPTS THE USB FROM TIME TO TIME OP 
THE MOST LABOR-SAVING MEDIUM AVAILABLE. 

Money not an invention, but developed by civilization—It grows 
with the growth of exchanges—Exchange first of general com 
modities—Then of the more convenient commodities—Then 
of coin, whose commodity value comes to be forgotten—Illus 
tration of the American trade dollar—The lessening uses of 
commodity money and extensions of credit money—Two ele 
ments in exchange value of metal coin: intrinsic, or value of 
the metal itself; and seigniorage—Meaning of seigniorage— 
Exchange value of paper money is seigniorage—Use of money 
is not for consumption, but exchange—Proprietary articles as 
mediums of exchange—Mutilated coins—When lessening metal 
value in coins does not lessen circulating value—The essential 

 CONTENTS OF BOOK V. 475 

PAGE 

being that both represent the same exertion—This the reason 
why paper money exchanges equally with metal money of like 
denomination .......... 512 

CHAPTER YL 
THE TWO KINDS OF MONEY. 

SHOWING THAT ONE ORIGINATES IN VALUE FROM PRODUC 
TION AND THE OTHER IN VALUE FROM OBLIGATION. 

Money peculiarly the representative of value—Two kinds of 
money in the more highly civilized world—Commodity money 
and value from production—Credit money and value from obli 
gation—Of credit money—Of commodity money—Of intrinsic 
value—Gold coin the only intrinsic value money now in cir 
culation in the United States, England, France or Germany 526 

 INTRODUCTION TO BOOK V. 

FT^HIS Book is really in the nature of a supplement to 
J_ Book II.," The Nature of Wealth." ' In my first draft 
of arrangement, a matter of much perplexity, the discussion 
of money was to have followed the discussion of value, 
with which it is so intimately connected; or at least, to have 
followed the discussion as to the definition of wealth. But 
to have given to the subject of money in Book II. the 
thorough treatment which present confusions seem to 
require would not only have disproportionately expanded 
that Book, but would have made needful the anticipation 
of some of the conclusions more logically and conveniently 
reached in Book III. and Book IV. I therefore finally 
determined as the best arrangement for the reader of this 
work to answer briefly in the last chapter of Book II. the 
question as to the relation of money to wealth which the 
conclusion of the discussion of the nature of wealth would 
be certain to bring, and to defer a fuller discussion of the 
subjectof moneyuntil after the production and distribution 
of wealth had both been treated. This point has now been 
reached, and continuing as it were Chapter XXI. of 
Book II., "The Nature of Wealth," I proceed to the 
discussion of the medium of exchange and measure of 
value. 

 CHAPTER I. 
CONFUSIONS AS TO MONEY. 

SHOWING THE DIVERGENCE IN COMMON THOUGHT AND AMONG 
ECONOMISTS AS TO MONEY. 

Present confusions aa to money—Their cause—How to disentangle 

them. 

T INHERE is no social idea or instrument with which 
i civilized men are more generally and personally 
familiar than money. From early infancy to latest age 
we all use it in thought and speech and daily trans 
actions, without practical difficulty in distinguishing what 
is money from what is not money. Yet as to what it 
really is and what it really does, there are both in common 
thought on economic subjects and in the writings of 
professed economists the widest divergences. This is 
particularly obvious in the United States at the time I 
write. For twenty years the money question has been 
under wide discussion, and before that, has had similar 
periods of wide discussion from the very foundation of 
the American colonies, to say nothing of the discussion 
that has gone on in Europe. Yet the attitude of Congress, 
of the State legislatures, of the political parties, and the 
press, shows that nothing like any clear conclusion as to 
first principles has yet been arrived at. As for the vast 
literature of the subject which has been put into print 
within recent years any attempt to extract from it a 
consensus of opinion as to the office and laws of money is 

479 

 480 OF MONEY. Book V. 

likely to result in the feeling expressed by an intelligent 
man who recently made this attempt, that " The more one 
reads the more he feels that any sure knowledge on the 
question is beyond his comprehension." 

The very latest American cyclopedia (Johnson's, 1896) 
gives this definition: "Money is that kind of currency 
which has an intrinsic value, and which thus if not used 
as currency would still be wealth." Thus, there are some 
who say that money really consists of the precious metals, 
and that whatever may be locally or temporarily or par 
tially used as money can be so used only as a represen 
tative of these metals. They hold that the paper money 
which now constitutes so large a part of the currency of 
the civilized world derives its value from the promise, 
expressed or implied, to redeem it in one or another of 
these metals, and by way of assuring such redemption vast 
quantities of these precious metals are kept idly in store 
by governments and banks. 

Of those who take this view, some hold that gold is the 
only true and natural money, in the present stage of 
civilization at least; while others hold that silver is as 
much or even more entitled to that place, and that the 
gravest evils result from its demonetization. 

On the other hand there are those who say that what 
makes a thing money is the edict or fiat of government 
that it shall be treated and received as money. 

And again, there are others still who contend that 
whatever can be used in exchange to the avoidance of 
barter is money, thus including in the meaning of the 
term, notes, checks, drafts, etc., issued by private parties, as 
fully as the coins or notes issued by governments or banks. 

Much of the contradiction and confusion which exists 
in popular thought proceeds from the pressure of personal 
interests brought into the question by the relation of debtor 
and creditor. But the confusions which prevail among 
professed economists have a deeper source- They evidently 

 Chap. 1. CONFUSIONS AS TO MONEY. 481 

result from the confusions which prevail in economic 
thought and teaching as to the nature of wealth and the 
cause of value. Money is the common measure of value, 
the common representative and exchanger of wealth. 
Unless we have clear ideas of the meaning of value and the 
nature of wealth, it is manifest therefore that we cannot 
form clear ideas as to the nature and functions of money. 
But since we have cleared up in the preceding chapters the 
meaning of the terms value and wealth, we are now in 
a position to proceed with an inquiry into the nature, 
functions and laws of money. It is unnecessary to waste 
time with any attempt to disentangle the maze of contra 
dictory statements of fact and confusions of opinion with 
which the current literature of the subject is embarrassed. 
The true course of all economic investigation is to observe 
and trace the relation of those social phenomena that are 
obvious now and to us. For economic laws must be as 
invariable as physical laws, and as thechemist or astronomer 
can safely proceed only from relations which he sees do here 
and now exist to infer what has existed or will exist in an 
other time and place, so it is with the political economist. 

Yet we find, if we consider them, that these divergences 
in the definition of money spring rather from differences 
of opinion as to what ought to be considered and treated 
as money, than from differences as to what, as a matter 
of fact, money actually is. The men who differ most 
widely in denning money find no difficulty in agreeing as 
to what is meant by money in daily transactions. Since 
we cannot find a consensus of opinion among economists, 
our best plan is to seek it among ordinary people. To 
see what usually is meant by money we have only to note 
the essential characteristics of that which we all agree in 
treating as money in our practical affairs. 

After we have seen what money really is, and what are 
the functions it performs, we shall then be in a position to 
determine what are the best forms of money. 

 CHAPTER II. 
THE COMMON UNDERSTANDING OF MONEY. 

SHOWING THAT THE COMMON USE OP MONEY IS TO BUT 
THINGS WITH, AND THAT ITS ESSENTIAL CHARACTER IS 
NOT IN ITS MATERIAL BUT IN ITS USE. 

The use of money to exchange for other things—Buying and selling 
—Illustration of the travelers—Money not more valuable than 
other things, but more readily exchangeable—Exchanges without 
money—Checks, etc., not money—Different money in different 
countries—But money not made by government fiat—Does not 
necessarily consist of gold and silver—Or need intrinsic value— 
Its essential quality and definition. 

w 

HEN we are confused as to the true meaning of an 
economic term, our best plan is to endeavor to 
obtain a consensus of opinion as to what the thing really 
is j what function it really performs. 

If I have agreed to pay money to another the common 
understanding of what money is will not hold my agree 
ment fulfilled if I offer him wood, or bricks, or services, or 
gold or silver bullion, even though, as closely as can be 
estimated, these may be of equal value to the money 
promised. My creditor might take such things in lieu of 
what I had agreed to pay. But he would be more likely 
to object, and his objection if fully expressed would 
amount to this: "What you agreed to pay me was 
money. With money I can buy anything that any one 
has to sell, and pay any debt I owe. But what you offer 

482 

 Chap. II. COMMON UNDERSTANDING OF MONEY. 483 

me is not money. It is something I would be willing to 
take if I happened to have any personal use for it. But 
I have no personal use for it, and to get any one to give 
me for it what I may want I must find some one who wants 
this particular thing and make a trade with him. What 
you propose would therefore put on me trouble, risk and 
loss not contemplated in our agreement." And the justice 
of this objection would be recognized by all fair men. 

In this—in the ease with which it may be passed from 
hand to hand in canceling obligations or transferring 
ownership—lies the peculiar characteristic of money. It 
is not the intrinsic nature of the thing, but the use to 
which it is applied that gives its essential character to 
money, and constitutes the distinction between it and 
other things. Even children recognize this. I make 
friends with a little one of four or five, and, showing it a 
stick of candy, ask what that is for ? it will say, " That 
is to eat." If I show a hat or a pair of shoes, it will say, 
" That is to wear." If I show a toy, it will say, " That is 
to play with." But if I show a piece of money, it will say, 
even though to it as yet all money may be pennies, " That 
is to buy things with." 

Now, in this, the little child will give a definition of 
money that, whatever may be our monetary theories, we 
all practically recognize. The peculiar use of money— 
what as money " it is for "—is that of buying other things. 
What by virtue of this use is money, may or may not have 
capability for any other use. That is not material. For 
so long as a thing is reserved to the use of buying things 
any use inconsistent with this use is excluded. 

We might, for instance, apply sticks of candy to the use 
of buying things. But the moment a stick of candy was 
applied to the use of being eaten its use in buying things 
would end. So, if a greenback be used to light a cigar, 
or a gold coin converted to the use of filling teeth, or of 

 484 OF MONEY. Book V. 

being beaten into gold-leaf, its use as money is destroyed. 
Even where coins are used as ornaments, their use as 
money is during that time prevented. 

In short, the use of money, no matter of what it be 
composed, is not directly to satisfy desire, but indirectly 
to satisfy desire through exchange for other things. We do 
not eat money nor drink money nor wear money. We pass 
it. That is to say, we buy other things with it. We esteem 
money and seek it, not for itself, but for what we may 
obtain by parting with it, and for the purpose of thus 
parting with it. This is true even where money is hoarded, 
for the gratification which hoarding gives is the conscious 
ness of holding at command that with which we may 
readily buy anything we may wish to have. 

The little child I tave supposed would probably not 
know the meaning of the word exchange, which is that of 
the voluntary transfer of desired things for desired things. 
But it would know the thing, having become familiar with 
it in the little exchanges that go on between children—in 
the giving of marbles for tops, of candy for toys, or in 
transactions based on " I will do this for you, if you will 
do that for me." But such exchanges it would probably 
speak of as trades or swaps or promises, reserving the 
words buying or selling to exchanges in which money is 
used. 

In this use of words the child would conform to a 
practice that has become common among careful writers. 
In the wider sense, buying and selling merely distinguish 
between the giver and receiver in exchange; and it is in 
this wider sense that Adam Smith uses the words, and as 
in poetry or poetical expression we continue to use them. 
But both in ordinary usage and in political economy we 
now more generally confine the words buying and selling 
to exchanges in which money is given or promised, speaking 
of an exchange in which money is not involved, as a barter 

 Chap. II. COMMON UNDERSTANDING OF MONEY. 485 

or trade, or simply an exchange. It is where money is 
one of the things exchanged that the transaction is called 
a purchase and sale; the party who gives money for an 
other thing being termed the buyer, and the party who gives 
the other thing for the money being termed the seller. 

In this usage, we habitually treat money as though it 
were the more notable or more important side of exchanges 
in which things not money are given for money—that side 
of exchange from which or towards which the initiative 
impulse proceeds. And there is another usage which 
points in the same direction. Among the masses of our 
people at least, and I presume the same usage obtains in 
all countries, good manners is held to require that where 
money passes in a transaction of exchange, the receiver of 
the money should by some such phrase as " Thank you," 
indicate a sense of benefit or obligation. 

The reason of both these usages is, I think, to be found 
in the fact that money is the thing in which gain or profit 
is usually estimated; the thing which can usually be most 
readily and certainly exchanged for any other thing. 
Thus whatever difficulty there may be in exchanging 
particular commodities or services for other commodities 
or services is generally most felt in exchanging them for 
money. That exchange once made, any subsequent 
exchange of the money for the things that are the ultimate 
objects of desire is comparatively easy. It is this that 
makes it seem to those who do not look closely, that what 
is sought in exchange is money, and that he who gets 
money in return for other things, is in a better position 
than he who gets other things in return for money. 

To see in what money really differs from other things 
having exchangeable or purchasing power let us imagine 
a number of men to undertake a journey through a 
country where they have no personal acquaintance. Let 
them for instance start from New York, in pleasant 

 486 OF MONEY. Book V. 

•weather, to make a leisurely trip by the highroads for 
one to two hundred miles. Let them for the defrayal of 
the expenses of the journey provide themselves with 
exchangeable things of different kinds. Imagine one to 
have a valuable horse; another some staple commodity, 
such as tobacco or tea; another gold and silver bullion; 
another a check or bill of exchange, or a check-book; and 
a fifth to have current money. These things might have 
value to the same amount, but at the first stop for rest 
and refreshment the great difference between them as to 
readiness of convertibility would be seen. 

The only way the man with the horse could pay for the 
slightest entertainment for man or beast, without selling 
his horse for money, or bartering for things that might 
be very inconvenient to carry, would be by trading him 
for a less valuable horse. It is clear that he could not go 
far in this way, for, to say nothing of the delays incident 
to horse trades, he would, if he persisted in them under 
pressure of his desire to go on, soon find himself reduced 
to an animal that could hardly carry himself. 

Though of all staple commodities, tobacco and tea are 
probably those most readily divisible and easily carried, 
the tourist who tried to pay his way with them would find 
much difficulty. If not driven to sell his stock outright 
for what money he could get, he would virtually have to 
convert his pleasure excursion into a peddling trip; and, 
to say nothing of the danger he would run of being 
arrested for infringement of Federal or local license laws, 
would be put to much delay, loss and annoyance in finding 
those willing to give the particular things he needed for 
the particular things he had. 

And while gold and silver are of all commodities those 
which have the most uniform and staple value, yet the 
man who had started with bullion would, after he had 
left the city, hardly find any one who could tell their real 

 Chap. II. COMMON UNDERSTANDING OF MONEY. 487 

value or was willing to take them in return for commod 
ities or service. To exchange them at all at anything like 
a reasonable rate he would have to hunt up some village 
jeweler who could test and weigh them, and who, though 
he might offer to give him a clock or a trinket, or to repair 
his watch in exchange, would hardly have the commodities 
or service our traveler needed at his disposal. To get 
what he wanted for what he had to give without recourse 
to money he would be driven to all sorts of intermediate 
exchanges. 

As for the man with the check-book, or check or bill of 
exchange, he would find himself the worst off of all. He 
could make no more use of them where he was not known 
than of so much blank paper, unless he found some one 
who could testify to his good credit or who would go to 
the expense of telegraphing to learn it. To repeat this at 
every stopping-place, as would be necessary if his trip were 
to be carried through as it had been begun, would be too 
much for the patience and endurance of an ordinary man. 

But the man with the money would find no difficulty 
from first to last. Every one who had any commodity to 
exchange or service to render would take his money gladly 
and probably say " Thank you " on receiving it. He alone 
could make the journey he set out to make, without delay 
or annoyance or loss on the score of exchanges. 

What we may conclude from this little imaginative 
experiment is not that" of all things money is the most 
valuable thing. That, though many people have in a 
vague way accepted it, would involve a fallacy of the 
same kind that is involved in the assumption that a 
pound of lead is heavier than a pound of feathers. What 
we may safely conclude from our experiment is, that 
of all exchangeable things money is the most readily ex 
changeable, and indeed that this ready exchangeability 
is the essential characteristic of money. 

 488 OF MONEY. Book V. 

Yet we have but to extend our illustration so as to 
imagineour travelers takingwith them beyond this country 
that same money they had found so easily exchangeable 
here, to see that money is not one substance, nor in all 
times and places the same substance. 

What is money in the United States is not money in 
England. What is money in England is not money on the 
Continent. What is money in one of the Continental 
states may not be money in another, and so on. Although 
in places in each country much resorted to by travelers 
from another country, the money of the two countries 
may circulate together, as American money with English 
money in Bermuda; or Canadian money with American 
money at Niagara Falls; or Indian money, English money, 
French money and Egyptian money at Port Said; yet the 
traveler who wishes to pass beyond such monetary borders 
with what will readily exchange for the things he may 
need must provide himself with the money of the country. 
The money that has served him in the country he has left 
becomes in a country using a different money a mere 
commodity the moment he leaves the monetary border, 
which he will find it advantageous to exchange with some 
dealer in such commodities for money of the country. 

Is money therefore a matter of mere governmental 
regulation? That is to say, can governmental statute or 
fiat, as is to-day contended by many, prescribe what money 
shall be used and at what rate it shall pass ? 

It is unnecessary for those of us who lived in or visited 
California between the years 1862 and 1879, to look further 
than our own country and time to see that it cannot. 
During those years, while the money of the rest of the 
Union was a more or less depreciated paper, the money of 
that State, and of the Pacific coast generally, was gold and 
silver. The paper money of the general government was 
used for the purchase of postage stamps, the payment of 

 Chap. II. COMMON UNDERSTANDING OF MONET. 489 

internal revenue dues, the satisfaction of judgments of the 
Federal courts, and of those of the State courts where 
there was no specific contract, and for remittances to the 
East. But between man and man, and in ordinary trans 
actions, it passed only as a commodity. 

If it be said that governmental power was not fully 
exerted in this case; that the United States government 
dishonored its own currency in making bonds payable and 
Custom-House dues receivable only in gold, and that the 
California specific contract law virtually gave the recog 
nition of the State courts only to gold and silver, we may 
turn to such examples as that of the Confederate currency; 
as that of the Continental currency; as that afforded by 
Colonial currencies prior to the Revolution; as that of the 
French assignats; or to that comical episode in which the 
caustic pen of Dean Swift, writing under an assumed name, 
balked the whole power of the British government in its 
effort to induce the Irish people to accept what was really 
a better copper money than that they were using. 

Government may largely affect the use of money, as it 
may largely affect the use of language. It may enact 
what money shall be paid out and received by government 
officials, or recognized in the courts, as it may prescribe 
in what language government documents shall be printed 
or legislative or legal proceedings held, or scholars in the 
public schools be taught. But it can no more prescribe 
what shall be used as the common medium of exchange 
between man and man in transactions that depend on 
mutual consent than it can prescribe in what tongue 
mothers shall teach their babes to lisp. In all the many 
efforts that governments, limited or absolute, have made 
to do this, the power of government has signally failed. 

Shall we say then, as do many who point out this 
impotency of mere government fiat, that the exchange 
value of any money depends ultimately upon its intrinsic 

 490 OF MONEY. Sook V. 

value; that the real money in the world, the only true and 
natural money, is gold and silver, one or both—for the 
metal-moneyists differ as to this, being divided into two 
opposing camps—the monometallists and the bimetallists T 

This notion is even more widely opposed to facts than 
is that of the fiatists. Gold and silver have for the longest 
time and over the widest area served, and yet do serve, 
as material for money, and sometimes have served, and in 
some places yet do serve, as money. This was the case, 
to some extent, in the early days of the California diggings, 
when every merchant or hotel-keeper or gambler or bar 
tender was provided with a bottle of acid and a pair of 
scales, and men paid for goods or food or lodging or 
drinks or losses out of buckskin bags in which they carried 
gold dust or nuggets. This is to some extent still the case 
in some parts of Asia, where, as was once the case in parts 
of Europe, even gold and silver coin passes by weight. 
But gold and silver are not the money of the world. The 
traveler who should attempt to go round the world paying 
his expenses with gold and silver bullion would meet the 
same difficulty or something like the same difficulty that 
he would meet in the country around New York. Nor 
would he obviate that difficulty by taking instead of 
bullion, gold and silver coin. Except in a few places, such 
as Bermuda or the Hawaiian Islands, they too would 
become commodities not easily exchangeable when he left 
the United States. 

The truth is that there is no universal money and never 
yet has been, any more than there is or has been in times 
of which we have knowledge a universal language. 

As for intrinsic value, it is clear that our paper money, 
which has no intrinsic value, performs every office of 
money—is in every sense as truly money as our coins, 
which have intrinsic value; and that even of our coins, 
their circulating or money value has for the most part no 

 Chap. II. COMMON UNDERSTANDING OF MONET. 491 

more relation to intrinsic value than it has in the case of 
our paper money. And this is the case to-day all over the 
civilized world. 

The fact is that neither the fiat of government nor the 
action of individuals nor the character or intrinsic value 
of the material used, nor anything else, can make money 
or mar money, raise or lessen its circulating value, except 
as it affects the disposition to receive it as a medium of 
exchange. 

