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Title: Principles of Political Economy, Vol. II
Author: Roscher, Wilhelm, 1817-1894
Language: English
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PRINCIPLES
OF
POLITICAL ECONOMY
BY
WILLIAM ROSCHER,
PROFESSOR OF POLITICAL ECONOMY AT THE UNIVERSITY OF LEIPZIG,
CORRESPONDING MEMBER OF THE INSTITUTE OF FRANCE, PRIVY
COUNSELLOR TO HIS MAJESTY, THE KING OF SAXONY.
FROM THE THIRTEENTH (1877) GERMAN EDITION.
WITH ADDITIONAL CHAPTERS, FURNISHED BY THE AUTHOR, FOR THIS FIRST
ENGLISH AND AMERICAN EDITION, ON
PAPER MONEY, INTERNATIONAL TRADE, AND THE
PROTECTIVE SYSTEM;
AND A PRELIMINARY
ESSAY ON THE HISTORICAL METHOD IN POLITICAL ECONOMY
(From the French)
BY L. WOLOWSKI,
THE WHOLE TRANSLATED BY
JOHN J. LALOR, A. M.
VOL. II.
[Illustration: Printer's Logo]
NEW YORK:
HENRY HOLT & CO.
1878.
Entered according to Act of Congress, in the year eighteen hundred
and seventy-eight,
BY CALLAGHAN & CO.,
In the office of the Librarian of Congress, at Washington, D. C.
DAVID ATWOOD, STEREOTYPER AND PRINTER, MADISON, WIS.
TO
WILLIAM H. GAYLORD, ESQ.,
_COUNSELOR AT LAW_,
OF CLEVELAND, OHIO,
TO WHOSE BROTHERLY CARE IT IS LARGELY DUE THAT I LIVED TO
TRANSLATE THEM,
THESE VOLUMES
ARE AFFECTIONATELY INSCRIBED.
BOOK III.
DISTRIBUTION OF GOODS.
CHAPTER 1.
INCOME IN GENERAL.
SECTION CXLIV.
RECEIPTS.--INCOME.--PRODUCE.
The idea covered by the word receipts (_Einnahme_) embraces all the new
additions successively made to one's resources within a given period of
time.[144-1] Income, on the other hand, embraces only such receipts as
are the results of economic activity. (See §§ 2, 11.) Produce (_Ertrag_,
_produit_) is income, but not from the point of view of the person or
_subject_ engaged in a business of any kind, but from that of the
business itself, or of the _object_ with which the business is
concerned, and on which it, so to speak, acts.
Income is made up of products, the results of labor and of the
employment and use of resources. These products, the producer may either
consume himself or exchange against other products, to satisfy a more
urgent want.[144-2] Hence, spite of the frequency with which we hear
such expressions as these: "the laborer eats the bread of his employer;"
"the capitalist lives by the sweat of the brow of labor;" or, again, a
manufacturer or business man "lives from the income of his
customers,"[144-3] they are entirely unwarranted. No man who manages his
own affairs well, or those of a household, lives on the capital or
income of another man; but every one lives on his own income, by the
things he has himself produced; although with every further development
of the division of labor, it becomes rarer that any one puts the
finishing stroke to his own products, and can satisfy himself by their
immediate consumption alone. Hence we should call nothing diverted or
derived income except that which has been gratuitously obtained from
another.[144-4]
[Footnote 144-1: Including of course, gifts, inheritances,
lottery prizes, etc.]
[Footnote 144-2: Thus the original income of the peasant
consists in his corn, of the miller in his flour, of the
baker in his bread, of the shoemaker in his shoes. The money
which circulates among all these and the purchaser, is only
the means of exchanging that part of their products which
they cannot themselves use, for other goods. Money, on the
other hand, was the original income of the producers of the
gold or silver it contains. Compare _Mirabeau_, Philosophie
rurale, 1763, ch. 3. _Adam Smith_, II, ch. 2. But
especially, see _J. B. Say_, Traité II, ch. 1, 5; and
_Sismondi_, N. P., I, 90, 376, in which it is correctly
said, that the quality which constitutes anything capital or
income does not inhere in the thing itself, but depends on
the person. Compare, however, I, 148; _Hermann_, Staatsw.
Untersuch. 297 ff., 33 seq.]
[Footnote 144-3: A fundamental thought in _St. Chamans_, Du
Système d'Impôt, 1820. Nouvel Essai sur la Richesse des
Nations, 1824.]
[Footnote 144-4: Thus, for instance, the support given by
the head of a family to the members thereof; also gifts,
alms, thefts. Even _A. L. Schlözer_, St. A., II, 487, will
allow that no one "eats the bread of another," but the
person who has received it from the latter by way of favor
and for nothing. In the case of a rented house, there is
only an exchange of objects of income. The person to whom it
is rented gives up a portion of his, and the renting party
the use of his house. Similarly, in the case of personal
services. Writers who maintain that only certain kinds of
useful labor are productive, must of course extend the
limits of diverted income much farther. See _Lotz_,
Handbuch, III, § 133; _Rau_, Lehrbuch, I, §§ 248, 251.
_Cantillon_ thinks that if no landowner spent more than his
income, it would be scarcely possible for any one else to
grow rich. (Nature du Commerce, 75.) According to _Stein_,
Lehrbuch, 347, every one gets his income from the income of
other people!]
SECTION CXLV.
INCOME.--GROSS, FREE AND NET.
In all _income_, we may distinguish a _gross_ amount, a _net_ amount and
a _free_ amount.[145-1] The gross income of a year, for instance,
consists of all the goods which have been newly produced within that
time. The net[145-2] income is that portion of the former which remains
after deducting the cost of production (§ 106), and which may therefore
be consumed without diminishing the original resources. Only the new
values incorporated in the new commodities make up the net income.
Evidently, a great portion of what is considered in one business the
cost of production is net income in a great many others; as for
instance, what the person engaged in one enterprise in production has
paid out in wages and interest on capital. By means of this outlay, a
portion of his circulating capital is drawn by others as income, and, on
the other hand, a portion of their original income is turned into a
portion of his circulating capital.[145-3] _Free_ income, I call that
portion of net income which remains available to the producer after his
indispensable wants have been satisfied.
An accurate kind of book-keeping which keeps these three elements of
income separate is more generally practicable as civilization advances.
We might call it the _economic balance_. Where commerce is very thriving
it is even customary to provide by law that those classes who need it
especially should have this species of book-keeping. People in a lower
stage of cultivation, with their poetical nature, are unfriendly to such
calculations.[145-4] [145-5] And where natural-economy (_Naturalwirthschaft_)
or barter prevails, a book-keeping of this kind of any accuracy is scarcely
practicable. The ratio which net income bears to gross income is a very
important element to enable us to judge of the advantageousness of any
method of production. If every producer should succeed in consequence of
keeping his books in this manner, in determining exactly the cost to him of
each of his products, this would be an economic progress similar to that of
general spread of good chemical knowledge in the arts. On the amount of
_free_ income, on the other hand, depends all the higher enjoyment of life,
all rational beneficence, and the progressive enrichment of mankind.[145-6]
[Footnote 145-1: Similarly in _Sismondi_, N. P., II, 330,
and _Rau_, Lehrbuch, I, § 71, a.]
[Footnote 145-2: Called by _Hermann_, loc. cit., simply
income.]
[Footnote 145-3: This truth _J. B. Say_ has exaggerated to
the extent of claiming that gross and net income are one and
the same so far as entire nations are concerned. (Traité,
II, ch. 5; Cours pratique, III, 14; IV, 74.) But the gross
profit of the entire production of any one year is much
greater than the simultaneous net income of all the
individuals engaged in it. This is accounted for by the fact
that in such production an amount of circulating capital is
invested which was saved from the net profit of previous
economic times. Compare _Storch_, Nationaleinkommen, 90 ff.
_Kermann_, loc. cit., 323 ff.]
[Footnote 145-4: In the East, a valuation by one's self of
his property is considered a guilty kind of pride, usually
punished by the loss of one's possessions. (_Burckhardt_,
Travels in Arabia, I, 72 ff.) See _Samuel_, 24, on the
census made by David. The Egyptians, however, as may be
inferred from their monuments, must have very early and very
extensively felt the want of some kind of book-keeping such
as we have mentioned. A very accurate sort of book-keeping
among the more highly cultured Romans, with a daily
memorandum and a monthly book with entries from the former
(_adversaria-tabula expensi et accepti_). Compare _Cicero_,
pro Roscio, com. 2, 3; pro Cluent, 30; _Verr._, II, 1, 23,
36. The Latin _putare_, from _putus_, pure, means: to make
an account clear, and therefore corresponds to the American
provincialism, "I reckon," i. e., I believe; and is a
remarkable proof of a rigid method of keeping accounts. The
Italian, or so-called double-entry method of book-keeping,
which gives the most accurate information on the profit from
every separate branch of business, became usual among the
nations of modern Europe whose civilization was the first to
ripen, about the end of the fifteenth century. Its invention
is ascribed to the monk Luca Paciolo di Borgo S. Sepolcro.
In England, this kind of book-keeping is very gradually
coming into use even among farmers, while _Simond_, Voyage
en Angleterre, 2 ed., II, 64, _Dunoyer_, Liberté du Travail,
VIII, 5, say, "it would in France be considered as
ridiculous as the book-keeping of an apple vendor." In
Germany, there have been for some time past, manufactories
of commercial books. Besides, the remarkable difference
brought out by the income tax in England between the exact
statements made by large manufacturers, etc., and by those
engaged in industry on a medium or small scale, bears
evidence of the better way in which the former keep their
accounts, the cause and effect of their better business in
general. Compare _Knies_, in the Tübing. Zeitschr., 1854,
513. On the best mode of determining income, see _Cazaux_,
Eléments d'Économie publique et privée, Livre, II. It is
especially necessary to keep an account of the increase or
diminution, even when accidental, of the value of the fixed
capital employed.]
[Footnote 145-5: The Code de Commerce, I, art. 8, requires
that every merchant should keep a journal, paged and
approved by the authorities, showing the receipts and
disbursements of each day, on whatever account, and also the
monthly expenditures of his family. Besides, he is required
to make a yearly inventory of his debits and credits,
subscribe to it and preserve it. That such books were
excellent judicial evidence may be shown by Italian statutes
of the fourteenth century. (_Martens_, Ursprung des
Wechschrechts, 23.) Those of Germany even in 1449.
(_Hirsch_, Danziger Handelsgeschichte, 232.)]
[Footnote 145-6: Importance of the so-called "transferring
to credit," where a business man considers his business as
an independent entity and as distinct from himself.]
SECTION CXLVI.
NATIONAL INCOME.--ITS STATISTICAL IMPORTANCE.
Among the most important[146-1] but also the most difficult objects of
statistics, that book-keeping of nations, is national income. In
estimating it, we may take our starting point from the goods which are
elements of income, or from the persons who receive them as
income.[146-2]
In the former case the gross national income consists:
A. Of the raw material newly obtained in the country.
B. Of imports from foreign countries, including that which is secured by
piracy, as war-booty, contributions, etc.
C. The increase of values which industry[146-3] and commerce add to the
first two classes up to the time of their final consumption.
D. Services in the narrower sense and the produce (_Nutzungen_) of
capital in use.
All these several elements, estimated at their average price in money,
which supposes that all purchases, especially those under the head D,
are made voluntarily[146-4] and at their natural price.
To find the national net income, we must deduct the following items:
A. All the material employed in production which yields no immediate
satisfaction to any personal want.[146-5]
B. The exports which pay for the imports.
C. The wear and tear of productive capital and capital in use.
In the second case the net national income is to be calculated from the
following items:
A. From the net income of all independent private businesses etc.[146-6]
B. From the net income of the state, of municipalities, corporations and
institutions, derived from their own resources.
C. Under the former heads must be taken into the account such parts of
property as have been immediately consumed and enjoyed.[146-7]
D. Interest on debt must be added only on the side of the creditor, and
deducted from the income of the debtor; otherwise, _error dupli_. This
does not apply to taxes or church dues because the subjects of a good
state and members of a good church purchase thereby things which are
really new and of at least equal value to the outlay. Besides, in both
instances, it is necessary to calculate the number of men who live from
the national income, the average amount of their indispensable wants,
and the average price in money of the same, in order to determine the
_free_ national income by deducting the sum total of these average
wants, estimated at this average price.[146-8] [146-9]
[Footnote 146-1: Not only to compare the happiness and power
of different nations with one another, but also for purposes
of taxation, the profitableness and innocuousness of which
suppose the most perfect adaptation to the income of the
whole people.]
[Footnote 146-2: The former, in _Rau_, Lehrbuch, I, § 247;
the latter in _Hermann_, 308 ff. The former mode of
calculation gives us a means of judging of the comfort of
the people, their control of natural forces, etc.; the
second, of the relation of classes among the people. (_v.
Mangoldt_, Grundriss, 99. V. W. L., 316 ff.) Each member of
the nation produces his income only in the whole of the
nation's economy. Hence _Held_, Die Einkommensteuer, 1872,
70, 77, would, but indeed only under very abstract fictions,
construct private income from the national, and not _vice
versa_.]
[Footnote 146-3: On the average degree of this increase of
values in different industries, see _Chaptal_, De
l'Industrie française, II, passim. _Bolz_, Gewerbekalender
für, 1833, 111. No such scale can be lastingly valid,
because, for instance, almost all technic progress decreases
the appreciation of values through industry, and every
advance made by luxury raises the claims to refined quality
etc. See _Hildebrand_, Jahrbücher für Nat-Oek., 1863, 248
ff.]
[Footnote 146-4: Many items in Class D evade all
calculation. Thus, for instance, the numberless cases of
personal services which are enjoyed only by the doer
himself; also the greater number of products
(_Nutzungen_=usufruct) of capital in use for the consumption
of the owner himself. (Latent income.) Only, it may be, in
the case of dwelling houses, equipages, etc., that the
consumption by use can be estimated in accordance with the
analogy of similarly rented goods.]
[Footnote 146-5: The principal materials consumed in
manufactures are of course not to be deducted here, because
the increase in their value was taken into account above.]
[Footnote 146-6: When an artist who earns $10,000 per annum
appears in a country, the gross national income increases in
a way similar to that in which it increases when a new
commodity is found which would have a yearly increase of
value equal to $10,000 over and above that of the raw
material. Cost of production in the case of such a virtuoso
is scarcely to be alluded to. Nearly his entire income, with
the exception of his traveling expenses, etc., is net, and
the greater portion of it _free_. An income tax would affect
his hearers after as it did before, and in his income, find
a completely new object. _Per contra_, see Saggi economici,
I, 176 f.]
[Footnote 146-7: For purposes of taxation, where a relative
valuation is more the question than an absolute one, it
would be sufficient to assume that every household consumed
clothing, utensils, etc., in proportion to the rest of their
income. Hence, these items might, unhesitatingly, be omitted
altogether.]
[Footnote 146-8: Mathematically demonstrated by _Fuoco_,
Saggi economici, II, 102 ff.]
[Footnote 146-9: The gross income of British Europe is
estimated by _Pebrer_, Histoire financière et statistique
générale de l'Empire Br., 1834, II, 90, at £514,823,059,
viz.: agriculture, £246,600,000; mining, 21,400,000;
manufactures, after deduction made of the raw material,
£148,050,000; internal and coast trade, £51,975,060; foreign
commerce and navigation, £34,398,059; banking, £4,500,000;
interest from foreign countries, £4,500,000. By _Moreau de
Jonnés_, Statist de la Gr. Br., 1837, I, 312, it is
estimated at 18,000,000,000 francs, from which, however, the
raw material used in industry is not deducted. The net
income of Great Britain was estimated by Pitt, in 1799, at
£135,000,000, of which £25,000,000 were received by
landowners for rent, £25,000,000 by farmers, £5,000,000 were
tithes, £3,000,000 from forests, canals, and mines,
£6,000,000 from houses, £15,000,000 from state funds,
£12,000,000 from foreign commerce, £28,000,000 from inland
commerce and manufactures, £3,000,000 from fine arts,
£80,000,000 from Scotland, £5,000,000 from foreign
countries. (_Gentz_, Histor. Journ., 1799, I, 183 ff.)
_Lowe_, England in its present Situation, 1822, p. 246,
speaks of 255,000,000. About 1860, the incomes subject to
taxation alone, that is, all above £100, amounted to
335,000,000. The remainder was certainly worth one-half of
this. (Statist. Journ., 1864, 121.) _Baxter_, in 1867,
assumed it to be £825,000,000. Compare _L. Levi_, on
Taxation, 6.
In France, about forty years ago, according to Chaptal,
Doudeauville, Balbi and others, about 6,500,000,000 francs
gross national income could be counted on. _Schnitzler_
speaks of 7,000,000,000 francs (Creation de la Richesse en
France, 1842, I, 392), after deduction made of the raw
material of manufacture. According to _Wolowski_,
Statistique de la Fr., 1847, it was more than 12,000,000,000
francs. _M. Chevalier_, Revue des deux Mondes, March 15,
1848, has it 10,000,000,000 at most. In these four
estimates, only material products are taken into account.
_Ch. Dupin_ thinks the income per capita was, in 1730, = 108
francs; in 1780, = 169; in 1830, = 269. _Cazeaux_, Eléments,
163, estimated the net national income, in 1825, at
5,000,000,000 francs; _Cochut_, in 1861, at 16,000,000,000.
(Revue des deux Mondes, XXXVII, 703.)
In Spain, _Borrego_, Nationalreichthum, etc. Spaniens, 1834,
33, estimated the income from agriculture at 2,284,000,000
francs; from industry, etc., 361,000,000; commerce,
124,000,000; from houses, 186,000,000; canals, streets etc.,
8,500,000; personal services, 75,000,000; money in
circulation (probably loaned capital), 85,000,000.
In the United States, in 1840, the national income was
estimated at over $1,063,000,000; from agriculture, over
$654,000,000; from manufactures, nearly $240,000,000;
commerce, almost $80,000,000; mining, over $42,000,000; from
lumber (_Wäldern_), almost $17,000,000; and from the
fisheries, almost $12,000,000. The per capita amount of
income was $62. It was largest in Rhode Island--$110; in
Massachusetts it was $103; in Louisiana, $99; and in Iowa,
smallest, $27; in Michigan, it was $33. Compare _Tucker_,
Progress of the United States, 195 ff. The census of 1860
assumes the national wealth, slaves not included, at
$14,183,000,000, that is $451 per capita, with a per capita
annual income of $112. According to _Czörnig_, the gross
income of Austria, from agriculture, the chase and
fisheries, in 1861, was 2,119,000,000 florins; from mining,
41,000,000; from the industries, 1,200,000,000. In Prussia,
the net national income, not including the revenue from
state property, nor the income of the royal household,
seems, from the returns of the income and _class_ tax, to
have been about 2,458,000,000 thalers, in 1874. _Engel_,
Preuss. Statist. Ztschr., 1875, 133. The majority of the
above estimates are obviously unreliable.]
SECTION CXLVII.
NATIONAL INCOME.--ITS STATISTICAL IMPORTANCE.
[CONTINUED.]
The question frequently discussed, whether it is more advantageous to
increase the gross income or the net income[147-1] of a people, may be
readily answered with the assistance of our tripartite division. Since
economic production has no other object than the satisfaction of human
wants, the mere increase of the gross income of a people is a matter of
indifference. An increase of the net income puts a people in a condition
to increase either their numbers or their enjoyments. (See §§ 163 and
239.) The most desirable condition is where both these results are
produced. It is fortunate for a people when the _free_ income of the
nation increases by reason of the absolute or relative decrease of the
cost of production, which adds nothing to enjoyment. But it is
politically and morally to be lamented when it increases at the expense
of the satisfaction of man's necessary wants, especially if the majority
of the people deny themselves in this respect to produce that end. Sir
Thomas More called the sheep of his time, to make place for which so
many farm houses were razed to the ground, ravenous beasts, which
devoured men and laid waste city and country.[147-2]
[Footnote 147-1: The greater number of writers, at bottom,
understand by this question only whether greater efforts
should be made to increase the wages of the lower classes or
the rent and rate of interest on capital paid to the higher.
(_Schmoller_, in the Tüb. Zeitschrift, 1863, 22.)]
[Footnote 147-2: The difference between gross and net income
was introduced into the science principally by the
Physiocrates. _Vauban_ (1707) had no conception of it, and
thirty years later a French minister, in his instructions
concerning the levy of the _vingtièmes_, dimly seeing that
the aggregate amount of the harvest was not clear gain,
ordered, to obtain the latter, that the cost of reaping and
threshing should be deducted. (_Dupont_, Correspondence of
_J. B. Say_, 404, éd. Daire.) By _produit net_, _Quesnay_
means the excess of original production over its cost,
considered from the personal point of view of the individual
landowner. This excess, it is claimed, can alone increase
the national wealth and alone support the "steril" class.
The political and military bearing of this very clearly
recognized. (102 ff., éd Daire.) Hence _Quesnay_, favors it
in every way; by large farming instead of small, by stock
raising on a large scale, supplanting home labor by cheaper
foreign labor, by machinery and the employment of manual
labor, etc.; 91 ff., 200 ff., 274 ff. The elder _Mirabeau_
teaches even that the goodness of a government or of a
constitution, and even national morality may be inferred
from the amount of the _produit net_. (Ph. rurale, ch. 5.)
_Stewart_, Principles, I, ch. 20. _Adam Smith_ gives greater
prominence to the gross income, and grades the principal
branches of national labor according as they increase the
gross product of the nation's economy. (II, chs. 1, 5.)
Similarly, _J. B. Say_, Traité, ch. 8, § 3; _Lauderdale_,
Inquiry, 142.
_Ricardo_ thoroughly reacts against this view, and considers
it a matter of indifference whether a net product (interest
on capital and rent) of a given amount be obtained by the
labor of five or seven million other men, so long as only
five million can live on it. (Principles, ch. 26.) Similarly
_Ganilh_, Systèmes, I, 218 ff.; Théorie, II, 96.
Controverted by _Malthus_, Principles, II, § 6. _Buquoy_,
Theorie der Nat. Wirthsch., 1815, 310 ff. _Sismondi_ has
ridiculed this predilection for the net product which in
_Ricardo_ corresponds with what the Germans call free
product (_freien Ertrage_), and which, contrary to Ricardo's
own opinion, he calls Ricardo's ideal, saying that according
to him, nothing more was to be desired but that "the king
should remain alone on the island and, by turning a crank
forever, do all the work of England through the
instrumentality of automata." (N. P., II, 330 ff.) An entire
people should value only gross product. (I, 183.) In his
Etudes, Essai, II: Du Revenu Social, _Sismondi_
distinguishes as elements of the gross national income: a,
pure capital, the return of outlay; b, that which is at once
both capital and income, and serves as family support
(capital as a necessarily remaining supply, income as the
product of the preceding year); c, net income, the excess of
production over consumption.
The Socialists of our day would prefer to see the whole net
income of a people employed in the satisfaction of the
necessary wants of an ever increasing population. By this
procedure, as a natural consequence, we should witness first
the curtailing of the taxing power, of the funds for the
satisfaction of the more refined wants and of the saving of
capital, nor would it be long before even the existing
generation would experience the bitterness of this "living
from hand to mouth." After a time, even the possibility of
progress and even of mere increase of population would
cease.
_Hermann_, Staatsw. Untersuch., 297 ff., has better than
almost any one else developed the theory of income, and he
lays most stress on the satisfaction of wants as the chief
aim of public economy. _Kröncke_, Das Steuerwesen, 1804, 381
ff.; Grundsätze einer gerechten Besteuerung, 1819, 93 f.,
may be considered the predecessor who prepared the way for
him. Compare the profound work of _Bernhardi_, Versuch einer
Kritik der Gründe die für grosses und kleines Grundeigenthum
angeführt werden, St. Petersburg, 1848. Many controversies
on this subject may be closed by a more accurate
understanding as to terms. Thus, for instance, when _Rau_,
Handbuch, embraces in the cost of production the necessary
maintenance of material-workmen, and of those engaged in the
labor of commerce; or when _Jacob_, Staatswissenschaft, §
496, and _Storch_, Einkommen, 116 ff., even the necessary
support of every class useful to society, their valuation of
the gross national income is in only apparent conflict with
our doctrine on the subject.]
SECTION CXLVIII.
THE TWO PHASES OF INCOME.
In every income which has anything to do with other incomes, it is
necessary to distinguish its immediately productive side, and its profit
or acquisition side. It is necessary, in the first place, that all the
products made by private parties should, so to speak, be put into the
common treasury of the national economy, and that each should thence
draw his own private revenue. Justice requires that there should be a
perfect correlation between the two; that each should enjoy precisely
the quota of the national income to the production of which his person
or his property contributed. A just appreciation of the relative
productive power of the divers branches of labor constitutes one of the
chief bulwarks against the inroads of destructive socialistic theories.
The person who calls a good doctor or a good judge unproductive should,
to be consistent, call those who by their greater intelligence are
fitted to superintend agricultural and industrial enterprises
unproductive, also, as is done by the coarser socialists with their
apotheosis of mere manual labor. Unfortunately, such a settlement as is
above contemplated among the different factors of production, whose
owners are desirous to divide the common product among them, is possible
only where the factors of production are either of the same kind, or can
be reduced to a common denominator.[148-1] But if justice pure and
simple were meted out, no man could subsist. Love or charity must
supplement justice in order to assist those (and especially such as
without any fault of theirs) who are not able to produce anything, or
enough to supply those wants, for instance, children and the poor.
As the net national income, following the three great factors of all
economic production, is divided into three great branches, rent, wages
and interest on capital, the net income from any private business may be
reduced to one or more of these branches.[148-2] The three great
branches of income may be considered with advantage from a great many
different points of view. We may inquire in the case of each of them:
concerning its absolute magnitude, its relation to the aggregate
national income, to the magnitude of the factor of production, of which
it constitutes the remuneration; by what number of men it is shared, and
what number of wants it satisfies.[148-3] Lastly, the difference between
the amount stipulated for, and the original amount of both rent and
wages, as well as the interest of capital, is of special importance. The
former consists in the price paid by the borrower for the use of the
factor of production to the owner; the latter in the immediate products
which the employment of the same productive power brings on one's own
account. Evidently, the original amount is, in the long run, the chief
element in the determination of the stipulated amount. While the former
depends more on the deeper and more durably effective elements of price,
especially the cost of production, the value in use and the paying
capacity of purchasers; the latter is conditioned more by the
superficial variations of supply and demand, and even by custom. For our
purposes, the former is by far the more important, but, at the same
time, by far the more difficult to perceive.
[Footnote 148-1: This is possible between labor and capital,
at least in so far as a comparison can be instituted between
the sacrifice of human rest there is in labor and the
sacrifice of enjoyment in the building up of capital. But
the person who introduces an entirely unimproved piece of
land into the service of production, stands to the laborer
as well as to the capitalist in a relation which is entirely
incomparable with any other. (See § 156.) The doctrine of
former agriculturists, that one-half of the harvest was to
be ascribed to the soil and the other to the manure, would
not suffice here, even if it were correct. Compare _Fraas_,
Gesch. der Landbau- und Forstwissenschaft, 257. But in the
production of a calf, the coöperation of a bull and cow are
necessary. Yet no one is in condition to determine what
portion of the calf is to be accounted as belonging to
either. If the bull and cow belong to different owners, the
relation of supply and demand, and the deeper causes that
determine them, decide in what proportion the value of the
calf is to be divided among them.]
[Footnote 148-2: Among the greatest services rendered by
_Adam Smith_ is, his complete demonstration, that any income
may be resolved into one or more of the three great branches
of the national income. (I, ch. 6.)]
[Footnote 148-3: _Ricardo_ has not unfrequently bewildered
uncritical readers, by his habit--in which he is by no means
always consistent--of using the expressions higher and lower
wages, higher and lower profit of capital, to designate not
the absolute greatness of these branches of income, either
in money or in the wants of life, nor their greatness from a
personal point of view, but only their relative greatness as
compared with the aggregate income, the measure of the quota
of the aggregate product which is divided among workmen,
capitalists, etc. And yet, in the case of most economic
questions, this is without doubt the less interesting side.
Compare the polemic of _R. Jones_, On the Distribution of
Wealth, 1831, I, 288 ff.; _Senior_, Outlines, 142 seq.;
_Carey_, On the Rate of Wages, 1834, 24. Thus, according to
_Ricardo_, the increase of one branch is possible only at
the expense of another, while in the case of flourishing
nations, the three branches increase absolutely and
together. _Ricardo_, himself, was by no means unacquainted
with this, as may be seen from _Baumstark's_ German
translation of his work, pp. 37, 108 ff.]
CHAPTER II.
THE RENT OF LAND.
SECTION CXLIX.
THEORY OF RENT.
Rent is that portion of the regular net product of a piece of land which
remains after deducting the wages of labor and the interest on the
capital usual in the country, incorporated into it.[149-1] Hence it is
the price paid for the using of the land itself, or for what Ricardo
calls the original inexhaustible forces of the soil which are capable of
being appropriated.[149-2] This price also depends, of course, on the
relation between demand and supply; the demand in turn, on the wants and
means of payment of buyers, but the supply by no means on cost of
production, which, from the definitions above given, is here
unthinkable. However, land has this in common with other means of
production, that its price is mainly determined by that of its products.
[Footnote 149-1: According to _von Thünen_, Der isolirte
Staat. in Beziehung auf Landwirthschaft und Nat. Oek, 1850,
I, 14: "what remains of the revenue of an estate after
deducting the interest on all the objects of value which may
be separated from the soil." According to _Whately_, it is
surplus profit. The expression "regular product" supposes,
among other things, an average skillfulness of the economic
individual. Thus, for instance, the farm-rent of a piece of
land generally includes besides the real rent of the land,
interest on much capital which is more or less firmly fixed
in the soil. The importance of the latter may be
approximately determined from the fact that in the
electorate of Hesse, for instance, the value of all meadow
lands, woods, and agricultural lands is estimated at from
205 to 206 millions of thalers, and the value of all the
houses at 100 millions. (_Hildebrand_, Statist. Mittheil.
über die volkswirthschaftlichen Zustände Kurhessens, 1852,
37.) In the English income tax of 1843, the annual value of
all lands in Great Britain was estimated at over 45 millions
sterling, that of all houses at over 38 millions. However
the farm-rent of a piece of land does not by any means
always embrace the entire rent. A part of the rent is paid
to the state in the form of taxes, and another portion to
the payment of tithes. Short leasehold terms, frequent land
sales, the comparatively great difficulty of disengaging
capital invested in the cultivation of land, the union of
landed proprietor, capitalist and laborer in one person
easily obscure the law of rent.]
[Footnote 149-2: The stores of immediate plant food in a
piece of land, of minerals in a mine, of salt in a salt
mine, etc., are subject to the law of rent only in so far as
they may be considered inexhaustible; that is, they are not,
strictly speaking, subject to it. Our definition applies all
the more to the capacity for cultivation, and of support or
bearing capacity mentioned in § 35; and hence it is easier
to follow the law of rent in the case of land used for
building purposes than for agriculture. When _v. Mangoldt_
claims that the exhaustibility or inexhaustibility of the
soil has nothing to do with rent so long as it flows evenly
(_so lange sie eben fliesst_) he is in harmony with his own
general conception of rarity-premiums
(_Seltenheitsprämien_).]
SECTION CL.
THEORY OF RENT. (CONTINUED.)
Agricultural products of equal quantity and quality are produced on
pieces of land of unequal fertility, even when the same amount of skill
is displayed by the husbandman, with very different outlays of capital
and labor.[150-1] And yet the price of these products in the same market
is uniformly the same. This price must, on the supposition of free and
intelligent competition, be, in the long run, at least high enough to
cover the cost of production on even the worst soil (the margin of
cultivation according to Fawcett), which must be brought under
cultivation in order to satisfy the aggregate want. (See § 110.) This
worst land need yield no rent.[150-2] The better land which, with an
equal outlay of labor and capital, produces a greater yield, furnishes
an excess over the cost of production.[150-3] This excess is rent,
which, as a rule, is obviously higher in proportion as the difference in
fertility between the worst and the better land is greater. The person
who cultivates the land of a stranger may unhesitatingly turn this rent
over to the owner; since, notwithstanding his so doing, all that he has
himself contributed to production in labor and capital of his own,
returns to him entire in the product.[150-4]
According to § 34, a continual increase in the amount of labor and
capital lavished on the fertilization of land, agricultural science
remaining the same, leads, sooner or later to this, that every new
addition of capital or labor becomes relatively less remunerative than
the preceding.[150-5] The worse the land is, the sooner is this point
reached. Hence, it necessarily happens that, with an increase in the
aggregate want of agricultural products, greater and greater amounts of
labor and capital are employed in the further fertilization of land, and
that there comes to be a greater difference between the fertility of the
worst and better lands, in consequence of which the rent of the latter
rises.[150-6]
[Footnote 150-1: _Flotow_, Anleitung zur Abschätzung der
Grundstücke nach Klassen, 1820, 50 ff., estimates the cost
of production of a _scheffel_ of rye on land of the first
class, at scarcely 1½ thalers; on land of the tenth class,
at 3 thalers. In Hanover, it is estimated that about 60 per
cent. of the land devoted to gardening and agricultural
products produces only from 2 to 4 times the quantity of
seed sown; over 35 per cent. from 5 to 8 times, and 4.5 per
cent. from 9 to 12 times. (_Marcard_, Zur Beurtheilung des
Nat. Wohlstandes im Königreich Hanover, Tab. 3.) In Prussia,
the rates of net produce adopted by the central commission
in 1862 vary from 3 to 420 silver groschens per _morgen_, in
the case of agricultural land; from 6 to 420 in the case of
meadow land; in the case of pasturage, from 1 to 360. (_v.
Viebahn_, Statist. des Zollvereins, II, 966.) In England,
parliamentary investigations (1821) have shown that the best
land produces from 32 to 40, and the worst from 8 to 12
bushels per acre of wheat. (Edinburgh Review, XL, 21.) As to
the influence of the elevation of land, the royal Saxon
commission for the assessment of the value of land,
estimated that the net product of an acre _of_ land at a
height above the level of the sea,
In the case of 2d class land--
Of 500 feet, 55 per cent.
Of 800 " 52½ "
Of 1600 " 48 "
Of 2400 " 43.8 "
In the case of 11th class land--
42.9 per cent. of the gross yield.
39½ " " " "
34 " " " "
26 " " " "]
[Footnote 150-2: The English are very fond of assuming that
the worst land for the time being under cultivation pays no
rent. (_Ricardo_, Principles, II, 2.) This fact is
frequently obscured by the aggregation into one economic
whole of land that pays no rent and land that is able to pay
rent. (_John Stuart Mill_, Principles, II, ch. 16, § 3.)
True it is that there is a great deal of land which cannot
be farmed out, but which can be used only by its owners.
Compare _Salfeld_, in the Landwirthsch. Centralb., 1871, II,
182 ff. On land near Wetzlar which, notwithstanding the high
price of land in the neighborhood, could not be farmed out
at auction, because no one was desirous to lease it, and
which was therefore turned over to the highest bidder for
the preceding piece, see _Stöckhardt_, Zeitschr. für
deutsche Landwirthe, 1861, 237. Where, however, all the land
has its own proprietors, the competition of farmers may
easily produce a rent for the worst land. It is a matter of
complete indifference to the theory of rent, whether the
worst land when possessed only by right of occupation or
used as pasturage for cattle previous to its cultivation,
had value or not. Compare _Nebenius_, Œff. Credit, I, 29;
_Hermann_, Staatswirthsch. Unters., 170 seq.]
[Footnote 150-3: The analogous gradation in mining may make
this clearer.]
[Footnote 150-4: _Ricardo_ illustrated this by the following
example. An uncultivated tract of country is settled by a
small colony. As long as there is here an excess of land of
the best quality, and everyone may take possession of it
without paying anything therefor, no rent of the land which
is merely occupied is possible. But if all the first class
land is under cultivation--land which perhaps with the
employment of a small amount of capital yields 5 quarters an
acre per annum; and the increasing population necessitates
the cultivation of land of the second class, which with the
same outlay of capital yields only 4 quarters an acre per
annum, there arises a rent of 1 quarter an acre per annum
for land of the first class. For the price, 4 quarters is
now high enough to cover the cost of production per acre,
and it must be a matter of complete indifference (complete
indifference?) to a new comer whether he obtains 5 quarters
from land of the first class as a farmer and pays out 1
quarter, or whether he harvests 4 quarters from second class
land as proprietor. If there is a further increase of
population, so that land of the third class also, which
yields only 3 quarters per acre per annum, must be brought
under cultivation, the price of corn rises again because the
cost of production has now to be covered by three quarters.
Land of the first class now pays a rent of 2 quarters and
second class land of 1 quarter. (Ch. 2.)]
[Footnote 150-5: _von Thünen_, der isolirte Staat, II, I,
179, estimates that a bed of manure 1/3 of an inch thick on
an acre of ground, increases the production by ½; that a
second ½ inch of manure increases the yield only by a + of
5/8 corn; the third of ¼ corn, etc. _Geyer_ is of opinion
that, in Saxony, land of the average quality will yield a
gross product of 60 thalers per acre, and 14 thalers net
product per acre, in case it is managed with the greatest
intelligence and the employment of a large amount of
capital; when managed in a very ordinary way, it would yield
20 thalers gross, and 7½ thalers net product. _Thünen_
gives the following formula determining when it is more
advantageous to cultivate the old land with more
_intensiveness_ (higher farming) than to begin the
cultivation of new: As long as p - _a_q is less than
sqrt(ap), so long is an increase of the outlay of capital on
the same land more profitable than the cultivation of new
land, and _vice versa_. Here p = aggregate product obtained
by a workman in a year from the amount of capital used by
him; a = sum of his necessary yearly wants; _a_ = the
interest per annum of a capital = p; q = the amount of
capital given to assist the individual workman.]
[Footnote 150-6: _Ricardo_ had, in every case in which
outlay of capital and labor of different degrees of
productiveness had to be used on the same land, to suppose a
price of the products = the cost of the least productive
outlay. See the tables in _Ricardo's_ work, On the Influence
of a low Price of Corn on the Profits of Stock, 1815, 14
seq. _Schmoller_, on the other hand, rightly applies the
principle of united costs of production in as far as the
usual amount of profit of the producer is added to the cost
of the commodity with the highest cost of production.
Mittheilungen des Landwirthsch. Instituts zu Halle, 1865,
128. Compare _supra_, §§ 106, 110.]
SECTION CLI.
THEORY OF RENT.--LAND FAVORABLY SITUATED.
The favorable situation of a piece of land operates, in almost every
politico-economical respect, in the same manner as its fertility.[151-1]
If a market, to be fully supplied, needs to be fed from a circuit of ten
miles, the price must be sufficient to make good not only the other cost
of production but the freight over ten miles. Here, therefore, all
producers living nearer to the market, who have to make a smaller outlay
for transportation and yet obtain the same market price for their
produce, make a profit exactly corresponding to the advantage of their
situation.[151-2]
The situation of individual pieces of land relatively to farm buildings,
etc., operates in a similar way.[151-3]
[Footnote 151-1: _L'éloignement équivaut à la stérilité._
(_J. B. Say._) If we imagine with _A. Walker_ an entirely
uncultivated country, equally fertile in every part, settled
only on the coast, and divided into shares of equal breadth,
equally accessible at all points, so that every settler has
unlimited space to extend his possessions from the coast
into the interior, the shares situated in the middle of the
coast strip would be most eagerly sought after; since in its
vicinity, prospectively, all the institutions of the country
would come together. The colonist, therefore, who should
obtain that share as his, would, unquestionably, be in a
condition to pay a price for this preference, that is a
rent. (Science of Wealth, 296.)]
[Footnote 151-2: It is a consequence both of their
difference of situation and of their fertility that in the
Himalaya the farmers low down on the sides pay 50 per cent.
of the gross product as farm-rent, and higher up, 20 per
cent. less. (_Ritter_, Erdkunde, III, 878.) Both influences
may be traced most accurately in East Friesland, and in
similar places: marsh land, sandy land, heath land, and high
moorland.
Its situation influences especially the money rent of land,
and its quality the amount of produce. (_McCulloch_,
Principles, III, 5.)]
[Footnote 151-3: We need only mention the hauling of the
crops and of manure. According to the instructions of the
royal Saxon commission, above mentioned, the cost is assumed
to be 10 per cent. higher for a distance of 250 rods, and 20
per cent. higher for a distance of 500 rods.]
SECTION CLII.
THE THEORY OF RENT. [CONTINUED.]
From what we have said, it follows that the rent of the land of a
country is equal at least to the sum of all the differences between the
product of the least productive portions of capital which have been
necessarily laid out in the cultivation of the soil and the product of
the other portions more productively laid out by other husbandmen. It
may rise higher than this on account of a coalition among landowners or
immoderate competition among farmers, who may thereby be forced to
surrender a portion of their wages and interest on capital to the
former; but it can never lastingly fall below this amount. If the
landowners themselves were to surrender all claim to rent, the price of
agricultural products would not sink if the market was kept fully
supplied; and the excess obtained from the better land over and above
the cost of production would go, but only in the nature of a gift, to
the farmers, corn dealers and individual consumers.[152-1] Normal rent
is not to be explained by any mysterious or peculiar productiveness[152-2]
of the land that yields it, but on the contrary, by the fact that even
material forces unexhaustible in themselves, but which can be productive
only in combination with given parcels of land, uniformly oppose even
successively greater difficulties to every successive and additional
improvement.[152-3]
Moreover, the capital which becomes a part of the land to such an extent
that it cannot be separated from it, and perhaps not even distinguished
from it at sight, such for instance as has been laid out for purposes of
drainage or in the purchase of material intended to modify the nature of
the soil, partakes of the character of the land itself, and its yield
obeys the laws of rent. How frequently it happens that such improvements
made by the farmer without the least assistance from the owner of the
land permanently contribute to an increase of the rent. (§ 181.)[152-4]
[Footnote 152-1: Compare _J. Anderson_, An Inquiry into the
Nature of the Corn Laws, 1777. Extracts from the same in the
Edinburgh Review, LIV, 91 ff. On the other hand, _Buchanan_,
on Adam Smith, IV, 134, thinks that rent arises exclusively
from the monopoly of the owners, and that without it the
price of corn would be lower. It is certain, however, that
if the land of a country be considered as one great piece of
property, and under one great system of husbandry, the
products of the soil might be offered permanently at a price
corresponding to the average cost of production, on the
better and worse pieces of land. (_Umpfenback_, N. Oek.,
191.)]
[Footnote 152-2: _Malthus_, On the Policy of restricting the
Importation of foreign Corn, 1815. Additions, 1817, to the
Essay on the Principle of Population, III, ch. 8-12;
Principles, 217 ff.]
[Footnote 152-3: _Ricardo_ says that if air, water,
elasticity and steam were of different qualities, and might
be made objects of exclusive possession; and that if each
kind could be had only in a moderate supply, they would,
like land, produce a rent, according as they were brought
into use, one kind after another. In the class of natural
forces, also, the possession of a secret of production or of
inimitable skill, or a legal right to its exclusive use, may
produce something similar to rent. (_Senior_, Outlines, 91.)
_Hermann_, Staatswirthsch. Unters., 163 ff., had already
laid the foundation of this doctrine, and earlier yet,
_Canard,_ 17 seq., and _Hufeland_. I, 303 ff. See _supra_, §
120. Hence _v. Mangoldt_ uses the word rent to designate all
rarity-premiums. _John Stuart Mill_, III, ch. 5, 4.
_Schäffle_ speaks of the universal existence of a surplus;
that is, of the factor of rent (Nat. Oek., I, Aufl., 140
ff.), and has recently developed this into a theory
thoroughly systematic and detailed. (Nationalökonomische
Theorie der ausschliessenden Absatzverhältnisse, 1867.)
According to him, rent is "the premium paid for the most
economic course taken in the interest of society in
general;" and hence he finds rent as much in superior labor
and in a very advantageous outlay of capital. Yet he grants,
that "exclusive custom (_Kundschaft_) on the basis of
natural advantages occurs only in the case of land-rent."
(59.) And even granting that he is right, that no rent is by
itself forever secure (74 seq.), and that much rent is a
premium paid for a search after and the appropriation of the
best land, divination of the best situations, etc. (60 ff.,
74 ff.), there still remains the great difference between
rent and the extra income from labor and capital; that here
the very transitory nature of the substratum, or basis, and
the personal merit of the recipient, is the rule, while in
the former case it is a rare exception. Willingly,
therefore, as I recognize the possibility and fruitfulness
of Schäffle's way of conceiving this subject (the latter,
especially, for monographic purposes), I prefer, so far as
the entire system is concerned, the keeping apart of the
three branches of income corresponding to the three factors
of production as has been usual since Adam Smith's time.]
[Footnote 152-4: _John Stuart Mill_, ch. 16, § 5. An example
in _Fawcett_, Manual, 149 seq. This explains many objections
to Ricardo's laws, which are the result of misconception.
Thus, for instance, in _Schmalz_, Staatswirthschaftslehre,
I, 81, Quarterly Review, XXXVI, 412 ff. _Bastiat_, Harmonies
économiques, ch. 9, where rent is considered the interest on
the capital laid out in bringing land under cultivation and
improving it. If, however, we imagine an island to emerge
suddenly from the waves in the vicinity of Naples, in
consequence of an earthquake, no one can doubt that its land
would sell at a very high rate and pay a very good rent. And
yet no capital or labor has been laid out on it. A similar
lesson is taught by the fact, that, in Scotland, rocks which
are covered twice a day by the waves are leased for the sake
of the sea-weed left on them. (_Adam Smith_, Wealth of
Nations, I, ch. 11.) Also by the fact, that in Poulopinang,
a cavity in which many edible swallows' nests are found,
pays £500 a year rent. (Geogr. Ephemeriden, Oct., 1805,
134.) However, _Bastiat_, abstractly speaking, is right when
he says, that every one by the importation of agricultural
products from quarters which pay no rent, and still more by
emigrating thither, may deprive the owners of land of the
tribute imminent in rent.
But how would it be if the cost of transportation and
emigration amounted to more than the rent? The case
theoretically so important, in which all the land in the
world is supposed to have been appropriated as private
property, this writer, generally so lucid, treats in a
surprisingly blind way (275 ff). It is remarkable that _A.
Walker_, Science of Wealth, spite of his prejudices in favor
of Bastiat's doctrines on the gratuitous nature of all
natural forces, nevertheless follows, essentially,
_Ricardo's_ theory of rent, 294 ff.
A much more vulgar error yet is, that rent is the result of
the capacity of the capital employed in the purchase of the
land to produce some interest Thus _Hamilton_, Reports to
the Congress on the Manufactures of the United States, 1793,
and _Canard_, Principes, sec. 5. Per _contra_, compare
_Turgot's_ view, _supra_, § 42, note 1. Even _Locke_,
Considerations on the Lowering of Interest, Works, II, 17
ff., maintained the closest parallel between rent and
interest to be possible, with this difference only, that
money was all of a kind but pieces of land of different
degrees of fertility. Similarly _Sir D. North_, Discourse
upon Trade, 1791, with his parallel of landlord and
stocklord.]
SECTION CLIII.
THEORY OF RENT. (CONTINUED.)
Ricardo says that rent can never, not even in the slightest degree,
constitute an element in the price of corn. This is certainly not a very
happy way of expressing the truth, that a high rent is not the cause,
but the effect, of a relatively high price of corn.[153-1] Ricardo would
have been nearer right had he said that rent was not a component part of
the price of every portion of the supply of corn brought to market.
Is rent an addition to national income? Ricardo (ch. 31) answers this
question in the negative, and says that it takes from the consumers what
it gives to the owners of the land, and that it increases only the value
in exchange of the national wealth.[153-2] It is evident that as thus
stated, the question is not properly put. Neither interest on capital
nor wages are any addition to a nation's income, but, like rent, only
forms of trade, by means of which that income is distributed among the
individuals constituting the nation. (§ 201.)
The special kind of product obtained from a piece of land influences its
rent only in so far as the growth of that kind of product is exclusively
confined either by nature, privilege or prejudice to certain
land.[153-3] Adam Smith is of opinion that the rent of agricultural land
is ordinarily (!) one-third of the gross product; that of coal mines,
from one tenth to a maximum of one-fifth; of good lead and tin mines,
one sixth (with the dues paid the state of twenty-one and two-thirds per
cent.); of Peruvian silver mines, scarcely one-tenth; of gold mines,
one-twentieth. And he thinks that rent grows less certain for every
succeeding article.[153-4]
So far as this is based on facts, it may be explained as follows: The
greater capacity an article has for transportation from one place to
another, the less important is advantage of situation, which is
generally one of the chief elements of rent. The more indispensable the
commodity is, the more readily is the consumer induced to pay a price
for it greater than the cost of production; that is, to pay a rent. This
again is enhanced by the difficulty of the preservation of the
commodity. Lastly, the more it is a mere product of nature,[153-5] the
more difficult it is to simultaneously employ several portions of
capital of different grades of productiveness in its production.
[Footnote 153-1: To be met with in this form even in _Adam Smith_,
Wealth of Nations, I, ch. 11, pr. _John Stuart Mill_, Principles
II, ch. 16, § 6, thus states the matter: "Whoever cultivates land,
paying a rent for it, gets in return for his rent an instrument of
superior power to other instruments of the same kind for which no
rent is paid. The superiority of the instrument is in exact
proportion to the rent paid for it." According to _v. Jacob_,
Grundsätze der Nat. Oek., I, 187, rent constitutes a much larger
portion of the price of commodities than is generally supposed, in
as much as wages depend so largely on the price of the means of
subsistence. Per contra, _Baudrillart_, Manuel, 391 ff., who
maintains that rent is practically insignificant.]
[Footnote 153-2: Similarly _Buchanan_, loc. cit., and _Sismondi_,
Richesse commerciale, I, 49. Compare contra, _Malthus_, Inquiry
into the Nature and Progress of Rent, 15. I would call attention
_en passant_ to the absurdity that there may be an increase in the
value in exchange of a nation's entire resources without any
increase in its value in use. (_Supra_, § 8.)]
[Footnote 153-3: Thus _Adam Smith_ remarks that corn fields and
rice fields pay very different rents, because it is not always
possible to convert one into the other. (Wealth of Nat., I, ch. 11,
1.) Compare the tabular statistical view of the rent of land used
for vineyards, gardens, meadows, pasturages, wood and farming
purposes, in _Rau_, Lehrbuch, I, § 218. For a general theory of the
rent of wooded land, see _Hermann_, Staatsw. Unters., 177 ff.; of
vineyards, 181 seq.]
[Footnote 153-4: _Adam Smith_, Wealth of Nat., I, ch. 11, 3.]
[Footnote 153-5: It is hereby rendered akin to those low stages of
civilization in which no rent is paid.]
SECTION CLIV.
THEORY OF RENT. (CONTINUED.)
As the purchase of a piece of land[154-1] is no more and no less than
its exchange against a portion of capital in the shape of money,[154-2]
its purchase price depends generally on the amount it will rent for as
compared with the interest on the capital to be given in exchange for
it. The rate of interest remaining the same, it rises and falls with its
rent. And _vice versa_, the rent remaining the same it rises and falls
inversely as the rate of interest.[154-3] A rise in the price of land is
not always a proof of the growing wealth of a people. It may proceed
from a depreciation of the value of money, or from a decrease of the
rate of interest caused by a decline in the number of loans which can be
advantageously placed.
It is frequently said, that the price paid for land is greater than the
money-capital which yields an equal revenue.[154-4] This, abstraction
made of proletarian distress prices for small parcels of land and of the
political and social privileges of landowners, is accounted for by the
assumed greater security of the latter,[154-5] which, however, fares ill
enough in war times, and times of political disturbance. The fact itself
is found to exist, I think, only in economically progressive times, when
confidence prevails, and it is based on the pretty certain prospect that
the rate of interest will decline, while rents will rise.[154-6]
It has been observed in Belgium, that the medium farm rent of land, in
quarters remarkable for any economic peculiarity whatever, pays an
interest lower, as compared with the purchase money, in proportion as
the country about is more thickly populated, and as its husbandry is
carried on by farmers instead of by owners.[154-7] This phenomenon is
doubtless correlated with these others, that the conditions just named
are pretty regularly attendant on a high state of civilization, and that
advanced civilization is attended uniformly by a decline in the rate of
interest. (175).[154-8]
[Footnote 154-1: In every day language, people say of a man
who has purchased a piece of land, that he "put" as much
capital as is equal to the purchase price "into his land;"
or "laid out on it" as much. But this mode of expression is
as inaccurate as is this other: "the sun is rising," or "the
sun has gone down."]
[Footnote 154-2: _Macleod_, who is not fond of the natural
mode of expression, maintains that the purchase price of a
piece of land is equal to the discounted value of the sum of
the values of all the future products to be obtained from
the land. (Elements, 75.)]
[Footnote 154-3: C:i::L:r in which C = the capital, i = its
interest, L = the piece of land, and r = its rent.]
[Footnote 154-4: There are traces to be found of the fact
among the ancient Greeks, that the farm-rent of landed
estates paid a smaller interest on the purchase money than
was otherwise usual in the country. _Isaeus de Hagn._, 42;
_Salmasius_, De Modo Usur., 848.]
[Footnote 154-5: Thus even _North_ and _Locke_, loc. cit.;
_Cantillon_, Nature du Commerce, 294.]
[Footnote 154-6: Compare _List_, Werke II, 173. In Belgium,
farm-rent per _hectare_ was, in 1830 = 57.25 francs, in 1835
= 62.78, in 1840 = 70.44, in 1846 = 74.50, on an average.
This was at the rate of from 2.62 to 2.80, or an average of
2.67 per cent. on the purchase money. If to this we add the
increase in the rise of land between 1830 and 1846, divided
by 16, the yearly revenue rises from 2.67 to 3.91 per cent.,
that is pretty nearly the rate of interest on hypothecation,
and is higher or lower in the different provinces, as the
former is higher or lower. (_Heuschling_, Résumé du
Récensement général de 1846, 89.) In France, land paid but
from 2 to 3 per cent. on the purchase money; but both rents
and the price of land have doubled between 1794 and 1844.
(Journal des Econ., IX, 208.)]
[Footnote 154-7: Moreover, whole countries may, because of
their great natural advantages, possess, so far as the
commerce of the entire world is concerned, something
analogous to rent. Thus, for instance, North America,
although here, this world-rent finds expression in the
national height of the wages of labor and of the rate of
interest, (_v. Bernhardi_, Versuch einer Kritik der Gründe
welche für grosses und kleines Grundeigenthum angeführt
werden, 1848, 294.)]
[Footnote 154-8: Writers as old as _Culpeper_, A Tract
against the high Rate of Usurie, 1623, and _Sir J. Child_,
Discourse of Trade, p. 22 of the French translation,
observed the connection existing between a low rate of
interest, national wealth and a flourishing state of
commerce on the one hand, and a high price of the
necessaries of life and of land in the other. _Sir W. Petty_
would estimate the rent of land as follows: If a calf
pasturing in an open meadow gains as much flesh in a given
time as is equal to the cost of the food of 50 men for a
day, and a workman, on the same land, in the same time,
produces food for 60 men, the rent of the land must be 50,
and the rate of wages 10. (Political Anatomy of Ireland, 62
seq.; compare 54.) Besides, he accounts for the height of
rents by the density of the population exclusively, and he
would prefer to see both increase _ad infinitum_. (Several
Essays on Political Arithmetic, 147 ff.)
The germs of the _Ricardo_ law of rent, in _Boisguillebert_:
the price of corn determines how far the cultivation may be
extended; by manuring the land, as much corn as desired may
be obtained, provided the cost of production is covered.
(Traité des Grains, II, ch. 2 ff.) There is a foreshowing of
the same law in the Physiocratic view that only in the
production of raw material is there a real excess over and
above the cost--_produit net_. Compare _Quesnay_, Probl.,
économique, 177 ff. Sur les travaux des artisans. (Daire.)
_Auxiron_, Principes de tout Gouvernement, 1776, I, 126.
_Adam Smith_ came very near to the true principle in the
case of coal mines, but was hindered reaching it in other
cases by the false assumption that certain kinds of
agricultural production always yield a rent, while others do
so only under certain circumstances. Besides he always
considered the interest of capital fixed in the soil;
buildings, for instance, as part of the rent. (Wealth of
Nat., I, ch. 11.) Compare _Hume's_ Letter to Adam Smith;
_Burton's_ Life and Correspondence of Hume, II, 486; _von
Thünen_, Isolirter Staat., I, 15 ff.
The most immediate predecessors of _Ricardo_, Principles, 2,
3, 24, 31, are _Anderson_ (§ 152); _West_, Essay on the
Application of Capital to Land, 1815, and _Malthus_, Inquiry
into the Nature and Progress of Rent, 1815. See § 152. It is
wonderful how a theory which, in 1777, remained almost
untouched, was in 1815 etc., attacked and defended with the
greatest zeal, because it then affected the differences
between the moneyed and landed interest. Yet _Ricardo_ did
not take into account at all the rent-creating influence of
the situation of land in relation to the market, as well as
to the "farm-office" (_dem Wirthschaftshofe_). The influence
of the system of husbandry on rent, first thoroughly treated
by _von Thünen_, loc. cit. What has recently been urged
against _Ricardo_ by, for instance, _J. B. Say_, Traité, II,
ch. 9; _Sismondi_, N. P., III, ch. 12; _Jones_, Essay on the
Distribution of Wealth, 1831 (see Edinburg Review, LIV),
bears evidence either of a misunderstanding of the great
thinker, or else contains only modifications of some
individual abstract propositions of his, stated perhaps too
strictly. In judging _Ricardo_, it must not be forgotten,
that it was not his intention to write a text-book on the
science of Political Economy, but only to communicate to
those versed in it the result of his researches, in as brief
a manner as possible. Hence he writes so frequently making
certain assumptions; and his words are to be extended to
other cases only after due consideration, or rather
re-written to suit the changed case.
_Baumstark_ very correctly says: "Rent rises, not because
new capital has been invested, but when the circumstances of
trade make a new addition to capital possible."
(Volkswirthschaftliche Erläuterungen über Ricardo's System,
1838, 567.) _Fuoco's_ Nuova Teoria della Rendita, Saggi
economici, No. 1, is nothing but an Italian version of the
doctrines of Malthus and Ricardo. The greater number of
anti-Ricardo theories of rent have originated from the rapid
and apparently unlimited growth of national husbandry in
recent times. Thus it is a fundamental thought in
_Rodbertus_, Sociale Briefe, 1851, No. 3, that an increase
of the price of corn need not attend an increase of
population, either uniformly or necessarily. According to
_Carey_, The Past, the Present and the Future, ch. 1, 1848,
the most fertile land is last brought under cultivation,
because it is covered with swamps, forests, etc.; and
because it offers greater resistance to the work of the
agriculturist, by reason of its luxurious vegetation. The
more elevated lands are first cultivated which present fewer
obstacles to cultivation on account of their dryness, their
thinner crust, etc. Carey generalizes this and thinks he has
reversed the _Ricardo_ law of rent! He overlooks entirely
that _Ricardo_ speaks only of the original powers of the
soil. Now a swampy land which must be dried at the expense
of a great deal of labor, possesses less of these original
powers than a sandy soil which may be sown immediately. See
_Carey_, Essay on the Rate of Wages, 232 ff., and the
lengthy exposition of the same doctrine rank with inexact
natural science and unhistorical history in the same
author's Principles of Social Science, 1858, vol. I.
There is this much truth, however, in Carey's error that,
with increasing economic progress, the superiority not only
of situation, relatively to the market, but also of natural
fertility, may of itself go over to other lands. Thus, for
instance, the ancient Slaves used clay soil everywhere as
pasturage, and cultivated the sandy soil, because their
pick-axes could overcome the resistance only of the latter.
_Langethal_, Geschicte der deutschen Landw., II, 66;
_Waitz_, Schlesw. Holstein, Gesch., I, 17. Similarly in
Australia: _Hearne_, Plutology, 1864. Compare, _Roscher_,
Nationalökonomik des Ackerbaues, § 34. The word fertility
should not be taken too exclusively in its present
agricultural sense. In a lower stage of civilization, the
facility of military defense or the _ut fons, ut nemus
placuit_--_Tacit._, Germ., 16--may have more weight.
The chief difference in the theories of rent consists in
this: whether rent is considered a result of production or
only of distribution, and an equalization of gain. Compare
_Behrens_, Krit. Dogmengeschichte der Grundrente, 1868, 48.]
SECTION CLV.
HISTORY OF RENT.
In poor nations, and in those in a low stage of civilization, especially
where the population is sparse, rent is wont to be low. In Turkistan,
land is valued according to the capital invested in its
irrigation.[155-1] In the interior of Buenos Ayres, at the beginning of
the nineteenth century, landed estates were paid for in proportion to
the magnitude of the live stock on them, so that it seemed, at least, as
if the land was given for nothing, or simply thrown in with the
purchase. And only a short time since, an English acre in the same
country, fifteen _leguas_ from the capital, was worth from three to four
pence, and at a distance of fifty _leguas_, only two pence.[155-2] In
Russia, also, not long since, the valuation of landed estates was made,
not in proportion to the superficies, but according to the number of
souls, that is, of male serfs, a _remnant_ suggestive of the previous
situation when no rent was paid.[155-3] Where, in relatively uncivilized
medieval times, instances of the farming out or leasing of land occur,
farm-rents are so small that their payment can only be considered as a
mere recognition of the owner's continuing right of property.
Under these circumstances, it is natural that great landowners,
especially in the lower stages of civilization, should exert an
especially great influence; and that their low tenants (_Hintersassen_)
are more dependent in proportion to the want of capital and the absence
of trade. Hence, these are wont to make up for the smallness of their
rent by great honors paid to their landlords, and great services,
especially military service.[155-4] Besides, the lords of the manor, in
almost every medieval period, have used their influence with the
government to cut down the wages of labor by serfdom and other similar
institutions, and the rate of interest on capital by prohibiting
interest, by usury laws, etc.; and thus, in both ways, to artificially
increase their own share of the national income.
[Footnote 155-1: _A. Burnes_, Reise nach Bukhara, II, 238.]
[Footnote 155-2: _W. Maccann_, Two Thousand Miles Ride
through the Argentine Provinces, London, 1853, I, 20; II,
143. Ausland, 1843, No. 140. Frisian ancient documents in
which parcels of land are described as _terræ 20 animalium,
48 animalium_, etc. _Lacomblet_, Urkundenbuch, I, 27.
_Kindlinger_, Münster Beitr., I, Urkundenbuch, 24.]
[Footnote 155-3: The custom began to be more usual in Russia
also to say "so many _dessjatines_ and the peasantry
belonging thereto." This was especially so in the case of
very fertile land, as for instance in Orel. See _v.
Haxthausen_, Studien, II, 510. Formerly the bank loaned only
250 per soul, afterwards up to 300 R. Bco. (II, 81). Spite
of this _v. Haxthausen_ thinks that rent would be illusory,
in Russia, in case agriculture was carried on with hired
workmen. (I, Vorrede, XIII.) _Carey's_ remark, "every one is
familiar with the fact that farms sell for little more than
the value of the improvements," may be true of the United
States (The Past, Present and Future, 60.)]
[Footnote 155-4: This condition of things continued in the
highlands of Scotland until the suppression of the revolt of
1745. The celebrated Cameron of Lochiel took the field with
800 tenants, although the rent of the land was scarcely
£500. (_Senior_, Three Lectures on the Rate of Wages, 45.)
"Poor 12,000 pound sterling per annum nearly subverted the
constitution of these kingdoms!" (_Pennant._)]
SECTION CLVI.
INFLUENCE OF ADVANCING CIVILIZATION ON RENT.
Advancing civilization contributes in three different ways to raise
rents.[156-1] The growth of population necessitates either a more
_intensive_ agriculture (higher farming), or causes it to extend over
less fertile parcels of land, or parcels less advantageously
situated.[156-2] If the growth of population be attended by an increase
of capital, this happens in a still higher degree. The people now
consume, if not more, at least wheat of finer quality, more and better
fed live stock; the consequence of which is, that the demands made on
the land are increased. Lastly, if the population be gradually
concentrated in large cities, this fact also must contribute to raise
rents, because it requires a multitude of costly transportations of
agricultural produce and so increases the cost of production (up to the
time of consumption) on the less advantageously situated
land.[156-3] [156-4]
As most of the symptoms of a higher civilization become apparent
earliest, and in the most striking manner, in large cities, so also a
rise in rents is first felt in them. The building of houses may be
considered as the most _intensive_ of all cultivation of land and that
which is most firmly fixed to the soil.[156-5] Rent has nowhere an
unsurpassable maximum any more than a necessary minimum.
[Footnote 156-1: _Jung_, Lehrbuch der Cameralpraxis, 1790,
182, has so little idea of this that he is of opinion that
farm-rent must grow ever smaller.]
[Footnote 156-2: According to _Schmoller_, in the
Mittheilungen des landwirthschaftlich. Instituts zu Halle,
1865, 112 seq., the average farm-rent of the Prussian
domains per _morgen_, and the population to the square mile,
amounted:
===============+============+============+============+============
_District._ | _1849._ | _1864._ | _1849._ | _1858._
---------------+------------+------------+------------+------------
| _Thalers._ | _Population_
| | _per square mile_
Königsberg, | 0.73 | 1.16 | 2076 | 2298
Gumbinnen, | 0.59 | 0.76 | 2059 | 2249
Danzig, | 1.02 | 1.51 | 2656 | 2926
Marienwerder, | 0.63 | 1.06 | 1944 | 2135
Posen, | 0.69 | 1.07 | 2789 | 2857
Bromberg, | 0.69 | 1.10 | 2116 | 2322
Stettin, | 1.07 | 1.73 | 2355 | 2614
Cöslin, | 0.83 | 1.30 | 1735 | 1940
Stralsund, | 0.95 | 1.50 | 2347 | 2549
Breslau, | 1.19 | 1.45 | 4733 | 5034
Liegnitz, | 1.17 | 1.75 | 3676 | 3763
Oppeln, | 0.86 | 1.20 | 3973 | 4433
Potsdam, | 1.08 | 1.59 | 3317 | 3640
Frankfort, | 1.29 | 2.00 | 2446 | 2660
Magdeburg, | 2.31 | 2.98 | 3290 | 3508
Werseburg, | 2.35 | 3.03 | 3934 | 4270
Erfurt, | 2.04 | 2.55 | 5621 | 5735
Münster, | .... | 2.03 | 3192 | 3299
Minden, | 2.48 | 2.62 | 4841 | 4808
===============+============+============+============+============
Compare the review of rents in the states of the Zollverein,
in _v. Viehbahn_, Statistik, II, 979. It is difficult to
compare different countries with one another in this
respect, because it is seldom certain whether the word rent
means exactly the same thing in them. Besides, it should not
be overlooked, how difficult it is to ascertain what rent,
in the strict sense of the term, as used by _Ricardo_, is.]
[Footnote 156-3: Moreover, the rise of rents, in so far as
it depends on the greater cost of transportation to a
growing market, becomes progressively slower. The concentric
circles about that point increase in a greater ratio than
the radii.]
[Footnote 156-4: As to the history of rents in England, a
comparison of the years from 1480 to 1484, with the most
recent times, shows that the amount of rent estimated in
money in agricultural districts, where no very great
"improvements" have been made, have increased as 1 to
80-100, while the price of wheat has increased 12-fold and
wages 10-fold. (_Rogers_, in the Statist. Journal, 1864,
77.) According to _Hume_, History of England, ch. 33, it
seems that rents under Henry VIII. were only 1/10 of those
usually paid in his time, while the price of commodities was
only ¼ of the modern. _Davenant_, Works, II, 217, 221,
estimates the aggregate rent of land, houses and mines, at
the beginning of the seventeenth century, at £6,000,000;
about 1698, at £14,000,000; capitalized respectively at
£72,000,000 and £252,000,000. About 1714, _J. Bellers_,
Proposals for Employing the Poor, puts it at £15,000,000;
about 1726, _Erasm. Phillips_, State of the Nation in
Respect to Commerce etc., at £20,000,000; about 1771, _A.
Young_, at £16,000,000; about 1800, _Beeke_, Observations on
the Income-Tax, at £20,000,000; about 1804, _Wakefield_,
Essay on Political Economy, at £28,000,000; about 1838,
_McCulloch_, Statist., I, 535, at £29,500,000. The poor tax
in England and Wales, in 1841, was on a valuation of
£32,655,000. (_Porter_, Progress, VI, 2, 614); 1864-5, the
annual value of lands, £46,403,853 (Stat. Journal, 1869.)
Moreover, the income from houses, railroads, etc. (real
property other than lands), increased very much more than
that received from pieces of farming land; between 1845 and
1864-5, the former by 392.8 per cent., and the latter by
27.9 per cent. (_Hildebrand's_ Jahrbb., 1869, II, 383 seq.);
and the income tax of 1857 on £47,109,000. There was a still
more rapid growth of rent in Scotland. In 1770, it was only
£1,000,000-1,200,000: in 1795, £2,000,000; in 1842,
£5,586,000. (_McCulloch_, I, 576, ff.) In Ireland, about
1776, it was only $900,000, according to _Petty_. (Political
Anatomy of Ireland, I, 113.) _A. Young_ assumed it to be
£6,000,000 in 1778; _Newenham_, View of Ireland, about 1808,
£15,000,000. In many parts of the Rosendale Forest in
Lancashire, the land is leased by the ell, at £121, and even
at £131 per acre; i. e., more than the whole forest of
15,300 acres was rented for in the time of James I. In many
of the moorland portions of Lancashire, rent has risen in
150 years, 1,500 and even 3,000 per cent. (Edinburg Rev.,
1843, Febr., 223.)
The amount of rents in Prussia, _Krug_ assumed to be in
1804, 50,000,000 thalers, and _von Viebahn_, Zollverein
Statistik, II, 974, in 1862, 116,500,000 thalers. _Lavergne_
assumed the rents of France after 1850 to be 1,600,000,000
francs (Revue des deux Mondes, Mars, 1868); and _Dutot_,
Journal des Economistes, Juin, 1870, in 1870, at
2,000,000,000. In Norway, the capitalized value of all the
land was assessed at 13,000,000,000 thalers in specie, in
1665; in 1802, at 25,500,000; in 1839, at 64,000,000
thalers. _Blom_, Statistik von Norwegen, I, 145. The older
such estimates are, the more unreliable they are.]
[Footnote 156-5: In Paris, in 1834, the square _toise_ = 37
sq. feet, in the Rue Richelieu and Rue St. Honoré, cost
1,500 to 2,000 francs; in Rue neuve Vivienne, 2,500 to 3,500
francs; in 1857, from 200 to 500 francs per square meter, =
10 sq. feet, was very usual. (_Wolowski_.) Before the gates
of Paris, the rent amounted to as high as 250 francs per
_hectare_; at Fontainebleau, to only from 30 to 40. (Journal
des Economistes, Mars, 1856, 337.) In Market Square,
Philadelphia, land was worth from 3,000 to 4,000 francs per
sq. _toise_, and in Wall Street, New York, about 4,000
francs. (_M. Chevalier_, Letters sur l'Amérique, 1836, I,
355.) In St. Petersburg, after 6 years, the house frequently
falls to the owner of the area. (_Storch._ by _Rau_, I, 248
f.) In Manchester, the Custom House area cost from 10 to 12
pounds sterling per square yard; in the center of the city,
as high of £40, that is, nearly £200,000 per acre. In
Liverpool, in the neighborhood of the Exchange and of Town
Hall, the cost is from 30 to 40 pounds sterling. (Athenæum,
Dec. 4, 1852.) In London, a corner building on London
street, erected for £70,000, with only three front windows,
pays a rental of £22,000. (Allg. Zeitung, 1 Febr., 1866.)
The villa at Misenum--a very beautiful location--which the
mother of the Gracchi bought for about 5,000 thalers, came
into the possession of L. Lucullus, consul in the year B. C.
74, for about 33 times as much. _Mommsen_, Römisch. Gesch.,
II, 382.]
SECTION CLVII.
HISTORY OF RENT.--IMPROVEMENTS IN THE ART OF AGRICULTURE.
Improvements in the art of agriculture which are confined to individual
husbandmen leave rent unaffected. They do not perceptibly lower the
price of agricultural products, and only effect an increase of the
reward of enterprise which is entirely personal to the more skillful
producers and does not attach to the ground itself.
But how is it when these improvements become general throughout the
country? If population and consumption remain unchanged, the supply of
agricultural products will exceed the demand. This would compel farmers,
if there be no avenue open to exports, to curtail their production. The
least fertile and most disadvantageously situated parcels of land will
be abandoned to a greater or less extent, and the least productive
capital devoted to agriculture, withdrawn. In this way, rent goes down
both relatively and absolutely, although the owners of land may be able
to partially cover their loss by the gain which results to them as
consumers and capitalists.[157-1] (§ 186). After a time, however, and as
a consequence of the diminished price of corn, population and
consumption will increase, and entail an extension of agriculture and a
consequent rise in rents.[157-2] If it, relatively speaking, reaches the
same point as before, it still is absolutely much greater than before.
Let us suppose that there are three classes of land of equal extent in a
country, which for an equal outlay of capital produce 100,000, 80,000
and 70,000 bushels yearly. The rent of the land here would be equal to
at least 40,000 bushels. If the yield of production now doubles, while
the demand for agricultural products also doubles, the aggregate harvest
will be 200,000 + 160,000 + 140,000 bushels, and consequently rent will
have risen to at least 80,000 bushels. But this increase of rent has
injured no one. If the population increases in a less degree than the
productiveness of the land, the consumer may, to a certain extent, gain
largely, and the landowner better his condition. However, great
agricultural improvements spread so gradually over a country, that, as a
rule, the demand for agricultural products can keep pace with the
increased supply. But even in this case, that transitory absolute
decline of rent may be avoided; and it cannot be claimed universally, as
it is by many who are satisfied with mumbling Ricardo's words after him,
that an increase of rent is possible only by an enhancement of the price
of the products of the soil. Where the development of a people's economy
is a normal one, the rent of land is wont to increase gradually, but at
the same time to constitute a diminishing quota of the entire national
income.[157-3]
Improvements in milling,[157-4] and in the instruments of
transportation[157-5] adapted to agricultural products, and the
introduction of cheaper[157-6] food, have the same effect as
improvements of agricultural production. All such steps in advance
render an increase in population, or in the nation's resources, possible
without any corresponding increase in the amount paid to landowners as
tribute money.[157-7]
The foregoing facts furnish us the data necessary to decide what
influence permanent soil improvements have on the rent of land.[157-8]
The improved parcels of land now grow more fertile. Their rentability
also increases, while that of the others becomes not only relatively but
absolutely less, if the demand remains unaltered. The whole is as if
capital had been transformed into fertile land, and this added to the
improved land.