In different times and places all sorts of things capable 
of more or less easy transfer have been used as money. 
Thus in San Francisco in the early days, when the sudden 
outflow of gold from the mines brought a sudden demand 
for money which there was no ready means of supplyingj 
bogus coins, known to be bogus, passed from hand to 
hand as money; and in New York at the beginning of the 
Civil War, when there was a great scarcity of circulating 
medium, owing to the withdrawal of gold and silver from 
circulation, postage stamps, car tickets, bread tickets, and 
even counterfeit notes, known to be counterfeit, passed 
from hand to hand as money. 

Shall we say then that they are right who contend that 
a true definition of money must include everything that 
can be used in exchange to the avoidance of barter ? 

Clearly, we cannot say this, without ignoring a real and 
very important distinction—the distinction between money 
and credit. For a little consideration will show that the 
checks, drafts, negotiable notes and other transferable 
orders and obligations which so largely economize the use 
of money in the commercial world to-day, do so only when 
accompanied by something else, which money itself does 
not require. That something else is trust or credit. This 
is the essential element of all devices and instruments for 
dispensing with the medium ship of money without resort 
to barter. It is only by virtue of it that they can take 

 492 OF MONET. Book r. 

the place of the money which in form they are promises 
to pay. 

When I give money for what I have bought, I pay my 
debt. The transaction is complete. But I do not pay my 
debt when I give a check for the amount. The transaction 
is not complete. I merely give an order on some one else 
to pay in my place. If he does not, I am still responsible 
in morals and in law. As a matter of fact no one will 
take a check of mine unless he trusts or credits me. And 
though an honest face, good clothes and a manifest ex 
igency might enable me to pass a small check upon one 
who did not know me, without the guarantee of some one 
he did know, I could as readily, and perhaps more readily, 
get him to trust me outright. So, I cannot, except to one 
who knows me or to whom I am identified as a man of 
good credit, pass the check of another or his note or draft 
or bill of exchange in my favor, and without guaranteeing 
it by indorsement. Even then I do not make a payment; 
I merely turn over with my own guarantee an order for 
payment. 

Thus there is a quality attaching to money, in common 
apprehension, which clearly distinguishes it from all forms 
of credit. It is, so far as the giver of the money is con 
cerned, a final closing of the transaction. The man who 
gives a check or bill of exchange must guarantee its 
payment, and is liable if it be not paid; while the drawer 
on the other hand retains the power at any time of stopping 
payment before that has been actually made. Even the 
man who gives a horse or other commodity in exchange 
must, save as to certain things and with the observance of 
certain requirements, guarantee title, and that it shall 
possess certain qualities expressed or implied. But in the 
passing of money the transaction is closed and finished, 
and there can be no further question or recourse. For 

 Chap. II. COMMON UNDERSTANDING OP MONET. 493 

money is properly recognized by municipal law as the 
common medium of exchange. 

All such things as checks, drafts, notes, etc., though they 
largely dispense with and greatly economize the use of 
money, do so by utilizing credit. Credit as a facilitator 
of exchange is older than money and perhaps is even now 
more important than money, though it may be made into 
money, as gold may be made into money. But though it 
may be made into money, it is not in itself money, any 
more than gold of itself is money, and cannot, without 
confusion as to the nature and functions of money, be 
included as money. 

What then shall we say that money is f 

Evidently the essential quality of money is not in its 
form or substance, but in its use. 

Its use being not that of being consumed, but of being 
continually exchanged, it participates in and facilitates 
other exchanges as a medium or flux, serving upon a larger 
scale the same purpose of keeping tally and facilitating 
transfers as is served by the chips or counters often used 
in games of chance.* 

This use comes from a common or usual consent or 
disposition to take it in exchange, not as representing 
or promising anything else, but as completing the 
exchange. 

* It is most important that this purely representative character 
of money should be thoroughly understood and constantly kept in 
mind, for from the confusion resulting from the confounding of 
money with wealth have flown the largest and most pernicious results. 
It was the basis of that anti-social theory of international exchanges 
which has cost European civilization such waste of labor and drain 
of blood, formerly known as the mercantile system and which sur 
vives in the protectionism of to-day. And it is at the bottom of 
those theories prevalent in the United States to-day which seek to 
increase wealth by increasing money. 

 494 OP MONEY. Book V. 

The only question ady one asks himself in taking money 
in exchange is whether he can, in the same way, pass it on 
in exchange. If there is no doubt of that, he will take it; 
for the only use he has for money is to pass it on in 
exchange. If he has doubt of that, he will take it only at 
a discount proportioned to the doubt, or not take it at all. 

What then makes anything money is the common con 
sent or disposition to accept it as the common medium 
of exchange. If a thing has this essential quality in any 
place and time, it is money in that place and time, no 
matter what other quality it may lack. If a thing lacks 
this essential quality in any place and time, it is not 
money in that place and time, no matter what other qual 
ity it may have. 

To define money: 

Whatever in any time and place is used as the common 
medium of exchange is money in that time and place. 

There is no universal money. While the use of money 
is almost as universal as the use of languages, and it 
everywhere follows general laws as does the use of lan 
guages, yet as we find language differing in time and 
place, so do we find money differing. In fact, as we shall 
see, money is in one of its functions a kind of language 
—the language of value. 

 CHAPTER IH. 

MEDIUM OP EXCHANGE AND MEASURE 
OP VALUE. 

SHOWING HOWTHE COMMON MEDIUM OP EXCHANGE BECOMES 
THE COMMON MEASURE OP VALUE, AND WHY WE CANNOT 
FIND A COMMON MEASURE IN LABOR. 

Money is most exchanged—Why not measure value fcy labort— 
Smith's unsatisfactory answer—The true answer—Later can 
afford no common measure, and commodities are preferably taken 
—Survivals of common measures—Difference in common measures 
does not prevent exchange. 

I HAVE in the last chapter defined money as whatever 
is at any time and place used as the common medium 
of exchange. This is indeed the primary quality of money. 
But proceeding from this use as a common medium of 
exchange, money has another and closely conjoined use— 
that of serving as a common measure of value. 

The reason of this is that the use of money as a common 
medium of exchange, which causes it to be esteemed for 
exchange and not for consumption, makes it of all 
exchangeable things that which in civilized societies is 
often and most commonly exchanged. A given portion 
of wood or coal, for instance, may be used by the producer 
and thus not be exchanged at all; or it may be exchanged 
once or perhaps even half a dozen times between cutting or 
mining and its reaching in the hands of the consumer the 
ultimate end for which it was produced, the combustion 

495 

 496 OF MONET. Book V. 

that supplies heat. So it is with potatoes or wheat or corn. 
The majority of horses are probably not exchanged at 
all during their working days, and it would be a much 
exchanged horse who should have six owners during his 
life. Cotton and wool and hemp and silk may pass from 
one to half a dozen exchanges before they assume the form 
of cloth or rope, and in that form may pass through from 
two to half a dozen more exchanges before reaching the 
consumer. And so with lumber or iron or most of the 
forms of paper, meat or leather. Not only is the ultimate 
purpose of the exchanges of such things destructive 
consumption, but they are mainly composed of things 
which if not soon consumed will wear out or decay. 

Money, on the other hand, is not produced for the 
purpose of being consumed, but for the purpose of being 
exchanged. This, not consumption, is its use. And we 
always seek for its substance materials least subject to 
wear and decay, while it is usually carefully guarded by 
whoever for the moment may be in its possession. And 
further while an article of money may frequently pass 
through more hands in a single day than ordinary articles 
of wealth are likely to pass through during the whole period 
of their existence, the use of money in thought and speech 
as a symbol of value brings it to the constant notice of 
those who do not often tangibly use it. Thus it is that 
the value of the money which is the common medium of 
exchange in any community becomes to the people of that 
community better known than the value of anything else, 
and hence is most readily and constantly chosen to compare 
the value of other things. 

But here may arise a question, which I wish thoroughly 
to answer: If, as explained in Book II., value is in itself 
a relation to labor, why can we not find not merely a 
common measure of value, but an exact and final measure 
of value in labor itself f 

 Chap. III. FUNCTIONS OF MONEY. 497 

This is a question that perplexes a great many of the 
monetary theories that have been broached in the United 
States without finding scholastic recognition, and it is 
raised but not satisfactorily answered by Adam Smith. 

In a passage previously quoted in full* Adam Smith 
says: " But though labor be the real measure of the ex 
changeable value of all commodities, it is not that by which 
their value is commonly estimated." And then goes on to 
explain the reason of this. 

But in the attempt to explain this fact Adam Smith falls 
into confusion through the slipperiness of his terms and 
misses the true reason. While he says in effect that the 
time of exertion will not measure the quality of exertion, 
he yet, almost in the same breath, uses time as the measure 
of exertion, saying that " every commodity is ... more 
frequently exchanged for and thereby compared with other 
commodities than with labor," that "it is more natural 
therefore to estimate its exchangeable value by the quantity 
of some other commodity than by that of the labor which 
' it can purchase," and that " the greater part of the people 
too understand better what is meant by the quantity of a 
particular commodity than by a quantity of labor," thus 
ignoring what he had just shown, that it is the labor (in 
the sense of exertion) that their possession will save which 
determines the value of all commodities. His attempted 
explanation of the fact that the real measure of value is 
not the common measure of value, amounts to nothing 
more than that it is more usual to measure value by 
commodities than by labor. This is no explanation of the 
fact; it is merely a statement of the fact. We cannot 
explain a custom or habit by saying that it is natural or 
showing that it is usual. The very thing to be explained 
is why it seems natural and has become usual. 

» Page 231. 

 498 OP MONEY. Book V. 

Yet in the light of our previous investigation the reason 
why the real measure of value cannot serve as a common 
measure of value is clear. It lies in the human constitution. 
We become conscious of exertion through the "toil and 
trouble " it involves—the feeling of effort and at length of 
irksomeness and repugnance that attends its continuance. 
Now feeling is an affection or condition of the individual 
perception or Ego, which can find objective manifestation 
only through action. Even the mother can know the 
feelings of the babe only through its actions. If she can 
tell that it is hungry or sleepy or in pain, or is satisfied 
and happy, it is only in this way. 

As we have seen, labor in the sense of exertion, is the 
true, ultimate and universal measure of value; what 
anything will bring in exchange being always based upon 
an estimate of the toil and trouble attendant upon the 
exertion which the possession of that thing will save. 

But this is an estimate which, though each may make it 
for himself, he cannot convey to another directly, since the 
feeling of weariness or repugnance, the dislike of "toil 
and trouble," which constituting the resistance to, is the 
measure of, exertion, can, in our normal condition at least, 
be conveyed to, or expressed by one to another only 
through the senses. 

We make such estimate^ continually in our own minds, 
for memory which registers the experience of the individual 
permits us to compare the exertion it has required to do 
or procure one thing with what it has required to do or 
procure another thing. But to express to another person 
my idea of the amount of exertion required to do or procure 
a particular thing there must be something that will serve 
us as a mutual measure of the resistance to exertion, that 
is to say the "toil and trouble" that exertion involves. 

Thus, to convey to one ignorant of swimming some idea 
of the exertion it requires, I must compare it with some 

 Chop. III. FUNCTIONS OP MONEY. 499 

exertion with which we are both familiar, such as walking. 
Or, if a stranger wishes to know of me what exertion he 
will have to make to walk to a certain point, I will tell 
him, if I know it, the distance, and give some idea of the 
character of the road, for he will have some idea of the 
exertion required to walk a given distance on an ordinary 
road. If he be a Frenchman accustomed to meters and 
kilometers, which neither of us can translate into feet and 
miles, I will still be able to convey to him my idea by 
saving, so many minutes' or hours' walk, for all men have 
some idea of the exertion required to walk for a certain 
time. If we could find no common nomenclature of time, 
I could still give him some idea by pointing to the dial of 
my watch or to the sun, or by finding from whence he had 
come, and making him understand that the distance he 
had yet to go was longer or shorter, and the road harder 
or easier. But there must be some point of mutual 
knowledge which will furnish us with a common measure, 
for me to make myself intelligible to him at all 

So reversely, a common experience of required exertion . 
will, in the absence of a more exact measure, give some 
idea of distance or area, as 

A bowshot from her bower eaves, 
He rode between the barley sheaves, 

or, 

They gave him of the corn-land 

That was of public right, 
As much as two strong oxen 

Could plow from morn to night. 

Now while exertion is always the real measure of value, 
to which all common measures of value must refer, yet to 
get a common measure of value, which will enable us to 
express from one to another both quantity and quality 
(duration and intensity) of exertion, we must take some 

 500 OF MONEY. Book V. 

result of exertion, just as to find a common measure of 
heat, light, expansive force or gravitation we must take 
some tangible manifestation of those forms of energy. It 
is because commodities, being the results of exertion, are 
tangible manifestations of exertion that they are generally 
and naturally used as common measures of value. 

Even where exertion is expressed in time, there is always 
at least an implied reference to accomplishment or results. 
Where I hire a man to work for me by the day or week 
or month in occupations which show tangible result, as in 
digging or draining, in plowing or harvesting, in felling 
trees or chopping wood, it is always with a certain idea of 
the tangible result to be achieved, or in other words, of 
the intensity as well as of the duration of the exertion. 
If I find no result, I say that no work has been done; and 
if I find that the results are not such as should have come 
from a reasonable or customary intensity of exertion with 
a reasonable or customary knowledge or skill, I say that 
what I really agreed to pay for has not been accorded me. 
And disinterested men would support me. 

On going ashore in San Francisco, a shipmate of mine, 
who could not tell a scythe from a marlinspike, hired out 
to a farmer in haying-time for $5 a day. At his first 
stroke with the scythe he ran it so deep in the ground 
that he nearly broke it in getting it out. Though he 
indignantly denounced such antiquated tools as out of 
fashion, declaring that he was used to " the patent scythes 
that turn up at the end," he did not really feel wronged 
that the farmer would not pay him a cent, as he knew that 
the agreement for day's labor was really an agreement 
for so much mowing. 

In fact, the form of measuring exertion by time, at 
bottom, involves its measurement by result. 

This we find to be true even where there is no definite 
result. If I hire a boatman or cabman to take me to a 

 Chap. III. FUNCTIONS OF MONEY. 501 

certain point, the distance, being known, affords a close 
idea of the exertion required, and it is the fairest, and to 
both parties usually the most agreeable way, that the 
stipulation shall be for that result, or as the cabmen in 
Europe say " by course ?" which is a definite payment for 
a definite result. But even were I to take a boat or a cab 
without fixed idea of where I want to go, and agree to pay 
by the hour, there is an implied understanding as to the 
intensity of the exertion for which I am to pay. Either 
boatman or cabman would feel that he was not keeping 
his agreement fairly, and I would certainly feel so, were 
he, for the purpose of " putting in time," to row or drive 
at a snail's pace. 

So strong is the disposition to take tangible results as 
the measure of exertion that even where quality is of more 
importance than quantity, as in literary work, the formal 
measurement is even in our best magazines and newspapers 
by the page or column, differences in quality, real or 
expected, beiug recognized partly in the readiness with 
which an article is accepted, and partly in a greater price 
per page or per column. 

In short, while exertion, including both quantity and 
intensity, is always the true and final measure of value, it 
is only through the manifestations of exertion that any 
common measure of value can be had. Thus commodities 
being tangible expressions of exertion become the readiest 
common measures of value, and have since the beginning 
of human society been so used. 

While any commodity, or for that matter any definite 
service, may be used as a common measure of value to the 
extent to which it is recognized as embodying or express 
ing a certain amount of exertion and thus having a def 
inite, though not necessarily a fixed value, the tendency 
is always to use for this purpose the commodity whose 
value is most generally and easily recognized. And since 

 502 OF MONET. Book V. 

the commodity which is used as the common medium of 
exchanges becomes in that use the commodity which is 
of tenest exchanged and whose value is most generally and 
easily recognized, whatever serves as the common medium 
of exchange tends in that to become the common measure 
of value, in terms of which the values of other things are 
expressed and compared. In societies which have reached 
a certain stage of civilization this is always money. Hence 
\ve may define money with regard to its functions as that 
which in any time and place serves as the common medium 
of exchange and the common measure of value. 

It must be remembered, however, that of these two 
functions, use as the common medium of exchange is 
primary. That is to say, use as the common medium of 
exchange brings about use as the common measure of 
value, and not the reverse. But these two uses do not 
always exactly correspond. 

Thus, in New York and its neighborhood one may still 
hear of shillings or York shillings (12£ cents) as a measure 
of small values. There is no such coin, this use of an 
ideal shilling being a survival from Colonial times. So, 
in Philadelphia one may hear of fips and levies; in New 
Orleans of picayunes and in San Francisco of bits, sur 
vivals of the Spanish coinage; and in the far Northwest of 
" skins," a purely ideal measure of value surviving from 
the time when the Hudson Bay Company bartered with 
the Indians for furs. During, and for some time after, the 
civil war two different common measures of value were in 
co-temporaneous use in the United States—paper money 
and gold. But since the resumption of specie payments, 
though paper money still constitutes the more largely used 
medium of exchange, gold alone has in this country 
become the common measure of value. And though gold, 
silver and paper are all largely, and generally co-tempora- 
neously, used throughout the civilized world to-day as 

 Wiap.III. FUNCTIONS OP MONEY. EOS 

supplying the common medium of exchange, the great 
monetary division is between the countries which use gold 
as the common measure of value and the countries which 
use silver. 

But it is still evident, as Adam Smith said, that labor 
(in the sense of exertion) is "the real measure of the 
exchangeable value of all commodities,"—" the only 
universal as well as the only accurate measure of value, or 
the only standard by which we can compare the values of 
all commodities in all times and in all places." For it is 
still true, as he said, that " the real price of everything, 
what everything really costs to the man who wants to 
acquire it, is the toil and trouble of acquiring it. What 
everything is really worth to the man who has acquired it, 
and who wants to dispose of it or exchange it for something 
else, is the toil and trouble which it can save to himself, 
and which it can impose upon other people." 

Since labor is thus the real and universal measure of 
value, whatever any country may use as the common 
measure of value can impose little difficulty upon the 
exchanges of its people with the people of other countries 
using other common measures of value. Nor yet would 
any change within a country from one common measure 
of value to another common measure of value bring more 
than slight disturbance were it not for the effect upon 
credits or obligations. In this lies the main source of 
the controversies and confusions with which the " money 
question " is now beset. 

Before going further it would therefore be well, at least 
so far as pertains to the idea of money, to examine the 
relations of credit to exchange. 

 CHAPTER IV. 

THE OFFICE OF CREDIT IN EXCHANGES. 

[SHOWING THAT THE ADVANCE OP CIVILIZATION ECONOMIZES 
THE USE OP MONEY. 

Tendency to over-estimate the importance of money—Credit existed 
before the use of money began, and it is now and always has been 
the most important instrument of exchange—Illustration of ship 
wrecked men—Adam Smith's error as to barter—Honey's most 
important use to-day is as a measure of value.]1 

I HAVE sought to explain the common understanding 
of money and the part that it plays in exchanges by 
supposing a number of travelers. I did so because it is in 
such small and immediate exchanges as a traveler must 
make among strangers that the peculiar usefulness of 
money is most clearly felt. I did not mean to assume that 
the difficulties of barter in all places and times are so great 
as those that in the vicinity of New York at the close of 
the Nineteenth Century would attend the effort of a traveler 
to supply his personal needs by that means of exchange. 

On the contrary there are even now parts of the world 
where a traveler might find a properly selected stock of 
commodities more readily and advantageously exchange 
able than money itself, and the difficulties of barter have 
certainly increased not merely with the greater use of 
money, but with such modern appliances as post-offices, 

i Heading not complete In MS. See Prefatory Note.—H. O., JB. 
504 

 Chap. IV. OFFICE OF CREDIT IN EXCHANGES. BOB 

steamboats, railways, telegraphs and telephones, and with 
the greater concentration of population and exchanges 
that result from them. Even in our own civilization barter 
must have been a more efficient means of exchange in the 
times that preceded the great industrial development of 
the Nineteenth Century than it is now because people were 
more generally accustomed to it. The old traveling 
merchants and even the old foreign merchants, who sent 
their ships over the maritime world, were largely barterers, 
and the stated fairs of which we have now only faint 
survivals, but which formed so important a part in the 
industrial life of our ancestors, gave place and occasion for 
the meeting of those who wished to make a direct exchange 
of commodities for commodities or services for services 
that are wanting now. 

The effect of the general adoption of the more elaborate 
and on a large scale more efficient methods of an advanced 
civilization is always to relegate to forgetfulness the 
simpler methods previously in use. We have become 
within a few years so accustomed to the electric telegraph 
that we are apt to think that without it men would be 
reduced in carrying messages to the means of transporta 
tion by land or water, and to forget that telegraphs were 
in use before electric telegraphing was dreamed of. The 
convenience of the lucifer match has made its use so 
universal, that most of us if thrown on our own resources 
without matches, would find it a most serious difficulty to 
light a pipe or make a fire. A hunting party of civilized 
men, if deprived by accident of their ammunition, might 
starve to death before they could kill game even where it 
was abundant. Yet at the beginning of this century lucifer 
matches were unknown, and men killed game before fire 
arms were invented. 