[Footnote 157-1: Since it has seemed absurd to many writers
to say that an improvement in the art of agriculture may
cause rents to decline (compare _Malthus_, Principles, I,
ch. 3, 8), _John Stuart Mill_, Principles, IV, ch. 3, § 4,
prefers to put the question thus: whether the landowner is
not injured by the improvement of the estates of other
people, although his own is included in the improvement.
Compare _Davenant_, Works, I, 361. And so the long
agricultural crisis through which Germany passed at the
beginning of the third decade of this century was produced
mainly by the great impulse given to agriculture (_Thaer_,
_Schuerz_ etc.), while population did not keep pace with it.
Similarly, at the same time, in England, _McCulloch_, Stat.,
I, 557 ff. Of course, the less fertile pieces of land
declined even relatively most in price. From 1654 to 1663,
Switzerland experienced a severe agricultural crisis,
attended with oppressive cheapness of corn, a great decline
in the price of land, innumerable cases of insolvency,
revolts of the peasantry, emigration, etc. (_Meyer von
Knonau_, Handbuch d. schweiz. Gesch., II, 43.) The Swiss
had, precisely during the Thirty Years' War which spared
them, so extensively developed their agricultural interests,
that now that other countries began to compete with them,
they could not find a market large enough for their
products. For English instances of similar "agricultural
distress" in the seventeenth and eighteenth centuries, see
_Child_, Discourse on Trade, 73, 124 seq.; _Temple_,
Observations upon the U. P., ch. 6; _Tooke_, History of
Prices, I, 23 seq., 42. Even where there have been no
technic improvements, a series of unusually good harvests
may have the same results, of which there are many instances
scattered through _Tooke's_ first volume.
There is great importance attached in England to the
difference between those agricultural reforms which save
land and those which effect a saving in capital and labor.
The latter, it is said, decrease the money rent of the
landowner by depreciating the price of corn, but leave the
corn-rent unaltered. The former, on the other hand, decrease
the rent both in money and corn, but the money rent in a
higher degree. (_Ricardo_, Principles, ch. 2; _J. S. Mill_,
Principles, IV, ch. 3, 4.)]
[Footnote 157-2: When the demand for products of the soil
which minister to luxury, such as fat meat, milk,
vegetables, is increasing, a greater cheapness of the
necessary wheat may raise rent, for the reason that lands
are now cultivated which were not formerly tillable. Thus,
there is now land in Lancashire which could not formerly be
planted with corn, because the laborers would have consumed
more than the harvest yielded. Since the large imports of
the means of subsistence from Ireland these lands have been
transformed into artificial meadows, gardens, etc.
(_Torrens_, The Budget, 180 ff.) Compare _Adam Smith_, I,
257, ed. Bas. _Banfield_ would misuse these facts to
overturn the theory of Ricardo. (Organization of Industry,
1848, 49 ff.)]
[Footnote 157-3: The French testamentary tax was on an
amount,
In 1835, of 552 mill. francs moveable property
and 984 " immoveable.
In 1853, of 820 " francs moveable property
and 1,176 " immoveable.
In 1860, of 1,179 " francs moveable property
and 1,545 " immoveable.
so that the preponderance of immoveable property constituted
a converging series of 78, 43, and 31 per cent. (_Parieu._)
In North America, with its great unoccupied territory, the
reverse is the case. The census of 1850 gave a moveable
property of 36 per cent.; that of 1860 of only 30 per cent.
According to _Dubost_, the rent of land in Algeria was 80
per cent., a gross product of only 10-15 francs per
_hectare_; in Corsica, 66 per cent., a gross yield of from
30-35 per cent.; in the Department du Nord, 17.5-24 per
cent., a gross yield of from 500-740 francs. (Journal des
Economistes, Juin, 1870, 336 ff.)]
[Footnote 157-4: The repeated sifting of the bran (_mouture
économique_) had great influence in this respect. In France,
in the sixteenth century, a _setier_ of wheat gave only 144
pounds of bread. In 1767, according to _Malouin_, L'Art du
Bonlanger, it gave 192 pounds. It now gives from 223 to 240
pounds. The gain in barley is still greater; the _setier_
gives 115 pounds of flour, formerly only 58. (_Roquefort_,
Histoire de la Vie Privée des Français, I, 72 ff.
_Beckmann_, Beitr. zur Gesch. der Erfind., II, 54.)]
[Footnote 157-5: In the beginning of the eighteenth century,
the counties in the neighborhood of London addressed a
petition to Parliament against the extension of the building
of turnpike roads which caused their rents to decline, from
the competition of distant districts. (_Adam Smith_, Wealth
of Nat., I, ch. 11, 1.) Compare _Sir J. Stewart_,
Principles, I, ch. 10. Improvements in transportation which
affect the longest and shortest roads to a market in an
absolutely equal degree, as, for instance, the bridging of a
river very near the market, leave rent unaffected. (_von
Mangoldt_, V. W. L., 480.)]
[Footnote 157-6: _Malthus_, Principles, 231 ff. If the
laboring class were to become satisfied with living on
potatoes instead of meat and bread as hitherto, rents would
immediately and greatly fall, since the necessities of the
people might then be obtained from a much smaller
superficies. But after a time, the consequent increase in
population might lead to a much higher rent than before;
since a great deal of land too unfertile for the cultivation
of corn might be sown with potatoes, and thus the limits of
cultivation be reached much later.]
[Footnote 157-7: In France, between 1797 and 1847, the
average price of wheat did not rise at all. _Hipp. Passy_
mentions pieces of land which produced scarcely 12
hectolitres of wheat, but which now produce 20--an increased
yield of 170 francs, attended by an increase in the cost of
only 75 francs. (Journal des Economistes, 15 Oct., 1848.)
Moreover, it may be that a not unimportant part of modern
rises in the price of corn may be accounted for by the
better quality of the corn caused by higher farming. (_Inama
Sternbeg_, Gesch. der Preise, 10 seq.) Such facts, readily
explainable by _Ricardo's_ theory, remove the objection of
_Carey_, _Banfield_ and others, that the condition of the
classes who own no land has, since the middle ages,
unquestionably improved. Political Economy would be simply a
theory of human degradation and impoverishment, if the law
of rent was not counteracted by opposing causes. (_Rœsler_,
Grundsätze, 210.) According to _Berens_, Krit.
Dogmengeschichte, 213, the actual highness of rent is to be
accounted for by the antagonism between the "soil-law
(_Bodengesetz_) of the limited power of vegetation," and the
"progress of civilization" (but surely only to the extent
that the latter improves the art of agriculture). Thus, too,
_John Stuart Mill_, Principles, I, ch. 12; II, ch. 11, 15
seq.; III, ch. 4 seq.; IV, ch. 2 ff.]
[Footnote 157-8: Thus, for instance, drainage works which,
where properly directed, have paid an interest of from 25 to
70 per cent. per annum in England and Belgium on the capital
invested.]
SECTION CLVIII.
HISTORY OF RENT.--IN PERIODS OF DECLINE.
If a nation's economy be declining, in consequence of war for instance,
the disastrous influence hereof on rent may be retarded by a still
greater fall in wages or in the profit on capital. But it can be hardly
retarded beyond a certain point.[158-1] As a rule, the decline of rents
begins to be felt by the least fertile and least advantageously situated
land.[158-2] [158-3]
[Footnote 158-1: "The falling of rents an infallible sign of
the decay of wealth." (_Locke._) In England, in 1450, land
was bought at "14 years' purchase;" i. e., with a capital =
14 times the yearly rent paid, in 1470, at only "10 years'
purchase." (_Eden_, State of the Poor, III, App., I, XXXV.)
This was, doubtless, a consequence of the civil war raging
in the meantime. The American war (1775-82) depressed the
price of land in England to "23¼ years' purchase,"
whereas it had previously stood at 32. (_A. Young._) The
rent of land, in many places in France, declined from 10,000
to 2,000 livres, on account of the many wars during Louis
XIV.'s reign. (_Madame de Sévigné's_ Lettres, 25 Dec, 1689.)
Even in 1677, it was only one-half of its former amount
(_King_, Life of Locke, I, 129.) The whole Bekes county
(_comitat_) in Hungary was sold for 150,000 florins under
Charles VI.; after the unfortunate war with France.
(_Mailath_, Oesterreich, Gesch., IV, 523.) Compare
_Cantillon_, Nature du Commerce, 248. In Cologne, a new
house was sold in the spring of 1848 for 1,000 thalers, the
site of which alone had cost 3,000 thalers; and there are
six building lots which formerly cost over 3,000 thalers,
now valued at only 100 thalers. (_von Reden_, Statist.
Zeitschr., 1848, 366.) On the other hand, Napoleon's war
very much enhanced English rents (_Porter_, Progress of the
Nation, II, 1, 150 ff.), because it affected England's
national husbandry principally by hindering the importation
of the means of subsistence. (_Passy_, Journal des
Economistes, X, 354.)]
[Footnote 158-2: Thus the price of lands, in Mecklenburg,
between 1817 and 1827, fell 30 to 40 per cent. in the least
fertile quarters; in the better, from 15 to 20 per cent.
(_von Thünen_, in _Jacob_, Tracts relating to the Corn
Trade, 40, 187.) _Per contra_, see Hundeshagen Landwirthsch.
Gewerbelehre, 1839, 64 seq., and _Carey_, Principles, I,
354.]
[Footnote 158-3: The average rent in England was, in 1815,
17s. 3d. In the counties, it was highest in Middlesex, 38s.
9d.; in Rutland, 38s. 2d.; Leicester, 27s. 3d.; lowest in
Westmoreland, 9s. 1d. In Wales, the average was 7s. 10d.;
highest in Anglesea, 19s.; lowest in Merioneth, 4s. 8d. In
Scotland the average was 5s. 1½d.; highest, Midlothian,
24s. 6½d.; lowest, Highland Caithness, Cromarthy,
Inverness and Rosse, from 1s. 1d. to 1s. 5d.; Orkneys,
8½d.; Sutherland, 6d.; Shetlands, 3d. In Ireland, the
average was 12s. 9d.; highest in Dublin, 20s. 1½d.;
lowest, Donegal, 6s. (_McCulloch_, Stat., I, 544 ff.;
Yearbook of general Information, 1843, 193.) In France,
_Chaptal_, De l'Industrie Fr., 1819, I, 209 ff., estimates
the average yield per _hectare_ at 28 francs; in the
Department of the Seine, 216; Nord, 69.56; Lower Seine,
67.85; in the upper Alps, 6.2; in the lower Alps, 5.99: in
the Landes, 6.25. While in the Landes, only 20 francs a
_hectare_ are frequently paid, the purchase price in the
neighboring Medoc is sometimes 25,000 francs. (Journal des
Economistes, Jan. 15, 1851.) In Belgium, the average price
of agricultural land is 52.46; in East Flanders, 53.19; in
Namur, 29.24. (_Heuschling_, Statistique, 77.)]
SECTION CLIX.
HISTORY OF RENT.--RENT AND THE GENERAL GOOD.
We so frequently hear rent called the result of the monopoly[159-1] of
land, and an undeserved tribute paid by the whole people to landowners,
that it is high time we should call attention to the common advantage it
is to all. There is evidently danger that, with the rapid growth of
population, the mass of mankind should yield to the temptation of
gradually confining themselves to the satisfaction of coarse, palpable
wants; that all refined leisure, which makes life and the troubles that
attend it worth enduring, and which is the indispensable foundation of
all permanent progress and all higher activity, should be gradually
surrendered. (See § 145.) Here rent constitutes a species of reserve
fund, which grows greater in proportion as these dangers impend by
reason of the decline of wages and of the profit of capital, or
interest.[159-2] Besides, precisely in times when rent is high, the sale
and divisibility of landed estates act as a beneficent reaction against
the monopoly of land, which is always akin to the condition of things
created by rent.
But it is of immeasurably greater importance that high rents deter the
people from abusing the soil in an anti-economic way; that they compel
men to settle about the centers of commerce, to improve the means of
transportation, and under certain circumstances to engage in the work of
colonization; while, otherwise, idleness would soon reconcile itself to
the heaping together of large swarms of men.[159-3] The anticipation of
rent may render possible the construction of railroads, which enable the
land to yield that very anticipated rent.
[Footnote 159-1: "Rent is a tax levied by the landowners as
monopolists." (_Hopkins_, Great Britain for the last forty
Years, 1834.) For a very remarkable armed and successful
resistance of farmers in the state of New York to the claims
for rent of the Rensselaer family, represented by the
government, see _Wappäus_ Nord Amerika, 734.]
[Footnote 159-2: _Malthus_, Additions to the Essay on
Population, 1817, III, ch. 10; compare also _Verri_,
Meditazioni, XXIV, 3. The Physiocrates call the landowners
_classe disponible_, since, as they may live without labor,
they are best adapted to military service, the civil
service, etc., either in person or by defraying the expenses
of those engaged in them. (_Turgot_, Sur la Formation etc.,
§ 15; Questions sur la Chine, 5.)]
[Footnote 159-3: Well discussed by _Schäffle_, Theorie, 65,
72, 83. _Malthus_ considers the capital and labor expended
in agriculture more productive than any other, because they
produce not only the usual interest and wages, but also
rent. If, therefore, the manufacturing and commercial profit
of a country = 12 per cent., and the profit of capital
employed in agriculture = 10 per cent., a corn law which
compelled the capital engaged in manufactures and commerce
to be devoted to agriculture would be productive of
advantage to the national husbandry in general, if the
increase in rent should amount to about 3 per cent. (On the
Effects of the Corn Laws and of a Rise or Fall in the Price
of Corn on the Agriculture and the general Wealth of the
Country, 1815. The Grounds of an Opinion on the Policy of
Restricting the Importation of Foreign Corn, 1815.) Compare
_supra_, § 55, and the detailed rectification in _Roscher_,
Nationalökonomik des Ackerbaues, etc., § 159 ff.]
CHAPTER III.
WAGES.
SECTION CLX.
THE PRICE OF COMMON LABOR.
Like the price of every commodity, the immediate wages of common labor
is determined by the relation of the demand and supply of labor. Other
circumstances being the same, every great plague[160-1] or
emigration[160-2] is wont, by decreasing the supply, to increase the
wage's of labor; and a plague, the wages of the lowest kind of labor
most.[160-3] And so, the increased demand, in harvest time, is wont to
increase wages; and even day board during harvest time is wont to be
better.[160-4] [160-5] In winter the diminished demand lowers wages
again.[160-6] Among the most effective tricks of socialistic sophistry
is, unfortunately, to caricature the correct principle: "labor is a
commodity," into this other: "the laborer is a commodity."
Moreover, common labor has this peculiarity, that those who have it to
supply are generally much more numerous than those who want it; while
the reverse is the case with most other commodities. Another important
peculiarity of the "commodity" labor, is, that it can seldom be bought,
without at the same time reducing the person of the seller to a species
of dependence. Thus, for instance, the seller cannot be in a place
different from that in which his commodity is. Hence a change in the
person, etc. of the buyer very readily necessitates in the workman a
radical change of life, and that the levelling adjustment of local
excess and want is rendered so difficult in the case of this
commodity.[160-7] Hence, it is that, if in the long run the exchange of
labor against wages is to be an equitable one (§ 110), the master of
labor must, so to speak, incorporate part of his own personality into
it, have a heart for faithful workmen and thus attach them to
himself.[160-8]
[Footnote 160-1: High rate of Italian wages after the plague
in 1348, but also many complaints of the indolence and
dissoluteness of workmen. (_M. Villani_, I, 2 ff., 57 seq.
_Sismondi_, Gesch. der ital. Republiken in Mittelalter, VI,
39.) In England, the same plague increased the wages of
threshers from an average of 1.7 d. in 1348, to 3.3 d. in
1349. Mowers received, during the 90 years previous, 1/12 of
a quarter of wheat per acre; in 1371-1390, from 1/7 to 1/6.
The price of most of their wants was then from 1/8 to 1/12
as high as in _A. Young's_ time, and wages ¼ as high.
(_Rogers_, I, 306, 271, 691.) The great earthquake in
Calabria, in 1783, produced similar effects. (_Galanti_, N.
Beschreiburg von Neapel, I, 450.) Compare _Jesaias_, 13, 12.
On the other hand, depopulation caused by unfortunate wars
is not very favorable to the rate of wages; instance,
Prussia in 1453 ff., after the Polish struggle, and Germany,
after the Thirty Years' War.]
[Footnote 160-2: How much it contributes to raise wages that
workmen can, in a credible way, threaten to move to other
places, is illustrated by the early high wages and personal
freedom of sailors. Compare _Eden_, State of the Poor, I,
36. In consequence of the recent great emigration from
Ireland, the weekly wages of farm hands in that country was
57.4 per cent. higher than in 1843-4. In Connaught, where
the emigration was largest, it was 87 per cent. higher.
(London Statist. Journ., 1862, 454.)]
[Footnote 160-3: Compare _Rogers_, I, 276, and _passim_.]
[Footnote 160-4: And this in proportion as the uncertainty
of the weather causes haste. In England, the harvest doubles
wages. (_Eden._) In East Friesland, it raises it from 8-10
ggr. to 2 thalers sometimes (_Steltzner_); in the steppes of
southern Russia, from 12-15, to frequently 40-50 _kopeks_.
This explains why the country people who come into the
weekly market are anxious, during harvest time, to get rid
of their stocks as fast as possible. According to the
Statist. Journal, 1862, 434, 448, the average wages in
harvest and other times, amounted to:
_In harvest time._ _Other times._
In Scotland for males, 18s. 7d. 12s. 11½d.
" " females, 11s. 4d. 5s. 7d.
In Ireland " males, 12s. 9d. 6s. 11½d.
" " females, 8s. 3d. 3s. 9d.
" " males, 15s. 4d. 7s. 1¼d.
" " females, 7s. 1¾d. 3s. 11d.
The reason why the wages of females rises more in harvest
time than the wages of males may be the same that in many
places in Ireland has made emigration more largely increase
the wages of women. (l. c., 454.) Every excess of workmen
depresses, and every scarcity of workmen enhances the wages
of the lowest strata relatively most.]
[Footnote 160-5: The wages of English sailors was usually
40-50 shillings a month. During the last naval war, it rose
to from 100 to 120, on account of the great demand created
by the English fleet. (_McCulloch_, On Taxation, 40.)]
[Footnote 160-6: The winter wages of German agricultural
laborers varies between 6.1 and 20 silver groschens; summer
wages between 7.9 and 27.5 silver groschens. _Emminghaus_,
Allg. Gewerbelehre, 81, therefore, advises that in winter
the meal time of workmen in the fields should be postponed
to the end of the day, and winter wages then made less low
than at present.]
[Footnote 160-7: _W. Thornton_, On Labour, its wrongful
Claims and rightful Dues, its actual, Present and possible
Future, 1869, II, ch. 1. _Harrison_, Fortnightly Review,
III, 50.]
[Footnote 160-8: Just as the husband binds himself in
marriage. While in concubinage there is apparent equality,
it costs the woman a much greater sacrifice than the man.]
SECTION CLXI.
WAGES OF LABOR.--THE MINIMUM OF WAGES.
Human labor cannot, any more than any other commodity, be supplied, in
the long run, at a price below the cost of production.[161-1] [161-2] The
cost of production here embraces not only the necessary or customary
means of subsistence of the workman himself, but also of his family;
that is, of the coming generation of workmen. The number of the latter
depends essentially on the demand for labor. If this demand be such that
it may be satisfied by an average of six children to a family, the rate
of wages must be such as to support the workman himself and to cover the
cost of bringing up six children.[161-3] Where it is customary for the
wife and child, as well as for the father, to work for wages, the father
does not need to earn the entire support of the family, and hence
individual wages may be smaller.[161-4] But if it were to fall below the
cost mentioned above, it would not be long before increased mortality
and emigration, and a diminution of marriages and births would produce a
diminution of the supply; the result of which would be, if the demand
remained the same, a renewed rise of wages.
Conversely, it would be more difficult for the rate of wages to be
maintained long much above that same cost, in proportion as the
gratification of the sexual appetite was more generally considered the
highest pleasure of sense, and the love of parents for their children as
the most natural human duty. As Adam Smith says, where there is a great
demand for men, there will always be a large supply of them.[161-5]
[Footnote 161-1: Compare _Engel's_ beautiful lecture on the
cost of labor to itself (_Selbstkosten_ = _self-cost_),
Berlin, 1866.]
[Footnote 161-2: _Wolkoff_ zealously and rightly argues,
that the minimum wages is not the _taux naturel_ of wages.
(Lectures, 118 ff., 284.) _von Thünen_ also divides wages
into two component parts--that which the workman must lay
out in his support in order to continue able to work, and
that which he receives for his actual exertion. (Isolirter
Staat., II, 1, 92 seq.)]
[Footnote 161-3: _Gasparin_ distinguishes five periods in
the career of a workman generally: a, he is supported by his
parents; b, he supports himself and is in a condition to
save something; c, he marries, and supports his children
with trouble; d, the children are able to work, and the
father lives more comfortably; e, his strength and resources
decline. (_Villermé_, Tableau de l'État physique et moral
des Ouvriers, 1840, II, 387.)]
[Footnote 161-4: _Cantillon_, Nature du Commerce, etc.,
1755, is of opinion that a day laborer, to bring up two
children until they are grown, needs about as much as he
does for his own support; and that his wife may, as a rule,
support herself by her own work. (42 ff.) In Germany, it is
estimated that, in the case of day laborers, a woman can
earn only from 1/3 to ½ of what her husband does; mainly
because she is so frequently incapacitated for work by
pregnancy, nursing, etc. (_Rau_, Lehrbuch, I, § 190.) In
France, in 1832, a man working in the fields earned, on an
average, 1¼ francs a day, the wife ¾ of a franc (200
days to the year), the three children 38/100 francs (250
days to the year), an aggregate of 650 francs per annum.
(_Morogues._) In England, the average amount earned in the
country was for males, per annum, £27 17s.; (munications
relative to the Support and Maintenance of the Poor, 1834,
p. LXXXVIII.) The wife of an English field hand, without
children, earns 1/3 more than one with children. In the case
of mothers, a difference of fewer or more children is
unnoticeable in the effects on wages. (London Statist.
Journal, 1838, 182.) In the spinning factories in
Manchester, in 1834, children between 9 and 10 years of age
were paid, weekly, from 2s. 9d. to 2s. 10d.; between 10 and
12, from 3s. 6d. to 3s. 7d.; between 12 and 14, from 5s. 8d.
to 5s. 9d.; between 14 and 16, from 7s. 5d. to 7s. 6d.
(Report of the Poor Commissioners, 204.) Those manufactures
which require great physical strength, like carpet and
sail-cloth weaving, and those carried on in the open air and
in all kinds of weather, allow of no such family competition
and debasement of wages. (_Senior_ in the Report of the
parliamentary Committee on Hand Weavers, 1841.)]
[Footnote 161-5: Similarly, _J. Möser_, Patriot. Phant., I,
40. _Adam Smith_ infers from the following symptoms in a
country that wages are higher there than the indispensable
minimum, viz.: if wages in summer are higher than in winter,
since it is seldom that enough is saved in summer to satisfy
the more numerous wants of winter; if wages vary less from
year to year and more from place to place than the means of
subsistence, it they are high even where the means of
subsistence are cheapest. (Wealth of Nat., I, ch. 8.)]
SECTION CLXII.
COST OF PRODUCTION OF LABOR.
The idea conveyed by the expression necessaries of life is, within
certain limits, a relative one. In warm countries, a workman's family
needs less clothing, shelter, fuel and even food[162-1] than in cold
countries. This difference becomes still more striking when the warm
countries possess absolutely cheaper food as, for instance, rice,
Turkish wheat, bananas etc. Here, evidently, other circumstances being
the same, the rate of wages may be lower.[162-2] The cultivation of the
potato has operated in the same direction; since an acre of land planted
with potatoes yields, on an average, twice as much food as the same acre
planted with rye.[162-3] In France, two-thirds of the population lived
almost without animal food, on chestnuts, Indian corn, and potatoes
(_Dupin_), while in England, malt, hops, sugar, brandy, tea, coffee,
tobacco, soap, newspapers, etc. are described as "articles chiefly used
by the laboring classes." (_Carey_.)
The standard of decency of the working class also has great influence
here. The use of blouses in Paris has nothing repulsive, nor that of
wooden shoes in many of the provinces of France, nor the absence of
shoes in lower Italy; while the English workman considers leather shoes
indispensable, as he did only a short time ago a cloth coat. Compare
_infra_, § 214.[162-4]
[Footnote 162-1: Explained since _Liebig's_ time by the fact
that a part of food is consumed to preserve animal heat:
means of respiration in contradistinction to means of
nutrition. Recent research has shown that in cold weather
more urea and also more carbonic acid are given off; hence
the means of supplying this deficit should be greater in
cold weather than in warm. This more rapid transformation is
wont, when nutrition is sufficient, to be accompanied by
more energetic activity. (_Moleschott_, Physiologie der
Nahrungsmittel, 1850, 47, 50, 83.)]
[Footnote 162-2: This is opposed in part by the fact that a
hot climate induces indolence, and that therefore he needs a
greater incentive to overcome his disposition to idleness.
Thus, in the cooler parts of Mexico, the rate of wages was
26 sous a day, in the warmer, 32 sous. (_Humboldt_, N.
Espagne, III, 103.)]
[Footnote 162-3: According to _Engel_, Jahrbuch für Sachsen,
I, 419, on acres similarly situated and under similar
conditions, the lowest yielded:
_Watery contents _Watery contents
included._ excluded._
Of wheat, 1,881 lbs. 1,680 lbs.
" rye, 1,549 " 1,404 "
" pease, 1,217 " 1,095 "
" potatoes, 21,029 " 5,257 "
The dry substance of these products yielded:
_Azotized _Mineral
Substance._ _Fecula._ Matter._
Wheat, 282 lbs. 879 lbs. 49 lbs.
Rye, 243 " 661 " 34 lbs.
Pease, 309 " 431 " 33 lbs.
Potatoes, 525 " 3,785 " 178 lbs.
In Saxony, from 1838 to 1852, the average prices stood as follows:
_Of Rye._ _Of Wheat._ _Of Potatoes._
One lb. of dry substance, 1 1.28 .95
One lb. of protein substance, 1 1.11 1.78
One lb. of fecula, 1 1.14 0.72
(loc. cit.) The high price of protein in wheat depends
probably on the more agreeable appearance and pleasanter
taste of wheat flour; the still higher price of potato
protein on the exceedingly easy mode of its preparation.]
[Footnote 162-4: As regards food alone, the cost of the
support of a plowman on Count Podewil's estate, reduced by
_Rau_, Lehrbuch, § 191, to the unit of rye, is annually
1,655 lbs. of rye. According to _Koppe_, it is 1,952 lbs.;
to _Block_, 2,300 lbs.; to _Kleemann_, from 1,888 to 2,552
lbs.; to _Möllenger_, 2,171 lbs. The first three estimate
the cost in meat at 78, 160 and 60 pounds. Compare _Block_,
Beitr. Z. Landgüterschätzungskunde, 1840, 6. Exhaustive
estimates for all Prussian governmental districts in _von
Reden_, Preussische Erwerbs, und Verkehrsstatistik, 1853, I,
177 ff., according to which the requirement, per family,
varies between 71 thalers in Gumbinnen and 204 thalers in
Coblenz, the average being 105 thalers. According to more
recent accounts, a laborer's family in East Prussia, gangmen
not included, get along very well on 177 thalers per annum.
(_von der Goltz_, Ländl. Arbeiterfrage, 1872, 9 ff.) In
Mecklenburg, omitting _Hofgänger_, on 183 thalers. (Ann.
des. patr. Vereins, 1865, No. 26.)
The necessary outlay of the family of an agricultural day
laborer in England, in 1762, was estimated as follows: for
bread and flour, £6 10s. per annum; for vegetables and
fruit, £1 1-2/3s.; for fuel, light and soap, 2-9-5/6s.; for
milk, butter and cheese, £1 1-6-5/6s.; for meat, £1 6s.; for
house-rent, 1-6s.; for clothing, bedding, etc., 2-16-1/3s.;
for salt, beer and colonial wares, 1-16-5/6s.; for medicine,
expenses attending confinement of wife, etc., 1-6½s. (_J.
Wade_, History of the middle and working Classes, 1853,
545.) Concerning 1796, compare _Sir F. M. Eden_, State of
the Poor, I, 660, 1823; _Lowe_, on the present Condition of
England. Compare on the receipts and expenses of ten working
families in and about Mühlhausen, the tables in the Journal
des Economistes, October, 1861, 50; and further
_Ducpétiaux_, Budgets économiques des Classes ouvrières en
Belgique, 1855. According to _Playfair_ in _Knop_,
Agriculturchemie, I, 810, ff., different classes of grown
men need daily food.
===================+=========+========+========+========+========
GRAMMES. | _1._ | _2._ | _3._ | _4._ | _5._
-------------------+---------+--------+--------+--------+--------
Plastic material, | 56.70 | 70.87 | 119.07 | 155.92 | 184.27
Fat, | 14.70 | 28.35 | 51.03 | 70.87 | 70.87
Starch, | 340.20 | 340.20 | 530.15 | 567.00 | 567.00
===================+=========+========+========+========+========
Here 1 stands for a convalescent who can bear only enough to
preserve life; 2, the condition of rest; 3, moderate motion
of from 5 to 6 English miles' walk daily; 4, severe labor =
a walk of 20 English miles daily; 5, very severe labor = to
a day's walk of 14 English miles, with a load weighing 60
lbs. If the fat be given in terms of starch, the aggregate
need of both substances in the case of 1 is 6.6 times as
great as the need of plastic substance; in the case of 2, 3,
4, and 5, respectively 5.7, 5.2, 4.8 and 4.0 times as much.
A Dutch soldier doing garrison duty receives daily, in times
of peace, 0.333 kilogrammes of wheat flour, 0.125 of meat,
0.850 of potatoes, 0.250 of vegetables, containing in the
aggregate 60 grammes of albumen. In forts, where the service
is more severe, he receives 0.50 kilogrammes of wheat flour,
0.06 of rice or groats, with an aggregate amount of 116
grammes of albumen. (_Mulder_, Die Ernährung in ihrem
Zusammenhange mit dem Volksgeiste, übersetzt _von
Molecshott_, 1847, 58 seq.) According to the researches of
Dr. Smith, in order to avoid the diseases caused by hunger,
a man needs, on an average, to take 4,300 grains of carbon
and 200 grains of nitrogen in his daily food; a woman 3,900
grains of carbon and 180 grains of nitrogen. In 1862, the
workmen in the famishing cotton industries of Lancashire
were actually reduced to just about this minimum. (_Marx_,
Kapital, I, 642.) Death from starvation occurs in all
vertebrates when the loss of weight of the body, produced by
a want of food, amounts to between two-fifths and one-half
of what it was at the beginning of the experiment.
(_Chossat_, Recherches expérimentales sur l'Inanition, 184,
3.)]
SECTION CLXIII.
WAGES OF LABOR.--POWER OF THE WORKING CLASSES
OVER THE RATE OF WAGES.
In this way, the working classes hold in their own hands one of the
principal elements which determine the rate of wages; and it is wrong to
speak of an "iron law" which, under the control of supply and demand,
always reduces the average wages down to the means of subsistence.[163-1]
For the moment, indeed, not only individual workmen, but the whole
working class is master of the supply of its commodity only to a very
small extent; since, as a rule, the care for existence compels it to
carry, and that without interruption, its whole labor-power to market.
But it is true that the future supply depends on its own will; since,
with an increase or decrease in the size of the families of workingmen,
that supply increases or diminishes. If, therefore, by a favorable
combination of circumstances, wages have risen above the height of
urgent necessity, there are two ways open to the working class to take
advantage of that condition of things. The workman either raises his
standard of living, which means not only that his necessary wants are
better satisfied, his decencies increased and refined, but also and
chiefly, that the intellectual want of a good prospect in the future,
which so particularly distinguishes the honorable artisan from the
proletarian is taken into consideration. And it is just here that a
permanent workingmen's union, which should govern the whole class, might
exert the greatest influence. Their improved economic state can be
maintained only on condition that the laboring class shall create
families no larger than they hope to be able to support consistently
with their new wants.[163-2]
Or, the laboring class continues to live on as before, from hand to
mouth, and employ their increased resources to gratify their sexual
appetite earlier and longer than before, thus soon leading to an
increase of population.
The English took the former course in the second quarter of the last
century, when English national economy received a powerful impetus, and
the large demand for labor rapidly enhanced the rate of wages. The
Scotch did in like manner a generation later. The second alternative was
taken by the Irish, when the simultaneous spread of the cultivation of
the potato[163-3] and the union with England, at the beginning of the
nineteenth century, gave an extraordinary extension to their resources
of food. While the population of Great Britain, between 1720 and 1821,
did little more than double, the population of Ireland increased from
2,000,000 to nearly 7,000,000 between 1731 and 1821. No wonder,
therefore, that the average wages of labor was twenty to twenty-four
pence per day in the former, and in the latter only five pence.
(_MCCulloch._)[163-4]
Naturally enough, this difference of choice by the two peoples is to be
explained by the difference in their previous circumstances. The Irish
people, robbed by violence of their own higher classes, and, therefore,
and on this account precisely, almost entirely destitute of a middle
class, had lost the check on increase they possessed in the middle ages,
without having as yet assimilated to themselves the checks which come
with a higher stage of culture. Their political, ecclesiastical and
social oppression allowed them no hope of rising by temporary sacrifices
and energetic efforts permanently to a better condition as citizens or
gentlemen. Only the free man cares for the future. Hence, the sexual
thoughtlessness and blind good nature, the original tendencies of the
Irish people, necessarily remained without anything to counterbalance
them. It always supposes a high degree of intelligence and
self-restraint among the lower classes, when an increase in the
thing-value, or the real value of wages, does not produce an increase in
the number of workmen, but in their well-being. The individual is too
apt to think that it matters little to the whole community whether he
brings children into the world or not, a species of egotism which has
done most injury to the interests in common of mankind. As a rule, it
requires a great and palpable enhancement of wages to make workmen, as a
class, raise their standard of living.[163-5] [163-6]
[Footnote 163-1: Compare _Lassalle_, Antwortschreiben an das
Central Comite zur Berufung eines allg. deutschen
Arbeitercongresses, 1863, 15; also _Turgot_, sur la
Formation etc., § 6. When _Lassalle_ says that when a varied
standard of living has become a national habit it ceases to
be felt as an improvement, he says what is in a certain
sense true. But is the man to be pitied who, absolutely
speaking, is getting on well enough; relatively speaking,
better off than before; but who is only not better off than
other men?]
[Footnote 163-2: A case in Holstein, in which, in the first
half of the eighteenth century, the serfs of a hard master
conspired together not to marry, and thus soon forced him to
sell his estate. (_Büsch_, Darstellung der Handlung, V, 3,
II.)]
[Footnote 163-3: On the otherwise remarkable economic
advance in Ireland about 1750, see _Orrey_, Letters
concerning the Life and Writings of Swift, 1751, 127;
_Anderson_, Origin of Commerce, a., 1751.]
[Footnote 163-4: Compare especially _Malthus_, Principles,
ch. 4, sec. 2. How little Adam Smith dreamt of this may be
best seen in I, 115, Bas. Recently, the average wages per
week amounted in England to 22½s., in Scotland to
20½s., in Ireland to 14¾s. (_Levi_, Wages and Earnings
of the working Classes, 1866.)]
[Footnote 163-5: Thus the unheard of long series of
excellent harvests in England, between 1715 and 1765,
contributed very largely to this favorable transformation.
Day wages expressed in wheat, between 1660 and 1719,
amounted on an average to only about 2/3 of a peck; between
1720 and 1750, to an entire peck. In the fifteenth century,
a similar series of good harvests contributed very much to
the flourishing condition of the "yeomanry." Under Henry
VII., workmen earned from two to three times as much corn as
they did a century later. And so in France, the great
Revolution at the end of the eighteenth century, by setting
free a vast quantity of hitherto bound-up force, enhanced
the productiveness of the entire economy of the nation, and
made the division of the national income more nearly equal.
There is an essential connection here between the rapidity
of the transition and the facts, that the habits of
consumption of the working class received a powerful
impulse, and that population increased much less rapidly
than the national income. Compare _John Stuart Mill_,
Principles, II, ch. 11, 2. In our own days again, English
workmen had a splendid opportunity to raise their standard
of life. Emigration to Australia, etc. preponderated over
the natural increase of population to such an extent that,
in 1852, for instance, only 217,000 more human beings were
born in England and Wales than died, and 368,000 emigrated.
At the same time, exports increased: in 1849, they were
£63,000,000; in 1850 £71,000,000; about the end of 1853,
something like £90,000,000.
This golden opportunity was used by the English laboring
classes to both largely multiply marriages and to enhance
the rate of wages. The number of marriages contracted in
England yearly, from 1843 to 1847, was 136,200; from 1853 to
1857, 159,000. The number of births annually, from 1843 to
1847, was 544,800; from 1853 to 1857, 640,400. And wages, in
a number of industries, rose, between 1839 and 1859, from
about 18 to 24 per cent. (Quarterly Review, July, 1860, 86),
while the prices of most of the necessaries of life
declined. That, in the same time, the condition of English
laborers was elevated, both intellectually and morally, is
proved by many facts cited in _Jones' and Ludlow's_ work on
the social and political condition of the laboring classes
in England. In Germany, the recent establishment of peace on
a firm footing and the French war contributions have given
the country an impulse which might be taken advantage of by
the laboring class with the happiest results if they would
accustom themselves to more worthy wants and at the same
time preserve their accustomed industry.]
[Footnote 163-6: The cheapening of the necessaries of life,
experience shows, is more likely to lead to an increase of
population; that of luxuries, to a raising of the standard
of life or of comfort.]
SECTION CLXIV.
WAGES.--COST OF PRODUCTION OF LABOR.
As the cheapening of the means of subsistence, when the circle of wants
of the laboring class has not correspondingly increased, leads to a
decline of wages, so an enhancement of their price must, when wages are
already so low as only to be able to satisfy indispensable wants,
produce an increase in the rate of wages. The transition in the former
case is as pleasing as in the latter it is replete with the saddest
crises.[164-1] The slower the rise in the price of the means of
subsistence is, the more it is to be feared that the working classes
will seek to meet it, not by emigration or by a diminished number of
marriages, but by decreasing the measure of their wants, the
introduction of a poorer quality of food, etc.[164-2]
However, all this is true only of permanent changes in the average price
of the means of subsistence, such as are produced, for instance, by the
development of agriculture, by taxation etc. Transitory fluctuations,
such as result, for instance, from a single good or bad harvest, cannot
have this result.[164-3] It is, in poor countries at least, one of the
worst effects of a bad harvest, that it tends to positively lower the
rate of wages. A multitude of persons who would otherwise be able to
purchase much labor are now deterred from doing so, by the enhancement
of the price of food.[164-4] On the other hand, the supply increases:
many men who before would not work even for money, see themselves now
compelled to do so. Those who have been workmen hitherto are compelled
by want to make still greater exertions.[164-5]
In very cheap years, all this is naturally reversed.[164-6]
[Footnote 164-1: According to _McCulloch_, Edition of _Adam
Smith_, 472, the food of a day laborer's family constitutes
between 40 and 60 per cent. of their entire support. In the
case of Prussian field hands, it is generally 54 per cent.
greatest in the province of Saxony, viz., 58 per cent. and
lowest in Posen, 43 per cent. Compare _Rau_, Lehrbuch, I, §
191. This may serve as a point of departure, from which to
measure the influence of a given enhancement of the price of
corn. In opposition to _Buchanan_ (Edition of _Adam Smith_,
1817, 59), who had denied the influence of the price of the
means of subsistence on the rate of wages, see _Ricardo_,
Principles, ch. 16.]
[Footnote 164-2: How easily English farmers have accustomed
themselves to the consequences of momentary calamities, may
be seen from _John Stuart Mill_, Principles, II, ch. 11, 5
seq.; _Thornton_, Population and its Remedy, 1846, passim.
_Malthus_, Principles, sec. 8, shows in opposition to
_Ricardo_, Principles, ch. 8, that it is not all one to the
laboring classes whether their wages rise while the price of
the means of subsistence remains the same, or whether the
rate of wages remaining nominally the same, the commodities
to be purchased decline in price. If for instance,
potato-food, physiologically considered, was just as good as
flesh-food and wheat bread, yet an unmarried workman or a
father with a number of children below the average would be
able to save less from the former for the reason that it
possesses less value in exchange. (Edinburg Rev., XII, 341.)
Thus, e. g., in Ireland, between _A. Young_ and _Newenham_
(1778-1808), the rate of wages increased more than the price
of potatoes, but all other means of subsistence in a still
greater ratio. (_Newenham_, A view of Ireland, 1808.)
Compare _Malthus_, On the Policy of Restricting the
Importation of foreign Corn, 1815, 24 ff.; contra.
_Torrens_, on the Corn trade, 1820, 374 ff.]
[Footnote 164-3: Compare _Garve_ in _MacFarlan_, On
Pauperism, 1785, 77. Thus, in the United States, the same
quantities of coffee, leather, pork, rice, salt, sugar,
cheese, tobacco, wool, etc., could be earned in 1836 by 23.5
days' labor; in 1840, by 20.75; in 1843, by 14.8; in 1864,
by 34.6. (_Walker_, Science of Wealth, 256.)]
[Footnote 164-4: The person who formerly consumed perhaps
four suits of clothes in a year now limits himself to two,
and forces the tailor to dismiss one journeyman. In Bavaria,
the dear times, 1846-47, and probably also the disturbances
of 1848-49, caused officials, pensioners, annuitants and
professional men to discharge one-tenth of the female
domestics they employed in 1840. (_Hermann_, Staatsw.
Unters, II, Aufl., 467.)]
[Footnote 164-5: The labor of digging during the time of
scarcity in England was paid one-third of the price usually
paid in good years. (_Porter_, Progress of the Nation, III,
14, 454.) On the Slavic portions of Silesia, see _Hildebrand's_
Jahrb., 1872, I, 292. According to _Rogers_, I, 227 ff., 315
ff., and the table of prices in the appendix to _Eden_,
State of the Poor, the price in England of a quarter of
wheat and a day's wages was, in--
1287, 2s. 10¼d. 3d.
1315, 14s. 10-7/8d. 3d.
1316, 15s. 11-7/8d. 3-7/8d.
1392, 3s. 2-5/8d. 5d.
1407, 3s. 4d. 3d.
1439, 8s.-26s. 8d. 4½d.
1466, 5s. 8d. 4-6d.
1505, 6s. 8d. 4d.
1575, 20s. 8d.
1590, 21s. 3-6d.
1600, 10d.]
[Footnote 164-6: _Petty_, Several Essays on Political
Arithmetic, 133 ff. _Adam Smith_, Wealth of Nat., I, ch. 8.
_Ricardo_, Principles, ch. 9. In Hesse, in consequence of a
series of many rich harvests from 1240 to 1247, no servants
could be had at all, so that the nobility and clergy were
obliged to till their own lands. (_Anton_, Gesch. der
deutschen Landwirthschaft, 111, 209.)]
SECTION CLXV.
WAGES.--THE DEMAND FOR LABOR.
The demand for labor, as for every other commodity, depends, on the one
hand, on the value in use of it, and on the other, on the purchaser's
capacity to pay for it (his solvability), These two elements determine
the maximum limit of wages, as the means of support considered
indispensable by the workmen determine the minimum. There are
circumstances conceivable under which the rise in wages might entirely
eat up rents; but there must always be a portion of the national income
reserved to reward capital (its profit). If wages were to absorb the
latter also, the mere owner of capital would cease to have any interest
in the progress of production. Capital would then be withdrawn from
employment and consumed.[165-1] Obviously, no man engaged in any
enterprise can give more as wages to his workmen than their work is
worth to him.[165-2] Hence the additional product in any branch of
industry, due to the labor of the workman last employed, has a
controlling influence on the rate of the wages which can be paid to his
fellow workmen. If the additional products of the workmen successively
last employed constitute a diverging series,[165-3] the last term in the
series is the natural expression of the unsurpassable maximum of wages;
if they constitute a converging series, men the employer can pay the
last workman higher wages than the additional product due to him;
provided, however, that the reduction which is to be expected in the
case of the workmen previously employed to the same level still leaves
him a sufficiently high rate of profit.[165-4] Hence the growing skill
of a workman, in and of itself, makes an increase of his wages
possible;[165-5] while, conversely, if he can be replaced by capital,
which always relatively decreases the value in use of his labor, there
is a consequent pressure on his wages.
[Footnote 165-1: _Storch_, Handbuch, I, 205 seq.]
[Footnote 165-2: Higher wages promised, for instance, as a
reward for saving a human life or some other very precious
thing in great danger of being destroyed. In the case of
material production, labor is worth to the party engaged in
the enterprise, at most, as much as the price of the product
after the remaining cost of reproducing it is deducted.]
[Footnote 165-3: Possibly in consequence of a better
division of labor or of some other advance made in the
technic arts.]
[Footnote 165-4: Thus, for instance, in harvesting potatoes,
if, after they have been ploughed up, only those nearest the
surface are collected, a laborer can gather over thirty
Prussian _scheffels_ in a day. But the fuller and completer
the gathering of potatoes desired is, the smaller will be
the product of one workman and of one day's labor. If,
therefore, a man wants to gather even the last bushel in a
potato field of 100 square rods, so much labor would be
required to accomplish it that the workman would not gather
enough to feed him during his work, to say nothing of
supplying his other wants. Supposing that 100 _scheffels_ of
potatoes had grown on 100 square rods, and that of these
were harvested--
_When the number of _Then the additional yield
men employed in obtained by the
gathering them was_ last workman employed is_
4, 80 scheffels,
5, 86.6 " 6.6 scheffels.
6, 91 " 4.4 "
7, 94 " 3 "
8, 96 " 2 "
(_von Thünen_, Der isolirte Staat, II, 174 ff.)]
[Footnote 165-5: In Manchester, in 1828, the wages paid for
spinning one pound of cotton yarn, No. 200, was 4s. 1d.; in
1831, only from 2s. 5d. to 2s. 8d. But, in the former year,
the spinner worked with only 312 spools; in the latter, with
648; so that his wages increased in the ratio of 1274 to
1566. (_Senior_, Outlines.)]
SECTION CLXVI.
WAGES.--PRICE OF COMMON LABOR.
In the case of a commodity as universally desired as human labor is, the
idea of the purchasers' capacity to pay (solvability) must be nearly
commensurate with the national income, or to speak more correctly, with
the world's income.[166-1] In regard to the different kinds of labor,
and especially to common labor, it is evident that the different kinds
of consumption require very different quantities of them. Here,
therefore, we depend on the direction which national consumption takes,
and this in turn is most intimately related to the distribution of the
national income.[166-2] If all workmen were employed in nothing but the
production of articles consumed by workmen, the rate of wages would be
determined almost exclusively by the ratio between the number of the
working population and the amount of the national income. But, if this
were the case, landowners and capitalists would be obliged to live just
as workmen do, and their highest luxury would have to consist in feeding
idlers. (§ 226). The effect must be much the same, when the wealthy are
exceedingly frugal and employ their savings as rapidly as possible in
the employment of common home labor; while, on the other hand, the
exportation of wheat, wood, and other articles, which the working
classes consume, in exchange for diamonds, lace, champagne, diminishes
the efficient demand for common labor in a country.[166-3]
The assumption frequently made, that the demand for labor depends on the
size of the national capital, is far from exact.[166-4] Thus, for
instance, every transformation of circulating into fixed capital,
especially when the labor used in effecting this transformation is
ended, diminishes the demand for other labor. That principle is not
unconditionally true, even in the case of circulating capital. Thus, for
instance, the rate of wages is wont to be raised by the transfer of
capital from such businesses as require little labor into such as
require much.[166-5] Only that part of circulating capital can have any
weight here which is intended, directly or indirectly, for the purchase
of labor and for the purchase of each kind of labor in particular.[166-6]
The capital of the employer is, by no means, the real source[166-7] of the
wages of even the workmen employed by him, It is only the immediate
reservoir through which wages are paid out, until the purchasers of the
commodities produced by that labor make good the advance, and thereby
encourage the undertaker to purchase additional labor. Correlated to this
is the fact, that other circumstances being the same, those workmen usually
receive the highest wages who have to do most immediately with the
consumer.[166-8]
[Footnote 166-1: _Senior_ denies this. Let us suppose that
agriculture in Ireland employs on every 200 acres ten
working men's families, one-half of whom are used to satisfy
the aggregate wants of the working people, and the other
half in the production of wheat to be exported to England.
If now the English market requires meat and wool instead of
wheat, the Irish landowner will, perhaps, find it
advantageous, of the ten laboring families, to employ one in
stock raising, a second in obtaining food, etc. to support
the laborers, and to discharge all the others. If, then, the
increased net product is employed in the purchase of other
Irish labor, all goes on well enough; but if, instead of
this, the landowners should import articles of English
manufacture, the demand for labor in Ireland would doubtless
decrease, notwithstanding the increase of its income.
(Outlines, I, 154.) _Senior_ here overlooks two things:
first, that in the supposed case, if eight-ninths of Irish
laborers are thrown out of employment, spite of the
increased income of the owners of landed estates, Ireland's
national income is on the whole probably diminished (§ 146),
and secondly, that, possibly, the demand for labor in
England experiences a greater increase than the decrease in
Ireland; since, with the addition to the world-income, there
would be an increase in the world-demand for labor.]
[Footnote 166-2: Compare _Hermann_, Staatswirthsch.
Untersuch., 280 ff. Earlier yet, _Malthus_, Principle of
Population, II, ch. 13.]
[Footnote 166-3: Thus, _Thomas More_, Utopia, 96, 197,
thinks that if every one was industrious and engaged in only
really useful business, no one would need to fatigue himself
very much; while, as it is now, the few real laborers there
are wear themselves out in the service of the vanity of the
rich, are poorly fed and worked exceedingly hard.]
[Footnote 166-4: _McCulloch_, Principles, 104, seq. 2d ed.]
[Footnote 166-5: Thus, in France, during the continental
blockade, distant ocean commerce declined, and manufactures
flourished instead. (_Lotz_, Revision, III, 134.)]
[Footnote 166-6: Thus, _Adam Smith_ divides "the funds
destined for the payment of wages" into two kinds: the
excess of employers' income over their own maintenance, and
the excess of their capital over the demands of their own
use of it. (Wealth of Nat, I, ch. 8.) _Senior_ considers it
a self-evident principle, that the rate of wages depends on
the size of the "fund for the maintenance of laborers
compared with the number of laborers to be maintained."
(Three Lectures on the Rate of Wages, 1830, Outlines, 153,
ff.) But what determines the quota of the aggregate national
wealth and national income that is to constitute this fund?
_Carey_, Rate of Wages, 1835, has a very exhaustive
commentary on _Senior_.]
[Footnote 166-7: _Watts_, Statist. Journal, 1861, 500,
asserts altogether too generally that an "increase of profit
increases the future wages-fund, and consequently the demand
for laborers;" and that therefore every new machine useful
in manufactures must also be of use to the laboring class.
The employer engaged in any enterprise who has grown richer,
_can_ pay more wages, but whether he _will_ do it depends on
other causes, and even his ability to do it, in the long
run, on his customers. When _John Stuart Mill_, Principles,
I, ch. 5, 9, says that only the capital which comes into the
hands of labor before the completion of their work
contributes to their support, it is as if he were to explain
the phenomena of prices by demand and supply, and nothing
else, denying the influence of the cost of production, of
value in use, and of the deeper determining causes upon
them. (_Supra_, § 107, note 1.) Compare _Roesler_, Z. Kritik
der Lehre vom Arbeitslohn, 1861, 104 ff. In England, the
superstition which to a great extent attached to the idea
"wages-fund," was first questioned by _F. Longe_, Refutation
of the Wages-Fund Theory of modern Political Economy, 1866.
See also _Thornton_, On Labour, II, ch. 1. Even _John Stuart
Mill_ dropped his earlier erroneous views on this subject.
(Fortnightly Review, May and June, 1869.) Not, however,
without exaggeration, as is proved by his well-known saying,
that laborers needed capital but no capitalists. Still, even
here, he tenaciously holds that a rise in wages which
increases the price of some classes of commodities, must
decrease the aggregate demand for commodities. But better
paid workmen may now increase their demand for commodities
to the same extent that the purchasers of labor who do not
gain as much as before, or the consumers of the goods whose
price has been enhanced diminish theirs. (_Brentano_, in
Hildebrand's Jahrbb., 1871, 374.) Only, this increase need
not affect the very commodities influenced by the decrease.]
[Footnote 166-8: Thus, the person who builds his own house
is wont to pay his workmen better than a contractor or
builder by profession; and the maker of the entire
manufactured article, as a rule, suffers less frequently
than the maker of only half of it. (_Hermann_, Staatsw.
Unters., II, Aufl., 471.)]
SECTION CLXVII.
DIFFERENCE OF WAGES IN DIFFERENT BRANCHES OF LABOR.
All the causes which make wages higher in some branches of labor; than
in others, may be divided into three great categories.[167-1]
A. Rare personal acquirements. The supply of labor requiring rare
personal ability will always be limited.[167-2] Such labor must,
naturally, have great value in use, when a small supply of it is met by
a great demand.[167-3] It sometimes happens that a species of labor can
be utilized only by a small circle of persons who demand it. But the
wages for it is raised very high by the great solvability of those who
do demand it. How frequently it happens, for instance, that a minister
is paid a very high salary for the ability he possesses of making
complicated and dry affairs of state attractive to the personal taste of
his sovereign.[167-4] Here, particularly, the confidence which the
workman inspires by his skill and fidelity enters as an element. Without
this confidence, there are many kinds of business which would be crushed
out entirely by the control it would be necessary to subject them to,
and others would not be possible at all.[167-5] When, for instance, in a
large manufacturing establishment, understrappers, workmen, foremen,
subordinate superintendents, directors, etc., draw different salaries,
their pay, if equitably graduated, should be in harmony with the
principles laid down in § 148, The head of a manufacturing
establishment, for instance, who has organized a more perfect division
and coöperation of labor, himself, and by means of which ten men are
enabled to perform the work before performed by twenty, may equitably
retain, as the reward of his organizing power, a considerable amount of
what was previously paid out in wages. Louis Blanc's proposition, that
all should receive equal salaries is, as Bastiat remarks, equivalent to
the assertion that a yard of cloth manufactured by a lazy or unskillful
workman is worth as much as two yards manufactured by an industrious and
skillful one.[167-6]
Such qualified labor, as is treated of here, may be most accurately
estimated, the quality of which supposes a certain cost of acquisition.
This cost may be considered as the outlay of so much capital, which,
with interest,[167-7] should come back to the workman in his wages.
Otherwise, others would be deterred from entering the same business by
the example of his loss. Here, especially, it is necessary to take into
account the long period of apprenticeship or tuition, and the large fees
paid for the same; and this, whether they depend on the natural
difficulties in the way of acquirement or on artificial obstacles
opposed to freedom of competition.[167-8] The influence of these
circumstances is particularly great in those kinds of labor which
require a "liberal" education.[167-9] Among the costs of production
proper, peculiar to this labor-force, must be included, also, the
necessary support of the workman, during the interval between the
completion of his studies and the beginning of his full reward.[167-10]
When a species of work requires special current expenses to be made in
order to its proper performance, these also should of course be made
good to the workman in his wages. Most intellectual labor, for instance,
requires quiet surroundings. The brain-worker cannot share his study
with his family, and, therefore should receive wages or remuneration
large enough in amount to enable him to arrange his dwelling
accordingly. A similar circumstance, only in a much higher degree,
enhances the price paid for diplomatic service.
[Footnote 167-1: Excellent germs thereof in _Adam Smith_,
Wealth of Nat., I, ch. 10, 1. Earlier yet, in _Galiani_,
Della Moneta, I, 2. _Cantillon_, Nature du Commerce, 24 ff.]
[Footnote 167-2: Even in the case of mere manual labor, for
instance, a skillful packer of goods is paid higher wages
than a mere day laborer; a sower better than a plowman or a
digger; a vintner, in general, better than an agricultural
laborer: in the Palatinate of the Rhine, in the ratio of
36:24. Thus, almost anyone can paint a door or a house,
while an artist possesses a species of natural monopoly.]
[Footnote 167-3: Thus, the Greek juggler, who understood how
to throw lintels from a certain distance through the eye of
a needle, was very appropriately rewarded by his king with a
bushel of lintels. On the other hand, the high fee paid for
an operation for cataract depends both on the great
importance of the eye which cannot be replaced in any way,
and on the rarity of the courage among doctors to pierce the
eye of a living man. Very remarkable achievements, which it
requires great education to understand, are generally paid
for at a very low rate. (_Stein_, Lehrbuch, 123.)]
[Footnote 167-4: I need only recall _Richelieu_ and
_Mazarin_, the last of whom left an estate worth 200,000,000
livres. (_Voltaire_, Siècle de Louis XIV., ch. 6.) In
Parisian industries, few workmen are as well paid as those
who are skilled in rapidly effecting changes of form. The
so-called _premières de modes_ frequently received more than
1,800 francs a year, while the _apprêteuses_ received only
from 15 to 20 sous a day. (Revue des deux Mondes, Sept. 15,
1850.) There are women there paid very well for making
pin-cushions, pen-wipers, etc., each one of a different
form; but as soon as any one form ceases to be a novelty,
the wages paid for making it sinks to a minimum. (_M. Mohl_,
Gewerbswissenschaftliche Reise durch Frankreich, 87.)]
[Footnote 167-5: Jewelers, lawyers, statesmen, generals.
_Senior_ says that of the income of £4,000 which a lawyer or
a doctor draws, only £40 are wages for his labor; £3,000 are
a rent paid for the possession of extraordinary talent, or
for his good luck, and £960 as the interest on his
intellectual capital, which is also the chief element of
wealth. (Outline, 134.)]
[Footnote 167-6: On the sad experience of the tailors'
association founded by Louis Blanc himself, at Clichy, and
in consequence of which they soon gave up paying equal wages
and returned to piece wages, see Journal des Economistes,
Mars, 1850, 349.]
[Footnote 167-7: As the interest on land improvements
assumes the character of rent, so also does that of the
education of labor the character of wages. The rate of
interest usual in a country, and the average duration of the
life of the workman affect the capital thus invested as a
species of annuity.]
[Footnote 167-8: Wages in the country are generally lower
than in the cities. In the electorate of Hesse, for
instance, on the supposition of steady employment, males, in
the country, received 69 thalers, 23 silver groschens a
year; females, 55 thalers, 9 silver groschens; in the
cities, on the other hand, males, 88 thalers, 23 silver
groschens, and females 61 thalers, 28 silver groschens.
(_Hildebrand_, statistische Mittheilungen, 101, 137.) And
so, according to _Colquhoun_, Treatise on Indigence, 1806,
the English agricultural laborers received, on an average,
£31 per annum, and manufacturing workmen, £55. The reason of
this is, besides the greater facility of learning how to
perform agricultural labor, the greater dearness of living
in cities, and in England also, because industry has
developed much more rapidly than agriculture.]
[Footnote 167-9: The cost of bringing up a common laborer,
in England, according to _Senior_, is £40; a gentleman,
£2,040. (Outlines, 205.) The more expensive an education
which one acquires for its own sake and without any special
object beyond this in view, is, the less can the capital
laid out in it affect wages. (_von Mangoldt_, V. W. L.,
382.)]
[Footnote 167-10: If the salaries of clergymen are, on an
average, lower than the income of a lawyer or a doctor, it
is partly because theological candidates are provided for
much earlier, and partly because of the lesser cost
attending the study of theology. Thus, at the end of the
eighteenth century, there were 350 students at the
University of Tubingen who are maintained gratis, on
foundation-money, and who had previously attended monastery
schools, free of charge. (_Nicolai_, Reisebescreibungen, XI,
73.) The remarkable contrast between the high wages of the
Athenian sophists and the low wages of modern abbés, Adam
Smith accounts for principally by the many scholarships of
modern times. In Saxony, in 1850 etc., the outlay by the
state and of foundation-funds for the education of a student
amounted to an average of nearly 140 thalers. (_Engel._)]
SECTION CLXVIII.
DIFFERENCE OF WAGES IN DIFFERENT BRANCHES OF LABOR. (CONTINUED.)
B. The great economic risk of the work. When a branch of labor necessary
to a country is, notwithstanding, attended by many chances of failure to
the individual who devotes himself to it, a sufficient supply of the
labor can be relied on only in case that the danger attending it is
compensated for by a corresponding premium paid to success.[168-1] The
choice of a profession or avocation, Adam Smith has compared to a
lottery, in which the fortunate winners gain only what the unfortunate
have lost. The greater the prizes, the greater also the number of
blanks.[168-2] However, the surplus wages in risky kinds of labor are
not sufficient to constitute a full insurance premium. This is connected
with the vanity of men who, as a rule, over-estimate not only their
talent but their good fortune,[168-3] and especially in youth, when they
decide on the choice of a profession, etc. According to this, wages must
be specially low where even complete failure does not endanger the
living or the social position of the workman. Partly on this account are
the industries carried on by women so poorly remunerated;[168-4] as also
such work as is done by a large class of people to fill up their leisure
hours.[168-5]
The prospect of frequent interruptions in any kind of labor must have
the same effect on the wages paid for it as its economic or business
risk.[168-6] Thus, for instance, a mason or roofer must earn at least
enough, during the days he can work, to enable him to live during the
time he is prevented working by bad weather. Hence, the highness of his
wages may, in some respects, be called an apparent one.[168-7] Wages
paid by the week more generally tend to equality than wages paid by the
day, and more so yet wages paid by the year, for then winter and summer
compensate the one for the other. When the workman must be ever ready to
perform his task, account must be taken not only of the number of hours
he is engaged, but also of fractions of his waiting hours, which must be
paid for likewise.[168-8] Two half days cost almost everywhere more than
one whole one.
The number of holidays plays a very important part here. In Protestant
countries, the workman must, in about three hundred work days, earn
enough to live on for about sixty holidays as well. In Catholic
countries, before the time of Clement XIV., he had to earn enough in
addition to support himself for about one hundred and fifty holidays, on
ninety of which he performed no work whatever.[168-9] So large a number
of holidays produces a higher rate of wages or necessitates a low
standard of life among the working classes.[168-10] Something similar is
true of evening leisure and rest;[168-11] _i. e._, of the time when
labor ceases.
[Footnote 168-1: The greater the preparatory cost of labor
is, the more difficult it is for workmen to go from one kind
of labor to another; but, at the same time, the more certain
it is that, without the inducement of a premium paid, there
will be no after increase or recruiting of labor-force.]
[Footnote 168-2: Thus, for instance, in the country, where
doctors generally get along well enough, the most skillful
never obtains any very distinguished position. But, in large
cities, on the other hand, there is the greatest difference
between first-class physicians and obscure practitioners.
Great generals usually obtain a larger income and greater
influence than great admirals; and so it is that prizes in
the military lottery are greater, and there are therefore
more blanks than in the naval lottery. The common soldier is
almost everywhere worse paid than the common sailor. (_Adam
Smith._) To some extent, this depends on the prison-like
life of the seaman in times of service, and in the absence
of an attractive uniform. As to the extent that the lottery
comparison is defective, see _Macleod_, Elements, 215.]
[Footnote 168-3: Who, otherwise, would have anything to do
with a lottery in which the mass of players were certain to
lose, and the keeper of it to gain? And this accounts for
the fact well known to all financiers, that the amount of
the budget remaining the same, a greater eagerness to enter
the military service of the country is inspired by endowing
the higher positions munificently--provided they are
attainable by all--and paying the lower ones in a very
niggardly way, than when the pay is made more uniform.
Something similar is to be observed in the ecclesiastical
service of the Roman and Protestant churches, inasmuch as
the former, considered from an economic point of view,
offers more magnificent prizes, but also more blanks, while
the latter divides its emoluments more equally.]
[Footnote 168-4: As most seamstresses are, when the worst
comes to the worst, supported by their parents, connections
by marriage, brothers, etc., the condition of those who have
to live by their needle must be a pretty hard one. Who is
not familiar with the refrain to _Hood's_ celebrated song of
the shirt: "Oh God, that bread should be so dear, and flesh
and blood so cheap!" There is a "distressed needlewoman's
society" in London. They undoubtedly suffer from an
overcrowding of their avocation, yet their chief desire is
that the competition of all who do not live exclusively by
the labor of their hands should be prohibited; for instance,
that of seamstresses who are paid for their work outside of
factories. (Edinb. Rev., 1851, 24.) In Paris, in 1845, the
yearly earnings of women workers averaged 375 francs, their
yearly wants 500 francs. (Journal des Economistes, X, 250.)
This does not apply to female servants whose wages,
especially in highly cultured localities as the vicinity of
large cities (Holstein, Brandenburg), is very high. In
England, the wages of female domestics is frequently higher
than in the United States; and hence nearly two-thirds of
all English girls between fifteen and twenty-five years of
age serve as maids. _Browning_, Political and Domestic
Condition of Great Britain, 413; _Carey_, Rate of Wages, 92.
A remarkable indication that women thrive only in the
family. (Compare § 250.)]
[Footnote 168-5: Thus, the darning of stockings in the sandy
parts of North Germany, in the Highlands of Scotland, in the
Faroe Islands, and formerly, even in the ante-rooms of the
Russian nobility. (_Schlözer_, Anfangsgründe der
Staatswirthsch, I, 126.) Flax spinning and linen weaving in
Westphalia and Ireland, and wool weaving in the East Indies.
Manufacturing industries must be in a very highly developed
condition, and machinery carried to a high degree of
perfection to compete in price with these accessory
industries. Cheapness of many products manufactured in
convents and monasteries.]
[Footnote 168-6: Among these interruptions, may also be
reckoned the prospect the laborer has of being early
incapacitated for work, and thus of seeing himself cut off
from every other source of support. This is one of the
principal reasons why opera singers are generally better
paid than actors.]
[Footnote 168-7: In Leipzig, in 1863, mason and carpenter
journeymen earned during the summer, from twenty silver
groschens to one thaler, ordinary garden workmen, 20 silver
groschens, while shoemaker journeymen did not make much more
than 3½ thalers a week, and manual laborers, only from 10
to 15 silver groschens a day. The masons of Paris have the
reputation of being the best patrons of the savings banks,
and, on that account, are more exposed to being attacked by
thieves than any other class. (_Frégier_, Des Classes
dangereuses, II, 3, 1.) High wages paid for threshing in
East Prussia, because, the workman during the winter can be
employed in very few different kinds of labor, and therefore
must earn his entire support by threshing. In Paris, of
101,000 persons engaged in industry in 1860, 6,400 had to
calculate on no interruption of their work, the remaining
number, however, lost with a certain degree of regularity,
from 2 to 4 months a year. (Revue des deux Mondes, 15 Fév.,
1865.) If the interruption can be so accurately estimated in
advance that the workman may engage in some business for
himself during the interval, as for instance when the
workmen in the Bavarian breweries work during the summer as
masons, its influence on wages decreases. (_Storch_,
Handbuch, I, 192.) As to how, in Switzerland, since 1850,
the guaranty of full employment to masons in winter is
considered as an addition to the wages of summer, see
_Böhmert_, Arbeiterverhältnisse, I, 141.]
[Footnote 168-8: _Commissionaires_, hack-drivers,
_Extraposthalter_ in Germany, porters, nurses, guides,
servants in watering places and countries visited by
tourists. A London porter gets at least a shilling an hour.
If employed by the day, he of course gets smaller wages.
Image venders, who travel from house to house, sell their
wares much lower at their own houses. The person who calls
them in from the street is obliged to pay them not only for
this one journey, but for several others which yielded them
no profit.]
[Footnote 168-9: If we call the minimum daily need or the
absolute requirement of the workman = m, the rate of daily
wages in the former case must amount to at least m + m/6; in
the latter, on the other hand, to m + m/4. A Bavarian
holiday estimated at a _minus_ of much more than 1,000,000
florins. (_Hermann_, II, Anfl., 192.)]
[Footnote 168-10: _Von Sonnenfels_, Polit. Abhandlungen,
1777, 332 ff.]
[Footnote 168-11: In a part of Lower Bavaria, in which there
were 204 holidays in a year, among them the anniversaries of
the consecration of 40 churches in the country about, and a
feast day following each such anniversary, as well as
target-shooting festivals, the celebration begins at 4
o'clock P. M. of the preceding day. (_Rau_, Lehrbuch, I, §
193.)]
SECTION CLXIX.
THE DISAGREEABLENESS OF CERTAIN CLASSES OF LABOR.--ITS EFFECT ON WAGES.
C. Lastly, the personal disagreeableness of the work, which must be
compensated for by higher wages. The uncleanness of a coal-worker's
task, that of the chimney-sweep, and the repulsive labor of the butcher,
demand high compensation, while other branches of business, themselves
productive of pleasure, and therefore engaged in by many for pleasure's
sake only, yield relatively little to those who engage in them as a
regular industry.[169-1]
To this category belong the kinds of labor which require extraordinary
effort,[169-2] or which put life or health in unusual jeopardy.[169-3]
But, indeed, when the danger attending any kind of work is made glorious
by the romantic light of honor, or by still higher motives, it ceases to
have any influence on wages.[169-4] On the other hand, the
disreputableness of a business in itself raises wages;[169-5] whereas,
scholars, poets, etc., leaving the charm inherent in their occupations
out of account, are for the most part remunerated only by the honor paid
them, and, not unfrequently, only by fame after they have gone
hence.[169-6] And yet their talents are so rare, the preparation so
laborious, the economic risk so great! Nor is there for the really
creative workman any such thing as evening rest. (_Riehl._) Common
intellectual labor is worse paid in our days than it was, comparatively
speaking, a generation ago; because the increased average education
makes it less burthensome to most people, and even seem positively
agreeable to many. It would, indeed, be a dangerous retrogressive step
towards barbarism, if it should come to such a pass, that labor
preponderantly intellectual should be permanently more poorly
remunerated than mere muscular labor.[169-7] [169-8]
[Footnote 169-1: Thus the chase, fishing in rivers (compare
_Theocrit._, Idyll., 21), gardening, fine female manual
labor, and literature.]
[Footnote 169-2: The high wages paid to mowers and threshers
may be accounted for on this ground (§ 160). In countries
that have a strong heavy soil, wages are frequently 20 per
cent. higher than under circumstances otherwise similar
where it is sandy or light. In Mexico, a digger gets about
twice the wages of an agricultural laborer. (_Senior_, On
the Value of Money, 56.)]
[Footnote 169-3: Almost every trade predisposes to some
special disease. Compare _Halfort_, Enstehung, Verlauf und
Behandlung der Krankheiten der Künstler und
Gewerbetreibenden, 1845. _Livy_, Traité d'Hygiène publique
et privée, 1850, II, 755. It has been noticed, in Sheffield,
that thoughtless steel polishers look unfavorably on certain
new inventions intended to protect workmen against inhaling
small particles of stone and iron dust. They dread that if
these inventions come into general use, their wages would be
lowered in consequence; and prefer a short and merry life to
one longer and more quiet.
In places in which nearly all kinds of work are dangerous,
the danger cannot of course relatively raise the wages of
anyone. Thus, in the Thuringian forest, the wages of the
haulers of wood are very low. (_Lotz_, Revision, III, 151.)]
[Footnote 169-4: Missionaries! Besides the extremely small
wages paid to common soldiers (in the German infantry only
36.5 thalers cash per annum, to which in Leipzig, for
instance, rations, etc., add about 34 thalers more) is an
outlay made by the government principally to effect a levy
of the tax of the compulsory labor that lies in
conscription. (_Knies._) In the volunteer system, the
difference between officers and men is wont to be much
smaller. Thus, _Gustav Wasa_ paid his German mercenaries as
follows: 6 marks a month to captains, five to lieutenants
and 4 to common soldiers. (_Geijer_, Schwed. Gesch., II, 125
seq.) Similarly in the case of the Greek hired troops.
(_Böckh_, Staatshaushalt der Athener, I, 165 ff.) As to how
little at the outbreak of a war, soldier earnest money is
increased, and positions as officers most sought after, see
_Hermann_, II, Aufl., 479.]
[Footnote 169-5: Thus, for instance, the skinning or flaying
of dead animals is comparatively well paid, to which the
rarity of the application of the work of executioners
contributes. (_J. Moser_, Patr. Ph., I, No. 34.) The high
wages of actors, singers, dancers, and especially of the
female members of the stage, depends principally on the
contempt with which they were formerly looked upon;
excommunicated by the Catholic church, and a scarcely milder
sentence passed upon them by the Protestant, until about the
middle of the eighteenth century. (_Schleiermacher_,
Christliche Sitte, 681.) Compare even _J. J. Rousseau_,
Lettre sur les Spectacles à Mr. d'Alembert sur son Article
Genève.]
[Footnote 169-6: _Schiller's_ "Theilung der Erde." _Blanqui_
says of the learned: "They are most frequently satisfied
with a citizen-crown, and think themselves remunerated when
justice has been done to their genius. Their magnanimity
impels them, to their own injury, to diffuse their knowledge
as rapidly as possible. Thus they are like the light of day
which no one pays for, but which all enjoy, without thanking
the giver as they ought." The reward of intellectual labor
is called an _honorarium_. (_Riehl_, Die Deutsche Arbeit,
1861, 232.) According to _J. B. Say_, Traité, II, ch. 7, the
poor wages of savants depends on the fact that they take to
market, and all at once, a great quantity of what they
produce, which cannot even be used up.]
[Footnote 169-7: In Switzerland, journeymen are often better
paid than the clerks kept by the greater tradesmen.
(_Böhmert_, Arbeiterverhältnisse, II, 168.) In England,
also, since 1850, the wages for "unskilled labor" has risen,
relatively, most. (_Tooke_, Hist. of Prices, VI, 177.) It
would be a frightful peril to our whole civilization if
school teachers and subordinate officials should be turned
into enemies of the entire existing state of things by
want.]