And so it is with money. Its use is so general in our 
high civilization and its importance so great that we are 

 506 OP MONEY. Sook V. 

apt to over-estimate that importance and to forget that 
men lived and advanced before money was developed, and 
both to underrate the efficiency of the means of exchange 
other than that of money, and the amount of exchanging 
that even now goes on without any more use of money 
than that of a counter or denominator of values. 

It is not only that the simplest form of exchange, the 
transfer of things desired in themselves for things desired 
in themselves, still to some extent continues; but the 
advance of civilization which in an early stage develops 
the use of money as a medium of exchange begins in later 
stages to develop means for dispensing with or much 
economizing this use of money. The exchanges between 
different countries are still carried on without the use of 
money, and so in great measure are domestic exchanges, 
even in the same locality. Not merely in the rural districts 
and in small transactions is there much exchanging with 
out actual transfer of money, but in the greatest cities, the 
largest transactions, habitually spoken of and thought of 
as though they involved the transfer of money, really take 
place without it. The richer people in fact use compara 
tively little money, even in personal transactions, and I 
fancy that a man of good credit who kept a bank-account 
might, if he tried to, live from year's end to year's end, 
even in a great city like New York (and with less effort in 
a smaller place), without a penny of actual money passing 
through his hands. His income, if not received in small 
amounts, he would get in checks or similar transfers. His 
larger expenses he could of course pay for in checks, and 
even such things as newspapers, tickets for street-car lines 
or railways, or admission to theaters, postage-stamps, etc., 
he could with a little effort get in the same way. 

Now all this economizing in the use of money, which 
we are accustomed to think of as, and indeed in some of 
its forms really is, the latest development of a civilization 

 Chap.ir. OFFICE OF CKEDIT IN EXCHANGES. 507 

that for immemorial ages has been accustomed to the use 
of money, is really in essence a return to something that 
must have been in use for the facilitating of exchanges 
before money was developed among men. That something 
is what we call trust or credit. Credit is to-day and in our 
highest civilization the most important instrument of 
exchange; and that it must have been from the very first 
appearance of man on this globe the most important 
instrument of exchange, any one can see, if he will only 
discard the assumption that invalidates so much of our 
recent philosophy and philosophic history—the assump 
tion that the progress of civilization is a change in man 
himself—and allow even prehistoric man the same reason 
ing faculties that all we know of man in historic times 
shows to belong to him as man. 

Imagine a number of totally shipwrecked men swimming 
ashore in their buffs to an uninhabited island in a climate 
genial enough to enable them to support life. What would 
be their first exchanges f Would they not be based upon 
the various forms of the proposition, "I will do or get 
this for you, if you will do or get that for me ? " Now, no 
matter where or how they got into this world, this must 
have been the position of the first men when they got here, 
and all that we can reason from with any certainty goes 
to show that these first men must have been essentially 
the same kind of men as we ourselves. 

If there is any difference in priority between them, 
credit must, in the nature of things, have preceded barter 
as an instrument of exchange, and must at least from the 
very first have assisted barter. What more natural than 
that the man who had killed a deer, or made a large catch 
of fish, should be willing to give now while he had abun 
dance in return for a promise expressed or implied that 
his neighbor when similarly fortunate would in the same 
way remember him ? The organization of credit into more 

 608 OF MONEY. Book V. 

elaborate and finer forms goes on with the development 
of civilization, but credit must have begun to aid exchanges 
with the very beginnings of human society, and it is in 
the backwoods and new settlements rather than in the 
great cities that we will to-day find its direct forms playing 
relatively the most important part in exchanges. 

In explaining the origin and use of money, Adam Smith 
much overrated the difficulties of barter, and in this he 
has been followed by nearly all the writers who have 
succeeded him. Of the condition before the use of the 
metals as money he says (Book I., Chapter IV. of the 
"Wealth of Nations"): 

One man, we shall suppose, has more of a certain commodity than 
he himself has occasion for, while another has less. The former 
consequently would be glad to dispose of, and the latter to purchase, 
a part of this superfluity. But, if this latter should chance to have 
nothing that the former stands in need of, no exchange can te made 
tetneen them. The butcher has more meat in his shop than he him 
self can consume, and the brewer and the baker would each of them 
be willing to purchase a part of it. But they have nothing to offer 
in exchange, except the different productions of their respective 
trades, and the butcher is already provided with all the bread and 
beer which he has immediate occasion for. No excliange can, in this 
case, be made betiveen them. He cannot be their merchant, nor they 
his customers; and they are all of them thus mutually less service 
able to one another. . . . 

. . . The man who wanted to buy salt, for example, and had noth 
ing but cattle to give in exchange for it, must have been obliged to buy 
salt to the value of a whole ox, or a whole sheep, at a time. He could 
seldom buy less than this, because what he was to give for it could 
seldom be divided without loss; and if he had a mind to buy more, 
he must, for the same reasons, have been obliged to buy double or 
triple the quantity, the value, to wit, of two or three oxen, or of two 
or three sheep. If, on the contrary, instead of sheep or oxen, he had 
metals to give in exchange for it, he could easily proportion the 
quantity of the metal to the precise quantity of the commodity which 
he had immediate occasion for. 

Though this explanation of the difficulties attending 
barter has been paraphrased by writer after writer since 

 Chap.ir. OFFICE OF CEEDIT IN EXCHANGES. B09 

Adam Smith, it is an exaggeration so gross as to be 
ridiculous. The differentiation of such trades as that of 
the butcher, brewer and baker, the fact that men habitually 
devote their labor to the production of more of certain 
commodities than they themselves can consume, implies a 
division of labor that could not possibly take place were 
exchange impossible under the circumstances that Adam 
Smith assumes. And it is evident that such circumstances 
would impose no insuperable difficulty to exchange even 
though a true money had not yet come into use. The 
butcher, with meat that he wanted to dispose of, would 
not have refused the exchange offered by the brewer and 
baker because he himself was already provided with all 
the bread and beer that he had immediate occasion for. 
On the contrary, he would say, " I have no immediate use 
for bread and beer because I am already supplied, but I 
will give you the meat you want on your promise to give 
me its equivalent in bread and beer when I call for them." 
Nor need he necessarily wait for his own supply of bread 
and beer to be exhausted before calling on the baker and 
brewer for the fulfilment of their promises, for since man's 
wants are not satisfied with meat, bread and beer alone, 
he might want from the tailor a coat, from the grazier a 
bullock, from the carpenter a house; and since they could 
not take from him at once full payment in such a 
perishable commodity as meat, he could help out his part 
of the exchange by telling the baker and brewer to give 
to them the bread and beer they had promised him. 

That is to say, it is not necessary to an exchange that 
both sides of it shall be effected at once or with the same 
person. One part or side of the full exchange may be 
effected at once, and the effecting of the other part or side 
may be deferred to a future time and transferred to 
another person or persons by means of trust or credit. 
And by this simple and natural device, and without the 
intervention of money, salt could be exchanged for less 

 510 OF MONEY. Book V. 

quantities of beef or mutton than are likely to spoil before 
a single family could consume them. The truth is that 
the difficulties of incidence which Adam Smith speaks of 
here as if they were inseparable from barter are always 
avoided by the use of trust where trust is possible. It is 
only where there are no other exchanges going on and it 
is not probable that the parties concerned will come into 
contact directly or indirectly again, as in a desert or at 
sea, that owing to want of incidence no exchange can be 
made between them.* 

It is really in exchange between those who are unknown 
to each other and do not expect to meet each other again 
that money performs its most indispensable office (as 
illustrated in Book V., Chapter II.). The use of mouey, by 
which the traveler can easily carry with him the means of 
supplying his needs, has greatly facilitated traveling; yet 
in the bill of exchange, the letter of credit, Cook's coupons, 
and the book of certified checks, which are so largely 
displacing money for the use of travelers, we come back 
again to the use of trust. 

Trust or credit is indeed the first of all the instrumen 
talities that facilitate exchange. Its use antedates not 
merely the use of any true money, but must have been 

* But even here there is often something of the nature of exchange, 
although it may lack the element of certainty. When a boy, passing 
through a street in Philadelphia during a sudden rain, I met a gen 
tleman standing in a doorway and proffered him the shelter of my 
umbrella, going a little out of my way to take him to his destination. 
As we parted he said, " You and I are not likely to meet again, as I 
am a stranger here; but one good turn deserves another, and I will 
try to return your service to me by doing such a service for some one 
else, telling him to pass it along." Possibly that little kindly service, 
which I would have forgotten but for the impression his words made, 
maybe "passing along" still. Both good and evil pass on as waves 
pass on. Yet I cannot but think that in the long run, good outlives 
evil. For as to the normal constitution of the human mind, evil must 
bring the wider and more permanent pain, the impulse to its per 
petuation must meet the greater friction. 

 Chap.lV. OFFICE OF CREDIT IK EXCHANGES. 611 

coeval with the first appearance of man. Truth, love, sym 
pathy are of human nature. It is not only that without 
them man could never have emerged from the savage state, 
but that without them he could not have maintained him 
self even in a savage state. If brought on earth without 
them, he would inevitably have been exterminated by his 
animal neighbors or have exterminated himself. 

Men do not have to be taught to trust each other, except 
where they have been deceived, and it is more often in our 
one-sided civilization, where laws for the collection of 
debts have weakened the moral sanction which public 
opinion naturally gives to honesty, and a deep social 
injustice brings about a monstrous inequality in the 
distribution of wealth, and not among primitive peoples, 
that the bond is of tenest required to back the simple word. 
So natural is it for men to trust each other that even the 
most distrustful must constantly trust others. 

And trust or credit is not merely the first of the agencies 
of exchange in the sense of priority; it yet is, as it always 
has been, the first in importance. In spite of our extensive 
use of money in effecting exchanges, what is accomplished 
by it is small as compared with what is accomplished by 
credit. In international exchanges money is not used at 
all, while the great volume of domestic exchange is in 
every civilized country carried on by the giving and 
cancelation of credits. As a matter of fact the most 
important use of money to-day is not as a medium of 
exchange, though that is its primary use. It is that of a 
common measure of value, its secondary use. Not only 
this, but with the advance in civilization the tendency is 
to make use of credit as money; to coin, as it were, trust 
into currency, and thus to bring into use a medium of 
exchange better adapted in many circumstances to easy 
transfer than metallic money. The paper money so largely 
in use in all civilized countries as a common medium of 
exchange is in reality a coinage of credit or trust. 

 CHAPTER V. 

THE GENESIS OF MONEY. 

[SHOWING THAT THE LAW OP GRATIFYING DESIRES WITH 
THE LEAST EXERTION PROMPTS THE USE PROM TIME TO 
TIME OP THE MOST LABOR-SAVING MEDIUM AVAILABLE. 

Money not an invention, but developed by civilization—It grows with 
the growth of exchanges—Exchange first of general commodities 
—Then of the more convenient commodities—Then of coin, whose 
commodity value comes to be forgotten—Illustration of the Ameri 
can trade dollar—The lessening uses of commodity money and 
extensions of credit money—Two elements in exchange value of 
metal coin: intrinsic, or value of the metal itself, and seigniorage— 
Meaning of seigniorage—Exchange value of paper money is seign 
iorage—Use of money not for consumption, but exchange—Propri 
etary articles as mediums of exchange—Mutilated coins—Debased 
coinage—When lessening metal value in coins does not lessen 
circulating value—This the reason why paper money exchanges 
equally with metal money of like denomination.]' 

MONET is not an invention, but rather a natural 
growth or development, arising in the progress 
of civilization from common perceptions and common 
needs. The same fundamental law of human nature which 
prompts to exchange, the law by which we seek to satisfy 
our desires with the least exertion, prompts us with the 
growth of exchanges to adopt as a medium for them the 
most labor-saving instruments available. 

i The port of chapter heading within brackets not in MS. —H.OK, JE. 
512 

 Chap. V. THE GENESIS OF MONEY. 613 

All exchange is of services or commodities. But as 
commodities are in reality concrete services they afford 
from the first the readiest media of exchange, performing 
that office and serving as measures of value not only for 
other commodities but for direct services. 

But commodities (under which name we include all 
movable products of labor, which, as such, have value so 
long as they retain the capacity of ministering to desire) 
greatly differ in their availability as media of exchange. 
Those best fitted for that use are those which are least 
perishable, which can be most easily passed from hand to 
hand and moved from place to place; which are most 
uniform in their articles and most homogeneous in their 
structure, so that they may be estimated with most cer 
tainty and divided and reunited with the least waste, and 
whose value is from their general use best known and 
most quickly recognized. 

In proportion as these qualities are united in one com 
modity there is a natural tendency to its use as a medium 
for the exchange of other things, and this use tends again 
to the wider knowledge and quicker recognition of its value. 

In primitive societies, or in the outposts of civilization 
where better means were not readily obtainable, skins, 
shells, salt, beads, tobacco, tea, blankets, and many other 
of the less perishable and more portable commodities, have 
in an imperfect way and to a limited extent been used as 
common media of exchange and common measures of value, 
thus becoming the money of the time and place.* But 

* Adam Smith and most of the subsequent writers have included 
cattle in the list of things that have in rude times served this func 
tion. Smith says, Book I., Chapter IV., "Wealth of Nations": 

" In the rude ages of society, cattle are said to have been the common 
instrument of commerce; and, although they must have been a most 
inconvenient one, yet in old times we find things were frequently 
valued according to the number of cattle which had been given in 

 614 OP MONET. Book V. 

the metals, and particularly the precious metals, so well 
fill all the requirements of a medium of exchange, that 
•wherever they have become well known mankind have 
applied them to this use. At first they were doubtless 
weighed, and perhaps tested, with every passage from 
hand to hand; but as their use for purposes of exchange 
became more common, the same desire to economize labor 
which leads the baker to give his bread the form and shape 
of loaves or rolls, and the tobacconist or tea-dealer to put 
up his commodities into uniform packages, must soon have 
led to the running of the metals used as media of exchange 
into pieces of definite weight and purity, so that they may 
be passed from hand to hand without the trouble of 
weighing and testing them. To make these pieces of 
circular form, since that is the most convenient and the 
least subject to abrasion in handling, and to afford evidence 
that they yet retained their original substance by stamping 
their sides and edges, are obvious devices that seem to have 

exchange for them. The armor of Diomede, says Homer, cost only 
nine oxen; but that of Glaucus cost an hundred oxen." 

Although I have hitherto accepted this statement, closer consid 
eration now convinces me that the inconvenience attaching to snch 
a use of cattle never conld have permitted them to take the place of 
money. As for the authority of Homer, the state of the arts assumed 
in the Iliad would imply the use of metal money, and the Marquis 
Gainier has contended that the oxen spoken of were really coins. 
But this supposition is not the only alternative to supposing that the 
allusions in Homer's poems are to be taken as indicating that cattle 
were in use as the common medium of exchange and common mea 
sure of value. In ordinary speech, and especially in poetry, which 
eschews the exactness of monetary terms, such things as cattle, lauds, 
slaves, have always been used to convey a vague but striking idea of 
wealth or value; and it seems far more reasonable so to understand 
the references of ancient writers than to take them as proof that 
commodities so inconvenient to divide, preserve and transfer as cat 
tle ever passed from the position of an article of exchange to that of 
its common medium and measure. 

 Chap. r. THE GENESIS OP MONEY. 516 

been adopted wherever sufficient skill in the arts had been 
attained and the metals were in this way used. And thus 
by a natural development in use, a commodity peculiarly 
adapted to the purpose becomes, in the shape of coined 
money, the commodity which serves as a medium of 
exchange and measure of value for all commodities and 
services, and which has been in use among peoples of the 
most advanced civilization for long ages and still remains 
in use, though not in exclusive use, to our day. 

But while the first purpose of coinage is, we may safely 
assume, to save the trouble of weighing and testing the 
commodity which has become a common medium of 
exchange, the general use of these coins as giving evidence 
of weight and purity must gradually have the effect of 
transferring the quality of ready exchangeability from the 
commodity to the coin. The habit of weighing and testing 
passes away; even the amount of the commodity embodied 
in the coin is, by the great majority of those who use it, 
forgotten or not heeded; and the shape, size, color and 
devices of the coin become the things that give it circula 
tion. An American Eagle, or ten-dollar piece, contains so 
many grains of gold of a certain fineness, and exchanges 
at the value of the gold. But not one in ten thousand of 
those who use this coin, and who know its value in rela 
tion to other things that they are in the habit of buying 
and selling, know how many grains of gold it contains. 
A man with a ten-dollar gold piece will find no difficulty 
in the United States in fairly exchanging it for anything 
he may happen to want, but he would find much difficulty 
in fairly exchanging the same quantity of gold in the 
shape of dust or of an ingot, anywhere except at a mint 
or with a bullion dealer. 

A curious evidence of this tendency to accept the sign 
rather than the substance is given in the history of the 
American trade dollar. For many years much of the ex- 

 616 OF MONET. EooJc V. 

port of silver to China has been in the shape of Mexican 
dollars, the stamp of which has become known there as 
evidencing a certain weight of silver. Thinking that it 
might take the place in China of the Mexican coin the 
American government in 1874 coined what was called a 
trade dollar. It was a better finished and handsomer coin 
than the Mexican dollar, and contained a greater weight of 
silver. But the Chinese preferred a coin whose look they 
had become familiar with, to one that was new to them, 
even though the latter was of greater intrinsic value. The 
attempt was a failure, and after an instructive domestic 
experience, which it is not worth while to speak of here, 
the coinage of the trade dollar was stopped. 

Now this transfer of ready exchangeability from the 
commodity to the coin, with the accompanying relegation 
of the commodity itself to the same position in exchange 
held by other commodities, which takes place as a result 
of the use of coin money, is a matter of great importance, 
leading ultimately to a complete change in the nature of 
the money used. 

In the coinage of the precious metals the use of com 
modities as a medium of exchange seems to have reached 
its highest form. But the very same qualities which of 
all commodities best fit the precious metals for this use, 
attach or may attach in still higher degree to something 
which, having no material form, may be passed from person 
to person or place to place without inconvenience from 
bulk or weight, or danger of injury from accident, abrasion 
or decay. This something is credit or obligation. And 
as the advance of civilization goes on, the same tendency 
to seek the gratification of desire with the least exertion, 
which with a certain advance of civilization leads to the 
development of commodity money, leads with its further 
advance to the utilization of credit as money. 

Movement in this direction may be distinguished along 
three lines: 1—The admixture in coinage of obligation 

 Chap. K THE GENESIS OF MONEY. 517 

value with production value. 2—The use of obligation 
or credit as representing an economizing commodity 
money. 3—The use of pure credit money. 

We are here considering only money. Not only is credit 
a facilitator of exchange before money of any kind is 
developed, but the same social progress which shows itself 
in the development of money also shows itself in the 
extension of credit. If the use of money supersedes the 
use of credit in some exchanges, it is only where the use 
of credit is difficult and inconvenient; and in facilitating 
exchanges over wider areas than the use of the primitive 
forms of credit would have been equal to, it also increases 
that mutual knowledge and mutual desire to exchange 
that are necessary to the extension of credit. Although the 
primary and local function of money is that of affording 
a common medium of exchange, its secondary function of 
affording a common measure of values soon becomes of 
greater importance, and the extension of credits in our 
modern civilization is far more striking and important 
than the extensions in the use of money as a medium of 
exchange. Though the use of any particular money as a 
medium of exchange is still local, the money of any one 
country circulating only to a very limited extent in other 
countries, yet the development of credits has been such 
that the exchange of commodities to the ends of the earth 
and among peoples using different moneys as mediums of 
exchange, is conducted by means of it. But what we are 
considering now is not this development of commercial 
credits, but the way in which the use of commodity money 
passes into the use of credit money; or in other words, the 
way in which the coinage of production value into a 
convenient medium of exchange passes into the coinage 
of obligation values. 

The demand for any metal in exchange is at first, like 
the demand for other things in exchange, a demand for 
consumption; and its value or rate of exchange, is 

 518 OF MONET. Book V. 

determined by the cost of producing it in merchantable 
form. As one or another of the metals began to come 
into use as a medium of exchange, the largest demand for 
it would doubtless for some time still be for consumption, 
and any change in the form of the metal made to fit it for 
this new use would at first entail little or no greater cost 
than that of the ordinarily merchantable form. Thus the 
value of the metal used as money would at first be no 
greater than that of the same metal intended for consump 
tion. But when coinage fairly began, something more of 
labor would be required to produce the stamped and 
finished coin than to produce the mere ingot of merchant 
able shape. 

Hence there are, or may be, two elements in the 
exchange value of metal coin—(1) the intrinsic value, or 
value of the metal itself, which is governed by the cost of 
producing it in merchantable form; and (2) the cost of 
changing it from that form into the form of finished coin. 
This second element, the charge for coinage, is called 
seigniorage, from the idea that the coining of money has 
from the earliest times been deemed a function of the 
sovereign—the seignior or lord—as representative of 
organized society or the state. 

There are two different ways in which it has been 
customary to pay for turning a merchantable material 
into a finished product Thus: From time immemorial 
until the present when machinery has begun to revolu 
tionize industrial methods, it was the custom for the man 
who wanted a suit of clothes to buy the material, take it 
to a tailor, and pay him for the work of making it into a 
suit. The tailor was not presumed to keep any of the cloth, 
and if he did so it was called " cabbage." During the 
same time it was, on the contrary, the universal custom for 
the miller to get his pay by keeping a part of the material 
brought Viim for conversion. The farmer or purchaser 

 Chap. r. THE GENESIS OF MONET. 619 

brought his grain to the mill, receiving back less than its 
equivalent in meal, the difference being the toll that the 
miller retained for the service of grinding. The manu 
facturer who is now succeeding both the old tailor and 
the old miller buys the material and sells the finished 
product. 

Now the conversion of metal into coin seems always to 
have been paid for in the same way as the conversion of 
grain into meal or flour, by a toll or deduction in the 
return. This toll or seigniorage may be less or more than 
the actual cost of coinage. It is what the lord or state, 
who has the sole privilege of coinage, chooses to take for 
it; the difference between the rate at which metal is 
received or bought at the mint and the rate at which it is 
returned or issued in coin. 

Had the coinage of metal into money been left to the 
free competition of individual enterprise, the charge for 
this conversion would have tended to the lowest point at 
which coin could be produced in sufficient quantities to 
supply the demand. But so far as we can see this has 
never been the case. The primary object of coinage being 
the certification of weight and fineness, that is obviously 
best assured by the stamp of the highest and most widely 
known authority, that of the sovereign or state. Where 
coinage is thus monopolized in the hands of the sovereign, 
the element of seigniorage in the value of coin may be 
eliminated altogether by the agreement or practice of the 
sovereign to return in coin the full amount of metal 
brought to his mints, as is to-day the case in some countries 
with some metals; or it may be extended so as to become 
the most important of the two elements in the value of 
coin by the refusal of the sovereign to coin on other terms 
and the exclusion or refusal of other coinage. Indeed, 
by the selection of some very cheap commodity for the 
material of coinage, it may become practically the only 

 520 OP MONEY. Book V. 

element of value. For, as Ricardo pointed out, the whole 
exchange value of paper money may be considered as a 
charge for seigniorage. 

The reason of this fact that, the issuance of money being 
a monopoly, the element of intrinsic value may be partially 
or entirely eliminated without loss of usefulness, is to be 
found in the peculiar use of money. The use of other 
commodities is in consumption. The use of money is in 
exchange. Thus the intrinsic character of money is of no 
moment to him who receives it to circulate again. The 
only question that he is concerned with is as to the 
readiness of others to receive it from him when he wants 
in his turn to pass it on. And this readiness where coined 
money comes into use as the common medium of exchange 
is associated with coinage, which becomes the badge or 
stamp of circulation. 

There are to-day certain commodities having a large 
and wide-spread sale in neatly put up packages under pro 
prietary names, such as Pears' Soap, dolman's Mustard, 
Royal Baking Powder, and so on. The reputation as to 
quantity and quality of contents which has been secured 
for the packages bearing such a trade-mark gives their 
manufacturers proprietary profits often very considerable 
that are analogous to seigniorage. For a short time and 
to a small extent these profits might be increased by 
decreasing the quality of the goods. Those who bought 
them to sell again would at first be unconscious of the 
difference and would buy as before. But as soon as they 
reached the hands of purchasers for consumption, the 
difference would be detected and the demand would 
decline, for the demand of those who buy such things to 
sell again springs from the demand of those who buy for 
consumption. 

But (and the expedients resorted to in times of sudden 
and acute monetary scarcity may suggest this) let us 

 Cliap. V. THE GENESIS OF MONEY. 521 

imagine some such proprietary packed article to pass into 
use as the medium of exchanga The increased demand 
caused by the new and wider use would enable the owners 
of the trade-mark, by restricting supply of which they 
would have exclusive control, to carry up the value of the 
article so far above that of the contained commodity that 
it would pass out of use for consumption. Yet so long as 
the demand for it as a medium of exchange continued, it 
would have use for that purpose, and the owners of the 
trade-mark could not merely keep up the price, but could 
with impunity reduce the quantity and quality of the 
contents of their packages to almost any extent. For 
since every acceptance of a thing in exchange is in reality 
a purchase of it, and every transfer of it in payment of 
an obligation or in return for any other thing is in reality 
a sale, the entire demand for an article used only as a 
medium of exchange would be with a view to subsequent 
sale—would be a demand of merchants or traders, who are 
not concerned with the intrinsic qualities of what they buy 
to sell again, but only with its salability. 

In the illustration I have used, the possibility of les 
sening the quality or quantity of the packages without 
lessening their value as a medium of exchange, is depend 
ent on their having passed out of use for consumption 
and the demand for them being entirely the demand 
for use in exchange. For, so long as any part of the 
demand was a demand for consumption, the lessening of 
commodity value would, by checking the total demand, 
operate at once to reduce value not merely of that part 
used for consumption, but that part used for exchange. 

Now the first coined money being commodity money, 
the demand for it would be for a long time, in part at least, 
a demand for consumption. In the simpler stage of the 
arts, coin would be much more frequently than now beaten 
or melted into plate, adornments, ornaments, etc. And 

 622 OF MONEY. Book V. 

more important still perhaps, it would continue to be used 
as a commodity in the exchange with other countries. 
It is probable that the coinage of the more important 
sovereigns had a far wider area of diffusion when inter 
national commerce was much less than it is now. For, 
although the area of commerce was more limited than 
now, there was proportionately more of the area without 
any coinage of its own, and the development of credit as 
a medium of international exchanges, the use of coin in 
them as a conveniently portable commodity, was probably 
relatively greater than now. 

Now, the demand for coin sent abroad, as American 
gold sent to England, like the demand for coin for use in 
the arts, is a demand for use in consumption and would 
quickly show itself in a lessening of aggregate demand 
and consequently of value, upon a reduction of the com 
modity value of coin, no matter how strictly the workmen 
of the mints were sworn to secrecy, as was the device of 
sovereigns who contemplated deteriorating their coinage. 

But still more important is the fact that in order to 
keep up the value of coin while diminishing its intrinsic 
value it is necessary that the supply be strictly limited. 
But the sovereigns, whether princes or republics, who 
have resorted to the expedient of debasing their coinage 
have generally done so for the purpose of turning the 
same amount of metal into more coin, rather than that of 
keeping the same amount of coin in circulation with the 
use of less metal, or have been unable to resist the temp 
tation to do this when they found opportunity. 

That the circulating value of money need not necessarily 
depend on its intrinsic value, must have been clear to 
discerning men as soon as the habitual nse of coined 
money had made its signs and emblems the accepted 
tokens of value, so that it passed from hand to hand 
without testing and usually without weighing. The fact 

 Chap. V. THE GENESIS OF MONET. 523 

that coins that had lost something of their intrinsic value 
by abrasion continued to pass current, must have made 
clipping and filling and sweating, early devices of the 
cunning, which raised figures and milled edges would not 
prevent, unless supplemented by such mercantile stipulation 
or legislative enactment as secured common agreement not 
to accept such coins. This of itself would show that the 
circulating value of a coin did not as a matter of fact 
depend upon the value of the material it contained. 

Thus to the ministers and advisers of the sovereigns, 
who seem everywhere to have assumed from the first 
exclusive privilege of coining, it must have seemed an 
easy and safe economy to reduce the cost of the coin by 
substituting for its material some part of cheaper metal. 
Hence came those numerous and repeated reductions in 
the value of coins which are a marked feature in all 
monetary history; which have reduced the English pound 
sterling to but a fraction of its original equivalence to a 
pound troy, and in other countries have brought about a 
still greater difference. 

So far as the principal and most important coinage is 
concerned, these attempts have from time to time ended 
in disaster, and in the final reunion of circulating value 
with commodity value, either by the rejection and with 
drawal of the debased coin and a recoinage, or more 
frequently by the lowering of the circulating value to the 
level of the commodity value. 

This, however, is not a necessary result of a debase 
ment of coinage, as is so often assumed. A less valuable 
metal may be substituted in a coin for a more valuable 
metal without lessening the circulating value, provided— 
and this is the essential condition — it continues to 
be as hard for those who use the coin in exchanges to 
get the one as it was to get the other; or in other words 
that it continues to represent the same exertion. 

 B24 OF MONEY. Book V. 

For all exchange is really the exchange of labor, and 
the rate at which all things tend to exchange for all other 
things is determined by the relative difficulty of obtaining 
them. That a ten pound note of the Bank of England, 
having practically no intrinsic value, will exchange for 
ten gold sovereigns, having an intrinsic value of that 
amount of gold—that a five dollar note of the government 
of the United States, having no intrinsic value; five silver 
dollars, having an intrinsic value of something like two 
dollars and a half; and a five dollar piece, having an 
intrinsic value of five dollars, will exchange in this countiy 
for each other or for the same amount of commodities or 
services of any kind, is because the difficulty of getting 
these things, the quantity and quality of exertion ordinarily 
required to obtain them, is precisely the same. Should it 
become in the slightest degree harder to get one of these 
things than the others, this will show itself in a change of 
the rate at which they exchange. In this case we say that 
the one commands a premium or that the others bear a 
discount. 

The difficulty of procurement which brings to the same 
value the gold coin, silver coin and notes spoken of, so 
that they will exchange for each other or for equal quan 
tities of other things, is, though of the same intensity, of 
different kinds. In the gold coin, it is the difficulty of 
mining, refining and transporting the metal (for neither in 
Great Britain nor in the United States does the govern 
ment make any charge or exact any seigniorage for the 
coinage of gold). In the silver coin, it is partly the difficulty 
of obtaining the metal and partly the difficulty imposed 
by the only terms on which the government will coiu silver 
dollars—or in other words, by the seigniorage it demands. 
In the notes, it is the difficulty imposed by the restrictions 
on the issuance of such notes—or, as it may be considered, 
all seigniorage. What in short, gives to the paper notes 
or coins of small intrinsic value the same exchange value 

 Chap. F. TEE GENESIS OF MONEY. B2B 

as the gold coin, is that the government concerned, which 
has the monopoly of coinage in its respective country, will 
not issue one of them on any less terms than it does the 
other, thus making them all to the individual equally hard 
to get. 

What has everywhere caused the failure of the innumer 
able attempts to reduce the intrinsic value of the principal 
and important coin, without reducing its circulating value, 
is not the impossibility of the task, but the fact that the 
sovereigns who have attempted it did not, and perhaps 
could not, observe the necessary condition of success, the 
strict limitation of supply. But the purpose of the 
sovereigns, whether princes or republics, in debasing 
coinage has been, or underpressure of the temptation has 
become, not an attempt to make a less value in metal 
serve for the same quantity of coin, but to issue a greater 
quantity of coin on the same value in metal. Thus instead 
of restricting the supply of coin to the point where the 
demand for its use as a medium of exchange would keep 
up its exchange value irrespective of the lessening in its 
intrinsic value, they proceeded at once to increase supply 
on a falling demand, and met the inevitable depreciation 
of circulating value by fresh increase of supply, so that 
no matter how much the intrinsic value of the coin was 
reduced, its circulating value followed. 

[Principle same as that which caused depreciation in French 
assignat, Continental money, etc.] l 

It is this fall of circulating value with the fall of intrinsic 
value where it is not kept up by restriction of supply that 
has through succeeding depreciations reduced the English 
pound sterling to but a fraction of its original equivalence 
to a pound troy, and in other countries has brought about 
a still greater difference. 

> Note In MB. Indicating illustration to be developed by author. — H. G., 3s. 

 CHAPTER VI. 

THE TWO KINDS OF MONEY. 

[SHOWING THAT ONE ORIGINATES m VALUE FROM PRODUC 
TION, THE OTHER DSf VALUE FROM OBLIGATION. 

Money peculiarly the representative of value—Two kinds of money 
in the more highly civilized world—Commodity money and value 
from production—Credit money and value from obligation—Of 
credit money—Of commodity money—Of intrinsic value—Gold 
coin the only intrinsic value money now in circulation in the 
United States, England, France or Germany.] 1 

WHILE value is always one and the same power, that 
of commanding labor in exchange, there are as we 
have seen, with reference to its sources, two different 
kinds of value—that which proceeds from production and 
that which proceeds from obligation. Now money is pecu 
liarly the representative of value—the common medium or 
flux through which things are exchanged with reference 
to their value, and the common measure of value. And 
corresponding to and proceeding from this distinction 
between the two kinds of value, there are, we find, two 
kinds of money in use in the more highly civilized world 
to-day—the one, which we may call commodity money, 
originating in the value proceeding from production; and 
the other, which we may call credit money, originating in 
the value proceeding from obligation. 

This distinction has of course no relation to differences 
of denomination, such as those between English pounds, 

1 Merely the title In this heading appears In MS. — H. O., JB. 
526 

 Chap.ri. THE TWO KINDS OF MONET. 627 

French francs and American dollars. These are but 
differences of nomenclature. Nor yet does it coincide 
with differences in the material used as money, as for 
instance that between metal money and paper money. 
For while all paper money is credit money, all metal 
money is not commodity money. What I understand by 
commodity money is money which exchanges at its value 
as a commodity, that is to say, which passes current at no 
more than its " intrinsic value," or value of the material 
of which it is composed. Credit money is money which 
exchanges at a greater value than that of the material of 
which it is composed. In the one case the whole value for 
which the money exchanges is the value it would have as 
a commodity. In the other case the value for which the 
money exchanges is greater than its commodity value, and 
hence some part at least of its exchange value as money is 
given to it by credit or trust. 

For instance, a man who exchanges ten dollars' worth 
of wheat for a coin containing ten dollars' worth of gold 
makes in reality a barter. He exchanges one commodity 
for an equal value of another commodity, crediting or 
trusting nobody, but having in the coin he has received a 
commodity which, irrespective of its use as money, has an 
equal value to that he gave. But the man who exchanges 
ten dollars' worth of wheat for a ten-dollar note receives 
for a commodity worth ten dollars what, as a commodity, 
has only the value of a bit of paper, a value practically 
infinitesimal. What renders him willing to take it as an 
equivalent of the wheat is the faith or credit or trust that 
he can in turn exchange it as money at the same valuation. 
If he drops the coin into the sea, he loses value to the 
extent of ten dollars, and the sum of wealth is lessened by 
that amount. If he burns the paper note, he suffers loss, 
to the value of ten dollars, but he alone; the sum of wealth 
is only infinitesimally lessened. Paper money is in truth 

 628 OP MONEY. tiook F. 

of the same nature as the check or order of an individual 
or corporation except (and in this lies the difference that 
makes it money) that it has a wider and readier credit. 
The value of the coin of full intrinsic value, like the value 
of the wheat, is a value that comes from production. But 
the value of the paper money is, like the value of the check 
or order, a value from obligation. 

The first money in use was doubtless a commodity 
money, and there are some countries where it is still the 
principal money, and places perhaps where it is the only 
money. But in the more highly civilized countries it has 
been very largely superseded by credit money. In the 
United States, for instance, the only commodity or intrinsic 
value money now in circulation is the gold coinage of the 
United States. Our silver dollars have an intrinsic or 
commodity value of only some fifty cents, and the value 
of our subsidiary coinage is still less. That they circulate 
in the United States at the same value as gold shows that 
their exchange value has no reference to their intrinsic 
value. They are in reality as much credit money as is the 
greenback or treasury note, the difference being that the 
stamp, which evidences their credit and thus secures their 
circulation, is impressed not on paper, but on a metallic 
material. The substitution of what is now the cheapest 
of metals, steel, or the utter elimination of intrinsic value, 
would not in the slightest lessen their circulating value. 
What is true of the United States in this respect is also 
true of England, of France, of Germany, and of all the 
nations that have adopted gold as the common measure of 
value. Their only commodity money is certain gold coins; 
their other coins being token or credit money. In the 
countries that have retained silver as the common measure 
of value the standard coin is generally commodity money, 
but the subsidiary coins, having less intrinsic value, are in 
reality credit money. 

 INDEX. 

Adapting, its place in produc 
tion, 327-330, 332,353-354, 358, 
400, 414. 

Agriculture, alleged law of di 
minishing returns in, 174, 335- 
338, and the Malthusian the 
ory, 336, 337-338; confusion of 
the spatial law with, 351-356; 
relation of space to, 357, 358. 

Analysis, definition of, 29. 

Animals, how distinguished from 
man, 11-18, 19, 29, 36, 51, 53, 
56, 59, 77, 82, 85, 287, 291-292, 
397-399; how they resemble 
man, 13-14, 85, 291; and in 
stinct, 15-18, 291-292,397-398; 
cooperate, 397-399. 

Antinomy, 345-346, 348. 

Aristotle, final cause, 50; defini 
tion of wealth, 132. 

Austrian school, displaced the 
classical school, 124, 208-209, 
215, 252; value, 218, 252; mar 
ginal utilities, 218, 237; ab 
sence of scientific method in, 
448-449. 

Bacon, Francis, inductive logic, 
96-97; right reasoning, 139; 
Idols of the Forum, 340. 

Bain, definition of wealth, 123. 

Baird, Henry Carey, deduction 
and induction, 93. 

Beckford, "Vathek" and Font- 
hill, 369. 

Biddle, Clement C., validity of 
property, 184. 

Bisset, Andrew, natural rights, 
194. 

Bohm-Bawerk, Eugen V., does 
not define wealth, 124; teach 
ings of, 208-209. 

Bowen, definition of wealth, 
122. 

" Britannica, Encyclopaedia," old 
political economy dead, 205- 
206. 

Buckle, on civilization, 25; im 
portance of Smith's "Wealth 
of Nations," 89; selfishness in 
political economy, 89-90. 

Bull, Irish, from what its humor 
comes, 274. 

Cairnes, J. E., does not define 
wealth, 124; prediction as to 
political economy, 179-181. 

Capital, confusions as to, 120- 
121, 176-177; meaning fixed in 
"Progress and Poverty," 211, 
270-271, 298-300; wealth that 
is called, 293-300; all, is 
wealth, 294-295, 296; but all 
wealth not, 294-295, 296; paper 
money not. 299n.; other things 
not, 296-297; definition of, 293- 
294, 296, 299, 413; the third 
factor in production, 406, 413- 
415; when it may aid labor, 
414; it does not use labor, but 
is used by labor, 414-415. 

Carey, Henry C., induction and 
deduction, 93-94; protection 
ism, 196. 

529 

 530 

INDEX. 

Carlyle, Thomas, repugnance to 
"dismal science," 88; German 
thought in England, 196. 

Catallactics, substitute for po 
litical economy, 128-129. 

Cause, reason the power of trac 
ing its relations, 29-30, 33, 45- 
46; power that apprehension 
of its relations gives, 33-38; 
relative meaning of, 46-47; 
ultimate or sufficient reason, 
48-49; Aristotle on final, 
50; doctrine of final, 50; will 
or spirit the only explanation 
of first or final, 51-54, 56-57, 
79, and called God, 54, 57, 79; 
Mill's confusion, 44(M43. 

Chalmers, Dr., does not define 
wealth, 124; of natural rights, 
186-187. 

" Chambers' Encyclopedia," 
death of old political econ 
omy, 206-207. 

Christ, Kingdom of Heaven re 
vealed to babes, 139-140 ; why 
He sympathized with the poor, 
306-307. See Jesus. 

Christianity, made to soothe the 
rich, 174. 

Civilization, extensions of man's 
powers in, 19-23, 29-43, 91; rise 
of, to what due, 20-22; what it 
means, 24-28,37-38; vagueness 
as to what it is, 24-25, Guizot, 
25, Buckle, 25; its relation to 
the state or body politic, 25-28; 
to the body economic or Greater 
Leviathan, 27-28, 118, 399-400, 
428; origin and genesis of, 29- 
38; the germ of, 33-34; used as a 
relative term, 37; justice, high 
est aspect of, 35; how it devel 
ops, 39-43; as to history of, 37; 
extent of cooperation in mod 
ern, 20-22, 27, 36-38, 39-40, 43, 
325, 378-379, 426; machinery 
in, 379; exchange at root of, 
399-401; cause of death of, 439; 
makes no changes in man as 
man, 507. 

Clark, definition of wealth, 123. 

Classical school, 208. 

Commodity, as a term for an arti 
cle of wealth, 282. 

Compensation, Mill on, 137-138; 
Dove, 192-193; Spencer, 192- 
193. 

Competition, in determining 
value, 251, 253; office of, in 
production, 402-403; the life of 
trade, 402, 403; regarded as an 
evil. 402; its origin, 403; a 
natural law, 403. 

Confucius, meaning of recipro 
city, 306. 

Consequence, meaning of, 45-46; 
invariable sequence, 46, 55-56, 
80, 435-136, 437; of laws of na 
ture, 44-57, 80, 435-436, 437, 
440-443; Mill's improper use of 
word, 440-443. 