[Footnote 169-8: The high wages paid to engineers on
railroads is accounted for by the wear, physical and mental,
their employment entails, and also by their unavoidable
expenses away from home; further, by the importance of the
interests confided to their trust. On the Leipzig-Dresden
Railway, locomotive engineers, for the most part previously
journeymen blacksmiths, earned 900 thalers a year.
Similarly, in the case of pilots. The high wages paid on
board ships engaged in the slave-trade arose from the
unhealthiness of the African coast, where formerly
one-sixteenth of the crew died yearly (Edinburg Rev., 480),
from the moral turpitude of the business, and from the
severe penalties under which it was afterwards prohibited.
On the other hand, the low wages paid to European mining
laborers is largely the consequence of the certainty of
being cared for in old age, of those so employed. Weavers'
wages are low because the facility of learning the trade
makes it possible for the business to be carried on at home;
and hence there is a comparatively great pressure to engage
in it. (_Baines_, History of the Cotton Manufacture, 485
ff.)
According to the first annual report of the poor law
commissioners (202), the weekly wages in Manchester of
hod-carriers was 12s.; of hand-weavers, 7-15s.; of diggers,
10-15s.,; of pack-carriers, 14-15s.; of shoemakers, 15-16s.;
of machine-weavers, 13-16-5/6s.; of white-washers, 18s.; of
tailors, 18s.; of dyers, 15-20s.; of plasterers, 19-21s.; of
masons, 18-22s.; of tinsmiths, 22-24s.; of carpenters, 24s.;
of spinners, 20-25s.; of machinists, 26-30s.; of iron
founders and power-loom tenders, 28-30s. In Belgium, the
average daily wages for male labor was 1.18 francs for
agricultural laborers; for those engaged in industry, 1.48
francs; in the manufacture of linen, 0.80 francs; of cotton,
1.55; of woolens, 1.62; of silk, 1.25; of stockings, 1.14;
of glass, 2.58; of coal, 1.33. All according to the
Statistique générale de la B. In Athens, in the time of
Aristophanes, a pack-carrier earned 4 oboli a day; a street
sweeper, 3; a stone cutter on the public works, 6; a
carpenter, 5; for roofing houses and taking down
scaffoldings, each man, 6. The architects who superintended
the building of the temple of Polias, on the other hand, got
only 6 oboli per day, and the contractor 5. (_Böckh_, I, 165
ff.)
The Edictum Diocletiani of the year 301 after Christ
contains the following provisions in relation to wages,
besides "board:" shepherds, camel-drivers and muleteers, 20
denarii; agricultural laborers, water-carriers, scavengers,
25; bakers, masons, roofers, house-finishers and repairers
of the inside, lime burners, wheelwrights and common clay
moulders, 50; boatsmen, sailors, makers of marble or mosaic
floors, 60; wall painters, 70; clay moulders for statues,
75; artistic painters, 150. (ed. _Mommsen_, cap. 7.) In
slave countries, the price of different slaves is to be
judged, mainly, by the above rules. Concerning the Greeks,
see _Böckh_, I, 95 ff. _St. John_, The Hellenes, III, 23 ff.
It is a characteristic fact that the Romans, after the
Syrian war, began to pay high prices for the hitherto much
despised kitchen slaves. (_Livy_, XXXIX, 6.) Remarkable
fixed prices for slaves by _Justinian_: Cod. VI, 43, 3; VII,
7, 1, 5. Thus, in the Lex Burgundionum, tit. 10, the
compensation for the murder of a common laborer is fixed at
30 solidi; of a carpenter, at 40; of a smith, at 50; of a
silversmith, at 100; of a goldsmith, at 150. Advanced
civilization is wont to raise the price of slaves who
perform work of a higher quality, just as it raises the
wages of labor of a higher quality.]
SECTION CLXX.
RATE OF WAGES.--INFLUENCE OF CUSTOM.
Custom always exerts a great influence where there is question of
choosing an avocation with the intention of devoting one's self to it
entirely and exclusively. There is a public opinion which fixes the
gradation of the different classes of labor and their appropriate
reward, which is slow to change, and which both determines, and is
determined by the relation of supply and demand. There is an equilibrium
between the pleasantness of work and the rate of wages only in the case
of such kinds of labor as are on the same social footing. It frequently
happens, however, that the most repulsive work has to be performed by
those who are forced to accept any pay and to be satisfied with
it.[170-1] There are many branches of labor those engaged in which still
form a kind of exclusive caste; and the pay of the higher branches is
maintained at a high rate, especially by the fact that the members of
the castes to which they belong are provident in their marriages. The
lower classes are not in a condition to meet the preparation necessary
to engage in such professions, even if they were certain of being
afterwards reimbursed with interest for the outlay.[170-2] One of the
chief causes of the lowness of wages paid to women is, that so few
branches of labor are traditionally open to them, that the few that are,
are intended to supply luxuries, and are, besides, for the most part,
over-crowded. The distribution of the aggregate wages earned by any
industry, among the higher and lower classes of workmen who coöperate in
it, depends very largely on their social position relatively to one
another.[170-3] [170-4] Here political forms and changes may exert the
greatest influence.[170-5]
Thus, the artificial increase of the wages of masters effected by the
former guild-system was produced, to say the least, as much at the cost
of the journeymen and apprentices as of the public. And if, on the other
hand, it cannot be said that the most recent marked rise in wages, in so
many countries, is merely the consequence of the extension of the
parliamentary right of suffrage, certain it is that the two phenomena
are very closely related, and that both are at once the effect and the
cause of the intensified feeling of individuality and of the
consciousness of constituting a class in the community of the lower
strata of society.
[Footnote 170-1: At least where the supply of labor in
general surpasses the demand. Compare _J. S. Mill_,
Principles, II, ch. 14, 3d ed. The dangerous industries in
which lead, quicksilver, arsenic, etc. are manipulated or
employed, should be and can be better paid than they
actually are. In the Bavarian Palatinate, stone-cutters
rarely reach their 45th year; and yet their wages are very
low, because of the comparative over-population of the
country. (_Rau_, _Haussen's_ Archiv., N. T. X., 228.) But
the lowness of wages here is certainly and mainly caused by
the little thought the workmen themselves give to
considerations of health.]
[Footnote 170-2: The lower the rate of wages of any class
sinks, the more difficult it becomes for parents to devote
their children to another career.]
[Footnote 170-3: In Paris, 24,463 workmen with less than 3
francs daily; 157,216, with from 3 to 5; 10,393, with from 5
to 20 and even 3 to 5 francs. It is remarkable, however, how
uniform the average wages in the different trades is:
_vêtements_, 3.33 francs; _fils et tissus_, 3.42;
_boisellerie_, _vannerie_, 3.44; _garçons boulangers_,
_bouchers_ 3.50; _arts chimiques et céramiques_ 3.71;
_bâtiments_, 3.81; _carosserie_, 3.86; _peaux et cuirs_,
3.87; _ameublement_, 3.90; _articles de Paris_, 3.94;
_métaux communs,_ 3.98; _métaux précieux_, 4.17;
_imprimerie_, 4.18. (Journal des Economistes, Janv. 1853,
111.)]
[Footnote 170-4: How the Roman advocates were given to all
sorts of ostentation, and even borrowed costly rings in
order to raise their _honoraria_, see _Juvenal_, VII, 105,
ff.]
[Footnote 170-5: The salaries paid to the employees in the
office of the minister of finance in France and the United
States were as follows: to the porter, 1,500 and 3,734
francs; the lowest clerk, 1,000 to 1,800, and 5,420 francs;
to the head clerk, 3,200 to 3,600, and 8,672 francs; the
secretary general, 20,000 and 10,840 francs; to the
minister, 80,000 and 32,520 francs. (_Tocqueville_,
Démocratie aux États-Unis, II, 74.) In the treasury
department, at Washington, of 158 employees, only 6 received
less than $1,000 salary, but only 2 over $2,000. (_M.
Chevalier_, Lettres sur l'Amérique du Nord, II, 151, 456.)
Compare _Büsch_, Geldumlauf, IV, 34. In Russia, the wages of
the higher classes of laborers as compared with those paid
the commoner class is much higher than in Germany.
(_Kosegarten_, in _Haxthausen_, Studien, III, 583.) On the
other hand, in England, since 1850, the rate of wages for
unskilled labor has risen relatively more than any other.
(_Tooke_, Hist. of Prices, VI, 177.)]
SECTION CLXXI.
HISTORY OF THE WAGES OF COMMON LABOR.--IN THE LOWER STAGES OF
CIVILIZATION.
In very low stages of civilization, where there is scarcely any such
thing as rent, and where capital is extremely rare, the wages of labor,
notwithstanding its small amount absolutely speaking, must eat up the
greatest part of the product.[171-1] With every further advance, the
condition of the laboring class is modified, according as the natural
decline in this relative amount of their wages is outweighed or
counterbalanced, or neither outweighed nor counterbalanced, by the
increase in the aggregate product; in other words, in the national
income in general as compared with the number of workmen.
[Footnote 171-1: _Adam Smith_, Wealth of Nat., I, ch. 8.
Thus in the case of nations of hunters. The wages of free
laborers in Russia, at the beginning of this century, were
so high that mowers, in the vicinity of Moscow, received a
good half of the corn mowed by them, (_von Schlözer_,
Aufangsgründe, I, 65.) As a rule, the natural relation of
the three branches of income is here postponed by the
intervention of slavery. (§ 76, 155.) But, for instance,
since the negroes have been emancipated, in the southern
states of the American Union, it has become necessary to
promise them one-half of the cotton crop as wages, and for
the employer to run all the risk of a bad harvest. (_R.
Somers_, The Southern States since the War, 1871.) On the
wretched pay of domestic servants in the middle ages, see
_Grimm_, D. Rechtsalterth., 357.]
SECTION CLXXII.
HISTORY OF THE WAGES OF COMMON LABOR.--IN FLOURISHING TIMES.
When, where a nation's economy[172-1] is growing and flourishing,
capital increases more rapidly than population, there is a search for
employment by capital still greater than the search for employment by
labor. The consequence is, of course, a decline in the rate of interest,
and a rise in the rate of the wages of labor, although the latter may be
compelled to surrender a part of its increase to rent, which also rises.
If simultaneously with these phenomena, there have been great advances
made in national productive skill, especially in the cultivation of
land; if, therefore, labor and the capital consumed have become more
prolific, the condition of the laboring class is improved in a two-fold
manner; the condition of capitalists needs, to say the least, grow no
worse, and the increase of rent paid to landowners may be
avoided.[172-2]
This favorable development is most striking in the colonies of rich and
highly civilized parent countries, where the labor, capital and social
customs of an old and ripe civilization are found together with the
overflowing natural forces inherent in a virgin soil, engaged in the
work of economic production. Here the growth of national wealth is most
rapid; and the rate of wages is here wont to be highest.[172-3] With the
high rate of interest that obtains where capital is rapidly saved, and
with the low price of land, it is not a matter of difficulty for good
workmen to enter into the ranks of landowners and capitalists. In North
America, and especially in the western part,[172-4] it is very
frequently in the normal course of economic development for young people
to begin to work on wages, then to work on their own account, and
finally to become themselves employers of labor.
[Footnote 172-1: Compare _Hermann_, Staatswirths. Unters.,
241 ff.; _J. S. Mill_, Principles, ch. 3. As to how _Carey_
confounds the rise and fall of the productiveness of labor
with the rise and fall of wages, see _J. S. Mill's_ views in
_Lange_, 1866, 218 ff.]
[Footnote 172-2: In England, wages from 1400 to 1420,
estimated in produce, were much higher than from 1500 to
1533. (Statist. Journal, 1861, 544 ff.) Later, a quarter of
wheat was earned by day labor as follows: under Elizabeth,
in about 48 days; during the seventeenth century, in 43
days; between 1700 and 1766, in 32 days; between 1815 and
1848, in from 19 to at most 28¾ days. (_Hildebrand_, Nat.
Oek. der Gegenwart und Zukunft.) Since 1860, it has been
earned in about 14 days. About 1668, the wages paid to
English laborers and servants was one-third higher than
twenty years before. (_Sir J. Child_, Discourse on Trade, p.
43 of the French translation.) _D. Defoe_, Giving Alms no
Charity, 1704, draws a much more favorable picture of the
time next succeeding. _Adam Smith_, Wealth of Nat., I, ch.
8, shows how money-wages, in the eighteenth century, were
higher and the price of corn lower than in the seventeenth
century. Between 1737 and 1797, wages in most parts of
England, except in the immediate neighborhood of the great
cities, doubled. (_Eden_, I, 385.) In Scotland, about the
year 1817, the wages of married farm servants, expressed in
corn, were about 60 per cent. higher than in 1792.
(_Sinclair_, Grundgesetze des Ackerbaues, 105.)
_Boisguillebert_, Traité des Grains, I, 2, estimates the
wages in France, for agricultural laborers, at least from 7
to 8 sous, of present money, and at twice that amount in
harvest time. In 1697, laborers in Paris received from 40 to
50 sous. (Détail de la France, I, ch. 1, ch. 7.) _Vauban_
estimates wages in large cities at 22½-45 sous; for
country manual laborers, at 18 sous; for agricultural
laborers, 12-13-1/5 sous. (Project d'une Dime royale, 89
Daire.) On the other hand, _Chaptal_, De l'Industrie, Fr. I,
245, 1819, speaks of an average wage--25 sous. _Dureau de la
Malle_, Economie polit. des Romains, I, 151, allows
agricultural laborers, in 80 departments of France, only
20-25 sous. According to _Moreau de Joannés_, Journal des
Econ., Oct. 1850, the average wages of a French agricultural
family amounted per annum, in 1700, to 135 francs; in 1760,
to 126; in 1788, to 161; in 1813, to 400; in 1840, to 500
francs. While _A. Young_, Travels in France, 1787-89, speaks
of wages of 20 sous a day; _Peuchet_, Statist. élémentaire,
1805, 361, assumes it to be 30 sous, although the price of
corn was not much higher. Compare _Birkbeck_, Agricultural
Tour of France, 13, who is of opinion even, that French
laborers are better situated than the English (?). From 1830
to 1848, wages decreased about 30 per cent. (_L. Faucher_,
Revue des deux Mondes, Avril, 1848.) _Levasseur_, Histoire
des Classes ouvrières en France, II, 1858.
General data for whole countries are obviously very
doubtful. In Germany, for instance, economically active
places have witnessed an undoubted elevation of the
condition of the laboring classes. Thus, in Hamburg and
Lower Saxony, about the end of the eighteenth century
(_Büsch_, Geldumlauf, II, 56 ff.); while in Thuringia, in
1556, a _sümmer_ of rye was earned by 7 summer days' labor,
and in 1830 ff. by 8. (_Lotz_, Handbuch, I, 404.) In Hessen,
also, there has been but a very small increase in wages.
_(Hildebrand,_ Nat. Oek., I, 190.) According to _von der
Goltz_, Ländliche Arbeiterfrage, 1872, 84 seq., wages in the
country during the last twenty or thirty years have
increased on an average, 50 per cent. at least; in Bavaria
about 100 per cent.; in the Rhine province, male wages,
about 100; female wages, from about 75 to 100 per cent. The
masterly investigations of the wages of typesetters in Jena
and Halle by _Strasburger_ in _Hildebrand's_ Jahrb., 1872, I
ff., show that from 1717 to 1848, there was scarcely any
change in them. A million m's was paid for in 1717-40 with
26.93 Prussian _sheffels_ of rye; 1804-47 with from 24.80 to
28.80. Since then, a remarkable rise; so that in 1871, up to
November, 76.26 was reached. The prices of food, dwellings,
fuel, clothing, such as is in demand by such laborers, rose
between 1850 and 1860, 16.7 per cent., and the wages for
1,000 m's in the same period of time rose about 14.3 and
43.7 per cent. In the industrious manufacturing vicinity of
Moscow, wages in 1815 were four times as high as in 1670,
while the means of subsistence rose relatively much less.
(_Storch_, I, 203.)]
[Footnote 172-3: In the United States, the wages of
carpenters and masons, about the end of the last century,
were $0.62 and $0.75; in 1835, of the former from $1.12 to
$1.25, and for the latter from $1.37 to $1.50. In 1848, the
general wage was $0.75. The price of corn, in the meantime,
did not rise, and the price of manufactured articles was
much smaller. (_Carey_, Rate of Wages, 26 seq.; Past,
Present and Future, 154.) In New York, as far back as 1790,
wages were much higher (_Ebeling_, Geschichte und
Erdbeschreibung von Nordamerika, II, 917); and between 40
and 50 years ago, a journeyman mason might earn over 700
thalers per annum. Agricultural laborers, in 1835, got $9 a
month and their board, valued at $65 for the whole year. In
the vicinity of large cities, both were higher. (_Carey_,
91.) The condition of the factory hands, in Lowell, is a
very good one. In 1839, more than 100 of them had over
$1,000 each in the savings banks, and pianos at their mess
places. (_Boz_, Notes on America, 1842.) Most of them could
save $1.50 a week. _Colton_, in his Public Economy (1849),
says that a workman would consider himself in a bad way if
he could not save half of his wages. Compare _Chevalier_,
Lettres sur l'Amérique, II, 174, 122, 19; I, 221 ff.
Apprentices in the United States, in almost every instance,
begin to be paid wages as soon as their work begins to prove
useful. The work of half-grown children, who had not yet
left the parental roof, was so well paid that it was
estimated that a child earned for his parents, on the whole,
£100 more than he cost them. What an incentive to marriage!
(_Adam Smith_, Wealth of Nat., I, ch. 8.) In Canada,
agricultural laborers earn between £24 and £30 per annum and
their board. In and around Melbourne, agricultural laborers
got from 15 to 20 shillings a week and lodging; herdsmen,
£35 to £40 a year; girls, from £20 to £45 (Statist. Journal,
1872, 387 ff.); female cooks, from £35 to £40; male cooks,
from £52 to £156. In hotels, girls, from £30 to £35; female
cooks, from £50 to £100; domestic servants, £39 to £52;
carpenters, masons, etc., 10 shillings a day; the best
tailors, from 60 to 75 shillings a week; shoemakers, from 40
to 55 shillings; bakers, from 40 to 60 shillings a week.
(Statist. Journal, 1871, 396 seq.) In San Francisco, a short
time since, servant girls got $25 a month; Chinese, $1 a
day; common laborers, $2; skilled artisans, from $3 to $5.
(_Whymper_, Alaska, 299, 326.) The wages of a European
tradesman, in Rio Janeiro, was from I to 2 Spanish piasters
a day. (_Martius_, Reise, I, 131.) In the English West
Indies, a new-born negro was formerly worth £5. (_B.
Edwards_, History of the West Indies, II, 128.) The high
wages paid in young colonies are frequently made temporarily
still higher, by a large influx of capital in the shape of
money, brought by emigrants, and by government outlays.
Thus, in Van Diemen's land, for instance, in 1824,
carpenters, masons, etc. got 12 shillings a day; in 1830,
10; in 1838, only from 6 to 7, although between 1830 and
1838, the export trade of the island trebled while the
population scarcely doubled. (_Merivale_, On Colonies, II,
225.)]
[Footnote 172-4: As to how many workmen in the eastern part
of North America buy land in the west, and so threaten their
employers with immediate emigration, see _Brentano_,
Arbeitergilden, II, 131. However, in Massachusetts, women's
wages are in many instances so low that, considering the
dearness of the means of subsistence, it is almost
impossible to understand how they exist. (Statist. Journal,
1872, 236 ff.)]
SECTION CLXXIII.
HISTORY OF THE WAGES OF COMMON LABOR.--IN FLOURISHING NATIONS.
A permanently[173-1] high rate of wages[173-2] is, both as cause and
effect, very intimately connected with a flourishing condition of
national life. It proves on the one hand, great productiveness of the
public economy of the people generally: prudence, self-respect and
self-control, even of the lowest classes, virtues, which, however, are
found, on the whole, only where political liberty exists, and where the
lowest classes are rightly valued by the higher.[173-3] On the other
hand, it produces a condition of the great majority of that portion of
the population who have to support themselves on the wages they receive,
worthy of human beings, a condition in which they can educate their
children, enjoy the present and provide for the future. Equality before
the law and participation in the affairs of government are empty
phrases, and even tend to inflame the passions, where the rate of wages
is not high. When the lower classes are dissatisfied, in highly
civilized countries, with the sensitiveness and mobility of the whole
national life, there can be no certainty of the freedom of the middle
classes or of the rule of the upper. Here, in other respects, also, the
philanthropy of employers harmonizes remarkably well with their
reasonable self-interest. According to § 40, only the well-paid workman
can accomplish anything really good, just as, conversely, only the good
workman is on the whole, and in the long run, well paid. This suggests
the physiological law, that where muscular activity is great, nutrition
must be great, likewise; and the rapid waste and repair of tissues
strengthens the muscles and gives tone to the whole physical life. With
a correct insight into the relations of things, antiquity described its
greatest worker, Herakles, as a great eater also. A well-paid workman,
who costs and accomplishes as much in a day as two bad ones, is cheaper
than they. He works much more cheerfully and faithfully, is, hence, more
easily superintended, is less frequently sick, and later
decrepid.[173-4] His childhood costs less, and his burial is not so
expensive. In cases of need, he can more easily bear the weight of
taxation or a temporary lowering of wages.[173-5] We might say of the
granting of holidays and of evening leisure something similar to what we
have said of the rate of wages. They are indispensable requisites to the
development of a desirable individuality in the working classes; and
when used for that purpose are certainly no detriment to the product of
labor or to employers.[173-6] [173-7]
In consideration of all the blessings attending a high rate of wages, we
may well be induced to put up with a certain and frequently inconvenient
external defiance of the lower classes which is wont to accompany
it.[173-8] It teaches the upper classes many a moral lesson, and is
surely a lesser sin in the lower, than the cowardly, malicious crimes of
the oppressed. When wages are so low that they have to be supplemented
by begging or public charity, the effect on morality is the same as when
government officials, who cannot live on their salaries, resort to
bribery or embezzlement.[173-9] [173-10]
[Footnote 173-1: A merely momentary rise in wages might be
the result of a great calamity, destructive of human life,
and might seduce workmen not intellectually prepared for it
into idleness. Compare _von Taube_, Beschreib. von Slavonien
etc., II, § 4.]
[Footnote 173-2: On the necessity of _free_ wages, that is
of an excess over and above the costs of support and of
maintaining one's position, see _Roesler_, Grandsätze, 394.]
[Footnote 173-3: _Dans aucune histoire on ne rencontre un
seul trait, qui prouve que l'aisance du peuple par le
travail a nui à son obéissance, (Forbonnais.)_ This is true
only of well governed countries. When, in England, about the
middle of the eighteenth century, a great improvement took
place in the condition of the laboring classes,
_Postlethwayt_ (Great Britain's commercial Interests, 1759)
was one of the first to recognize its general beneficial
character; also _Th. Mortimer_. (Elements of Commerce,
Politics and Finance, 1774, 82 ff.) _Benjamin Franklin_,
before the American revolution, was of opinion that high
wages made people lazy. (On the Price of Corn, 1776. On the
laboring Poor, 1768.) He afterwards, however, acknowledged
its generally good effect, and that even the products of
labor might be cheapened thereby. (On the Augmentation of
Wages, which will be occasioned in Europe by the American
Revolution. Works II, 435 ff.) See further, _Paoletti_, Veri
Mezzi di render felici le Società, ch. 15; _Ricardo_,
Principles, ch. 5; _Th. Brassey_, on Work and Wages, 1872.
_Umpfenbach_, Nat. Oek, 181, calls the costliness of labor to
the purchaser of labor, "givers' wages," their purchasing
power to the laborer himself, "receivers' wages," and is of
opinion, that as civilization advances, the former declines
and the latter rises.]
[Footnote 173-4: When in the department of the Tarn flesh
food was introduced among journeymen smiths instead of mere
vegetable diet, the sanitary improvement that followed was
so great that the number of days lost by sickness in a year
decreased from 15 to 3. (_Moleschott_.)]
[Footnote 173-5: In high stages of civilization, it is
always more profitable, the result being the same, to keep a
few well fed cattle than many poorly fed. (_Roscher_,
Nationalök. d. Ackerbaues, § 179.) _Infra_, § 231. When the
drainage of Oxford street in London was made while wages
were rising, it happened that the cubic foot of masonry work
at 10 shillings per day was cheaper than it was formerly at
6 shillings per day. (_Brassey_, 68 ff.) _Senior_ calls it
an absurdity to consider the high wages paid in England as
an obstacle in the way of its successful competition with
other countries. Rather would he consider it as the
necessary result of the excellence of English labor. Thus,
in his Lectures on the mercantile Theory of Wealth, p. 76,
he says that if the English employ a part of their labor
injudiciously, they must pay it not in proportion to what it
really accomplishes, but to what it might do if well
employed. If a man calls in a doctor to cut his hair, he
must pay him as a doctor. If he puts a man to throwing silk
who might earn 3 ounces of silver a week spinning cotton, he
must pay him weekly 3 ounces of silver, although he may
deliver no more silk within that time than an Italian who
gets only 1½ ounces.]
[Footnote 173-6: Norfolk country workmen never worked more
than 10 hours a day except in harvest and seed time. But a
plowman there accomplished as much in 5 days as another in
8. (_Marshall_, Rural Economy of N., 138.) In southwestern
Germany, the country working day is from 2 to 4 hours
shorter than in the northeast, and yet just as much is
accomplished in the former quarter. (_von der Goltz_, Ländl.
Arbeiterfrage, 88, 131.) Thus the coal diggers of South
Wales work 12 hours a day, those of Northumberland, 7; and
yet the same achievement is 25 per cent. dearer in case of
the former. In the construction of the Paris-Rouen Railroad,
the English achieved more than the French, although the
former worked from 6 A. M. to 5:30 P. M., and the latter
from 5 A. M. to 7 P. M. (_Brassey_, 144 ff.) Examples from
English manufactories in _Marx_, Kapital, I, 401 seq. In an
English factory the hours worked were 12, and afterwards,
11. This caused the number of attendants of the evening
school to grow from 27 to 98. (_Horner._) _Dollfuss_, in
Mühlhausen, reduced the number of hours worked from 12 to
11, and let the wages remain the same as before. The result
was besides a great saving made in fuel and light, a surplus
product of at least 1-2/3 per cent. Something similar
observed by _M. Chevalier_, Cours, I, 151.
Hence _J. Möser_, Patr. Ph., III, 40, desired, on this
account, that work in the evening should be prohibited by
law. In England, not only the moral necessity, but also the
economic general utility of leisure time of workmen has been
defended, among others by _Postlethwayt_, Dictionary of
Trade and Commerce, I, prelim. Discourse, 1751. A beautiful
law, V Moses 24, 15. Only, care must be taken not to go to
the other extreme, which is still more detrimental to
personality. The North American ideal of 8 hours a day for
work, 8 for eating, sleeping, etc., and 8 for leisure, would
be injurious except to workmen intellectually very active.
But the provision to be met with in many states of the Union
and in the arsenal employ of the government, that in case of
doubt, the work day is to be tacitly assumed as of 8 hours,
has, it is said, correspondingly lowered wages. See _supra_,
§ 168.]
[Footnote 173-7: In India, where the institution of caste is
found, nearly half the year is made up of feast days, while
in rationalistic China there is no Sunday and very few
general holidays. (_Klemm_, A. Kulturgeschicht. VI, 425.
_Wray_, The practical Sugar Planter, 1849.) The
Judaic-Christian sanctification of the seventh day is a
happy medium between these two extremes. Recuperation and
collectedness get their due without its costing too much to
action. _Ora et labora!_ Compare _Sismondi_, N. P. II, ch.
5. Which is best, traveling on foot, to drag along all the
time, or to walk decently and rest properly between times?
The rest of Sunday, even leaving the work of recuperation
and edification out of account, is necessary in the
interests of the family and of cleanliness. The French
_decadis_ accomplished materially even too little: _ils ont
à faire à deux ennemis, qui ne cèderont pas, la barbe et la
chemise blanche_. (_B. Constant._) Hence, an English prize
essay on the material advantages of Sunday found 1,045
competitors among English working men. (Tübinger Zeitschr.,
1851, 363.)]
[Footnote 173-8: Thus _Parkinson_, A Tour in America,
complains that with four servants in the house, he was
obliged to polish his own shoes, and with his wife and
children to milk the cows, while his people were still
asleep. Strange servants bringing a message, come in with
their hats on. All domestics are called mister or misses.
Servant maids are called "helps," and their masters,
"employers." If a person at a hotel asks for a laundress, he
is answered: "Yes, man, I will get a lady to wash your
clothes." Similarly in _Fowler_, Lights and Shadows,...
three Years' Experience in Australia. But, at the same time,
it is remarkable how seldom a native born white American
accepts a fee. On the other hand, Russia is the classic land
of fees. There is a popular story in that country to the
effect that when God divided the earth among the different
nations, they were all satisfied except the Russians, who
begged a little drink-money or fee in addition, (_von
Haxthausen_, Studien, I, 70.) Similarly in Egypt. (_Ebers_,
Durch Gosen zum Sinai, 1873, 31 seq.) The system of feeing
servants holds a middle place between the modern system of
paying for everything lawfully and the medieval system in
which people either rob, donate or beg.]
[Footnote 173-9: Compare _Garve_ in _Macfarlan_, 90. The
wages of English wool workers in 1831 amounted to:
_Tax per capita of the_
_population for_
_In_ _support of the poor._
Leeds, 22---22½s. 5s. 7d.
Gloucester, 13---15¼s. 8s. 8d.
Somerset, 16¾--19¾s. 8s. 9d.
Wilts, 13-7/12--15-5/12s. 16s. 6d.
_Ure_, Philosophy of Manufactures, 476. After an
enthusiastic eulogy of high wages, _McCulloch_ remarks
especially that the English poor rates cost more than if the
laborers were obliged to provide for themselves by getting
higher wages. (Principles, III, 7.) Sad results of the
system which came into vogue in the South of England in
1795, to supplement wages according to the price of corn and
the number of children. Previously the laboring classes
married only after the age of 25 and even at 35, and not
until they had saved from £40 to £50. After the above
mentioned system was adopted, even minors married. (Edinburg
Review, LIII, 4, 7.)]
[Footnote 173-10: _Von Thünen_, Isolirte Staat., II, 1, 154,
gives the following formula as the expression of ideal
wages: sqrt(ap), in which a = the necessary requirement for
maintenance of the workmen, and p = the aggregate product of
his labor. _von Thünen_ attached so much importance to this
formula that he had it engraved on his tomb-stone. But even
if it were possible to reduce capital-generating labor and
wage-labor to a common denominator, it would not be possible
nor equitable to maintain the same dividing measure when
capital and labor contributed in very different amounts to
the production of the common product. An artist, for
instance, who could make costly vessels out of very cheap
clay and with cheap fuel would get too little by _von
Thünen's_ law; a mechanic who used a very efficient and
costly machine, too much. The fundamental defect in his
theory, _von Thünen_ himself seems to have obscurely felt.
Compare the letter in his Lebensbeschreibung, 1868, 239 and
_Roscher_, Geschichte der Nat. Oek., in Deutschland, 895 ff.]
SECTION CLXXIV.
HISTORY OF THE WAGES OF COMMON LABOR.--IN DECLINING COUNTRIES AND TIMES.
When, circumstances being otherwise unaltered, the aggregate income of a
nation decreases, the wages of labor are wont to be lower in proportion
as the points above mentioned, and which are unfavorable to the laborer
in his competition, appear.[174-1] The worse distribution, also, of the
national resources, when, instead of a numerous middle class, a few
over-rich people monopolize all that is to be possessed, diminishes the
wages of common labor and thus again produces a worse distribution than
before.[174-2] In a similar way, wages must decline when the mode of
life of the laboring class, or the quality of their work, has
deteriorated. Some of these causes may exist transitorily even among
otherwise flourishing nations; as, for instance, in war times,[174-3] or
when population for a while grows more rapidly than national wealth. But
among nations universally declining, they are all wont to meet, and one
strengthens the other.[174-4] One of the saddest symptoms of such a
condition is the low value here put upon the life and strength of
workmen. The cheapness of labor has indeed a charm for enterprising
spirits, which induces them to employ human labor even where machinery,
beasts, etc., would economically be better adapted to the performance of
the work.[174-5] Day-laborers are, on this account, more profitable to
persons of enterprise (_Unternehmer_=_undertaker_) because they can more
easily rid themselves of them. But such egotistic calculation should
have no place even in the case of actual slaves.[174-6]
Besides, it not unfrequently happens, that the laboring class seek to
oppose the decline of wages by increasing their industry, shortening
their holidays and leisure, and by drawing their wives and children into
their work. This may, under certain circumstances, result in an increase
of the national income, and thus constitute a transition to the
restoration of high wages, especially if beforehand there was reason to
complain of the idleness of the working class. But if the other
circumstances of competition are unfavorable to the working class, if
especially they used their personally increased income to add to the
population, it would not be long before they fell back to their previous
state. In such case, the consequence is, that the same quantity of labor
has become cheaper; that all permanent profit falls to the capitalists
and landowners, and all that remains to the laboring class is only
greater toil, a sadder home-life, and sadder children. The danger of
such an issue is all the greater, because few things so much contribute
to reckless marriages and the thoughtless procreation of children, as
the industrial coöperation of wife and child.[174-7] [174-8]
[Footnote 174-1: Hence _Adam Smith_ says that it is not the
richest countries in which wages are highest, but those
which are becoming rich most rapidly.]
[Footnote 174-2: The classic lands of low wages and
pauperism are especially the East Indies and China. A
minister of Kienlong was punished after he had extorted
about 20,000,000 thalers. (_Barrow_, II, 149.) In the
confiscation of the well known _Keschen_, the authorities,
according to their own accounts, found 682 pounds of gold
and more than 6,000,000 pounds in silver. Considering the
colossal banquets of the rich, embracing several hundred
courses, of which _Meyen_, Reise um die Erde, II, 390,
describes an example, the wretched food of the poor is
doubly striking. Count _Görtz_ relates that in Canton, rats
and serpents are regularly exposed for sale. (Reise, 445.)
The lowness of wages appears from the fact--one of
many--that servants frequently get nothing but their board.
(_Haussmann_, Voyage en Chine, etc.) In the cities,
tradesmen with their tools run hither and thither about the
streets begging for employment in the most imploring manner.
Thousands live all their lives on rafts. Numberless
instances of infanticide from want of food, (§ 251.) The
influence of these circumstances on the morality of the
people is best illustrated by the fact that _Keschen_, when
he was ambassador to Thibet, preferred to confide his newly
collected treasures to the escort of the French missionaries
he persecuted rather than to the mandarins named by himself,
so much more highly did he estimate European than Chinese
honesty. (Edinburg Rev., 1851, 425 ff.) In the Chinese
picture-writing, the word happiness was designated by a
mouth well corked with rice. Chinese statisticians speak of
mouths (_Maul_) where ours treat of the number of heads or
souls. _Ritter_, Erdkunde, II, 1060. More favorable accounts
in _Plath_, Münch. Akad., 1873, 784, 788 seq.
In the East Indies, a great many of the rejected castes live
on carrion, dead fish, noxious insects, and even the middle
class find wheat flour too dear, and therefore mix it with
peas, etc. (_Ritter_, VI, 1143.) It is said that Bengal, in
the famine of 1770, lost more than one-third of its
inhabitants. (_Mill_, History of British India, III, 432.)
Eloquent description of misery in _Rickard_, India, or Facts
submitted to illustrate the Character and Condition of the
native Inhabitants, II, London, 1832. An immense number of
badly paid servants of whom it may however be said that each
one accomplishes very little. The Pindaries may pass for an
extreme of Indian pauperism, corresponding to the
pirate-calamity during the later Roman Republic. (Quarterly
Review, XVIII, 466 ff.; _Ritter_, VI, 394 ff.)]
[Footnote 174-3: Thus, in England, during the last great
war, wages rose less than the price of corn, and sank less
after it. About 1810, wages were nearly 100 per cent. higher
than in 1767; but, on the other hand, the price of wheat,
115; of meat, 146; of butter, 130, and of cheese, 153 per
cent. (Edinburg Rev., XL., 28.) If it has some times been
observed that crime, communistic machinations and
revolutionary movements grow less frequent in times of war,
the fact is not to be ascribed necessarily to a better
condition of the laboring class. It might possibly be the
consequence of the strongest and wildest elements of the
laboring class finding some other career.]
[Footnote 174-4: _Adam Smith_, loc. cit., on this point
describes China as a stationary country (according to _R.
Fortune_, Wanderings in China, 1847, 9, a decided decline
has been noticeable there for a long time), and Bengal as a
declining one. On the condition of wages among the Romans,
_Juvenal_, III, 21 ff., is one of the principal sources.
Hence the desire to emigrate because honest labor had no
longer any foothold (23 ff.). Poor dwellings of the laboring
class, dark, exposed to danger from fire (166, 190 ff.,
225), and yet comparatively dear (223 seq.). Numerous crowds
of robbers and beggars (302 ff.; IV, 116 ff.; V, 8; XIV,
134). On beggary, see _Seneca_, Controv., V, 33. De
Element., II, 6. De Vita beata, 25 ff. _Martial_, V, 81,
XIV, 1, complains of the absence of outlook among the poorer
classes. _Horace_, too, is rich in passages which might be
appropriately cited in this connection. Characteristic
question of the nabobs, in _Petron._, 48, 5: What on earth
is that thing called a pauper?]
[Footnote 174-5: Thus, in China, the East Indies, etc.,
people travel in palanquins borne by men; in a multitude of
cases, Chinese commodities are carried in wheelbarrows; and
a great many roads are constructed, in reference not to
wagons, properly so-called, but to this species of vehicle.
How heartless the Chinese, who, before they save a drowning
man, first higgle about the reward, and take pleasure in
pestilence, famine, etc., because those who survive profit
by them. See _Finlaison_, Journey of the Mission to Siam,
1826, 62 ff.]
[Footnote 174-6: Hence _Menander_ (342-290 before Christ)
says it is better to be the slave of a good master than to
live wretched in freedom. (_Stobœus_, Flor., 62, § 7.
_Meinecke_, Fr. com. Gr., IV, 274.) _Libanios_, too, (Tom.,
483, Reiske), in his "Blame of Poverty," represents slavery
as better cared for, and freer from worry. Horrible
contracts made even in Cæsar's time, from want, by freemen,
to become gladiator-slaves. _Cicero_, pro Roscio, Am. 6;
_Horat._, Serm., II, 7, 58 ff.; _Petron._, 117; _Seneca_,
Epist., 37. And so by Justinian, cases of declined freedom
are supposed. (L. 15, _Justin._, Cod., VII, 2.) "_Dans une
armée on estime bien moins un pionnier, qu'un cheval de
caisson, parce que le cheval est fort cher, et qu'on a le
pionier pour rien. La suppression de l'esclavage a fait
passer ce calcul de la guerre dans la vie commune._"
(_Linguet._)]
[Footnote 174-7: _Sismondi_ is guilty, however, of a
philanthropic exaggeration when he says that the labor of
children is always fruitless to the laboring classes. (R. P.
I., 235.)]
[Footnote 174-8: The bringing into juxtaposition of the
rates of wages in different countries is doubtless one of
the most important objects of comparative statistics. Only
it is necessary not to confine it to the money amount of
wages, but to make it embrace the prices of the principal
means of subsistence. Thus, in France, before the outbreak
of the French Revolution, a French workman earned a cwt. of
bread on an average of 10.5 days; one of meat in 36.8; an
English workman, in 10.4 and 25.3 days. (_A. Young._) In the
interior of Russia, a female weaver earns, in a day, almost
one Prussian _scheffel_ of rye, in Bielefeld, only about
one-tenth of a _scheffel_; a table-cloth weaver, in the
former place, 18 silver groschens, while the _scheffel_
costs from 12 to 15 silver groschens. (_von Haxthausen_,
Studien, I, 119, 170.) According to _Humboldt_, the
money-wages paid in Mexico were twice as high, and the price
of corn two-thirds as dear, as in France. (N. Espagne, IV,
9.) According to _Rau_, Lehrbuch, I, § 180, the procuration
of the following means of subsistence required in day labor
in:
==============+============+=========+==========
| | | |
|_Manchester.|_Hanover.|_Hanover.|
| | | |
| 1810-20_ | 1700_ | 1827_ |
--------------+------------+---------+----------
Cwt. beef, | 26 | 33 | 35 |
" potatoes,| 1.85 | ---- | ---- |
" wheat, | 5.5 | ---- | ---- |
" rye, | ---- | 6.5 | 8.7 |
" butter, | 42.3 | 87 | 64 |
" sugar, | 96 | 181 | 128 |
==============+============+=========+==========
|_Upper | | |
|Canada. |_Brandenburg.| Gratz. |
| | | |
| 1830_ | 1820-33_ |1826-45_ |
--------------|--------+-------------+----------
Cwt. beef, | 6.6 | 34 | 36 |
" potatoes,| ---- | 1 | 2.68 |
" wheat, | 2 | 7.6 | 11 |
" rye, | 1.5 | 5.4 | 8.6 |
" butter, | 22 | 83 | 84 |
" sugar, | ---- | ---- | ---- |
==============+============+=========+==========
Estimated in silver, the East Indian laborer earns from £1
to £2 a year; the English, £9 to £15; the North American,
£12 to £20. (_Senior._) _Hildebrand_, Nat-Oek., I, 195 ff.,
assures us that the average rate of wages in Germany, in
1848, amounted to 400 thalers a year; in England, to 300
thalers; and that the prices of the means of subsistence in
the latter country were 1½ times higher than in the
former. _Engel_, Ueber die arbeitenden Klassen in England,
1845, shows only the dark side of a real picture, and is
silent on the other, and is well corrected by _Hildebrand_,
I, 170 ff. Excellent statistics in _Sir F. M. Eden_, State
of the Poor, I, 491-589. On the more recent times, compare
the Edinburgh Review, April, 1851, April, 1862; Quarterly
Rev., Oct., 1859, July, 1860. _Ludlow_ and _Jones_, loc.
cit. On the situation in France, see _Blanqui's_ report in
the Mémoires de l'Académie des Sciences morales et
politiques, II, 7. _Leplay_, Les Ouvriers des deux Mondes,
II, 1858. Very important are the "Reports from Her Majesty's
diplomatic and consular Agents abroad respecting the
Condition of the industrial Classes, and the Purchase-power
of money in foreign Countries." (1871.)]
SECTION CLXXV.
WAGE POLICY.--SET PRICE OF LABOR.
Among the artificial means employed to alter the existing rate of wages,
we may mention first, a rate of wages fixed by governmental authority.
These have, in many places, constituted an intermediate step between
serfdom and the free wage-system. In most cases, this measure was
intended in the interest of the upper classes to prevent the lower
obtaining the full advantage of their freedom under the favoring
circumstances of competition.[175-1] In later times, another cause has
frequently been added to this, viz.: by diminishing the cost of
production to increase foreign sales. (See § 106.) In the higher stages
of civilization, nations will scarcely look with favor on the diminution
of the rightful, for the most part, individually small gains of the most
numerous, the poorest and most care-worn class of the community.[175-2]
The purchasers of labor would, in consequence, be badly served, since
they would have lost the possibility of obtaining better workmen by
paying higher wages. Hence, there would, probably, be none but mediocre
labor to be found.[175-3] On the other hand, fixed rates which keep
within the limits described in § 114 are, under certain circumstances,
desirable. This is especially the case where the purchasers of labor on
the one hand, and the buyers of labor on the other, have formed
themselves into united groups, and where the rate fixed is only in the
nature a treaty of peace under governmental sanction, when a war over
prices had either broken out actually or there was danger to fear that
one would break out. It must not be forgotten, that thus far common
labor has scarcely had any thing similar to an "exchange."[175-4]
[Footnote 175-1: The plague known as the black death of
1348, which devastated the greater part of Europe, was
followed by many complaints on the part of the buyers of
labor, of the cupidity and malicious conspiracies of the
working classes. (See _supra_ § 160.) Fixed rates of wages
under Peter the Cruel of Castile, 1351; contemporaneously in
France, Ordonnances, II, 350, and in England, 25 Edw. III,
c. 2; 37 Edw. III, c. 3. In France, the wages of a thresher
were fixed at the one-twentieth or the one-thirtieth of a
_scheffel_, while in present Saxony it is from
one-fourteenth to one-twelfth. In England, under the same
ruler, who had seen his castle at Windsor built, not by day
laborers for wages, but by vassal masons, vassal carpenters,
etc., whom he got together from all parts of the kingdom.
That the rates might not be evaded, the succeeding king
forbade both the leaving of agriculture for industry and
change of domicile without the consent of a justice of the
peace. (12 Richard II., c. 3.) All such provisions were
little heeded in the 16th century. (_Rogers_, the Statist.
Journal, 1861, 544 ff.)
Fixed rates of wages under Henry VII. and Henry VIII., in
the interest of workmen. (_Gneist_, Verwaltungsrecht, II,
Aufl., 461 ff.) The fact that in 5 Elizabeth, c. 4, another
attempt was made to fix the rate of wages by governmental
provisions, in which the person paying more than the sum
fixed was threatened with 10 days' imprisonment, and the
person receiving less with 12, was in part akin to the
English poor laws. If a poor man had the right to be
eventually employed and supported by the community, it was,
of course, necessary that the justice of the peace should be
able to determine at what wages anybody should be prepared
to work before he could say: I can find no work. Extended by
2 James I., c. 6, to all kinds of work for which wages were
paid. (_Eden_, State of the Poor, V, 123 ff., 140.) The
buyers of labor in the eighteenth century frequently
complained that these fixed wages were more to the advantage
of workmen than of their masters. (_Brentano_, English
Guilds., ed. by _Toulmin Smith_, 1870, Prelim. CXCI.)
In Germany, the depopulation caused by the Thirty Years' War
explains why, before and after the peace of Westphalia, so
many diets were concerned with fixing the rate of wages of
servants. Compare _Spittler_, Gesch., Hanovers, II, 175.
Among the most recent instances of English fixed rates of
wages, is 8 George III., for London tailors, and the
Spitalfields Act of 1773, for silk weavers who had, a short
time before, revolted. Also in New South Wales, about the
end of the last century, on account of the high rate of
colonial wages. (_Collins_, Account of the English Colonies
of New South Wales, 1798.) Later, _Mortimer_, Elements of
Politics, Commerce and Finance, 1174, 72, maintains fixed
rates of wages to be necessary. In Germany the imperial
decree of 1830, tit., 24, and again the ordinance of Sept.
4, 1871, provide that each magistrate shall fix the rate of
wages in his own district. _Chr. Wolf_, Vernunftige Gedanken
vom gesellsch. Leben der Menschen, 1721, § 487, would have
the rates so fixed that the laborers might live decently and
work with pleasure.]
[Footnote 175-2: Proposal for a fixed sale of wages in the
protocols of the Chamber of Lords of Nassau, 1821, 12.]
[Footnote 175-3: The Spitalfields Act was repealed in 1824,
for the reason that the manufacturers themselves attributed
the stationary condition of their industries for a hundred
years to the fact that they were hampered by that act.
_Ricardo's_ and _Huskisson's_ prophecies, on this occasion,
fulfilled by the great impulse which the English silk
industries soon afterwards received.]
[Footnote 175-4: Compare _Brentano_, Arbeitergilden der
Gegenwart, II, 288. However, fixed rates of wages equitably
arranged, in the establishment of which neither party has
been given an advantage over the other, have continued to
exist much longer than our distrustful and novelty-loving
age would think possible. Thus compositors' wages in London,
from 1785 to 1800, from 1800 to 1810, from 1810 to 1816, and
from 1816 to 1866, remained unaltered; those of London ship
builders, from 1824 to 1867; of London builders, from 1834
to 1853, and from 1853 to 1865. (_Brentano_ II, 213. Compare
II, 250, 267 ff.)]
SECTION CLXXVI.
WAGES-POLICY.--STRIKES.
Where the wages-receiving class feel themselves to be a special class,
_vis-a-vis_ of the purchasers of their labor, they have frequently
endeavored, by the preconcerted suspension of labor upon a large scale,
to force their masters to pay them higher wages, or grant them some
other advantage.[176-1] It is hard to say whether such strikes have more
frequently failed or succeeded.[176-2]
As a rule, a war over prices, carried on by such means, and without
force on either side, must generally issue in the victory of the richer
purchasers of labor.[176-3] The latter require the uninterrupted
continuation of labor for their convenience and profit; but the workmen
need it to live. It is but seldom that the workmen will be in a
condition to stop work for more than a few months, without feeling the
sting of hunger. The purchaser of labor can live longer on his capital;
and the victory here belongs to the party who, in the struggle, holds
out longest. Hence, a strike that lasts more than six weeks may, for
that reason alone, be considered a failure. The employers of labor, on
account of their smaller number and greater education, make their
counter-coalition much more secret and effective. How many instances
there are in which labor-saving machines have come into use more rapidly
than they otherwise would have come but for the influence of these
coalitions![176-4]
On the other hand, it cannot be ignored that a host of workmen, by means
of an organization which provides them with a unity of will, such as the
heads of great enterprises naturally possess, must become much better
skilled in carrying on a struggle for higher wages. Where wages in
general tend to rise, but by force of custom, which is specially
powerful here (§ 170), are kept below their natural level, a strike may
very soon attain its end. And workmen are all the more to be wished
God-speed here in proportion as employers are slow to decide of their
own motion upon raising wages, and where, under certain
circumstances,[176-5] a single cold-hearted master might force all his
competitors to keep wages down. If even the entire working class should
follow the example of the strikers, so that all commodities, in so far
as they are products of labor, should grow dearer to an extent
corresponding to the rise in wages, there would still remain an
improvement of the condition of the working class at the cost of the
interest paid on capital and the profits of enterprise. It is, of
course, otherwise with the struggle of workmen against the natural
conditions which determine the rate of their wages (§§ 161-166) in which
they might, in turbulent times, possibly succeed[176-6] temporarily, but
would, in the long run, have to fail.[176-7]
The working class will be best fortified in such a struggle for higher
wages when their organization is a permanent one, and when they have
taken care, during good times, to collect a certain amount of capital to
protect their members, during their cessation from work, against acute
want. This is the object of the trades-unions as they have grown up in
England, especially since the total decline of the guild system and of
governmental provisions relating to apprentices, fixed rates of
wages[176-8] etc. But it cannot be denied that these unions, although
democratic in form, often exercise a very despotic sway over their
members;[176-9] that they have, so far as the employers of labor are
concerned, and the non-union laborers, gone back to a number of
measures, outgrowths of the guild and embargo systems, which it was
fondly hoped had been forever banished by the freedom of
industry.[176-10] What many of the friends of this system hope it may
accomplish in the future, viz.: regulate the whole relation between
capital and labor, and thus, on the whole, control the entire public
economy of a people,[176-11] is, fortunately, all the more certainly a
chimera, as any national or universal approximation to this end would be
the most efficacious way to compel employers of labor to the formation
of corresponding and probably far superior opposing unions.
Notwithstanding this, however, I do not doubt that the recent
development of trades-unions in England is both a cause and an effect of
the rise in wages in the branches of industry in question, as well as of
the moral elevation of the condition of the working class which has
simultaneously taken place.[176-12] The mere possibility of a strike is
of itself calculated, in the determination of the rate of wages, to
procure for the equitable purchaser of labor the desirable preponderance
over the inequitable.[176-13]
[Footnote 176-1: Even _Boisguillebert_, Traité des Grains,
was acquainted with instances of this kind in which from 600
to 800 workmen simultaneously left their masters. There are
much earlier instances in Italy. Thus, in Sienna, in 1381
and 1384, in which the nobility sided with the workmen.
(Rerum Ital. Scriptores, XV, 224, 294.) Strikes of
journeymen began to be much more frequent in Germany in the
guilds, from the time of the prospect of their becoming
masters themselves, and of their living in the family of the
masters had decreased. On similar strikes at Spires, in
1351, at Hagenau in 1409, and Mainz in 1423, see _Mone's_,
Zeitschrift, XVII, 56; XIII, 155, and _Hegel,_ Strassb.
Chr., II, 1025. A remarkable strike of the Parisian book
printers under Francis I. (_Hildebrand's_ Jahrb., 1873, II,
375 ff.) In so-called "home manufactures," where the
"manufacturer" is both orderer, preparer and seller, but
strikes are scarcely possible without much fixed capital.
The strike of the factory spinners in Lancashire in 1810
caused 30,000 workmen to stop work for four months.
Among the next following coalitions of labor, those of the
Glasgow weavers in 1812 and 1822 were very important. In the
latter, two workmen who would not participate with the
strikers were blinded with sulphuric acid. In 1818, great
strike by the Scotch miners. The Preston strike of 1853
lasted 36 weeks. It is said that 6,200 male and 11,800
female working people took part in it. (_Athenæum_, 30
Sept., 1854.) Compare _Morrison_, Essay on the Relations
between Labor and Capital, 1854. For a history of Swiss
strikes, especially of the Zürich compositors' strike in
1873, see _Böhmert_, Arbeiterverhältnisse, II, 287 ff. Comic
type of a strike of married women in _Aristophanes_,
Lysistrata. A practical one in Rome at the departure of the
plebeians for the holy mountains, 492 before Christ.
(_Livy_, II, 32,) then, on a small scale, on the removal of
the pipers after Tiberius, 311 before Christ. (_Liv._, IX,
30.)]
[Footnote 176-2: Instances of successful strikes:
Fortnightly Review, Nov. 1865. Similarly in Germany, in
1865; but there, in truth, many strikes were only defensive
and intended to restore the former thing-value of the
declined money (Werke, XIII, 151). The English strikes, in
1866 and 1867, failed nearly all, so that wages again
declined to their level in 1859, and in many places, to what
they had been in the crisis-year 1857. (Ausland, 16 April,
1868.) As to how even in Victoria, strikes which opposed a
decline of wages from 16 to from 8 to 10 shillings a day
failed, after doing great injury, see Statist. Journ., 1861,
129 ff.]
[Footnote 176-3: The Preston strikers of 1853 got even from
their non-striking colleagues, £30,000. Had their masters
prevented this, the affair would have been terminated much
sooner. (Quart. Rev., Oct. 1859.) But employers are much
more frequently divided by rivalries than workmen,
especially in strikes against new machines or when a
manufacturer, who has too large a supply of goods on hand,
desires a strike himself. On account of their smaller
number, too, they are less in a condition to declare a
recusant colleague in disgrace. _Adam Smith's_ remark that
coalitions of capitalists are much more frequent than those
of workmen, only that much less is said of them, is hardly
applicable to our time. (Wealth of Nat., I, ch. 8, p. 100,
ed. Bas.) But, since the strike of the London builders in
1859, capitalists have begun to form more general opposing
unions. On a very energetic one among the ship builders on
the Clyde, see _Count de Paris_, Les Associations ouvrières
en Angleterre, 1869, ch. 7. Examples on a smaller scale,
Edinburg Review, LXXXIX, 327 ff. On the other hand, a
"lock-out" on the part of capitalists is very difficult,
from the fact that it is impossible to prevent idle workmen
from being supported from the poor fund. Moreover, there can
be no greater folly than for the workmen to add insult to
their masters to their demand for higher wages, because then
the limits within which the latter are willing to continue
the business at all, are made much narrower, than they would
be on a merely economic estimate.]
[Footnote 176-4: Thus the "iron man," by which a single
person can put from 1,500 to 3,000 spindles in motion; also
an improved plane-machine, by means of which several colors
can be printed at once. (_Ure_, Philosophy of Manufactures,
366 ff.) Machines for riveting cauldrons. (_Dingler_,
Polytechnisches Journal, LXXV, 413.)]
[Footnote 176-5: Compare the statements in the Statist.
Journal, 1867, 7.]
[Footnote 176-6: Thus in several places in 1848, and in
Paris in 1789, where even the lackeys and apothecary clerks
formed such unions. (_Wachsmuth_, Gesch. Frankreichs im
Revolutionszeitalter, I, 178.) Similarly, frequently in
isolated factories.]
[Footnote 176-7: _Thornton_ mentions six instances in which
strikes and strike-unions may permanently raise wages: a,
when those engaged in an enterprise have a virtual monopoly
in their own neighborhood; b, when the country has, for the
industry in question, great advantage over other lands; c,
when the demand for the product of the industry is necessary
on account of an increasing number and increasing capacity
to pay of customers; d, when the progress of the arts,
especially of machinery, makes the industry more productive;
e, when the rise in the rate of wages affects all branches
of industry to the same extent, and at the same time; f,
when the industry is carried on on so large a scale that it
yields greater profit, even while paying a smaller
percentage than other industries. (On Labour, III, ch. 4.)
It is easy to see that many of these conditions meet in the
building industries in large cities.]
[Footnote 176-8: Compare _Brentano_ in the Preliminary Essay
to _T. Smith's_ English Guilds, ch. LXXII ff. The same
author's Die Arbeitergilden der Gegenwart Bd., I, 1871.]
[Footnote 176-9: The greater number of strikes begin with a
small minority, generally of the best paid workmen, whom the
others follow unwillingly but blindly. (Edinb. Rev., 149,
422.) The despotic power of the Unions over their members
depends principally on the fact that their treasury serves
not only to maintain strikes but at the same time as an
insurance fund for old age and sickness, and that every case
of disobedience of a member is punished by expulsion, i. e.,
with the loss of everything he has contributed. Hence the
Quart. Rev., Oct., 1867, advises that these two purposes
which are so hard, technically speaking, to reconcile with
each other, should be required to be kept separate,
especially as most of the unions, considered as benevolent
associations, are really insolvent. (Edinb. Review, Oct.,
1867, 421 ff.) On the other hand, both the _Count of Paris_,
ch. 3, and _Thornton_ are favorable to the admixture of
humane and offensive objects in the trades-unions, because
the former contribute to make the latter milder. _Brentano_,
I, 153, has no great objection to the insolvency shown by
the books of the unions _vis-a-vis_ of their duties as
insurers, since, hitherto, the subscription of an
extraordinary sum has never failed to make up the deficit. A
strike is detrimental in proportion as the striking workmen
represent more of the previous preliminary operations that
go to finish a product; as when, for instance, the 50 or 60
spinners in a factory strike, and in consequence, from 700
to 800 other workmen are thrown out of employment and forced
into idleness against their will. What might not have been
the consequence of the great union of the coal miners of
Durham and Northumberland, the members of which numbered
40,000 men, and stopped work from April to the beginning of
September, 1864, so that at last it became necessary to
carry Scotch coal to Newcastle! Compare _Engels_, Lage der
arbeitenden Klassen in England, 314 ff.]
[Footnote 176-10: The English unions even forbid their
members to exceed the established time of work, or the
established task. Thus, for instance, a penalty of one
shilling for carrying at any time more than eight bricks in
the case of masons, and a similar penalty inflicted on the
person's companions who witness the violation of the rule
and do not report the guilty party. Equality of wages for
all members; piece-wages allowed only when the surplus
earned is divided among one's companions. Hence the complete
discouragement of all skill or industry above the average.
If an employer exceeds the prescribed number of apprentices;
if he engages workmen not belonging to the union; if he
introduces new machines, a strike is ordered. With all this
the severest exclusion respectively of one class of
tradesmen by the other. If a carpenter lays a few stones, a
strike immediately! (Quart. Rev., October, 1867, 363, 373.)
Rigid shutting out of the products of one district from
another. (Edinburg Rev., October, 1867, 431.) The poor
hand-weavers were thus prevented going from their
over-crowded trade into another. (_J. Stuart Mill_,
Principles, II, ch. 14, 6.) However, many trades-unions
still seem to be free from these degenerations, and the most
influential unions the most moderate in their proceedings.
(_Count de Paris_, ch. 8, 9; _Thornton_, III, ch. 2.)
_Brentano_ expressly assured us that such degeneration of
the unions in England is confined to the building
trades-unions. (I, 68, 188.)]
[Footnote 176-11: "They have no notion of contenting
themselves with an equal voice in the settlement of labor
questions; they tell us plainly that what they aspire to is
to control the destinies of labor, ... to dictate, to be
able to arrange the conditions of employment at their own
discretion." (_Thornton_, III, ch. 1.) The membership of the
English trades-unions was estimated, at the Manchester
Congress, June, 1868, at 500,000 by some, and at 800,000 by
others. _Brentano_, II, 310, speaks of 960,000. Since 1830,
there have been frequent endeavors to effect a great
combination, with special organizations of the different
trades. During recent years, there have been even beginnings
of an international organization, although in Germany, for
instance, at the end of 1874, there were 345 trades-unions,
with a membership of over 21,000. (_M. Hirsch._) A formal
theory of workmen's unions to culminate in popular
representation, in _Dühring_, Arbeit und Kapital, 1866,
especially, p. 233; while the American _Walker_ accuses all
such combinations, which used compulsion on any one, of
moral high treason against republican institutions. (Science
of Wealth, 272.)]
[Footnote 176-12: The former view, for instance, of _Harriet
Martineau_, "The tendence of strikes and sticks to produce
low wages" (1834) is now unconditionally shared only by few.
When _Sterling_ says that the momentary success of a strike
is followed by a two-fold reaction which restores the
natural equilibrium, viz.: increase of the number of workmen
and decrease of capital (Journal des Econ., 1870, 192), he
overlooks not only the length of the transition time which
would certainly be possible here, but also that an altered
standard of life of the workmen prevents the former, and one
of the capitalists the latter. The _Count of Paris_ and
_Thornton_ do not doubt that the elevation of the condition
of the English working classes, as proved by _Ludlow_ and
_Jones_, is to be ascribed, in part, to the effect of the
trades-unions. Many of the unions work against the
intemperance and quarrelsomeness of their members. The
people's charter of 1835, came from the London "workingmen's
association."]
[Footnote 176-13: On the great utility of the arbitration
courts between masters and workingmen, by which the struggle
for wages is terminated in a peaceable manner and without
any interruption of work, see _Schäffle_, Kapitalismus and
Socialismus, 659. More minutely in _Thornton_, III., ch. 5.
_Faucher_, Vierteljahrsschr., 1869, III, 302, calls
attention to the fact that such "boards" may be abused to
oppress small manufacturers.]
SECTION CLXXVII.
WAGES-POLICY.--STRIKES AND THE STATE.
Should the state tolerate the existence of strikes or strike-unions?
Legislation in the past most frequently gave a negative answer to the
question, as well from a repugnance for high wages as for the self-help
of the masses.[177-1] But even leaving the above reasons out of
consideration, every strike is a severe injury to the national resources
in general,[177-2] one which causes that part especially to suffer from
which those engaged in the various enterprises and the working class
draw their income. And, even for the latter, the damage endured is so
great that it can be compensated for only by very permanently high
wages.[177-3] How many a weak man has been misled by a long cessation
from work during a strike, which ate up his savings, into lasting
idleness and a devil-may-care kind of life. When employers, through fear
of strikes, keep all large orders, etc. secret, the workmen are not in a
condition to forecast their prospects and condition even for the near
future. And in the end a dread of the frequent return of such
disturbances may cause capital to emigrate.[177-4]
However, where there exists a very high degree of civilization, there is
a balance of reasons in favor of the non-intervention of
governments,[177-5] but only so long as the striking workmen are guilty
of no breach of contract and of no crime. Where every one may legally
throw up his employment, there is certainly no plausible legal objection
to all of them doing so at once, and then forming new engagements.
Coalitions of purchasers of labor for the purpose of lowering wages,
which are most frequent though noiselessly formed, the police power of
the state cannot prevent. If now it were attempted to keep the working
class alone from endeavoring to correspondingly raise their wages, the
impression would become general, and be entertained with right, that the
authorities were given to measuring with different standards. Where the
working classes so sensitively feel the influence of the government on
the state of their wages, they would be only too much inclined to charge
every chance pressure made by the circumstances of the times to the
account of the state, and thus burthen it with a totally unbearable
responsibility. Since 1824, freedom of competition has prevailed in this
matter on both sides in England.[177-6] The dark side of the picture
would be most easily brightened by a longer duration of contracts of
labor.[177-7]
Whether the trades-unions, when they shall have happily withstood the
fermentative process now going on, shall be able to fill up the void
created by the downfall of the economically active corporations of the
latter part of the middle ages, we shall discuss in our future work, Die
Nationalökonomik des Gewerbfleisses. One of the chief conditions
precedent thereto is the strict justice of the state, which should
protect members of the unions from all tyranny by their leaders, and
from violations of the legal rights of non-members.[177-8]
[Footnote 177-1: Thus even 34 Edw. III., c. 9. Journeymen
builders were forbidden by 3 Henry VI., c. 1, to form
conspiracies to enhance the rate of wages, under pain of
felony. Finally, 39 and 40 George III., c. 106, threatened
any one who, by mere persuasion, should induce a workman to
leave his master's service, etc., with 2 months in the
work-house, or 3 months' imprisonment. In France, as late as
June and September, 1791, all conspiracies to raise wages
were prohibited under penalty, the incentive to such
prohibition being the opposition to all _intérêts
intermédiaries_ between the _intérêts particulier_; and the
_intérêt general_ which is characteristic of the entire
revolution. Compare the law of 22 Germinal, 11. The German
Empire on the 16th of August, 1731, threatened journeymen
strikers even with death, "when accompanied by great
refractoriness and productive of real damage." (Art. 15.)]
[Footnote 177-2: The strike of the spinners of Preston, to
compel equal wages with those of Bolton, lasted from October
to the end of December, 1836. The spinners got from their
treasury 5 shillings a week (previously 22½ shillings
wages); twisters, 2 to 3 shillings; carders and weavers
lived on alms. In the middle of December, the funds of the
union were exhausted. Altogether, the workmen lost 400,000
thalers; the manufacturers, over 250,000; and many merchants
failed. (_H. Ashworth_, Inquiry into the Origin and Results
of the Cotton Spinners' Strike.) The Preston strike of 1853
cost the employers £165,000, the workmen, £357,000.
(Edinburgh Rev., July, 1854, 166.) The North-Stafford
puddlers' strike, in 1865, cost the workmen in wages alone
£320,000. Concerning 8 strikes that failed, mostly between
1859 and 1861, which cost in the aggregate £1,570,000, of
which £1,353,000 were wages lost, see Statist. Journ., 1861,
503. A great mortality of the children of workingmen
observed during strikes!]
[Footnote 177-3: _Watts_ assumes that the strikers seek to
attain, on an average, an advance in their wages of five per
cent. Now, a week is about equivalent to two per cent. of
the year. If, therefore, a strike lasted one month, the
increase of wages it operates must last one and three-fifths
years to compensate the workmen for their loss. A strike
that lasts 12½ months would require 20 years to effect
the same, and this does not include interest on lost wages.
(Statist. Journal, 1861, 501 ff.) However, it is possible
that the striking workingmen themselves should lose more
than they gained, but that, for the whole working class, the
gain should exceed the loss; since those who had not
participated in the strike would participate in the
increased wages. _Thornton_ is of opinion that employers
have won in most strikes, but surrendered in the intervals
between strikes, so that now English workmen receive
certainly £5,000,000 more in wages than they would be
getting were it not for the trades-unions. (III, ch. 3-4.)]
[Footnote 177-4: By the Norwich strike, about the beginning
of the fourth decade of this century, what remained of the
industrial life of that city disappeared. (_Kohl_, Reise,
II, 363 ff.) Similarly in Dublin. (Quart. Rev., October,
1859, 485 ff.) In Cork, the workingmen's union, in 1827,
allowed no strange workmen to join them, and, it is said,
committed twenty murders with a view to that end. The
builders demanded 4s. 1d. a day wages. This discouraged the
erection of new buildings, and it frequently happened that
they found employment only one day in two weeks. (Edinb.
Rev., XLVII, 212.) When workingmen struggle against a
natural decline of the rate of wages, they, of course, add
to their misfortune.]
[Footnote 177-5: The grounds on which _Brentano_, following
_Ludlow_ and _Harrison_, justifies the intervention of the
state, have a very dangerous bearing, inasmuch as they do
not suppose, as a condition precedent, a perfectly wise and
impartial governmental authority.]
[Footnote 177-6: 5 George IV., c. 95: "provided no violence
is used." Further, 6 George IV., c. 129, and 122 Vict., c.
34. The law of 1871 declares the trades-unions lawful,
allows them the right of registration, and thus empowers
them to hold property. In France, the law of May 25, 1864,
alters articles 414 to 416 of the _Code pénal_ to the effect
that only such strikes shall be punished as happen _à l'aide
de violences, voies de fait, manœuvres frauduleuses_;
also coalitions against the _libre exercise du travail à
l'aide d'amendes, défenses, proscriptions, interdictions_.
But these amendments were rendered rather inoperative by the
fact that meetings of more than 20 persons could be held
only by permission of the police.]
[Footnote 177-7: As, for instance, the coal workers in the
north of England required a half year's service. So long as
the trades-unions consider themselves, by way of preference,
as instruments of war, it is conceivable how they oppose all
binding contracts for labor. So now among the German
journeymen book-printers, and so, also, for the most part,
in England. (_Brentano_, II, 108.) In quieter times, when
the trades-unions shall have become peace institutions, this
will be otherwise. We cannot even enjoy the bright side of
the freedom of birds without enduring its dark side! In
Switzerland, breaches of contract by railroad officers are
guarded against by their giving security beforehand; in
manufactures, by the holding back of from 3 to 14 days'
wages. (_Böhmert_, Arbeiterverhältnisse, II, 91, 388 ff.)]
[Footnote 177-8: In Switzerland, the trades-unions have
shown themselves very powerful against the employers of
tradesmen, but rather powerless against manufacturing
employers, and thus materially increased the already
existing inferiority of the former. (_Böhmert_, II, 401.)
They may, however, by further successful development,
constitute the basis of a new smaller middle class, similar
to the tradesmen's guilds at the end of the middle ages; and
indeed by a new exclusiveness, in a downward direction. This
would be a bulwark against the destructive inroads of
socialism similar to that which the freed peasantry in
France were and still are. While this is also _Brentano's_
view, _R. Meyer_, Emancipationskampf des vierten Standes,
1874, I, 254 ff., calls the trades-unions a practical
preparation for socialism to which the English "morally went
over" in 1869 (I, 751); which indeed loses much of the
appearance of truth from the fact that _Marx_ (_Brentano_,
Arbeitergilden, II, 332) and the disciples of _Lassalle_
(_Meyer_, I, 312) hold the trades-unions in contempt. _John
Stuart Mill_ approves of all trades-unions that seek to
effect the better remuneration of labor, and opposes all
which would bring the wages paid for good work and bad work
to the same level. (Principles, II, ch. 14, 6; V, ch. 10,
5.) Compare _Tooke_, History of Prices, VI, 176. Reports of
the Commissioners appointed to inquire into the Organization
and Rules of Trades-Unions, 1857.]
SECTION CLXXVIII.
WAGES-POLICY.--MINIMUM OF WAGES.
The demand[178-1] so frequently heard recently, that the state should
guaranty an "equitable" minimum of wages, could be granted where the
natural rate of wages has fallen below that minimum, only on condition
that some of the working class in the distribution of the wages capital
(no longer sufficient in all the less profitable branches of business)
should go away entirely empty handed. Hence, as a rule, in addition to
that wages-guaranty, the guaranty of the right to labor is also
required. But as useful labor always finds purchasers (the word "useful"
being here employed in the sense of the entire economy of a people, and
understood in the light of the proper gradation of wants and the means
of satisfying them), such a right to labor means no more and no less
than that the state should force labor which no one can use, upon
others.[178-2] Something similar is true of Louis Blanc's proposition
that the rate of wages of the workmen should be determined and regulated
by their own votes and among themselves.[178-3]
All such measures are injurious in proportion as they, by extending aid
and the amount of the minimum, go beyond the limits of benevolence, and
approach those of a community of goods. (§ 81 ff.) However, if they
would be lasting and not pull workmen rapidly down to the very depths of
universal and irremediable misery, these measures should be accompanied
by the bestowal of power on the guarantor to hold the further increase
of the human family within bounds.[178-4]
The condition of workmen can be continued good or materially improved
only on condition that their numbers increase less rapidly than the
capital destined for wages. The latter increases usually and most surely
by savings. But only the middle classes are really saving. In England,
for instance, the national capital increases every year by at least
£50,000,000, while the working classes spend at least £60,000,000 in
tobacco and spirituous liquors, _i. e._, in numberless instances, only
for a momentary injurious enjoyment by the adult males of the class, one
in which their families have almost no share. According to this, every
compulsory rise in wages would be a taking away from the saving class
and a giving to a class that effect no savings. Is not this to act after
the manner of the savages who cut down a fruit tree in order more
conveniently to relish its fruit?[178-5]
Benjamin Franklin calls out to workmen and says: If any one tells you
that you can become rich in any other way than through industry and
frugality, do not listen to him; he is a poisoner! And, in fact, only
those changes permanently improve the condition of the working classes
which are useful to the whole people: enhanced productiveness of every
branch of business in the country, increased capital, the growth (also
relative) of the industrial middle classes, the greater education,
strength of character, skill and fidelity in labor of workmen
themselves. Much especially depends upon their foresight and
self-control as regards bringing children into the world. Without this
latter virtue even the favorable circumstances would be soon trifled
away.[178-6]
[Footnote 178-1: Compare, besides, the Prussian A. L. R.,
II, 19, 2. In _Turgot_, _droit du travail_, and _droit au
travail_ are still confounded one with the other. Œuvres
éd. _Daire_, II, 302 ff; especially 306. In such questions,
people generally think only of factory hands. But have not
writers just as good a _droit au travail_ to readers whom
the state should provide them with, lawyers to clients and
doctors to patients?]
[Footnote 178-2: _L. Faucher_ calls the _droit au travail_
worse than the equal and compulsory distribution of all
goods, because it lays hands on not only present products
but even on the productive forces. It supposes that
unlimited production is possible; that the state may
regulate the market at pleasure to serve its purposes; that,
in fact, the state can give without having first taken what
it gave. (Mélanges d'Economie politique, II, 148 ff.) The
French national assembly rejected the "right to labor" on
the 15th of September, 1848, by 596 ayes to 187 nays, after
the provisional government had proclaimed it, February 25.
Le Droit au Travail à l'Assemblée nationale avec des
Observations de _Faucher, Wolowski, Bastiat_ etc., by _J.
Garnier_, Paris, 1848.]
[Footnote 178-3: _L. Blanc_, De L'Organization du Travail,
1849.]
[Footnote 178-4: "Every one has a right to live. We will
suppose this granted. But no one has a right to bring
creatures into life to be supported by other people. Whoever
means to stand upon the first of these rights must renounce
all pretension to the last.... Posterity will one day ask
with astonishment what sort of people it could be among whom
such preachers could find proselytes." (_J. S. Mill_,
Principles, II, ch. 12.)]
[Footnote 178-5: Compare _Morrison_, loc. cit. Quarterly
Rev., Jan. 1872, 260. The English savings in the savings
banks, between 1839 and 1846, increased yearly in amount
only £1,408,630, and scarcely half of this came from
wages-workmen in the narrower sense of the term. What the
latter contribute to the fund for the old and sick is not
really productive capital but only individually deferred
consumption. Let us suppose that a man had an income of
$3,000 a year, of which he laid out yearly $2,000 ($1,000
for wages, $1,000 for rent and interest on capital), and
that he capitalizes $1,000. If now this man were, either
through philanthropy or in furtherance of socialism, to
double the wages he paid, the result would not be
detrimental to the economic interests of the whole country
only on the supposition that working classes who received
the increased wages should either save what he is no longer
able to save, or that by inventions or greater personal
skill, etc., they should increase the national income.]
[Footnote 178-6: According to _Hildebrand's_ Jahrbb., 1870,
I, 435, 193, North American workmen, the quality of work
being supposed the same, now accomplish from 20 to 30 per
cent. less than before 1860. Thus, in 1858, in New York, a
steam engine was manufactured for $23,000, in 2,323 work
days. In 1869, a similar one was built for $40,000 in 3,538
days. In the former case, the manufacturer made a profit. In
the latter, he lost $5,000.
_John Stuart Mill_, II, ch. 13. Against the
"philanthropists" who find it hard to preach to the poor,
the only efficacious means of improving their condition,
_Dunoyer_, L. du T., IV, ch. 10, says: The rich _do_ employ
it, although they have much less need of it! Even _Marlo_
admits that a guaranty of the right to labor, without any
measures to limit population, would, in a short time, and
irredeemably lead the country to destruction. (Weltökonomie,
I, 2, 357.) _von Thünen_, der isolirte Staat., II, 1, 81
ff., would take a leap out of the vicious circle that those
who live by the labor of their hands can produce no rise in
their wages, because they are too little educated to hold
their increase properly in check; and that, on the other
hand, they cannot give their children a decent education,
because their wages are too low; by suggesting that
educational institutions should be established by the state,
and that these should elevate the subsequent generation of
workmen intellectually.]
CHAPTER IV.
INTEREST ON CAPITAL.
SECTION CLXXIX.
THE RATE OF INTEREST IN GENERAL.
Interest on capital,[179-1] or the price paid for the use of capital,
should not be confounded with the price of money (§ 42); although in
common life people so frequently complain of want of money where there
is only a want of capital, and sometimes even when there is a
superabundance of money.[179-2] This error is connected with the fact,
that for the sake of convenience, loans of capital are so often effected
in the form of money and that they are always at least estimated in
money; but neither of these things is essential.
In reality, however, we as seldom meet with interest[179-3] pure and
simple, as we do with rent pure and simple. A person who works with his
own capital can, at best, by a comparison with others, determine where,
in the returns of his business, wages stop and interest begins.[179-4]
And even in the loaning of capital, it depends largely on supply and
demand, whether the creditor shall suffer a deduction in consequence of
the absence of care and labor attending his gain, and whether the
debtor, in order to get some capital at all, shall sacrifice a part of
the wages of his labor.[179-5] When Adam Smith assumes it to be the rule
that the "profit of stock" is about twice as great as the "interest of
money,"[179-6] it is evident that a considerable amount of what is
properly wages or profit of the employer (_Uhternekmer_ = undertaker) is
included in the former.
Many businesses have the reputation of paying a very large interest on
the capital employed in them, when in reality they only pay the
undertaker of them wages unusually high as compared with the amount of
capital employed in them. Apothecaries, for instance, are called in some
places "ninety-niners," because it is said that they earn 99 per cent.
To discover the error, it would be sufficient to inquire the rate of
interest on the capital borrowed by the apothecary on hypothecation, for
instance, to enlarge his industry. But on the other hand, such a man who
has more than any other manufacturer to do with the most delicate
materials and with them in greater variety, requires proportionately
greater caution and knowledge. Besides, as the guardian of the health
and life of so many, and even as the comptroller of physicians, he
should be a man who inspired universal and unqualified confidence.[179-7]
By the rate of interest customary in a country, we mean the average rate of
the interest on money-capital employed safely and without trouble.
[Footnote 179-1: In the case of fixed capital, we generally
speak of rent; in the case of circulating capital, of
interest. If interest be conceived as a fractional part of
the capital itself, the relation between the two is called
"the rate of interest," most generally expressed as a
percentage, and for one year.]
[Footnote 179-2: In Russia, great depreciation of the
assignats, and yet the people complained of a "want of
money." (_Storch_, Handbuch, II, 15.) According to the San
Francisco correspondent of the Times, Jan. 31, 1850, one per
cent. a day discount was paid there! Compare _North_,
Discourse on Trade, 11 seq.]
[Footnote 179-3: Gross interest and net interest
corresponding to the difference between gross product and
net product.]
[Footnote 179-4: This is the natural rent of capital in
contradistinction to the stipulated rent. (_Rau_, Lehrbuch,
I, § 223.)]
[Footnote 179-5: Thus, for instance, a so-called beginner
who is conscious of possessing great working capacity, but
who possesses for the time being little credit. _Tooke_,
Considerations on the State of the Currency, 1826,
distinguishes three kinds of capitalists: a, those who are
averse to running any risk whatever or incurring any
trouble, or are not able to incur any risk or trouble, for
whom every great increase of the sinking fund lowers the
rate of interest, and every war loan raises it; b, those who
will run no risk, but who are not averse to the trouble of
looking after their investments and of endeavoring to obtain
a higher rate of interest; c, such as, to obtain a higher
rate of interest, unhesitatingly risk something. Borrowers
he divides thus: a, those who employ the borrowed capital
and their own in such a way as to enable them to meet their
obligations and besides to earn a reasonable profit; b,
those who need others' capital to make up for the momentary
failure of the productiveness of their own; lastly c,
unproductive consumers.]
[Footnote 179-6: Wealth of Nat., I, ch. 9. The gross product
of English cotton industry was, in 1832, estimated at
£32,000,000, viz: £8,000,000 worth of material, £20,000,000
wages, £2,000,000 interest, £2,000,000 undertaker's profits.
(_Schön_, Nat. Oek, 104.)]
[Footnote 179-7: _Adam Smith_, I, ch. 10, 1: where the
reasons why a shop-keeper in a small town apparently gets a
larger interest than one in a large city, and yet gets rich
less frequently, are developed. The high profit made from
industrial secrets, Adam Smith very correctly considers
wages (I, ch. 7). Why not also that made by inn-keepers? (I,
ch. 10, 1.) When the returns of a business differ according
to circumstances which depend on the person of the conductor
of the business himself, and may by him be transferred into
another business, etc.; when the competition in it is
determined by personal agreeableness or disagreeableness, it
is evident that the larger returns are to be ascribed rather
to the highness of wages than of the rate of interest. The
profit also which a second-hand hirer makes is wages.
(_Riedel_, Nat. Oek., 376.)]
SECTION CLXXX.
RATE OF INTEREST IN GENERAL.--ITS LEVEL.
Within the limits of the same national-economic territory, the different
employments of capital tend uniformly to pay the same rate of
interest.[180-1] If one branch of business were much more profitable
than another, it would be to the interest of the owners of capital to
allow it to flow into the former and out of the latter, until a level
was reached.[180-2]
The most noticeable exception to this rule is only an apparent one. The
revenue (_Nutzung_) derived from the use of capital must not be
confounded with its partial restoration.[180-3] Thus, for instance, the
rent of a house, if the entire capital is not to be sooner or later
consumed entirely, must embrace, besides a payment for the use of the
house, a sum sufficient to defray the expenses of repairing it, and even
to effect a gradual accumulation of capital for the purpose of
rebuilding. The risk attending the investment of capital plays a very
large part and must be taken into special consideration. If the risk in
a business be so great that ten who engage in it succeed and ten fail,
the returns of the former, which are more than double those usual in the
country, in reality pay, when the ten who failed are taken into the
account, only the rate of interest customary in the country. The risk
may depend on the uncertainty of the person to whom the capital is
confided;[180-4] on the uncertainty of the branch of business in which
it is intended to employ it,[180-5] or on the uncertainty of the
commercial situation in general; but especially may it depend on the
uncertainty of the laws.[180-6] The temporary lying idle of capital, for
instance, in dwelling houses at bathing places during the winter season,
increases the rate of interest much more than it does the rate of wages
in the corresponding case of the lying idle of labor; for the reason
that there is something pleasurable in the repose of the latter.
(_Senior._) On the whole, the vanity of mankind has an effect upon the
rate of interest similar to that which it has on the rate of wages. (See
§ 168.) It causes the small chances of loss to be estimated below their
real value, and the extraordinary chances of gain above it.[180-7]
[Footnote 180-1: Compare _Harris_, Essay on Money and Coins,
13. _Per contra, Ganilh_, Dictionnaire analyt., 107.
According to _Hermann_, Staatsw. Untersuchungen, 147, a
product which withdraws an amount of capital = _a_ from the
immediate use of its owner for _n_ months must bring in in
its price a surplus, over and above the outlay of capital,
which would bear the same ratio to the profit from another
product which employed an amount of capital = _b_, _m_
months, that _an_ bears to _bm_.]
[Footnote 180-2: The class of bankers, etc. which precisely
in the higher stages of civilization is one so highly
developed, is called upon to adjust these differences.]
[Footnote 180-3: Life annuities and annual revenues, _à
fonds perdu_.]
[Footnote 180-4: Hence, for instance, good men engaged in
industrial pursuits who employ borrowed capital productively
pay lower interest than idlers who are suspected of desiring
only to spend it in dissipation. High house-rent usually
paid by proletarians.]
[Footnote 180-5: Thus even in _Anderson's_ time, it was
necessary that the profit of one good year in the whale
fishery should compensate for the damage caused by six bad
ones. (Origin of Commerce, III, 184.) Slave-traders made
their calculations to lose from three to four out of five
expeditions. (Athenæum, May 6, 1848) Similarly in smuggling
and contraband. High rate of interest in gross adventure
trade and bottomry contracts, frequently 30 and even 50 per
cent.; in ancient Athens, for a simple voyage to the Black
Sea, 36 per cent., while the rate of interest customary in
the country was only from 12 to 18 per cent.; the interest
paid by rented houses only 8-1/7, and by land leases only 8
per cent. (_Bockh_, Staatshaushalt der Athener, I, 175 ff.;
_Isaeus de Hagn._, Hered., 293) In Rome, before Justinian's
time, maritime interest was unlimited. (_Hudtwalker_, De
Foenore nautico Romano, 1810.) And so in the manufacture of
powder, the frequent explosion of the mills has to be taken
into account: in France and Austria, 16 per cent. per annum.
(_Hermann_, Principien, 119.) Here belong those new
enterprises which, when they succeed, pay a high profit.
_Thaer_, in reference to this insurance premium, says: if
the capital employed to purchase a landed estate yields 4
per cent., the inventory (_Inventar_) should bring in at
least 6, and the working capital 12 per cent. (Ration.
Landwirthschaft.)]
[Footnote 180-6: Compare _supra_, § 91; _infra_, §§ 184,
188.]
[Footnote 180-7: Thus _Friedr. Perthes_, in _Politz_,
Jarhbüchern, Jan., 1829, 42, thinks that the publication of
scientific books in Germany, since 1800, caused, on the
whole, a loss of capital. In the Canadian lumber trade,
also, speculators, in the aggregate, lost more than was
gained. Yet the business goes on because of its lottery
character. (_John Stuart Mill_, II, ch. 15, 4.) In
lotteries, it is certain that the aggregate of players lose.
So too in speculation in English stocks, on account of the
costs to be paid the state. In the case of frightful losses,
which may afford food for the imagination, the reverse is
found. Thus, for instance, in England, fire insurance, stamp
duties included, was paid for at a rate five times as high
as mathematical calculation showed it to be worth.
(_Senior_, Outlines, 212 ff.) Much here depends naturally on
national character, which, in England for instance, or in
the United States, is much more adventurous than in many
quiet regions of continental Europe.]
SECTION CLXXXI.
RULE OF INTEREST IN GENERAL.--CAUSES OF DIFFERENT RATES.
The real exceptions to the above rules are caused by a prevention of the
leveling influx and outflow of capital. Among nations in a low stage of
civilization, there is wont to be a multitude of legal impediments in
this respect. The existence of a difference of classes, of privileged
corporations, etc., not only restrains the transition of workmen, but
also of capital from one branch of industry to another. But even the
mere routine of capitalists, that blind distrust of everything new so
frequently characteristic of easily contented men, may produce the same
result.[181-1] In the higher stages of civilization, patents for
inventions and bank privileges, are causes of a lastingly higher rate of
interest than is usual in the country.[181-2] Finally, since in many
enterprises only a large amount of capital can be used at all, or at
least with most advantage, the aggregation of which from many small
sources is ordinarily much more difficult than the division of a large
one into small fractional parts; the rate of interest for very small
amounts of capital, and especially in the higher stages of civilization,
is usually lower than that of large amounts of capital. We need only
mention interest paid by savings-bank investments.[181-3]
If circulating capital has been changed into fixed capital, its yield
will depend upon the price of the particular goods in the production of
which it has been made to serve. Compared with the cost of restoration
of fixed capital, this yield may, in a favorable case, constitute an
extraordinarily high rate of interest, in an unfavorable a very low one;
and the former of these two extremes has a greater chance of being
realized, in proportion as it is difficult to multiply fixed capital of
the same kind; the latter, the more exclusively it can be employed in
only one kind of production, and the longer time it takes to be used up
by wear.[181-4] When fixed and circulating capital coöperate in
production, the latter, because it can be more easily withdrawn, but
also more easily replaced, first takes out its own profit, that is the
profit usual in the country and leaves all the rest to the former. When
fixed capital is sold, practically no attention is paid to what it
originally cost. The purchaser pays only for the prospective revenue it
will yield, which he capitalizes at the rate of interest usual in the
country. The seller henceforth looks upon his gain as an accretion to
capital, his loss as a diminution of capital, and no longer as high or
low interest.[181-5] That accretion might be considered the wages, paid
once for all, for the intelligent labor which governed the original
investment of the capital, and _vice versa_.
[Footnote 181-1: Thus the rate of interest in the Schappach
valley remained for a long time much lower than in the
vicinity, for the reason that the peasantry who had grown
rich through the lumber trade possessed notwithstanding
little of the spirit of enterprise. (_Rau_, Lehrbuch, I, §
233.)]
[Footnote 181-2: Here the law produces a species of
artificial fixation.]
[Footnote 181-3: _Von Mangoldt_, Unternehmergewinn, 150.]
[Footnote 181-4: In other words, the more fixed they are.
Thus, for instance, dwelling houses in declining cities,
canals, etc. which have been supplanted by better commercial
routes; or again, the shafts and stulms of a mine which has
been abandoned. When Versailles ceased to be a royal
residence, the value of inhabited houses sank to one-fourth
of what it had been. (_Zinkeisen_ in _Raumer's_ histor.
Taschenbuch, 1837, 426.) A rate of interest greater than
that usual in a country is seldom found where freedom of
competition prevails, since it is necessary there to
distinguish between rent and interest on capital. When in an
open city, the capital employed in the construction of
dwelling houses _detractis detrahendis_ pays 8 per cent.,
while the rate of interest customary in the country is only
4 per cent., the supply of houses will grow continually
greater. Only the difficulties in the way of transferring
capital from one business to another could here retard the
leveling process, which where the political prospect for
instance was bad, might last a long time--one of the
principal reasons why, in 1848, the rent of houses declined
much less than their purchase prices. The conjuncture was
not serious enough to prevent the increase of population;
but it entirely stopped the building of new houses. On the
other hand, a bridge or railroad company may maintain a high
rate of profit because competition cannot exist in the face
of the great expense such enterprises require; but
especially because the party who has here the advantage of
priority may lower the price of transportation to such a
point as to entirely discourage his rival. Compare
_Hermann_, Staatsw. Untersuchungen, 145 ff. Interesting
example of the London gas and water companies in _Senior_,
Outlines, 101.]
[Footnote 181-5: Thus, for instance, Leipzig-Dresden
railroad stock cost originally 100 thalers per share, and
was taken at that rate. The yearly dividends amounted in
1856 to 13 thalers; that is, 13 per cent. for the original
stockholders. But a person who on the 30th September, 1856,
paid 285 thalers for a share, received but an interest of
4½ per cent. on his capital. It is characteristic, how
_Serra_, Sulle Cause, etc., 1613, I, 9, calls the high and
the low rate of interest _prezzo basso e alto delle
entrate_.]
SECTION CLXXXII.
VARIATIONS OF THE RATE OF DISCOUNT.
The fact that in commerce, etc., the rate of interest on capital loaned
for short periods of time (discount) is subject to great fluctuations,
while the mortgage rate of interest, for instance, remains the same
throughout, depends on similar causes.[182-1] Yet there are
contingencies in trade which, when taken immediate advantage of, promise
enormous profits, but which may disappear within a month; risks of the
most dangerous kind which can be conjured only by the immediate aid of
capital. These are both sufficient grounds of a high rate of interest.
Again, there are times of the profoundest calm in the commercial world,
during which capitalists are perfectly willing to make loans at a low
rate of interest, provided they are sure to be able to get back their
capital with the first favorable breeze that blows. Agriculture is too
immovable to come opportunely to the assistance of capitalists, here as
a receiver and there as a loaner of capital. As the cycle of its
operations is gone through usually only in a series of years, sudden
influxes or outflows of capital would cause it the greatest
injury.[182-2]
[Footnote 182-1: _Nebenius_, Œff. Credit, I, 74 ff. Thus,
Hamburg discount towards the end of the last century
fluctuated between 2½ and 12 per cent., while the capital
invested in agriculture brought an interest almost
invariably of 4 per cent. (_Büsch_, Geldumlauf, VI, 4, 19.)
At the same time, in Pennsylvania, the usual rate of
interest was 6 per cent. per annum, and the rate of discount
not unfrequently from 2 to 3 per cent. a month. (_Ebeling_
Geschichte und Erdbeschreib. von Amerika, IV, 442.) During
the crisis of 1837, it happened that ¼ per cent. a day was
paid. (_Rau_, Archiv. N. F. IV, 382.) In the Prussian ports,
during the crisis of 1810, it is said that in July the rate
of discount was 2½ per cent. a month. (_Tooke_, Thoughts
and Details, I, 111.) In Hamburg and Frankfort the rate of
discount rose in the spring of 1848, but declined in June to
2; until December it was 1¼, until the summer of 1849,
¾ per cent. (Tüb. Zeitschr., 1856, 95.) Rate of discount
in France, about 1798, at least 2 per cent. a month.
(_Büsch_, loc. cit., IV, 52.) Half a year previous, capital
employed in the purchase of land paid an interest of from 3
to 4 per cent. Legal interest was 5 per cent.; discount, at
most, 6 per cent.; in very prosperous times 8-9, per cent.
(_Forbonnais_, Recherches et Considérations, I, 372.)]
[Footnote 182-2: Remarkable case in _Cicero's_ time in which
bribery, carried on on a large scale, raised the rate of
discount from 4 to 8 per cent. _Cicero_ ad. Quint. M, 15;
ad. Att. IV, 15.]
SECTION CLXXXIII.
EFFECT OF INCREASED DEMAND FOR LOANS.
The price paid for the use of capital naturally depends on the relation
between the supply and demand, and especially of circulating capital.
The increase of the supply need no more unconditionally lower the rate
of interest than the price of any other commodity. If 50 hunters kill
1,000 deer yearly, and give 100 deer per annum as interest to the
capitalists who provided them with ammunition and rifles, a second
capitalist with an equal number of rifles and an equal amount of
ammunition may appear on the scene. If now 2,000 deer a year are killed,
the rate of profit of the capitalists will probably remain the same. But
if the woods are not rich enough in game for this, or the hunters not
numerous enough, too indolent, or too easily satisfied, the rate of
interest falls.[183-1]
The difficulties in the way of the desired increase of capital are here
of great importance. The smaller the surplus over and above their
absolutely necessary wants, which the people produce, the less their
tendency to make savings, the less the inclination to capitalization;
and the less the security afforded by the law is, the higher must the
rate of interest be to induce people to face these difficulties. We may
very well transfer the idea of cost of production to this
condition.[183-2]
The demand for capital depends, on the one hand, on the number and the
solvability of borrowers, especially of non-capitalists like landowners
and workmen; and, on the other hand, on the value in use of the capital
itself. Hence the growth of population is, other circumstances being the
same, a means to raise the rate of interest; because it infallibly
increases the competition of borrowers of capital, even if the increased
rate must take place at the expense of wages. The solvability or paying
capacity of the land-owning class as contrasted with the capitalists
can, in the last analysis, depend only on the extent and fertility of
their lands and on the quality of their agricultural husbandry; the
solvability or paying capacity of the working class, only on their skill
and industry. Where these have grown, an increase of the rate of
interest may be found in connection with an absolute growth of the rate
of wages and of rent, because the aggregate income of the nation has
become greater.
The value in use of capital, which is more homogeneous in proportion as
it has the character of circulating capital (_res fungibiles_) is, in
most instances, synonymous with the skill of the working class, and the
richness of the natural forces connected with it. The deciding element,
therefore, is the yield of the least productive investment of capital
which must be made to employ all the capital seeking employment. This
least productive employment of capital must determine the rate of
interest customary in a country precisely as cost of production on the
most unfavorable land determines the price of corn (§§ 110, 150), and as
the result of the work of the laborer last employed does the rate of
wages. (§ 165.)
What portion of the total national income, after deduction is made of
rent, shall go to the capitalists and what portion to the working class,
will depend mainly on whether the capitalists compete more greedily for
labor or the laboring classes for capital.[183-3] If, for instance,
capital should increase more rapidly than population, there must be a
relative increase in wages, and _vice versa_.[183-4] This is true
especially of that peculiar kind of higher wages which we shall (§ 145,
ff.) designate as the "undertaker's profit." The smaller the number of
persons engaged in enterprises is, in comparison with the number of
retired persons who live on their rents, incomes, etc., the smaller is
the portion of the so-called net profit of enterprise the latter must be
satisfied with in the shape of interest.[183-5]
[Footnote 183-1: It is one of _Ricardo's_ (Principles, ch.
21) chief merits, that he demonstrated the groundlessness of
the opinion that the mere increase of capital must, on
account of the competition of capitalists, lower the rate of
interest, as is assumed by _Adam Smith_, I, ch. 9, _J. B.
Say_, Traité, II, 8, and others. Compare also, _John Stuart
Mill_, Principles, IV, ch. IV, 1.]
[Footnote 183-2: _Storch_, Handbuch, II, 20.]
[Footnote 183-3: Frequent withdrawals of capital must, other
circumstances being the same, temporarily raise the rate of
interest. In the long run, however, the question is decided
by this: whether public opinion considers labor a greater
sacrifice than the saving of capital. Compare _Roesler_,
loc. cit., 8.]
[Footnote 183-4: Compare _Hermann_, Staatsw. Unters., 240
ff. Very much depends on whether the new increased
consumption (of workmen when wages are rising, of
capitalists when wages are declining) is of goods which are
mainly the product of large capital, large factories, etc.,
or chiefly of common labor, (_von Mangoldt_, Grundriss, 155
seq.) When _Adam Smith_ suggests that the relation between
wages and the profit of capital is determined by this:
whether there is a market demand for more work or more
commodities, for more "work to be done" or "work done" (I,
ch. 7), he is, spite of appearances, very unsatisfactory.
_Malthus_ distinguishes a restrictive principle of the rate
of interest, viz.: the return made to the least productive
agricultural capital, and a regulative one, viz.: the
reciprocal relation between demand and supply of capital and
labor. (Principles, ch. 5, sec. 4.) _Ricardo_, ch. 6, makes
the profit of capital at all times and in every country
depend on the quantity of labor which it is necessary to
expend on the land which pays no rent, in order to satisfy
the wants of workmen--a very correct theory.
Only _Ricardo_ himself (ch. 21) and his school postulate
altogether too unconditionally that their wants would always
coincide with the minimum of maintenance or support. Thus,
for instance, _J. S. Mill_, Principles, IV, ch. 3, 4.
However, _Mill_ instead of _Ricardo's_ "wages" employs the
better expression, "cost of labor." _Senior_ teaches that
the distribution of the aggregate result between laborers
and capitalists depends on the anterior course of both
classes: on the value of the capital previously employed by
capitalists to produce the means of satisfying working men's
wants, and on the number of workmen which the previous
laboring population have brought into existence. (Outlines,
188 ff.) Concerning _von Thünen's_ vain attempt at a general
formula, see _supra_, § 173. _Fourier's_ idea that 5/12 of
the product should be distributed among labor, 3/12 among
talent, and 4/12 among capital, is entirely baseless. (N.
Monde, 309 ff.) _Considérant_, Destinée sociale, 192 ff. As
early a writer as _H. Boden_, Fürstliche Machtkunst, 1700
and 1740, 42, came strikingly near the truth. According to
him, a low rate of interest is produced by four
circumstances: surplus capital, a dearth of landed estates,
a want of credit and exact justice, and lastly, the heavy
taxation of capital.]
[Footnote 183-5: Thus, in the last century, Spanish
capitalists loaned capital readily to sure commercial
companies, at from 2 to 3 per cent. per annum. (_Bourgoing,_
Tableau de l'Espagne, I, 248.) The contemporary low rates of
interest in Hannover, _Büsch_, Geldumlauf, VI, 4, 12,
endeavors to explain by the absence of opportunities for
investment, as no one dared to loan to any extent on fiefs
or on the land of the peasantry, and because there was no
law governing bills of exchange, etc.]
SECTION CLXXXIV.
HISTORY OF THE RATE OF INTEREST.
Among barbarous nations, the loaning of capital is wont to happen so
seldom, and to be limited so strictly to near relations, that it does
not yet occur to any one to stipulate for a regular compensation
therefor.[184-1] But, however, when they pass from this state to
interest proper, the rate must be, of course, very high.[184-2] The
premium for insurance is here very great, the possibility and
inclination to accumulate capital exceedingly small. Even of the
existing supply of capital, a great part remains idle, because the
faculty and the institutions necessary to concentrate it and permit it
to flow are wanting. (§ 43.) The unskillfulness of labor is more than
overcome by the excess of fertile and naturally productive land, of rich
sites still unoccupied, the cream of which, as it were, needs only to be
culled. Population is indeed sparse, but the usually prevailing absence
of freedom of the lower classes prevents wages claiming the full benefit
of competition.[184-3] This last circumstance is especially
important.[184-4] For a given amount of the national income and of rent,
every depression of wages must obviously raise the rate of interest, and
every enhancement of wages lower it.[184-5]
[Footnote 184-1: _Tacit._, Germ., 26; _Marculf_, Form., 18,
25 ff., 35; _Savigny_, Ueber das altrömische Schuldrecht, in
the transactions of the Berlin Academy, 1833, 78 seq.]
[Footnote 184-2: According to the Lex Visig., V, 5, § 8, the
maximum rate of interest allowed on loans of money was
12½ per cent., and on other _res fungibiles_, 50 per
cent. From the 12th to the 14th century, the Lombards and
the Jews in France and England took generally (?) 20 per
cent. a year. (_Anderson_, Origin of Commerce, _a._, 1300.)
Philip V. of France, in 1311, fixed the rate of interest at
the fairs in Champagne at 15 per cent. (a species of
discount) at most, and at a maximum everywhere of 20 per
cent. (Ordonnances de la France, I, 484, 494, 508.) The
legal rate of interest in Verona, in 1288, was fixed at a
maximum of 12½ per cent.; in Modena, 1270, at 20 per
cent. (_Muratori_, Antiquitt. Ital., I, 894); in Bresica,
1268, at 10 per cent. (_v. Raumer_, Geschichte der
Hohenstaufen, V, 395 ff.) Frederick II. wished to reduce it
to 10 per cent. for Naples, but failed. (_Bianchini_, Storia
delle Finanze di Nap., I, 299.) The tables of _Cibrario_,
Economia polit. del medio Evo., III, 380, for 1306-1399,
show for upper Italy interest to have been at 20, 15, 14,
10, and also 5½ per cent. About 1430 the Florentines, in
order to moderate the enormously high rate of interest,
called Jews to their city, and the latter promised not to
charge over 20 per cent. (_Cibrario_, III, 318.) In the
Rhine country, the Kowerzens, during the 14th century, took
from 60 to 70 per cent., for which they had, however, to pay
a heavy tax to the archbishop. (_Bodmann_, Rh. Alterthümer,
716.) Of Jewish maximum rates of interest, in the 14th and
15th centuries, see _Stobbe_, Juden in Deutschland während
des M. Alters, 103, 110, 234 seq.; _Hegel_, Strassb. Chr.,
II, 977, 984.
The rate of interest usual in these countries must not
however be calculated from the data furnished by these
usurious rates and fixed rates of interest, simply. In
Germany, the rate of interest promised by princes in the
13th and 14th centuries was usually 10 per cent. The
Frankfort municipal loans made by Jews in the 14th century
bore interest at the rate of 9, 11-2/3, 13, 18, 26, and even
45 per cent. (_Kriegk_, F.'s Bürgerzwiste, 343, 539.) The
rate of interest in the purchase of annuities continually
declined between 1300 and 1500, especially in the time of
the emancipation of manual laborers. Old Base documents
give, between 1284 and 1580, as the highest rate, 11-3/9,
and as the least, 5 per cent. The latter became more and
more usual later, especially in the sale of house-rents
(_Hauszins_), so that in 1841 all annuities (_Renten_) might
be canceled by a payment of their amounts multiplied by 20.
Until the beginning of the 15th century, in the city, the
rule was 6 to 7 per cent.; outside of it, 8 to 10 per cent.
(_Arnold_, Geschichte des Eigenthums in den deutschen
Städten, 222 seq., 227 seq.) According to the Bremen Jahrb.
of 1784, 164 seq., the rate of interest in the case of
_Handfesten,_ in 1295, = 10 per cent., gradually sank: in
the 15th century it was never over 6-2/3; after 1450,
generally 5; in 1511 only 4 per cent. In 1441 ff., in
Augsburg, people were satisfied with a business profit of
7-2/3 per cent., while the usual rate of interest paid by
house-rent, etc. was 5 per cent. (_Hegel_, Augsb. Chr., II,
134 seq., 157.) Handsome tables in the rate of interest in
the purchase of annuities for all Germany, from 1215 to
1620, give as the rule, 7 to 10, scarcely ever over 15 per
cent., in _M. Neumann_, Geschichte des Wuchers, 266 ff. For
the upper Rhine, compare _Mone's_ Zeitschr., 26 ff. Among
the Fathers of the councils of Constance and Basil 5 per
cent. was considered equitable. Compare _F. Hammerlin_,
1389-1457, De Emtione et Venditione unius pro viginti.
Russian interest at 40 per cent., according to the laws of
Jaroslaw (ob. 1054 after Christ). _Karamsin_, Russ. Gesch.,
II, 47.]
[Footnote 184-3: The high rate of interest in many countries
at present may be thus accounted for. In the United States,
during the last century, less than 8 per cent. was seldom
paid. (_Ebeling_, III, 152.) According to _M. Chevalier_,
Lettres sur l'Amérique du Nord, 1836, I, 59, the rate of
interest in Pennsylvania was 6, in New York, 7, in most of
the slave states, 8-9; in Louisiana, 10 per cent. In South
Australia (1850) it was, with full security, 15-20 per cent.
(_Reimer_, Südaustralien, 39.) In the West Indies, about the
end of the last century, a strong negro might produce a
revenue equal to one-fourth of his capital value. (_B.
Edwards_, History of the British West Indies, II, 129.) In
Brazil, the lowest rate of interest was at 9 per cent., and
12-18 per cent. was nothing unusual. (_Wappäus_, M. and S.
Amerika, 1871, 1413.) In Cuba, for the government 10, for
private parties, 12 to 16 per cent. (_Humboldt_, Cuba, I,
231.) In Potosi, in 1826, Temple got 30 per cent. interest
on chattel mortgage, and from 2 to 4 per cent. a month was
offered, while the rate of interest in Buenos Ayres amounted
to 15 per cent. per annum. (_Temple_, Travels, II, 217.) In
Russia, _Storch_, Handbuch, I, 262, speaks of 8-10 per cent.
According to _v. Haxthausen_, it was, in the interior, never
less than from 8 to 12 per cent. per annum; at Kiew and
Odessa, 1¼, 1½ and 2 per cent. per month. (Studien, I,
58, 467; II, 495.) In _Greece_, the rate of interest on
first mortgages is at least 10, on a second, 15-18 per cent.
(Ausland, 1843, No. 82.)]
[Footnote 184-4: _Nebenius_, Œff. Credit, I, 55.]
[Footnote 184-5: Only in this particular instance is what
_Ricardo_ so frequently insists on true, viz: that the rate
of wages can be increased only at the expense of the profit
of capital, and _vice versa_.]
SECTION CLXXXV.
HISTORY OF THE RATE OF INTEREST.--INFLUENCE OF AN ADVANCE IN
CIVILIZATION.
With an advance in civilization, the rate of interest is wont to
decline.[185-1] [185-2] One of the chief causes of this phenomenon is the
necessity, as population and consumption increase, to employ capital in
the fertilization of less productive land, and in less profitable
investments.[185-3] An increase in the stock of money does not
necessarily depreciate the rate of interest. If this increase comes in
connection with a corresponding depreciation of the individual pieces of
metal, it cannot be said that the nation has thereby become richer in
capital. All that would be required in such case is only a greater
number of pounds of gold or silver, or more paper bills to represent the
same capital.[185-4] Only during the transition-period, during which the
depreciation of money is still incomplete, is the rate of interest wont
to be lowered; and all the more, since loaned capital is generally
offered and sought after in the form of money.[185-5] [185-6]
The decline of the rate of interest generally shows itself earliest in
the large cities, which are everywhere the national organ, in which the
good and bad symptoms of later civilization may be soonest
observed.[185-7]
Moreover, the condition of capitalists is not necessarily made worse by
a decline of the rate of interest. It is possible that, for a long time,
the increase of capital should continue more rapid than the decrease of
interest for each individual. (If, indeed, the aggregate interest of
capital should become absolutely smaller, there is always a pleasant
remedy available, viz.: to consume a part of the capital!) But, however,
a decline of the rate of interest is nearly always followed by increased
activity on the part of capitalists; and they come to the resolve to
retire later to enjoy the results of their previous labors. In Holland,
after the time of Louis XIV., no branch of business was wont to pay more
than from two to three per cent. In the case of the purchase of land, no
one calculated on more than two per cent. Hence it was scarcely possible
for small capitalists there to live on their interest; and the good
sense of the people so well adapted itself to this state of things that
to live in leisure on one's rents was considered a not entirely
honorable mode of existence.[185-8] The lower the rate of interest, the
larger, in highly civilized countries, is the stock on hand of cash apt
to become, for the reason that business men then hope to gain more by
the advantages of cash payments than by the saving of interest.[185-9]
[185-10]
[Footnote 185-1: _Proudhon's_ idea, that this decline might
at last bring about a total abolition of interest, is based
on the same error as this other: that since a man may keep
diminishing his per diem quantum of food, he might finally
dispense with food altogether. _Proudhon's_ Banque du
Peuple--People's Bank--which, by gradually diminishing the
interest on its loans to the minimum cost of its
administration, should compel other capitalists to follow
its example.]
[Footnote 185-2: Thus, in England, by virtue of 37 Henry
III., c. 9, the legal interest was = 10 per cent.; by 21
James I, c. 17 = 8; about 1651 = 6 per cent. (confirmed in
1660); by 12 Anne, ch. 16 = 5 per cent. In the time of
George II., where the security was good, only 3 per cent.
was, as a rule, paid. In France, the legal rate of interest,
at the beginning of the 16th century, was 1/10 of the
capital; after 1657, 1/12; 1601 (_Sully_), 1/16; 1634
(_Richelieu_), 1/18; 1665 (_Colbert_), 1/20. Compare
_Forbonnais_ Recherches et Considérations, I, 48, 225, 385
ff. It continued at this rate of 5 per cent. with short
interruptions until the revolution. (_Warnkönig_, Franz.
Staats. und Rechtsgeschichte, II, 588 seq.)
The rates of interest in Russia, in the 16th century, had
already declined to 20 per cent. (_Herberstein_, Reise, 41
ff.; _Karamsin_, Russ. Geschichte, VII, 169.) In Holland, in
1623, it was estimated that land purchases paid 3 per cent.;
hypothecations, 4 to 6; deposits, 5 to 6; a flourishing
business, 10 per cent. Compare _Usselinx_ in _Laspeyres_,
Geschichte der volkswirthschaftl. Anschauungen der
Niederländer, 76. About 1660, the rate of interest usual in
Italy and Holland was at most 3 per cent. (in war times, 4);
in France, 7; in Scotland, 10; in Ireland, 12; in Spain, 10
to 12; in Turkey, 20 per cent. (_Sir J. Child_, Discourse on
Trade, French translation, 75 ff.) Side by side with 6 per
cent. as the rate of interest in England, it was (a little
later) 10 in Ireland. _Petty_, Political Anatomy of Ireland,
74.
The same course of things is to be observed in ancient
times. In _Solon's_ time, and again in that of _Lysias_, it
was 18 per cent. (_Böckh_, Staatshaushalt der Athener, I,
143 ff.) I am of opinion that the rate of interest declined
during this long interval, but rose again in consequence of
the Peloponnesian war. Among friends, in the time of
_Demosthenes_, 10 per cent. (adv. Onetor., I, 386.)
_Aristotle_, Rhet., III, 10, mentions 12 per cent., which
_Aeschines_, adv. Ctes., 104, and _Demosthenes_, adv. Aph.,
I, 820, 824, call low. The rate of commercial interest in
Egypt (146 before Christ) seems to have been 12 per cent.
per annum. (_Letronne_, Recompense promise à celui, etc.,
1833, 7.) Contemporaneously in Rome, a similar rate of
interest must have been considered usurious. (_Cicero_, ad.
Att., I, 12.) Under the emperor _Claudius_, 6 per cent.
(_Columella_, De Re rust., III, 3.) _Justinian_ allowed _to
personae illustres_ 4 per cent. per annum. (L. 26 Cod., IV,
32.)]
[Footnote 185-3: A Huron with his bow and arrow kills 12
pieces of game; the European, with a much better capital,
his rifle, only 5. Compare _v. Schözer_, Anfangsgründe, I,
28. _Mallthus_, Principles, ch. 5. According to _Ricardo_,
ch. 6, the decline of the rate of interest because of the
necessity of carrying on agriculture under harder
conditions, must make all capital of which raw material
forms a part more valuable; while the possessors of
money-capital particularly find no indemnification.
_Wakefield_, England and America, 1853, accounts for it by
saying that production, besides the coöperation of capital
and labor, needs "a field of employment;" and _Bastiat_,
Harmonies, ch. 5, 13, by saying that with the advance of
civilization, the results of former services lose in value
as compared with later ones, because performed under less
favorable circumstances.]
[Footnote 185-4: _D. Hume_, Discourses No. 4 On Interest.
Per contra, see _Locke_, Considerations of the Consequences
of the Lowering of Interest; _Law_, sur l'Usage des Monaies,
1697 (Daire); and _Montesquieu_, Esprit des Lois XXII, 6.
_Cantillon_ draws a very nice distinction: If the increased
amount _of_ money in a state comes into the hands of
loaners, it will decrease the current rate by increasing the
number of loaners; but if it comes into the hands of
consumers, the rate rises, because now the demand _for_
commodities is so much greater. (Nature du Commerce, 284.)]
[Footnote 185-5: The reviews in the Göttingen G. Anz., 1777,
and of _von Iselin_, in the Ephemeriden der Menschheit, II,
170 ff., 177, question _Adam Smith's_ (Wealth of Nat., II,
ch. 4) entirely too positive denial of the influence of the
American production of gold and silver on the diminution of
the rate of interest, a view which was shared also by
_Turgot_, Form. et Distr., § 78. See a beautiful comparison
between a declining of the prices of the currency which,
promotes production, with the phenomena attending the growth
of a tree, in _Schäffle_, N. Oek., II, Aufl., 249.]
[Footnote 185-6: Thus the rate of interest in Rome fell from
12 to 4 per cent. when Octavian suddenly threw the treasures
of conquered Egypt upon the market, and the price of
commodities only doubled. When later commerce had divided
this amount of money among the provinces, it rose again.
(_Sueton._, Oct., 41; _Dio C._, LI, 17, 21; Oros, IV, 19.)
_Law's_ emissions of paper, in colossal amounts, depressed
the rate of interest to 1¼ per cent. (_Dutot_, Réflexions,
990--Daire.) But as soon as the paper money had lost its
value, the former condition returned. Similar observations
in Rio de Janeiro: _Spix_ und _Martius_, Reise, I, 131.]
[Footnote 185-7: While in Paris the capital safely invested
paid 2½ to 3 per cent., 57 out of 61 _conseils généraux_
declared, in 1845, that the rate of interest on
hypothecations, in their departments, was always over 5 per
cent.; 17 estimated it at an average of from 6 to 7 per
cent.; 12 at from 7 to 10; some said 12 and 15, and even 22
per cent. in the case of small sums loaned for a short time.
(_Chegarny_, Rapport au Nom de la Commission de la Réforme
hypoth., 29 Avril, 1851.) In Russia, at the beginning of
this century, the rate of interest in the Baltic provinces
was 6 per cent.; in Moscow, 10; in Taurien, 25; in Astracan,
30 per cent. (_v. Schlözer_, Anfangsgründe I, 102.) In 1750,
in Naples, the rate of interest was from 3 to 5 per cent.,
in the provinces from 7 to 9 per cent. (_Guliani_, della
Moneta, IV, 1.) In Trajan's time in Rome, 6; in Bithynia, 12
per cent. (_Plin._, Epist. VII, 18; X, 62.)]
[Footnote 185-8: _Delacourt_ Aanwysing, 1669, I, 7.
_Temple_, Observations on the U. Provinces, ch. 6, Works L.
1854. Even _Descartes_ says of Holland's _ubi nemo non
exercet mercaturam_. Compare per contra, _H. Grotius_, Jus
Belli et Pacis, II, 12, 22. Very large capitalists, in
_Smith's_ time, certainly lived generally on the interest of
their money: Richesse de Hollande, II, 172. In England, at
the present day, likewise, a vast number of persons who live
on the interest of their money, occasionally take part in
the speculation in commodities; which explains why so-called
commercial crises are incomparably more extensive there, and
reach incomparably deeper, than in Germany. Similarly,
according to _Conring_, De Commercii, 1666, c. 36, in Venice
and Genoa.]
[Footnote 185-9: Hence the larger cash balances in England
at the present day, which, however, are not kept in the form
of coin, but of bank notes and bankers' deposits.]
[Footnote 185-10: As to how every frugal capitalist works to
the injury of capitalists as a class, but to his own
advantage, by lowering the rate of interest and increasing
the rate of wages, see _Senior_, Outlines, 188 ff.]
SECTION CLXXXVI.
HISTORY OF THE RATE OF INTEREST.--CAUSES OF A HIGH RATE IN THRIVING
COMMERCIAL NATIONS.
There are, however, even where a people's economy is in a flourishing
condition, many obstacles which cause the decline of the rate of
interest to take a retrogressive course, or which at least may delay it
for a time.
To this category belong all the modifications of a nation's economy
alluded to in § 183.[186-1] Among them, therefore, is every extension of
the limits of productive land. Let us suppose a nation which, its
capital and labor remaining the same in every respect, should suddenly
double its territory. The less productive places where investments were
made in the old province are now abandoned, and labor and capital
emigrate to the new. The result is, of course, an increase of the
aggregate national income, and, at the same time, a decrease of rent. (§
157.) Hence, the interest on capital and the wages of labor, taken
together, must greatly increase. Which of these two branches shall
profit most and longest by the increase will depend upon whether capital
or the number of workmen increases most rapidly.[186-2] A similar effect
must be produced when, by changes or modifications in the commercial
situation, in the tariff, etc., a nation is enabled to obtain the means
of subsistence at cheaper rates from more fertile and less settled
countries.[186-3]
The introduction of better methods of production has very different
immediate consequences, according as these methods affect the
commodities which minister to the wants peculiar to workmen as a class,
or do not. Let us suppose, as a first case, that the cost of ordinary
clothing is reduced one half by reason of newly discovered material,
better machines, etc. As in the case of the whole people, so also in
that of the owners of capital as consumers, there is, in consequence, an
addition to their enjoyment of life. Their interest as well as their
capital, compared with clothing material, would have become more
valuable. But the relation between capital and interest, that is, the
rate of interest, could not be directly changed. (Compare _infra_, note
3.) Only when the working class employ their materially increased wages
to increase population; when in consequence hereof, their wages,
estimated in money, again decline beyond what it was before; when,
therefore, the price of a given quantity of labor declines, does the
rate of interest rise, although a portion of that which the workmen have
lost may be added to rent on account of the increased population?[186-4]
[186-5] If the applicability of the new method of production is confined to
articles of luxury used by the upper classes, for instance to fine lace,
the rate of interest usual in the country will be affected thereby only to
the extent that through the medium of commerce such products are exchanged
with foreign nations against commodities consumed by the working classes.
But there are very few improvements in production which have not led to a
greater cheapness of those things which satisfy the wants of the working
class; and this is especially clear in the improvements in the means of
transportation so usual in our day.
However, the increase of fixed capital, such as machines, railroads,
etc., once they are completed, may, at first, cause a depression of the
rate of wages, as well as an enhancement of the rate of interest; the
former from the fact that a number of workmen is thereby, at least
temporarily, thrown out of employment; the latter because the conversion
of so much circulating into fixed capital must diminish the supply of
the former.[186-6]
A second class of obstacles consists in the diminution of the supply of
capital. War, for instance, always causes such a destruction of capital,
and at the same time for the most part renders the reproduction of
capital more difficult to such a degree that the rate of interest is
wont to rise greatly.[186-7] Something similar is true of other great
catastrophes and of extravagance on a large scale.[186-8] Every state
loan, whether intended for direct consumption or to procure capital for
use (_Nutzkapitalien)_, decreases the supply of circulating capital
which most directly determines the market rate of interest.[186-9] [186-10]
[Footnote 186-1: _Wolkoff_ very well shows that the economic
progress of mankind is effected partly by the improvement of
production, and partly by saving. The former increases the
rate of interest, the latter lowers it. (Lectures, 182, 189.
Compare _supra_, § 45.)]
[Footnote 186-2: Thus the rate of interest in Russia rose,
after Catherine II. had conquered the provinces situated on
the Black Sea. (_Storch_, Handbuch, II, 34.) The same is
still more strikingly apparent in the judicious planting of
agricultural colonies.]
[Footnote 186-3: Abolition of the English corn laws! Foreign
commerce when very advantageous, always adds to the
well-being of the people; to the rate of interest, however,
only to the extent that articles which are calculated to
satisfy the wants of the working class become cheaper in
consequence; and this in turn lowers the rate of wages. Let
us suppose that a country had hitherto purchased yearly
10,000 barrels of wine for $1,000,000. It might now happen
that, in consequence of an advantageous commercial treaty,
for instance, the 10,000 barrels might be obtained for
$500,000. If, after this, wine-drinkers want to spend
$1,000,000 for wine as they did before, they of course
double their consumption of wine, but the rate of interest
remains unchanged. If, on the other hand, they leave their
consumption of wine where it was before and apply the saved
half million to effect an increased demand for home
products, the capital required for this production is set
free at the same time. Hence, the relation between the
supply and demand for capital has not changed, abstraction
made of certain difficulties in the transaction. Compare
_Ricardo_, Principles, ch. 7, rectifying _Adam Smith_,
Wealth of Nat., I, ch. 9.]
[Footnote 186-4: An increase in the rate of interest caused
by a diminution in the rate of wages does not last long.
Capital now increases more rapidly, and the increase is
accompanied by an increased demand for labor. If, in the
mean time, workmen have become accustomed to a lower
standard of life, the increasing wages are followed by an
increase of population: then the necessity of having
recourse to the cultivation of land of a worse quality is an
additional cause of a decreasing rate of interest. (Edinb.
Rev., March, 1824, 26.)]
[Footnote 186-5: According to this, it is easy to tell what
influence the increasing skill or activity of the working
class (for instance by a decrease in the number of holidays,
coöperation of wife and child) must have. Where there has
been no accompanying and corresponding elevation of the
standard of life, and of the want of the class, the gain
soon falls to the lot of the capitalists or landowners.]
[Footnote 186-6: See the very clear but not entirely
complete discussion in _John Stuart Mill_, Principles, IV,
ch. 3 ff. When new railways, machines, etc., before they are
complete, simultaneously increase the rate of interest and
the rate of wages, and even sometimes rent, although they do
not immediately increase the national income in any way, the
phenomena are to be explained, not by a distribution of
income, but as the result of an advance of capital made.]
[Footnote 186-7: Compare _supra_, § 184. The rise of the
rate of interest in Basil, between 1370 and 1393, _Arnold_
(loc. cit.) accounts for by the wars and defeats of the
upper German cities. Similarly in Zürich, 1457. (_Joh.
Müller_, Schweizer Geschichte, IV, 211.) During the time
immediately following the Spanish war of succession, the
_usuriers les flus modérés_ in France got 12-15 per cent. a
year. (_Dutot_, Réflexions, 1866.) In Russia the rate of
interest, after the war of 1805-15, rose by 4-5 per cent.
(_Storch_, Handbuch, 35 seq.) Per contra, _Nebenius_, Œff.
Credit., 70 seq.]
[Footnote 186-8: Thus the Hamburg conflagration, combined
with the bad harvests of 1841, raised the rate of interest
in Mecklenburg for a long series of years. Similarly in
Würtemburg, the many bad harvests from 1845 to 1853, which
are said to have caused a deficiency of 50,000,000 florins.
(Tübinger Zeitschr., 1856, 568.)]
[Footnote 186-9: In bad times, state loans are usually
effected at a disproportionally high rate of interest. This
also operates momentarily on the general rate of interest,
to the injury of persons engaged in business enterprises;
who, by the very fact of the withdrawal of so much capital,
become involved in an unfavorable competition. In the long
run, indeed, the high or low rates of interest paid by
national debts, in so far as the creditor cannot demand
reimbursement, has no influence on the rate of interest
usual in the country. Such debts as cannot be declared due
assume the character of stationary capital, the value in
exchange of which is determined by their yearly return,
capitalized at the rate of interest usual in the country.
(_Hermann_, Staatswirthschaftliche Untersuch., 223.)]
[Footnote 186-10: The coöperation of most of the causes
above mentioned raised the English rate of interest which
had sunk to 3 per cent. to an average of 5, from about 1760
to 1816. Thus _Gauss_, in a manuscript work which I have
used, relates that the fund for the support of professors'
widows in Göttingen was, in 1794, expected to pay only 3 per
cent. In 1799, the trustees observed that their capital
could often be safely invested at 4 per cent.; somewhat
later the rate of interest rose to 5 per cent., at which
point it remained for years. About 1843 ff. the rate of
interest in old Bavaria was only 4 per cent.; in more highly
cultured Rhenish Bavaria, 5 per cent.]
SECTION CLXXXVII.
HISTORY OF THE RATE OF INTEREST.--EMIGRATION OF CAPITAL.
Midway between these classes of obstacles lies the very usual proceeding
of highly civilized nations whose rate of interest is low, to transfer
their capital into countries with a higher rate of interest, where the
production of raw material is predominant.[187-1] This is most
thoroughly accomplished by the emigration for good of the capitalists
themselves; but also least frequently, because the natural attachment of
man to his native country is usually too powerful, among the well-to-do
classes, to be overcome by the attraction of a higher rate of interest.
Temporary settlements in foreign countries are by far more frequent.
Either the capitalist removes there himself, for a time, to return
enriched, at farthest, in his old age; or he establishes a permanent
branch of his business there, and superintends it through the agency of
a trusted representative. The inhabitants of northern Italy, during the
last centuries of the middle ages, maintained such establishments, not
only for the purpose of carrying on commerce in merchandise along the
shores of the Levant, but also the money trade in the principal
countries of the west.[187-2] Similarly, the Hanseatic cities
contemporaneously in the north and northeast of Europe; and, to-day, the
English in almost all the important seaport cities in the world.[187-3]
Such enterprises are always somewhat dangerous, especially in countries
but little advanced in civilization.[187-4]
The best means to facilitate the migration of capital is credit. It is,
indeed, true, that in international trade, ordinary private loans are
seldom made. To make such loans would be to run too many risks; risks
through a want of knowledge of persons or circumstances, on account of
the difficulties in the way of continued supervision, and of being able
to assert and defend one's rights away from home.[187-5] Loans are much
more readily made to foreign states, to great corporations, or
joint-stock companies, whose condition is well-known; and which, by
reason of their perpetuity, have a deep and obvious interest in
maintaining an honorable reputation. The issuing of certificates of
stock, etc., has greatly facilitated international trade in
capital.[187-6] But the mode of loaning in foreign parts preferred is to
sell them commodities, and to require payment for them only after some
time has elapsed, of course, with interest. Purchases, on the contrary,
are paid for immediately, possibly even in advance.[187-7] The lower the
rate of interest in a country is, the longer and more cheaply can it
give credit to others; a new reason why the less civilized countries are
particularly fond of trading with the most civilized.[187-8] [187-9]
[Footnote 187-1: _Nebenius_, Der öffentliche Credit, 83 ff.
After the end of the Napoleonic war, English capital flowed,
by way of preference, towards South America, afterwards
towards Spain and Portugal; after 1830, to North America;
after 1840, towards Germany and France, to be invested in
the construction of railways in the latter countries.]
[Footnote 187-2: The inhabitants of Asti began in 1226 to
carry on the trade in money in trans-Alpine counties. In
1256, _Louis IX_. ordered 150 Asti money-changers to be
thrown into prison, and he confiscated the money they had
loaned in France, to the amount of over 800,000 livres. They
were afterwards turned over to their enemy, the Count of
Savoy, as usurers. (_Muratori_, Scr. Rerum Ital., XI, 142
seq.) About 1268, Louis IX. banished all money-changers of
Lombard or Cahors origin: they were allowed only three
months in which to collect their debts. (_Sismondi_,
Histoire des Fr., VIII, 112.) About 1277, again all Italian
money dealers were imprisoned, and 120,000 gold guldens
extorted from them. (_Giov. Villani_, VII, 52.) After the
Lombards had lost their freedom, the business passed into
the hands of the Florentines and of the inhabitants of
Lucca. (_Sismondi_, Gesch. der ital. Republiken, IV, 602;
_Dante_, Inferno, XXI, 38.) Great part played by the
brothers Franzesi as dealers in articles of luxury, and
loaners on pledge etc., at the court of Philip IV. They seem
to have instigated the persecution of other Italian money
dealers, in 1291, from jealousy. (_Sismondi_, Histoire des
Fr., VIII, 429 seq.) Great losses of the Florentines by the
English-French war in 1337: Edward III. remained in the debt
of his bankers Peruzzi and Bardi to the amounts respectively
of 135,000 and 184,000 marks sterling; so that they and many
others failed. France imprisoned all the Italian money
dealers, and compelled them to pay a large amount of
ransom-money. (_G. Villani_, XI, 71.) In 1376, the Pope who
was engaged in a struggle with Florence, called upon all
princes to despoil all Florentine merchants within their
jurisdiction of their wealth, and to sell them as slaves;
and France and England actually did so. (_Sismondi_,
Geschichte der ital. Republiken, V, 257 seq., VII, 74.)]
[Footnote 187-3: Shortly before the French Revolution, Cadiz
had over 50 wholesale merchants against 30 retail, 30
modistes and at least 100 tradesmen from France.
(_Bourgoing_, Tableau, III, 130.) Commercial colonies!]
[Footnote 187-4: Thus even the emperor Paul of Russia caused
the property of English factors to be confiscated. The
galleons which Holland and England captured in the Spanish
war of succession belonged mostly to Amsterdam houses.
(_Ranke_, Franz. Gesch., IV, 226.) Even _Galiani_, Della
Moneta, IV, 3, thinks that, on this account, such commerce
is incompatible with the warlike spirit. It is certain,
however, that a government like the English would do well
not to permit a war with such countries as Russia or the
United States to break out too suddenly, that their subjects
might have time to collect all their outstanding dues. When,
in 1855, it was reported in London that all Russian drafts
were dishonored, people looked upon that fact as the surest
sign of coming war. English merchants had called in their
advances to Russia during the preceding economic period, and
refused to make new ones.]
[Footnote 187-5: This of course disappears when the
borrowing country is dependent on the loaning country. Thus,
the Canton of Uri formerly prohibited the inhabitants of the
Livinerthal to borrow capital except from them. It is said
that, at the beginning of this century, the Uri capital then
loaned amounted to one-half a million florins, that is, an
average of 250 per householder. Now it is not over one-fifth
of that amount. (_Franscini_, Canton Tessin, 126.) Think
also of the plantation colonies! But even the East Indies
may be looked upon as a species of colony for England. Hence
_Fawcett_, Manual, 105, is rightly of the opinion that no
other country has the possibility of being as useful to the
East Indies as England. And in fact, the East Indian
railways obtained of their capital of £82,500,000, only a
very small part, £800,000, in India itself, a very small
proportion of which latter sum was subscribed by the native
population. (Ausland 24, Juli, 1869.)]
[Footnote 187-6: What England is to-day, the Italian
commercial cities were in the 16th and 17th centuries, viz.:
the chief market for foreign loans. (Compare _Mun,_
England's Treasure, 1664, ch. 4.) The Genovese loaned money
in foreign countries at 2 and 3 per cent. (_Montanari_,
Della Moneta, 1867, cap. 2.) It is said that the Dutch, in
1778 invested 1,500 millions of livres in foreign national
debts, especially those of France and England. (Richesse de
Hollande, II, 178.) According to _J. G. Forster_, Schriften,
III, 335, in 1781 alone, in Europe, 800 millions loaned
capital. The Niederl. Jaerboek of 1789, p. 729, estimates
the amount of interest coming from abroad, English and
French not included, at from 50 to 60 millions of florins.
About 1844, according to official estimates, 1,000 million
florins in foreign loans, that is one-third of whole
national income. (Allgemeine Zeitung, 1844, No. 35.) Now,
Belgium, 300 million florins, in Austrian evidences of
indebtedness. (Quarterly Review, October, 1862, 402.)
According to _Baumstark_, Staatswissensch. Versuche über
Staatscredit, etc., 1833, 77, foreign nations, between 1818
and 1825, borrowed in England £49,000,000; and, about the
same time, England participated in Russian, French and North
American loans to the extent of £55,500,000. It is said that
there were, in 1843, £25,000,000 English capital in the
canals, railroads and banks of the United States. (_Porter_,
Progress of the Nation, III, 4, 634.)]
[Footnote 187-7: It is evident, from many of Demosthenes'
orations on private matters, that Athens was in the habit of
advancing the commercial capital needed by a great part of
the inhabitants of the Mediterranean coast. Many colonial
cities, Phaselis, for instance, had the very worst
reputation in this respect. They were virtually pirates as
regards Athens. (Adv. Lacrit., 931.) Here also it seems that
the goods taken for the loan had to be brought to Athens.
(941.) On the regular advances of Prussian merchants to
their Lithuanian and Polish vendors, in the 15th century,
while the former were forbidden even to buy on credit, see
_Hirsch_, Geschichte des Danziger Handels, 167, 177. In
Colbert's time, the Dutch gave 12 months credit in Europe.
(_J. De Wit_, Mémoires, 184.) In England, _Child_ perceives
a great advance in this: that in 1650, in all business in
the interior, there was a credit of 3 to 18 months given;
and in 1669, everything was paid for in cash. (Discourse on
Trade, 45.) Concerning previous times, see _W. Raleigh_,
Observations touching Trade and Commerce with the Hollander
and other nations, 1603. (Works, VIII, 951 ff.) In North
America, merchants in the interior frequently purchase their
goods of importers on 6 months credit. (_Tellkampf_,
Beiträge, I, 52.) In the West Indies, about the end of the
last century, the English gave a credit, generally, of from
12 to 16 months. (_B. Edwards_, History of the British West
Indies, II, 383.) In Brazil, in the case of imports, 4, 8
and even 12 months credit; payment in monthly installments,
and frequently even longer delay, without interest. In the
case of exports, when cash payments are not made, 1 per
cent. a month, (_v. Reden_, Garn und Leinenhandel, 332.)
Recently only about 40 per cent. of foreign advances are
made at 12 to 20 months, 60 per cent. at from 50 to 70 days.
(Tübing. Zeitschr., 1864, 517.)
In Buenos Ayres, the producer or collector of export
articles required the price to be paid usually a long time
in advance (_habilitacion_), a very bold but necessary
procedure, on account of his poverty. (_Robertson_, Letters
on S. America, I, 174 ff.) In the corn trade in South
Russia, at least one-half of the purchase money was required
to be paid in advance, and even before shipment, the other
half as soon as the corn arrived in the harbor, and, hence,
sometimes, long before it was put on board. (_W. Jacob_, On
the Corn Trade of the Black Sea, 23.) Compare _Tooke_, View
of the Russian Empire, I, 339, Richesse de Hollande, II, 43,
_Storch_, Handbuch, II, 61 seq. Russia was, about 1770, a
credit-giving nation to the still poorer Persians.
(_Gmelin_, Reise, III, 413.) The Spaniards also, in their
American colonies, had always an expedition ready and
waiting, the payment for which was made on the arrival of
the second. (_Depons_, Voyage dans la Terre Firme, II, 368.)
Moreover, active commerce simply, especially when
circuitous, may be considered as in some way an
international loan; and thus it is that the favorable
"balance," by means of which claim-rights are obtained in
foreign countries, is secured.]
[Footnote 187-8: Notwithstanding the gratitude of the United
States towards France, and spite of all the French
ambassador could do, the English immediately after the
conclusion of peace, attracted the greatest part of American
trade to themselves. (_Chaptal_, de l'Industrie Fr., I,
103.) Countries with a low rate of interest have an
advantage in this respect, which grows after the manner of
compound interest, when the duration of the advance of
capital is prolonged. (_Senior_, Outlines, 195.)]
[Footnote 187-9: How capitalists may, by the giving of
international credit, fall into an injurious habit, is shown
by the late and troublesome building up of the Dutch railway
system, while so many foreign railway enterprises were
provided with Dutch capital.]
SECTION CLXXXVIII.
HISTORY OF THE RATE OF INTEREST.--EFFECT OF A LOW RATE ON STATIONARY
NATIONS.
Beneficial as the spur of a low rate of interest is for countries
capable of development, it is a heavy drag on a stationary people, and
more so on those who have lost a portion of the field for the investment
of their capital by the competition of too powerful rivals.[188-1] A
real superabundance of capital is attended with cares and temptations
for the middle classes very similar to those caused by a so-called
over-population, especially to dishonesty and extravagance.[188-2] When
capital, population and the skillfulness of labor remaining the same,
continues to increase, the enlarged capital may very readily have every
succeeding year only the same return to divide among its owners, that
the smaller had in previous years.[188-3] Hence additional saving here
would produce no real enrichment of the people; and it might even happen
that the instinct to accumulate capital might in the future become
torpid to a greater degree than the capital itself had increased. In any
case, however, the decline of the rate of interest can continue only to
a certain point. There are numberless persons who would rather consume
their capital, or invest it in hazardous speculations than put it out at
interest at one per cent. a year.[188-4] At least, the tendency of a
decline in the rate of interest is, in the case of the richer, to
increase the amount of capital consumed as compared with productive
capital. The more moderate, sober and provident a people are, the lower
may the rate of interest decline without producing this effect. And so,
the more the capital of a nation is concentrated in the hands of a few;
because then the owners of capital are all the later forced to break in
upon it, for the sake of subsistence.[188-5] [188-6]
Among nations which have totally declined, the rate of interest is wont
to reach a high point once more; the natural result of great losses of
capital and men, while, at the same time, the freedom of the lower
classes and the security of property have been either curtailed or lost.
The weakness of age is, in many respects, even in the case of nations, a
second childhood.[188-7]
[Footnote 188-1: _Temple_, Works I, 102, assures us that the
Dutch in his time considered the payment of the principal of
a public debt a real misfortune: "they receive it with
tears, not knowing how to dispose of it to interest with
such safety and ease." On Italy, see _Bandini_ (ob. 1760),
Sopra le Maremme Sienese, 154 seq.; earlier _Montanari_,
Della Moneta, 57. In the England of the present time, small
capitalists especially belong to the so-called "uneasy"
classes.]
[Footnote 188-2: Numberless bankrupts and unbounded
extravagance in Holland. (Richesse de Hollande, II, 168.) In
England, the hazardous enterprises of 1825 were very much
promoted by the action of the government which a short time
before reduced the interest on its state debt. (_Tooke_,
History of Prices, II, 148 ff.)]
[Footnote 188-3: _J. S. Mill_, IV, ch. 4, 4. When _Ricardo_,
ch. 6, says that every increase of productive capital must
enhance the value in use, and still more the value in
exchange, of a nation's property, but under such
circumstances only to the advantage of the working class,
and still more of the land owning class, he at least
apparently presupposes an improvement, or increase of
labor.]
[Footnote 188-4: Think only of the so-called commercial
crises, the speculation-rage preceding which is excited by
the lowness of the rate of interest, the destruction of
capital in which makes the rate of interest to retrograde
materially. However, this very decline is, in itself, only a
spur to speculation in evidences of national indebtedness,
stocks, etc., in commodities, only where, without such
speculation, a rise in prices was to be expected. Thus, for
instance, the great English periods of speculation: 1796
ff., in colonial products; 1808 ff., in raw materials in
general; 1814, in articles of export, were times in which
there was not the slightest facility in obtaining credit.
(_Tooke_, History of Prices, III, 159.)]
[Footnote 188-5: Between 1829 and 1849, the highest rate of
interest paid by English capital employed in cotton
industries was little over 2½ per cent. (Edinb. Rev.,
April, 1849, 429.)]
[Footnote 188-6: As the symptoms of a condition are very
frequently mistaken for its cause, there have been many
writers who, blinded especially by the contemplation of
Holland, considered the lowness of the rate of interest as
the _causa causans_ of all wealth, and who promised really
magical results from its legislative regulation by the
state. Thus _Sir Thomas Culpeper_, A Tract against the high
Rate of Usury, 1623; continuation 1630; _Sir J. Child_,
Brief Observations concerning Trade and the Interest of
Money, 1668; Discourse of Trade, 1690. _Anderson_ (ob.
1765), was of a similar opinion: Origin of Commerce, a.
1601, 1651; and even _Ganilh_, Dictionnaire analytique, 99
seq. (_Infra_, § 162.) Per _contra_, the anonymous essay,
Interest of Money mistaken, 1668, and _Locke_,
Considerations of the Consequences of the Lowering of
Interest and Raising the Value of Money, 1691. Most moderns
have considered the decline of the rate of interest an evil.
Thus, for instance, _Canard,_ Principes, ch. 5, who
uniformly makes this the starting point of a nation's
downfall. See also _McCulloch_, Principles, III, 8.
_Malthus_ draws a comparison between the saving of capital
and the generation of children: only a high rate of interest
makes the former really useful, and a high rate of wages the
latter.
Even great destruction and disturbances of capital by war,
by loans to the state, for instance, are soon made good,
provided the sources of the saving of capital are not dried
up. (Principles, III, 370 ff., 401, ff.) _John Stuart Mill_
expressly counsels rich and highly civilized nations not to
neglect beneficent enterprises, although economically
unproductive, because capital might be lost in them. The
result of such a loss would, under certain circumstances,
simply be that less capital would be exported or wasted in
speculation. (Principles, II, ch. 5, 1.) Similarly _Canard_,
who, therefore, compares state loans with blood-letting, as
a remedy for a plethoric disease. (Ch. 9.) _Turgot_
confounded cause and effect when he compared a high rate of
interest to an inundation, below the level of which nothing
can be produced; and which, the lower it became, the more
dry ground there was for men to work on. (Sur la Formation,
etc., § 89.)]
[Footnote 188-7: Rate of interest in Persia from 40 to 50
per cent. a year. (Ausland, 1844, No. 208.) In Tripoli,
Christians and Jews alike loan the Arabs at the rate of 5
per cent. a month; at least 1½ or 2. (_Rohlfs_, von
Tripolis nach Alexandrien, 1871, I, 22.) In most of the East
Indian kingdoms, the rate of interest is so high for the
government itself that when the creditor, even without a
return of the capital, gets the interest only for a few
years, he is considered passably well indemnified. (_J. S.
Mill_, II, ch. 15, 2.) In China, 12 to 15 per cent.; 36
nothing unheard of. (_Barrow_, China, 562.)]
SECTION CLXXXIX.
INTEREST-POLICY.--LEGITIMATENESS OF INTEREST.
The legitimateness of interest is based on two unquestionable grounds:
on the real productiveness of capital, and on the real abstinence from
enjoyment of it by one's self.[189-1] Let us suppose a nation of
fishermen with no private ownership in land and no capital, living naked
in caverns, on sea-fish which the ebb of the ocean has left in the
puddles along the shore, and which are caught only with the hand.[189-2]
All workmen here may be equal, and each catch and consume three fish a
day. Let us again suppose that some clever savage reduces his
consumption to two fish a day, for one hundred days, and uses the stock
of one hundred fish collected in this way to enable him to devote all
his strength and labor, during fifty days, to the construction of a boat
and a net. With the aid of this capital he, from the first, catches
thirty per day. What now will his fellow tribesmen, who are not capable
of such intelligent and systematic self control to do as he has done,
do? What will they offer him for the use of his capital? In discussing
this question both parties will very certainly consider not only the
fifty days' labor spent in the construction of the boat, etc., but also
the one hundred and fifty days during which its maker had to abstain
from his full ration of food. If the borrower, of the thirty fish which
may be caught daily with the aid of his capital, gives twenty-seven
away, his condition is at least no worse than it was at first. On the
other hand, the lender, if compensated only for the wear and tear of his
capital, would reap no profit whatever from his loan. The interest to be
paid will be fixed somewhere between these two extremes by the relation
between demand and supply. A loan which pays no interest is a donated
use of capital. (_Knies._)[189-3] Interest may be called the reward of
abstinence (_Senior_), in the same way as wages is called the reward of
industry.[189-4] With the abolition of interest, exchange would be
limited to the mere present, without any mediation between the past and
the future. A great number of services would bring no equivalent in
return, and, therefore, as a rule, never be performed. Most of the
charges commonly made in our day against the "tyranny of capital" are,
at bottom, only a complaint that capital is not inexhaustible; and even
those workmen who are obliged to pay most to capital would be much worse
off without it.
[Footnote 189-1: The Greeks very appropriately call interest
τόκος, i. e., that which is born. In the loaning of capital
productively invested, the creditor, in the interest
received, consumes the real produce of his property. If the
debtor has consumed the property unproductively, the
creditor indeed lives on the debtor's other returns or
supplies; which, however, without his intervention would
probably have been consumed by their owner.]
[Footnote 189-2: We here, for the time being, make
abstraction of all entangling surrounding circumstances.
However, _Diodor._, III, 15 ff., and _Strabo_, XVI, 773,
describe a very similar condition of things among the
Ichthyographs; also _Hildebrand_, Reise, um die Erde, III,
2, in China. In the Sudan, whole generations fetch water
every day from a distant town, instead of working for a few
weeks to dig a deep well nearer home. (_Barth_, Afr. Reise,
III, 297.)]
[Footnote 189-3: The most recent relapse into the old error
of the unproductiveness of capital, viz.: that of _Karl
Marx_ (Das Kapital; Kritik der polit. Oekonomie, I, 167) is a
turning round and round of the author in the vicious circle
of his demonstration. If the value of every commodity
depends simply on the labor necessary to bring it into
existence, or on the time of labor required to produce it,
it is self-evident that the value of the capital consumed
for the purpose of its production, can at most be only
preserved in the new product, and that all the additional
value (_Mehrwerth_) of the latter should be ascribed to
labor. (172, and passim.) Hence, strictly speaking, the
capitalist who advances capital to workmen, is still bound
in duty to be grateful to the latter when the value of his
advance is preserved to him undiminished, (§ 173) and all
interest levied by him should be considered as a payment
towards the extinguishment of the capital [debt] itself.
(556.) Relying on such theories, many socialists admit
private property and even the right of inheritance to means
of enjoyment and use capital (_Gebrauchskapitalien_)
provided only that land and productive capital should pass
over into the "collective property" of society, with
compensation, however, to their former owners. Considering
the short duration of most goods used in enjoyment or
consumed, the evil consequences of a community of goods
mentioned in § 81, could not be avoided to any extent by
this means.
How entirely fallacious the above assumption is, is seen
most strikingly in the case of such goods as cigars, wine,
cheese, etc., which, without the least addition of labor, by
merely postponing the consumption of them, obtain a much
larger value both in exchange and in use. Or, how would it
be possible, for instance, to reduce the value of a
hundred-year-old tree, over and above the cost of planting
it, to labor alone? Similarly, the fact that on a Chilian
_hacienda_, 25 per cent. of the cattle can be slaughtered
and no diminution of the herd take place. (_Wappäus_, M. und
S. Amerika, 784.) _Strassburger_ rightly inquires: if all
the profit of capital is based on a cheating of workmen by
capitalists, who is cheated in the case in which a
manufacturer without workmen earns more with an increased
capital than before with a small capital? (_Hildebrand's_
Jahrb., I, 103.)]
[Footnote 189-4: In a time full of nabobism and pauperism,
when some can, without the least abstinence, make immense
savings, and others none at all even with the greatest
abstinence, we may comprehend where the socialists find food
for their derision of the expression, "reward of
abstinence."]
SECTION CXC.
INTEREST-POLICY.--AVERSION TO INTEREST.