Consumption, not concerned with 
distribution, 426. 

Cooperation, gives rise to civiliza 
tion, 20-22, 27, 36-38, 39-40,43; 
meaning in current political 
economy, 371, andits true mean 
ing, 372; the two ways, 371-381; 
of combination of effort, 372- 
373, 380; of division or sep 
aration of effort, 372-381; of 
machinery, 379; extent of, in 
modern civilization, 325, 378- 
379, 426; Smith on division of 
labor, 182, 372, 374; his three 
heads, 380; a better analysis, 
380-381; its two kinds, 382-396; 
of directed or conscious, 383- 
385,391-393; of spontaneous or 
unconscious, 385-396; depen 
dent on exchange, 332, 378, 399, 
401; intelligence that suffices 
for one impossible for the other, 
385,394-395; conscious, will not 
suffice for the work of the un 
conscious, 393-395; this the 
fatal defect of socialism, 391- 
396; the spiritual element in 
production, 391, cannot be 
combined, 392; man power and 
miud power, 392-393; the 
Greater Leviathan, 22-23, 27- 
28, 36, 118, 395-396, 399-400, 
428; all living things engage in, 

 INDEX. 

531 

399, bees and ants from in 
stinct, 397-399, man from rea 
son, 398-399. 

Copernicus, astronomy before, 
138; his prudence, 168. 

Corn-laws, significance of agita 
tion and repeal of, 175-176. 

Creation of the world, and time, 
367-368. 

Credit, its office in exchanges, 
491-493, 504-511, 517, 526-528; 
paper money a coinage of, 
511. 

Davis, Noah K., inductive and 
deductive logic, 98-99. 

Debt, cannot be wealth, 137, 277- 
278; value from obligation, 262; 
slavery, 262; not capital, 296. 

Deduction, as used in political 
economy, 92-100. 

Desire, man's reason in the satis 
faction of, 17-18; cooperation 
or the Greater Leviathan in the 
satisfaction of, 22-23, 27, 36, 70, 
379; reason behind, 31-32; ex 
change springs from, 37, 512; 
causal relations, 50-51; the 
prompter of man's actions, 76, 
81-82, 247, 285, 326, 411, and 
satisfaction of, the end and 
aim, 81-82, 83, 285, 326, 411; 
distribution in the satisfaction 
of, 427-428; man could not ex 
ist without, 83; philosophies 
teaching extinction of, 83; 
working and stealing in the 
satisfaction of, 71-73; funda 
mental law of political econ 
omy, 76-77, 80, 91, 99, 254, 268, 
332; width and importance of 
the field of political economy, 
81-85, 303, 324-325; many kinds 
of, 82-83, 85, 247; subjective 
and objective, material and im 
material, 83-85; and value, 213- 
221, 245, 249, 252-256, 260, 261, 
268; nature and measurement 
of, 246-247; wealth and the 
satisfaction of, 279-280, 285- 
292, 340, 357; capital aud the 
satisfaction of, 293-297; three 

modes in production of satis 
fying, 332; origin of competi 
tion and, 403; genesis of money 
and, 512-525. 

Dickens, Charles, repugnance to 
the "dismal science," 88. 

Diminishing returns, alleged 
law of, 174, 335-338; the real 
law of, 340, 355-356, 357-364, 
368. 

Distribution, current confusion as 
to laws of, 177, 460-461; the 
laws Of, and their correlation 
treated in " Progress and Pov 
erty," 202; of value from obli 
gation, 272; includes neither 
transportation nor exchange, 
326, 400, 425-426, nor taxation, 
426, nor consumption, 426; der 
ivation and uses of the word, 
423-429; original meaning, 434; 
nature of, 430-439; a continua 
tion of production, 426-427, 
438-439; deals with future pro 
duction, 438-439, and affected 
through production, 446-447, 
453; laws of, belong to the nat 
ural order, 428; not concerned 
with human laws, 432, but so 
taught by classical school, 430- 
435; Mill's confusion, 430-435, 
440-443, 447-449, 455-459; com 
mon perception of this, 440-449; 
concerned with natural laws, 
435-439, 450-451, 454-459; rela 
tion to the moral law, 437-438, 
451-453; of the death of civili 
zation, 439; human will power 
less to affect, 443-447 ; the great 
laws of, 444; real difference 
from the law of production, 
450-453; of property, 454-459; 
causes of confusions as to prop 
erty, 460-469. 

Dollar, trade, the American, 515- 
516. 

Dove, Patrick Edward, on natural 
rights, 189-194; compensation, 
192-193. 

dvpont de Nemours, suggested 
Physiocrats' name, 145n. See 
Physiocrats. 

 532 

INDEX. 

Economic, as used for politico- 
economic, 66; the unit, 69. 

Economic bodv, how evolved and 
developed, '20-23, 35-37, 118, 
395-396, 428; gives rise to and 
takes name from body politic, 
25-28; growth of knowledge an 
aspect of, 39-40, 41-43; how 
political economy relates to, 
68-73. 

Economics, substituted for po 
litical economy, 128-130; what 
it teaches, 207. 

Economists, the French. See 
Physiocrats. 

Ego, what it is, 47,69; its depen 
dence on matter, 84-85; desire 
a quality of the, 246; determina 
tion of value and the, 252. 

Elements. See Factor. 

Elizabeth, Queen, and monopo 
lies, 278. 

Energy, what it is in philosophy, 
9; its correlative elements or 
factors, 9-10; mau but passing 
manifestation of, 13-14; its 
place in the world, 77, 80. 

Evil, outlived by good, 5lOn. 

Evolution, profound truth of, 85. 

Exchange, how reason impels to, 
35-37; not a separate depart 
ment in political economy, 425- 
426; law of diminishing returns 
in production and, 338; coo'p- 
eration and, 332, 378, 399, 401; 
none of the animals but man, 
397-399; and the Greater Le 
viathan, 35-36, 399-400 ; at the 
root of civilization, 399-401; 
even slavery involves it, 400; 
motive of the primary postu 
late of political economy, 401; 
money the common medium of, 
495-503; all, is really the ex 
change of services or com 
modities, 513-524. 

Exchangeability, comes from 
value, 235-249. 

Exchanges, credit in, 491-493, 
504-511, 517, 526-528. 

Exchanging, its place in produc 
tion, 325-326, 331-332,354,397- 

401, 414, 426; highest of the 
three forms of production, 400; 
not a part of distribution, 400, 
425-426. 

Exertion, fundamental law of po 
litical economy and, 86-91, 99, 
254, 268,332; positive and nega 
tive, 245-249; desire prompts, 
246; value a relation to, 228- 
234, 242, 244-249, 253-256, 257- 
269, 275, 497-501, 503; manifes 
tations of, become the common 
measures of value, 501-503; 
wealth a result of human, 285, 
287-288; but all human, not 
wealth, 285-287; essential idea 
of wealth, 292, 293; higher pow 
ers of, 295-296, 369; all that 
political economy includes, 301- 
303; spacial law and, 360. 363, 
365-366; time and, 368-370; co 
operation and, 374; competition 
and, 403; economic term for, is 
labor, 411; fundamental law of 
human nature, 512; value of 
paper money and, 524. 

Experiment, imaginative, as a 
method in political economy, 
29-30,100; use of, 240-241, 248- 
249, 436-437, 485-487, 507. 

Factor, meaning of term, 9; 
the three, of the world, 9-10, 
47, 77, 80; the two original 
factors of political economy, 
77, 413; the two necessary in 
production, 279, 413; the three 
in general production, 405-407, 
444; land, the natural or pas 
sive, 77, 408-410; labor, the 
human or active, 77, 80, 411- 
412; capital, the compound, 
413-415. 

Fallacies, how made to pass as 
truths, 134-136. 

Fawcett, definition of wealth, 122. 

Franchises, their value from ob 
ligation, 262-263; permanence 
of this value, 310-312; not real 
wealth, 277-278. 

Free trade, advocated by Physio 
crats, 152-153, 165, and by 

 INDEX. 

633 

Adam Smith, 164, 165; weak 
ness in Smith's teaching of, 
182-183; sought by American 
Peace Commissioners, 195-196. 

Gainier, Marquis, oxen used as 
money in Homer, 513w.-514w. 

Garrison, William Lloyd, change 
of public opinion towards, 
142. 

German, confused political econ 
omy, 195-196, 197-199, 208-209V 
283-284, 345, 461; socialism, 
197-199; trick of verbal contra 
diction, 341. 

God, and final cause, 47, 50, 52, 
54; the teological argument, 
50; distinct from nature, 54, 
55; how the reason posits it, 
10, 79, 403; the Most-Merciful, 
31; the All-Maker, 409; is just, 
451-452; manifestations of, 435- 
436, 443-444; Adam's curse, 91; 
made responsible for social ills, 
174, 333, 336, 355; Kant and 
Schopenhauer's substitute, 348. 

Godoonof, Boris, and serfdom, 
278. 

Good, it outlives evil, 510w. 

Goods, as used in political econ 
omy, 282-283; the Austrian 
school, 283-284. 

Gournay. See Physiocrats. 

Growing, its place in production, 
330-331, 353-354, 358, 400, 414; 
relation of space to, 357-364. 

Guizot, vagueness in describing 
civilization, 25. 

Hawaiian Islands, Christian mis 
sionaries, 297. 

Hegel, characterized by Schopen 
hauer, 208-209. 

Hern, Professor, the name plu- 
tology for political economy, 
128-129. 

Historical school, its style, 206; 
absence of scientific method, 
448-449. 

Hobbes's Leviathan, 22,25-26,27; 
relation to Greater Leviathan, 
22-23, 27-28, 395-396. 

Homer, oxen used as money, 
513w.-514n. 

Horace, endurance of his odes, 
310. 

Hyndman, H. M., Spence on 
natural rights, 185. 

Hypothesis, as a method in po 
litical economy. See Experi 
ment, Imaginative. 

Imaginative experiment. See 
Experiment. 

Immortality, man's belief in, 34. 
See Resurrection. 

Impot unique, origin and mean 
ing, 150-151; the single tax, 
150-151. 

Increment, unearned, its mean 
ing, 150; Mill on, 150, 195; and 
the Physiocrats, 355. 

Induction, as used in political 
economy, 92-100. 

Ingram, John Kells, old political 
economy dead, 120»., 205-206. 

Instinct, small development of, in 
man, 16, 397-398; large devel 
opment in animals, 15-18, 291- 
292,397-398; reason and, 36-37, 
291-292, 397-399. 

Interest, Smith not clear as to, 
183; law of, and the correla 
tion with the laws of rent and 
wages, treated in "Progress 
and Poverty," 202; one of the 
three great laws of distribution, 
444; futile attempts to regulate, 
445. 

Interests, special, study of polit 
ical economy affected by, 
xxxiii.-xxxv., 132-142,154,167- 
168, 169, 171-176, 182-184, 207, 
273-274, 333, 447, 461. See 
Privilege, Special. 

Intrinsic. See Value. 

James, E. J., on induction and 
deduction, 97-98; Smith's place 
in political economy, 169; old 
political economy dead, 205-207. 

Jefferson, Thomas, why the rich 
were against Jesus, 132. 

Jesus, Jefferson on why the rich 

 534 

INDEX. 

were against Him. 132. See 
Christ. 

Jevons, definition of wealth, 122; 
confusion as to, 196-197; value 
from marginal utilities, 218. 

"Johnson's Encyclopedia," old 
political economy dead, 206- 
207 ; definition of money, 480. 

Jones, definition of wealth, 12]. 

Justice, highest aspect of civiliza 
tion, 35; the government of the 
universe has its foundation in, 
451; not concerned with pro 
duction, 451-452, but governs 
distribution, 452; at the bottom 
of property, 456-459; Montes 
quieu on, 453. 

Kant, space and time and antin 
omy, 345-346, 348, 350; and 
Schopenhauer, 346-348; his 
categorical imperative, 458. 

Knowledge, man's earliest, of his 
habitat, ll; what it is and how 
it grows, 39-43; springs from 
cooperation, 20, 39; the incom 
municable knowing called skill, 
40-41, 59; the communicable 
knowing called, 41-43; that 
properly called science, 58-64. 

Labor, value of, 240; various 
senses of, 243; when land value 
is a robbery of, 256; in relation 
to space, 357-364; relation to 
time, 368-370; combination and 
division of, 371-381; Smith on 
division of, 182, 372, 374, 380; 
impossibility of division of, 
under socialism, 394-395; one 
of the two factors necessary in 
production, 279,413 ; one of the 
three factors in general produc 
tion, 405-406, 411-412, 413-414; 
its order, 406-407; capital is 
stored, 279, 296, 413; when cap 
ital may aid, 414; capital used 
by, 414-415; the essential prin 
ciple of property, 461-462; why, 
though the real measure of 
value, it cannot serve as the 
common measure, 495-503; all 

exchange is really exchange of. 
524. 

"Laissezfaire, laissez oiler," 153. 

Lalor, John J., definition of polit 
ical economy, 61-63; definition 
of wealth, 122. 

Lalor's Cyclopedia, induction and 
deduction, 97-98; Adam Smith, 
169. 

Land, basis of monopoly of, 137, 
and Mill's condemnation, 137; 
the term as used in political 
economy, 352, 408^09, 464; na 
ture of its value, 240; value of, 
and desire, 255-256; when its 
value is a consequence of civi 
lization and within the natural 
order, 256, and when destruc 
tive of civilization and a rob 
bery of labor, 256; value of 
obligation, 265-266, and not 
wealth, 265-266, 277-278, 297, 
nor capital, 297; can have no 
moral sanctions as properly, 
265, and rightfully belongs to 
the community; 265; perma 
nence of its value, 310-312; 
man's dependence on, 351-352; 
extension the fundamental per 
ception of the concept, 352, this 
confused and limited, 78, 353- 
356; intensive use of, made pos 
sible by extensive use of, 364; 
first or passive factor in pro 
duction, 77, 405-406, 408-410, 
412-413; importance of observ 
ing order of, 406-407; capital 
springs from union of labor and, 
406,413; erroneously included in 
thecategoryofprivateproperty, 
460-461; called by lawyers real 
property, 461; Smith's view of, 
461; Mill's attempts to defend 
private property in, 462; con 
fused meanings, 463-466; dif 
ferent meanings of, 466-468; 
Mill succeeds only in justify 
ing property in the produce of 
labor, 469; of "improved" and 
"made," 463-469. 

Landowners, their influence on 
political economy, 170-175,182- 

 INDEX. 

535 

184; Smith avoids antagonizing, 
182; true beneficiaries of pro 
tectionism, 175-176; invalidity 
of their right to land values, 
277-278; compensation to, Mill, 
137-138, Spencer, 192-193, 
Dove, 192-193; cannot contrib 
ute to production, 409-410; 
their income and the laws of 
distribution, 460-461. 

Language, how it grows in copi 
ousness, flexibility and beauty, 
274. 

Laiighlin, definition of wealth, 
123. 

Laveleye.De, definition of wealth, 
122. 

Law, science deals with natural, 
not human, 58-60; the funda 
mental, of political economy, 
86-91,99,254,268,332; natural, 
not human, the subject of po 
litical economy, 61-64, 76-77, 
426,428-429; natural law always 
the same, 428-429, 435-436; of 
nature, what it is, 435-436,443, 
452; Mill's definition, 443; the 
will behind it, 435-436; common 
perception of natural, in distri 
bution, 440-449, Mill's admis 
sion, 440-441, 443; sequence, 
consequence and natural, 44- 
57, 440-443; human law con 
fused with natural, in distri 
bution, 440-441, 443, 448-449; 
inflexibility of, in distribution, 
443^44. 

Lawyers, and real property, 461. 

Leverson, M. R., definition of 
wealth, 122. 

Leviathan, Hobbes's, 22, 25-26, 
27; the Greater, 22-23, 27-28, 
35-36, 118, 395-396, 399-400, 
428. 

Logic. See Reason. 

Macdonald, D. C., Ogilvie on 
natural rights, 185-186. 

Machinery-in civilization, 379. 

Macleod, H. D., definition of 
wealth, 122; objects to Smith's 
definition, 146; his confusion, 

196-197; definition of econom 
ics, 129; account of the Physio 
crats' views, 155-158. 

Macvane, definition of wealth, 
123. 

Maecenas, his name in Horace's 
odes, 310. 

Mal thus, definition of wealth, 
121; objects to Smith's defini 
tion, 146. 

Malthusian theory, 173-174, 183, 
333-334; alleged law of dimin 
ishing returns in agriculture 
and, 335, 336, 337-338. 

Man, his place and powers, 11-18, 
351-352; how extended in civ 
ilization, 19-23, 29-43, 91; his 
earliest knowledge of his habi 
tat, 11, and how it grows, 11-14; 
his physical nature, 13-18; his 
resemblance to other animals, 
13-14, 85, 291, and distinction 
from them, 11-18, 19, 29, 36, 
51, 53, 56, 59, 77, 82, 85, 287, 
291-292, 397-399; but a passing 
manifestation of matter and 
energy, 13-14; his spiritual na 
ture, 14-18, 29, 37-38, 84-85, 
287,307; the social animal, 21; 
the artificial, in the body politic 
called Leviathan, 22, 25-26, 
27, the still greater, in the 
body economic called the 
Greater Leviathan, 22-23, 27, 
36, 118, 395-396, 399, 428; his 
belief in immortality, 34; res 
urrection from the dead, 312; 
distinction of the civilized, from 
the savage, 39-43; as compre 
hended in and as apart from 
nature, 47-48, 84-85; his laws 
distinct from political econ 
omy, 58-61; his actions 
prompted by desire, 18, 81-82, 
the satisfaction of which is the 
fundamental law of political 
economy, 86-91, 99, 254, 268, 
332; he could not exist without 
desire, 83; his subjective and 
objective, material and imma 
terial desires, 83-85; in the 
hierarchy of life, 85; a pro- 

 636 

INDEX. 

dncer, not a creator, 324; his 
dependence on land, 77, 351- 
352; subject to the epacial law, 
363-364; his full powers to be 
utilized only in independent 
action, 392-396; his conscious 
and unconscious intelligence, 
395; the exchanging animal, 
398-39J; the natural order re 
quires equality with his fel 
lows, 256; civilization makes 
no change in him as man, 507; 
trust or credit coeval with his 
first appearance, 510-511. 

Marginal utilities. See Utilities. 

Mark Twain, Esquimau story, 
305. 

Marshall, Alfred, definition of 
wealth, 125-126; and classifica 
tion of goods, 283-284; teach 
ings of Austrian school, 208- 
209; alleged law of diminish 
ing returns in agriculture, 336. 

Marx, Karl, does not define 
wealth, 124; his teachings, 197. 

Mason, Alfred B., definition of 
political economy, 61-63; defi 
nition of wealth, 122. 

Mathematics, and political econ 
omy, 128n., 129-130. 

Matter, what it is in philosophy, 
9; one of the three elements or 
factors of the world, 9, 77; its 
correlative elements, 9-10; man 
but a passing manifestation of, 
13-14, 47; incases man's spirit 
or soul, 47, 84-85; necessity of 
man's freedom of access to, 79, 
351-352. 

McCulloch, definition of wealth, 
121; objects to Smith's, 146. 

Memory, subconscious, store 
house of that knowledge called 
skill, 40-41, 377. 

Menger, teachings of Austrian 
school, 208-209. 

Mercantile system. See Protec 
tionism. 

Metaphysics, proper meaning of, 
339; effect on political econ 
omy of confusions in, 340, and 
on the higher philosophy, 340; 

of space and time, 339-350; 
t'.Tiger of thinking of words as 
things, 340-341; words as used 
by Plato and the Theosophists, 
341; space and time not con 
ceptions of things, but of rela 
tions of things, 341-343, and 
cannot have independent be 
ginning or ending, 343-344; 
space and time as used by 
poets and religious teachers, 

344. and Viy philosophers, 344- 

345. 350; Kant, 345-346, 350; 
Schopenhauer, 346-348, 350; 
mysteries and antinomies, 348- 
349; human reason and eternal 
reason, 349-350; "the abso 
lute," "the unconditioned," 
" the unknowable," 350. 

Michelet, consecrated absurdities, 
140. 

Mill, John Stuart, implication of 
God in term " Law of Nature," 
55; definition of wealth, 122; na 
ture of wealth, 137-138; delu 
sions, 133-134,137; his intellec 
tual honesty, 137, 460; careful 
education and abilities,432-433, 
455, 461; condemnation of land 
monopoly, 137-138; compensa 
tion, 137-138; unearned incre 
ment, 150,195; course of devel 
opment of political economy, 
176; his early influence on 
Henry George, 201; value, 215- 
219, 223; alleged law of dimin 
ishing returns in agriculture, 
335-337; contention that laws 
of distribution are human laws, 
430-435, 440-443, 455, 459, and 
that produce distributes itself, 
447-448; utilitarianism, 455- 
459, 461; confusion as to prop 
erty, 462-469; confounds the 
different meanings of land. 463- 
466. 

Mirabean. See Physiocrats. 

Money, confusion from using it as 
a common measure of value, 
226-227; how it gets its power 
as a medium of exchange, 266- 
267; confusion as to the word 

 INDEX. 

537 

has strengthened protection 
ism, 280-281, 493re.; when capi 
tal and when not, 298-299; when 
wealth and when not, 299»., 313- 
314; definition of, in "John- 
eon's Encyclopedia," 480; true 
definition of, 494, 495; confu 
sion as to, 479-481; due largely 
to pressure of personal inter 
ests, 480, but among economists 
to confusion as to wealth and 
value, 480-481; the medium of 
exchange and measure of value, 
481,495-503; common use of the 
word, 275-276; common under 
standing of, 482-494; use of, to 
exchange for other things, 482- 
484; Smith's sense of buying 
and selling, 484; present mean 
ing of, as distinguished from 
barter, trade or exchange, 484- 
485; not more valuable than 
other things, but more readily 
exchangeable, 485-487,495-496; 
exchangeability its essential 
characteristic, 487, 491-494; 
exchanges without, 485-487; 
checks not, 487; different coun 
tries have different, 488; not 
made by governmental fiat, 488- 
490, 491; does not necessarily 
consist of gold or silver, 489- 
490, 491, or need intrinsic value, 
489-491; no universal, 490-494; 
its primary and secondary qual 
ities, 495; tendency to overesti 
mate its importance, 504-506; 
credit used before, 506,510-511; 
most important use of money 
to-day, 511; the representative 
of value, 526; genesis of, 512- 
525; not an invention, but a de 
velopment of civilization, 512; 
grows with growth of ex 
changes, 512; cattle used as, 
513n.-514n.; first purpose of 
coinage of, 513-515; American 
trade dollar, 515-516; lessen 
ing uses of commodity and ex 
tensions of credit, 516-517; 
two elements in exchange value 
of metal, 518; intrinsic value 

in, 518-528; seigniorage in, 518- 
519; Ricardo on paper, 520; 
may be useful though intrinsic 
value be eliminated, 520, 523- 
525; debasement immediately 
felt in first coined, or commod 
ity, 520-523; the two kinds of, 
526-528. 

Monopoly, land, based on force 
and fraud, 137; condemnation 
of, by Mill, 137-138; increase 
in value of, not to common in 
terest, 268-269; value of, not 
wealth, 277-278. 

Montchretien, Antoine de, first 
used term political economy, 
67. 

Montesquieu, on justice, 453. 

Mortgages, not wealth, 277; not 
capital, 296. 

Mystery, theologians' reference to 
space and time, 344-346, 348. 

Natural opportunities,not wealth, 
277—278. 

Natural order, natural laws be 
long to the, 60; Physiocrats and 
the, 149-159, 164; single tax in 
the, 145, 159, 165-166, 167; 
equality of men intent of, 256; 
laws of distribution and the, 
428. 

Natural rights. See Rights. 

Nature, how manifested in the 
universe, man and the animals, 
11-18, 51-54; term law of, how 
derived, 46-54; word law as 
applied to, 54-55; meaning of 
term law of, 55-57, and Mill's 
definition, 443; sequence, con 
sequence and laws of, 44-57, 
435-436, 437, 440-443; Mill's 
confusion of human laws •with 
laws of, 440-443; laws of. and 
political economy, 58-61, 76-77; 
its essential distinction from 
God, 54; implication of God in 
word, 55-57; man's action sub 
ject to laws of, 80; the passive 
factor or element in political 
economy, 77; interpreted by 
man's reason by assuming rea- 

 B38 

INDEX. 

son in, 75; fundamental law of 
political economy a law of, 
87-88. 

Needs, how distinguished from 
other human desires, 82-83,247; 
order of, 85. 

Newcomb, definition of wealth, 
123. 

Newton, anecdote of, 395. 

Nicholson, J. Shield, does not de 
fine wealth, 126-127. 

Nirvana, in the philosophy of 
negation, 347-348. 

Obligation, value from, what it is, 
257-269,309; source of, 271, 272; 
it does not increase wealth, 272, 
and has to do only with distri 
bution, 272; permanence of, 
309-312. 

Ogilvie, William, natural rights, 
185-186. 

"Our Land and Land Policy," 
philosophy of the natural order, 
163-164; when and how written, 
201. 

Palgrave, R. H. Inglis, " Diction 
ary of Political Economy," 206. 

Perception, and non-perception, 
352-353. 

Perry, A. L., dispenses with the 
term wealth, 124-125, 130. 

Philosophy, meaning of term, 9; 
how the teaching of, is warped, 
138-139; that teaching of the 
extinction of desire, 83, 347- 
348; that concerned with grati 
fying material needs, 85; that 
of the natural order taught by 
the Physiocrats, 149-159, 164; 
that of the natural order known 
as the single tax, 145, 159, 165- 
166, 167; that of the natural 
order in " Our Land and Land 
Policy," 163-164; that of the 
natural order and Smith, 164; 
Christ's, and a true political 
eco_nomy, 304-307. 

Physiocrats, their use of the term 
"politicaleconomy,"67; origin 
and meaning of their name, 

145n.; who they were and what 
they held, 148-159; cause of 
their confusion, 151-152, 354- 
355; real free traders, 152-153, 
165; originated term "Laissea 
faire, laissee alter," 153; ante 
dated and surpassed Kicardo, 

154-155; explanation of their 
rent doctrine, 154-155; their 
views explained in "Progress 
and Poverty," 154-155; Mac- 
leod's account of their views, 

155-158; their day of hope and 
fall, 159, 168-169; overthrown 
by a special interest, 154; as 
single taxers, 145,153,159,165- 
166,168; as described by Adam 
Smith, 67, 145; his relations 
with them, 160-169, 171, 173; 
intended dedication toQuesnay, 

161-162; resemblance of views, 

162-165, and differences, 165- 
169; men who followed, 186- 
199; value, 220; land not 
wealth, 265-266; definition of 
wealth, 270-271. 

Plato, world of ideas, 79; trick of 
verbal contradiction, 340-341. 

Playfair, William, apology for 
Smith's radicalism, 173. 

Plntology, as a substitute for 
political economy, 128-129. 

Political economy, its practical 
importance, xxxi.—xxxiv., 81-85, 
280; how it must be studied, 
xxxi.-xxxix., 76, 481; purpose 
of, xxxi.-xxxii., 117; definition 
of, 3,67,104,115,127,301,304, by 
Mason and Lalor, 61-62; mean 
ing, units and scope of, 65-73, 
276; origin of term, 65-67; con 
cerned with natural, not human 
laws, 58-64,76-77,426,428-429, 
and these laws invariable, 481; 
province of, 67-68, 303; ele 
ments of, 74-80; its three grand 
divisions, 421; can go no further 
than distribution, 428-429; fun 
damental law of, 86-91,99,254, 
268, 332; primary postulate Of, 
90-91,99,401, 512; central prin 
ciple of, 150; methods of, 29-30, 

 INDEX. 

539 

92-100; as science and as art, 
101-104; body politic and, 
xxxiv., 67-68, 73, 428; body 
economic and, 68-73; institu 
tions of learning and, xxxii.- 
xxxv., 3, 61-64,92,113, 119-130, 
135, 140, 174-175, 176, 180-181, 
183, 203-209, 233-234, 273, 281, 
355; theology and, xxxiv.; not 
properly a moral or ethical sci 
ence, 72-73; selfishness and, 
88-91, 99; riches and poverty 
in, 304-307; confusions in its 
current teachings, xxxii.-xxxv., 
61-64, 75, 78, 88, 101-104, 115, 
117-130, 131-142, 176-177, ISO- 
181, 183, 196-197, 203, 210-211, 
212, 213-222, 226-234, 235-240, 
243-245, 247, 252, 273, 326, 333, 
334, 339-340, 371, 400-401, 406- 
407, 415, 429, 430-439, 440-443, 
448-449, 450-451, 459. 460-469; 
the " dismal science,'7 88, 151, 
174-175; study of, affected by 
special interests, xxxiii.-xxxv., 
130-142, 167-168, 169, 171-176, 
182-184, 207, 273-274, 333, 447, 
461; as to history of, 115,120n., 
131-142, 169, 170-181, 182-199, 
200-209, 271; Physiocrats first 
developers of, 148-150; Smith's 
influence on, 170-181, 182; 
breakdown of Smith's, 176- 
181; German influence on, 195- 
196, 197-199, 208-209, 283-284, 
345, 461; Austrian school of, 
124,208-209, 215,278 252; Say's 
hopes for, 130, 177-178, 180; 
Cairnes's predictions, 179-181; 
why it considers only wealth 
and not all satisfactions, 301- 
303; its object-noun, 127, 181, 
301; wealth in, and in individual 
economy, 118-119, 276; mean 
ing of wealth in, 270-284, 293, 
296, 340, 357; meaning of value 
in, 224-225; statistics and, 120»., 
181; mathematics and, 128»i., 
129-130; metaphysics and, 339- 
340; catallactics and plntology 
as substitutes for, 128-129; 
economics and, 128-130; turned , 

against protectionism by Smith, 
182; afterwards made to favor 
protectionism, 195-196; conflict 
of socialism with a real, 198, 
403; historical school of, 206, 
448; classical school of, 208, 
448; death of old, 120»., 205- 
206; Christ's philosophy and a 
true, 306-307; places of trans 
portation and exchange in, 325- 
326, 400-401, 425-426; proper 
meaning of word land in, 352, 
408-409, and of production, 323- 
326, 357, and of cooperation, 
372, and of labor, 411-412, and 
of distribution, 428; not con 
cerned with consumption, 426, 
nor taxation, 426; absence of 
scientific method in current, 
448. 

Poor, cannot be under a true po 
litical economy, 304-307; why 
Christ sympathized with the, 
306-307. 

Population, theory of. See Mal- 
thusian Theory. 

Possessions, unjust, 304-307. 

Poverty, Smith's silence on cause 
of, 183; cannot exist under a 
true political economy, 304-307. 

Price, current teachings as to, 
227; Adam Smith on, 229, 503; 
treated as an economic term, 
229».; attempts to regulate, 446. 

Privilege, special, and value from 
obligation, 262-267, does not 
increase the sum of wealth, 
277-278; not capital, 296-297. 
See Interests, Special. 

Production, began with man, 35- 
36; based on natural law, 461; 
meaning of, 323-326, 327, 357; 
what it involves, 327; differ 
ence from creation, 323-324; 
other than of wealth, 302-303, 
324-325; alleged law of dimin 
ishing returns in agriculture, 
174, 335-338; spacial law re 
lates to all, 340, 355-356, 357- 
364, 368; all modes of, require 
time, 340, 365-370; cost of, a 
measure of value, 253-254; 

 540 

INDEX. 

value from, 257-269, 271, 272, 
and in what it consists, 308, 
and its permanence, 309-312; 
place of cooperation in, 332, 
426, and its meaning, 371; the 
two ways in which cooperation 
increases, 371-381; the two 
kinds of cooperation in, 382- 
396; thought the originating 
element in, 391, and cannot be 
fused, 391-392; directed coop 
eration utilizes the sum of 
men's physical powers in, 392, 
but unconscious cooperation 
utilizes the sum of their intel 
lects as well, 392-393; man's 
full powers to be utilized in, 
only in independent action, 
393-396; how slavery checks, 
393; the Greater Leviathan 
and, 395^-396; transportation 
included in, 326,426; exchange 
also, 299, 326, 426, mistakes 
as to this, 326, 400-401; the 
three modes, 327-332, 359, 400, 
414; adapting in, 327-330, 332, 
353-354, 358; growing in, 330- 
331, 353-354, 357-358; exchang 
ing in, 331-332, 354; office 
of exchange in, 397 - 401 ; 
office of competition in, 402- 
403; names and order of the 
three factors of, 405-407, 444; 
land the first factor in, 77, 279, 
408-410; labor the second fac 
tor in, 77, 80, 279, 411-412; 
capital the third factor in, 413- 
415; appropriation has no place 
in, 415; how related to dis 
tribution, 426-427,437-439; dis 
tribution affected through, 446- 
447, 453; division into three 
elements of, 444; real differ 
ence between laws of distribu 
tion and, 450-453. 

Produit net, meaning and signifi 
cance of, 150-151. 

" Progress and Poverty," and the 
landowner's prophecy, 170-171; 
and validity of property, 184, 
240: Spencer's "Social Stat 
ics," 189; brief history of, 200- 

201, 203; what it contains, 201- 
202; effect on scholastic politi 
cal economy, 203-209; fixed 
meaning of wealth and capital, 
211, 270-271, 298-300; another 
method of determining mean 
ing of wealth, 271-272; the 
Malthusian theory and, 334; 
rise of the single taxers and, 
355, 356. 

Property, its validity in the old 
political economy, 184; first 
really questioned in " Progress 
and Poverty," 184; in land 
without moral sanction, 265; 
efforts of special interests to 
prevent question of, 273-274; 
laws of distribution determine 
ownership of, 454; based on 
natural law, 454-459, 460-i61; 
Mill's recognition and error, 
454-459; causes of confusion as 
to, 460-469; pre-assumption 
that land is, 460-461; essential 
principle of, 461-462; where 
Mill is wrong, 462-469. 

Protectionism, genesis of, 134; 
Smith's attack on, 171-172,175, 
182; repeal of English corn- 
laws, 176, the contest revealing 
true beneficiaries of, 175-176; 
merchants and manufacturers 
not ultimate beneficiaries of, 
175-176; selfishness and, 196; 
a form of socialism, 197; effect 
of, on political economy in 
Germany, 195, and in the 
United States, 179, 196, 207; 
strengthened by confusion as 
to money, 280-281, 493n.; value 
from obligation and, 263, 264- 
265, not to common interest, 
268-269; competition and, 402- 
403. 

Psychological school. See Aus 
trian School. 

Pun, what it implies, 274. 

Quesnay, Francois, leader of the 
Physiocrats, 145; who he was 
and what he taught, 148-159; 
Smith's relations with, 160- 

 INDEX. 

B41 

162; resemblance of George's 
views, 163; agriculture the 
only productive occupation, 
354-355. 

Quincey, Thomas De, value, 
215-216. 

Kae, definition of wealth, 121. 

Reason, distinguishes man from 
the animals, 14-18, 29, 31-37, 
51,56, 77-78,85,397-399; welds 
men into the social organism 
or economic body, 19-24, 399; 
essential qualities of, 29-30, 33, 
45-46; it impels to exchange, 
35-37; its process of operation, 
29-30, 47-48, 92-100; the Ego 
and, 47; impels man to seek 
causal relations, 56-57, 79; how 
it apprehends the world, 77, 
85; now it interprets nature, 
75; how it posits God, 79, 403; 
instinct and, 36-37, 291-292, 
397-399; metaphysics, 339; 
mysteries, 344-346,348; antino 
mies, 345-346, 348; pure, 346; 
Hegel and Schopenhauer, 208- 
209; Kant and Schopenhauer, 
346-348, 350; the human, one 
and to be relied on, 349-350; 
lunacy and madness do not 
affect, 349; human and eternal, 
344-350. 

Reasoning, the three methods 
used in political economy, 92- 
100; power of special interests 
to pervert, 135-136; Bacon on 
the right way of, 139. 

Reciprocity, exalted meaning 
given by Confucius, 306. 

Kent, the central principle of 
political economy, 150; produit 
net, 150; unearned increment, 
150; proposition of the impfit 
unique or single tax, 150-151; 
Bicardo's formulation of the 
law, 154, Physiocrats antici 
pated and surpassed him, ISO- 
151, 154-155; law of, treated in 
" Progress and Poverty," 202; 
Smith's theory of, 173-174, he 
•was not clear as to, 183; theory 

of, and diminishing returns in 
agriculture, 333-334; related to 
agriculture in current teaching, 
356; one of the three laws of 
distribution, 444; futile at 
tempts to regulate, 445-446. 

Kesurrection, relation of value 
from obligation, 309-312. 

Bicardo, does not define wealth, 
124; rent doctrine and the 
Physiocrats, 154-155; law of 
rent, 183 ; corrects Smith as to 
rent, 173-174; restriction of 
meaning of word land, 255-256; 
of paper money and seignior 
age, 520. 

Bich, Christianity made to soothe 
the, 174; cannot be any, under 
a true political economy, 304- 
307; Christ's philosophy, 306- 
307. 

Bight, no business of political 
economy to explain difference 
between wrong and, 73. See 
Justice. 

Kights, natural, the Physiocrats, 
149-159; Smith, 164-165, 172; 
" Our Land and Land Policy," 
201; " Pi-ogress and Poverty," 
201-203; Spence, 185; Ogilvie, 
185-186; Chalmers, 186-187; 
Wakefield, 187-188; Spencer, 
188-189, 191-193; Dove, 189- 
194; Bisset, 194. 

Kogers, Thorold, does not define 
wealth, 124. 

Buskin, John, repugnance to 
"dismal science," 88; defini 
tion of wealth, 123-124. 

Satisfactions, of desires and, SI- 
85, 301-303, 324-325; wealth 
cannot be reduced to, 289. See 
Desire. 

Say, Jean Baptiste, definition of 
wealth, 121; hopes for political 
economy, 130, 177-178, 180. 

Schopenhauer, of extinction of 
desire, 83; Hegel, 208-209; 
Kant, 346-348; the world as 
will and idea, 347-348, 350. 

Science, the knowledge properly 

 542 

INDEX. 

called, 58-64; meaning of word, 
58-59; deals with natural, not 
human laws, 59-64, 426. 

Selfishness, its place in the cur 
rent and in the true political 
economy, 88-91, 99; and pro 
tectionism, 196. 

Senior, definition of wealth, 121- 
122. 

Sequence, meaning of, 45; invari 
able or consequence, 45-46, 55- 
56, 80, 435^36; of laws of na 
ture, 44-57, 80, 435-436, 437, 
440-443; in the realm of spirit, 
366-367; Mill confuses it with 
consequence, 440-443. 

Service, two ways of satisfying 
human desire, 72-73; confusion 
with the word labor, 244; wealth 
essentially a stored and trans 
ferable, 289-292; direct and in 
direct, 290; natural or normal 
line in the possession or enjoy 
ment of, 306; barter and, 505. 

Shadwell, definition of wealth, 
122. 

Shakespeare, boast of his lasting 
verse, 309-310. 

Skill, the incommunicable know 
ledge called, 40-41, 43, 59. 

Slavery, effect of, on denning 
wealth, 131-133; effect on 
thought, 141-142; value of ob 
ligation and, 258-259, 263; debt 
is, 262; economic wealth and, 
277-278; capital and, 296-297; 
production checked by, 393; 
exchange and, 400. 

Smart, "William, teachings of the 
Austrian school, 208-209. 

Smith, Adam, meaning of term 
'' political economy," 66-67; im 
portance of his "Wealth of 
Nations," 89; the deductive 
method, 92; nature of term 
wealth, 120, 143-147, 164-165, 
229-230, 279-280, where he was 
confused, 183, 210,271,279; cat 
tle used as money, 513n.-514n.; 
not clear as to capital, wages, 
or rent, 183; value in use 
and value in exchange, 213- 

225; did not confine wealth to 
money or the precious metals, 
279; exchange value a relation 
to exertion, 228-234, 267-268; 
price, 229, 503; confusion as to 
causes of value, 259-260, 265; 
the measure of value, 497, 
503; error in regarding land as 
property, 461; error as to diffi 
culty of barter, 508-510; de 
scription of Physiocrats, 67, 
145, relations with them, 160- 
169, 171, 173, resemblance of 
views, 162-165, independence 
of them, 165-169, as evidenced 
by "Moral Sentiments," 162; 
intended dedication of "Wealth 
of Nations" to Quesnay, 161- 
162; his work on the "Wealth 
of Nations," 160-161; Dugald 
Stewart and, 161-162, 172; ad 
vocated the natural order, 164; 
a free trader, 164, 165, but 
failed to appreciate the single 
tax, 165-166, 167-168; his pru 
dence as an individual and a 
philosopher, 167-169, 182; did 
not venture to show cause of 
poverty, 183; James on his 
place in political economy, 169, 
and Ingram's view, 205-206; his 
influence on the science, 170- 
181, 182; addressed the cul 
tured, 170; backed by the 
landed interest, 171-175, 182, 
yet suspected of radicalism, 
171-173; against protectionism, 
164, 165, 171-172, 175, 182; 
weakness of his free-trade 
views, 182-183; mistaken as to 
cause of rent, 173-174; theory 
of wages, 167, 174, 233; division 
of labor, 182, 372, 374, 380; the 
theory of population, 174; 
breakdown of his political 
economy, 176-181, 200-209; il 
logical teachings of, 182-183; 
selfishness in political econ 
omy, 89-90; his greatness, 461. 
Socialism, its proposals, 197-199; 
Karl Marx's teachings, 197; 
trade-unionism, 197, 199; pro* 

 INDEX. 

543 

tectionism, 197, 402; conflict 
•with true political economy, 
198, 403; without religion and 
philosophy, 198; against com 
petition, 402-403; that in Peru, 
198; its great defect, 391; the 
originating element in produc 
tion is men's thought, 391, 
which cannot be combined or 
fused, 391-392; directed co 
operation utilizes the sum of 
men's physical powers, 392, 
but independent action utilizes 
the sum of their intellects as 
w_ell, 392-393; effect of subor 
dination seen in slavery, 393; 
why socialism is impossible, 
393-396. 