At the same time, there is a strong aversion to the taking of interest
prevalent among nations in a low stage of civilization. Industrial
enterprises of any importance do not as yet exist here at all, and
agriculture is most advantageously carried on by means of a great many
parcels of land, but with little capital. The purchase of land is so
rare, and hampered by legal restrictions to such a degree, that loans
for that purpose are almost unheard of. And just as seldom does it
happen, by reason of the superabundance of land, that the heir of a
landowner borrows capital to effect an adjustment with his co-heirs, and
thus enter alone into the possession of the estate. Here, as a rule,
only absolute want leads to loaning.[190-1] If, in addition to this, we
consider the natural height of the rate of wages in such times, the
small number and importance of the capitalist class (§ 201), the tardy
insight of man into the course and nature of economic production,[190-2]
it will not be hard to understand the odium attached in the middle age
of every nation to so-called interest-usury[190-3] (_Zinswucher_).
Most religions, the Christian excepted (the universal religion!), have
been founded in the earlier stages of the nations who profess them, and
have there, at least outwardly, exercised their greatest influence. No
wonder, therefore, that so many religions have prohibited the taking of
interest. Thus, for instance, the Jewish which, indeed, allows interest
to be taken from foreigners, but raises loaning without interest among
Jews in their commerce with one another, to the dignity of a duty
binding on the conscience of the beneficent rich.[190-4] [190-5]
Similarly in the Koran.[190-6] The Fathers of the Church, also, on the
whole, look with disfavor on the taking of interest, relying upon
well-known passages in the Old Testament, and, in part, on misunderstood
expressions in the New.[190-7] This is especially true of the Fathers of
the Church from the beginning of the fourth century, when the Roman
empire was frightfully impoverished by the devastations of the
barbarians, and as a consequence the conditions as to interest which
prevail in the lowest stages of civilization had returned. Mercy towards
the poor usually occupies the foreground in the demonstrations of the
Fathers.[190-8]
[Footnote 190-1: Distress-debts in contradistinction to
acquisition-debts. (_Schmalz_, Staatswirthsch. Lehre in
Briefen, I, 227.) Compare _Hesiod._, Opp., 647; also
_Herodot._, I, 138.]
[Footnote 190-2: Thus _Aristotle_, calls the taking of
interest a gain against nature, since money is only a medium
of exchange, and cannot produce its like. (Polit., 3, 23,
Schn.) Similarly, _Plato_, De Legg., V, 742, and _Seneca_,
De Benef., VII, 10. Compare, however, _Tacit_., Annal, XIII,
42 seq. As late a writer as _Forbonnais,_ 1754, accounts for
interest thus: Some people hoard their money instead of
spending it; hence a scarcity or want of money, and those
who need it are obliged, in order to draw it out, to promise
to pay interest. (Eléments de Commerce, II, 92 ff.)]
[Footnote 190-3: Numerous disturbances on account of debt,
during the first centuries of the Roman Republic, until
finally (compare _Livy_, VII, 42), the taking of interest
was in the year 349 (?) before Christ, entirely prohibited.
(_Tacit._, Annal. VI, 16.) The public opinion in such
matters may be understood from the words of Cato: _majores
ita in legibus posuerunt, furem dupli condemnari,
foeneratorem quadrupli_. (De Re rust.) The _foenerari_
compared with the _hominem occidere_. (_Cato_, in _Cicero_,
De Off., II, 25.) In the higher stages of civilization
little heed was paid to the law, in practice (compare
_Livy_, XXXV, 7; _Plut._, Cato, I, 21.), although the
democratic party always held fast to the legal perpetuation
of the prohibition of interest. (_Mommsen_, Römisch. Gesch.,
III, 493.)]
[Footnote 190-4: Exod., 22, 25; Levit., 25, 35 ff.;
Deuteron., 15, 7 seq.; 23, 19 seq.; Psalms, 15, 5; 109, 11;
112, 5; Proverbs, 28, 8; Jerem., 15, 10; _Hes._, 18, 8.
After the return from exile, the prohibition was restored.
(Net. 5, 1 ff.) Was there, in the long duration of such
prescriptions, an educational measure having reference to
the peculiar fault towards which the Jewish national
character had a special tendency? In Josephus's time even,
usury practiced on one's country people was universally
despised (Antiq. Jud., IV, 8, 25.), and the Talmud continues
it. Compare _Michaelis_, De Mente ac Ratione Legis M. Usuram
prohibentis. In Russia, the orthodox Jews are wont to evade
the legal rate of interest by exacting one-half the profit,
and estimating it approximately in advance at a probable
sum. If, afterwards, the debtor declares under oath that he
made no profit, the creditor has no more to say; but then
the borrower would lose all credit in the future. (_Bonav.
Mayer_, Die Juden unserer Zeit, 1842, 13 seq.)]
[Footnote 190-5: The Mosaic passages, however, only prohibit
the taking of interest from poor people of one's own
country.]
[Footnote 190-6: The prohibition in the Koran, ch. 2, 30, is
regularly evaded in Persia, by deducting the proper amount
at the moment the loan is made. (_Chardin_, IV, 157 ff.)
Under the Mongolian rulers, it was done by way of
preference, by a fictitious sale for cash, at prices out of
all proportion. "Why cannot capitalists either buy land or
carry on trade?" asked Sultan Gazan, on an occasion when the
prohibition of interest was strongly insisted on.
(_d'Ohsson_, Histoire des Mongols, IV, 397.)]
[Footnote 190-7: For instance, _Luke_, 6, 34 ff., where
interest is no more prohibited than in _Luke_, 14, 12 ff.,
the mutual invitation of friends to a feast. Not less
groundless is the supposed allegorical allusion (_Matthew_,
21, 12) to interest-creditors. Rather might an approval of
interest be inferred from _Matthew_, 25, 27.]
[Footnote 190-8: _Origen_, for instance, would have the
creditor take no interest; but exhorts the debtor to return
double the amount unasked. (Homil., III, ad. Ps., § 37.)
Hence there is here no condemnation of interest, but only an
effort to transform all legal relations into relations of
love. Quite the reverse in _Lactant._, Instit., VI, 12;
_Basil_, ad. Matth., 5 ff.; _Ambrose_, De Off., III, 3;
_Chrysost._, ad. Matth. Hom., 56; Tim., VII, 373 ff. (Paris,
1727); _Hieronym._, ad. Ezech., V, 367 c. (Francof, 1684);
_Augustin._, Epist., 54. Even _Cyprian_, 183, 318 (Paris,
1726).]
SECTION CXCI.
INTEREST-POLICY.--THE CANON LAW, etc.
The canon law, from the first, endeavored to prevent contracts for
interest. We may even say that the prohibition of interest-usury is the
key-stone of the whole system of the political economy of the _Corpus
Juris Canonici_. The development of that law coincides, as to time, with
the senility of the Roman Empire and the childhood of modern
nations.[191-1] In the golden age of papal power, every
interest-creditor was refused the communion, the _testamenti factio_ and
the right of ecclesiastical burial. Proceedings at law could not be
instituted for the recovery of the principal debt until the creditor had
restored all the interest obtained. In the council of Vienna, in 1311,
it was declared heresy to defend the taking of interest. The universal
antipathy of the church towards the growing importance of the
_bourgeoisie_,[191-2] and the desire to give the spiritual courts an
extensive jurisdiction in litigated cases, may have contributed largely
to the adoption of these measures. In later medieval times, the secular
power offered its services to execute these laws;[191-3] and, to judge
of what public opinion in this matter was, we need only call to mind the
decided disapproval of interest by Dante, Luther and Shakespeare.[191-4]
The _Weddeschat_, a species of pledge or loan on security, constituted
the transition from this state of things to the modern economic system
of interest. The _Weddeschat_ was a sale with a reserved right of
redemption, by which the debtor gave his creditor the use and enjoyment
of a piece of land a sort of interest in kind, but which he could at any
time recover back, by payment of the principal. This was not very
oppressive on the debtor, as he was the only party who could recall the
contract.[191-5] In a higher stage of civilization, indeed the
continuance of this species of land-pledge would be exceedingly
disadvantageous, since the momentary possessor of a piece of land which
might be bought back by another person at any time at a price fixed in
advance, would scarcely think of improving it.[191-6]
And so, the introduction of rent-purchase (_Rentekauf_) was an important
step in advance: the incumbrancing of a piece of land which remained in
the possession of the debtor with an interest in kind paid to the
creditor. The latter could never claim anything further, while the
debtor and his heirs might redeem the land from this interest-incumbrance
by paying back the purchase money.[191-7] As the Pope, on the 19th of
January, 1569, renewed, in express terms, the prohibition of all interest
not based on rent-purchase, so did the police ordinances of the Empire, of
the sixteenth century, declare it to be the only lawful form of loaning at
interest; provided, always, that only the debtor could demand the
cancellation of the contract.[191-8] We find, however, that, on the whole,
at least Protestant countries had, before 1654, adopted the modern Roman
law relating to interest.[191-9] [191-10]
However, the long persistence of the prohibition of the canon law in
relation to interest, even with the refuge afforded by the introduction
of the rent-purchase system, and of dormant partnerships (_Commanditen_)
etc., so common in the sixteenth century,[191-11] would be
unintelligible, if, contemporaneously, the Jews did not carry on an
important and somewhat free trade in capital,[191-12] precisely as the
Armenians, Hindoos and Jews do in the Mohammedan world of to-day.
[Footnote 191-1: The apostolic canons and several decrees of
councils of the fourth century prohibit the taking of
interest by the clergy. A Spanish provincial council dared,
in 313, to extend the prohibition to the laity. Pope Leo I.
condemned the taking of interest by the laity also, but only
in the form of a moral law. (443.) The synod of
Constantinople (814) punished the violation of the
prohibition with excommunication. See _Thomas Aquin._ (ob.
1274.) De Usuris, in the Quæstiones disputatae et quod
libetales. The canon law, however, always permitted
delay-interest (_Verzugszinsen_), and Gregory IX, allowed
_justa et moderata expensa et congruam satisfactionem
damnorum_ to be taken into account, (c. 17, X.) De Fora
Comp. II, 2. A tacit recognition of the productiveness of
capital is to be found in c. 7, X. De Donatt. inter. Virum.
cett. IV, 20; and the later schoolmen, _Antonin_ and
_Bernhardin_, (ob. 1459 and 144) are pretty clear on the
point. But _Albertus Magnus_ had already recognized the
_damnum emergens_ and _Thomas Aquinas_ the _lucrum cessans_
as causes of interest. (Tübinger Zeitschr., 1869, 151, 159,
161.) The essentially modern character of Roman law, which,
in the form it has finally assumed, is in harmony with a
high development of national economy, accounts for the fact
that the glosse of _Accursius_ relying on _Irnerius_ and
_Bulgarus_ entirely ignores the prohibition of interest. For
a similar reason, in the 16th century, _Donellus_ and
_Cujacius_ stand entirely on Roman ground. In the interval,
indeed, men like _Bartolus_ and _Baldus_ were not disquieted
by the canon law. (_Endemann_, Studien in der
Römisch-Canonischen Wirtchaftsund Rechtslehre, I, 18, 27
seq. 61.) Compare the rich historical material in
_Salmasius_, De Usuris, 1638; De Modo Usurarum, 1639, and De
Mutuo, 1640.]
[Footnote 191-2: _A. Thierry_, Lettres sur l'Histoire de
France, éd. 2., 248 ff.]
[Footnote 191-3: Thus the emperor Basil, in the year 867, as
_Justinian_ had before him, forbade the further payment of
interest, once the amount already paid equaled the
principal. (L. 29 seq.; Cod. IV, 32, Nov., 121, 2.) Compare
Sachsenspiegel, I, 54. _Edward the Confessor_ is said to
have issued the first prohibition of interest. (_Anderson_,
Origin of Commerce, a. 1045.) _Edward III._ forbade all
interest as the ruin of commerce. (Idem a., 1341.) About
1391, the lower House had its zeal aroused against the
"shameful vice of usury;" and again, in 1488, all interest
on money and all rent-purchases stipulated for on unlawful
conditions, were threatened with a fine of £20, the pillory,
and six months imprisonment. (_Anderson_, a., 1488.) In
France, the edict of Philip IV. of 1312. Compare
_Beaumanoir_, Coûtumes, ch. 67, des Usures, No. 2.]
[Footnote 191-4: _Dante_, Inferno, XI, 106 ff., suggests
that interest-creditors had violated the command of _Moses_,
I, 3. _Macchiavelli_ seems to judge otherwise: Compare
Istoria Fior., VII, a, 1464; VIII, a, 1478. Very interesting
discussions on the legitimateness of the taking of interest
in 1353 seq., in which the Dominicans, up to the time of
_Savonarola_, defended the strictest opinion. (_M. Villan_,
III, 106.) _Luther_, Tract on Trade and Money, 1524, and
Sermon on Usury, 1519. Later still, _Luther_ became more
moderate. Thus, in his letter to the Danzig counsel, 1525,
in _Neumann_, Geschichte des Wuchers in Deutschland, 617
ff., in which, for instance, he blames the forcible carrying
out of interest-prohibitions, draws a distinction between
rich and poor, etc. So, too, in his letter: An die
Pfarrherren, wider den Wucher zu predigen, 1540.
_Melanchthon_, Phil. moral., 137 ff., is also more moderate.
_Calvin_ was clearer in this matter, and no longer
recognized the canonical prohibition of interest. (Epistolæ
et Responsa, Hanov., 1597, epist. 383.) Similarly
_Zwinglius_, who will not praise interest, but considers it
a natural consequence of property (Opp. ed. Tugur., 1530, I,
319 ff.), and even _Erasmus_, ad. Evang. Luc., 6, 44. Adagia
v. Usuræ nautt. In _Shakespeare_, compare Merchant of
Venice. _Bodinus_ also rejects on principle, even Roman
interest, which he held to be 1½ per cent. a year: De
Republ., 1584, V. 2. Even the practical Dutch excluded the
so-called "table-keepers," from the communion up to 1657.
Compare the contests hereon in _Laspeyres_, Gesch. d.
volkswirthsch. Ansich. d. Niederl., 258 ff.]
[Footnote 191-5: The mutual right of cancellation
(_Kündbarkeit_) in the case of these contracts during
periods poor in capital and credit, would easily have ruined
the debtor. Compare _J. Möser_, Patr. Ph., II, No. 18. Hence
municipal rights in the latter part of the middle ages,
which in many other respects are so antagonistic to Rome,
have seldom anything to object to its measures in this
matter.]
[Footnote 191-6: A reason why, as _A. Strüver_ remarks, the
Church which was more a creditor than a debtor, never
approved the Weddeschat above mentioned.]
[Footnote 191-7: The institution of rent-purchase
(_Rentekauf_) was already developed in the Hanse cities at
the beginning of the fourteenth century. (_Stobbe_, in the
Zeitschr. f. deutsches Recht, XIX, 189 ff.) About 1420, the
bishops of Silesia inquired of the Pope, whether such
contracts which had been the practice in Silesia for a
century were lawful. The answer was a favorable one,
although he left the rate of interest free in this
particular case (Extr. Com. III, 5, 1, 2); after _Alexander
IV._, however, as early as 1258, had instructed inquisitors
not to take part in litigations concerning usurious
contracts. Formerly all such contracts were prohibited in
express terms. (Decret. Greg., V. 19, 1, 2), although, in
France, the ordinances of Louis IX. and Louis X. (1254 and
1315) had established fixed rates of interest therefor.
Between pledge and rent-purchase, the right of the (virtual)
loaner to expel the (virtual) borrower, which after fell
into disquietude, occupies, so to speak, a middle place.
(Compare _Eichhorn_, D. St.- und R.-Gesch., II, § 361, a
III, § 450.) It was decreed, in France, in 1565, that all
rent in kind should be converted into money rent.
(_Warnkönig_, Franz., St.- und R.-Gesch., II, 585 ff.)]
[Footnote 191-8: Magnum Bullar. Roman., II, 295.]
[Footnote 191-9: A Prussian law allowing interest even
without a contract of rent-purchase as far back as 1385.
(_Voigt_, Geschich. von Preussen, V, 467.) In Marseilles, in
1406, a rate of interest of ten per cent. allowed.
(_Anderson_, Origin of Commerce, s. a.) Likewise in England,
37 Henry VIII., c. 9. In Brandenburg, 1565, 6 per cent.
(_Mylius_, C. C., March, II, 1, 11.) A retrograde step by 5
and 6 Edward VI., c. 20; by which all interest was again
prohibited. These laws had, practically, the effect of
increasing interest to 14 per cent., and were therefore
repealed in 1571. How unnatural the prohibition was is
apparent from the fact that by 4 and 5 Philip and Mary, c.
2, the possessor of 1,000 marks was estimated equal to a
person with £200 annual income. In Denmark, the taking of
interest at 5 per cent. was allowed in 1554, since "although
it is contrary to God's command, yet [according to an
opinion given by _Melanchthon_] this commerce cannot be
entirely abolished." (_Kolderup-Rosenvinge's_ Dänische R.
G., in _Homeyer_, § 142.) Similar views of the elector
Augustus, 1583. (Cod. August 1, 139 ff.)
The German Empire, in 1600, allowed the debtor to contract
that, in case of delay, the contract might be declared
annulled. In France, on the other hand, even during the 18th
century, nearly all loans were made in the form of
_rent-purchase_ (_Law_, Trade and Money, 127), and the
creditor could declare the contract void only in case the
debtor did not pay him the rent. (_Warnkönig_, Franz. R. G.,
II, 585 ff.) For strictly Catholic countries, the prohibition
relating to the taking of interest still really remains.
However, _Leo X.'s_ bull, Inter multiplices, exempts the
so-called _monti di pietà_, and by this means put obstacles
in the way of saving, and promoted real usury. Of this last,
_Niebuhr_, Briefe, II, 399, adduces very striking instances
from the Pope's own temporal dominion. In the case of
pledge, even 12 per cent. per annum is required. (Rom im
Jahr, 1833, 163.) Yet, in 1830, the Poenitentiaria Romana
instructed the clergy, without, however, deciding the chief
question, not to disquiet people any longer in the
confessional who had taken interest. (_Guillaumin_,
Dictionnaire de l'Economie politique, art. usure.) On the
Russian Sect, _Staroverzen_, which still condemns the taking
of interest, see _Storch_, Handbuch, II, 19. By the Russian
government it was permitted very early. _Ewers_, Ältestes
Recht der R., 323 seq.]
[Footnote 191-10: The first scientific defense of interest
is generally considered to be that of _Salmasius_, loc. cit.
Yet _Bacon_, Sermones fideles, C. 39 (after 1539), and at
bottom also _H. Grotius_, De Jure Belli et Pacis, 1626,
taught that it was lawful to take interest in so far as it
was not against the love due to one's neighbor (_Endemann_,
loc. cit., I, 62 ff.), and _Besold_, Quaestiones aliquot de
Usuris, 1598, was as near the truth as _Salmasius_. Compare
_supra_, note 4. How earnestly _North_ and _Locke_ labored
against the lowering of interest by governmental
interference, see _Roscher_, Z. Gesch. der engl.
Volkswirths., 90, 102 ff. The best writers, in strictly
Catholic countries, did violence to themselves in this
matter for a long time after. Thus _Galiani_, Della Moneta,
II, I seq.; and one cannot help being greatly surprised at
witnessing the subtleties which _Turgot_, Mémoire sur le
Prêt d'Argent, 1769, had to have recourse to, to prove the
clearest matters. Thus: at the moment of the loan, a sum of
money is exchanged against the mere promise of the other
party, which is certainly less valuable. [If it were not,
why should he borrow?] This difference must, therefore, be
made up in interest, etc. _Mirabeau_ even was a decided
opponent of interest. (Philos. rurale, ch. 6.) Compare,
however, the theological defense by _Viaixnes_, 1728, in the
Traité des Prêts de Commerce, Amsterdam, 1759, IV, 19 ff.]
[Footnote 191-11: Of course, evaded in a thousand ways in
practical life. Thus, for instance, people gave wheat, other
commodities, and even uncoined gold and silver as loans, and
had what interest they pleased promised them. In alienating
the capital, they might stipulate _à fonds perdu_, as they
thought best. (Turgot, I, c. § 29.) When debtors had
promised under oath to make no complaint, the church ordered
that they should be helped officially. When the temporal
power showed itself lax, Alexander III. decreed that such
questions should be brought before the spiritual courts.
(Decret. Greg. V., tit. 19; 13 _Innocent_, Epist., VIII, 16;
X, 61.) In England, _Richard of Cornwall_ obtained a
monopoly of the whole loaning business. (_Matth. Paris_, ed.
1694, 639: compare, also, 20 Henry III., 5.), from which
fact the existence of the custom of taking interest about
1235, is apparent. Cases in which English kings borrowed and
promised payment back _cum damnis, expensis et interesse:_
Anderson, Origin of Commerce, a. 1274, 1339.]
[Footnote 191-12: Compare _Gioja_, Nuovo Prospetto, III,
190. The canon law desired to put an interdict on their
taking interest also: Decret. Greg., V, tit. 19, 12, 18.
Frequently, also, a minimum of interest was provided for
them: Ordonnances de la Fr., L. 53 seq. II, 575. Receuil des
anciennes, Lois, I, 149, 152. John of France extended this
to four _deniers_ per _livre_ per week, that is, annually
86-2/3 per cent.! (_J. B. Say_, Traité II, ch. 8.) In
Austria, in 1244, 174 per cent. allowed! (_Rizy_, Ueber
Zinstaxen und Wuchergesetze, 1859, 72 ff.)]
SECTION CXCII.
INTEREST-POLICY.--GOVERNMENT INTERFERENCE.--FIXED RATES.
Instead of the medieval prohibition of interest, most modern states have
established fixed rates of interest, the exceeding or evasion of which,
by contract or otherwise, is declared null and void, and is usually
punishable as usury.[192-1] If the fixing of the rate is intended to
depress the rate of interest customary in the country,[192-2] [192-3] it
uniformly fails of its object. If control were great enough, vigilant
and rigid enough, which is scarcely imaginable, to prevent all
violations of the law, it is certain that less capital would be loaned
than had been, for the reason that every owner of capital would be
largely interested in employing his capital in production of his own.
More capital, too, would go into foreign parts, and there would be less
saved by those not engaged in any enterprise of their own. All of this
would happen to the undoubted prejudice of the nation's entire
economy.[192-4] [192-5]
If, on the other hand, the control by the government be not great
enough, the law would, in most cases, be evaded; especially as each
party, creditor as well as debtor, would find it to his advantage to
evade it. The latter, who otherwise would not be able to borrow at all,
is, as a rule, more in need of obtaining the loan, than the creditor is
to invest his capital. How easily, therefore, might he be induced to
bind himself by oath or by word of honor![192-6] He would, moreover, be
compelled to pay the creditor not only the natural interest and the
ordinary insurance premium, but also for the special risk he runs when
he violates the law threatening him with a severe penalty.[192-7] Hence
the last result is either a material enhancement of the difficulty of
obtaining loans or an enhancement of the rate of interest.[192-8]
[Footnote 192-1: This is, historically, the second meaning
of the word usury, while in the middle ages, for instance in
England, under Elizabeth (_D. Hume_), the taking of any
interest whatever was called usury. Science should employ
this word only in the sense used in § 113.]
[Footnote 192-2: In Switzerland, at the end of the 17th
century, not only were those punished who took more interest
than the law prescribed, but those who took less. (Compare
Rechtsquellen von Basel, Stadt und Land, 1865, Bd. II.)]
[Footnote 192-3: Fixed rates of interest of this kind are to
be accounted for in part by a still continuing aversion of
the legislator for interest in general; in part, by the
opinion which prevails that precisely the most useful and
most productive classes might be elevated by an artificial
lowness of the rate of interest. (But most especially the
government itself, which borrows more than it lends.) When
Louis XIV. about 1665, lowered the rate of interest to 5 per
cent., he claimed in the preamble to his decree that it
would have the effect of promoting the welfare of landowners
and business men, and of preventing idleness. Similarly
_Sully_, Economies royales, L, XII. And so _J. Child_,
Discourse of Trade, 69 ff., says that every lowering of the
rate of interest, by law, produced a completely
corresponding increase of the national wealth. He says,
since the first reduction (?) of interest in 1545, the
national wealth increased six fold; since the last, in 1651,
the number of coaches increased a hundred fold;
chamber-maids wore now better clothes than ladies formerly;
on 'Change there were more persons with a fortune of £10,000
than before with £1,000. Similarly _Culpeper_: compare
_Roscher_, Z. Geschichte der eng. Volkswirthsch., 57 ff.
Later, the French generally thought that a lowering of the
rate of interest would prove injurious to the _noblesse de
la robe_; hence even in 1634, parliament was opposed to it.
(_Forbonnais_, Recherches et Considérations, I, 48, 226.)
_Darjes_ says that information of all loans of capital
should be made to the police authorities, and that the
authorities might compel payment and the loaning of the
principal over again to parties in need of capital. (Erste
Gründe, 426 seq.) Something analogous practically provided
for by the Würtemberg _Landesordnungen_ of the 16th century.
(Compare also _von Schröder_, F. Schatz- und Rentkammer,
XXV, 3.)]
[Footnote 192-4: Precisely a high rate of interest is a
powerful incentive to saving, and to the importation of
capital.]
[Footnote 192-5: _Usurae palliatae_, interest taken out of
the capital, or stem-interest, called also money-usury in
contradistinction to patent interest-usury. To this category
belong the written acknowledgments of indebtedness to a
larger amount than that actually received; acknowledging it
in a higher kind of money than that in which the loan was
made; the compulsory taking by the debtor of commodities at
a disproportionately high price, in the place of money, or
at a disproportionately low one, by the creditor. See the
enumeration of such things in the police regulations of the
empire, 1530, art. 26, and 1548, art. 17. Thus, in Paris,
jewels are "sold" to students hard-pressed for money, which
immediately find their way to the _monts de piété_, and have
to be paid for some time after to the usurious "seller," at
a most exorbitant price. The person who loans $100 at 6 per
cent., and retains the interest for the next following year
from the date of the loan, takes in reality nearly 6.4 per
cent. Fraudulent accessory expenses of all kinds, _faux
frais_, expenses of registration, for prolongation, and
extinguishment, etc. Here belong, also, the provisions
introduced into contracts to make redemption more difficult,
the fixing of terms of payment in such a manner that the
debtor is almost forced to let them slip by--called "usury
in the conditions" in Austria. Remarkable instances from the
16th century in _Vasco_, Usura libera, § 57 ff. Recently,
_Braun_ und _Wirth_, Die Zinswuchergesetze, 1856, 190 ff. In
view of the manifold business transactions behind which the
interest-usurer may take refuge, the complete prevention of
the latter would break the legs of commerce (loc. cit., 145
ff.).]
[Footnote 192-6: If the state, by annulling such promises,
should incite the people to violate them, it would be a
frightful step towards the demoralization of the nation:
"thus rewarding men for obtaining the property of others by
false promises, and then, not only refusing payment, but
invoking legal penalties on those who have helped them in
their need." (_J. S. Mill_, Principles, V, ch. 10, 2.)
Besides, the Austrian usury law of 1803 punishes the
borrower also as a spendthrift, and imprisons him for six
months (§ 18), or else it designates where he shall make his
domicile (_Ortsverweisung_). Modern loaning on drafts and
bills of exchange, the acceptance of which is forged with
the knowledge of the creditor, corresponds to what
_Plutarch_, Quaest., Gr., 53, relates of the Cretans, who
had, especially in later times, the worst possible
reputation for avarice and dishonesty. (_Polyb._, VI, 46.
_Paul_ to Titus, I, 12.)]
[Footnote 192-7: He must insure him against the usury laws.
(_Adam Smith._) According to _Krug_, Staatsökonomie, the
usury laws should be called so because they promote usury,
not because they prevent it. Compare to some extent,
_Montesquieu_, Esprit des Lois, XXII, 18 ff.]
[Footnote 192-8: When Catherine II. reduced the rate of
interest in Livonia, in 1785, from 6 to 5 per cent., it soon
became impossible, even on the best security, to borrow at
less than 7 per cent. (_Storch_, Handbuch, II, 26.) And so,
when in New York, in 1717, the rate of interest was reduced
to 6 per cent., it became necessary, the following year, to
raise it again to 8 per cent. The merchants, themselves,
petitioned that it might be so raised, because they found it
impossible to get any loans whatever. (_Ebeling_, Geschichte
und Erdbeschreib. von Nord Amerika, III, 152.) In Chili, the
legal rate of interest is 6 per cent., the actual rate,
however, never under 12 per cent., and frequently 18 to 24
per cent. In Peru, on the other hand, the repeal of the
usury laws rapidly reduced the rate of interest from 50 to
24 per cent., and finally to 12. (_Pöppig_, I, 118.)]
SECTION CXCIII.
INTEREST-POLICY.--EFFORTS TO AVOID THE EVIL EFFECTS OF A FIXED RATE.
It has been thought possible to avoid the evil effects of a fixed legal
rate of interest, by regulating it in such a way as to make it
coincident with the rate customary in the country.[193-1] But there are
numberless transactions in which an insurance premium, or premium for
risk or certain expenses of administration[193-2] on the part of the
loaner is inseparable from the true interest. Here, even the law which
entered most into detail could never properly provide for the infinite
gradations or shades of risk and trouble; and the rate in a great many
transactions would, therefore, be placed below the natural height.
Turgot long since observed that the value of a promise of future payment
is different not only for different persons, but at different times.
Thus, for instance, it is really less after there have been numerous
cases of bankruptcy than at other times.[193-3] If, now, it was desired
to fix the maximum rate of interest in such a way that it should equal
the rate customary in the country, where the security is good, the best
real property security for instance, the consequence would be, that
those persons who had no such guaranty to offer (leaving the loaning
"among brothers" out of the question) would either be unable to borrow
money at all, or, by evading the law, only at an artificially higher
rate. Hence the legislator causes injury where he wished to favor. This
has been observed in England in almost all past commercial
crises.[193-4] The man who makes it his business to loan his capital, on
short time and in small sums, undertakes a trade which the examination,
and the surveillance of a large number of small debtors, and the
necessity of reinvesting the many small sums paid him, render
exceedingly troublesome and disagreeable. Moreover, in loaning on short
terms of payment, there is always danger that his money may lie idle for
some length of time. These are reasons sufficient, why, in such cases,
when the whole compensation is denominated interest, a rate of interest
greater than usual in the country is equitable and even necessary. (§
179.)[193-5]
It has been frequently suggested that spendthrifts and adventurers
should be hindered using, or to speak more correctly, abusing the
nation's wealth by laws prohibiting the rate of interest at which they
might be expected to obtain credit; and this in the interest alike of
the creditors they might possibly find and in their own.[193-6] But
almost every inventor of genius, from Columbus to Stephenson, has been
obliged to be considered "an adventurer" for a time by "solid men." The
law limits him thus, and more especially during the critical period of
outlay which precedes the undoubted triumph of his idea, to his own
means or the gifts of others.[193-7] And how inadequate, as rule, are
both. The rich are as seldom discoverers, as discoverers are skillful
supplicants. And, as regards spendthrifts, they may ruin themselves in
so many thousands of ways, especially by buying or selling, and
unhindered by the state, that it is scarcely apparent why the one way of
borrowing should be legally closed to them.[193-8] How is it, if the law
itself drives them into the hands of a worse class of creditors, and
compels them to pay yet a higher rate of interest? Are they not simply
more rapidly ruined? States, themselves, have scarcely ever given any
heed to their own usury laws in borrowing or loaning.[193-9]
[Footnote 193-1: In Austria, in 1803, in loaning on pledge,
4 per cent.; in other loans and in the trade of merchants
with one another, 6 per cent. In France, since 1807, with
merchants, 6 per cent.; with others, 5. _Salmasins_, De Mono
Usur., c. 1, advises that the maximum should be fixed as
high as that usual in the most unfavorable cases. The
reduction from such rate, where possible, would regulate
itself.]
[Footnote 193-2: _Petty_, Quantulumcunque concerning money,
1682.]
[Footnote 193-3: Sur le Prêt d'Argent, § 36.]
[Footnote 193-4: How many merchants would have avoided
bankruptcy here if they had been allowed to borrow at 8 per
cent.! The established rate of 5 per cent. was certainly too
low, considering the great demand for capital and the want
of confidence at the moment, to permit capital to be loaned
at that rate. Many saw themselves compelled to sell their
merchandise or evidences of state indebtedness at a loss of
30 per cent., in order to meet their obligations. But the
person who, to anticipate the receipts due in 6 months, for
instance, consents to suffer a loss of 30 per cent., pays,
in a certain sense, interest at the rate of 60 per cent. a
year. Compare _Tooke_, Considerations on the State of the
Currency, 60, and History of Prices, II, 163, on the Crisis
of 1825-26. Since the Bank, least of all, could exceed the
legal rate of interest, numberless applications were made to
it in times of war in order to obtain the difference between
the legal rate and the rate usual in the country.
(_Thornton_, Paper Credit of Great Britain, ch. 10.)
Prussia, November 27, 1857, suspended the usury laws for 3
months, on account of the commercial crisis, except the
provisions relating to pawn-broker and minors.]
[Footnote 193-5: _Turgot_ tells of Parisian "usurers" who
made weekly advances to the market women of la Halle, and
received for 3 livres, 2 sous interest; that is 173 per
cent. a year. The premium for insurance may have been very
high here. When such loaners were brought before the courts,
and they were sentenced to the galleys, the usual punishment
for usury, their debtors came and testified their gratitude
by begging for mercy to them! (Mémoire sur le Prêt d'Argent,
§ 14, 31.) Compare _Cantillon_, Nature du Commerce, 276.]
[Footnote 193-6: Thus, _Adam Smith_, Wealth of Nations, II,
ch. 4. Similarly, _Roesler_ Grundsätze, 495 ff. Compare,
_per contra_, _Jer. Bentham_, Defense of Usury: showing the
Impolicy of the present legal Restraints on the Terms of
pecuniary Bargains in Letters to a Friend. To which is added
a Letter to Adam Smith on the Discouragement imposed by the
above Restraints to the Progress of inventive Industry,
1787; 3 ed., 1816.]
[Footnote 193-7: The first steamboat in the United States
was, for a long time, called the "Fulton-folly!"]
[Footnote 193-8: It is just as hard to see why only
money-capital should have a fixed rate of interest, and not
buildings, etc. likewise.]
[Footnote 193-9: In Holland, the legal rate of interest was
lowered, in 1640, to 5 per cent., and in 1655 to 4; but not
since. (_Sir J. Child_, Discourse of Trade, 151.) Besides,
_Locke_, Considerations on the Lowering of Interest, Works,
III, 34, assures us that, in his time, a man in England
could make contracts for unlimited interest.]
SECTION CXCIV.
INTEREST-POLICY.--REPEAL OF THE USURY LAWS.
However, the complete repeal of the usury laws[194-1] has not under all
circumstances accomplished what it was supposed it would; and the state
should take great care, lest by an incautious framing of its laws, it
should put judges in such a position that they may be compelled to
coöperate in the execution of immoral contracts.[194-2] In the lowest
strata, so to speak, of the loaning business, the medieval condition
continues to exist (§ 190) after it has disappeared in the upper. Here,
the loan is effected scarcely ever for the purposes of production, but
most generally because of the most urgent necessity; and the debtor is
not in a condition, from want of education, and especially from his
ignorance of arithmetic, to estimate the magnitude of the burthen he has
undertaken. The business of loaning is, under such circumstances,
considered dishonorable, to some extent, by the public. And when a
business necessary in itself is held disreputable by public opinion, the
usual result is that bad men alone engage in it.[194-3] Real competition
which would but fix the natural price is wanting here in proportion as
the debtor is anxious for secrecy.[194-4]
Abuses in this respect are best guarded against by the establishment of
government loan-institutions, and by the publicity of the administration
of justice to debtors.[194-5] Besides, every contract might be
prohibited the terms of which were such that an inexperienced borrower
could not from them obtain a clear conception of the burthen he accepts,
or which hindered him from paying the debt at a proper time.[194-6]
Lastly, there should be a rate of legal interest fixed by the state to
be charged in such cases as interest is found to be in justice due, but
in which none is provided for by contract; and this rate should
approximate as nearly as possible to the rate usual in the
country.[194-7] [194-8]
[Footnote 194-1: In 1787, Joseph II. abolished the penalties
for usury, but allowed the provisions denying a legal
remedy, in cases of usurious demand of over 4 per cent. for
hypothecations, 6 per cent. for bills and 5 per cent. for
other loans, to remain. Compare the prize essay by
_Günther_, Versuch einer vollständigen Untersuchung über
Wucher und Wuchergesetze, 1790; _v. Kees_, über die
Aufhebung der Wuchergesetze, 1791; _Vasco_, Usura libera,
1792. The opposite view represented by _Ortes_, E. N., II,
24, and _v. Sonnenfels_, Ueber Wucher und Wuchergesetze,
1789, and zu Herrn _von Kees_, Abhandlung, etc., 1791. The
debates on the repeal of the usury laws in the French
Chamber of Deputies, after which _Lherbette's_ motion in
favor of their repeal was rejected. In France they were,
during the assignat-period of bewilderment virtually, and in
1804-1807 expressly (C. C., Art. 1907), but only
provisionally repealed. In Würtemberg, all those having the
right to draw bills of exchange were exempted from them in
1839. Since the law of 1848, governing bills of exchange,
gave all persons capable of contracting, the right to draw
bills of exchange, the usury laws have ceased to have any
existence; without much noise before and without much
complaint after. (A. Allgem. Ztg., 24 März, 1857.) Recent
complete or partial repeal of the usury laws: in England, in
1854; in Denmark, in 1855; in Spain, in 1856; Sardinia,
Holland, Norway and Geneva, 1857; Oldenburg, 1858; Bremen,
1859; in the kingdoms of Saxony and Sweden, in 1864;
Belgium, 1865; Prussia, the North German Confederation, and
to some extent Austria, in 1867.]
[Footnote 194-2: Compare _F. X. Funck_, Zins und Wucher,
1868, a moral theological treatise which rightly demands a
more rigid popular morality in relation to real usury, after
the repeal of the usury laws. The recent cases in which
courts have juridically acquitted usurers because they could
not do otherwise, but have branded them morally, are of very
questionable propriety, in view of the facility with which
high and usurious rates of interest may be confounded. _R.
Meyer_, Emancipationskampf, I, 78, advises that the
capitalist be allowed to ask whatever interest he wishes,
but that the state, as judge and executor of the laws,
should enforce payment only at a certain rate determined by
law.]
[Footnote 194-3: Many laws seem to purposely permit this,
inasmuch as they allow a rate of interest, higher in
proportion as the position of the creditor is less
respectable. Thus, formerly, in some places, the Jews might
require higher interest than the Christians. Justinian
allows _personis illustribus_ only 4 per cent.; ordinary
private persons, 6 per cent.; money-changers, etc., 8 per
cent. (L. 26, Cod. IV, 32.) On the other hand, according to
the Indian legislation of Menu, the Brahman is obliged to
confine himself to 2, the warrior to 3, the _vaysya_ to 4,
the _sudra_ to 5 per cent. per month at most. (Cap. 8.)]
[Footnote 194-4: _Turgot_ considered that only the _prêteurs
à la petite semaine_, pawnbrokers who loaned to hard-pressed
people on the confines of the middle class and artisans, and
the infamous characters who advanced money to the sons of
rich men to spend in dissipation, still passed for usurers.
Only the latter are injurious; not, however, because of the
high rate of interest they charge, but because they help in
a bad cause. (Sur le Prêt d'Argent, § 32.) According to
_Colquhoun_, Police of the Metropolis, 167, there are women
in London from whom the hucksteresses borrow 5 shillings
every day and return them every evening with ½ shilling
interest. Something analogous happens much more frequently
in the country, especially in the loaning in kind of
productive capital to poor persons. Thus, in Tessin, there
are many "iron cattle" which the borrower is obliged to
return at their original value, plus an interest of about 36
per cent. (_Franscini_, C. Tessin, 152.) On the Rhine,
frequently as much as 200 per cent. a year, is stipulated
for in such contracts. _Morstadt_, der N. Oekonom. Heft., IX,
727.]
[Footnote 194-5: Compare _J. J. Becher_, Polit. Discurs,
1668, 219; _v. Schröder_, F. Schatz- und Rentkammer, Bd. §§
123, 133 ff. The first _montes pictatis_ were expressly
intended to check the usury of the Jews. Thus, in Florence,
in 1495, after the expulsion of the Jews, voluntary
contributions were made to found a municipal loaning
establishment. Similarly, _Tiberius_, Tacit. Ann., VI, 16
seq. _Count Soden_, Nat-Oek., IV, 57; V, 319, advises that
all contracts for interest should be recorded in a public
registry, under pain of their being held not actionable.]
[Footnote 194-6: _Günther_, loc. cit., thinks that, in every
contract in which the rate of interest is masked, its real
rate should be expressed under penalty of invalidity. In
addition to this, he would have those who have attained
their majority put in full control of their fortune only
after they had undergone an examination.
It seems opportune that the old prohibition against interest
on interest (_Cicero_, ad. Att., V, 21, and L, 26, Digest,
XIV, 6) and the provision that the interest should not be
permitted to be greater than the _alterum tantum_ (Digest,
l. c.) should be permitted to continue. (Digest, l. c.) Both
of these measures were first decreed by Lucullus, for the
protection of Asia Minor. Compare § 115. Florentine law, of
1693, that interest in arrears, or that interest on interest
beyond 7 years, should not be added to the principal without
an express contract to that effect. (_Vasco_, Usura libera,
§ 155.) In England, the usury laws were by 2 and 3 Victor.,
c. 37, repealed, but only to the extent of excepting from
their provisions bills of not over 12 months, and money
loans not over £10. Compare _Rau_, Lehrbuch II, § 323.]
[Footnote 194-7: Compare _Locke_, Considerations: Works, 10,
32 ff. In Spain, the Council of State is required to
regulate the rate of legal interest yearly (law of 1856,
art. 8); a thing which, according to _Braun_, would be
better done in each individual case by the judges
themselves. (_Faucher's_ Vierteljahrsschrift, 1868, II,
13.)]
[Footnote 194-8: In Athens, the rate of interest in general
was voluntary from the time of Solon, who, however, did away
with slavery for debt. (Lysias adv. Theomn., 360.) Yet there
was a legal rate of interest of 18 per cent. for the case in
which a divorced husband delayed the return of his wife's
dowry. Compare _Böckh_, Staatshaushalt der Athener, I, 148.]
CHAPTER V.
THE UNDERTAKER'S PROFIT. (_UNTERNEHMERLOHN._)
SECTION CXCV.
THE REWARD OF ENTERPRISE.
The essence of an enterprise or undertaking, in the politico-economical
sense of the word, consists in this, that the undertaking party engages
in production for the purpose of commerce, at his own risk. In the
earlier stages of a nation's economy, the production of consumers is,
naturally enough, limited chiefly by their own personal wants. Somewhat
later, when the division of labor has been further developed, the
workman produces at first, enough to meet occasional determinate
"orders;" and still later to meet them regularly and as a business.
Later yet, and in stages of civilization yet higher, especially when the
freedom of labor constantly grows, as it is wont to, here, and the
freedom of capital and trade becomes more extensive, enterprise plays a
part which grows more important as time rolls on, and is usually carried
on more at one's own risk.[195-1] This transition is a great advance,
inasmuch as the advantages of the coöperation of labor and of _use_ may
be utilized in a much higher degree by undertakers (_Unternehmer_) than
by producers who labor only to satisfy their own household wants, or to
meet "orders" already made. The awakening of latent wants, a matter of
the utmost importance to a people who would advance in civilization, is
something which can enter into the mind only of a man endowed with the
spirit of enterprise (an undertaker).[195-2]
While most English political economists have confounded the personal
gain of the undertaker with the interest on the capital used by
him,[195-3] many German writers have called the "undertaker's earnings"
or profit a special, and fourth, branch of the national income,
coördinate with rent, wages, and the interest on capital.[195-4] Yet,
the net income of every undertaker is either the fruit of his own land
used for purposes of production and of his capital, in which case it is
subject to the usual laws of development of rent and interest; or, it
must be considered as wages paid for his labor.[195-5] These wages he
earns, as a rule, by organizing and inspecting the work, calculating the
chances of the whole enterprise; frequently by, at the same time,
keeping the books and acting as cashier; and, in the case of small
undertakings, as a common fellow-workman. (Tradesman, peasant). In every
case, however, even when he puts an agent paid by himself in his place,
he earns these wages from the fact that his name keeps the whole
enterprise together; and for the reason that, in the last
instance,[195-6] he has to bear the care and responsibility attending
it.[195-7] When a business goes wrong, the salaried director or foreman
may permit himself to be called on to engage in another; but the weary,
watchful nights belong to the undertaker or man of enterprise, alone;
and "how productive such nights frequently are!"[195-8]
This profit of the undertaker is subject essentially to the same natural
law as wages in general are; only it differs in this from all other
branches of income, that it can never be stipulated for in advance.
Rather does it consist of the surplus which the product of the
undertaking affords over and above all the rent stipulated for in
advance or estimated at the rate usual in the country, the interest on
capital, and wages of common labor.[195-9]
[Footnote 195-1: At first, usually imperfect enterprises in
which the shop-instruments, etc., are kept ready for present
orders; and then complete or perfect enterprises. (_v.
Mangoldt_, Volkswirthschaftslehre, 255.)]
[Footnote 195-2: _v. Mangoldt_, Lehre vom Unternehmergewinn,
1855, 49 ff. The same author shows, in his
Volkswirthschaftslehre, that it is better for the general
good that the risk should be borne by the producer than by
the consumer. In the case of the taking of orders, there is
danger only of a technic failure, but in enterprise proper,
there is possible also an economic miscarriage of the work,
even when successful from a technic point of view. But in
the case of the undertaker (man of enterprise),
responsibility is much more of an incentive, production much
more steady, and therefore much better able to exhaust all
means of help. Consumers are much more certain in their
steps, as regards price, etc., since they find what they
want ready made.]
[Footnote 195-3: Thus _John Stuart Mill_, Principles, II,
ch. 15, 4, teaches with a certain amount of emphasis that
the "gross profits of stock" are different not so much in
the different branches in which capital is employed, as
according to the personal capacity of the capitalist himself
or of his agents. There are scarcely two producers who
produce at precisely the same cost, even when their products
are equal in quality, and equally cheap. Nor are there two
who turn over their capital in precisely the same time.
These "gross profits" uniformly fall into three classes:
reward for abstinence, indemnity for risk, remuneration for
the labor and skill required for superintendence. _Mill_
complains that there is in English no expression
corresponding to the French _profit de l'entrepreneur_. [The
translator has taken the liberty to use the expression
"undertaker's profit," for what the French call the _profit
de l'entrepreneur_, and the Germans _Unternehmerlohn_, spite
of its funereal associations, and because Mill himself
employed it, although he recognized that it was not in good
usage.--TR.] (II, ch. 15, 1) _Adam Smith_ had the true
doctrine in germ (Wealth of Nat., I, ch. 6), but those who
came after him did little to develop it. Compare _Ricardo_,
Principles, ch. 6. 21. _Read_, Political Economy, 1829, 262
ff., and _Senior_, Outlines, 130 seq., were the first to
divide profit into two parts: interest-rent (_Zinsrente_)
and industrial gain. Similarly, _Sismondi_, N. P., IV, ch.
6. According to _A. Walker_, Science of Wealth, 1867, 253,
285, "profits are wages received by the employer."]
[Footnote 195-4: _Hufeland_, Grundlegung, I, 290 ff.;
_Schön_, Nat-Oek., 87, 112 ff.; _Riedel_, Nat-Oek., II, 7 ff.;
_von Thünen_, Der isolirte Staat, II, 1 80 ff.; _v.
Mangoldt_, Unternehmergewinn, 34 ff. The latter divides the
undertaker's profit (_profit de l'entrepreneur_) into the
following parts:
A. Indemnity for risk. If this be only an indemnity exactly
corresponding to the risk, it cannot be looked upon at all
as net income, but only as an indemnification for capital.
If individual undertakers, favored by fortune, receive a
much larger indemnification than is necessary to cover their
losses, such indemnification is not income either, but an
extraordinary profit not unlike a lottery-gain, unless it be
called, perhaps, the reward of extraordinary courage
(_Eiselen_), i. e., wages. If, lastly, the indemnity is
uniformly somewhat larger than the risk, in order to
compensate for the continual feeling that one is running a
risk, it must be remembered that all remuneration for
present sacrifice, made directly for the sake of production,
is wont to be embraced under the name of wages.
B. Wages and interest for the labor and capital utilized
only in one's own production, and which cannot be let. _v.
Mangoldt_ himself admits, that, in the long run, only
certain qualified labor belongs to this category.
C. Undertaker's rent (_Unternekmerrente_) depending on the
rarity of undertakers (men of enterprise) compared with the
demand. This, therefore, is not a third component part, but
only one which adds to the other two, _Storch_, Handbuch, I,
180, and _Rau_, Lehrbuch, I, § 237 ff., consider the profit
of the undertaker as an admixture of wages and interest.
Professor _J. Miscszewicz_ has given expression to an
interesting thought in opposition to myself: that credit is
a fourth factor of production (natural forces, labor and
capital being the other three) produced by the three older
factors, as capital by the two oldest. The undertaker's
profit he then considers the product of this fourth factor,
corresponding to rent, interest and wages.]
[Footnote 195-5: Compare _Canard_, Principes, ch. 3; _J. B.
Say_, Traité, II, ch. 7, Cours pratique, V, 1-2, 7-9,
distinguishes three branches of income: rent, interest and
the profits of industry; and he divides the latter again
into the profits of the _savant_, the undertaker and
workmen, (_v. Jacob_, Grundsätze der Nat.-Oek., § 292;
_Lotz_, Handbuch, I, 471; _Schmalz_,
Staatswirthschaftslehre, I, 116; _Nebenius_, Œff. Credit,
I, Aufl., 466.)]
[Footnote 195-6: I need only call attention to the influence
that the mere name of a general sometimes exerts over the
achievements and sometimes even over the composition of his
army (Wallenstein!); and how important it sometimes is to
keep his death a secret. And so the mere name of a minister
of finance may facilitate loans, etc.]
[Footnote 195-7: It is sufficient to mention the different
positions occupied by the shareholders and preferred
creditors of a joint-stock company.]
[Footnote 195-8: Compare _von Thünen's_ Isolirter Statt, II,
80 ff., and his Life, 1868, 96. _Meister muss sich immer
plagen!_ (_Schiller._) See a long catalogue of books on the
position of the undertaker in the principal different
branches of industry in _Steinlein_, Handbuch der
Volkswirthschaftslehre, I, 445 ff.]
[Footnote 195-9: _Tantièmes_ occupy a middle place between
wages and the undertaker's profit; dividends a middle place
between undertaker's profit and the interest of capital. On
this is based _Rodbertus's_ view, that an increase of joint
stock companies raises _ceteris paribus_ the rate of
interest, and an increase of productive associations the
rate of wages, for the reason that in each instance, there
is some admixture of "undertaker's profit," or reward of
enterprise.]
SECTION CXCVI.
UNDERTAKER'S PROFIT.--CIRCUMSTANCES ON WHICH IT DEPENDS.
As the wages or reward of labor, in all instances, depends on the
circumstances mentioned in § 167 ff., so, also does the reward of
enterprise; in other words, the undertaker's profit or wages. It
depends, therefore:
A. On the rarity of the personal qualities required in a business, which
qualities may be divided into technical and ethical qualities. Among the
latter are, especially, the capacity to inspire capitalists with
confidence and workmen with love for their task; the administrative
talent to systematize a great whole made up of men and to order it
properly, to keep it together by sternness of discipline in which
pedantry has no part, and by economy with no admixture of avarice; and
frequently endurance and even presence of mind. These ethical,
statesmanlike qualities are, take them all in all, a more indispensable
condition of high undertaker's profit than the technical are.[196-1]
B. On the risk of the undertaking in which not only one's property, but
one's reputation, may be lost.[196-2]
C. As to the disagreeableness of the undertaking or enterprise, we must
take into especial consideration the disinclination of capitalists in
general to assume the care and trouble of concerning themselves directly
with the employment of their capital. (§ 183.) The undertaker's profit
is, besides, lower in proportion as he needs to care less for the
profitable application of the different sources of production, and for
their preservation. Hence it is, in general, higher for the direction of
circulating than of fixed capital; in speculative trade and in wholesale
trade which extends to the whole world, than in retail trade and merely
local business.[196-3]
It has, indeed, been remarked, that the undertaker's profit is, as a
rule, proportioned to the capital employed.[196-4] This may be true in
most cases, but only as the accidental compromise between opposing
forces. It is evident that the greater the enterprise is, the greater
may be the surplus over and above the compensation stipulated for in
advance of all the coöperating productive forces, and not only
absolutely but also relatively. We need only call to mind the successful
results attending the greater division of labor (§ 66) and the greater
division of use (_Gebrauchstheilung_) (§ 207); the greater facility of
using remains in production on a large scale, and the fact that all
purchases, and all obtaining of capital are made, when the items are
large, at cheaper rates, because of the more convenient conducting of
the business.
This is true up to the point where the magnitude of the whole becomes so
great as to render the conducting of it difficult. Considered even
subjectively, the great undertaker, whose name and responsibility keep a
great many productive forces together, may demand a higher reward,
because there are so few persons competent to do the same. On the other
hand, it cannot be denied that a support in keeping with his position
may be called the amount of the cost of production of the undertaker's
labor. If this cost is once fixed by custom, it will, of course, be
relatively high in those branches of business which permit only of the
employment of a small capital.[196-5]
In the higher stages of civilization, the undertaker's profit has, like
the rate of interest, a tendency to decline. This decline is, indeed, in
part, only an apparent one, caused by the decreased risk and the smaller
indemnity-premium. But it is, in part, a real one, produced by the
increased competition of undertakers.[196-6] The more intelligent
landowners and workmen become, the more readily do they acquire the
capacity and desire to use the productive forces peculiar to them in
undertakings of their own; and the number of retired persons who live
from their rents grows smaller with the decline of the rate of interest.
The strong competition of undertakers now leads to degeneration, and
undertakings or enterprises become usual in which the gains or losses
are subjective, and are destitute of all politico-economical
productiveness; for instance, the purchase of growing fruits, and
businesses carried on in "margins," or differences. It is self-evident
that the circumstances which retard the rate of interest, or turn it
retrograde, would have a similar effect on the undertaker's profit. (§
186.) On the whole, a rapidly growing people meet with great gains and
losses, but the preponderance is in favor of the former. A stationary
people are wont to become more and more careful and cautious. A
declining people underestimate the chances of loss, although in their
case they tend more and more to preponderate over the chances of gain.
(_v. Mangoldt._)
[Footnote 196-1: Thus _Arkwright_, by his talent for
organization principally, attained to royal wealth, while
_Hargreaves_, a greater inventive genius, from a technic
point of view, had to bear all the hardships of extreme
poverty.]
[Footnote 196-2: An experienced Frenchman, _Godard_,
estimates that of 100 industrial enterprises attempted or
begun, 20 fail altogether before they have so much as taken
root; that from 50 to 60 vegetate for a time in continual
danger of failing altogether, and that, at the furthest, 10
succeed well, but scarcely with an enduring success.
(Enquête commerciale de 1834, II, 233.)]
[Footnote 196-3: Thus _Ganilh_, Théorie de l'Economie
politique I, p. 145, was of the opinion that in France's
foreign trade the profit was only 20, and in its internal
trade, scarcely 10 per cent. of the value put in
circulation.]
[Footnote 196-4: _Hermann_ loc. cit. 208.]
[Footnote 196-5: According to _Sinclair_, Grundgesetze des
Ackerbaues, 1821, the profit on capital of English farmers
was wont to be from 10 to 18 per cent. Only in very
remarkable cases, by persons in very favorable
circumstances, was from 15 to 20 per cent. earned; that is,
on the whole, less than in commerce and industry. In the
case of farmers of meadow land, 15 per cent. and even more
was not unusual; because there is a need of less outlay
here, but more mercantile speculation, especially in the
fattening of live stock.
At the end of the last century English farmers expected 10
per cent. profit on their capital. (_A. Young_, View of the
Agriculture of Suffolk, 1797, 25.) And so _Senior_ is of
opinion that, in the England of to-day, industrial
enterprises of £100,000 yield a profit of less than 10 per
cent. a year; those of £40,000, at least 12½ per cent.;
those of from £10,000 to £20,000, 15 per cent.; smaller ones
20 per cent. and even more. He makes mention of fruit
hucksters who earned over 20 per cent. a day; that is, over
7,000 per cent. a year! (Outlines, 203 seq.) In Manchester,
manufacturers, according to the same authority, turned over
their capital twice a year at 5 per cent.; retail dealers,
three times a year at 3½ per cent. (Ibid, 143.) _Torrens_,
The Budget (1844), 108, designates 7 per cent. as the
minimum profit which would induce an English capitalist to
engage in an enterprise of his own. According to _v.
Viebahn_, Statistik des Regierungsbezirks Düsseldorf, 836,
I, 180, the undertaker's profit, i. e., the surplus money of
the value of the manufactured articles, after deduction made
of the raw material and wages, in the Berg country, amounted
to, in 81 iron factories, 146,400 thalers; in 6 cotton
factories, to 21,200 thalers; in 15 cloth factories, to
14,725 thalers; in 4 worsted factories, to 1,700 thalers; in
4 brush factories, to 800 thalers; in 2 tobacco factories to
10,220 thalers; in 2 paper factories, to 7,400 thalers; on
an average, 1,924 thalers; although many undertakers earned
only from 200 to 400 thalers, and some few from 5,000 to
10,000 thalers.]
[Footnote 196-6: This is, of course somewhat oppressive to
many individuals, and hence we find that in those countries
which are unquestionably making great advances in
civilization, there are so many complaints of alleged
growing impoverishment. Compare _Sam. Fortrey_, England's
Interest and Improvement, 1663; _R. Coke_, A Treatise
wherein is demonstrated that the Church and State of England
are in equal danger with the Trade of it, 1671. Britania
languens, showing the Grounds and Reasons of the Increase
and Decay of Land, etc., 1680. And per contra, England's
great Happiness, wherein is demonstrated that a great Part
of our Complaints are causeless, 1677. Analogous claims
might be shown to exist in Germany by a collection of almost
any number of opinions advanced during the last thirty
years.]
SECTION CXCVI (_a._).
UNDERTAKER'S PROFIT.--HAVING THE "LEAD."
The undertaker's profit is that branch of the national income in which
the greater number of new fortunes are made. If a landowner has a large
income, he generally considers himself obliged to make a correspondingly
large outlay, one in keeping with his position; and workmen who are not
undertakers themselves seldom have the means to make large savings.
Besides, undertakers stand between the purchasers of their products and
the lessors of the productive forces used by them in the peculiarly
favorable situation which I may describe by the expression: having, as
they say in card-playing, "the lead."[196a-1] When, in the struggle for
prices, one party occupies a position which enables him to observe every
change of circumstance much sooner than his opponent, the latter may
always suffer from the effects of erroneous prices. If, for instance,
the productiveness of business increases, even without any personal
merit of the individual undertakers themselves, it will always be some
time before the decline in the price of commodities and the rise in the
rate of interest take place, as a result of the increased competition of
undertakers, consequent upon the extraordinary rate of the undertaker's
profit. It is difficult, and even impossible in most instances for the
proprietors of the productive forces which they have rented out, to
immediately estimate accurately the profit made by undertakers. On the
other hand, the least enhancement of the price of the forces of
production is immediately felt by the undertakers, and causes them to
raise their prices. They just as quickly observe a decline of the prices
of the commodities, and know how to make others bear it by lowering
wages and the rate of interest.[196a-2] It should not be forgotten that
the persons most expert, far-seeing, active and expeditious in things
economic, belong to the undertaking class.[196a-3] [196a-4]
[Footnote 196a-1: The same principle is effective in
intermediate commerce, and in the intervention of bankers
between government and state creditors.]
[Footnote 196a-2: This is much less the case in rents, for
the reason that contracts here are made for a much longer
term. Hence, here the farmer has as much to fear as to hope
from a change of circumstances. Hence, too, we meet with a
farmer who has grown rich much more seldom than with a
manufacturer or a merchant.]
[Footnote 196a-3: If an undertaker can cede his higher
reward to another and guaranty its continuance, the
circumstances which enable him to do this assume the nature
of fixed capital; for instance, the trade or _clientèle_
secured by custom or privilege. If the undertaker has not
the power to dispose of it in this way, the increased profit
either disappears with his retirement from the business or
falls to the owner of the capital employed, and still more
to the land owner. Thus, for instance, how frequently it has
happened that a store, which has been largely resorted to by
the public, drawn thither by the business tact of the
lessee, has afterwards been rented by the owner at a higher
rent! (_Hermann_, loc. cit. 210.)]
[Footnote 196a-4: _Lassalle's_ socialistic attacks on
Political Economy have been directed mainly against the
undertaker's profit or reward. Compare the work
"Bastiat-Schulze von Delitzsch, der ökonom. Julian oder
Kapital und Arbeit," 1863. By means of state credit, he
would have this branch of income turned over to common
labor. _Dühring_ also, Kapital und Arbeit 90, declaims not
so much against capital as against "the absolutism of
undertakers." _Schäffle_ D. Vierteljahrsschrift Nr. 106, II,
223, objects to this, that undertakers give value in
exchange to unfinished products, a great service rendered
even to the laboring class, who otherwise would have to
resign the advantages of the division of labor.
The undertaker's profit is precisely the part of the great
politico-economical tree from which further growth chiefly
takes place. To artificially arrest it, therefore, would be
to hasten the stationary state, and thus make general and
greater the pressure on workmen and capitalists, which it is
sought to remove locally. Hence _Roesler_, Grundsätze, 507
ff., very appropriately calls the undertaker's profit the
premium paid by society to those who most effectually combat
the "law of rent." The importance of a good undertaker may
be clearly seen when a joint stock manufacturing company
pays a dividend of from 20 to 30 per cent., while one close
by, of the same kind, produces no profit whatever. But, at
the same time, the socialistic hatred of this branch of
income may be easily accounted for, in a time full of
stock-jobbing, which last never produces except a
pseudo-undertaker's profit.]
CHAPTER VI.
CONCLUDING REMARKS ON THE THREE BRANCHES OF INCOME.
SECTION CXCVII.
INFLUENCE OF THE BRANCHES OF INCOME ON THE PRICE OF COMMODITIES.
We have seen, § 106, that the cost of production of a commodity,
considered from the point of view of individual economy, may be reduced
to the payment for the use of the requisite productive forces rented or
loaned to the producer. Hence every great variation in the relation of
the three branches of income to one another must produce a corresponding
variation in the price of commodities.[197-1] When, for instance, the
rate of wages increases because they absorb a larger part of the
national income, those commodities in the production of which human
labor, directly employed, is the chief factor, must become dearer as
compared with others. Whether this difference shall be felt principally
by the products of nature or of capital (compare § 46 seq.), depends on
the causes which brought about the enhancement of the rate of wages.
Thus, a large decrease of population, or emigration on a large scale,
will usually lower rent as well as the rate of interest;[197-2] an
extraordinary improvement made in the art of agriculture, only the
former; and an extraordinary increase of capital, only the latter. The
usual course of things, namely that the growth of population
necessitates a heavier draft on the resources of the soil, and thus
causes rents to go up, and makes labor dear, must have the effect of
raising the price of the products of labor and of natural forces, as
compared with the products of capital; and all the more as it causes the
rate of interest to suffer a positive decline. The products of
mechanical labor become relatively cheaper; and cheaper in proportion as
the producing machinery is more durable; therefore in proportion as, in
the price of the services it renders, mere interest preponderates over
compensation for its wear and tear.[197-3]
Let us, for a moment, leave ground-rent out of the question entirely,
and suppose a nation's economy whose production is conducted by eleven
undertakers employed on different commodities. Let us suppose that
undertaker No. 1 uses machinery exclusively and employs only as many
workmen as are strictly necessary to look after it, that undertaker No.
2 has a somewhat larger number of workmen and a somewhat smaller amount
of fixed capital, etc.; and that this increase in the number of workmen
and decrease in the amount of fixed capital continues until we reach
undertaker No. 11, who employs all his capital in the payment of wages.
If now, the rate of wages were to rise, and the interest on capital to
fall in the same proportion, the commodities produced by undertaker No.
11 would rise most in price, and those of No. 1 decline most. In the
case of undertaker No. 6, the opposing influences would probably balance
each other, and if the producers of money belonged to this sixth class,
it would be very easy to get a view of the whole change in the
circumstances of production, in the money-price of the different
commodities.[197-4]
[Footnote 197-1: Compare _Adam Smith_, I, ch. 7, fin. This
relative increase or decrease of one branch of income at the
expense or to the advantage of another, should be
distinguished from the absolute change of its amount which
does not affect the cost of production. Thus, for instance,
when the rent of land indeed increases, but in consequence
of a simultaneous improvement in agriculture, a decline in
the rate of interest, and an enhancement of the price of
wheat is avoided (§ 157). So, too, when individual wages
increase on account of the greater skill and energy of
labor, but the same quantity and quality of labor do not
become dearer (§ 172 seq.); and lastly, when the rate of
interest remaining unaltered, the receipts of capitalists
are increased by reason of an increase of their capital (§
185).]
[Footnote 197-2: After the great plague in the 14th century
in England, when all the products of labor became dearer,
skins and wool fell largely in price: _Rogers_, I, § 400.]
[Footnote 197-3: Anyone who carefully reads all the five
divisions of _Ricardo's_ first chapter will soon find that
this great thinker rightly understood the foregoing,
although the great abstractness and hypothetical nature of
his conclusions might easily lead the reader astray. The
proposition which closes the second part, and which has been
so frequently misunderstood by his disciples, can be
maintained only on the supposition that the prices of all
commodities hitherto have been made up of equal proportions
of rent, capital and wages. But think of Brussels lace and
South American skins!]
[Footnote 197-4: Compare _J. Mill_, Anfangsgründe der polit.
Oekonomie, Jacob's translation, § 13 ff.; _McCulloch_,
Principles, III, 6. _Adam Smith_ was of opinion, that higher
wages enhanced the price of commodities in an arithmetical
ratio, a higher rate of interest in a geometrical one (I,
ch. 9). Similarly _Child_, Discourse of Trade, 38. This last
_Kraus_, Staatswirthschaft, better expresses by saying that
an increase in the rate of interest operates in the ratio of
the compounded interests.]
SECTION CXCVIII.
REMEDY IN CASE ONE FACTOR OF PRODUCTION HAS BECOME DEARER.
When one of the three branches of income has grown as compared with the
others; in other words, when the factor of production which it
represents has become relatively dearer, it is to the interest of the
undertaker and of the public, that it should be replaced where possible
by another and cheaper productive force. (§ 47.) On this depends the
advantageousness of _intensive_ agriculture (high farming) in every
higher stage of civilization. There land is dear and labor cheap. Hence,
efforts are made to get along with the least amount of land-surface, and
this minimum of land is made more productive by a number of expedients
in cultivation, by manuring it, by seed-corn, etc., of course also by
the employment of journeymen laborers, oxen, etc. And since the price of
land is intimately connected with the price of most raw material,
remains are here saved as much as possible, often with a great deal of
trouble.[198-1] In a lower stage of civilization, such savings would be
considered extravagance. As land is here cheap, and capital dear, it is
necessary to carry on the cultivation of land _extensively_; that is,
save in capital and labor, and allow the factor nature to perform the
most possible. The clearing up of untilled land, or the draining of
swampy land etc., would be frequently injurious here; for it would
require the use of a very large amount of capital to obtain land of
comparatively little value.
In large cities, it is customary to build houses high in proportion to
the dearness of the land.[198-2] Thus, in England, where the rate of
interest is low and wages high, labor is readily supplanted by capital.
In countries like the East Indies or China, the reverse is the case. I
need only call attention to the palanquins used in Asia instead of
carriages; to the men who in South America carried ore down eighteen
hundred steps to the smelting furnaces,[198-3] and, on the other hand,
to the "elevators," so much in favor in England, which are used in
factories to carry people from one story to another inside to save them
the trouble of going up stairs.[198-4]
[Footnote 198-1: The sickle instead of the scythe; careful
threshing by hand, and, where the rate of interest is low,
threshing by machinery instead of the treading out of the
sheaf by oxen. Thus in Paris the scraps from restaurants and
soap factories are made into stearin; and the remnants in
shawl factories in Vienna are sent to Belgium to be used by
cloth manufacturers.]
[Footnote 198-2: Remarked in ancient times of Tyre, which
was situated on a small island, and, therefore, without the
possibility of horizontal extension. (_Strabo_, XVI, 757.)]
[Footnote 198-3: _Humboldt_, N. Espagne II, ch. 5, II, ch.
11.]
[Footnote 198-4: Thus, in England, the safety of railroad
trains is not secured as in Germany by a multitude of
watchmen, etc.; but by solid barriers, by bridges at every
crossing, in other words, by capital.]
SECTION CXCIX.
INFLUENCE OF FOREIGN TRADE.
Foreign trade, that great means of coöperation of labor among different
nations, affords such a remedy in a very special manner. It very
frequently happens that the undertakers of one country, when a certain
factor of production seems too dear at home, borrow it elsewhere. Thus,
for instance, a country with a high rate of wages draws on another for
labor, and one with a high rate of interest on another for
capital.[199-1] We elsewhere consider such a course of things from the
standpoint of the supplying country, which in this way is healed of a
heavy plethora of some single factor of production which disturbs the
harmony of the whole. (§§ 187, 259, ff.). But, at the same time, the
supplied country, considered from a purely economic point of view, reaps
decided advantages therefrom. If, for instance, a Swiss confectioner
returns from Saint Petersburgh to his home, after having made a fortune
in an honest way, no one can say that Russia has grown poorer by the
amount of that fortune. This man made his own capital; if he were to
remain in Russia, its national economy would be richer than before his
immigration thither. Now, it is, at least, no poorer, and has in the
meantime had the advantage of the more skilled labor of the
foreigner.[199-2] And, so, when a capitalist living in Germany purchases
Hungarian land, the national income of Hungary is diminished by the
amount of the annual rent which now goes to Germany; but it receives an
equal amount in the interest on capital, provided the purchase was an
honorable one and the capital given in exchange for the land honestly
invested.[199-3] If Hungary, in general, had a superabundance of land
but a lack of capital, the economic advantage is undoubted.[199-4]
These economic rules, indeed, are applicable only to the extent that
higher and national considerations do not in the interest of all, create
exceptions to them. "Is not the life more than meat, and the body than
raiment?" No rational people will allow certain services to be performed
for them preponderantly by foreigners, even when they can be performed
cheaper by the latter--the services of religion, of the army, of the
state, etc. The same is true of landownership; and all the truer in
proportion as political and legal rights of presentation and other forms
of patronage are attached to it. Lastly, hypothecation-debts which go
beyond certain limits, may entail the same consequences as the complete
alienation of the land;[199-5] and Raynal may have been, under certain
circumstances, right when he said, that to admit foreigners to subscribe
to the national debt was equivalent to ceding a province to them.[199-6]
It is obvious that a great power may do much in this relation that would
be a risk to a small state.[199-7] [199-8]
[Footnote 199-1: "The transportation of productive capital
and industrial forces from one point where their services
are worse paid for, to another where they find a rich
reward, will not be apt to be made so long as the
equilibrium may be obtained [most frequently much more
easily] by the interchange of the products." (_Nebenius_,
Œff. Credit, I, 48.) The repeal of the corn laws in England
certainly diminished the emigration of English capital.]
[Footnote 199-2: For an official declaration of the
Brazilian state in this direction, see Novara Reise.]
[Footnote 199-3: Basing himself hereon, _Petty_, Political
Anatomy of Ireland, 82 ff., questions the usual opinion,
that Ireland suffered so much from absenteeism. He says that
a prohibition of absenteeism carried out to its logical
conclusion would require every man to sit on the sod he had
tilled himself. _Carey_, On the Rate of Wages, 1835, 477,
calls English capitalists who draw interest from America,
absentees.]
[Footnote 199-4: The older political economists have, as a
rule, ignored this law, and were wont to consider every
payment of money to a foreign country as injurious. Thus,
for instance, _Culpeper_, Tract against the high Rate of
Usury, 1623, 1640, disapproves all loans made from foreign
countries, because they draw more money in interest, and in
repayment of the principal out of the nation, than they
brought into it at first; and all the more, as the loan is
generally procured, not in the precious metals, but in
foreign goods, of which there is a superabundance in the
home country. Similarly _Child_, Discourse of Trade, 1690,
79, who claims that the creditor was always fattened at the
expense of the debtor. Hence _v. Schröder_, Fürst, Schatz-
und Rentkammar, 141, advises that the capital borrowed in
foreign countries should be confiscated. Compare, also, _v.
Justi_, Staatswirthschaft, II, 461. And yet the very
simplest calculation shows, that if a man borrows $1,000 at
5 per cent. and makes 10, he is doing a good business with
the borrowed capital. This _Locke_, Considerations, 9,
recognizes very clearly. Compare, also, _J. B. Say_, Traité,
II, ch. 10, and _Hermann_, Staatsw. Unters., 365 seq.]
[Footnote 199-5: Think of the English creditors in Portugal
and the Genoese in Corsica (_Steuart_, Principles, II, ch.
29.) Considered simply from an economic standpoint, the
Edinburg Review, XX, 358, very clearly demonstrates that
England should recruit her army from Ireland, where wages
are so much lower than in Great Britain. But how dangerous
in a political sense! In 1832, one-fourth of the stock of
the United States Bank was in the hands of foreigners, and
hence its opponents nick-named it the "British Bank." By the
rules of the principal bank in Philadelphia, in 1836, only
American citizens were allowed a vote in its proceedings.
Similarly in the case of the Bank of France. (_M.
Chevalier_, Lettres sur l'Amerique du N. I, 364.) It may be
remarked in general, that the older political economists
have based correct political views on false economic
principles, while the more modern ignore them entirely.]
[Footnote 199-6: Compare _Montesquieu_, E. des Lois L, XXII,
17; _Blackstone_, Commentaries, I, 320.]
[Footnote 199-7: Thus Austria conceded, in 1854-55, a number
of railways to French capitalists, and always favored the
purchase of landed estates by small foreign princes. In the
latter case, Austrian influence abroad was much more
promoted by the measure than was foreign influence in
Austria.]
[Footnote 199-8: Every nationality is not worth the
sacrificing of the highest economic advantage or profit to
it. Or, would it be preferable to leave the Hottentots and
Caffirs, poor, barbarous and heathenish?]
SECTION CC.
INFLUENCE OF THE BRANCHES OF INCOME ON THE PRICE OF COMMODITIES.
In relation to foreign trade, in the narrowest sense of the term, fears
were formerly very frequently expressed and are sometimes even now,
which in the last analysis are based on the assumption that one country
might be underbid by another in all branches of commodities.[200-1] This
is evidently absurd. Whoever wants to pay for foreign commodities can do
it only in goods of his own. When he pays for them with money, the money
is either the immediate product of his own husbandry (mining
countries!), or the mediate product obtained by the previous surrender
of products of his own. To receive from foreign countries all the
objects which one has need of, would be to receive them as a gift.
It is just as absurd to fear that the three branches of income in the
same country's economy should be all relatively high at the same time,
and competition with foreign countries be thus made more difficult. Rent
and interest especially in this respect have to demean themselves in
ways diametrically opposed to each other.[200-2] When trade is entirely
free, every nation will engage at last in those branches of production
which require chiefly the productive forces which are cheapest in that
country; that is which the relatively low level of the corresponding
branch of income recommends to individual economy and enterprise. The
merely absolute and personal height of the three branches of income has,
as we have said, no direct influence on the price of commodities. In
this respect, all these may be higher in one country than in another.
Thus, for instance, English landowners, capitalists and workmen may be
all at the same time in a better economic condition respectively than
Polish landowners, capitalists and workmen, when the national income of
England stands to its area and population in general, in a much more
favorable ratio than the Polish.[200-3]
[Footnote 200-1: Thus, _Forbonnais_, Eléments du Commerce I,
73. _J. Moser_, Patr. Ph., I, No. 2.]
[Footnote 200-2: For a thorough refutation of the error that
everything is dearer in England than in France, see Journ.
des Econ., Mai, 1854, 295 seq. A distinguished architect
assured me in 1858, that a person in London could build
about as much for £1 as for from 6 to 7 thalers in Berlin;
only the aggregate expense in both countries is made up of
elements very different in their relative proportions.]
[Footnote 200-3: We very frequently hear that countries with
high wages must be outflanked in a neutral market by
countries with a low rate of wages. _Ricardo's_ disciples
reject this, because a decrease in the profit would put the
undertaker in a condition to bear the loss caused by the
high wages paid. See Report of the Select Committee on
Artisans and Machinery. _Senior_ ridicules such reasoning
very appropriately by inquiring: "Might not the loss enable
him to bear the loss?" Outlines, 146. And so _J. B. Say_
thinks that wages are always lowest when undertakers are
earning nothing. The truth is rather this: a country with a
relatively high rate of wages cannot, in a neutral market,
offer those commodities the chief factors required for the
production of which is labor; but the comparatively low rate
of interest or low rents, or the lowness of both found in
connection therewith, must fit it to produce other
commodities very advantageously. If, therefore, the rate of
wages rises, the result will be to divert production and
exports into other channels than those in which they have
hitherto flowed. The old complaint of Saxon agriculturists,
that there is a lack of labor in the country, is certainly
very surprising in a nation as thickly populated as Saxony.
But the remedy proposed by the most experienced
practitioners consists chiefly in a higher rate of wages to
enable workmen to care for themselves in old age, the
introduction of the piece-work system and an increase of
agricultural machines. But it seems to me, that the whole
situation there points to the advantage of in part limiting
the large farming hitherto practiced to live-stock raising
and other branches in which labor may be spared, and in part
of replacing it, by small farming of plants which are
objects of trade.
Many points belonging to this subject have been very well
discussed by _J. Tucker_, in his refutation of _Hume's_
theory on the final and inevitable superiority of poor
countries over rich ones in industrial matters. (Four Tracts
on political and commercial Subjects, 1774, No. 1; _L.
Lauderdale_, Inquiry, 206.)]
SECTION CCI.
HARMONY OF THE THREE BRANCHES OF INCOME.--INDIVIDUAL DIFFERENCE IN THEM.
As national-economical civilization advances, the personal difference of
the three branches of income is wont to become more and more sharply
defined.[201-1] The struggle between landowners, farmers and workmen,
which Ricardo necessarily assumed, did not exist at all in the middle
ages; since landowners and farmers were then usually one and the same
person, and since workmen, either as slaves or peasants, were protected
against competition properly so called. And so in the industry of that
time, based on the trades or on domestic industry.[201-2] [201-3]
When, later, the division of labor increases, all the differences of
men's aptitudes are turned to more advantage, and are more fully
developed. In the same proportion that a working class is developed, the
members of which are nothing but workmen, and can scarcely hope to
possess capital or land,[201-4] there grows up, side by side with it, a
class of mere capitalists, who come to obtain an ever-increasing
importance.
Considered from a purely economic point of view, this transition has its
great advantages. How much must the existence of a special class of
capitalists facilitate the concentration of capital and the consequent
promotion of production, as well as its (capital's) price-leveling
influx and outflow! Even "idle" capitalists have this of good, that,
without them, no competent man, destitute of means could engage in any
independent enterprise. When, indeed, the gulf between these two classes
passes certain bounds, it may, politically and socially, become a great
evil. (§ 63.)[201-5]
[Footnote 201-1: Among nations in their decline, rent and
interest fall into one possession again, because capitalists
here are wont to buy the land. (_Roscher_, Nationalökonomik
des Ackerbaues, § 140 ff.)]
[Footnote 201-2: Related to this peculiarity of the middle
ages is the fact that the canon law looked with disfavor on
the personal separation of the three factors of production.
So also in the prohibition of the _Weddeschat_ referred to §
161, instead of rent-purchase (_Rentekauf_), also by
extending the idea of partnership to a number of
transactions which are only forms of loan. (_Endemann_ in
_Hildebrand's_ Jahrb., 1863, 176 ff.) Antiquity also, with
the independence of its οἶκος, with its slavery, etc., had
not developed the difference between the three branches of
industry to any extent. _Rodbertus_, in _Hildebrand's_
Jahrbb., 1865, I, 343.]
[Footnote 201-3: If older writers, like _Steuart_, etc.,
speak so little of capital, labor and rent, and so much of
city and country, it is not on account of ignorance simply.
The contrast between the latter was then much more important
than to-day, and that between the former much less
developed. When, indeed, _Colton_, Public Economy of the
United States, 1848, 155 ff., claims that because in America
the three branches of income do not exist in so separated a
condition as in Europe, therefore European Political Economy
and its theories are not applicable to America, he forgets
that science should not be simply a description or
impression made of the reality, but an analysis of it.]
[Footnote 201-4: It is a very characteristic fact that, in
our days, when workmen are spoken of, it is generally day
laborers and tradesmen that are understood. In Prussia, in
1804, 17.8 per cent. of the population earned their living
by letting out their labor; in 1846, 22.8 per cent. as
day-laborers, servants, journeymen, tradesmen and factory
hands. (_Dieterici._)]
[Footnote 201-5: _Ricardo_, Principles, ch. 4, recognizes
the bright side as well as _Sismondi_, N. P., I, 268, or
_Buret_, De la Misère des Classes laborieuses en Angleterre
et en France, 1841, its dark side. _Sismondi_ thinks that
land and the capital employed in its cultivation are found
to the greatest disadvantage in the hands of the same
person. The existence of a thrifty peasant class (also of a
class of tradesmen) is one of the best means to prevent the
too wide separation of the three branches of income.]
SECTION CCII.
HARMONY OF THE THREE BRANCHES OF INCOME.--NECESSITY OF THE FEELING OF A
COMMON INTEREST.
Every class corresponding to a branch of the national income must live
with the consciousness that its interests coincide with the economic
interests of the whole nation. Whenever the entire national income
increases, each branch of it may increase without any injury to the
others, and, as a rule, does really increase.[202-1] But it is possible
that the land owning class may be specially dependent on the prosperity
of the whole people. How easy it is for workmen to emigrate; and how
much easier yet for capital! England, to-day, can scarcely carry on a
great war, in which it would not, at least at the beginning, have to
fight English capital.[202-2] Where the treasure is, the heart is also!
The land alone is immovable. It alone cannot be withdrawn from the
pressure of taxation or from the distress of war. It alone cannot flee
into foreign parts.[202-3] [202-4] At the same time, it cannot be denied
that the possibility of being able to carry one's fortune out of a
country in one's pocketbook and to be able to procure there with one's
money the same conveniences, customs, etc., to which one was accustomed
at home, is, under certain circumstances, an important element of
political and religious freedom. Moreover, the bright side and the dark
of every class of owners, especially the dread of all unnecessary and
also of all necessary change, must be common to rent and interest.
Hence, where there is a marked and well-defined separation of the
branches of income, it will be always considered a difficult but
unavoidable problem, how to enable mere labor to take an active part in
the affairs of the state.[202-5]
In times when calm prevails (not, however, in transition-crises such as
are referred to in § 24), there is a public opinion concerning merit and
reward, we might say a public conscience, by which a definite relation
of the three branches of income to one another is declared equitable.
Every "fair-minded man" feels satisfied when this relation is realized,
and this feeling of satisfaction is one of the principal conditions
precedent to the prosperity of production; inasmuch as upon it depends
the participation (_Theilnahme_) of all owners of funds and forces.
Every deviation from this relation or proportion is, of course, a
misfortune,[202-6] but never so great as when it takes place at the
expense of the wages of labor. It should never be forgotten that rent is
an appropriation of the gifts of nature, and that interest is a further
fruit obtained by frugality from older labor already remunerated.
Besides, the rate of wages when high, generally adds to the efficiency
of labor, which cannot be claimed for interest or rent.[202-7] The best
means to preserve the harmony of the three branches of income is,
however, universal activity. "Rich or poor, strong or weak, the idler is
a knave." (_J. J. Rousseau._)
[Footnote 202-1: The contrast between _Adam Smith_, at the
end of the first book, and _Ricardo_, ch. 24, in regard to
this point, is very characteristic of the times of those two
authors. According to _Smith_, the private interests of the
landowners and laborers run entirely parallel; only both
classes are easily deceived as to their own interests.
Capitalists understand their own interest very well, and
represent it with great energy; but their interest is in
opposition to the common good, in so far as their profit
among a poor and declining people is higher than among a
rich and flourishing one. _Ricardo_, on the other hand,
thinks that the interest of the landowners is opposed to
that of all others for the reason that they desire that the
cost of the production of wheat etc. should be as high as
possible.
Related to this is the fact that, in _Adam Smith's_ time,
the new theory of rent remained almost unnoticed, but that
after 1815, it became rapidly popular. In a similar way, the
socialists of the present time are wont to charge the
undertaking class with opposing their own interests to those
of the whole people, meaning by the whole the majority. (§
196 a.)]
[Footnote 202-2: Towards the end of the 14th century the
great Flemish merchants always sided with the absolutism of
France in opposition to their own _Artevelde_.]
[Footnote 202-3: Hence it is, that in so many constitutions,
charters of cities, etc., the exercise of the higher rights
of citizenship is conditioned by the possession of a certain
quantity of land, and that landownership is considered as a
species of public function.
I read, a short time ago, the life of a North-German
noblemen who, in 1813, had fought bravely against the
French, "although he was a man of large estates, and the
enemy might therefore very easily have laid hands on them."
If this "although" of his eulogist expressed the actual
feeling of large landed proprietors, a great many old
political institutions would have lost all foundation.
_Ad. Müller_ was of opinion that the rights of
primogeniture, etc., might be an obstacle in the way of the
development of the net income of a nation's economy; but
that they gave to the state and to the national life the
warlike tone so necessary to them, etc. (Elemente, II, 90.)]
[Footnote 202-4: "The Roman capitalists on whom Pompey
counted, left him in the lurch at the moment of danger,
because Cæsar destroyed only the constitution, but respected
their business relations." (_K. W. Nitsch._)]
[Footnote 202-5: _Kosegarten_, Nat. Oek., 186, thinks that,
on account of the struggle between the labor interest and
the interest of capitalists, in our times, the "fourth
estate" is not as well represented by persons belonging to
the propertied classes as the constitutionalist party
thinks. And in fact, _Jarke_, Principienfragen, 1854, 197,
would have it represented by the government, in order to
prevent the struggle between rich and poor. See
_Cherbuliez_, Riche ou Pauvre, p. 242 seq.]
[Footnote 202-6: _A. Walker_ shows, in a very happy manner,
how no misfortune, however great, whether it come from
heaven or from earth, in the shape of pestilence, drought,
flood or oppressive taxation, so rapidly and hopelessly
ruins a nation's economy as when the harmony which should
exist between capital and labor is disturbed by foul play or
legal frauds between labor or capital and their reward. (Sc.
of Wealth, 66.)]
[Footnote 202-7: Compare _Lotz_, Revision, III, 322 ff.,
327, 334 ff. Handbuch, I, 511 ff. _Lafitte_, Sur la
Réduction de la Rente, 56. _Fuoco_ exaggerates this into the
principle: _che la distribuzione, e non la produzione, sia
la prima e principal operazione in economia_. (Saggi
economici, II, p. 44.)]
CHAPTER VII.
DISTRIBUTION OF NATIONAL INCOME.
SECTION CCIII.
EFFECT OF AN EQUAL DIVISION OF THE NATIONAL INCOME.
The best distribution of the national income among a people is that
which enables them to enjoy the greatest amount and variety of real
goods, and permanently to produce real goods in an increasing quantity
and variety.
If the income of a people were divided equally among all, each one would
indeed, be, to a very great extent, independent of all others. But then,
no one would care to devote himself to the coarser and less agreeable
occupations, and these would be either entirely neglected, or people
would have to take turns in engaging in them.[203-1] (§ 9.) And thus
would disappear one of the chief advantages of the division of labor,
viz: that the higher orders of talent are devoted to the higher orders
of labor. Besides, it is very doubtful, whether, under such
circumstances, there would still be any solvent (_zahlungsfähige_)
demand for the achievements of art.
Nor would the saving of capital prosper, where such equality prevailed.
Most men consider the average outlay of their equals as an unavoidable
want, and save only to the extent that they possess more than others of
their class. If, therefore, every one had an equal income, no one would
consider himself in a condition to save.[203-2] The same consideration
would deter most men from every economic venture, and yet no great
progress is possible where no venture is made.[203-3] [203-4]
[Footnote 203-1: According to _Schäffle_, System, II, 379
ff., "the distribution of the social return of production
which conduces to the attainment of the highest measure of
civilization in the moral association of men and in all the
grades of that association, and thereby to the satisfaction
of all true human wants in the highest degree." Thus only
can a satisfactory line of demarkation be drawn between the
profit of capital and the wages of labor (384).]
[Footnote 203-2: See _Aristoph._, Plut., 508 ff. Not taken
into consideration sufficiently by _Benjamin Franklin_, in
his eulogy of the equality of property: The internal State
of America, 1784.]
[Footnote 203-3: The essential characteristic of the desert
is, according to _Ritter_, Erdkunde, I, 1019 seq., its
uniformity. No break in the horizontal plain, and hence no
condensation of atmospheric vapor into bodies of water of
any considerable size. The composition of the soil is
everywhere the same; nothing but masses of silex and salt,
hard and sharp. Lastly, extreme mobility of the surface,
which undulates with every wind, so that no plant can take
root in it. Nearly every feature in this picture finds its
analogon in the extreme political and economic equality of
men.]
[Footnote 203-4: _Les supériorités, qui ne sont dues qu'à,
un usage plus intelligent et mieux réglé de nos facultés
naturelles, loin d'être un mal, sont un véritable bien.
C'est dans la plus grande prospérité, qui accompagne un plus
grand et plus heureux effort, qu'est le principe de tout
développement._ (_Dunoyer_, Liberté du Travail, IV, 9, 10.)
But, indeed, the rich man should never forget that society
"inasmuch as it permits the concentration of wealth in his
hands, expects that he will employ it to better advantage
than the mass of mankind would if that same wealth were
equally divided among them." (_Brentano._)]
SECTION CCIV.
DISTRIBUTION OF NATIONAL INCOME.--MONEYED ARISTOCRACIES AND PAUPERISM.
The extreme opposite of this, when the middle class disappears and the
whole nation falls into a few over-rich men and numberless proletarians,
we call the oligarchy of money, with pauperism as the reverse of the
medal. Such a social condition has all the hardship of an aristocracy
without its palliatives. As it is, as a rule, the offspring of a
degenerated democracy,[204-1] it cannot in form depart too widely from
the principle of equality. Only get rich, they cry to the famishing
poor; the law puts no obstacle in your way, and you shall immediately
share our position.[204-2] Here the uniformity and centralization of the
state, which are an abomination in the eyes of genuine aristocracy, are
carried to the extreme. Capital takes the place of men, and is valued
more than men. All life is made to depend on the state, that its
masters, the great money-men, may control it as they will. The falling
away of all restrictions on trade, and of all uncommercial
considerations relating to persons and circumstances, gives full play to
capital, and speculators seek to win all that can be won. And, indeed,
all colossal fortunes are generally made at the expense of others,
either with the assistance of the state-power or by speculation in the
fluctuations of values.[204-3] The dependence of proletarians on others
is here all the greater, because from a complete absence of capital and
land, so far as they are concerned, they are compelled, uninterruptedly,
to carry their entire labor-force to market; and also because the supply
of labor is made in masses embracing a large number of individuals,
while the demand for labor lies in the hands of very few, and may be
very readily and systematically concentrated.[204-4] So great and
one-sided a dependence is, for men too far removed from one another for
real mutual love, doubtless one of the greatest of moral temptations. It
is as easy a matter for the hopelessly poor to hate the law, as it is
for the over-rich to despise it.[204-5] Under such circumstances, the
contagious power of communism, the dangers of which to order and freedom
we have treated of in § So, is great. There is a dreadful lesson in the
fact of history, that six individuals owned one-half of the province of
Africa, _when Nero had them put to death_![204-6] Externally, a moneyed
oligarchy will always be a weak state. The great majority who have
nothing to lose take little interest in the perpetuation of its
political independence. They rather rejoice at the downfall of their
oppressors hitherto, and are cheered by the hope of obtaining a part of
the general plunder.[204-7] The rich, too, separated from the neglected
and propertyless masses of the nation, and rightly distrustful of them,
begin to forget their nationality, and to balance its advantages against
the sacrifices necessary to preserve it. But, a merely materialistic
calculation leads doubtless to the conclusion, that universal empire is
the most rational form of the state. The world-sovereignty of Rome was,
by no circumstance more promoted than by the struggles between the rich
and the poor, which devastated the _orbis terrarum_, and in which the
Romans generally sided with the property classes.[204-8] [204-9] [204-10]
[204-11] However, the worst horrors of the contrast here described can
occur only in slave-countries. Compare _Roscher_, Nationalökonomik des
Ackerbaues, § 141.
[Footnote 204-1: The more the lower classes degenerate into
the rabble, and the more the national sovereignty comes into
the hands of this rabble, the easier will it become for the
rich to buy up the State.]
[Footnote 204-2: In the middle stages of the nation's
economy, such as are described in §§ 62, 66, 90, 207, in
which even the relative advantages of industry on a large
scale over industry on a small scale, are not much developed
the making political rights dependent on the possession of a
certain amount of property is certainly a means of promoting
equality. Hence, therefore, a reconciliation between the
differences of class created by birth, may be effected for a
long time here.]
[Footnote 204-3: _Hermann_, Staatsw. Untersuchungen, II,
Aufl. 136.]
[Footnote 204-4: _Necker_, Législation et Commerce des
Grains, 1775,1. passim. Compare _Bacon_, Serm fideles, 15,
29, 34, 39.]
[Footnote 204-5: _Schiller's_ terrible words:
"_Etwas muss er sein eigen nennen,
Oder der Mensch wird morden und brennen._"
--i. e., "Something must he call his own, or man will murder
and burn."
It is one of _J. G. Fichte's_ fundamental thoughts that as
all property is based on mutual disclaimer, the person who
has nothing of his own, has disclaimed nothing, and
therefore reserves his original right to everything.
(Geschlossener Handelstaat., Werke, III, 400, 445.)]
[Footnote 204-6: _Plin._, H. N., XVIII, 7.]
[Footnote 204-7: How frequently this circumstance turned to
the advantage of the Germans during the migration of
nations! Compare _Salvian_, De Gubern, Dei, VII. Very
remarkable answer given by a Roman taken prisoner by Attila,
why it must be more agreeable to live among the Huns than in
the over-civilized Roman Empire: Prisci legatio, in
_Niebuhr_, Corp. histor. Byzant., I, 191 ff. And thus the
conquest of Constantinople by the crusaders, took place amid
the jubilation of the populace and of the country people:
_Nicetus_, Chron. Hist. Urbs capta, § 11, 340. This law of
nature becomes most apparent when one compares the
preponderating power of Rome against Carthage, with its
weakness against the Cimbri and Mithradates. May not
Hannibal have been to his own country a phenomenon like that
which Cæsar was afterwards to Rome? A healthy and united
Carthage he certainly could have held against Italy.]
[Footnote 204-8: On the tendencies of the later times of the
Jewish monarchy toward an oligarchy of money, see _Amos_, 2,
6 seq.; 6 1 ff.; 8, 5 ff.; _Micha_, 2; 2 _Isaias_, 5, 8 seq.
Compare _Nehem._ 5. While Exodus, 30 and 38, mentions over
663,000 taxable men, the ten tribes comprising the kingdom
of Israel had only 60,000. XII Kings, 15, 19. _Ewald_,
Geschichte des Volkes Israel, II, 2, 320.]
[Footnote 204-9: The spirit of the Grecian moneyed oligarchy
is best revealed by _Plato_, De Republ., VIII, and
_Aristotle_, Polit., III, VI, passim, the first of whom
considers the contrast between rich and poor as in itself
demoralizing (IV, 422). All that can be called by the name
of tradition, the political faith of a people, and the
national feeling of right, had, in the Grecian world, been
transformed into mere reasoning and concerned itself, with
frightful exclusiveness, to the contrast existing between
rich and poor. Compare _Aristot._, Pol., II, 4, 1, with
_Droysen_, Gesch. des Hellenismus, II, 496 etc., and the
citations from _Menander_ in _Stob._, Serm., LXXXIX, 503, in
which gold and silver are proclaimed almighty. It is a
remarkable proof of the _omne venalia esse_ in Greece that
_Thucydides_ (II, 65) lauds even _Pericles_, especially for
his incorruptibility. _Demosthenes_ says of his
contemporaries, that it excited envy when any one was
bribed, laughter when he confessed it; that he who was
convicted of it (bribery) was pardoned, and he who blamed
it, hated. (Phil., II, 121.) Compare the list in _Demosth._,
Pro. Cor., 324; _Pausan_, III, 10. In Athens, on the
occasion of the census-constitution imposed forcibly on the
state by _Antipater_, that in a population of 21,000
citizens, only 9,000 had a property worth 2,000 drachmas or
more, that is, enough for a man to live on in the most
niggardly way, on the highest interest it would yield. If,
in addition to this, account be taken of the large number of
slaves, the small number of the property class is all the
more surprising, inasmuch as Lycurgus' financial
administration bears evidence that the people were in a
flourishing and comfortable condition; that afterwards,
peace for the most part prevailed, and that Alexander's
victories enabled Grecian commerce to make large gains.
Compare _Boeckh_, Staatsh. IV, 3, 9.
In Sparta, the governing class finally numbered only
700 families, 100 of which owned all the land, and 600
of which were, therefore, only noble proletarians. It
is well known that the social attempts at reform by
Agis and Kleomenes only precipitated the downfall of
the state. (_Plutarch_, Agis and Kleomenes.) _Aratos_
owed a great part of the consideration in which he was
held to the reputation which he obtained by protecting
the property of the Sicyonian exiles (_Thirlwall_,
History of Greece, VIII, 167), while on the other hand,
men like _Agathocles and Nabis_ supported their faction
by persecution of the rich, new debtor-laws and new
division of land. (_Polyb._, XIII, 6, XVI, 13, XVII,
17, XXVI, 2; _Livy_, XXXII, 38, 40, XXXIV, 31, XXXVIII,
34; _Plutarch_, Cleom, 20.) _Livy_ expressly says that
all the _optimates_ were in favor of the Romans, and
that the multitude wanted _novare omnia_ (XXXV, 34). On
the frightful struggle between these opposite parties,
on the revolutions and counter revolutions, see also
_Polyb._, XIII, 1, 2; XVIII, 36 ff., XXX, 14; XXII, 21;
XXXVIII, 2, 3; _Diodor._, XIX, 6, 9; _Exc._, 587, 623;
_Livy_, XLI, 25, XLII, 5; Pausan, VII, 14. In Bœotia,
no one was for 25 years, chosen by the people for the
higher offices, from whom they did not expect a
suspension of the administration of justice in the
matter of crimes and debts, as well as the spending of
the national treasure. (_Polyb._, XX, 14, 5, 6.) The
events at Corinth, before its conquest by the Romans,
forcibly remind one of the Paris Commune of 1871. This
decline had, as usual, begun earliest in the colonies:
thus, in Sicily, even in _Thucyd._, V, 4. Milesian
struggle off the πλουτὶς and χειρομάχα in _Plutarch_,
Qu. Gr., 32; _Athen._, XII, 524.]
[Footnote 204-10: The disappearance of the middle class in
Rome, between the second and third Punic war, was brought
about chiefly by the great foreign conquests made by it. An
idea of the wealth which the governors of the provinces
might extort may be formed from this among other facts, that
Cicero originally demanded against Verres a fine of
5,000,000 thalers. (_Cic._, in Verrem Div., 5.) Verres is
related to have said, that he would be satisfied if he could
retain the first year's booty; that during the second, he
collected for his defenders; and during the third, for his
judges! (_Cic._, in Verr., I, 14.) Even _Cicero_ became
richer within the space of one year, in Cilicia, where it
was well known he was not oppressive, by 110,000 thalers,
which sum does not include numerous presents, pictures, etc.
(_Drumann_, Gesch. Roms., VI, 384.) On the frightful
oppression and extortion practised by Brutus (!) in Asia,
see _Cicero_, ad. Att, V, 21; VI, 1. _Sallust_, in his
Jugurtha, has shown how such men waged war, and to what
extremes their well-deserved want might push them in his
Catiline. _Patricium scelus!_ Most of the senators were in
debt to Crassus; and this, together with his great political
insurance-activity and power in elections, criminal cases at
law, etc., it depended that he, for a time, figured beside
Cæsar and Pompey.
The wealth of these important personages must, and that not
only relatively, have made the poor poorer and their luxury
excited the covetousness of the people; but especially the
great number of slaves they kept, combined with their
pasturage system of husbandry, which rapidly spread over all
of Italy after the provinces had emptied their granaries to
supply the wants of the sovereign people, must have made it
less and less possible for the proletarians to live by the
work of their hands. Previously, the lower classes of the
free born had been exempted from the military service, while
slaves were conscripted for the fleet. Now, all this was
changed; and thus was taken away one of the chief causes
which had made the labor of free day laborers more
advantageous on the larger estates. (_Nitzsch_, Gracchen,
124 ff., 235 ff.) The spoils of war and conquest caused the
higher middle class to prefer to engage in the usurious
loaning of money rather than in industry which would much
more rapidly have formed a small middle class. (_Mommsen_,
R. G. I, 622 ff.)
Hence, the _misera ac jejuna plebecula, concionalis hirudo
aerarii_, according to _Cicero_, ad Att., I, 16, 6. At a
time, when the Roman census showed a population of over
1,500,000, Philippus, 104 before Christ, otherwise a
"moderate" man, could claim that there were not 2,000
citizens who had any property. (_Cic._, de Off., II, 21.)
True, those few were in such a position, that Crassus would
allow that those only were rich, who could feed an army at
their own expense. (_Cicero_, Parad., VI, 61; _Plin._, H.
N., XXXIII, 47.) Concerning the colossal private fortunes
under some of the earlier imperators, see _Seneca_, De
Benef., II, 27; _Tacit_., Ann., XII, 53, XIII, 32; XIV, 35;
Dial. de Causis, 8, _Dio C._, LXIII, 2 seq.
The clients of the time, that is the numerous poorly paid
idlers treated as things of little value, in the service of
the great, correspond, on a small scale, to the position of
the great crowd in relation to the emperor. Compare
_Friedländer_, Sittengeschichte Roms., I, 296 ff. As late as
the West-Gothic storm, there were many houses which drew
4,000 pounds in gold, and about 1/3 as much in kind, from
their estates, per annum. (_Plut._, Bibl. Cod., 80, 63,
Bekk.) Goddess Pecunia Majestas divitiarum, in _Juvenal_, I,
113.
If we take the Roman proletariat in its wider extent, the
most frightful picture it presents is its slave-wars. Such a
war Sicily had shortly before the _tribunate_ of the elder
Gracchus, cost over a million (?) livres; and at the same
time there was a great uprising of slaves desolating Greece.
(_Athen._, VI, 83, 87 ff., 104.) A second war broke out in
the time of Cimbri. But the most frightful was that under
Spartacus, who collected 100,000 men, and the course of this
uprising will always remain a type of proletarian and slave
revolts. It originated among the most dangerous class of
slaves, most dangerous because best prepared for the
struggle, the gladiators, and among the immense _ergastula_,
where they were held together in large masses. It spread
with frightful rapidity, because the combustible material on
which it fed was everywhere to be found. It was conducted
with the most revolting cruelty. What the slaves demanded
before all else was vengeance, and what dread had a
gladiator of a death unaccompanied by torture?
After the first successes of the slaves dissensions broke
out among them. Such hordes can nowhere long preserve a
higher object than the momentary gratification of their
passions--a fact which shields human society from their
rage. Piracy, also, is another side of this proletarian
system. It found its strongest aliment in the system of
spoliation practiced by the Romans in Asia Minor. The
oppressed along the whole coast, joined the pirates
"preferring to do violence rather than to suffer."
(_Appian_, B. Mithr., 92, _Dio C._, XXXII, 3.) The temples
and the wealthy Romans were in special danger. But the worst
feature in the horrible picture was that many of the great
shared in the spoils with the robbers. They bought slaves
and other booty from them at mock prices, even close by the
gates of Rome. (_Strabo_, XIV, 668 seq., _Dio C._, XXXVI,
5.) Precisely as the slave-wars were looked upon with
pleasure by the poorer free men. Incendiarism was one of the
chief weapons of mutinous pauperism. (_Drumann_, IV, 282.)
The celebrated bacchanalian trial and the questions of
poisoning which followed it as a consequence (186 before
Christ) may be looked upon, in Rome, as the first marked
symptoms of the disruption between the oligarchy of money
and the proletariat. This put the morality of the higher
classes in a bad light, while, at the same time, a large
slave conspiracy in Apulia, which was not suppressed until
the year 185, exhibited the reverse of the picture. Cato,
the censor, endeavored to oppose this tendency by high
sumptuary taxes, and by establishing proletarian colonies.
At the same time we see the various parties among the
nobility uniting and the publicans joining them. (_Nitzsch_,
Gracchen, 124 ff.) The history of the last hundred years of
the Republic turns chiefly on the three great attempts made
by the proletariat to overthrow the citadel of the moneyed
oligarchy, under the Gracchi, under Marius and under Cæsar.
The last was permanently successful but entailed the loss of
the freedom of both parties.
Among the pretty nearly useless remedies employed, besides
those described in § 79, I may mention the following also:
the great number of agrarian laws intended to lessen estates
of too great extent owned by one person, and to restore a
free peasant population, in the years 133, 123, 100, 91, 59
before Christ; the law in Hannibal's time (_Livy_, XXI, 63)
that no senator should own a ship with a capacity of more
than 300 amphora; the provision (_Sueton._, Caes., 42) that
all great herd-owners should take at least one-third of
their shepherds from the ranks of freemen; the many laws _de
repetundis_, the first of which was promulgated 149 before
Christ, intended to protect the provinces against spoliation
by the governors; the L. Gabinia, 56 before Christ, which
prohibited the loaning by the provinces in Rome; lastly, a
rigid enforcement of police provisions against slaves,
especially against their bearing arms, which were carried to
such an extent, that slaves who had killed a boar with a
spear were crucified. (_Cicero_, in Verr., II, 3.) The chief
rule of every real oligarchy of money is, while they hold
the lower classes in general under their yoke with great
severity, to keep dangerous elements in good humor at the
expense of the state. Among these are especially the rabble
in large cities and the soldiery. Compare _Roscher_,
Betrachtungen über Socialismus und Communismus, 436, 437.]
[Footnote 204-11: In medieval Italy, also, popular freedom
was lost through a moneyed oligarchy and a proletariat.
_Popolo grasso_ and _minuto_ (_bourgeoisie_--_peuple_) in
Florence. The former were reproached especially with the
breach of trust in the matter of the public moneys
(_Sismondi_, Gesch. der Ital. Republiken, II, 323, seq.),
which reminds one of the French cry, _corruption_ in 1847.
_Machiavelli_ gives a masterly description of the class
contrasts during the last quarter of the fourteenth century,
in his Istoria Fiorent., III, a. 1378, 4. The poor, whose
spokesmen recall the most desperate shibboleths of modern
socialists, dwell principally on this, that there is only
one important difference, that between rich and poor; that
all men are by nature entirely equal; that people get rich
only through deceit or violence; that the poor want revenge
etc. It is significant how, in Florence, the largest banker
finally became absolute despot, and that contemporaneously
in Genoa, the Bank of St. George, in a measure, absorbed the
state; the former supported by numerous loans made to
influential persons like Crassus (_Machiavelli_, Ist. Fior.,
VII); the latter by the overstraining of the system of
national debt.]
SECTION CCV.
DISTRIBUTION OF THE NATIONAL INCOME.--HEALTHY DISTRIBUTION.
Hence a harmony of the large, medium and small incomes may be considered
the indispensable condition of the economic prosperity of a
people.[205-1] This prosperity is best secured when the medium-class
income prevails, when no citizen is so rich that he can buy the others,
and no one so poor that he might be compelled to sell himself. (_J. J.
Rousseau._)[205-2] Where there is not a numerous class of citizens who
have time enough to serve the state even gratis, as jurymen, overseers
of the poor, municipal officers, representatives of the people etc.
(compare § 63), and property enough to be independent of the whims and
caprices of others, and to maintain themselves and the state in times of
need, even the most excellent of constitutions must remain a dead
letter. Nor should there be an entire absence of large fortunes, and
even of inherited large fortunes. The changes of ministry which
accompany constitutional government are fully possible only when the
choice of men who would not lose their social position by a cessation of
their salaries as public functionaries is not altogether too
limited.[205-3] Thus the transaction of the most important political
business, especially that which relates to foreign affairs, requires a
peculiar elasticity of mind, and a capacity for routine on the grandest
scale, which with very rare exceptions, can be acquired only by
habituation to them from childhood, and which are lost as soon as the
care for food is felt. The bird's-eye-view of those who are born "great"
does not, by any means, embrace the whole truth of human things, but it
does a very important side of it. Among this class, as a rule, it is
easiest to find great party leaders, while leaders who have to be paid
by their party, generally become in the long run, mere party
tools.[205-4] It is true that it requires great intellectual and moral
power to resist the temptations which a brilliant hereditary condition
presents; temptations especially to idleness, to pride and debauchery.
For ordinary men, it is a moral and, in the end, an economic blessing,
that they have to eat their bread in the sweat of their brow,[205-5] and
that they can grow rich only by long-continued frugality.[205-6]
However, the distribution of the national income, and every change in
that same distribution, constitute one of the most important but at the
same time one of the most obscure departments of statistics.[205-7] When
inequality increases because the lower classes absolutely decline, there
is no use in talking any longer about the prosperity of the
nation.[205-8] It is different, of course, when only the higher classes
become, relatively speaking, higher yet. But even this latter kind of
inequality may operate disastrously, inasmuch as it nourishes the most
dangerous tendency of democracy, that of envy towards those who are
better off.
[Footnote 205-1: _Verri_ Meditazioni, VI.]
[Footnote 205-2: _Aristotle's_ view that, in a good state,
the middle class should preponderate. (Polit. IV, 6, Sch.)
_Sismondi_ says: _la richesse se réalise en jouissances;
mais la jouissance de l'homme riche ne s'accroît pas avec
ses richesses_. (Etudes sur l'Economie politique, 1837, I,
15.)]
[Footnote 205-3: If state offices were to be filled by
doctors or lawyers who live by their practice, after a time,
only those could be had who had no large practice to
sacrifice, that is, beginners or obscuranti.]
[Footnote 205-4: Per contra, see _Bazard_, Doctrine de Saint
Simon, 323. But _Sismondi_ is certainly right: _nous ne
croyons point, que les hommes qui doivent servir à
l'humanité de flambeau naissent le plus souvent au sein de
la classe riche; mais elle seule les apprécie et a le loisir
de jouir de leurs travaux_. (Etudes, I, 174.)]
[Footnote 205-5: To appreciate the demoralizing effects of
an income obtained without labor and without trouble on men
of small culture, we need only witness the bourgeoisie at
great watering places, pilgrimage places, seats of courts
and university cities supported largely by students.
Similarly at Mecca, Medina, Meschhed, Rome, etc. (_Ritter_,
Erdkunde VIII, 295 seq. IX, 32), and even in Palestine,
during the crusades, when the miserable Pullanes counted on
the tribute of the pilgrims. (_Wilken_, VII, 369, according
to _Jacob de Vitriaco_.)]
[Footnote 205-6: A man with $100,000 a year has a much less
incentive to make savings than 100 men with $1,000 each per
annum, for the reason that his economic wants are already
all richly satisfied, and he can have little hope of
improving it by saving. (_von Mangoldt_, V. W. L., 141.)]
[Footnote 205-7: _Harrington's_ fundamental thought
(1611-1677, Works, 1700) is, that the nature of the
constitution of a state depends on the distribution of the
ownership of its land. "Balance of property!" Where, for
instance, one person owns all the land or the larger portion
of it, we have a despotism; where the distribution is more
equal, a democracy, etc. All real revolutions are based upon
a displacement of the centre of gravity of property, since
in the long run, superstructure and foundation can not be
out of harmony with each other. For this reason, agrarian
laws are the principal means to prevent revolutions.
(_Roscher_, Gesch. der English. Volkswirthschaftslehre, 53
ff.) _Montesquieu_ also pays special attention to the
political consequences of the distribution of wealth. Thus,
for instance, in monarchies, the creation of large fortunes
should be promoted by the right of primogeniture; in
aristocracies, on the other hand, the great wealth of a few
nobles is as detrimental as that of extreme poverty. (Esprit
des Lois, V, 8, 9.)]
[Footnote 205-8: The common assertion of the socialists,
that the inequality of property is frightfully on the
increase, is as far from being proved as is the opposite one
of _Hildebrand_, Nat. Oek. der Gegenwart und Zukunft, I, 245
ff. According to _Macaulay_, Hist. of England, ch. 3, there
were, in England, in 1685, only about three (ducal) families
with an annual income of about £20,000 a year. The average
income of a lord amounted to £3,000; of a baronet, to £900;
of a member of the house of commons, to scarcely £800; and a
lawyer with £1,000 per annum was considered a very important
personage. At the same time, there were 160,000 families of
free peasants, that is more than 1/7 of the whole
population, whose average income amounted to from £60 to
£70. For the year 1821, _Marshall_, Digest of all Accounts,
etc., II, 1833, assumes, that there were 4,000 families with
over £5,000 yearly income; 52,000 families with from £1,500
to £5,000; 386,000 families with from £200 to £1,000;
2,500,000 families with less than £200. Compare, _per
contra_, the Edinburg Review, 1835. The income tax
statistics of 1847 show that 22 persons had an income of at
least £50,000 a year; 376 persons, from £10,000 to £50,000;
788, from £5,000 to £10,000; 400, from £4,000 to £5,000;
703, from £3,000 to £4,000; 1,483, from £2,000 to £3,000;
5,234, from £1,000 to £2,000; 13,287, from £500 to £1,000;
91,101, from £150 to £500.
If we compare these numbers with the corresponding ones of
the income tax of 1812, the numbers of those who returned an
income of £150 to £500 increased 196 per cent.; of those
with an income of from £500 to £1,000, 148 per cent.; of
from £1,000 to £2,000, 148 per cent.; of from £2,000 to
£5,000, 118 per cent.; of from £5,000 and more, 189 per
cent.; while the population in general had increased by
about 60 per cent. Compare Athenæum, August, 1850; Edinburgh
Rev., April, 1857. Between 1848 and 1857, the development
was less favorable, so that the incomes of from £150 to £500
subject to taxation, increased only 7 per cent.; those from
£500 to £1,000 about 9.56 per cent.; those from £10,000 to
£50,000, by 42.4, and those over £50,000, 142.1 per cent.
Between 1858 and 1864, the incomes derived from industry and
commerce, subject to taxation below £200, had increased
about 19.4 per cent.; those over £10,000, 59 per cent.;
while the aggregate amount of all taxed incomes in this
category increased 19 per cent. (Stat. Journal, 1865, 546.)
According to _Baxter_, The National Income of the United
Kingdom, 1868, there are now 8,500 persons with a yearly
income of £5,000 and more, who draw in the aggregate 15.6
per cent. of the national British income, and on the average
nearly £15,000 each. There are, further, 48,800 persons with
a yearly income of from £1,000 to £5,000; 178,300 with from
£300 to £1,000; 1,026,400 with from £100 to £300; and
1,497,000 with less than £100 a year from their property. In
addition to this, 10,961,000 workmen on wages, with an
aggregate income of £324,600,000. Compare §§ 172, 230.
In France, the number of so-called _électeurs_, who paid
direct taxes to at least the amount of 200 francs was, in
1831, 166,583, and increased uninterruptedly until 1845,
when it was 238,251, while the population had increased only
8.5 per cent.
In Prussia, the revenue from class-taxation up to 1840,
increased, unfortunately, in a smaller proportion than the
population: hence the lowest classes must have increased
relatively more than the others. (_Hoffmann_, Lehre von den
Steuern, 176 ff.) Between 1852 and 1873, according to the
statistical returns from class-taxation and of the
classified income tax, the growth of large incomes in the
provinces of old Prussia, seems to have been much more rapid
than that of the smaller ones. Thus, for every 100
taxpayers, with an income of from 400 to 1,000 thalers,
there was an increase to 175.5; of from 1,000 to 1,600
thalers, for every previous 100, 210.2; from 1,600 to 3,200
thalers, 232.3; of from 3,200 to 6,000, 253.9; of from 6,000
to 12,000 thalers, 324.8; of from 12,000 to 24,000, 470.6;
of from 24,000 to 52,000 thalers, 576.3; of from 52,000 to
100,000 thalers, 568.4; of from 100,000 to 200,000 thalers,
533.3; of over 200,000, 2,200. Hence, probably, a greater
growth towards the top, than the general increase in the
population will account for.
This concentration of property took place most noticeably in
Berlin, where for instance, between 1853 and 1875 the
incomes of from 1,000 to 1,600 thalers increased 212.2 per
cent.; those from 24,000 to 52,000, 994.1 per cent. There
are now in the whole state 2.24 per cent. of the population
(including those dependent on them) subject to the income
tax; that is, estimated as having a yearly income of 1,000
thalers. Of the remaining 97.76 per cent., more than a
quarter, and probably more than one-half, are as a class
free from taxation, because their income is presumably less
than 140 thalers (6,049,699 against 532,367, exempt for
other reasons and 4,850,791 belonging to classes subject to
taxation: these three numbers probably not including
dependents). Among the payers of an income tax, there are
79,464 with an average income of 1,237 thalers per annum;
41,366 with 2,171 thalers; 12,305 with 4,279 thalers; 4,030
with 8,383 thalers; 1,655 with 16,527 thalers; 513 with
32,428 thalers; 163 with 65,595 thalers; 39 with 137,692
thalers; 21 with 427,142 thalers; and one with 1,700,000
thalers per annum. (Preuss. statist. Ztschr., 1875, 116,
132, 142, 145, 149.) As the reverse of this picture, we may
take the fact that, in 1870, of 1,047,974 cases of
guardianship, there were only 208,614 in which there was any
property to be looked after. (Justiz-Minist-Blatt, 1872, No.
6.)
The figures from Bremen are very favorable. The incomes
subject to taxation amounted, in 1847, to 71.6 thalers per
capita; in 1869, to 131.2. The incomes subject to taxation
in class No. 1, that is from 250 to 399 thalers, increased
78 per cent.; in class No. 2, 400 to 499 thalers, 45 per
cent.; in class No. 3, 500 thalers and more, by 57 per cent.
The average income of the third class amounted, in 1847-50,
to 1,952 thalers; 1866-69, to 2,439 thalers. In 1848, there
were, of estates of over 3,000 thalers subject to taxation,
only 38 to every 1,000 inhabitants; in 1866, 49. (Jahrb. f.
amtl. Statistik Bremens, 1871, Heft 2, p. 185 seq.)]
BOOK IV.
CONSUMPTION OF GOODS.
CHAPTER I.
CONSUMPTION OF GOODS IN GENERAL.
SECTION CCVI.
NATURE AND KINDS OF CONSUMPTION.
As it is as little in the power of man to destroy matter as it is to
create it, we mean by the consumption of goods, in the broad sense of
the word, the abolition of or the doing away with an utility without any
regard to the question whether another higher utility takes its place;
in its narrower sense (consumption proper), a decrease of resources of
any kind. Consumption is the counterpart of production (§ 30), the top
of the tree of which production is the roots, and the circulation and
distribution of goods the trunk. (_A. Walker._) There is, also, what
Riedel calls immaterial consumption, as when a utility disappears,
either because the want itself to which it ministers disappears or
because views have changed as to the means to be employed towards its
satisfaction.[206-1]
[Footnote 206-1: Diminutions of value, such, for instance,
as an almanac, a newspaper, etc., undergoes simply from the
appearance of the next years' etc.; of a shield or a part of
an officer's uniform with the initials of the reigning
sovereign, only because of the fact of a new succession to
the throne. A boot or a glove loses a great part of its
value when its mate is destroyed. (_Rau_, Lehrbuch, § 319.)]
SECTION CCVII.
NATURE AND KIND OF CONSUMPTION.--THE MOST USUAL KIND.
The commonest kind of consumption is that caused by the use of a thing,
or by the employing of it for the purpose of acquisition or of
enjoyment.[207-1] From time immemorial, enjoyment-consumption has been,
preponderantly, the affair of women, as acquisition-consumption has been
the business of men.[207-2] Other circumstances being equal, the degree
or extent of consumption by use (use-consumption) is determined by
national character. Thus, for instance, the cleanliness and love of
order characteristic of the Dutch have contributed greatly to the long
preservation in good condition of their dwellings and household
articles.[207-3]
In the higher stages of civilization, the use of goods is wont to be
divided more and more into special branches, according to the different
peculiarities of the goods themselves, and of the different wants of
men; a course of things which is, both as cause and effect, intimately
related to the division of labor. I here speak of a principle of
_division of use_ (differentiation and specialization). Thus, for
instance, Lorenz Lange, in 1722, found only one kind of tea in the trade
between Russia and China; Müller, in 1750, found seven; Pallas, in 1772,
ten; and Erman, in 1829, about seven hundred.[207-4] As the number of
gradations of different kinds of the same goods increases with
civilization, there is, in times of war, a retrogression in this
respect, to a lower economic stage.[207-5]
Opposed to this, we have the principle of the combination of use. There
are numberless kinds of goods which may serve a great many just as well
as they can one exclusive user; and this either successively or
simultaneously, inasmuch as there is no necessity why, with the
increasing use of the object, the size of the object itself should
increase in an equal proportion. (According to Marlo: wealth usable by
one; wealth usable by many; wealth usable by all.) Thus, for instance, a
public library may be incomparably more complete, and accessible in a
still higher degree than ten private libraries which together cost as
much as it did. And so, a restaurant-keeper may serve a hundred guests
at the same time, with a much greater table-variety, more to their
taste, and at a more convenient time, than if each person made the same
outlay for his private kitchen.[207-6] While formerly, only the great
could travel rapidly, combination of use has enabled even the lower
classes to do so in our own days. There is, doubtless, a dark side to
this picture, too. Combination of use requires frequently great
sacrifices of personal independence, which should not be underestimated
when they affect individuality of character, or threaten the intimacy
and closeness of family life. It is, however, a bad symptom when the
division of use increases without any corresponding combination of
use.[207-7] [207-8]
[Footnote 207-1: We should also mention here destructive
consumption, where the defenders of a country destroy
buildings, supplies, etc., only that the enemy may not use
them.]
[Footnote 207-2: Compare Die Lebensaufgabe der Hausfrau,
Leipzig, 1853; _von Stein_, Die Frau auf dem Gebiete der
National Oekonomie, 1875, and the beautiful remarks of
_Schäffle_, N. Oek., 166; and _Lotz_, Mikrokosmus, II, 370
ff.]
[Footnote 207-3: In Germany horses are said to last, on an
average, 18 years; in England 25; in France and Belgium,
only 12 years. (See for the proofs of this _Rau_, Handbuch
II, § 168.) The more civilized a people are, the less do
they completely destroy values by use; and the more do they
use their old linen, etc. as rags; their remains of food as
manure, etc. (_Roesler_, Grunds., 552.)]
[Footnote 207-4: _Ritter_, Erdkunde, III, 209. Thus, the
French in the 13th century were acquainted with only three
kinds of cabbage; in the 16th, with six, about 1651, with
12; they are now acquainted with more than 50; in the 16th
century they knew only 4 kinds of sorrel; in 1651, 7; about
1574, only 4 kinds of lettuce; to-day they know over 50;
under Henry II., they were acquainted with 2 or 3 kinds of
melons; in the 17th century, with 7; now they are acquainted
with over 40. (_Roquefort_, Histoire de la Vie privée des
Fr., I, 179 ff.) Instead of the four kinds of pears
mentioned by de Serre (1600), there were, in 1651, about
400. (I, 272.) Liebaud, 1570, knew only 19 kinds of grapes;
de Serre, 41. (_Roquefort_, III, 29 ff.) According to the
"Briefen eines Verstorbenen," IV, 390, the first
kitchen-gardener in London had 435 kinds of salad, 240 of
potatoes, and 261 of pease.
And so precisely in ancient times. While the earlier Greeks
speak of but one οἶνος, even at the most sumptuous feasts
(compare, however, _Homer_, Il. XI, 641;) and while even in
the time of Demosthenes only very few kinds of wine were
known (_Becker_, Charicles, I, 455), _Pliny_, H. N. XIV, 13,
was acquainted with about 80. In this respect the moderns
have never returned to ancient simplicity; at least the
fabliau, La Bataille des Vins, introduces us to 47 kinds of
French wine in the 13th century. (Compare also _Wackernagel_
in _Haupt's_ Zeitschrift für deutsches Alterth., VI. 261
ff., and _Henderson_, History of ancient and modern Wines,
1824.) The Lacedemonians, with their intentional persistence
in a lower stage of civilization, used the same garment in
winter and summer (_Xenoph._, De Rep. Laced., II, 4); while
the contemporaries of Athenæos (III, 78 ff.) were acquainted
with 72 kinds of bread. With what a delicate sense for good
living the Romans in Caesar's time had discovered the best
supply places for chickens, peacocks, cranes, thunny-fish,
muraena, oysters and other shell-fish, chestnuts, dates,
etc., may be seen in _Gellius_, N. A., VII, 16. Compare
_Athen._, XII, 540.
In the middle age of Italy, the houses had almost always
three rooms: _domus_ (kitchen), _thalamus_, _solarium_.
(_Cibrario_, E. P. del medio Evo, III, 45.) The manors or
masters' houses built on the estates of Charlemagne had 3
and 2 rooms, sometimes only 1, and sometimes 2 rooms and 2
bedrooms. According to an old document of 895, a shed was
worth 5 sols, a well-built manor 12. (_Anthon_, Geschichte
der deutschen Landwirth., I, 249 ff., 311.) The Lex
Alamanorum, tit. 92, provided that a child, in order to be
considered capable of living, should have seen the roof and
four walls of the house! See an able essay, capable of being
still further developed, by _E. Herrmann,_ in which he
endeavors to explain the _division of use_ and of labor on
Darwin's hypothesis of the origin of species in the D.
Vierteljahrsschrift, Januar., 1867.]
[Footnote 207-5: Thus, 1785-1795, the best Silesian wool
cost 60, the worst 26, thalers per cwt.; in 1805, on account
of the great demand for cloth to make military uniforms, the
former cost 78, the latter 50 thalers. (_Hoffmann_,
Nachlass, 114.)]
[Footnote 207-6: The one large kitchen naturally requires
much less place, masonry, fuel, fewer utensils, etc., than
100 small ones. Think of the relatively large savings
effected by the use of one oven kept always heated! Even the
Lacedemonians called their meal associations φειδίτια, i. e.,
save-meals. Dainties proper can be consumed only in very
small portions, but cannot well be prepared in such
quantities. A guest at a first class Parisian restaurant
has, at a moderate price, his choice of 12 _potâges_, _24
hors d'œuvres_, _15-20 entrées de bœuf_, _20 entrées
de mouton_, _30 entrées de volaille et gibier_, _15-20
entrées de veau_, _12 de pâtisserie_, _24 de poisson_, _15
de rôts_, _50 entremets_, _50 desserts_; and, in addition,
perhaps 60 kinds of French wine alone. What more can a
princely table offer in this respect? Compare
_Brillat-Savarin_, Physiologie du Goût, Médit., 28.]
[Footnote 207-7: In Diocletian's time, there was purple silk
worth from 2½ thalers to 250 thalers per pound.
(_Marquardt_, Röm. Privatalterthümer, II, 122.)]
[Footnote 207-8: Concerning the application of the above
principle in industry and in the care of the poor, see
_infra_. The advantages afforded by consumption in common,
or the combination of use, have been enthusiastically dwelt
upon by _Fourier_, and the organization of his phalansteries
is based essentially on that principle. In these colossal
palaces, which, spite of all their magnificence, cost less
than the hundred huts of which they take the place, a ball
is given every evening, because it is cheaper to light one
large hall, in which all may congregate. The division of
use, or of consumption also, is here developed in a high
degree. When 12 persons eat at the same table they have 12
different kinds of cheese, 12 different kinds of soup, etc.
Even little children are allowed to yield to the full to
their gluttonous propensities, since on them depends the
productive activity of the so-called _séries passionnées_.
Compare Nouveau Monde, 272. The Saint-Simonists also
characterize the _association universelle_ as the highest
goal of human development. (_Bazard_, Exposition, 144 ff.)
On the danger of this development to family life, see
_Sismondi_, Etudes I, 43.]
SECTION CCVIII.
NATURE AND KINDS OF CONSUMPTION.--NOTIONAL CONSUMPTION.
By the notional consumption (_Meinungsconsumtion_), as Storch calls it,
operated by a change of fashion, many goods lose their value, without as
much as suffering the least change of form or leaving the merchant's
shop. This kind of consumption, too, is exceedingly different in
different nations. Thus, in Germany, for instance, fashions are much
more persistent than in France.[208-1] In the most flourishing times of
Holland, only noblemen and officers changed with the fashions, while the
merchants and other people wore their clothes until they went to
pieces.[208-2] In the East, fashions in clothing are very
constant;[208-3] but the expensive custom there prevails, for a son,
instead of moving into the house occupied by his father, to let it go to
ruin, and to build a new one as a matter of preference. The same is true
even in the case of royal castles. Hence, in Persia, most of the cities
are half full of ruins, and are in time moved from one place to
another.[208-4]
The national income of a country is, on the whole, much less affected by
a change of fashion than the separate incomes of its people. The same
whim which lowers the value of one commodity increases the value of
another; and what has ceased to be in fashion among the rich, becomes
accessible, properly speaking, to the poorer classes of the community
for the first time.[208-5] The want of varying his enjoyments is so
peculiar to man, and so intimately connected with his capacity for
progress, that it cannot in itself be blamed. But if this want be
immoderately yielded to, if the well-to-do should despise every article
which has not the charm of complete novelty, the advantages of the whole
pattern-system, by means of which the preparation of a large number of
articles from the same model at a relatively small cost, would be lost.
Besides, fashion, which makes production in large quantities, for the
satisfaction of wants that are variable and free, possible, frequently
means even a large saving in the cost of production.[208-6]
[Footnote 208-1: The consequences of this are very important
to the character of French and German industry.
(_Junghanns_, Fortschritte des Zollvereins, I, 28, 51, 58.)
Rapidly as the Parisian fashions in dress make their way
into the provinces, their fashions in the matter of the
table are very slow to do so. (_Rocquefort_, Hist. de la Vie
privée des Fr., I, 88 seq.)]
[Footnote 208-2: _Sir W. Temple._ Observations on the U.
Provinces, ch. 6.]
[Footnote 208-3: As most persons adorn themselves for the
sake of the opposite sex, this invariability is caused by
the oriental separation of two sexes. Our manufacturers
would largely increase their market, if they could succeed
in civilizing the East in this respect. In Persia, shawls
are frequently inherited through many generations, and even
persons of distinction buy clothes which had been worn
before. (_Polak_, Persien, I, 153.) In China, the Minister
of Ceremonies rigidly provided what clothes should be worn
by all classes and under severe penalties. (_Davis_, The
Chinese, I, 352 seq.)]
[Footnote 208-4: _Jaubert_, Voyage en Perse, 1821. While
cities like Seleucia, Ctesiphon, Almadin, Kufa, and even
Bagdad, were built from the ruins of Babylon.]
[Footnote 208-5: In Moscow, merchants close their accounts
at Easter. Then begins a new cycle of fashions, after which
all that remains is sold at mock-prices. (_Kohl_, Reise,
98.) In Paris, there are houses which buy up everything as
it begins to go out of fashion and then send it into the
provinces and to foreign parts. Thus, there are immense
amounts of old clothing shipped from France and England to
Ireland. Hence, the latter country can have no national
costume appropriate to the different classes; and the
traveler sees with regret, crowds of Irish going to work in
ragged frock-coats, short trowsers and old silk hats. In
Prussia, many of the peasantry, in the time of Frederick the
Great, wore the discarded uniforms of the soldiery.]
[Footnote 208-6: _Schäffle_, N. Oek. _Hermann_, Staatsw.
Untersuchungen, II, Aufl., 100.]
SECTION CCIX.
CONSUMPTION WHICH IS THE WORK OF NATURE.
The least enjoyable of all consumption (_loss-consumption_) is that
which is the work of nature; and nature is certainly most consuming in
the tropics. During the rainy season, in the region of the upper Ganges,
mushrooms shoot up in every corner of the houses; books on shelves swell
to such an extent that three occupy the place previously occupied by
four; those left on the table get covered over with a coat of moss
one-eighth of an inch in thickness. The saltpetre that gathers on the
walls has to be removed every week in baskets, to keep it from eating
into the bricks. Numberless moths devour the clothing. Schomburgk found
that, in Guiana, iron instruments which lay on the ground during the
rainy season became entirely useless within a few days, that silver
coins oxydized, etc.; evidently a great obstacle in the way of the
employment of machinery. In summer, the soil of this same region, so
rich in roots, is so parched by the heat, that subterranean fires
sometimes cause the most frightful destruction.
In Spanish America, there are so many termites and other destructive
insects that paper more than sixty years old is very seldom to be found
there.[209-1]
The warmer portions of the temperate zone are naturally most favorable
to the preservation of stone monuments. Thus, for instance, in
Persepolis, where there has been no intentional destruction, the stones
lie so accurately superimposed the one on the other that the lines of
junction can frequently be not even seen. The amphitheatre of Pola has
lost in two thousand years only two lines from the angles of the
stones.[209-2] The Elgin marble statues would certainly have lasted
longer in Greece than they will in England. On the other hand, warm and
dry climates have a very peculiar and exceedingly frightful species of
nature-consumption in the locust plagues. The principal countries
affected by such consumption are Asiatic and African Arabistan, the land
of the Jordan and Euphrates, Asia Minor, parts of Northern India. On
Sinai, locust plagues occur, on an average, every four or five years;
but from 1811 to 1816, for instance, they destroyed everything each
year. Their course is in its effects like an advancing conflagration. It
turns the green country, frequently in a single day, into a brown
desert; and famine and pestilence follow in its path.[209-3]
The colder regions of the temperate zone are exposed to danger and
damage from land-slides in their long series of mountains, and from
avalanches, from quicksands in many of their plains, from floods and the
total destruction of land along their coasts;[209-4] but, on the other
hand, they are, relatively speaking, freest from hurricanes, earthquakes
and volcanoes, the ravages of which no human art or foresight is
competent to cope with. From the point of view of civilization and of
politics there is here a great advantage. See § 36. The former maritime
power of Venice and of Holland is closely allied to the dangers with
which the sea continually threatened them, and which was a continual
spur to both. But, on the other hand, the danger from earthquakes which
always impends over South America and Farther India, must produce
consequences similar to those of anarchy or of despotism, because of the
uncertainty with which they surround all relations. See § 39.[209-5]
[Footnote 209-1: _Ritter_, Erdkunde VI, 180 ff; _Schomburgk_
in the Ausland, 1843, Nr. 274; _Humboldt_, Relation hist.,
I, 306; Neuspanein, IV, 379; _Pöpping_, Reise, II, 197 ff.,
237 ff. The ant, even in Marcgrav's time, was called the
_rey do Brazil_.]
[Footnote 209-2: _Ritter_, Erdkunde VIII, 895; _Burger_,
Reise in Oberitalien, I, 7. The monuments of Nubia have
suffered much less from the hand of time than those of Upper
Egypt, because the air of the plateau is drier. The effects
of climate have been most severely felt in Lower Egypt,
where the air is most moist. (_Ritter_, I, 336, 701.) In the
case of wood, on the other hand, dryness may be a great
agent of destruction. Thus, in Thibet, wooden pillars,
balconies, etc., have to be protected with woolen coverings
to keep them from splitting. (_Turner_, Gesandtsreise,
German translation, 393 ff.)]
[Footnote 209-3: Compare _Ritter_, Erdkunde, VIII, 789-815,
especially the beautiful collection of passages from the
Bible bearing on the locust plague, 812 ff. _Pliny_, H. N.,
XI, 85. _Volney_, Voyages en _Syrie_, I, 305. For account of
an invasion of locusts, which, in 1835, covered half a
square mile, four inches in thickness, see _v. Wrede_, R. in
Hadhrammaut, 202. It is estimated that, in England, the
destruction caused by rats, mice, insects, etc., amounts to
ten shillings an acre per year; i. e., to £10,000,000 per
annum. (_Dingler_, Polyt. Journal, XXX, 237.)]
[Footnote 209-4: Origin of the gulf of Dollart in Friesland,
2½ square miles in area between 1177 and 1287; and of
Biesboch of 2 square miles in 1421. On the repeated
destruction of lands in Schleswig by inundations, see
_Thaarup_, Dänische Statistik, I, 180 seq. It is a
remarkable fact that in relation to the Mediterranean,
_Strabo_, VII, 293, considers all such accounts fables.]
[Footnote 209-5: As to how the grandeur and
irresistibleness, etc. of this nature-consumption in the
tropics leads men to superstition and the indulgence of wild
fancies, see _Buckle_, History of Civilization in England,
1859, I, 102 ff. Since the conquest of Chili, sixteen
earthquakes, which have destroyed large cities totally or in
part, have been recorded.]
SECTION CCX.
NECESSITY OF CONSIDERING WHAT IS REALLY CONSUMED.
Whenever there is question of consumption, it is necessary to examine
with rigid scrutiny, what it is that has been really consumed; that is,
that has lost in utility. The person, for instance, who pays twenty
dollars for a coat, has consumed that amount of capital only when the
coat has been worn out.[210-1] What is called the consumption of one's
income in advance is nothing but the consumption of a portion of capital
which the consuming party intends to make good from his future
income.[210-2] Fixed capital, too, can certainly be directly consumed;
for instance, when the owner of a house treats the entire rent he
receives from it as net income, makes no repairs, and no savings to put
up a new building at some future time. As a rule, however, the owner of
fixed capital must, in order to consume it, first exchange it against
circulating capital. Thus the prodigality and dissipation, especially of
courts of absolute princes, have found numerous defenders who have
claimed that they are uninjurious, provided only the money spent in
extravagance remained in the country.[210-3] The prodigality itself,
that is, the unnecessary destruction of wealth is not, on that account,
any the less disastrous.[210-4] If, for instance, there are fire-works
to the amount of 10,000 dollars, manufactured exclusively by the workmen
of the country, ordered for a gala day; the night before they are used
for purposes of display, the national wealth embraces two separate
amounts, aggregating 20,000 dollars; that is, 10,000 dollars in silver
and 10,000 in rockets, etc. The day after, the 10,000 in silver are
indeed still in existence, but of the 10,000 in rockets, etc., there is
nothing left. If the order had been made from a foreign country the
reverse would have been the case, the silver stores of the people would
have been diminished, but their supply of powder would remain intact.
In a similar way, there is occasion given for the greatest
misunderstanding when people so frequently speak of producers and
consumers as if they were two different classes of people. Every man is
a consumer of many kinds of goods; but, at the same time, he is a
producer, unless he be a child, an invalid, a robber, a pick-pocket,
etc.[210-5] At the same time, Bastiat is right in saying that in case of
doubt when the interests of production and of consumption come in
conflict, the state, as the representative of the aggregate interest,
should range itself on the side of the latter. If we carry things on
both sides to their extremest consequences, the self-seeking desire of
consumers would lead to the utmost cheapness, that is, to universal
superfluity, and the self-seeking wish of producers to the utmost
dearness, that is, to universal want.[210-6]
[Footnote 210-1: Compare _Mirabeau_, Philosophie rurale, ch.
1; _Prittwitz_; Kunst reich zu werden, 474.]
[Footnote 210-2: A very important principle for the
understanding of the real effects of the spending of a state
loan!]
[Footnote 210-3: In this way _Voltaire_, Siècle de Louis
XIV., ch. 30, excuses for instance the extravagant (?)
buildings at Versailles; and in a very similar way Catharine
II. expressed herself in speaking to the Prince de Ligne:
Mémoires et Mélanges par le Prince de Ligne, 1827, II, 358.
_v. Schröder_ even thinks that the Prince might consume as
much and even more than "the entire capital" of the country
amounted to; only, he would have him "let it get quickly
among the people again." He is also in favor of the utmost
splendor in dress, provided the public see to it that
nothing was worn in the country which was not made in the
country. (Fürstl. Schatz- u. Rentkammer, 47, 172.) Similarly
even _Botero_, Della Ragion di Stato VII, 85; VIII, 191; and
recently _v. Struensee_, Abhandlungen I, 190. The principle
of Polycrates in _Herodotus_ is nearly to the same effect.
Compare, per contra, _Ferguson_, Hist. of Civil Society, V,
5.]
[Footnote 210-4: With the exception of the profit made by
the manufacturers.]
[Footnote 210-5: Strikingly ignored by _Sismondi_, N. P.,
IV, ch. II.]
[Footnote 210-6: _Bastiat_, Sophismes économiques, 1847, ch.
IV. Everything which, in the long run, either promotes or
injures production, "steps over the producer and turns in
the end to the gain or loss of the consumer." Only for this
principle, inequality and dissensions among men would keep
growing perpetually. All that the systems of Saint Simonism
and communism contain that is relatively true is thus
realized.]
SECTION CCXI.
NATURE AND KINDS OF CONSUMPTION.--PRODUCTIVE CONSUMPTION.
There is no production possible without consumption. The embodiment of a
special utility into any substance is a limitation of its general
utility. Thus, for instance, when corn is baked into bread, it can no
longer be used for the manufacture of brandy or of starch.[211-1]
When, therefore, consumption is a condition (outlay) to production it is
called productive (reproductive).[211-2] Here, indeed, the form of the
consumed goods is destroyed, but the value of the goods lives on in the
new product.
There are different degrees of productiveness in consumption also. Thus,
to a scholar, his outlay for books in his own branch is immediately
productive; but nevertheless, books in departments of literature very
remote from his own, pleasure trips, etc. may serve as nutrition and as
a stimulus to his mind. According to § 52, we are compelled to consider
all consumption productive which constitutes a necessary means towards
the satisfaction of a real economic want. We may, indeed, distinguish
between productive consumption in aid of material goods, of personal
goods and useful relations; but in estimating the productiveness of
these different sorts of consumption we are concerned not so much with
the nature of the consumption as the results in relation to the nation's
wants. The powder that explodes when a powder magazine burns is consumed
unproductively; but the powder shot away in war may be productively
consumed just as that used to explode a mine may be unproductively
consumed; for instance, when the war is a just and victorious one and
the mining enterprise has failed.[211-3]
The maintenance or support of those workmen whom they themselves
acknowledge to be productive is presumably accounted productive
consumption by all political economists. Why not, therefore, the cost of
supporting and educating our children, who, it is to be hoped, will grow
up later to be productive workmen. Man's labor-power is, doubtless, one
of the greatest of all economic goods. But without the means of
subsistence, it would die out in a few days. Hence we may, and even
without an atomistic enumeration of the individual services and products
of labor, consider the continued duration of that labor-power itself as
the continued duration of the value of the consumed means of
subsistence.[211-4]
[Footnote 211-1: Even when air-dried bricks are made from
water and clay which cost nothing; when purely occupatory
work is done, and purely intellectual labor performed, some
consumption of the means of subsistence by the workmen is
always necessary.]
[Footnote 211-2: Χρηματιστικαὶ in contradistinction to
ἀναλωτικαὶ, according to _Plato_, De Rep., VIII, 559.
Temporary consumption. (_Umpfenbach._)]
[Footnote 211-3: _Storch_, Handbuch, II, 450.]
[Footnote 211-4: Against the difference formerly usually
assumed between productive and unproductive consumption, see
_Jacob_, Grundsätze der Nat. Oek., II, 530. It is because of
a too narrow view that _Hermann_ (II, Aufl., 311), instead
of reproductive consumption, speaks of technic consumption.]
SECTION CCXII.
UNPRODUCTIVE CONSUMPTION.
Moreover, unproductive consumption embraces not only every economic
loss, every outlay for injurious purposes,[212-1] but also every
superfluous outlay for useful purposes.[212-2] Yet, not to err in our
classification here, it is necessary to possess the impartiality and
many-sidedness of the historian, which enable one to put himself in the
place of others and feel after them as they felt. The man, for instance,
who, in cities like Regensburg and especially Rome, sees numberless
churches often, so to speak, elbowing one another, cannot fail to
recognize the difference between the buildings of to-day for business,
political, educational and recreative purposes, and the medieval, for
the satisfaction of spiritual wants. The latter also may, in their own
sphere, and in their own time, have, as a rule, operated productively,
as the former operate, often enough, by way of exception unproductively;
as in the case of railway and canal speculations which have ended in
failure. It would be difficult to decide between the relative value of
the two kinds of wants, because the parties to the controversy do not,
for the most part, share the want (_Bedürfniss_) of their respective
opponents, frequently do not even understand it, and therefore despise
it. Thus, there are semi-barbarous nations, who can entertain that
respect for the laws which is necessary even from an economic point of
view only to the extent that they see the person whose duty it is to
cause them to be observed seated on a throne and surrounded by
impressive splendor. Hence, such splendor here could not be considered
merely unproductive consumption.[212-3]
We must, moreover, remark in this place as we did above, § 54, that it
is easiest to pass the boundary line between productive and unproductive
consumption in personal services. In 1830, the expenses of the state, in
Spain, amounted to 897,000,000 of reals per annum; the outlay of
municipal corporations, to 410,000,000, and that for external purposes
of religion, 1,680,000,000. (_Borrego._) This is certainly no salutary
proportion; but it is scarcely evidence of a worse economic condition
than the fact that in Prussia it would require a basin one Prussian mile
in length, thirty-three and eight-tenths feet broad, and ten feet deep
to hold all the brandy drunk in the country (_Dieterici_); or this
other, that the British people spend yearly £68,000,000 sterling for
taxes and £100,000,000 yearly for spirituous liquors.[212-4] Berkeley
rightly says that the course practiced in Ireland, with its famishing
proletarian population, of exporting the means of subsistence and
exchanging them against delicate wines, etc., is as if a mother should
sell her children's bread to buy dainties and finery for herself with
the proceeds.[212-5] [212-6]
[Footnote 212-1: Thus, for instance, food which spoils
unused, and food which is stolen and which puts a thief in a
condition to preserve his strength to steal still more.]
[Footnote 212-2: So far _Senior_, Outlines, 66, is right:
the richer a nation or a man becomes, the greater does the
national or personal productive consumption become.]
[Footnote 212-3: Such gigantic constructions as the palaces,
pyramids, etc. of Egypt, Mexico or Peru are a certain sign
of the oppression of the people by rulers, priests or
nobles. One of the Egyptian pyramids is said to have
occupied 360,000 men for twenty years. (_Diodor._, I, 63;
_Herodot._, II, 175; _Prescott_, History of Mexico, I, 153,
History of Peru, I, 18.)]
[Footnote 212-4: Edinburg Rev., Apr., 1873, 399.]
[Footnote 212-5: _Berkeley_, Querist, 168, 175, says that
the national wants should be the guiding rule of commerce,
and that besides, the most pressing wants of the majority
should be first considered.]
[Footnote 212-6: _Ricardo_, Principles, p. 475, was of
opinion that an outlay of the national or of private income
in the payment of personal services increased the demand for
labor and the wages of labor in a higher degree than an
equal outlay for material things. The error at the
foundation of this is well refuted by _Senior_, Outlines,
160 ff.
The first to zealously advocate and treat the theory of
productive consumption was _J. B. Say_, Traité, III, ch. 2,
seq.; Cours pratique, II, 265. But the germs of the doctrine
are to be found in _Dutot_, Réflexions politiques sur le
Commerce et les Finances, 1738, 974, _éd_. Daire. His
distinctions are in part drawn with great accuracy. Thus he
says that, among others, a manufacturer of cloth,
productively consumes the results of his workmen, but that
the workmen themselves who exchange these results for bread,
consume the latter unproductively. _Say_ is guilty of the
inconsistency of claiming that only that consumption is
productive which contributes directly to the creation of
material exchangeable goods, spite of the fact that he gave
the productiveness of labor a much wider scope. _Rau_,
Lehrbuch, I, § 102 ff., 323 seq., is more consistent in so
far as he applies the same limitation in both cases.
(Compare also § 333, 336.) _Hermann_, Staatsw.