"Social Statics," and natural 
rights, 188-189, 191-193. 

Socrates, Plato's trick of verbal 
contradiction, 340-341. 

Soul. See Spirit. 

Space, and metaphysics, 340-348; 
and theology, 344-346, 348; 
what it is in political economy, 
351-352; confusion of the law 
of, with agriculture, 174, 351- 
356, whereas it relates to all 
production, 355, 357-364; defi 
nition of, 365; apprehension of 
it objective and different from 
that of time, 365-367. 

Species, development of, 333-334. 

Spence, Thomas, on natural 
rights, 185. 

Spencer, Herbert, of doge, 33».; 
natural rights, 188-189, 191- 
193; his recantation, 189; and 
"Progress and Poverty," 189; 
and "A Perplexed Philoso 
pher," 189; gives postulates of 
the single tax, 192; a free 
trader, 192: his doctrines com 
pared with Dove's, 191-193; 
compensation, 192-193. 

Spirit, what it is in philosophy, 
9: its correlative elements, 9- 
10; priority of, 10; its place in 
the world, 77,79,452; its place in 
civilization, 35, 37-38; in man, 
10,47-48,309; God the creative, 

10, 54, 55, 56-57, 79, 174, 452; 
Plato and the world of ideas, 
79; when it may have know 
ledge of spirit, 84; dependent 
on matter, 84-85,367; good and 
evil in it, not in external things, 
91; value of obligation and, 309- 
312; the originating element in 
production, 323-324, 391-392; 
sequence or time in the realm 
of, 366-367; laws of nature that 
relate to, 437-438; justice can 
relate only to, 451-452. 

Statistics, and political economy, 
120»., 181. 

Stewart, Dugald, Adam Smith. 
161-162, 172. 

Subsistence, man's power of in 
creasing his, 17-18. 

Synthesis, its meaning, 29. 

Tariff. See Protectionism. 

Tax, single, the Physiocrats and 
the, 145, 153, 159, 165-166, 168; 
meaning of, 150-151; imp6t 
unique, 150-151; and the nat 
ural order, 145, 159, 165-166, 
167; Herbert Spencer on pos 
tulates of, 192; rise of the 
movement for the, 355; chief 
difficulty of propaganda in the 
United States, 356. 

Taxation, not concerned with po 
litical economy, 426; what is 
meant Toy single tax, 151. 

Taxes, artificial values from them 
not to common interest, 268— 
269. 

Teleological argument, 50. 

Theology, relation to current po 
litical economy, xxxiv.; space 
and time as mysteries in, 344- 
346, 348. 

Theosophy, the trick of verbal 
contradiction, 341. 

Thompson, Robert Ellis, old po 
litical economy dead, 207. 

Time, and metaphysics, 340-348; 
and theology, 344-346,348; defi 
nition of, 365; apprehension of, 
subjective and different from 
space, 366; relation to spirits 

 644 

INDEX. 

and to creation, 366,368; all pro 
duction requires, 368-370; con 
centration of labor in, 369-370. 

Tools, their origin, 36. 

Torrens, definition of wealth, 121. 

Trade, at the base of civilization, 
35-37. 

Trade-unionism, and socialism, 
197, 199. 

Transportation, included in pro 
duction, 326,426; notconcerned 
with distribution, 326, 425. 

Turgot, on the art of darkening 
things to the mind, 63-64. See 
Physiocrats. 

TJlpian, definition of wealth, 132. 

Utilitarianism, how it befogged 
Mill, 455-459, 461. 

Utilities, marginal, value as de 
rived from, 218, 237. 

Value, confusions as to meaning 
of, 115, 210-211, 214-225, 226- 
234; Karl Marx and, 197; in 
use and in exchange, 212- 
225; original meaning of word, 
213, as used by Smith, 213-214, 
Mill's objection, 214-216, and 
his confusion, 217—225; real 
meaning of, 226-234, 249, 250- 
254, 264, 467; not a relation 
of proportion, 226-228, 236, 
267, but a relation to exer 
tion, 228-234, 235-249, 253-254, 
267-269; does not come from 
exchangeability but the re 
verse, 236, 247-248; causal re 
lationship to exchangeability, 
247; competition in determin 
ing, 251, 253; the two sources 
of, 249, 257-269, 270-284, 526; 
increase of wealth not involved 
by, 257-269; that from produc 
tion is wealth, 270-284; that 
from obligation relates alone 
to distribution, 272, and is no 
part of wealth, 276-278, 314, 
but outlasts that from produc 
tion, 308-312; the denominator 
of, 250-256; land and, 240, 255- 
256, 265-266; slavery and, 258- 

259, 263; not a relation to an 
intrinsic quality, but to hu 
man desire, 251-252, 513, this 
idea of, at bottom of the Aus 
trian school, 218, 252; but 
measure of, must be objec 
tive, 252-253; labor the final 
measure, 226-234, 249, 250-254, 
267, but money the common 
measure, and why labor cannot 
be, 495-503; money the repre 
sentative of, 526; competition 
and, 253-254; confusions in, 
from use of money, 266-267; 
utility and desirability and, 
214-221; marginal utilities and, 
218, 237; special interests and, 
273-274. 

Value, intrinsic, what it is, 221- 
222; not necessary to money, 
489-490, 491; as an element in 
money, 518-528. 

Vested rights. See Interests, 
Special. 

Vethake, definition of wealth, 122. 

Wages, Smith's truth and error, 
167, 174, 233; law of, and 
"Progress and Poverty," 202; 
origin and nature of, 233; cur 
rent doctrine of, 333; value of 
labor, 240; one of the three 
great laws of distribution, 444; 
futile attempt to regulate, 445. 

Wakefield, Edward Gibbon, per 
version of natural rights, 187- 
188. 

Walker, Francis A., looseness as 
a statistician, 120?).; definition 
of wealth, 123, 278n.; alleged 
law of diminishing returns in 
agriculture, 335. 

Wants, how distinguished from 
other human desires, 82-83,247; 
order of, 85. 

War.increased values attending it 
not to general interest, 268-269. 

Wealth, primary term of political 
economy, 117; its object-noun, 
127, 181, 301; origin of the eco 
nomic term, 118; common mean 
ing of the word, 117-119, 140; 

 INDEX. 

545 

danger of nsing it in this mean 
ing, 280-284; confusions as to 
its economic meaning, 115,117— 
130, 176-177, 181, 210; Whately 
on one of its ambiguities, 141; 
definition of, by economic 
writers Bince Smith, 121-127, 
278»./ failure of the scholastic 
economists, 203-204, one of the 
latest scholastic conceptions of, 
127, real difficulty that besets 
their formulation of a true def 
inition, xxxiii.-xxxv., 131-142, 
167-169, 273-274; Aristotle's 
definition, 132; Ulpiau's defini 
tion, 132; ineffectual gropings 
towards a determination of, 182- 
197; Smith's meaning of, 120, 
143-147, 164-165, 229-230, 279- 
280, yet he is not altogether 
clear, 183, 210, 271, 279; Physi 
ocrats' clear understanding of, 
149, 158, 164-165; different 
method from that used in 
" Progress and Poverty" in fix 
ing meaning, 270-272; the true 
meaning in political economy, 
270-284; proper definition of, 
270-271, 272, 270, 279, 287-288, 
293,296, 340,357; what is meant 
by increase of, 278-279; genesis 
of, 285-292; though it proceeds 
from exertion, all exertion does 
not result in, 285-287, nor yet 
can the idea be reduced to that 
of satisfaction, 289; its essen 
tial character, 288,289-292, 295, 
301; why political economy 
does not consider all satisfac 
tions, but only wealth, 301-303; 
"actual" and "relative," 282; 
it comes solely from produc 
tion, 272, which is' checked by 
slavery, 393, and increased by 
cooperation, 399-401; econo 
mists agree that all, has value, 
210; its value comes from pro 
duction, 272; the value from 
obligation relates only to the 
distribution of, 272; its produc 
tion involves space and time, 
340, 357-370; money con 

founded with, 493«.; that which 
is called capital, 293-300; all 
capital is, 294-295,296; not con 
sidered after distribution, 427- 
428; no single word in English 
to express the idea of an arti 
cle of, 282; use of the word 
commodity, 282; and of good, 
282-284; desire for, is legitimate 
in political economy, 304; moral 
confusions as to, 304-307; per 
manence of. 308-312; labor 
the only producer of, 415; why 
generally regarded as sordid 
and mean, 305-307; that part 
called capital, 293-300, 413; 
land not, 257-269, 277-278; 
other spurious wealth, 137, 257- 
269, 276-282,296-297,299w.., SIS- 
314; some money is, some is 
not, 299?j., 313-314. 

" Wealth of Nations," its impor 
tance as a book,80; comparison 
with "Progress and Poverty," 
120n.; what it accomplished, 
170-173; its illogical character, 
182-183. 

Whately, Archbishop, catallactic- 
as substitute name for political 
economy, 128-129; ambiguities 
of the word wealth, 141. 

Wieser, teachings of Austrian 
school, 208-209. 

Will, included in the element of 
the world called spirit, 9-10, 77, 
88; in man, 10, 47, 309; causal 
relations, 48-51; that behind 
nature's laws superior to that in 
man, 51-57, 59-60,80,444; place 
of human, in political economy, 
76, 79-80; good and evil not in 
external things, but in, 91; 
original meaning of distribution 
and, 434-437; natural laws of 
distribution and, 437-438; right 
or justice, ought or duty and, 452. 

World, the three factors or ele 
ments of, 9-10, 47, 77, 80; its 
origin, 10, 79, 367, 403. 

Wrong, no business of political 
economy to explain difference 
between right and, 73. 

 JJ 

"MOSES 

A LECTURE 

 PEEFATOEY NOTE. 

IN May, 1878, while he was employed in writing " Prog 
ress and Poverty," my father received an invitation 
to open a course of lectures before the Young Men's 
Hebrew Association of San Francisco. He chose for his 
subject Moses, and early in June delivered the following 
address. Afterwards under another title he offered it 
as an essay to an English periodical; but its author 
being an unknown man from a remote part of the world, 
the essay was rejected. It was also offered to one of the 
larger American magazines and was refused. When 
later the fame of "Progress and Poverty" made desira 
ble anything from its author's pen, my father refused to 
allow the essay to appear in any periodical. 

Early in 1884, when on his first lecturing tour through 
Great Britain, he delivered it in Kinnaird Hall, Dundee, 
before the congregation of Eev. David Macrae, and from 
that time on it became his favorite Sunday lecture, being 
read from many pulpits in Great Britain, Australia, 
Canada and the United States. 

In later years it has also in tract form been extensively 
circulated in this country and abroad. 

H. G., JR. 
NEW YORK, March 23, 1898. 

 "MOSES." 

r I THERE is in modern thought a tendency to look upon 
I the prominent characters of history as resultants 
rather than as initiatory forces. As in an earlier stage 
the irresistible disposition is to personification, so now it 
is to reverse this process, and to resolve into myths 
mighty figures long enshrined by tradition. 

Yet, if we try to trace to their sources movements 
whose perpetuated impulses eddy and play in the cur 
rents of our times, we at last reach the individual. It is 
true that "institutions make men," but it is also true 
that " in the beginnings men make institutions." 

In & well-known passage Macaulay has described the 
impression made upon the imagination by the antiquity 
of that church, which, surviving dynasties and empires, 
carries the mind back to a time when the smoke of sacri 
fice rose from the Pantheon and camelopard and tiger 
bounded in the Flavian amphitheater. But there still 
exist among us observances—transmitted in unbroken 
succession from father to son—that go back to a yet 
more remote past. Each recurring year brings a day on 
which, in every land, there are men who, gathering about 
them their families, and attired as if for a journey, eat 
with solemnity a hurried meal. Before the walls of 
Home were traced, before Homer sang, this feast was 

5 

 6 "MOSES": A LECTURE. 

kept, and the event to which it points was even then 
centuries old. 

That event signals the entrance upon the historic stage 
of a people on many accounts remarkable—a people who, 
though they never founded a great empire nor built a 
great metropolis, have exercised upon a large portion of 
mankind an influence wide-spread, potent and continu 
ous; a people who have for nearly two thousand years 
been without country or organized nationality, yet have 
preserved their identity and faith through all vicissi 
tudes of time and fortune—who have been overthrown, 
crushed, scattered; who have been ground, as it were, to 
very dust, and flung to the four winds of heaven; yet 
who, though thrones have fallen, and empires have 
perished, and creeds have changed, and living tongues 
have become dead, still exist with a vitality seemingly 
unimpaired—a people who unite the strangest contradic 
tions; whose annals now blaze with glory, now sound 
the depths of shame and woe. 

The advent of such a people marks an epoch in the 
history of the world. But it is not of that advent so 
much as of the central and colossal figure around which 
its traditions cluster that I propose to speak. 

Three great religions place the leader of the Exodus 
upon the highest plane they allot to man. To Christen 
dom and to Islam, as well as to Judaism, Moses is the 
mouthpiece and lawgiver of the Most High; the medium, 
clothed with supernatural powers, through which the 
Divine Will has spoken. Yet this very exaltation, by 
raising him above comparison, may prevent the real 
grandeur of the man from being seen. It is amid his 
brethren that Saul stands taller and fairer. 

On the other hand, the latest school of Biblical criti 
cism asserts that the books and legislation attributed to 
Moses are really the product of an age subsequent to 

 "MOSES": A LECTURE. 7 

that of the prophets. Yet to this Moses, looming vague 
and dim, of whom they can tell us almost nothing, they, 
too, attribute the beginning of that growth which flowed 
after centuries in the humanities of Jewish law, and in 
the sublime conception of one God, universal and eternal, 
the Almighty Father; and again, higher still and fairer 
rose that guiding star of spiritual light which rested over 
the stable of Bethlehem in Judea. 

But whether wont to look on Moses in this way or in 
that, it may be sometimes worth our while to take the 
point of view in which all shades of belief or disbelief 
may find common ground, and accepting the main fea 
tures of Hebrew record and tradition, consider them in 
the light of history as we know it, and of human nature 
as it shows itself to-day. Here is a case in which sacred 
history may be treated as we treat profane history, with 
out any shock to religious feeling. Nor can the keenest 
criticism resolve Moses into a myth. The fact of the 
Exodus presupposes such a leader. 

To lead into freedom a people long crushed by 
tyranny; to discipline and order such a mighty host; 
to harden them into fighting men, before whom warlike 
tribes quailed and walled cities went down; to repress 
discontent and jealousy and mutiny; to combat reac 
tions and reversions; to turn the quick, fierce flame of 
enthusiasm to the service of a steady purpose, require 
some towering character—a character blending in high 
est expression the qualities of politician, patriot, philoso 
pher and statesman. 

Such a character in rough but strong outline the tradi 
tion shows us—the union of the wisdom of the Egyptians 
with the unselfish devotion of the meekest of men. From 
first to last, in eveiy glimpse we get, this character is 
consistent with itself, and with the mighty work which 
is its monument. It is the character of a great mind, 

 8 "MOSES": A LECTURE. 

hemmed in by conditions and limitations, and working 
with such forces and materials as were at hand—accom 
plishing, yet failing. Behind grand deed, a grander 
thought. Behind high performance, the still nobler 
ideal. 

Egypt was the mold of the Hebrew nation—the matrix, 
so to speak, in which a single family, or, at most, a small 
tribe, grew to a people as numerous as the American 
people at the time of the Declaration of Independence. 
For four centuries, according to the Hebrew tradition 
—that is to say, for a period longer than America has 
been known to Europe, this growing people, coming a 
patriarchal family from a roving, pastoral life, had been 
placed under the dominance of a highly developed and 
ancient civilization—a civilization whose fixity is symbo 
lized by monuments that rival in endurance the everlast 
ing hills—a civilization so ancient that the Pyramids, as 
we now know, were hoary with centuries ere Abraham 
looked upon them. 

No matter how clearly the descendants of the kinsmen 
who came into Egypt at the invitation of the boy-slave 
become prime minister, maintained the distinction of 
race, and the traditions of a freer life, they must have 
been powerfully affected by such a civilization; and just 
as the Hebrews of to-day are Polish in Poland, German 
in Germany, and American in the United States, so, but 
far more clearly and strongly, the Hebrews of the Exodus 
must have been essentially Egyptians. 

It is not remarkable, therefore, that the ancient 
Hebrew institutions show in so many points the influ 
ence of Egyptian ideas and customs. What is remark 
able is the dissimilarity. To the unreflecting nothing 
may seem more natural than that a people, in turning 
their backs upon a land where they had been long 
oppressed, should discard its ideas and institutions. But 

 "MOSES": A LECTURE. 9 

the student of history, the observer of politics, knows 
that nothing is more unnatural. Habits of thought are 
even more tyrannous than habits of the body. They 
make for the masses of men a mental atmosphere out of 
which they can no more rise than out of the physical 
atmosphere. A people long used to despotism may rebel 
against a tyrant; they may break his statutes and repeal 
his laws, cover with odium that which he loved and 
honor that which he hated; but they will hasten to set 
up another tyrant in his place. A people used to super 
stition may embrace a purer faith, but it will be only 
to degrade it to their old ideas. A people used to perse 
cution may flee from it, but only to persecute in their 
turn when they get power. 

For "institutions make men." And when amid a 
people used to institutions of one kind, we see suddenly 
arise institutions of an opposite kind, we know that 
behind them must be that active, that initiative force— 
the men who in the beginnings make institutions. 

This is what occurs in the Exodus. The striking 
differences between Egyptian and Hebrew polity are not 
of form but of essence. The tendency of the one is to 
subordination and oppression; of the other, to individ 
ual freedom. Strangest of recorded births! from out 
the strongest and most splendid despotism of antiquity 
comes the freest republic. From between the paws of the 
rock-hewn Sphinx rises the genius of human liberty, and 
the trumpets of the Exodus throb with the defiant procla 
mation of the rights of man. 

Consider what Egypt was. The very grandeur of her 
monuments, that after the lapse, not of centuries but of 
millenniums, seem to say to us, as the Egyptian priests 
said to the boastful Greeks, " Ye are children !" testify 
to the enslavement of the people—are the enduring wit 
nesses of a social organization that rested on the masses 

 10 "MOSES": A LECTUBE. 

an immovable weight. That narrow Nile valley, the 
cradle of the arts and sciences, the scene, perhaps, of 
the greatest triumphs of the human mind, is also the 
scene of its most abject enslavement. In the long cen 
turies of its splendor, its lord, secure in the possession of 
irresistible temporal power, and securer still in the awful 
sanctions of a mystical religion, was as a god on earth, 
to cover whose poor carcass with a tomb befitting his 
state hundreds of thousands toiled away their lives. For 
the classes who came next to him were all the sensuous 
delights of a most luxurious civilization, and high intel 
lectual pleasures which the mysteries of the temple hid 
from vulgar profanation. But for the millions who con 
stituted the base of the social pyramid there was but the 
lash to stimulate their toil, and the worship of beasts to 
satisfy the yearnings of the soul. From time immemo 
rial to the present day the lot of the Egyptian peasant 
has been to work and to starve that those above him 
might live daintily. He has never rebelled. The spirit for 
that was long ago crushed out of him by institutions which 
make him what he is. He knows but to suffer and to die. 
Imagine what opportune circumstances we may, yet to 
organize and to carry on a movement resulting in the 
release of a great people from such a soul-subduing 
tyranny, backed by an army of half a million highly 
trained soldiers, requires a leadership of most command 
ing and consummate genius. But this task, surpassingly 
great though it is, is not the measure of the greatness of 
the leader of the Exodus. It is not in the deliverance 
from Egypt, it is in the constructive statesmanship that 
laid the foundations of the Hebrew commonwealth that 
the superlative grandeur of that leadership looms up. 
As we cannot imagine the Exodus without the great 
leader, neither can we account for the Hebrew polity 
without the great statesman. Not merely intellectually 

 "MOSES": A LECTURE. 11 

great, but morally great—a statesman aglow with the 
unselfish patriotism that refuses to grasp a scepter or 
found a dynasty. 

The lessons of modern history, the manifestations of 
human nature that we behold around us, would teach us 
to see in the essential divergence of the Hebrew polity 
from that of Egypt the impress of a master mind, even 
if Hebrew tradition had not testified both to the influ 
ence of such a mind, and to the constant disposition of 
accustomed ideas to reassert themselves in the minds of 
the people. Over and over again the murmurings break 
out; no sooner is the back of Moses turned than the cry, 
" These be thy gods, 0 Israel!" announces the setting 
up of the Egyptian calf; while the strength of the mo 
narchical principle shows itself in the inauguration of a 
king as quickly as the far-reaching influence of the great 
leader is somewhat spent. 