Untersuchungen, 170 seq., 231 ff., would prefer to see the
idea of productive consumption banished from the science,
for the reason that if the value of the thing alleged to be
consumed continues, there can be no such thing as its
consumption. But, I would rejoin: in a good national
economy, there would be, according to this, scarcely any
consumption whatever, because the aggregate value of that
which I have called above productive consumption is
unquestionably preserved, and continues in the aggregate
value of the national products.
Productive consumption is ultimately a stage of production,
just as production itself is ultimately a means to an end,
consumption, and therefore a preparation for the latter.
Both ideas may be rigorously kept apart from each other,
just as the expenses and receipts of a private business man,
who makes a great portion of his outlay simply with the
intention of reaping receipts therefrom, may be. Every one
desires his production to be as large as possible, and his
productive consumption, so far it does not fail of its
object, as small as possible. _Riedel_ rightly says that the
theory of reproductive consumption serves Political Economy
as the bridge which closes the circle formed by the action
of production, distribution and consumption. (Nat. Oek. III,
49.) One of the chief fore-runners of the view we advocate
was _McCulloch_, Principles, IV, 3 ff. _Gr. Soden_, Nat.
Oek., distinguishes economic consumption, un-economic and
anti-economic consumption. (Nat. Oek., I, 147.)]
SECTION CCXIII.
EQUILIBRIUM BETWEEN PRODUCTION AND CONSUMPTION.
In all cases economic production is a means to some kind of consumption
as its end.[213-1] The sharpest spur to productive activity is the
feeling of want.[213-2] "Want teaches art, want teaches prayer, blessed
want!" Well too has it been said: "Necessity is the mother of
invention!" Leaving mere animals out of consideration,[213-3] those men
who experience very few wants, with the exception of some rare and
highly intellectual natures, prefer rest to labor. Therefore, when
European merchants desire to engage in trade with a savage nation they
have uniformly to begin by sending them their nails, axes,
looking-glasses, brandy, etc., as gifts. Not until the savage has
experienced a new enjoyment does the want of continuing it make itself
felt; or is he prepared to produce for purposes of commerce.[213-4] In a
state of normal development, the complete and continuing satisfaction of
the coarser wants should constitute the foundation for the
higher.[213-5]
[Footnote 213-1: We should not, indeed, say, on this
account, with _Adam Smith_, IV, ch. 8, that "consumption is
the sole end and purpose of all production," for labor and
saving, besides their economic object have a higher one,
imperishable and personal. Compare _Knies_, Polit. Oek. 129,
and _supra_, § 30.]
[Footnote 213-2: According to _Sir F. M. Eden_, State of the
Poor, I, 254, it is one of the most unambiguous symptoms of
advanced civilization when families eat regularly at the
same table; so also sleeping in real beds. "Bed and board!"
It is said that the regularity of meal times was introduced
among the Greeks by Palamedes. _Athen._ I, 11, after
_Æschylus_.]
[Footnote 213-3: Hibernating animals have supplies and
dwellings, that is something analogous to capital.]
[Footnote 213-4: This advance is generally observed to be
introduced by the _jus fortioris_. _Steuart_, Principles I,
ch. 7. (Compare §§ 45-6-8.) In this way, the earliest
oriental despotisms have unwittingly been of great service
to mankind. What the sultan here accomplished with his few
favorites was done in the lower stages of civilization of
the west by the aristocracy of great vassals, in a manner
more worthy of human beings, and in a much more stable form.
(_J. S. Mill_, Principles I, 14 ff.)]
[Footnote 213-5: _Banfield_, Organization of Industry, 1848,
11.]
SECTION CCXIV.
CAUSES OF AN INCREASE OF PRODUCTION.
Only when wants increase does production increase also.[214-1] The old
maxim: _Si quem volueris esse divitem, non est quod augeas divitias, sed
minuas cupiditates (Seneca)_, would, if consistently carried out, have
thwarted the advance of civilization and frustrated the improvement of
man's condition. On the other hand, most political economists, without
more ado, assume that individuals, and still more nations, are wont to
extend the aggregate of their enjoyments just as far as there is a
possibility of satisfying their wants. But they forget here how great a
part is played in the world, as men are constituted, by the principle of
inertia.[214-2] At the first blush, what seems more natural than that
the less labor a people need employ to obtain the most indispensable
means of subsistence, the more time and taste would remain to them to
satisfy their more refined wants. According to this, we should expect to
discover a more refined civilization, especially, in intellectual
matters, in the earliest periods, when population is small, when land
exists in excess and is not yet exhausted. But, in reality, precisely
the reverse is the case. In the earliest stages of civilization
accessible to our observation, we find materialism prevailing in its
coarsest form, and life absorbed entirely by the lowest physical wants.
(Tropical lands.) Where bread grows on the trees, and one needs only to
reach out his hand and pluck it; where all one wants to cover his
nakedness is a few palm leaves, ordinary souls find no incentive to an
ant-like activity, or to a union among themselves for economic
purposes.[214-3] When a Mexican countryman earns enough to keep himself
and his family from absolute want by two days' labor in a week, he idles
away the other five. It never occurs to him that he might devote his
leisure time to putting his hut or his household furniture, etc., in
better shape. The necessity of foresight even is almost unknown; and in
the most luxuriantly fertile country in the world, a bad harvest
immediately leads to the most frightful famine. Humboldt was assured
that there was no hope of making the people more industrious except by
the destruction of the banana plantations.[214-4] But, indeed, there
would be little gained by such compulsory industry. To work for any
other end than satiation, it is necessary that man should feel wants
beyond the want created by mere hunger.[214-5] There are so many
conditions precedent (and mutually limiting one another) to a general
advance in civilization, that such an advance can, as a rule, take place
only very gradually. Let us suppose, for instance, a single Indian in
Mexico, perfectly willing to work six days in the week, and in this way
to cultivate a piece of land three times as great as his fellow Indians.
Where would he get the land? He would, for a time find no purchasers for
his surplus, and therefore not be in a condition to pay the landlord as
much as the latter hitherto received from the pasturage alone. Not until
cities are built and offer the rural population the products of industry
in exchange for theirs, can they be incited to, or become capable of
effecting a better cultivation of the land. This incentive and this
capacity, are inseparably connected with each other. Where the
agricultural population produce no real surplus, but after the fashion
of medieval times, produce everything they want themselves, and consume
all their own products with the exception of the part paid to the state
as a tax, there can scarcely be an industrial class, a commercial class,
or a class devoted to science, art, etc. And, conversely, it is only the
higher civilization which finds expression in the development of these
classes, that, by a more skillful guidance of the national labor, can
call forth its productiveness to an extent sufficient to yield a
considerable surplus of agricultural commodities over and above the most
immediate wants of the cultivators of the soil themselves. Hence, we
find that precisely in those countries which are most advanced in the
economic sense, there is relatively the smallest number of men engaged
in agriculture, and relatively the largest number in production of a
finer kind.[214-6] It is here as in private housekeeping: the poorer a
man is, the greater is the portion of his income which he is wont to lay
out for indispensable necessities.[214-7] [214-8]
[Footnote 214-1: There is obviously here supposed besides
the want thus increased, a capacity for development. Thus,
for instance, the inhabitants of New Zealand brought with
them, in what concerns clothing, dwellings, etc., the
customs of a tropical into a colder country, and did not
understand how to oppose the rigor of the new climate,
except by building immoderately large fires, until they
became acquainted with European teachers. (Edinb. Review,
April, 1850, 466.)]
[Footnote 214-2: Compare _R. S. Zachariä_, Vierzig Bücher
vom Staate, VII, 37. Men in the lower stages of civilization
cherish a greater contempt for those more advanced than they
are themselves visited with by the latter. Thus it was
customary for the Siberian hunting races to utter a
malediction: May your enemy live like a Tartar, and have the
folly to engage in the breeding of cattle. (_Abulghazi
Bahadur_, Histoire généalogique des Tartares.) Nomadic races
look upon the inhabitants of cities as for the most part
prisoners.]
[Footnote 214-3: The "happy, contented negroes," as Lord
John Russel called them, work in Jamaica, on an average,
only one hour a day since their emancipation. (Colonial
Magazine, Nov. 1849, 458.) Egypt, India, etc., from time
immemorial, the classic lands of monkish laziness. Compare
_Hume_, Discourses, No. 1, on Commerce. On the other hand,
the person who has six months before him for which he must
labor and lay up a store, if he would not famish or freeze,
must necessarily be active and frugal; and there are other
virtues which go along with these. (_List_, System der
polit. Oek., I, 304.) According to _Humboldt_, the change of
seasons compels man to get accustomed to different kinds of
food, and thus fits him to migrate. The inhabitants of
tropical countries are, on the other hand, like
caterpillars, which cannot emigrate nor be made to emigrate,
on account of the uniform nature of their food.]
[Footnote 214-4: _Humboldt_, N. Espagne, IV, ch. 9, II, ch.
5. Similarly among the coarser Malayan tribes, the facility
with which fish is caught and the cheapness of sago are the
principal causes of their inertia and of their unprogressive
uncivilization. (_Crawfurd._)]
[Footnote 214-5: _Le travail de la faim est toujours borné
comme elle. (Raynal.)_]
[Footnote 214-6: Compare _Adam Smith_, I, ch. 11, 2;
_supra_, § 54. In Russia, nearly 80 per cent. of the
population live immediately from agriculture; in Great
Britain, in 1835, only 35; in 1821, only 33; in 1831, only
31½; in 1841, only 26 per cent. (_Porter._) According to
_Marshall_, there were, in 1831, in British Europe,
1,116,000 persons who lived from their rents, etc. In
Ireland, there were, in 1831, over 65 per cent. of the
population engaged in agriculture (_Porter_); in 1841, even
66 per cent.]
[Footnote 214-7: In Paris, in 1834, the average income per
capita was estimated to be 1,029.9 francs, of which 46
francs were paid out for service; 55.7 for education; 11.5
for physicians' services, etc.; 7 on theatrical shows; 36
for washing; 13.6 for public purposes. (_Dingler_, Polyt.
Journal, LIII, 464.) According to _Ducpétiaux_, Budgets
économiques des Classes ouvrières en Belgique, 1855, and
_Engel_, Sächs. Statist. Ztschr., 1857, 170, the
proportional percentage of family expenses for the following
articles of consumption is:
=======================+=========================================
| EXPENSES OF
+--------------------+----------+---------
| _a laborer's_ | _family_ |_a well-_
| _family_ | _of the_ |_to-do_
_Consumption Purpose._ | _in comfortable_ | _middle_ |_family._
| _circumstances._ | _class._ |
+----------+---------+----------+---------
| _In_ | _In_ | _In_ | _In_
|_Belgium._|_Saxony._|_Saxony._ |_Saxony._
| _per_ | _per_ | _per_ | _per_
| _cent._ | _cent._ | _cent._ | _cent._
-----------------------+----------+---------+----------+---------
Food, | 61 \ | 62 \ | 55 \ | 50 \
Clothing, | 15 } | 16 } 95 | 18 } 90 | 18 } 85
Shelter, | 10 } 95 | 12 } | 12 } | 12 }
Heating and lighting, | 5 } | 5 / | 5 / | 5 /
Utensils and tools, | 4 / | | |
| | | |
Education, instruction,| 2 \ | 2 \ | 3.5 \ | 5.5 \
Public security, | 1 } 5 | 1 } 5 | 2 } 10 | 3 } 15
Sanitary purposes, | 1 } | 1 } | 2 } | 3 }
Personal services, | 1 / | 1 / | 2.5 / | 3.5 /
=======================+==========+=========+==========+=========
Hence _Engel_ thinks that when the articles of food,
clothing, shelter, heating and lighting have become dearer
by 50 per cent., and other wants have not, and it is desired
to proportionately increase the salaries of officials,
salaries of 300, 600 and 1,000 thalers should be raised to
427.5, 800 and 1,275 thalers respectively. (Preuss. Statist.
Zeitschr., 1875.) _E. Herrmann_, Pricipien der Wirthsch.,
106, estimates that in all Europe, 45.6 of all consumption
is for food, 13.2 for clothing, 5.7 for shelter, 4.6 for
furnishing, 5.3 for heating and lighting, 2.6 for tools and
utensils, 13.3 for public security, 6.6 for purposes of
recreation. Compare _Leplay_, Les Ouvriers Européens, 1855,
and _v. Prittwitz_, Kunst reich zu werden, 487 ff. The
expenses for shelter, service and sociability are specially
apt to increase with an increase of income.]
[Footnote 214-8: The necessity of an equilibrium between
production and consumption was pretty clear to many of the
older political economists. Thus, for instance, _Petty_
calls the coarse absence of the feeling of higher wants
among the Irish the chief cause of their idleness and
poverty. Similarly _Temple_, Observations on the N.
Provinces, ch. 6, in which Ireland and Holland are compared
in this relation. _North_, Discourses upon Trade, 14 seq.;
Potscr. _Roscher_, Zur Geschichte der english.
Volswirthschaftslehre, 83, 91, 127 ff. _Becher_, polit.
Discurs., 1668, 17 ff., was of opinion that the principal
cause keeping the three great estates together, the very
soul of their connection, was consumption. Hence the peasant
lived from the tradesman, and the tradesman from the
merchant. (_Boisguillebert_, Détail de la France, I, 4, II,
9, 21.) According to _Berkeley_, Querist, No. 20, 107, the
awakening of wants is the most probable way to lead a people
to industry. And so _Hume_, loc. cit., _Forbonnais_,
Eléments du Commerce, I, 364. The Physiocrates were in favor
of active consumption. Thus _Quesnay_, Maximes générales, 21
seq.; _Letrosne_, De l'Interêt social, I, 12. _La
reproduction et la consommation sont rêciprocquement la
mesure l'une de l'autre._ Some of them considered
consumption even as the chief thing (_Mirabeau_, Philosophie
rurale, ch. 1), which could never be too great. Further,
_Verri_, Meditazioni, I, 1-4. _Büsch_, Geldumlauf, III, 11
ff.
The moderns have frequently inequitably neglected the
doctrine of consumption. Thus it appears to be a very
characteristic fact that in _Adam Smith's_ great book, there
is no division bearing the title "consumption," and in the
Basel edition of 1801, that word does not occur in the
index. _Droz_ says that in reading the works of certain of
his followers, one might think that products were not made
for the sake of man, but man for their sake. But, on the
other hand, there came a strong reaction with _Lauderdale_,
Inquiry, ch. 5; _Sismondi_, N. Principes, L., II, passim;
_Ganilh_, Dictionnaire Analytique, 93 ff., 159 ff.; but
especially, and with important scientific discoveries,
_Malthus_, Principles, B. II. _St. Chamans_, Nouvel Essai
sur la Richesse des Nations, 1824, is an exaggerated
caricature of the theory of consumption. For instance, he
resolves the income of individuals into foreign demand or
the demand of strangers (29); considers the first condition
of public credit to lie in the making of outlay (32); and
even calls entirely idle consumers productive, for the
reason that they elevate by their demand a _utilité
possible_, to the dignity of a _utilité réelle_ (286 ff.)
The view advocated by Mirabeau, and referred to above, again
represented by _E. Solly_, Considerations on Political
Economy, 1814, and by _Weishaupt_, Ueb. die Staatsausgaben
und Auflagen, 1819. And so according to _Carey_, Principles,
ch. 35, § 6, the real difficulty does not lie in production,
but in finding a purchaser for the products. But he
overlooks the fact here that only the possessor of other
products can appear as a purchaser. From another side, most
socialists think almost exclusively of the wants of men, and
scarcely consider it worth their while to pay any attention
to the means of satisfying them.]
SECTION CCXV.
NECESSITY OF THE PROPER SIMULTANEOUS DEVELOPMENT OF PRODUCTION AND
CONSUMPTION.
Hence, one of the most essential conditions of a prosperous national
economy is that the development of consumption should keep equal pace
with that of production, and supply with demand.[215-1] The growth of a
nation's economy naturally depends on this: that production should
always be, so to speak, one step in advance of consumption, just as the
organism of the animal body grows from the fact that the secretions
always amount to something less than the amount of additional nutrition.
A preponderance of secretions would here be disease; but so would be a
too great preponderance of nutrition. Now, the politico-economical
disease which is produced by the lagging behind of consumption and by
the supply being much in advance of the demand, is called a commercial
(market) crisis. Its immediate consequence is, that for a great many
commodities produced, no purchasers can be found. The effect of this is
naturally to lower prices. The profit of capital and wages diminish. A
transition into another branch of production, not overcrowded, is either
not possible at all or is attended with care, great difficulties and
loss. It is very seldom that all these disadvantages are confined to the
one branch in which the disease had its original seat. For, since the
resources of the one class of producers have diminished, they cannot
purchase as much from others as usual. The most distant members of the
politico-economic body may be thereby affected.[215-2]
[Footnote 215-1: _Boisguillebert_ lays the greatest weight
on the harmony of the different branches of commerce.
_L'équilibre l'unique conservateur de l'opulence générale_;
this depends on there being always as many sales as
purchases. The moment one link in the great chain suffers,
all the others sympathise. Hence he opposes all taxation of
commodities which would destroy this harmony. (Nature des
Richesses, ch. 4, 5, 6; Factum de la France, ch. 4; Tr. des
Grains I, 1.) _Canard_ Principes d'E. politique, ch. 6,
compares the relation between production and consumption in
national economy with that between arteries and veins in the
animal body. On the other hand, _Sismondi_, N. Principes I,
381, describes the bewilderment and want which are wont to
arise when one wheel of the great politico-economical
machine turns round more rapidly than the others.]
[Footnote 215-2: Thus, for instance, an occasional
stagnation of the cotton factories of Lancashire has
frequently the effect of "making all England seem like a
sick man twisting and turning on his bed of pain." (_L.
Faucher._)]
SECTION CCXVI.
COMMERCIAL CRISES IN GENERAL.--A GENERAL GLUT.
The greater number of such crises are doubtless special; that is, it is
only in some branches of trade that supply outweighs demand. Most
theorists deny the possibility of a general glut, although many
practitioners stubbornly maintain it.[216-1] J. B. Say relies upon the
principle that in the sale of products, as contradistinguished from
gifts, inheritances, etc., payment can always be made only in other
products. If, therefore, in one branch there be so much supplied that
the price declines; as a matter of course, the commodity wanted in
exchange will command all the more, and, therefore, have a better vent.
In the years 1812 and 1813, for instance, it was almost impossible to
find a market for dry goods and other similar products. Merchants
everywhere complained that nothing could be sold. At the same time,
however, corn, meat and colonial products were very dear, and,
therefore, paid a large profit to those who supplied them.[216-2] Every
producer who wants to sell anything brings a demand into the market
exactly corresponding to his supply. (_J. Mill._) Every seller is _ex vi
termini_ also a buyer; if, therefore production is doubled, purchasing
power is also doubled. (_J. S. Mill._) Supply and demand are in the last
analysis, really, only two different sides of one and the same
transaction. And as long as we see men badly fed, badly clothed, etc.,
so long, strictly speaking, shall we be scarcely able to say that too
much food or too much clothing has been produced.[216-3]
[Footnote 216-1: When those engaged in industrial pursuits
speak of a lasting and ever-growing over-production, they
have generally no other reason for their complaints than the
declining of the rate of interest and of the undertaker's
profit which always accompany an advance in civilization.
Compare _J. S. Mill_, Principles, III, ch. 14, 4. However,
the same author, I, 403, admits the possibility of something
similar to a general over-production.]
[Footnote 216-2: _Say's_ celebrated Théorie des Débouchés,
called by McCulloch his chief merit, Traité, I, ch. 15. At
about the same time the same theory was developed by _J.
Mill_, Commerce defended, 1808. _Ricardo's_ express
adhesion, Principles, ch. 21. Important germs of the theory
may be traced much farther back: _Mélon_, Essai politique
sur le Commerce, 1734, ch. 2; _Tucker_, On the
Naturalization Bill, 13; Sketch of the Advance and Decline
of Nations, 1795, 182.]
[Footnote 216-3: Precisely the same commercial crisis, that
of 1817 seq., which more than anything else led _Sismondi_
to the conclusion that too much had been produced in all
branches of trade, may most readily be reduced to _Say's_
theory.
There was then a complaint, not only in Europe but also in
America, Hindoostan, South Africa and Australia, of the
unsaleableness of goods, overfull stores, etc.; but this,
when more closely examined, was found to be true only of
manufactured articles and raw material, of clothing and
objects of luxury; while the coarser means of subsistence
found an excellent market, and were sold even at the highest
prices. Hence, in this case, there was by no means any such
thing as over-production. The trouble was that in the
cultivation of corn and other similar products, too little
was produced. There was a bad harvest even in 1816.
The most important authorities in favor of the possibility
of a general glut are _Sismondi_, N. Principes, IV, ch. 4,
and in the Revue encyclopédique, Mai, 1824: Sur la Balance
des Consommations avec les Productions. Opposed by Say in
the same periodical (Juilliet, 1824); where the controversy
was afterwards reopened in June and July, 1827, by
_Sismondi_ and _Dunoyer_. Compare Etudes, vol. I; _Ganilh_,
Théorie, II, 348 ff.; _Malthus_, Principles, II, ch. 1, 8.
Compare _Rau_, _Malthus_ and Say, über die Ursachen der
jetzigen Handelsstockung, 1821. _Malthus'_ views were
surpassed by _Chalmers_, On Political Economy in Connexion
with the moral State of Society, 1832. But even _Malthus_
himself in his Definitions, ch. 10, No. 55, later, so
defined a "general glut" that there could be no longer
question of his holding to its universality. For an
impartial criticism, see especially _Hermann_, Staatsw.
Untersuchungen, 251, and _M. Chevalier_, Cours, 1, Leçon,
3.]
SECTION CCXVII.
COMMERCIAL CRISES IN GENERAL.
All these allegations are undoubtedly true, in so far as the whole world
is considered one great economic system, and the aggregate of all goods,
including the medium of circulation, is borne in mind. The consolation
which might otherwise lie herein is made indeed to some extent
unrealizable by these conditions. It must not be forgotten in practice
that men are actuated by other motives than that of consuming as much as
possible.[217-1] As men are constituted, the full consciousness of this
possibility is not always found in connection with the mere power to do,
to say nothing of the will to do.[217-2] There are, everywhere, certain
consumption-customs corresponding with the distribution of the national
income. Every great and sudden change in the latter is therefore wont to
produce a great glut of the market.[217-3] The party who in such case
wins, is not wont to extend his consumption as rapidly as the loser has
to curtail his; partly for the reason that the former cannot calculate
his profit as accurately as the latter can his loss.[217-4]
Thus laws, the barriers interposed by tariffs, etc., may hinder the
too-much of one country to flow over into the too-little of another.
England, for instance might be suffering from a flood of manufactured
articles and the United States from an oppressive depreciation in the
value of raw material; but the tariff-laws places a hermetic dike
between want on one side and superfluity on the other. Strong national
antipathies and great differences of taste stubbornly adhered to may
produce similar effects; for instance between the Chinese and Europeans.
Even separation in space, especially when added to by badness of the
means of transportation may be a sufficient hinderance especially when
transportation makes commodities so dear that parties do not care to
exchange. In such cases, it is certainly imaginable that there should be
at once a want of proper vent or demand for all commodities; provided,
we look upon each individual class of commodities the world over as one
whole, and admit the exception that in individual places, certain parts
of the whole more readily find a market because of the general crisis.
Lastly, the mere introduction of trade by money destroys as it were the
use of the whole abstract theory.[217-5] So long as original barter
prevailed, supply and demand met face to face. But by the intervention
of money, the seller is placed in a condition to purchase only after a
time, that is, to postpone the other half of the exchange-transaction as
he wishes. Hence it follows that supply does not necessarily produce a
corresponding demand in the real market. And thus a general crisis may
be produced, especially by a sudden diminution of the medium of
circulation.[217-6] And so, many very abundant harvests, which have
produced a great decline in the value of raw material, and no less so a
too large fixation of capital which stops before its completion,[217-7]
may lead to general over-production. In a word, production does not
always carry with itself the guaranty that it shall find a proper
market, but only when it is developed in all directions, where it is
progressive and in harmony with the whole national economy. To use
Michel Chevalier's expression, the saliant angles of the one-half must
correspond to the re-entrant angles of the other, or confusion will
reign everywhere. Even in individual industrial enterprises, the proper
combination of the different kinds of labor employed in them is an
indispensable condition of success. Let us suppose a factory in which
there are separate workmen occupied with nothing but the manufacture of
ramrods. If these now exceed the proper limits of their production and
have manufactured perhaps ten times as many ramrods as can be used in a
year, can their colleagues, employed in the making of the locks or
butt-ends of the gun, profit by their outlay? Scarcely. There will be a
stagnation of the entire business, because part of its capital is
paralyzed, and all the workmen will suffer damage.[217-8] [217-9]
[Footnote 217-1: As _Ferguson_, History of Civil Society,
says, the person who thinks that all violent passions are
produced by the influence of gain or loss, err as greatly as
the spectators of Othello's wrath who should attribute it to
the loss of the handkerchief.]
[Footnote 217-2: If all the rich were suddenly to become
misers, live on bread and water, and go about in the
coarsest clothing, etc., it would not be long before all
commodities, the circulating medium excepted, would feel the
want of a proper market--all, including even the most
necessary means of subsistence, because a multitude of
former consumers, having no employment, would be obliged to
discontinue their demand. Over-production would be greater
yet if a great and general improvement in the industrial
arts or in the art of agriculture had gone before. Compare,
_Lauderdale_ Inquiry, 88. This author calls attention to the
fact that a market in which the middle class prevails must
put branches of production in operation very different from
those put in operation where there are only a few over-rich
people, and numberless utterly poor ones: England, the
United States--the East Indies, and France before the
Revolution. (Ch. 5, especially p. 358.)]
[Footnote 217-3: If England, for instance, became bankrupt
as a nation, the country would not therefore become richer
or poorer. The national creditors would lose about
£28,000,000 per annum, but the taxpayers would save that sum
every year. Now, of the former, there are not 300,000
families; of the latter there are at least 5,000,000. Hence,
the loss would there amount to £100 a family per annum, and
the gain here to not £6 per family. We may therefore assume
with certainty that the two items would not balance each
other as to consumption. The creditors of the nation, a
numerous, and hitherto a largely consuming class, now
impoverished, would be obliged to curtail their demand for
commodities of every kind to a frightful extent; while a
great many taxpayers would not feel justified in basing an
immediate increase of their demand on so small a saving.
Other revolutions, more political in character, may operate
in the same direction by despoiling a brilliant court, a
luxurious nobility or numerous official classes of their
former income.]
[Footnote 217-4: The above truth has been exaggerated by
Malthus and his school into the principle that a numerous
class of "unproductive consumers," who consume more than
they produce, is indispensable to a flourishing national
economy. From this point of view, the magnitude of England's
debt especially has been made a subject of congratulation.
Compare _Malthus_, Principles, II, ch. 1, 9. Similarly
_Ortes_, E. N., III, 17, to whom even the _impostori
mezzani_ and _ladri_ seem to be a kind of necessity. (III,
23.) _Chalmers_, Political Economy, III ff. If it was only
question of consumption here, all that would be needed would
be to throw away the commodities produced in excess. Those
writers forget that a consumer, to be desirable, should be
able to offer counter-values.]
[Footnote 217-5: _Malthus_, Principles, II, ch. 1, 3.]
[Footnote 217-6: Let us suppose a country which has been
used to effecting all its exchanges by means of
$100,000,000. All prices have been fixed, or have regulated
themselves accordingly. Let us now suppose that there has
been a sudden exportation of $10,000,000, and under such
circumstances as to delay the rapid filling up of the gap
thus created. In the long run, the demand of a country for a
circulation may be satisfied just as well with $90,000,000
as with $100,000,000; only it is necessary in the first
instance that the circulation should be accelerated or that
the price of money should rise 10 per cent. But neither of
these accommodations is possible immediately. In the
beginning, sellers will refuse to part with their goods 10
per cent. cheaper than they have been wont to. But so long
as those engaged in commercial transactions have not become
completely conscious of the revolution which has taken place
in prices, and do not act accordingly, there is evidently a
certain ebb in the channels of trade, and simultaneously in
all. Demand and supply are kept apart from each other by the
intervention of a generally prevailing error concerning the
real price of the medium of circulation, and there must be,
although only temporarily, buyers wanted by every seller,
except the seller of money. In a country with a paper
circulation, every great depreciation of the value of the
paper money not produced by a corresponding increase of the
same, may produce such results. _Say_ is wrong when he says
that a want of instruments of exchange may be always
remedied immediately and without difficulty.]
[Footnote 217-7: Suppose a people, the country population of
which produce annually $100,000,000 in corn over and above
their own requirements, and thus open a market for those
engaged in industrial pursuits to the extent of
$100,000,000. And suppose that in consequence of three
plentiful harvests, and because of an inability to export,
the market should grow to be over-full, to such an extent
that the much greater stores of corn have now (§ 5, 103) a
much smaller value in exchange than usual. The latter may
have declined to $70,000,000. Hence the country people now
can buy from the cities only $70,000,000 of city wares. The
cities, therefore, suffer from over-production. That people
dispensing with the use of money should establish an
immediate trade between wheat and manufactured articles, in
which case the latter would exchange against a large
quantity of the former, is not practicable, because no one
can extend his consumption of corn beyond the capacity of
his stomach, and the storage of wheat with the intention of
selling it when the price advances is attended with the
greatest difficulties.]
[Footnote 217-8: If, for instance, there are too many
railroads in process of construction, all other commodities
may in consequence lose in demand, and when the further
construction begins to be arrested on account of a
superfluity of roads, the new rail factories, etc. are
involved in the crisis.]
[Footnote 217-9: On the special pathology and therapeutics
of this economic disease, compare _Roscher_, Die
Productionskrisen, mit besonderer Rücksicht auf die letzen
Jahrzente in the Gegenwart, Brockhaus, 1849, Bd., III, 721
ff., and his Ansichten der Volkswirthschaft, 1861, 279 ff.]
SECTION CCXVIII
PRODIGALITY AND FRUGALITY.
Prodigality is less odious than avarice, less irreconcilable with
certain virtues, but incomparably more detrimental to a nation's
economy. The miser's treasures, even when they have been buried, may be
employed productively, at least, after his death; but prodigality
_destroys_ resources. So, too, avarice is a repulsive vice, extravagance
a seductive one. The practice of frugality[218-1] in every day life is
as far removed from one extreme as the other. It is the "daughter of
wisdom, the sister of temperance and the mother of freedom." Only with
its assistance can liberality be true, lasting and successful. It is, in
short, reason and virtue in their application to consumption.[218-2]
[218-3]
[Footnote 218-1: Negatively: the principle of sparing;
positively: the principle of making the utmost use of
things. (_Schäffle_, Kapitalismus und Socialismus, 27.)]
[Footnote 218-2: Admirable description of economy in _B.
Franklin's_ Pennsylvanian Almanac, How poor Rich. Saunders
got rich; also in _J. B. Say_, Traité, III, ch. 5. _Adam
Smith_, W. of N., II, ch. 3, endeavors to explain why it is
that, on the whole and on a large scale, the principle of
economy predominates over the seductions of extravagance.
This, however, is true only of progressive nations.]
[Footnote 218-3: The Savior Himself in His miracles, the
highest pattern of economy: _Matth._, 14, 20; _Mark_, 6, 43;
8, 8; _Luke_, 9, 17; _John_, 6, 12. That He did not intend
to prohibit thereby all noble luxury is shown by passages
such as _Matth._, 26, 6 ff.; _John_, 2, 10.]
SECTION CCXIX.
EFFECT OF PRODIGALITY.
Prodigality destroys goods which either were capital or might have
become capital. But, at the same time, it either directly or indirectly
increases the demand for commodities. Hence, for a time, it raises not
only the interest of capital, but the prices of many commodities.
Consumers naturally suffer in consequence; many producers make a profit
greater than that usual in the country until such time as the
equilibrium between supply and demand has been restored by an increase
of the supply of the coveted products. But the capital of spendthrifts
is wont to be suddenly exhausted; demand suddenly decreases, and
producers suffer a crisis. As Benjamin Franklin says, he who buys
superfluities will at last have to sell necessities. Thus the
extravagance of a court may contribute to the rapid prosperity of a
place of princely residence.[219-1] But it should not be forgotten that
all the food-sap artificially carried there had to be previously
withdrawn from the provinces. The clear loss caused by the destruction
of wealth should also be borne in mind.[219-2] [219-3]
[Footnote 219-1: A rapid change of hands by money, as it is
called in every day life. See, _per contra_, _Tucker_,
Sermons, 31, 1774.]
[Footnote 219-2: Only the superficial observer is apt to
notice this apparent prosperity of the capital much more
readily than the decline of the rest of the country, which
covers so much more territory. In like manner, many wars
have had the appearance of promoting industry, for the
reason that some branches grew largely in consequence of the
increased demand of the state; but they grew at the expense
of all others which had to meet the increased taxes. Compare
_Jacob_ in _Lowe_, England nach seinem gegenwartigen
Zustande, 1823, cap. 2, 3; _Nebenius_, Oeffentlicher Credit,
I, Aufl., 419 ff.; _Hermann_, department of the Seine,
amounted, in 1850, to 497,000,000 francs; in the department
of the Bouches du Rhone, to 39,000,000 francs; in 1855, on
the other hand, they were, on account of the war,
887,000,000 francs and 141,000,000. (Journal des Econ.,
Juil., 1857, 32 ff.)]
[Footnote 219-3: The Journal des Economistes for March,
1854, very clearly shows, in opposition to the
state-sophists who recommended extravagant balls, etc. as a
means of advancing industry, and who even advocated the
paying officials higher salaries on this account, and making
greater outlays by them compulsory, that such luxury when it
comes of itself may be a symptom of national wealth, but
that it is a very bad means to produce prosperity
artificially.]
SECTION CCXX.
WHEN SAVING IS INJURIOUS.
The act of saving, if the consumption omitted was a productive one, is
detrimental to the common good; because now a real want of the national
economy remains unsatisfied.[220-1] The effecting of savings by
curtailing unproductive consumption may embarrass those who had
calculated on its continuance. But its utility or damage to the whole
national economy will depend on the application or employment of what is
saved. Here two different cases are possible.
A. It is stored up and remains idle. If this happens to a sum of money,
the number of instruments of exchange in commerce is diminished. Hence,
in consequence, there may be either a general fall in the price of
commodities, or some commodities may remain unsold; that is, according
to § 217, a commercial crisis of greater or smaller extent.[220-2] If it
be objects of immediate consumption that are stored up and lie idle,
articles of food or clothing, for instance, the price of such
commodities is wont to be raised by the new and unusual demand for them,
precisely as it is lowered afterwards when the stores are suddenly
opened and thrown upon the market.[220-3]
B. If the saving effected be used to create fixed capital, there is as
much consumption of goods, the same support of employed workmen, the
same sale for industrial articles as in the previous unproductive
consumption; only, there the stream is usually conducted into other
channels. If a rich man now employs in house-building what he formerly
paid out to mistresses; masons, carpenters, etc. earn what was formerly
claimed by hair-dressers, milliners, etc.: there is less spent for
truffles and champagne and more for bread and meat. The last result is a
house which adds permanently either to personal enjoyment, or
permanently increases the material products of the nation's
economy.[220-4] And it is just so when the wealth saved is used as
circulating capital. Here, the wealth saved is consumed in a shorter or
longer time; and to superficial observers, this saving might seem like
destruction; but it is distinguished from the last by this, that it
always reproduces its full equivalent and more. However, the whole
quantity of goods brought into the market by such new capital cannot be
called its product. Only the use (_Nützung_) of the new capital can be
so called; that is the holding together or the development in some other
way of other forces which were already in existence until their
achievements are perfected and ready for sale.[220-5] [220-6]
[Footnote 220-1: What evil influences such saving can have
may be seen from Prussian frugality in its military system
before 1806.]
[Footnote 220-2: The custom of burying treasure is produced
by a want of security (compare _Montanari_, Delia Moneta,
1683-87, 97 Cust.), and by an absence of the spirit which
leads to production. As _Burke_ says, where property is not
sacred, gold and silver fly back into the bosom of the earth
whence they came. Hence, in the middle ages, this custom was
frequent, and is yet, in most oriental despotic countries.
(_Montesquieu_, E. des L., XXII, 2.) And so in Arabia: _d'Arvieux_,
_Rosenmüller's_ translation, 61 seq. _Fontanier_, Voyage dans l'Inde
et dans le Golfe persique, 1644, I, 279. A Persian governor on his
death bed refused to give any information as to where he had buried
his treasure. His father had always murdered the slave who helped him
to bury his money or any part of it. (_Klemm_, Kulturgeschichte, VII,
220.) In lower stages of civilization, it is a very usual luxury to
have one's treasures buried with the corpse. In relation to David's
grave, see _Joseph._, Ant. Jud., VII, 15,3, XIII, 8, 4; XVI, 7, 1.
Hence the orientals believe that _every_ unknown ruin hides a
treasure, that every unintelligible inscription is a talisman to
discover it by, and that every scientific traveler is a
treasure-digger, (_v. Wrede_, R. in Hadhramaut, 113, 182 and
_passim_.) Similarly in Sicily. (_Rehfues_, Neuester Zustand von S.,
1807, I, 99.) In the East Indies every circumstance that weakens
confidence in the power of the government increases the frequency of
treasure-burial, as was noticed, for instance, after the Afghan
defeat. Treasure-burial by the Spanish peasantry (_Borrego_,
translated by Rottenkamp, 81), in Ireland (_Wakefield_, Account of I.
I, 593), in the interior of Russia (_Storch_, Handbuch, I, 142), and
among the Laplanders. The custom was very much strengthened among the
latter when, in 1813, they lost 80 per cent. by the bankruptcy of the
state through its paper money. (_Brooke_, Winter in Lapland, 1829,
119; compare _Blom_, Statistik von Norwegen, II, 205.) As during the
Thirty Years' War, so also in 1848, it is said that large amounts of
money were burned by the Silesian and Austrian peasantry. Much of it
is lost forever, but, on the whole, much treasure is wont to be found
where much is buried; governments there make it a regal right to
search for it.]
[Footnote 220-3: If the hoarding takes place in a time of
superfluity, and the restitution of the stores in a time of
want, there is of course no detrimental disturbance, but on
the contrary the consequence is a beneficent equilibrium of
prices. This is the fundamental idea in the storage of
wheat.]
[Footnote 220-4: In the construction of national buildings,
etc., we have the following course of things: compulsory
contributions made by taxpayers, or an invitation to the
national creditors to desist somewhat from their usual
amount of consumption, and to employ what is saved in the
building of canals, roads etc. In France, for instance,
after 1835, 100,000,000 francs per annum. (_M. Chevalier_,
Cours, I, 109.) The higher and middle classes of England
saved, not without much trouble, however, between 1844 and
1858, £134,500,000 in behalf of railway construction.
_Tooke-Newmarch_.]
[Footnote 220-5: Such savings have sometimes been prescribed
by the state. In ancient Athens many prohibitions of
consumption in order to allow the productive capital to
first attain a certain height. Thus it was forbidden to
slaughter sheep until they had lambed, or before they were
shorn. (_Athen._, IX, 375, I. 9.) Similarly the old
prohibition of the exportation of figs. (Ibid., III, 74.)
Compare Petit. Leges. Atticae, V, 3. _Boeckh_,
Staatshaushaltung, I, 62 seq.]
[Footnote 220-6: The process of the transformation of
savings from a money-income, in a money-economy
(_Geldwirthschaft_), into other products, more closely
analyzed in _v. Mangoldt_, V. W. L., 152 ff.]
SECTION CCXXI.
LIMITS TO THE SAVING OF CAPITAL.
It may be seen from the foregoing, that the mere saving of capital, if
the nation is to be really enriched thereby, has its limits. Every
consumer likes to extend his consumption-supply and his capital in use
(_Gebrauchskapitalien_); but not beyond a certain point.[221-1] Besides,
as trade becomes more flourishing, smaller stores answer the same
purpose. And no intelligent man can desire his productive capital
increased except up to the limit that he expects a larger market for his
enlarged production. What merchant or manufacturer is there who would
rejoice or consider himself enriched, if the number of his customers and
their desire to purchase remaining the same, he saw his stores of
unsaleable articles increase every year by several thousands?
This is another difference between national resources or world resources
and private resources. The resources of a private person, which are only
a link in the whole chain of trade, and which are, therefore, estimated
at the value in exchange of their component parts should, indeed, always
be increased by savings made. (§ 8.) For even the most excessive
increase of supply in general, which largely lowers the price of a whole
class of commodities, will never reduce the price of individual
quantities of that commodity below zero, and scarcely to zero. It is
quite otherwise in the case of national or world resources which must be
estimated according to the value in use of their component parts. Every
utility supposes a want. Where, therefore, the want of a commodity has
not increased, and notwithstanding there is a continuing increase in the
supply, the only result must be a corresponding decrease in the utility
of each individual part.[221-2]
If a people were to save all that remained to them over and above their
most urgent necessities, they would soon be obliged to seek a wider
market in foreign countries, or loan their capital there; but they would
make no advance whatever in higher culture nor add anything to the
gladness of life.[221-3] On the other hand, if they would not save at
all, they would be able to extend their enjoyments only at the expense
of their capital and of their future. Yet these two extremes find their
correctives in themselves. In the former case, a glut of the market
would soon produce an increased consumption and a diminished production;
in the latter the reverse. The ideal of progress demands that the
increased outlay with increased production should be made only for
worthy objects, and chiefly by the rich, while the middle and lower
classes should continue to make savings and thus contribute to wipe out
differences of fortune.[221-4]
[Footnote 221-1: Up to this point, indeed, wants increase
with the means of their satisfaction. The man who has two
shirts always strives to get a dozen, while the person who
has none at all, very frequently does not care for even one.
And so the person who has silver spoons generally desires
also to possess silver candle-sticks and silver plates. On
Lucullus' 5,000 chlamydes, see _Horat._, Epist., I, 6, 40
ff.]
[Footnote 221-2: That consumption and saving are not two
opposites which exclude each other is one of _Adam Smith's_
most beautiful discoveries. See Wealth of Nat., II, ch. 3.
But compare _Pinto_, Du Crédit et de la Circulation, 1771,
335. Before his time most writers who were convinced of the
necessity of consumption were apologists of extravagance.
Thus _v. Schröder_, F. Schatz- und Rentkammer, 23 seq. 47,
172. Louis XIV.'s saying: "A King gives alms when he makes
great outlays." According to _Montesquieu_, Esprit des Louis
VII., 4, the poor die of hunger when the rich curtail their
expenses. This view, which must have found great favor among
the imitators of Louis XIV. and Louis XV. was entertained to
some extent by the Physiocrates; for instance, _Quesnay_,
Maximes générales, 21 seq. Compare _Turgot_, Œuvres, éd,
_Dare_, 424 ff. On the other hand, _Adam Smith_, loc. cit.
says that the spendthrift is a public enemy, and the person
who saves a public benefactor. _Lauderdale_, Inquiry, 219,
reacts so forcibly against the one-sidedness which this
involves that he believes no circumstance possible "which
could so far change the nature of things as to turn
parsimony into a means of increasing wealth." In his polemic
against Pitts' sinking fund as inopportune and excessive, he
assumes that all sums saved in that way are completely
withdrawn from the national demand. See per contra
_Hufeland_ n. Grundlegung I, 32, 238. _Sismondi_, N. P. II,
ch. 6, with his distinction between _production_ and
_revenu_, is more moderate; the former is converted into the
latter only in as much as it is "realized," that is, finds a
consumer who desires it, and pays for it. Now only can the
producer rely on anything; can he restore his productive
capital, estimate his profit, and use it in consumption, and
lastly begin the whole business over again.... A stationary
country must remain stationary in everything. It cannot
increase its capital and widen its market while its
aggregate want remains unaltered. (IV, ch. 1.)]
[Footnote 221-3: Thus _John Stuart Mill_ thinks that the
American people derive from all their progress and all their
favorable circumstances only this advantage: "that the life
of the whole of one sex is devoted to dollar-hunting, and of
the other to breeding dollar-hunters." (IV, ch. 6, 2.) In
the popular edition of 1865, after the experience of the
American civil war, he materially modified this judgment.]
[Footnote 221-4: _Storch_, Nationaleinkommen, 125 ff. That
there is at least not too much to be feared from the making
of too great savings is shown by _Hermann_, St. Untersuch.,
371 seq. On the other hand, there is less wealth destroyed
by spendthrifts than is generally supposed, for spendthrifts
are most frequently cheated by men who make savings
themselves. (_J. S. Mill_, Principles, I, ch. 5, 5.)]
SECTION CCXXII.
SPENDTHRIFT NATIONS.
As there are extravagant and frugal individuals, so also are there
extravagant and frugal nations. Thus, for instance, we must ascribe
great national frugality to the Swiss. In many well-to-do families in
that country, it is a principle acted upon to require the daughters to
look to the results of their white sewing, instead of giving them
pin-money; to gather up the crumbs after coffee parties in the presence
of the guests, and to make soup of them afterwards, etc. Sons are
generally neither supported nor helped to any great extent by their
parents in their lifetime, and are required to found their own homes.
They, therefore, grow rich from inheritance only late in years, when
they are accustomed to a retired and modest mode of life, and have
little desire, from mere convenience sake, to change it for another. And
so Temple informs us that it never occurs to the Dutch that their outlay
should equal their income; and when this is the case they consider that
they have spent the year in vain. Such a mode of life would cost a man
his reputation there as much as vicious excess does in other countries.
The greatest order and the most accurate calculation of all outlay in
advance is found in union with this; so that Temple assures us he never
heard of a public or private building which was not finished at the time
stipulated for in advance.[222-1]
On the other hand, the Englishman lives rather luxuriantly. He is so
used to enjoying comparative abundance, that when English travelers see
the peasantry of the continent living in great frugality, they generally
attribute it to poverty and not to their disposition to make savings. If
England has grown rich, it is because of the colossal magnitude of its
production, which is still more luxuriant and abundant than its
consumption.[222-2] This contrast may be the effect in part of
nationality and climate;[222-3] but it is certainly the effect in part
also of a difference in the stage of civilization which these countries
have respectively reached. The elder Cato had a maxim that a widow
might, indeed, allow her fortune to diminish, but that it was a man's
duty to leave more behind him than he had inherited.[222-4] And how
prodigally did not the lords of the universe live in later times!
[Footnote 222-1: _Temple_, Observations on the U. Provinces,
Works, I, 136, 138 seq., 179. _Roscher_, Geschichte der
engl. Volkswirthschaftsl., 129. Thus, for instance, the
Richesse de Hollande, I, 305, describes a rich town near
Amsterdam in which a man with an income of 120,000 florins a
year expended probably only 1,000 florins per annum on
himself.]
[Footnote 222-2: As early a writer as _D. Defoe_, Giving
Alms no Charity! 1704, says: the English get estates; the
Dutch save them. An Englishman at that time with weekly
wages of 20 shillings just made ends meet; while a Dutchman
with the same grew rich, and left his children behind him in
very prosperous circumstances, etc. _L. Faucher_ draws a
similar contrast between his fellow countrymen and the
English. _Goethe's_ ingenuous observations (Werke, Bd., 23,
246, ed. of 1840) in his Italian journey, show that the
Italians, too, know how to save. _Molti pochi fanno un
assai!_ And so in Bohemia, the Czechs have a good reputation
for frugality, sobriety, etc. as workmen. They are more
frugal than the Germans, although all the larger businesses
belong to Germans, because when the Czech has saved
something, he prefers to return to his village to putting
his savings in jeopardy by speculation.]
[Footnote 222-3: Drunkenness a common vice of northern
people: thus in antiquity the Thracians (_Athen._, X, 42;
_Xenoph._, Exp. Cyri, VII, 3, 32), the Macedonians, for
instance, Philips (_Demosth._, Olynth., II, 23) and
Alexander's (_Plutarch_, Alex., 70; De Adulat, 13). To drink
like a Scythian, meant, among the Greeks, to drink like a
beast. (_Athen._, X, 427; _Herod._, VI, 84.) On North German
drunkenness in the 16th century, see _Seb. Münster_,
Cosmogr., 326, 730. _Kantzow_, Pomerania, II, 128.]
[Footnote 222-4: _Plutarch_, Cato, I, 21.]
SECTION CCXXIII.
THE MOST DETRIMENTAL KIND OF EXTRAVAGANCE.
The kind of extravagance which it is most natural we should desire to
see put an end to, is that which procures enjoyment to no one. I need
call attention only to the excessive durability and solidity of certain
buildings. It is more economical to build a house that will last 60
years for $10,000, than one which will last 400 years for $20,000; for
in 60 years the interest saved on the $10,000 would be enough to build
three such houses.[223-1] This is, of course, not applicable to houses
built as works of art, or only to produce an imposing effect. The object
the ancient Egyptians had in view in building their obelisks and
pyramids continues to be realized even in our day.
I might also call attention to the premature casting away of things
used. Our national economy has saved incredible sums since rags have
been manufactured into paper. In Paris 4,000 persons make a living from
what they pick up in the streets.[223-2]
[Footnote 223-1: Compare _Minard_, Notions élémentaires
d'Economie politique appliquée aux Travaux publics, 1850, 71
ff. He calls to mind the many strong castles of the age of
chivalry, the Roman aqueducts, theaters, etc., which are
still in a good state of preservation, but which can be used
by no one; so many bridges too narrow for our purposes, and
so many roads too steep. The sluices at Dunkirk, made 12.60
metres in width by Vauban, were made 16 meters wider in
1822, and still are too narrow for Atlantic steamships. In
England, private individuals have well learned to take all
this into account. Compare _J. B. Say_, Cours pratique,
translated by Morstadt, I, 454 ff.]
[Footnote 223-2: _Fregier_, Die gefährlichen Klassen,
translated 1840, I, 2, 38. In Yorkshire it is said that
woolen rags to the amount of £52,000,000 a year are
manufactured into useful articles. (_Tooke_,
Wool-Production, 196.) Compare The Use of Refuse: Quart.
Rev., April, 1868. On the ancient Greek ragpickers the
so-called σπερμολόγοις, see _St. John_, The Hellenes, III,
91; on the Roman _Centonariis_: _Cato_, R. R., 135;
_Columella_, R. R., I, 8, 9; _Marquardt_, II, 476, V, 2,
187.]
CHAPTER II.
LUXURY.
SECTION CCXXIV.
LUXURY IN GENERAL.
The idea conveyed by the word luxury is an essentially relative one.
Every individual calls all consumption with which he can dispense
himself, and every class that which seems not indispensable to
themselves, luxury. The same is true of every age and nation. Just as
young people ridicule every old fashion as pedantry, every new fashion
is censured by old people as luxury.[224-1]
But (§ I) a higher civilization always finds expression in an increased
number and an increased urgency of satisfied wants. Yet, there is a
limit at which new or intensified wants cease to be an element of higher
civilization, and become elements of demoralization. Every immoral and
every unwise want exceeds this limit.[224-2] Immoral wants are not only
those the satisfaction of which wounds the conscience, but also those in
which the necessities of the soul are postponed to the affording of
superfluities to the body; and where the enjoyment of the few is
purchased at the expense of the wretchedness of the many. And not only
those are unwise or imprudent for which the voluntary outlay is greater
than one's income, but those also where the indispensable is made to
suffer for the dispensable.
Thus it was in Athens, in the time of Demosthenes, when the festivities
of the year cost more than the maintenance of the fleet; when Euripides'
tragedies came dearer to the people than the Persian war in former
times. There was even a law passed (Ol. 107,4) prohibiting the
application of the dramatic fund to purposes of war under pain of
death.[224-3]
In the history of any individual people, it may be shown with
approximate certainty at what point luxury exceeded its salutary limits.
But in the case of two different nations, it is quite possible that what
was criminal prodigality with the one, may have been a salutary
enjoyment of life with the other; in case their economic
(_wirthschaftlichen_) powers are different. Precisely as in the case of
individuals, where for instance, the daily drinking of table wine may be
simplicity in the rich and immoral luxury in the case of a poor father
of a family.[224-4] Healthy reason has this peculiarity, that where
people will not listen to it, it never hesitates to make itself felt.
(_Benjamin Franklin._)[224-5]
However, the luxury of a period always throws itself, by way of
preference, on those branches of commodities which are cheapest.
[Footnote 224-1: _Stuart_, Principles, II, ch. 30,
_Ferguson_, History of Civil Society, VI, 2. Thus
_Dandolus_, Chron. Venet., 247, tells of the wife of a doge
at Constantinople who was so given to luxury that she ate
with a golden fork instead of her fingers. But she was
punished for this outrage upon nature: her body began to
stink even while she was alive. In the introduction to
_Hollinshed's_ Chronicon, 1557, there is a bitter complaint
that, a short time previous, so many chimneys had been
erected in England, that so many earthen and tin dishes had
been introduced in the place of wooden ones. Another author
finds fault that oak was then used in building instead of
willow, and adds that formerly the men were of oak but now
of willow. _Slaney_, On rural Expenditure, 41. Compare
_Xenoph._, Cyrop., VIII, 8, 17.]
[Footnote 224-2: Biblically determined: _Romans_, 13, 14.]
[Footnote 224-3: _Plutarch_, De Gloria Athen., 348.
_Athen._, XIV, 623. Petit. Legg. Att., 385.]
[Footnote 224-4: _Livy_, XXXIV, 6 ff.]
[Footnote 224-5: Most writers who have treated of luxury at
all have generally confined themselves to inquiring whether
it was salutary or reprehensible. Aristippus and
Antisthenes, Diogenes, etc.; Epicureans and Stoics. The
latter were reproached with being bad citizens, because
their moderation in all things was a hindrance to trade.
(_Athen._, IV, 163.) The Aristotelian _Herakleides_ declared
luxury to be the principal means to inspire men with
noble-mindedness; inspired by luxury, the Athenians
conquered at Marathon. (_Athen._, XII, 512.) _Pliny_ was one
of the most violent opponents of luxury. See _Pliny_, N. N.,
XXXIII, 1, 4, 13, and other places. The controversy has been
renewed by the moderns, especially since the beginning of
the 18th century, after luxury of every kind had previously
(for the most part on theological grounds, but also by
Hutten, for instance) been one-sidedly condemned. Among its
defenders were _Mandeville_, The Fable of the Bees, 1706,
who, however, calls everything a luxury which exceeds the
baldest necessities of life; _Voltaire_ in Le Mondain, the
Apologie du Luxe, and Sur L'Usage de la Vie; _Mélon_, Essai
politique sur le Commerce, ch. 9; _Hume_, Discourses, No. 2,
On Refinement in the Arts; _Dumont_, Théorie du Luxe, 1771;
_Filangieri_, Delle Leggi politiche ed economiche, II, 37;
and the majority of the Mercantile school and of the
Physiocrates. Among the opponents of luxury, _J. J.
Rousseau_ towers over almost all others. Further, _Fénélon_,
Télémaque, 1699, L. XXII; _Pinto_, Essai sur le Luxe, 1762.
The reasons and counter-reasons advanced by those writers
apply not only to luxury but to the lights and shades of
high civilization in general. When a political economist
declares for or against luxury in general, he resembles a
doctor who should declare for or against the nerves in
general. There has been luxury in every country and in every
age. Among a healthy people, luxury is also healthy, an
essential element in the general health of the nation. Among
an unhealthy people luxury is a disease, and
disease-engendering.
For an impartial examination of the question, see
_Ferguson_, History of Civil Society, towards the end; see
also _Beckmann_, in _Justis'_ Grundsätzen der Polizei, 1782,
§ 308; _Rau_, Ueber den Luxus, 1817; _Roscher_, Ueber den
Luxus, in the Archiv der Politischen Oekonomie, 1843, and in
his Ansichten der Volkswirthschaft, 1861, 399 ff.]
SECTION CCXXV.
THE HISTORY OF LUXURY.--IN THE MIDDLE AGES.
During the middle ages, industry and commerce had made as yet but little
progress. Hence it was as difficult then for luxury to be ministered to
by fine furniture as by the products of foreign countries. Individual
ornamental pieces, especially arms and drinking cups,[225-1] were wont
to be the only articles of luxury. We have inventories of the domains of
Charlemagne from which we find that in one of them, the only articles of
linen owned were two bed-sheets, a table-cloth and a pocket
handkerchief.[225-2] Fashion is here very constant; because clothing was
comparatively dearer than at present. And so now in the East. In the
matter of dwellings, too, more regard was had to size and durability,
than to elegance and convenience. The palaces of Alfred the Great were
so frailly built that the walls had to be covered with curtains as a
protection against the wind, and the lights to be inclosed in
lanterns.[225-3]
Hence the disposition to use the products of the home soil as articles
of luxury was all the greater, but more as to quantity than to
quality.[225-4] Since the knight could personally neither eat nor drink
a quantity beyond the capacity of his own stomach, he kept a numerous
suite to consume his surplus. It is well known what a great part was
played among the ancient Germans by their retinues of devoted servants
(_comitatus_), which many modern writers have looked upon as
constituting the real kernel of the migration of nations.
In England, it was a maxim of state policy with Henry VII., whose reign
there terminated the middle age, to prohibit the great liveried suites
of the nobility (19 Henry VII., ch. 14) as Richard II., Henry IV. and
Edward IV. had already attempted to do. But even under James I., we find
ambassadors accompanied by a suite of 500 persons or 300
noblemen.[225-5]
The rich man welcomed every opportunity which enabled him to make others
share in a dazzling manner the magnitude of his superfluous wealth:
hence the numberless guests at weddings who were frequently entertained
for weeks.[225-6] These festivities are memorable not because of the
delicacies or great variety of the dishes, but because of their colossal
magnitude. Even William of Orange, 1561, entertained at his wedding
guests who had brought with them 5,647 horses; and he appeared himself
with a suite of 1,100 men on horseback. There were consumed on the
occasion 4,000 bushels of wheat, 8,000 of rye, 11,300 of oats, 3,600
_eimers_ of wine, 1,600 barrels of beer.[225-7] In the ordinance of
Münden regulating weddings, promulgated in the year 1610, it is
provided, that, at a large wedding there should not be over 24 tables,
nor at a small one over 14, with 10 persons at each table.[225-8]
The hospitality of the lower stages of civilization[225-9] must be
ascribed as well to this peculiar kind of luxury as to mere good nature.
Arabian chiefs have their noon-day table set in the street and welcome
every passer-by to it.[225-10] (_Pococke._) And so, distinguished
Indians keep an open cauldron on the fire cooking all the time, from
which every person who comes in may help himself. (_Catlin._)
Compared with this luxury of the rich, the poverty found side by side
with it appears less oppressive. There is no great gap between the modes
of life of the different classes.[225-11] This is the golden age of
aristocracy, when no one questions its legitimateness. When, later, the
nobleman, instead of keeping so many servants, begins to buy costly
garments for himself, he, indeed, supports indirectly just as many and
even more men; but these owe him nothing. Besides, in this last kind of
luxury, it is very easily possible for him to go beyond his means, which
is scarcely ever the case in the former.[225-12]
[Footnote 225-1: Here, as a rule, the value of the metal was
greater than the form-value; and hence the medieval
monasteries frequently made loans of silver vessels, where
of course, the form could not be taken into consideration.
On the other hand, in the case of the table service,
presented by the king of Portugal to Lord Wellington, the
metal cost £85,000 and the workmanship £86,000. (_Jacob_,
Gesch. der edlen Metalle, translated by Kleinschrod, II, 5.)
Compare _Hume_, History of England, ch. 44, App. 3.
Similarly under Louis XIV. (_Sismondi_, Hist. des Français,
XXVII, 45.) When Rome was highly civilized, C. Gracchus paid
for very good silver ware, 15 times the value of the metal,
and L. Crassus, (consul 95 before Christ) 18 times its
value. _Mommsen_, R. Gesch. II, 383.]
[Footnote 225-2: _Specimen breviarii fiscalium Caroli
Magni_; compare _Anton_, Gesch. der deutschen Landwirthsch.
244 ff.]
[Footnote 225-3: _Turner_, History of the Anglo Saxons, VII,
ch. 6.]
[Footnote 225-4: In _Homer_, the kings live on nothing but
meat, bread and wine: compare _Athen._, I, 8. In the
saga-poetry of Iceland, _H. Leo_ does not remember to have
heard any other food mentioned except oat-pap, milk, butter
and cheese, fish, the flesh of domestic animals, and beer.
(_Raumer's_ Taschenbuch, 1835, 491)]
[Footnote 225-5: _Hume_, History of England, ch. 49, Append.
Similarly among all nations which have still preserved much
of the medieval. Thus the duke of Alba, about the end of the
last century, had not a single commodious hall in his
immense palace, but 400 rooms for his servants, since at
least all his old servants, and even their widows and
families, continued to live with him. In Madrid alone, he
paid £1,000 a month wages to his servants; and the son of
the duke, Medina-Celi, £4,000 per annum. (_Townsend_, II,
155, 158.) In many palaces in Moscow, previous to 1812,
there were 1,000 and more servants, unskillful, clad for the
most part as peasants, badly fed, and with so little to do
that perhaps one had no service to perform but to fetch
drinking water at noon, and another in the evening. Even
poor noblemen kept 20 and 30 servants, (_v. Haxthausen_,
Studien, I, 59.) _Forster_, Werke, VII, 347, explains Polish
luxury in servants, by the poorness of the servants there: a
good German maid could do more than three Polish servants.
Thus, in Jamaica, it was customary to exempt from the
slave-tax persons who kept fewer than 7 negroes. (_B.
Edwards_, History of the W. Indies, I, 229.) Compare _Livy_,
XXXIX, 11. The luxury of using torch-bearers instead of
candelabra lasted until Louis XIV.'s time. (_Rocquefort_,
Hist. de la Vie privée des Français, III, 171.) Compare _W.
Scott_, Legend of Montrose, ch. 4.]
[Footnote 225-6: A Hungarian magnate, under king Sigismund,
celebrated his son's wedding for a whole year. (_Fessler_,
Gesch. von Ungarn, IV, 1267.)]
[Footnote 225-7: _Müller_, Annal. Saxon, 68. Several
examples in _Sckweinichen's_ Leben von Büsching, I, 320 seq.
_Krünitz_, Enclycopædie, Bd. 82, 84 ff. The wedding of the
niece of Ottakar II. in 1264, has long been considered a
most brilliant event in the history of medieval luxury.
(_Palacky_, Gesch. von Böhmen, II, 191 ff.) Even yet, in
Abyssinia, on the occasion of royal feasts, only meat and
bread are eaten and mead drunk; but not only the great, but
even common soldiers are entertained one after the other.
(Ausland, 1846, No. 79.) Magnificent as was the table of a
West Indian planter, it was in some respects very simple. A
large ox was slaughtered for the feast, and everything had
to be prepared from that: roast beef, beef steaks, beef
pies, stews, etc. (_Pinckard_, Notes on the W. Indies, II.
100 ff.)]
[Footnote 225-8: _Spittler_, Geschichte Hanovers, I, 381.]
[Footnote 225-9: _Tacitus_, Germ., 21 Leg., says of the
Germans: _Convictibus et hospitiis non alia gens effusius
indulget. Quemcunque mortalium arcere tecto, nefas habetur.
Diem noctemque continuare potando, nulli probrum._]
[Footnote 225-10: Entirely the same among the ancient
Romans: _Valer. Max._, II, 5. Compare per _contra_,
_Euripid._, Herc. fur., 304 seq.]
[Footnote 225-11: Think of nomadic races especially, where
the rich can employ their wealth only to increase the number
of their partisans, for war purposes, etc.]
[Footnote 225-12: _Ferguson_, Hist. of Civil Society, VI, 3;
_Adam Smith_, Wealth of Nat., IV, ch. 4. Compare _Contzen_,
Politicorum, 1629, 662. As to how in the lower stages of
civilization, guests are used to supply the place of the
post-office service, see _Humboldt_, Relation hist., II,
61.]
SECTION CCXXVI.
LUXURY IN BARBAROUS TIMES.
The luxury of that uncivilized age shows itself for the most part on
particular occasions, and then all the more ostentatious, while in the
periods following it, it rather permeates the whole of life. Even J.
Möser excuses our forefathers for their mad celebration of their
_kirmesses_ and carnivals: _dulce est desipere in loco_, as Horace says,
and that they sometimes carried it to the extent of drowning
reason.[226-1] Among ourselves, the common man drinks brandy every day;
in Russia, seldom, but then, to the greatest excess.[226-2] The well
known peculiarity of feudal castles, that, besides one enormous hall,
they were wont to have very small and inconvenient rooms for every day
life, is accounted for in part by the great importance to them of festal
occasions, and in part by the cordiality of the life led in them, in
which lord and servants constituted one family. Nothing can be more
erroneous than to ascribe great temperance in general to people in a low
stage of civilization. Their simplicity is a consequence of their
ignorance rather than of their self-control. When nomadic races have
once tasted the cup of more delicate enjoyment, it is wont to hurry them
to destruction.[226-3]
[Footnote 226-1: _Möser_, Patr. Ph. IV, 7. On the feast of
fools and the feast of asses of the middle ages, compare
_Dutillet_, Mémoire pour sevir à l'Histoire de la Fête des
Fous; _D. Sacchi_, Delle Feste popolari del medio Evo.
During the latter half of the 16th century, the first
Hannoverian minister received only 200 thalers salary and
pieces of clothing, while the wedding of a certain von
Saldern cost 5,600 thalers. (_Spittler_, Gesch. Hannovers,
I, 333.)]
[Footnote 226-2: _v. Haxthausen_, Studien, II, 450, 513.
Thus, in 1631, of those who had died suddenly, there were
957 who died of drunkenness. (_Bernouilli_, Populationistik,
303.) According to _v. Lengefeldt_, Russland im 19. Jahrh.,
42, the number is now 1,474 to 1,911 per annum. On Poland,
see _Klebs_, Landeskulturgesetzgebung in Posen, 78. When the
South American Indians begin to drink, they do not stop
until they fall down senseless. (_Ulloa_, Noticias
Americanas, ch. 17.) The old Romans considered all
barbarians to be drunkards. (_Plato_, De Legg., I, 638.) In
eating, also, uncivilized people are extremely irregular. A
Jackute or Tunguse consumes 40 pounds of meat; three men
devour a whole reindeer at a meal. (_Cochrane_, Fussreise,
156.) One ate in 24 hours the back quarter of a large ox, or
½ a _pud_ of fat, and drank an equal quantity of melted
butter. (_Klemm_, Kulturgeschichte, III, 18.) Similarly
among hunting races. See _Klemm_, I, 243, 339; II, 13, 255.
On the South Sea Islanders, see _Hawkesworth_, III, 505;
_Forster_, I, 255.]
[Footnote 226-3: Rapid degeneration of almost all barbaric
dynasties as soon as they have subjugated civilized
countries.]
SECTION CCXXVII.
INFLUENCE OF THE CHURCH AND OF THE CITY.
The change in this situation takes place first of all in the churches
and in the cities. The Church has passed through almost every stage of
development in advance of the State; and civilization, both in the good
and bad sense of the term, has become general, and gradually acclimated
in the rural districts, through the influence of the cities. In the
Church, the earliest art endeavored to reach the beautiful. There, we
first find music, painting, sculpture, foreign perfumes, incense and
variegated garments.[227-1] In the cities, growing industry introduces a
more attractive style of clothing and a more ornamental style of
household furniture. Commerce, beginning to thrive, raises foreign
commodities into wants,[227-2] and thus the old luxury of feudal times
is modified.[227-3] The large number of idle servants is diminished. All
the more refined pleasures are extended downward to wider circles of the
people. Instead of individual bards, rhapsodists, skalds and
minnesingers, we have the beginnings of the theater, and instead of
tournaments, the shooting matches. (_Freischiessen._)
But it is remarkable how much earlier here pomp and splendor are
considered than convenience. The Spanish _romanceros_ of the 12th
century display wonderful splendor in their descriptions of the Cid, and
the trousseau of his daughters. But, on the other hand, the wife of
Charles VII. seems to have been the only French woman in the 15th
century who had more than two linen chemises. Even in the 16th century,
it frequently happened that a princess made a present to a prince of a
single shirt. At this time the German middle class were wont to sleep
naked.[227-4]
Even now, half-civilized nations look more to the outward appearance of
commodities than to their intrinsic value. Thus, for instance, in
Russia, we find large numbers of porcelain services extravagantly
painted and gilded, awkward, the material of which is full of blisters;
damaskeened knives, gilt sad-irons and candle-snuffers with landscapes
engraved on them: but nothing fits into anything else; the angles are
vicious, the hinges lame, and the whole soon goes to pieces. And so,
among export merchants in Bremen, for instance, it is a rule, on all
their wares intended for America, to put a label made of very beautiful
paper, with their coat-of-arms or firm-name in real silver, and to do
the packing in as elegant a manner as possible.[227-5] Cloths intended
for America are usually exceedingly light, destitute of solidity, but
very well dressed. The cotton-printers who work for the African market
prefer to employ false but cheap and dazzling colors.[227-6]
[Footnote 227-1: The use of window-glass in churches in
England dates from 674, in private houses from 1180.
(_Anderson_, Origin of Commerce, s. a.) Even in 1567, it was
so rare that during the absence of the lords from their
country seats, the panes were taken out and stored for safe
keeping. (_Eden_, State of the Poor, I, 77.) As to how
Scotland developed in this respect still later, see
_Buckle_, History of Civilization in England, II, 172.]
[Footnote 227-2: In our day, at the breakfast of a German of
the middle class, may be found East Indian coffee, Chinese
tea, West Indian sugar, English cheese, Spanish wine, and
Russian caviar, without any surprising degree of luxury.
Compare _Gellius_, N. A., VII, 16.]
[Footnote 227-3: In England, the transition is noticeable,
especially under Elizabeth: _Hume_ History, ch. 44, app. 3.
In France, under Louis XIV.; _Voltaire_, Siècle de Louis,
XIV., ch. 29.]
[Footnote 227-4: Poesias Castellanas anteriores al Siglo XV;
Tom. I, 347, 327. _Roscher_, loc. cit. _J. Voight_, in
_Raumer's_ historischem Taschenbuche, 1831, 290; 1835, 324,
seq. Thus, one of Henry VIII's wives, in order to get salad,
had first to send for a gardener from Flanders; while at the
time, a single ship imported into England from 3,000 to
4,000 pieces of clothing in gold brocade, satin or silk.
(_Anderson_, a. 1509, 1524, 4; Henry VIII, c. 6.)]
[Footnote 227-5: Irish linen, worth from 30 to 35 shillings,
is often provided with a label which cost 5 shillings.
(_Kotelmann_, Statistische Uebersicht der landwirthschaftl.
und industriellen Verhältnisse von Oestereich und dem
Zollverein, 215.)]
[Footnote 227-6: Compare _Kohl_, Reise in Deutschland, II,
18, 250. _Roscher_, in the Göttinger Studien, 1845, II, 403,
ff. About 1777, _Büsch_ described the difference of goods
manufactured in England "for the continent and home
consumption," as being just the same as the difference now
between goods for Africa and goods for Europe. (Darstellung
der Handlung, Zusatz, 89.)]
SECTION CCXXVIII.
HISTORY OF LUXURY IN HIGHLY CIVILIZED TIMES.
The direction which luxury takes in times when civilization is advanced,
is towards the real, healthy and tasteful enjoyment of life, rather than
an inconvenient display. This tendency is exceedingly well expressed by
the English word _comfort_, and it is in modern England that the luxury
of the second period has found it happiest development. It is found side
by side with frugality; and it frequently even looks like a return to
the unaffected love of nature.[228-1]
Thus, since Rousseau's time,[228-2] the so-called English gardens have
dropped the former Versailles-Harlem style. Thus, too, modern fashion
despises the awkward long wig, powdering etc.[228-3] Instead of garments
embroidered, or faced with fur or lace, and instead of the galloon hat
worn under Louis XIV. and Louis XV., the French revolution has
introduced the simple citizen frock-coat and the round silk hat. The
"exquisite" may even with these outshine others by the form he selects,
the material he wears, or by frequent change, but much less strikingly
than before.[228-4] Since every one, in the purchase of household
furniture, etc., looks more to its use than to the honor of being sole
possessor of an article or having something in advance of everybody
else, it becomes possible for industry to manufacture its products in
much larger quantities, and after the same model, and thus to furnish a
much better article for the same price.[228-5] Besides, more recent
industry has produced a multitude of cheap substitutes for costly
objects of luxury: plated silver-leafing, cotton-velvet goods,
etc.;[228-6] besides the many steel engravings, lithographs etc., which
have exerted so beneficent an influence on æsthetic education.
In the England of our days, the houses are comparatively small, but
convenient and attractive, and the salutary luxury of spending the
pleasant season in the country very general.[228-7] The country-roads
are narrow but kept in excellent order and provided with good
inns.[228-8] More value is here attached to fine linen cloth than to
lace;[228-9] to a few but nourishing meat-dishes than to any number of
sauces and confections of continental kitchens.[228-10] Especially is
the luxury of cleanliness, with its morally and intellectually
beneficial results found only in well-to-do and highly cultured nations.
As formerly in Holland, so now in England, it is carried to the highest
point of development. In the latter country, the tax on soap is
considered a tax on an indispensable article.[228-11] The reverse is the
case in North America, if we can believe the most unprejudiced and
friendly observers.[228-12] The person who lives in a log-house must, to
feel at ease within his four walls, first satisfy a number of necessary
wants.[228-13]
[Footnote 228-1: The reformation of the sixteenth century
had a remarkable tendency towards natural and manful
fashions, as contradistinguished from the immediately
preceding and the immediately following periods. Compare _J.
Falke_, Deutsche Trachten und Modenwelt, II, 1858.]
[Footnote 228-2: _J. J. Rousseau_, N. Héloise, II, L. 11.
Compare _Keysler_, Reise, I, 695.]
[Footnote 228-3: That a similar transition marked an epoch
in the history of Grecian morals was recognized even by
_Thucydides_, I, 6; compare _Asios_, in _Athen._, XII, 528.]
[Footnote 228-4: It will always remain a want to own clothes
for every day wear and festal occasions. The frock coat
satisfies this want in the cheapest way. As soon as people
cease to distinguish clothing for festal occasions by the
cut, gold-embroidery, fur-facing, etc. will appear again,
which would necessarily prove a great hardship to the
propertyless classes of the educated, and even to the higher
classes.]