It matters not when or by whom were compiled the 
books popularly attributed to Moses; it matters not how 
much of the code there given may be the survivals of 
more ancient usage or the amplifications of a later age; 
its great features bear the stamp of a mind far in 
advance of people and time, of a mind that beneath 
effects sought for causes, of a mind that drifted not with 
the tide of events but aimed at a definite purpose. 

The outlines that the record gives us of the character 
of Moses—the brief relations that wherever the Hebrew 
Scriptures are read have hung the chambers of the 
imagination with vivid pictures—are in every way con 
sistent with this idea. What we know of the life illus 
trates what we know of the work. What we know of 
the work illumines the life. It was not an empire such 
as had reached full development in Egypt, or existed in 
rudimentary patriarchal form in the tribes around, that 
Moses aimed to found. Nor was it a republic where the 

 12 "MOSES": A LECTURE. 

freedom of the citizen rested on the servitude of the 
helot, and the individual was sacrificed to the state. It 
was a commonwealth based upon the individual—a com 
monwealth whose ideal it was that every man should sit 
under his own vine and fig-tree, with none to vex him or 
make him afraid—a commonwealth in which none should 
be condemned to ceaseless toil; in which for even the 
bond-slave there should be hope; in which for even the 
beast of burden there should be rest—a commonwealth 
in which, in the absence of deep poverty, the manly 
virtues that spring from personal independence should 
harden into a national character—a commonwealth in 
which the family affections might knit their tendrils 
around each member, binding with links stronger than 
steel the various parts into the living whole. 

It is not the protection of property, but the protection 
of humanity, that is the aim of the Mosaic code. Its 
sanctions are not directed to securing the strong in 
heaping up wealth so much as to preventing the weak 
from being crowded to the wall. At every point it inter 
poses its barriers to the selfish greed that, if left 
unchecked, will surely differentiate men into landlord 
and serf, capitalist and workman, millionaire aad tramp, 
ruler and ruled. Its Sabbath day and Sabbath year 
secure, even to the lowliest, rest and leisure. With the 
blast of the jubilee trumpets the slave goes free, the debt 
that cannot be paid is canceled, and a redivision of the 
land secures again to the poorest his fair share in the 
bounty of the common Creator. The reaper must leave 
something for the gleaner; even the ox cannot be 
muzzled as he treadeth out the corn. Everywhere, in 
everything, the dominant idea is that of our homely 
phrase—"Live and let live!" 

And the religion with which this civil policy is so 
closely intertwined exhibits kindred features—from the 

 "MOSES": A LECTURE. 13 

idea of the brotherhood of man springs the idea of the 
fatherhood of God. Though the forms may resemble 
those of Egypt, the spirit is that which Egypt had lost. 
Though an hereditary priesthood is retained, the law in 
its fullness is announced to all the people. Though the 
Egyptian rite of circumcision is preserved, and Egyptian 
symbols reappear in all the externals of worship, the 
tendency to take the type for the reality is sternly 
repressed. It is only when we think of the bulls and 
the hawks, of the deified cats and sacred ichneumons of 
Egypt, that we realize the full meaning of the command: 
" Thou shalt not make to thyself any graven image!" 

And if we seek beneath form and symbol and com 
mand, the thought of which they are but the expression, 
we find that the great distinctive feature of the Hebrew 
religion, that which separates it by such a wide gulf 
from the religions amid which it grew up, is its utilita 
rianism, its recognition of divine law in human life. It 
asserts, not a God whose domain is confined to the far-off 
beginning or the vague future, who is over and above 
and beyond men, but a God who in his inexorable laws 
is here now; a God of the living as well as of the dead; 
a God whose immutable decrees will, in this life, give 
happiness to the people that heed them and bring misery 
upon the people that forget them. Amid the forms of 
splendid degradation in which a once noble religion had 
in Egypt sunk to petrification, amid a social order in 
which the divine justice seemed to sleep, I AM was the 
truth that dawned upon Moses. And in his desert con 
templation of nature's flux and reflux, the death that 
bounds her life, the life she brings from death, always 
consuming yet never consumed—I AM was the message 
that fell upon his inner ear. 

The absence in the Mosaic books of any reference to a 
future life is only intelligible by the prominence into 

 14 "MOSES": A LECTUKE. 

which this truth is brought. Nothing could have been 
more familiar to the Hebrews of the Exodus than the 
doctrine of immortality. The continued existence of the 
soul, the judgment after death, the rewards and punish 
ments of the future state, were the constant subjects of 
Egyptian thought and art. But a truth may be hidden 
or thrown into the background by the intensity with 
which another truth is grasped. And the doctrine of 
immortality, springing as it does from the very depths of 
human nature, ministering to aspirations which become 
stronger and stronger as intellectual life rises to higher 
planes and the life of the affections becomes more 
intense, may yet become so incrusted with degrading 
superstitions, may be turned by craft and selfishness 
into such a potent instrument for enslavement, and so 
used to justify crimes at which every natural instinct 
revolts, that to the earnest spirit of the social reformer 
it may seem like an agency of oppression to enchain the 
intellect and prevent true progress; a lying device with 
which the cunning fetter the credulous. 

The belief in the immortality of the soul must have 
existed in strong forms among the masses of the Hebrew 
people. But the truth that Moses brought so promi 
nently forward, the truth his gaze was concentrated upon, 
is a truth that has often been thrust aside by the doc 
trine of immortality, and that may perhaps, at times, 
react on it in the same way. This is the truth that the 
actions of men bear fruit in this world, that though on 
the petty scale of individual life wickedness may seem to 
go unpunished, and wrong to be rewarded, there is yet a 
Nemesis that with tireless feet and pitiless arm follows 
every national crime, and smites the children for the 
father's transgression; the truth that each individual 
must act upon and be acted upon by the society of which 
he is a part, that all must in some degree suffer for the 

 "MOSES": A LECTURE. IB 

sin of each, and the life of each be dominated "by the 
conditions imposed by all. It is the intense appreciation 
of this truth that gives the Mosaic institutions so practi 
cal and utilitarian a character. Their genius, if I may so 
speak, leaves the abstract speculations where thought so 
easily loses and wastes itself, or finds expression only in 
symbols that become finally but the basis of superstition, 
in order that it may concentrate attention upon the laws 
which determine the happiness or misery of men upon 
this earth. Its lessons have never tended to the essential 
selfishness of asceticism, which is so prominent a feature 
in Brahmanism and Buddhism, and from which Chris 
tianity and Islamism have not been exempt. Its injunc 
tion has never been, " Leave the world to itself that you 
may save your own soul," but rather, " Do your duty in 
the world that you may be happier and the world be 
better." It has disdained no sanitary regulation that 
might secure the health of the body. Its promise has 
been of peace and plenty and length of days, of stalwart 
sons and comely daughters. 

It may be that the feeling of Moses in regard to a 
future life was that expressed in the language of the 
Stoic: "It is the business of Jupiter, not mine;" or it 
may be that it partook of the same revulsion that shows 
itself in modern times, when a spirit essentially religious 
has been turned against the forms and expressions of 
religion, because these forms and expressions have been 
made the props and bulwarks of tyranny, and even the 
name and teachings of the Carpenter's Son perverted 
into supports of social injustice—used to guard the pomp 
of Cffisar and justify the greed of Dives. 

Yet, however such feelings influenced Moses, I cannot 
think that such a soul as his, living such a life as his— 
feeling the exaltation of great thoughts, feeling the 
burden of great cares, feeling the bitterness of great 

 16 "MOSES": A LECTURE. 

disappointments—did not stretch forward to the hope 
beyond; did not rest and strengthen and ground itself in 
the confident belief that the death of the body is but the 
emancipation of the mind; did not feel the assurance 
that there is a power in the universe upon which it 
might confidently rely, through wreck of matter and 
crash of worlds. Yet the great concern of Moses was 

•with the duty that lay plainly before him; the effort to 
lay the foundation of a social state in which deep 
poverty and degrading want should be unknown—where 
men released from the meaner struggles that waste 
human energy should have opportunity for intellectual 
and moral development. 

Here stands out the greatness of the man. What was 
the wisdom and stretch of the forethought which in the 
desert sought to guard in advance against the dangers of 
a settled state, let the present speak. 

In the full blaze of the nineteenth century, when every 
child in our schools may know of common truths things 
of which the Egyptian sages never dreamed; when the 
earth has been mapped and the stars have been weighed; 

•when steam and electricity have been pressed into our 
service, and science is wrestling from nature secret after 
secret—it is but natural to look back upon the wisdom 
of three thousand years ago as the man looks back upon 
the learning of the child. 

And yet, for all this wonderful increase in knowledge, 
for all this enormous gain of productive power, where is 
the country in the civilized world in which to-day there 
is not want and suffering—where the masses are not con 
demned to toil that gives no leisure, and all classes are 
not pursued by a greed of gain that makes life an ignoble 
struggle to get and to keep? Three thousand years of 
advance, and still the moan goes up: " They have made 
our lives bitter with hard bondage, in mortar and in 

 "MOSES": A LECTURE. 17 

brick, and in all manner of service!" Three thousand 
years of advance! and the piteous voices of little children 
are in the moan. 

Standing as I stand, where modern ideas have had full 
est, freest development; in the newest great city of the 
newest great nation; by the side of that ultimate sea, where 
ends the westward march of the race that has circled the 
globe, and farther west meets farthest east, the cool shades 
and sweet waters whose promise has so long lured us on 
seem dissolving into mocking mirage. 

Over ocean wastes far wider than the Syrian desert we 
have sought our promised land—no narrow strip between 
the mountains and the sea, but a wide and virgin conti 
nent. Here, in greater freedom, with vaster knowledge 
and fuller experience, we are building up a nation that 
leads the van of modern progress. 

And yet while we prate of the rights of man there are 
already among us thousands and thousands who find it 
difficult to assert the first of natural rights—the right to 
earn an honest living; thousands who from time to time 
must accept of degrading charity or starve. 

We boast of equality before the law, yet notoriously 
Justice is deaf to the call of him who has not gold, and 
blind to the sin of him who has. 

We pride ourselves upon our common schools, yet after 
our boys and girls are educated we vainly ask, "What 
shall we do with them ? " And under the shadow of our 
colleges, children are growing up in vice and crime, be 
cause from their homes poverty has driven all refining 
influence. 

We pin our faith to universal suffrage, yet with all 
power in the hands of the people, the control of public 
affairs is passing into the hands of a class of professional 
politicians, and our governments are becoming but a 
means for the robbery of the people. 

 18 "MOSES": A LECTURE. 

We have prohibited hereditary distinctions, we have 
forbidden titles of nobility; yet there is growing up 
among us an aristocracy of wealth as powerful and as 
merciless as ever held sway. 

We progress and we progress; we girdle continents 
with iron roads and knit cities together with the mesh of 
telegraph-wires; each day brings some new invention; 
each year marks a fresh advance—the power of produc 
tion increased, and the avenues of exchange cleared and 
broadened. Yet the complaint of " hard times " is louder 
and louder, and everywhere are men harassed by care, 
and haunted by the fear of want. With swift, steady 
strides and prodigious leaps, the power of human hands 
to satisfy human wants advances and advances, is multi 
plied and multiplied. Yet the struggle for mere exis 
tence is more and more intense, and human labor is 
becoming the cheapest of commodities. Beside glutted 
warehouses human beings grow faint with hunger and 
shiver with cold; under the shadow of churches festers 
the vice that is born of want. 

Trace to its root the cause that is thus producing waut 
in the midst of plenty, ignorance in the midst of intelli 
gence, aristocracy in democracy, weakness in strength— 
that is giving to our civilization a one-sided and unstable 
development, and you will find it something which this 
Hebrew statesman three thousand years ago perceived 
and guarded against. Moses saw that the real cause of 
the enslavement of the masses of Egypt was what has 
everywhere produced enslavement, the possession by a 
class of the land upon which and from which the whole 
people must live. He saw that to permit in land the 
same unqualified private ownership that by natural right 
attaches to the things produced by labor, would be 
inevitably to separate the people into the very rich and 
the very poor, inevitably to enslave labor—to make the 

 "MOSES": A LECTURE. 19 

few the masters of the many, no matter what the political 
forms, to bring vice and degradation, no matter what the 
religion. 

And with the foresight of the philosophic statesman 
who legislates not for the need of a day, but for all the 
future, he sought, in ways suited to his times and con 
ditions, to guard against this error. Everywhere in 
the Mosaic institutions is the land treated as the gift of the 
Creator to bis common creatures, which no one has the 
right to monopolize. Everywhere it is, not your estate, 
or your property, not the land which you bought, or 
the land which you conquered, but " the land which the 
Lord thy God giveth thee"—"the land which the Lord 
lendeth thee." And by practical legislation, by regula 
tions to which he gave the highest sanctions, he tried to 
guard against the wrong that converted ancient civiliza 
tions to despotisms—the wrong that in after centuries 
ate out the heart of Rome, that produced the embruting 
serfdom of Poland and the gaunt misery of Ireland, the 
wrong that is already filling American cities with idle 
men, and our virgin States with tramps. He not only 
provided for the fair division of the land among the 
people, and for making it fallow and common every 
seventh year, but by the institution of the jubilee he 
provided for a redistribution of the land every fifty years, 
and made monopoly impossible. 

I do not say that these institutions were, for their ulti 
mate purpose, the very best that might even then have 
been devised, for Moses had to work, as all great con 
structive statesmen have to work, with the tools that 
came to his hand, and upon materials as he found them. 
Still less do I mean to say that forms suitable for that 
time and people are suitable for every time and people. 
I ask, not veneration of the form, but recognition of the 
spirit. 

 20 "MOSES": A LECTURE. 

Yet how common it is to venerate the form and to 
deny the spirit! There are many who believe that the 
Mosaic institutions were literally dictated by the 
Almighty, yet who would denounce as irreligious and 
"communistic" any application of their spirit to the 
present day. And yet to-day how much we owe to these 
institutions! This very day the only thing that stands 
between our working-classes and ceaseless toil is one of 
these Mosaic institutions. Nothing in political economy 
is better settled than that under conditions which now 
prevail the working-classes would get no more for 
seven days' labor than they now get for six, and would 
find it as difficult to reduce their working-hours as 
now. 

Let the mistake of those who think that man was 
made for the Sabbath, rather than the Sabbath for man, 
be what it may; that there is one day in the week 
that the working-man may call his own, one day in the 
week on which hammer is silent and loom stands idle, 
is due, through Christianity, to Judaism—to the code 
promulgated in the Sinaitic wilderness. And who that 
considers the waste of productive forces can doubt that 
modern society would be not merely happier but richer, 
had we received as well as the Sabbath day the grand 
idea of the Sabbath year, or adapting its spirit to our 
changed conditions, secured in another way an equiva 
lent reduction of working-hours 7 

It is in these characteristics of the Mosaic institutions 
that, as in the fragments of a Colossus, we may read the 
greatness of the mind whose impress they bear—of a 
mind in advance of its surroundings, in advance of its 
age; of one of those star souls that dwindle not with 
distance, but, glowing with the radiance of essential 
truth, hold their light while institutions and languages 
and creeds change and pass. 

 "MOSES": A LECTURE. 21 

That the thought was greater than the permanent 
expression it found, who can doubt? Yet from that day 
to this that expression has been in the world a living 
power. 

Prom the free spirit of the Mosaic law sprang the 
intensity of family life that amid all dispersions and 
persecutions has preserved the individuality of the 
Hebrew race; that love of independence that under the 
most adverse circumstances has characterized the Jew; 
that burning patriotism that flamed up in the Maccabees 
and bared the breasts of Jewish peasants to the serried 
steel of Grecian phalanx and the resistless onset of 
Roman legion; that stubborn courage that in exile and 
in torture held the Jew to his faith. It kindled that fire 
that has made the strains of Hebrew seers and poets 
phrase for us the highest exaltations of thought; that 
intellectual vigor that has over and over again made the 
dry staff bud and blossom. And passing outward from 
one narrow race it has exerted its power wherever the 
influence of the Hebrew Scriptures has been felt. It has 
toppled thrones and cast down hierarchies. It strength 
ened the Scottish Covenanter in the hour of trial, and the 
Puritan amid the snows of a strange land. It charged 
with the Ironsides at Naseby; it stood behind the low 
redoubt on Bunker Hill. 

But it is in example as in deed that such lives are 
helpful. It is thus that they dignify human nature, and 
glorify human effort, and bring to those who struggle 
hope and trust. The life of Moses, like the institutions 
of Moses, is a protest against that blasphemous doctrine, 
current now as it was three thousand years ago—that 
blasphemous doctrine preached ofttimes even from Chris 
tian pulpits—that the want and suffering of the masses 
of mankind flow from a mysterious dispensation of Provi 
dence, which we may lament, but can neither quarrel 

 22 "MOSES": A LECTURE. 

with nor alter. Let him who hugs that doctrine to 
himself, him to whom it seems that the squalor and bru- 
tishness with which the very centers of our civilization 
abound are not his affair, turn to the example of that 
life. For to him who will look, yet burns the bush; and 
to him who will hear, again comes the voice: "The 
people suffer; who will lead them forth?" 

Adopted into the immediate family of the supreme 
monarch and earthly god; standing almost at the apex 
of the social pyramid which had for its base those toiling 
millions; priest and prince in a land where prince and 
priest might revel in all delights—everything that life 
could offer to gratify the senses or engage the intellect 
was open to him. 

What to him the wail of them who beneath the fierce 
sun toiled under the whips of relentless masters? Heard 
from granite colonnade or beneath cool linen awning, it 
was mellowed by distance to monotonous music. Why 
should he question the Sphinx of Fate, or quarrel with 
destinies the high gods had decreed? So had it always 
been, for ages and ages; so must it ever be. The beetle 
rends the insect, and the hawk preys on the beetle; order 
on order, life rises from death and carnage, and higher 
pleasures from lower agonies. Shall the man be better 
than nature? Soothing and restful flows the Nile, 
though underneath its placid surface finny tribes wage 
cruel war, and the stronger eat the weaker. Shall the 
gazer who would read the secrets of the stars turn 
because under his feet a worm may writhe ? 

Theirs to make bricks without straw; his a high place 
in the glorious procession that with gorgeous banners 
and glittering emblems, with clash of music and solemn 
chant, winds its shining way to dedicate the immortal 
edifice their toil has reared. Theirs the leek and the 
garlic; his to sit at the sumptuous feast. Why should 

 "MOSES": A LECTURE. 23 

he dwell on the irksomeness of bondage, he for whom the 
chariots waited, who might at will bestride the swift 
coursers of the Delta, or be borne on the bosom of the 
river with oars that beat time to songs? Did he long 
for the excitement of action 1—there was the desert hunt, 
with steeds fleeter than the antelope and lions trained 
like dogs. Did he crave rest and ease 1—there was for 
him the soft swell of languorous music and the wreathed 
movements of dancing-girls. Did he feel the stir of 
intellectual life?—in the arcana of the temples he was 
free to the lore of ages; an initiate in the select society 
where were discussed the most engrossing problems; a 
sharer in that intellectual pride that centuries after com 
pared Greek philosophy to the babblings of children. 

It was no sudden ebullition of passion that caused 
Moses to turn his back on all this, and to bring the 
strength and knowledge acquired in a dominant caste to 
the lifelong service of the oppressed. The forgetfulness 
of self manifested in the smiting of the Egyptian shines 
through the whole life. In institutions that molded the 
character of a people, in institutions that to this day 
make easier the lot of toiling millions, we may read the 
stately purpose. 

Through all that tradition has given us of that life 
runs the same grand passion—the unselfish desire to 
make humanity better, happier, nobler. And the death 
is worthy of the life. Subordinating to the good of his 
people the natural disposition to found a dynasty, which 
in his case would have been so easy, he discards the 
claims of blood and calls to his place of leader the fittest 
man. Coming from a land where the rites of sepulture 
were regarded as all-important, and the preservation of 
the body after death was the passion of life; among a 
people who were even then carrying the remains of their 
great ancestor, Joseph, to rest with his fathers, he yet 

 24 "MOSES": A LECTUBE. 

conquered the last natural yearning and withdrew from 
the sight and sympathy of men to die alone and unat 
tended, lest the idolatrous feeling, always ready to break 
forth, should in death accord him the superstitious 
reverence he had refused in life. 

"No man knoweth of his sepulcher unto this day." 
But while the despoiled tombs of the Pharaohs mock the 
vanity that reared them, the name of the Hebrew who, 
revolting from their tyranny, strove for the elevation of 
his fellow-men, is yet a beacon-light to the world. 

Leader and servant of men! Lawgiver and bene 
factor ! Toiler toward the promised land seen only by 
the eye of faith! Type of the high souls who in every 
age have given to earth its heroes and its martyrs, whose 
deeds are the precious possession of the race, whose 
memories are its sacred heritage! With whom among 
the founders of empire shall we compare himt 

To dispute about the inspiration of such a man were 
to dispute about words. From the depths of the unseen 
such characters must draw their strength; from fountains 
that flow only from the pure in heart must come their 
wisdom. Of something more real than matter; of some 
thing higher than.the stars; of a light that will endure 
when suns are dead and dark; of a purpose of which the 
physical universe is but a passing phase, such lives telL 

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