[Footnote 228-5: On the striking contrast presented in this
respect by the English and French, and even Russian customs,
see _Storch_, Handbuch, II, 179 ff. _J. B. Say_, Cours
pratique, translated into German by _Morstadt_, I, 435 ff.;
Deutsche Vierteljahrsschrift, 1853, I, 182.]
[Footnote 228-6: Paper-hangings, instead of costly gobelins
and leather hangings, were not known in France until after
1760, nor in the rest of Europe until much later. Busts of
plaster were (_Martial_, IX, 17, and _Juvenal_, II, 4) usual
among those who were less well off.]
[Footnote 228-7: Similarly even in _Giov. Villani_, XI, 93,
the villas of the highly cultured Florentines appear finer
than their city houses, while in Germany, at that time, even
the richest citizens lived only in the city.]
[Footnote 228-8: Sidewalks in the cities, recommended by _J.
J. Rousseau_, as a popular convenience and as a safeguard
against the carriage-aristocracy.]
[Footnote 228-9: In France, the luxury of lace was conquered
by Marie Antoinette, but still more effectually by the
Revolution. Previous to that time, many Parisians wore four
manchettes to each shirt. (_Palliser_, History of Lace,
1865.)]
[Footnote 228-10: During the middle ages, strongly seasoned
food, ragouts, etc., were more in favor than in even France
to-day; compare _Legrand d'Aussy et Roquefort_, Histoire de
la Vie priveé des Français, passim. The wine even, at that
time, used to be mixed with roots: _vin de romarin_,
_clairet_, _hippocras_, (_W. Wackernagel_, Kl. Schriften I,
86, 7.) The French kitchen became simpler and more natural,
only after the middle of the 18th century. (_Roquefort_,
III, 343.)]
[Footnote 228-11: The taxed consumption of soap amounted in
England in 1801 to 4.84 and in 1845, 9.65 pounds per capita.
(_Porter_, Progress of the Nation, V, 5, 579.) Soap-boiling
in London dates from 1520 only. Before that time, all white
soap was obtained from the continent. (_Howell_,
Londinopolis, 208.) _Erasmus_ charged that England, in his
time, was an exceedingly dirty country. The Italians, on the
other hand, were at that time greatly distinguished above
northern people, especially the Germans, by their
cleanliness. (_Buckhardt_, Kultur der Renaissance, 295.) The
Vienna river-baths after 1870, _Nicolai_, Reise, III, 17,
mentions as something deserving special note. The Leipzig
river-baths date from 1774.]
[Footnote 228-12: _Birkbeck_, Notes on America, 39. Even in
New York, it is not very long since there were no common
sewers. Just as characteristic is the uncleanliness of the
South African _boers_ (_Mauch_, in _Petermann's_
Mittheilungen, Ergänz-Heft, XXVII, 23), when compared with
the celebrated cleanliness of the old Dutch.
Americans will certainly not agree with the "friendly
and unprejudiced" observers mentioned in the text; for
no one acquainted with genuine American home-life can
deny that cleanliness is an American characteristic. It
is only justice to the author to say that the above
note (12), so far as it relates to America, appeared in
the second edition of his work, and probably in the
first; and that he is not so much to be blamed for it
as the unfriendly and prejudiced, if not ignorant
observers. It may be said, however, that, from the use
of the word "log-house," in the context, the author
does not intend to apply this remark to the older
settlements.--TRANSLATOR.]
[Footnote 228-13: The most frightful uncleanliness prevails
among the inhabitants of polar countries, who never bathe,
because of the climate, avoid all ventilation, and because
of the leathern clothing which they smear with grease, etc.
The Tunguses consider the after-birth cooked or roasted as a
great delicacy. "Fathers and mothers wipe their children's
noses with their mouth, and gulp the secretion down."
(_Georgi_, Beschreib. aller Nationen des russ. Reiches, I,
287.) Among the Koruks, the suitor rinses his mouth with his
sweetheart's water. (loc. cit., I, 349, 353.) Compare
_Klemm_, Kulturgeschichte, III, 24, 57. In warmer climates,
even less civilized nations are clean, for instance in the
East and South-Sea Islands, etc. All the more surprising is
the uncleanliness of the Hottentots and Bushmen, where the
natural color is observable only under the eyes, where the
tears produced by too much smoke has washed away the crust
of dirt which, with this exception, covers the whole body.
(_Klemm_, Kulturgeschichte, 333.) How long it takes for
cleanliness to become a national trait, may be inferred from
the history of water-closets, when, for instance, their
introduction into every house during the 16th and even the
17th century, had to be provided for by law in Paris.
(_Beckmann_, Beiträge, II, 358 ff.) The Göttingen statutes
of 1342 had to expressly prohibit persons to _merdare_ in
public wine-cellars where persons ate and drank together.
(_Spittler_, Gesch. Hannovers, I, 57.) Similarly in the
courts of the German princes. On the other hand,
universality of water-closets in England to-day.
In ancient times, too, the uncleanliness of the Spartans in
body and clothing was very surprising to the Athenians:
_Xenoph._, Resp. Laced., II, 4; _Plutarch_, Lycurg, 16.
_Just._, Lac., 5. Still more that of many barbarians, for
instance of the Illyrians: _Stobaeus_, V, 51, 132; _Gaisf.
Aelian._, V, H. IV, 1. The ancient Romans bathed only once a
week (_Seneca_, Epist., 86), while under the Empire, "the
baths embraced and filled up the whole life of man and all
his wishes." (_Gerlach._) Compare _Becker_, Gallus, II, 10
ff.; _Lamprid_, V, Comm., 11.]
SECTION CCXXIX.
EXTENT OF LUXURY IN HIGHLY CIVILIZED TIMES.
The luxury of this second period fills the whole of life and permeates
every class of people. Hence we may most easily determine the degree of
development a people have attained by the quantity of commodities of a
finer quality which are, indeed, not indispensable to life, but which it
is desirable should be consumed on as extensive a scale as possible by
the nation, for the sake of the fullness of life and the
freshness[229-1] of life to which they minister.
Thus, for instance, as civilization has advanced, there has been almost
everywhere a transition to a finer quality of the material of which
bread is made. The number of consumers of white bread in France in 1700,
was 33 per cent. of the population; in 1760, 40; in 1764, 39; in 1791,
37; in 1811, 42; in 1818, 45; in 1839, 60 per cent.[229-2] About 1758,
in England and Wales, 3,750,000 of people lived on wheat bread; on
barley bread, 739,000; on rye bread, 888,000; on oat bread, 623,000. The
cultured southeastern population had almost nothing but wheat bread,
while in the north and northwest, oat bread continued to be used a long
time; and in Wales only 10 per cent. of the population ate wheat bread.
This condition of things in England has since been much improved. But,
at the extremities of the Hebrides, nine-tenths of the population still
live on barley bread; and in Ireland it was estimated, in 1838, that
with 8,000,000 inhabitants, potatoes were the chief article of food of
5,000,000, and oat bread of 2,500,000.[229-3]
And so, the consumption of meat in cities is uniformly much larger than
in the country. In the cities of the Prussian monarchy and subject to
the slaughter-house tax, it amounted in 1846, per capita: in East
Prussia, to 61 lbs.; in Pommerania, to 66; in Posen, to 70; in West
Prussia, to 71; in Saxony, to 75; in the Rhine Province, to 83; in
Silesia, to 86; in Brandenburg, to nearly 104; in Berlin alone, to 114:
an average in the whole country, however, of scarcely 40 lbs. per
capita. (_Dietrici._) In the kingdom of Saxony, the average consumption
of beef and pork was, shortly before 1866, about 50 lbs.; in Dresden
alone, 86.7; in Leipzig, 136.9 lbs.[229-4] The consumption of meat in
England is exceedingly great, so that, for instance, in several orphan
asylums in London, the daily meat ration amounts to an average of from
0.23 to 0.438 lbs. The meat-consumption of a well-to-do family, children
and servants included, Porter estimates at 370 lbs. per capita per
annum. The meat ration of soldiers in the field amounts in England to
676 grammes a day; in France, to 350.[229-5]
The consumption of sugar in 1734, in England, was about 10 lbs. per
capita; in 1845, in the whole of the British Empire, 20-1/3 lbs.; in
1849, almost 25 lbs.; in 1865, over 34 lbs.; but it must not be
overlooked here, that in Ireland the consumption of sugar per capita was
scarcely over 8 lbs.[229-6] In the German Zollverein, the consumption of
sugar, in 1834, amounted to an average of 2½ lbs. per capita; in
1865, to more than 9 lbs. In France, the consumption of the same article
rose from 1.33 kilogrammes, the average from 1817 to 1821, to 7.35 lbs.
in 1865.[229-7] The population of the Zollverein rose 25.8 per cent.
between 1834 and 1847, while the importation of coffee increased 117.5
per cent.; of spices, 58.2; southern fruits, 34.5, and cocoa, 246.2 per
cent.[229-8]
A great many of vegetables and fruits, which seem to us to be almost
indispensable articles of subsistence, have been cultivated only a short
time. Thus the English have been acquainted with artichokes, asparagus,
several kinds of beans, salad, etc. only since 1660.[229-9] Even in
France, the finer kinds of fruits have appeared on the tables of the
middle class only since the beginning of the last century.
The per capita consumption of wool in England, about a generation ago,
amounted to about 4 lbs. a year; in Prussia to 1.67; of cloth, to 5.76
and 2.17 ells; of leather, to 3.03 and 2.22 lbs. respectively.[229-10]
Of silk goods, England consumes half as much as the rest of all Europe,
and an Englishman from 5 to 6 times as much as a Frenchman, although
England does not produce a single pound of raw silk.[229-11]
[Footnote 229-1: Thus, for instance, the modern enjoyments
of coffee, tea, newspapers, tobacco etc., promote
domesticity with which antiquity was so little acquainted.
_Zaccharia_, Vierzig Bücher, VI, 60.]
[Footnote 229-2: The food of the French people has improved
also in point of quantity. At the beginning of the
eighteenth century, of cereals there were 472 liters per
capita, at present there are 541 liters; and in addition,
now, 240 liters of potatoes and vegetables more than then.
Compare _Moreau de Joannès_, Statistique de l'Agriculture de
la France, 1848, and the same writer's Statistique céréale
de la France, in the Journal des Economistes, 1842, Janv. On
the recent decrease or increase in the consumption of meat,
see the very different estimates of _M. Chevalier_, Cours.,
I, 113 seq., and Journal des Economistes, Mars, 1856, 438
ff.]
[Footnote 229-3: _Ch. Smith_, Tracts on the Corn Trade,
1758, 182. _Eden_, State of the Poor, I, 563, seq. In
_McCulloch_, Statist, I, 316, 466 ff., 548. Moreover,
_Rogers_ says that English workmen in the middle ages, for
the most part, consumed wheat bread. (Statist. Journal,
1864, 73.) About the middle of the 13th century, only from
11 to 12 _malters_ of wheat were produced on the estates of
the bishop of Osnabrück; about 470 of oats, 300 of rye, and
120 of barley. (_J. Möser_, Osnabrück, Gesch., Werke, VII,
2. 166.) Even beer was brewed from oats in the earlier part
of the middle ages. (_Guérard_, Polyptiques, I, 710 ff.) The
ancients, also, in their lower stages of civilization, lived
on barley bread by way of preference, and went over to wheat
only at a later period; compare _Plin._, H. N. XVIII, 14.
_Heracl._, Pont, fr. 2. _Athen._, IV., 137, 141. _Plutarch_,
Alcib., 23. As to how, in Rome, the transition from _far_ to
the much more costly _triticum_, was connected with the
extension of the hide of land from 2 to 7 _jugera_, see _M.
Voigt_ in the Rhein. Museum f. Philol., 1868.]
[Footnote 229-4: To this, in Saxony, must be added about
from 6 to 7 pounds of veal and mutton. The recent increase
in the consumption of meat in Saxony is very encouraging:
1840, about 30 lbs. of beef and pork per capita; 1851-57, 40
lbs. (Sächs. Statist. Ztschr., 1867, 143 seq.) On the other
hand, _Schmoller_ estimated the consumption of meat in
general in Prussia, in 1802, at 33.8; in 1816, at 22.5; in
1840, at 34.6; in 1867, at 34.9 lbs. (_Fühling_, N. Landw.
Zeitg., XIX; Jahrg. Heft., 9 seq.) Paris consumed, in 1850,
145 pounds of butcher's meat per capita; in 1869, 194
pounds. In the year of the revolution, 1848, the consumption
declined 45 per cent.; the consumption of wine in barrels,
16 per cent.; in bottles, 44 per cent.; of sea-fish, 25 per
cent.; of oysters, 24 per cent.; of beer, 20 per cent.; of
eggs, 19 per cent.; of butter, 13 per cent.; of fowl, 6 per
cent. (_Cl. Juglar_, in the Journal des Economistes, March,
1870.)]
[Footnote 229-5: _Porter_, Progress of the Nation, V, 5, 591
ff.; _Hildesheim_, Normaldiet, 52 ff. Well-known English
popular song: "Oh, the roast beef of old England" etc. Even
at the end of the 17th century one-half of the nation
partook of fresh meat scarcely once or twice a week; most of
that consumed was salted. (_Macaulay_, History of England,
ch. 3.) But even _Boisguillebert_, Traité des Grains, II, 7,
characterizes the English as great beer-drinkers and
meat-eaters, from the highest class to the lowest, while the
French consumed almost nothing but bread. Similarly _J. J.
Becher_, Physiologie, 1678, 202, 248, on the great
consumption of meat and sugar in England.]
[Footnote 229-6: _Anderson_, Origin of Commerce, a. 1743;
_Porter_, Progress, V, 4, 350 ff.; Meidinger, 154 ff.;
Memorandum respecting British Commerce, etc., before and
since the Adoption of Free Trade, 1866. On men-of-war each
man gets 35-45 lbs. a year; in the poorhouse, old men
22¾. (_Porter._)]
[Footnote 229-7: In Henry IV.'s time, in France, sugar was
sold by the apothecaries by the ounce!]
[Footnote 229-8: _Deiterici_, Statist. Uebersicht des
Verkehrs, etc. im Zollvereine, 4; Fortsetzung, 168 ff., 208,
265, 599. Thus, in Great Britain, the population between
1816 and 1828 grew, from 13½ million to nearly 16
million. On the other hand, consumption, when the average
from 1816 to 1819 is compared with that from 1824 to 1828,
increased in a much greater proportion: soap, from 67¾ to
100 million pounds; coffee, from 7,850,000 to 12,540,000
pounds; starch, from 3-1/5 to 6-1/3 million pounds. (Quart.
Rev., Nov., 1829, 518.) The consumption of tea per capita in
1801 was 1.5 lbs., in 1871, 3.93 lbs. (Statist. Journ.,
1872, 243.) In the matter of illumination, a very beneficent
luxury has been obtained, inasmuch as, spite of the fact
that gas-light is so generally used in recent times, i. e.,
since 1804, the consumption of oil has very much increased,
on account of the lamps now so much in favor; and that of
candles also has increased, relatively speaking, more
rapidly than the population. The illumination produced is
much richer now than formerly, a fact which, besides its
sanitary advantages, has had a good influence in diminishing
street robberies. (_Julius_, Gefängnisskunde, XXII.) During
the middle ages, candles were very dear; according to
_Rogers_ (I, 415) 1-1/3 to 2 shillings per pound.]
[Footnote 229-9: Present state of England, 1683, III, 529;
compare _Storch_, Handbuch, II, 337 seq.]
[Footnote 229-10: _Dieterici_, Statist. Uebersicht, 321 ff.,
363, 399.]
[Footnote 229-11: _Bernouilli_, Technologie, II, 223. It is
a striking symptom of the wealth or ostentation of the later
period of the Empire that, according to _Ammian. Marcell_,
(XXIII, 258-ed. Paris, 1636) silk goods were a want even
among the lower classes, notwithstanding the fact that they
had to be imported from China.]
SECTION CCXXX.
EQUALIZING TENDENCY OF LATER LUXURY.
The whole social character of this luxury has something
equalizing[230-1] in it; but it supposes particularly that there is not
too marked a difference in the resources of the people.
A proper gradation of national wants is best guarantied by a good
distribution of the national resources.[230-2] The more unequal the
latter is, the more is there spent on vain wants instead of on real
ones; and the more numerous are the instances of rapid and even immoral
consumption. Where there are only a few over-rich men, more foreign
products and products of capital are wont to be called for than home
products and productions of labor; and luxury especially despises all
those commodities manufactured in large institutions.[230-3] Every
change in the consumption-customs of a people, in this respect, should
be most carefully observed; thus, for instance, whether brandy is
exchanged for beer, tobacco for meat, cotton for cloth, or the
reverse.[230-4]
One of the characteristics of this period is the endeavor to possess the
best quality of whatever is possessed at all, and to be satisfied with
less of it rather than purchase more of an inferior quality. This is,
essentially, to practice frugality, inasmuch as certain
production-services remain the same whether the commodity is of the best
or the worst quality, and that commodities of the best quality are more
superior to the worst in intrinsic goodness than they are in price. But
this course supposes a certain well-being already existing.
In this period, also, the luxury of the state is wont to take the
direction of those enjoyments which are accessible to all.[230-5]
[Footnote 230-1: Formerly the dress of citizens was a weak
imitation of the court costume: at present the reverse is
the case, and the court costume is only a heightening of the
citizen costume. Compare _Riehl_, Bürgerl. Gesellschaft,
191.]
[Footnote 230-2: _Helvetius_, De l'Homme, 1771. sec. VI, ch.
5.]
[Footnote 230-3: _J. B. Say_, Traité, II, 4; _Sismondi_, N.
P., IV, ch. 4. As early a writer as _Lauderdale_, Inquiry,
358 ff., thought the social leveling of modern times would
promote English industry. In the East Indies, on the other
hand, only the most expensive watches, rifles, candelabras
etc. were sold, because the nabobs were the only persons who
created any demand for European commodities (312 ff.). _Adam
Smith_, Wealth of Nat., II, ch. 3, draws a very correct
distinction between the luxury of durable goods and that of
those which perish rapidly; the former is less calculated to
impoverish an individual or a whole nation; and hence it is
much more closely allied to frugality. Similarly even
_Isocrates_, ad Niccol., 19; _Livy_, XXIV, 7; _Plin._, H.
N., XIII, 4; _Mariana_, 1598, De Rege et Regis Institutione,
III, 10; _Sir W. Temple_, Works, I, 140 seq., who found this
better kind of luxury in Holland: _Berkeley_, Querist, No.
296 ff.]
[Footnote 230-4: _Schmoller_, loc. cit., considers it no
favorable symptom, that in Prussia, between 1802 and 1867,
the per capita consumption of milk decreased and that of
wool increased. According to _L. Levi_, the consumption of
brandy in England decreased from 1854 and 1870, from 1.13 to
1.01 gallons per capita; but, on the other hand, the
consumption of malt increased from 1.45 to 1.84 bushels, and
the consumption of wine from 0.23 to 0.45 gallons. The
number of licenses to retail spirituous liquors was, in
1830, 6.30 per thousand of the population; in 1860-69, only
5.57. (Statist. Journal, 1872, 32 ff.)]
[Footnote 230-5: Compare _Cicero_, pro Murena, 36. The
Athenians under Pericles, in times of peace, spent more than
one-third of their state-income on plastic and architectural
works of art. The annual state-income amounted to 1,000
talents (_Xenoph._, Exp. Cyri, VII, 1, 27), while the
propylea alone cost, within 5 years, 2,012 talents.
(_Böckh_, Staatsh., I, 283.) On the other hand,
_Demosthenes_ complains of the shabbiness of public
buildings, and the magnificence of private ones in his time.
(adv. Aristocr., 689, Syntax., 174 seq.)
_Demetrius Phalereus_ blames even Pericles, on account of
his extravagance on the propylea, although Lycurgus had
been, not long before, addicted to luxury after the manner
of Pericles. (_Cicero_, De Off., II, 17.)]
SECTION CCXXXI.
THE ADVANTAGES OF LUXURY.
The favorable results which many writers ascribe to luxury in general
are true evidently only of this period. And thus luxury, inasmuch as it
is a spur to emulation, promotes production in general; just as the
awarding of prizes in a school, although they can be carried away only
by a few, excites the activity of all its attendants. A nation which
begins to consume sugar will, as a rule, unless it surrenders some
previous enjoyment, increase its production.[231-1] In countries where
there is little or no legal security, in which, therefore, people must
keep shy of making public the good condition they are in, this
praise-worthy side of luxury is for the most part wanting.[231-2]
All rational luxury constitutes a species of reserve fund for a future
day of need. This is especially true of these luxuries which take the
form of capital in use (_Nutzkapitalien_.) Where it is customary for
every peasant girl to wear a gold head-dress,[231-3] and every
apprentice a medal, a penny for a rainy day is always laid by among the
lower classes. The luxury which is rapidly consumed has a tendency in
the same direction. Where the majority of the population live on
potatoes, as in Ireland, where, therefore, they are reduced to the
smallest allowance of the means of subsistence, there is no refuge in
case of a bad harvest. A people on the other hand, who live on wheat
bread may go over to rye bread, and a people who live on rye bread to
potatoes. The corn that in good years is consumed in the making of
brandy may, in bad years, be baked into bread.[231-4] And the oats
consumed by horses kept as luxuries may serve as food for man.
Pleasure-gardens (_Lustgärten_) may be considered as a kind of last
resort for a whole people in case of want of land.[231-5] [231-6]
[Footnote 231-1: Compare _Benjamin Franklin's_ charming
story, Works I, 134 ff.; ed. Robinson. _Colbert_ recommended
luxury chiefly on account of its service to production.]
[Footnote 231-2: Turkish magnates who keep several
magnificent equipages ride to the sultan's in a very bad
one. Risa Pascha, when at the height of his power, had his
house near a villa of the sultan painted in the plainest and
most unsightly manner possible. The walls of a park in
Constantinople painted half in red and half in blue, to give
it the appearance of being two _gardens_. (Alg. Zeitung, 16
Juli, 1849.) In Saxony, between 1847 and 1850, the number of
luxury horses diminished from 6.11 to 5.64 per cent. of the
total number of horses in the kingdom. (_Engel_, Jahrbuch,
I, 305.) In the same country there were coined in 1848 over
64,000 silver marks, derived from other sources than the
mines. (_Engel_, Statis. Zeitschr. I, 85.) In England, on
the other hand, the number of four-wheeled carriages
increased more than 60 per cent. between 1821 and 1841,
while the population increased only 30 per cent. (_Porter_,
Progress, V, 3, 540.)]
[Footnote 231-3: Such a head-dress may very easily be worth
300 guldens in Friesland. Gold crosses worn by the peasant
women about Paris. (_Turgot_, Lettre sur la Liberté du
Commerce des Grains.)]
[Footnote 231-4: So far it is of some significance, that
nearly all not uncivilized nations use their principal
article of food to prepare drinks that are luxuries. Thus,
the Indians use rice, the Mexicans mais, the Africans the
ignam-root. It is said that in ancient Egypt, beer-brewing
was introduced by Osiris. (_Diodor._, I, 34.) Compare
_Jeremy Bentham_, Traité de Législation, I, 160. _Malthus_,
Principle of Population, I, ch. 12; IV, ch. 11.]
[Footnote 231-5: While in thinly populated North America,
space permits the beautiful luxury in cemeteries of
ornamenting surroundings of each grave separately (_Gr.
Görtz_, Reise, 24), the Chinese garden-style seeks to effect
a saving in every respect. In keeping with this is the fact
that animal food has there been almost abolished. Compare,
besides, _Verri_, Meditazioni, XXVI, 3.]
[Footnote 231-6: _Garve_ thinks that luxury, when it takes
the direction of a great many trifles, little conveniences,
etc., has the effect of distracting the people. Here there
are few men of towering ambition or of inextinguishable
revenge, but at the same time, few entirely unselfish and
incorruptible patriots. (_Versuche_, I, 232.)]
SECTION CCXXXII.
LUXURY IN DECLINING NATIONS.
In declining nations, luxury assumes an imprudent and immoral character.
Enormous sums are expended for insignificant enjoyments. It may even be
said that costly consumption is carried on there for its own sake. The
beautiful and the true enjoyment of life makes place for the monstrous
and the effeminate.
Rome, in the earlier part of the empire, affords us an example of such
luxury on the most extensive scale.[232-1] Nero paid three hundred
talents for a murrhine vase. The two acres (_Morgen_) of land which
sufficed to the ancient citizens for a farm (_Acker_) were not now
enough to make a fish-pond for imperial slaves. The sums carried by the
exiles with them, to cover their traveling expenses and to live on for a
time, were now greater than the fortunes of the most distinguished
citizens had been in former times.[232-2] There was such a struggle
among the people to surpass one another in procuring the freshest
sea-fish that, at last, they would taste only such as they had seen
alive on the table. We have the most exalted descriptions of the
beautiful changes of color undergone by the dying fish; and a special
infusion was invented to enable the epicure better to enjoy the
spectacle.[232-3] Of the transparent garments of his time, Seneca says
that they neither protected the body nor covered the nakedness of
nature. People kept herds of sheep dyed in purple, although their
natural white must have been much more agreeable to any one with an eye
for the tasteful.[232-4] Not only on the roofs of houses were fish-ponds
to be seen, but gardens even hanging on towers, and which must have been
as small, ugly and inconvenient as they were costly.[232-5] Especially
characteristic of the time was the custom of dissolving pearls in wine,
not to make it more palatable, but more expensive.[232-6] The emperor
Caligula, from simple caprice, caused mountains to be built up and cut
away: _nihil tam efficere concupiscebat, quam, quod posse effici
negaretur_.[232-7] This is the real maxim of the third period of luxury!
People changed their dress at table, inconvenient as it was to do so,
occasionally as often as eleven times. Perfumes were mixed with the wine
that was drunk, much as it spoiled its taste, only that the drinkers
might emit sweet odors from every pore. There were many so used to being
waited on by slaves that they required to be reminded by them at what
times they should eat and when they should sleep. It is related of one
who affected superiority over others in this respect, that he was
carried from his bath and placed on a cushion, when he asked his
attendant: "Am I sitting down now?"[232-8] It is no wonder, indeed, that
an Apicius should reach out for the poisoned cup when his fortune had
dwindled to only _centies sestertium_, _i. e._, to more than half a
million thalers.[232-9]
In this last period, the coarse debauchery of the earlier periods is
added to the refined. Swarms of servants, retinues of gladiators who
might be even politically dangerous,[232-10] monster banquets, at which
Cæsar, for instance, entertained the whole Roman people, colossal
palaces such as Nero's _aurea domus_, which constituted a real city;
annoying ostentation in dress[232-11] again becomes the order of the
day. The more despotic a state becomes, the more is the craving for
momentary enjoyment wont to grow; and for the same reason that great
plagues diminish frugality and morality.[232-12]
[Footnote 232-1: _Meierotto_, Sitten und Lebensart des
Römer, II, 1776; _Boettiger_, Sabina, II, 1803;
_Friedländer_, Darstellungen aus der Sittengeschichte Roms,
Bd. III, 1868; which latter work has been written with the
aid of all that modern science can afford.]
[Footnote 232-2: _Plin._, H. N., XXXVII, 7; XVIII, 2;
_Seneca_, Quaest. Natur., I, 17; Consol. ad. Helviam, 12.]
[Footnote 232-3: _Seneca_, Quaest. Natur., III, 18; _Plin._,
H. N., IX, 30.]
[Footnote 232-4: _Seneca_, De Benef., VII, 9; _Plin._, N.
N., VIII, 74.]
[Footnote 232-5: _Valer. Max._, IX, 1; _Seneca_, Epist, 122.
Thus Hortensius sprinkled his trees with wine. _Macrob._,
Sat., III, 13.]
[Footnote 232-6: Besides Cleopatra, Caligula especially did
this frequently. Compare also _Horat._, Serm., II, 3, 239
ff. Similarly, the luxury of the actor Aesopus, when he
placed a dish worth 6,000 _louis d'or_ before his guests,
consisting entirely of birds which had been taught to sing
or speak. _Pliny_, H. N., X, 72. Compare _Horat._, loc.
cit., 345.]
[Footnote 232-7: _Sueton._., Caligula, 37. _Hoc est luxuriae
propositum, gaudere perversis. Seneca_., Epist., 122.
According to the same letter of Seneca, the luxury of Nero's
time had its source rather in vanity than in sensuality and
gluttony.]
[Footnote 232-8: _Martial_, V, 79; _Plin_., H. N. XIII, 5.
_Seneca_, De Brev. Vitæ. I, 12.]
[Footnote 232-9: _Seneca_, Cons. ad Helviam 10, _Martial_,
III, 22.]
[Footnote 232-10: Hence, early limited by law. _Sueton._.
Caes. 10. Augustus limited the exiles to taking 20 slaves
with them: _Dio Cass._ VII, 27. Special value attached to
dwarfs, buffoons, hermaphrodites, eunuchs, precisely as
among the moderns in the times of the degenerated absolutist
courts, the luxury of which is closely allied in many
respects to that of declining nations.]
[Footnote 232-11: Caligula's wife wore, on ordinary
occasions, 40,000,000 sesterces worth of ornaments. _Plin._
H. N. IX, 58.]
[Footnote 232-12: _Gibbon_, History of the Decline and Fall
of the Roman Empire, ch. 27. What a parallel between this
later Roman luxury and the literary taste represented for
instance by Seneca!
Let any one who would embrace the three periods of luxury in
one view, compare the funeral ceremonies of the Greek age of
chivalry (_Homer_, Il.), with those in _Thucyd._ (II, 34,
ff.), _Demosth._ (Lept., 499 seq.), and the interment of
Alexander the Great and, of his friend Hephaestion
(_Diodor._, XVII, 115, XVIII, 26 ff.) Sullas (Serv. ad
_Virgil_, Æneid VI, 861. _Plutarch_, Sulla, 38), and that of
the wife of the emperor Nero (_Plin._, H. N. XII, 41).
_Roscher_, loc. cit. 66 ff.]
SECTION CCXXXIII.
LUXURY-POLICY.
Sumptuary laws (_die Luxusgesetzgebung_) have been aimed, at all times,
principally at the outlay for clothing, for the table and for
funerals.[233-1] In most nations the policy of luxury has its beginning
in the transition from the first to the second period of luxury above
described.[233-2] The extravagant feasts, which remain of the first
period, seem vulgar to the new public opinion which is created. On the
other hand, the conveniences of life, the universality, the refinement
and variety of enjoyments characteristic of the second period are not
acceptable to the austerity of old men, and are put down as effeminacy.
In this period the bourgeoisie generally begin to rise in importance,
and the feudal aristocracy to decay. The higher classes see the lower
approximate to them in display, with jealous eyes. And, hence, dress is
wont to be graded in strict accordance with the differences of
class.[233-3] But these laws must be regarded as emanating from the
tendency, which prevails in these times, of the state to act as the
guardian of its wards, its subjects. The authority of the state waxes
strong in such periods; and with the first consciousness of its power,
it seeks to draw many things into its sphere, which it afterwards
surrenders.
[Footnote 233-1: Which of these three kinds of luxury
specially preponderated has always depended on the
peculiarities of national character. Thus, among the ancient
Romans, it was the second; among the French, the first. In
Germany the prohibitions relating to "toasts," or drinking
one another's health have played a great part. Thus the
well-known Cologne reformation of 1837. Compare _Seb.
Münster_, Cosmogr., 326.]
[Footnote 233-2: In Greece, _Lycurgus'_ legislation seems to
have contained the first prohibition relating to luxury. No
one should own a house or household article which had been
made with a finer implement than an ax or a saw; and no
Spartan cook should use any other spice than salt and
vinegar. (_Plut._, De Sanitate, 12; _Lycurg._, 13. On
Periander, see _Ephorus_, ed. _Marx_, fr. 106. _Heracb._,
Pont. ed.; _Köhler_, fr. 5; _Diog. Laert._, I, 96 ff.) The
luxury-prohibitions of Solon were aimed especially at the
female passion for dress and the pomp of funerals. Those who
had the surveillance of the sex watched also over the luxury
of banquets. _Athen._, VI, 245; _Demosth._ in _Macart._,
1070. In Rome, there were laws regulating the pomp of and
display at funerals, dating from the time of the Kings; but
especially are such laws to be found in the twelve tables.
Lex Oppia de Cultu Mulierum in the year 215 before Christ. A
very interesting debate concerning the abolition of this law
in _Livy_, XXXIV, 1 ff. About 189, prohibition of several
foreign articles of luxury. _Plin._, H. N., XIII, 5, XIV,
16. Measures of Cato the censor. (_Livy_, XXXIX, 44.) First
law relating to the table, L. Orchia, in the year 187;
afterwards L. Fannia, 161, L. Didia, 143 before Christ.
(_Macrob._, Sat. V, 13; _Gellius_, N. A., II, 24. _Plin._,
H. N., X, 7.) After a long pause, sumptuary laws relating to
food, funerals and games of chance, constitute an important
part of Sulla's legislation.]
[Footnote 233-3: _Latus clavus_ of the Roman senators;
_annulus_ of the knights. In the latter middle age, the
knights were wont to be allowed to wear gold, and esquires
only silver; the former, damask; the latter, satin or
taffeta; but when the esquires also used damask, velvet was
reserved for the knights alone. _St. Palaye_, Das
Ritterwesen, by _Klüber_, IV, 107; II, 153 seq. But towards
the end of the middle ages many sumptuary laws were enacted
in cities by plebeian jealousy of the rich. The Venetian
sumptuary laws were passed on account of the anxiety of the
state that some rich men might shine above the rest of the
oligarchs.]
SECTION CCXXXIV.
HISTORY OF SUMPTUARY LAWS.
As in Italy, Frederick II., in Aragon, Iago I., in 1234, in England,
Edward III., by 37, Edward III., c. 8 ff., so in France Philip IV. was
the first who busied himself seriously with sumptuary
legislation;[234-1] that is the same king who had introduced in so many
things the modern political life into France. (For instance, the
ordinance of 1294, regulating apparel and the luxury of the table.) In
the 14th century, we find sumptuary laws directed mainly against expense
for furs, and in the 16th mainly against that for articles of gold and
silver. From the descriptions left us in such laws of the prohibited
luxuries, we may learn as much of the history of technology and of
fashion, as we may of the history of classes from the gradation of the
things permitted. The fines imposed for violations of these laws, under
Philip IV. went for the most part to the territorial lord; and in the
16th and 17th centuries to the foundation of charitable institutions.
The state, as a rule, took no share of them; doubtless to avoid the
odium which might attach to this kind of revenue.
Beginning with the end of the 16th century, the sumptuary laws of France
relating to the luxuries permitted to the several classes of the people
disappear. The legislator ceases to be guided by moral considerations
and begins to be influenced by reasons partaking of a commercial and
police character; and here we may very clearly demonstrate the origin of
the so-called mercantile or protective system. Thus, in the declaration
of Louis XIV. dated December 12, 1644, we find a complaint, that not
only does the importation of foreign articles of luxury threaten to rob
France of all its gold and silver, but also that the home manufacture of
gold cloth, etc., which at Lyons alone ate up 10,000 livres a week, had
the same effect. Under Colbert, in 1672, it was specially provided for,
in the prohibition of coarser silver ware, that all such ware should be
brought to the mint.[234-2] In the edict of 1660, the king even says
that he has in view especially the higher classes, officers, courtiers,
etc., in whom it was his duty to be most deeply interested. To preserve
the latter from impoverishment was the main object of the law.
Under Louis XV. all sumptuary laws were practically a dead
letter.[234-3] Their enforcement is, indeed, exceedingly difficult, as
it is always harder to superintend consumption than production. The
latter is carried on in definite localities, not unfrequently even in
the open air. The former is carried on in the secrecy of a thousand
homes. Besides, sumptuary laws have very often the effect to make the
forbidden fruit all the sweeter. Where they are based on a difference of
class, not only the passion for pleasure, but the vanity of the lower
classes is an incentive to their violation.[234-4] Spite of the severity
of the penalties attached to the violation of these laws, of redoubled
measures of control, which are dreadful burdens on the intercourse
between man and man,[234-5] the French government has been compelled to
admit, after almost every internal commotion, and almost every external
war, that its sumptuary laws fell into disuse.
[Footnote 234-1: Ordonnances de France, I, 324, 531. Worms
law of 1220. (_Riehl_, Pfälzer, 246.) Braunschweig law of
1228, that at weddings there should not be over 12 plates
nor more than three musicians. (_Rehtmeyer_, Chron., 466.)
Danish sumptuary law of 1269. First law regulating dress in
Prussia in 1269. (_Voigt_, Gesch. von Preussen, V, 97.) On
Henry II., see _v. Raumer_, Hohenstaufen, VI, 585. Some of
the earlier restrictions on luxury, such as that of 190 in
England and France, against scarlet ermine, etc., may have
been related to the religious fervor of the crusades. _St.
Louis_, during the whole period of his crusades wore no
articles of luxury.]
[Footnote 234-2: The English prohibition against the wearing
of silk on hats, caps, stockings etc. (1 and 2 Phil. and
Mary, ch. 2.) was promulgated with the intention of
promoting the home manufacture of wool. And so _Sully_,
Economics, L, XII, XVI, was in favor of laws regulating
outlay mainly from "mercantilistic" reasons, that the
country might not be impoverished by the purchase of foreign
expensive articles. The police ordinance of the Empire of
1548, tit. 9, desired to guard against both the "excessive"
exportation of money and the obliteration of class
differences; that of 1530, tit. 9, and the Austrian police
ordinance of Ferdinand I. had only the second object in
view. (_Mailath_, Gesch., von Oesterreich, II, 169 ff.) How,
in Denmark, prohibitions of luxury grew very soon into
prohibitions of imports with a protective intention, see in
_Thaarup_, Dänische Statistik, I, 521 seq. On the
mercantilistic object of the greater number of prohibitions
of coffee, in the 18th century, see _Dohm_, über
Kaffeegesetzgebung, in the D. Museum, Bd., II, St. 8, No.
4.]
[Footnote 234-3: _Des Essart_, Dictionnaire universel de
Police, VI, 146. In Great Britain, the Scotch luxury-law of
1621 is the last. (_Anderson_, Origin of Commerce, a. 1621.)
In Germany, there were some such laws until the end of the
18th century; and the laws regulating mourning have lasted
longest. Compare that of Frederick the Great of 1777, the
Bamberg and Wurzberg laws of 1784, in _Schlözer_,
Staatsanzeigen, IX, 460; fol. 141 ff. There are many men who
have no desire to go to any heavy expense in mourning, but
do not dare to give expression thereto in certain cases, and
therefore look with favor on a law to which they may appeal
as an excuse.]
[Footnote 234-4: Compare _N. Montaigne_, 1580, Essais, I,
63. A striking instance in antiquity: _Macrob._, II, 13;
most recently in _Lotz_, Revision, I, 407.]
[Footnote 234-5: Compare especially the French sumptuary law
of 1567. Zaleucos went so far in his severity as to punish
with death the drinking of unmixed wine, without the
prescription of a physician. (_Athen._, IX, 429.) The effort
has sometimes been made to enlist the feeling of honor of
the people in the controlling of luxury. Thus old Zaleucos
forbade the wearing of gold rings or Milesian cloth unless
the wearer desired to commit adultery, or to be guilty of
sins against nature (_Diodor._, XII, 21); but such laws are
scarcely attended with success.]
SECTION CCXXXV.
DIFFICULTY OF ENFORCING SUMPTUARY LAWS.
The impossibility of enforcing sumptuary laws has been most strikingly
observed, where it has been attempted to suppress the consumption of
popular delicacies in the first stages of their spread among the people.
Thus, an effort was made in this direction in the sixteenth century, as
regards brandy; in the seventeenth, as regards tobacco; in the
eighteenth, as regards coffee; all which three articles were first
allowed to be used only as medicines.[235-1] When governments discovered
after some time the fruitlessness of the efforts, they gave up the
prohibition of these luxuries and substituted taxes on them
instead.[235-2] Thus an effort was made to combine a moral and a fiscal
end. But it should not be lost sight of that the lower these taxes are,
the greater the revenue they bring in; that is, the less the moral end
is attained, the more is the fiscal end. Even Cato took this course. His
office of censor, which united the highest moral superintendence with
the highest financial guidance, must of itself have led him in this
direction.[235-3] In modern times the most important excises and
financial duties of entry have been evolved out of sumptuary laws. Even
the Turks, after having long tried to prohibit tobacco-smoking in vain,
afterwards found in the duties they imposed on that plant a rich source
of income. That such taxes are among the best imposed, where they do not
lead to frauds on the government, become excessive, or diminish
consumption to too great an extent, is universally conceded.
Beyond this there is, on the whole, little left of the old police
regulations relating to luxury. Thus, governmental consent is, in most
countries, required for the establishment of places where liquors are
sold at retail, for the maintenance of public places of amusement, for
shooting festivals, fairs, etc.; and this consent should not be too
freely granted. The police power prescribes certain hours at which
drinking places shall be closed. Games of chance are wont to be either
entirely prohibited or restricted to certain places and times (bathing
places), or are reserved as the exclusive right of certain institutions,
especially state institutions. The object of this is, on the one hand,
to facilitate their supervision, and on the other, to diminish the
number of seductive occasions. Here, too, belongs the appointment of
guardians to spendthrifts, which is generally done on the motion of the
family by the courts; but which, indeed, occurs too seldom to have any
great influence on the national resources, or on national morals.[235-4]
[Footnote 235-1: Hessian law that only apothecaries should
retail brandy, 1530. English tobacco laws of 1604; _Rymer_,
Fœdera, XVI, 601. Papal excommunication fulminated in
1624, against all who took snuff in church, and repeated in
1690. A Turkish law of 1610 provided that all smokers should
have the pipe broken against their nose. A Russian law of
1634, prohibiting smoking under penalty of death. In
Switzerland, even in the 17th century, no one could smoke
except in secret. Coffee had a hard struggle even in its
native place. (_Ritter_, Erdkunde, XIII, 574 ff.) Prohibited
in Turkey in 1633, under pain of death. _v. Hammer_,
Osmanische Staatsverwaltung, I, 75. In 1769, coffee was
still prohibited in Basel, and was allowed to be sold by
apothecaries only, and as medicine. (_Burkhardt_, C. Basel,
I, 68.) Hanoverian prohibition of the coffee trade in the
rural districts in 1780: _Schlözer_, Briefwechsel, VIII, 123
ff.]
[Footnote 235-2: According to _v. Seckendorff_,
Christenstaat, 1685, 435 seq., a decidedly unchristian
change.]
[Footnote 235-3: _Livy_, XXXIX, 44. In Athens, too, the
highest police board in the matter of luxury was the
areopagus, which was at the same time a high financial
court. Sully transformed the prohibition of luxury in regard
to banquets into a tax on delicacies. Similarly, in regard
to funeral-luxuries, at an earlier date. (_Cicero_, ad.
Att., XII, 35.)]
[Footnote 235-4: Customary even in the early Roman republic,
and adjudged _exemplo furioso_. (_Ulpian_, in L. 1 Digest,
XXVII, 10.) The immediate knights of the empire were in this
respect very severe towards those of their own order. See
_Kerner_, Reichsrittersch. Staatsrecht, II, 381 ff. _Sully_
ordered the parliaments to warn spendthrifts, to punish them
and place them under guardianship. (Economies royales, L,
XXVI.) According to _Montesquieu_, it is a genuine
aristocratic maxim to hold the nobility to a punctual
payment of their debts. (Esprit des Lois, V, 8.)]
SECTION CCXXXVI.
EXPEDIENCY OF SUMPTUARY LAWS.
To judge of the salutariness of sumptuary laws, we must keep the above
three social periods in view throughout. At the close of the first
period, every law which restricts the excesses of the immediately
succeeding age (the middle age) is useful because it promotes the noble
luxury of the second period.[236-1] And so, in the third period,
legislation may at least operate to drive the most immoral and most
odious forms of vice under cover, and thus to diminish their contagious
seduction. It is a matter of significance that, in Rome, the most
estimable of the emperors always endeavored to restrict luxury.[236-2]
But too much should not be expected of such laws. _Intra animum medendum
est; nos pudor in melius mutet._[236-3] It is at least necessary, that
the example given in high places should lend its positive aid, as did
that of Vespasian, for instance, who thus really opposed a certain
barrier to the disastrous flood of Roman luxury.[236-4]
But a strong and flourishing nation has no need of such leading
strings.[236-5] Where an excrescence has to be extirpated, the people
can use the knife themselves. I need call attention only to the
temperance societies of modern times (Boston, 1803), which spite of all
their exaggeration[236-6] may have a very beneficial effect on the
morally weak by the solemn nature of the pledge, and the control their
members mutually exercise over one another. It is estimated that, of all
who enter them, in the British Empire, at least 50 per cent. remain true
to the pledge. In Ireland the government had endeavored for a long time
to preserve the country from the ravages of alcohol by the imposition of
the highest taxes and the severest penalties for smuggling. Every
workman in an illegal distillery was transported for seven years, and
every town in which such a one was found was subjected to a heavy fine.
But all in vain. Only numberless acts of violence were now added to
beastly drunkenness. On the other hand, the temperance societies of the
country decreased the consumption of brandy between 1838 and 1842, from
12,296,000 gallons to 5,290,000 gallons. The excise on brandy decreased
£750,000; but many other taxable articles yielded so much larger a
revenue, that the aggregate government income there increased about
£91,000.[236-7] [236-8] The Puritanical laws which some of the United
States of North America have passed prohibiting all sales of spirituous
liquors except for ecclesiastical, medical or chemical purposes, have
been found impossible of enforcement.[236-9] [236-10]
[Footnote 236-1: Commendable laws relating to luxury in
Florence in the beginning of the 15th century. The outlay
for dress, for the table, for servants and equipages was
limited; but, on the other hand, it was entirely
unrestricted for churches, palaces, libraries, and works of
art. The consequences of this legislation are felt even in
our day. (_Sismondi_, Gesch. der Ital. Freistaaten im M. A.,
VIII, 261. Compare _Machiavelli_, Istor. Fior., VII, a.,
1472.)]
[Footnote 236-2: Thus Nerva (_Xiphilin._, exc. Dionis,
LXVIII, 2); Hadrian (_Spartian V. Hadrian_, 22); Antoninus
Pius (Capitol, 12); Marcus Aurelius (Capitol, 27); Pertinax
(Capitol, 9); Severus Alexander (_Lamprid_, 4); Aurelian
(_Lamprid_, 49); Tacitus (_Vopisc_, 10 seq).]
[Footnote 236-3: Extracted from the remarkable speech made
by the personally frugal Tiberius (_Sueton._, Tib., 34)
against sumptuary laws: _Tacit._, Annal., III, 52 ff.
Compare, however, IV, 63.]
[Footnote 236-4: _Tacit._, Ann., III, 55: but the
differences in fortune had, at the same time, become less
glaring. Henry IV. also dressed very simply for example's
sake, as did also Sully, and ridiculed those _qui portaient
leurs moulins et leur bois de haute-futaie sur leurs dos_.
(_Péréfixe_, Histoire du Roi Henry le grand, 208.)]
[Footnote 236-5: The gross luxuries of drunkenness and
gluttony are a direct consequence of universal grossness,
and disappear of themselves when higher wants and means of
satisfying them are introduced. (_v. Buch_, Reise durch
Norwegen und Lappland, 1810, I, 166; II, 112 ff.)]
[Footnote 236-6: While, formerly, they cared only to abstain
from spirits, the so-called "total abstinence" has prevailed
since 1832. Most teetotallers compare moderate drinking to
moderate lying or moderate stealing; they even declare the
moderate drinker worse than the drunkard, because his
example is more apt to lead others astray, and he is harder
to convert. (But, Psalm, 104, 15!) The coat of arms of the
English temperance societies is a hand holding a hammer in
the act of breaking a bottle. (Temperance poetry!)]
[Footnote 236-7: _McCulloch_, On Taxation, 342 ff. Speech of
_O'Connell_ in the House of Commons, 27 May 1842. The more
serious crimes decreased 1840-44, as compared with the
average number during the five previous years by 28, and the
most grievous by 50 per cent. (_Rau_, Lehrbuch, II, § 331.)
Recently, the first enthusiasm awakened by Father Matthew
has somewhat declined, and the consumption of brandy
therefore increased. Yet, in the whole United Kingdom in
1853, only 30,164,000 gallons were taxed; in 1835,
31,400,000; although the population had in the meantime
increased from 10 to 11 per cent. In 1834, there were in the
United States 7,000 temperance societies with a membership
of 1,250,000. The members of these societies are sometimes
paid higher wages in factories; and ships which allow no
alcohol on board are insured at a premium of five per cent.
less. (_Baird_, History of the Temperance Societies in the
United States, 1837.)]
[Footnote 236-8: In the princedom of Osnabrück, the number
of distilleries was noticeably diminished under the
influence of the temperance societies; but the consumption
of beer was rapidly increased twenty-fold. (Hannoverisches
Magazin, 1843, 51. _Böttcher_, Gesch. der M. V. in der
Norddeutschen Bundestaaten, 1841.)]
[Footnote 236-9: Even in 1838, Massachusetts had begun to
restrict the sale at retail. The agitation for the
suppression of the liquor shops begins in 1841. According to
the Maine law of 1851, a government officer alone had the
right to sell liquor, and only for the purposes mentioned in
the text. The manufacture or importation of liquor for
private use was left free to all. A severe system of
house-searching, imprisonment and inquisitorial proceedings
in order to enforce the law. Similarly in Vermont, Rhode
Island, Massachusetts and Michigan. (Edinburg Rev., July,
1854.) There are, however, numberless instances related in
which the law has been violated unpunished since 1856, and
still more since 1872. See _R. Russell_, North America, its
Agriculture and Climate, and Edinburg Rev., April, 1873,
404.]
[Footnote 236-10: From the foregoing, it is intelligible why
most modern writers, even those otherwise opposed to luxury,
are not favorably inclined towards sumptuary laws. "It is
the highest impertinence and presumption in kings and
ministers, to pretend to watch over the economy of private
people and to restrain their expense, either by sumptuary
laws or by prohibiting the importation of foreign luxuries.
They are themselves always, and without any exception (?)
the greatest spendthrifts in the society. If their own
extravagance does not ruin the state, that of their subjects
never will." (_Adam Smith_, I, ch. 3.) Compare _Rau_,
Lehrbuch II, § 358 ff. _R. Mohl_, Polizeiwissenschaft, II,
434 ff.
_Montesquieu's_ opinion that in monarchies luxury is
necessary to preserve the difference of class but that in
republics it is a cause of decline, is very peculiar. In the
latter, therefore, luxury should be restricted in every way:
agrarian laws should modify the too great difference in
property and sumptuary laws restrain the too glaring
manifestations of extravagance. (Esprit des Lois, VII, 4.)
As an auxiliary to the history of sumptuary laws, compare
_Boxmann_, De Legibus Romanorum sumptuarias, 1816. _Sempere
y Guarinos,_ Historia del Luxo y de las Leyes sumtuarias de
Espana, II, 1788; _Vertot_, Sur l'Establissement des Lois
somptuaires parmi les Français, in the Mémoires de
l'Academie des Inscr., VI, 737 seq, besides the sections on
the subject in _Delamarre_, Traité de la Police, 1772 ff.;
_Penning_, De Luxu et Legibus sumtuariis, 1826.
(_Holland._)]
CHAPTER III.
INSURANCE IN GENERAL.
SECTION CCXXXVII.
INSURANCE IN GENERAL.
The idea of societies for mutual assistance intended to divide the loss
caused by destructive accidents which one person would not be able to
recover from among a great many is very ancient. The insurance of their
members against causes of impoverishment was one of the principal
elements[237-1] of the strength of the medieval communities (_Gemeinden
und Körperschaften._) If we compare these insurance institutions of the
middle ages with those of the present, we discover the well-known
difference between a _corporation_ and an _association_. There the
members stand to one another in the relation of _persons_ who,
therefore, seek to guaranty their entire life in the one combination;
here, they appear only as the representatives of limited portions of
capital confronted with a definite risk, the average of which may be
accurately determined. Hence, the former are of small extent, mostly
local; the latter may extend over whole continents, and even over the
whole earth. The former have uniformly equal members; the latter embrace
men of the most different classes. While the former, therefore, simply
govern themselves, often only on the occasion of their festive
gatherings, the latter need a precise charter, an artificial tariff and
a board of officers.
As the absolute monarchical police-state constitutes, generally, the
bridge between the middle ages and modern times, so too the transition
from the medieval to the modern system of insurance has been frequently
introduced by state insurance.[237-2] [237-3] This was very natural at a
time when the guilds of the middle ages had lost their importance, and
private industry was not ripe enough to supply the void left by them.
The government of a country, far in advance intellectually of the
majority of its subjects, may, by force, induce them to participate in
the beneficent effects of insurance, and immediately provide
institutions extensive enough to guaranty real safety. While it may be
called a rule that mature private industry satisfies wants more rapidly,
in greater variety, and more cheaply than state industry; in the case of
insurance against accidents, especially of insurance against fire, there
are many peculiarities found which would make the entire cessation of
the immediate action of the state in this sphere, or its limitation
simply to a legislative and police supervision of insurance, seem a
misfortune. A dwelling is one of the most universal and urgent of wants,
and indeed a governing one in all the rest of the arrangements of life.
If it be destroyed, it is especially difficult to find a substitute for
it, or to restore it. And to the poorest class of those who need
insurance, private insurance will, perhaps, be never properly
accessible.[237-4] If German fire insurance and the German system of
fire prevention be so superior to the English and North American, etc.,
one of the principal causes is that German governmental institutions so
powerfully participate in it.[237-5]
[Footnote 237-1: The Icelandic _repps_ consisting as a rule
of 20 citizens subject to taxation, who mutually insured one
another against the death of cattle (to the extent of at
least one-fourth the value), and against damage from fire.
After every fire three chambers of each house were replaced;
so also the loss of clothing and of the means of
subsistence, but not other goods or articles of display.
(_Dahlmann_, Danisch Gesch., II, 281 ff.) Scandinavian
parish-duty, (_Gemeindepflicht),_ of assistance in case of
damage by fire: _Wilda_, Gesch. des deutschen Strafrechts,
I, 142. Similarly Capitul. a. 779 in _Pertz_, Leges, I, 37.
This matter plays an important part in the guilds out of
which a large portion of the ancient cities were evolved:
compare _Wilda_, Gildenwesen in M. Alter. 123.]
[Footnote 237-2: Proposed national fire insurance
(_Landesbrandversicherung_) in which for the time being
several villages should form a company, the surplus of which
was to go to the ærarian, and the deficit to be made up by
the same: _Georg Obrecht_, Fünf unterschiedliche Secreta,
Strasburg, 1617, No. 3. A similar proposition made on
financial grounds in 1609, and rejected in Oldenburg.
(_Beckmann_, Beitr. zur Gesch. der Erfind, I, 219 ff.) The
idea sometimes suggested in our day, of making the system of
insurance a government prerogative, arises as much from the
passion for centralization as from socialistic tendencies.
Compare the Belgian Bulletin de la Commission de Statist.
IV, 210, and _Oberländer_, Die Feuerversicherungsanstalten
vor der Ständeversammlung des k. Sachsen, 1857.]
[Footnote 237-3: Maritime insurance is much older than
insurance against risks on land; the Dutch institutions of
Charles V.'s time seem to have existed long before.
(Richesse de Hollande, I, 81 ff.) On Flemish, Portuguese and
Italian maritime insurance in the 14th century, see
_Sartorius_, Gesch. der Hanse, I, 215; _Schäfer_, Portug.
Gesch. II, 103 ff., and _F. Bald. Pegolotti_, Tratato della
Mercatura in Della decima, etc., della Moneta e della
Mercatura dei Fiorentini, 1765. The class engaged in
maritime commerce are indeed especially and early rich in
capital, speculative and calculating.]
[Footnote 237-4: In Berlin, in 1871, the movable property of
30.4 per cent. of all dwellings was insured; but with this
great difference, that of the smallest (without any heatable
rooms) only 5.3 per cent. were insured; while of dwellings
having 5-7 heatable rooms, 84 per cent. had taken this
precaution. (_Schwabe_, Volkszahlung von 1871, 169) But it
should not be forgotten that private insurance, especially
when speculative, is not in favor of having much to do with
persons of small means, while public institutions are, for
the most part, obliged to reject no proposition for
insurance in their own line, except when coming from a few
manufacturing quarters especially exposed to fire.]
[Footnote 237-5: Outside of Germany, public fire insurance
is to be still found only in German Austria, in Denmark,
Switzerland and Scandinavia. The Germans had, in 1871, an
insurance-sum of 5,908,760,000 thalers, while the mutual
private insurance companies had about 1,435,000,000 (of
which, at most, 200,000,000 to 300,000,000 were on immovable
property), and joint-stock insurance companies, after
deducting re-insurance (_Rückversicherung_), about
7,000,000,000. (Mittheilungen der öff. F. V. Anstalten,
1874, 84 ff.) Between 1865 and 1870, it was estimated that
the per capita insurance of the population was: in Saxony,
407 thalers; in Würtemberg, 410; in Baden, 365; in Prussia,
332; in Switzerland, 425. On the other hand, in the much
wealthier British Empire, only 325 per capita; in North
America, 215. (loc. cit., 92.) Even in the case of
joint-stock insurance companies, the average receipts of
premiums (1867-70) were, in Germany, 2 per 1,000 of the
insurance-sums; in the United Kingdom, 4.06 per 1,000; in
the United States, 10.77; and the damage respectively 1.25,
2.28, 5.92 per 1,000 of the insurance-sum. (loc. cit., 93.)]
SECTION CCXXXVII (_a_).
INSURANCE IN GENERAL.--MUTUAL AND SPECULATIVE INSTITUTIONS.
All insurance institutions fall into two classes:
A. Mutual insurance companies, in which the insured are also as a
society the insurers, and share the aggregate damage, of a year, for
instance, among themselves.
B. Speculative institutions, in which a party, generally a joint-stock
company, in consideration of a certain definite compensation (premium
agreed upon and paid in advance), assumes the risk.[237a-1]
So far as security is concerned, no absolute preference can be accorded
to either of these classes. Mutual insurance companies require to extend
their business very largely[237a-2] to be able to meet great damage. And
even where the liability of the members is unlimited, care must be taken
to distinguish between the legally and the actually possible.[237a-3]
The joint capital of a well organized[237a-4] premium-association
affords, in this respect sufficient security from the first, but the
ratio between its security-fund and the amount of its assumed
liabilities becomes less favorable as the business is extended, in case
the fund itself is not enlarged.[237a-5] Mutual insurance may accomplish
something analogous to that accomplished by a joint-stock fund by
collecting a reserve of yearly dues in advance, thus modifying the
burdensome vacillation of the amount payable each year.[237a-6]
Experience, however, teaches, that the strongest form of mutual
insurance, that supported either by municipalities or by the state, has
been able to meet extraordinary damage from fire much better than
premium-institutions, which are too quickly left in the lurch by the
stockholders when the damage is greater than the amount of the stock
subscribed. So also loss from fire caused by war or riots is for the
most part and on principle, excluded by speculative insurance
institutions.[237a-7]
In point of cheapness to the insured, mutual insurance seems to have the
advantage, since it contemplates no profit.[237a-8] From a
national-economical point of view, also, it is very much of a question,
whether the active competition of premium institutions, in a sphere
which affords little room for industry proper, is more of a spur to make
them "puff up" their claims (_Reclamen_) or to the simplification of
their administration.[237a-9] However, premium-institutions are more
easily capable of extending the circle of their business;[237a-10] which
of itself decreases the general expenses and strengthens their insuring
power. Premium-insurance supposes a greater development of capitalistic
speculation than does mutual insurance. But, even in the highest stages
of civilization, the competition of some mutual insurance companies is
desirable to protect the insured from a too high rate of profit to the
insurers.[237a-11] [237a-12] And since the principle of mutual insurance
has so little attraction for capitalists in a time like that in which we
live that it can be maintained perhaps only by the support of the state
or of municipalities, we may consider the desirableness of the state's
continuing to participate in some way in the matter of insurance as
established.
[Footnote 237a-1: We might, however, improperly add another
class, that of self-insurance, which lies in the proper
distribution of a large capital over a great many points.
When, for instance, a large state insures its buildings,
this seems a superfluous outlay of public money for the
benefit of private associations. Or does England insure its
ships? On this account, in Prussia, the insurance of
post-offices which Frederick William favored, has recently
been done away with. (_Stephan_, Gesch. der Preuss. Post,
195, 803.)]
[Footnote 237a-2: According to _Brüggemann_ (D. Allg. Ztg.,
1849, No., 75 ff.), 100 million thalers of an insurance-sum.
Actual American legislation prescribes in the case of mutual
insurance a minimum number of members of from 200 to 400, a
minimum amount of annual premiums of from $25,000 to
$200,000, of cash payments on the annual premium of from 10
to 40 per cent. of cash-paid yearly premiums, $5,000 to
$40,000; and a maximum amount of premium notes made by a
member of $500. (Compare Mittheilungen, 26 ff.)]
[Footnote 237a-3: Hence several mutual companies limit
themselves to a maximum liability. Thus, for instance, the
Gotha Fire Insurance Company requires from each member a
bond that in case of necessity, four times the amount of the
presumptive contribution paid in advance shall be paid
after; in Altona, six times the yearly premium is the
maximum.]
[Footnote 237a-4: In France, every premium-insurance-company
has to be approved by the government (Cod. de Comm., art
37), and the approval is not given until 1/5 of the
joint-stock capital has been deposited. (_Block_, Dictionn.
de l'administration, Fr. 153.) Many recent American laws
require that the shares of insurance companies should be
registered with the name of the owner.]
[Footnote 237a-5: The Aix-Munich Fire Insurance Association
raised its joint-stock capital after the Hamburg fire from 1
to 3 million thalers.]
[Footnote 237a-6: Usually so that the regular yearly
contribution is higher than the average damage and cost of
administration; this excess is then returned in the form of
a dividend, either immediately at the close of the yearly
account, or which is still safer, after several years. In
the Stuttgart private insurance company, the reserve must
amount to one per cent. of the amount insured, before the
premium-surplus is returned. The Gotha fire insurance
company, between 1821 and 1842, paid back an average of 46
per cent.; and even in 1842, after the Hamburg
conflagration, there was an after-payment of only 98 per
cent. necessary. This collection in advance of a fund for
extraordinary losses is more secure than borrowing in case
of need, and paying back in good years. Thus, the Baden
Landes-Brandkasse had a debt in 1837 of 800,000 florins.
(_Rau_, in the Archiv., III, 320 ff.) In a mutual insurance
company, where entrance and exit are free, this would be
scarcely possible.]
[Footnote 237a-7: Nearly three-fourths of the public
insurance institutions insure also against fire caused by
war (Mitth., 1874, 85), a matter of importance even as war
is waged in our own days, since in 1870-71, the damage from
fire by the Franco-Prussian war in France was estimated at
141,000,000 francs. (Mitth., 1873, 33.)]
[Footnote 237a-8: In Prussia, the mutual fire insurance
companies, in 1865 and 1866 had an administration outlay of
0.24 and 0.22 per 1,000 of the amount insured; the premium
insurance companies of 0.80 and 0.96; the latter doubtless
including large assessments for common purposes. (Preuss.
Statist. Ztschr., 1868, 269.) In all Germany, the outlay for
administration is, for public institutions, 4 per cent. of
the contributions; for premium institutions, inclusive of
their dividends, 37.1 per cent.; for the more important
French private institutions, even 68.8 per cent. (Mitth.,
1874, 89, 92.)]
[Footnote 237a-9: German public fire insurance institutions
generally have a territory of their own, in which that
institution is the only one of the kind. On the other hand,
the premium institutions in the whole empire keep about
80,000 agents, i. e., a number 50 times as large as the
number of officers of the former, (loc. cit. 90.)]
[Footnote 237a-10: Mutual insurance companies, as they have
extended, have sometimes split up into several; for
instance, the insurance companies against damage by hail at
Lübeck, Güstrow, Schwedt and Griefswald, daughters of that
at New Brandenburg.]
[Footnote 237a-11: The founder of the Mutual Fire Insurance
Company of Gotha expressed the hope that in it, it would be
possible to insure 60 per cent. cheaper than was customary
in the joint stock companies of the time. In the system of
agricultural _Einzelhöfe_ in Germany, small mutual insurance
companies are possible, and insurance then may be very
cheap.]
[Footnote 237a-12: On the premium associations, _Bernoulli_
Ueber die Vorzüge der gegenseitige Brandasscuranzen vor
Prämiengesellschaften, 1827. _Per contra_, _Masius_, Lehre
der Versicherung und Statische Nachweisung aller V.
Anstalten in Deutschland, 1846. In Prussia, premium
associations are growing more rapidly than mutual: the per
capita amount on the whole population insured in the former
against damage from fire in 1861 was 116.6 thalers; in 1866,
154.2; in 1869, 176.6; in the latter in 1861, 103.5; 1866,
124.3; 1869, 154.3 thalers. (_Engel_, Statist. Zeitschr.,
1868, 268 ff.; 1871, 284 ff.) In France, in the former, in
1857, almost 36 milliards of francs; in the latter, in 1864,
13 milliards. (Mitth., 1871, 51.)]
SECTION CCXXXVII (_b_).
INSURANCE IN GENERAL.--ECONOMIC ADVANTAGES OF INSURANCE.
The national-economic advantage of insurance consists in this, that the
damage which is divided among many, and which, therefore, is felt but
lightly by each one, is probably made up for, not by an inroad upon the
body of still existing original resources, but by savings made from
income. This, indeed, is unconditionally true only of such damage as
does not depend at all on the will of man, such as, for instance, the
damage caused by hail. On the other hand, there is especially in
maritime[237b-1] and fire insurance,[237b-2] a great temptation to
culpable and even criminal destruction; to the latter, when the object
insured is estimated at too high a value. (Speculation-fires!) And it is
difficult to say whether this drawback or that advantage is the greater.
But, on the other hand, every kind of insurance is attended by good
consequences to the credit of a people. It is of advantage to personal
credit, since it prevents sudden impoverishment; but it is by far more
advantageous to real-credit (_Realcredit_ = _material credit_) the
pledges of which, while their forms may be destroyed, it preserves the
value of; that is their economic essence. This last is most clearly
manifest in the case of public insurance institutions, with compulsory
participation; while in the case of entirely voluntary insurance, the
creditor can never be certain that his debtor has not neglected
something necessary. The aggregate danger is less than the sum of
individual dangers, for the reason that it is more certain, and that
uncertainty of itself is an element of danger.[237b-3] [237b-4]
[Footnote 237b-1: Even in Demosthenes' oration against
Zenothemis, we may see how easily the analogy of maritime
insurance may lead to criminal destruction of property.
Similar cases mentioned by _Pegolotti_ before the middle of
the 14th century. (Delia Decima dei Fiorentini, III, 132.)]
[Footnote 237b-2: French experience teaches that during a
commercial crisis there are more fires in mercantile
magazines than at other times; while in times when sugar is
a drug in the market, etc., many sugar factories are burned.
(Dictionnaire de l'Econ. polit, I, 88.) The style of our
house-building and fire-extinguishing institutions is wont
to improve with economic culture. Hence, for instance, in
Mecklenburg, 1651 to 1799, cities burned down, in whole or
in greatest part, 72 times; 1800 to 1850, only once.
(_Boll_, Gesch., von Mecklenb., II, 618 ff.) However, in
many countries the damage caused by fire has largely
increased: in Baden, for instance, by 100,000 florins a
year. Insurance capital, 1809 to 1818, 65 fl.; 1819 to 1828,
128 fl.; 1829 to 1836, 152 fl. (_Rau_, Archiv, III, 322.)
Similarly in Switzerland. In Bavaria, of every 10,000
buildings insured, in 1856-60, there were 4.6 fires per
annum; 1861-65, 5.04; 1866-69, 8.67. (Preuss. Statist.
Ztschr., 1871, 315.)
In Saxony, in 1849-53, there was one fire in every 290
buildings; 1854-58, in every 201; 1859-63, in every 180. Of
these fires, 68 per cent. of the whole number were from
known causes, i. e., 36.4 per cent. from incendiarism; 28.5
per cent. from negligence. (Sächs, Statist. Ztschr., 1866,
106, 115.) Even in antiquity, similar evil consequences
attended the generosity which gratuitously compensated
damage by fire. Compare _Juvenal_, III, 215 ff.; _Martial_,
III, 52. In England, of every 128 cases of damage by fire of
"farming stock," 49 were caused by incendiaries, for the
most part actuated by revenge. Hence, there, a notice is
posted on insured buildings by the insurance companies which
runs: "this farm is insured; the fire office will be the
only sufferer in the event of a fire." In London, of every
seven fires among the small trading class, one is estimated
to have been the work of an incendiary, and of all fires at
least one-third (Athenæum, 2, Nov., 1867), if not one-half
(Mitth., 1879, 100). One of the largest English fire
insurance companies estimates that the introduction of the
lucifer match has caused it a damage of £10,000 per annum.
Of 9,345 fires, 932 were ascribed to gas, 89 to certain, and
76 to doubtful, incendiarism, 127 to lucifer matches, 8 to
storms, 100 to negligence, 80 to drunkenness, 2,511 to the
catching fire of curtains, 1,178 to candles, 1,555 to
chimneys, 494 to stoves, 1,323 to unknown causes. (Quart.
Rev., Dec, 1854, 14 ff.) Fires originate from criminal
(_dolose_) causes most frequently when a new stage in the
politico-economical development of a people is reached,
which renders the buildings put up in a former and lower
stage of development insufficient.]
[Footnote 237b-3: A Prussian fire insurance regulation, as
far back as 1720, expressly says: "everybody scruples to
make the least loan on pledged houses in towns." "Every care
shall be taken to make the least possible amount of loans in
cities." (_Jacobi_, in _Engel's_ Zeitschr., 1862, 122.)
_Leib_, Dritte Periode, etc., 1708, cites a proverb to the
effect that, in Hamburg, "no house takes fire;" that is, at
a time that its fire-fund-system (_Brandkassenwesen_) had as
yet found few imitators, _v. Justi's_ proposition to combine
the insurance of houses against fire with a loaning-bank for
houses. (Polizeiwissenschaft, 1756, I, § 7, 8 ff.) In
Russia, in 1815, the loaning bank was the only fire
insurance company, which however assumed risks only on stone
houses at three-fourths of their value in consideration of
15 per 1,000 annual premium. (_Rau_, Lehrbuch, I, 229.)]
[Footnote 237b-4: _Spittler_, Politik., 441, objects to
insurance that it diminishes benevolence and approximates to
communism, thus hitting the dark side of all very high
civilization.]
SECTION CCXXXVII (_c_).
FIRE INSURANCE.
The present system of fire insurance has been introduced in many places
by the establishment of so-called domanial fire-guilds
(_Domanial-Brandgilden_), by which the country population on crown-lands
bound themselves to mutually assist one another by furnishing thatch,
and horse and hand power in the rebuilding of burned houses. Whatever
was wanting after this was made up by gratuitous supplies of wood from
the public forests, by the granting of governmental fire-licenses to beg
(_begging letters_), by permission to have collections made in the
churches[237c-1] etc. The next step was generally the establishment of
public insurance (_Landes-Assecuranz_) only for houses,[237c-2] but with
compulsory membership. This compulsion was justified by the continuing
interest of the state in the payment of the house-tax, as well as by the
interest of the eventual owner of the estate, and of
hypothecation-creditors.[237c-3] [237c-4] The insurance of moveable
property is much more recent, both by reason of the nature of the
property itself, which becomes of importance only at a later date, and
also on account of the much greater difficulty of carrying on such
insurance.[237c-5] The thought of making this species of insurance
compulsory, or of turning it over to the state, has seldom been
suggested.
[Footnote 237c-1: Thus in Austria, even after the middle of
the 18th century: _Schopf_, L. W. des öst. Kaiserstaates, I,
p. 175. In the mandate of the electorate of Saxony of Dec.
7, 1715; but the fire-fund (_Feuerkasse_) of 1729 depended
on voluntary but regular collections, besides which it
obtained certain contributions from the state and the
church. Those who gave nothing, however, were threatened
with getting nothing, or very little, in case of fire.
Parties desiring to rebuild massively had especially much to
expect. (Cod. August Forst., I, 538.) The charters of the
oldest German _Landesbrandkassen_ contain a provision that,
in future, no further fire-collections shall be allowed.]
[Footnote 237c-2: The English Hand-in-Hand Fire Office for
houses, founded in 1696; the Union Fire O., for houses and
movable property, in 1714: both mutual institutions. The
premium-institution, the Sun Fire Office, 1710
(_Frankenberg_, Europ. Herold, 1705, II, 181), mentions fire
insurance as a special characteristic of England. But we may
trace fire insurance on buildings and harvest supplies in
the low countries about the Vistula in Prussia, even as far
back as 1623. (_Jacobi_, loc. cit., 131.) Brandenburg
fire-fund, 1705, with voluntary admittance of all houses,
and fixed relation between the yearly contribution and the
insurance capital. If a fire happened, the fund repaired the
damage caused to the fullest extent its means allowed.
(_Mylius_, Corp. Const. March. V., I, 174 seq.) Even in
1706, it became necessary to prohibit speaking ill of the
institution. It was, therefore, abolished later. The first
Würtemberg private fire insurance company, 1754, founded on
similar principles, and which was still existing in 1760,
had a like fate (_Bergius_, Polizei und Camerelmagazin, III,
40 ff.), but it was exchanged in 1773 for a mutual public
company. In Berlin a mutual insurance company in 1718
(_Bergius_, Cameralistenbibliothek, 151); in Denmark, 1830
(_Thaarup_, Dän. Statist., II, 173 seq.); in Silesia, 1742;
Calenberg-Grubenhagen, 1750; in Baden, 1758; in Kurmark,
1765; in Hildesheim, 1765; in Hesse-Darmstadt, 1777. In
France, the Parisian institution of 1745 is considered the
oldest. (_Beckmann_, Beitr. z. Gesch. d. Erfindd., I, 218.)]
[Footnote 237c-3: In Galenberg-Grubenhagen only the
_Bauerhöfe_ subject to the common burthens were obliged to
enter, in Hildesheim, all houses subject to taxation; in
Darmstadt all house-owners who were allowed only a _dominium
utile_. In Kurmark, the subjects of the estate might be
compelled to enter by their lords, but could not be kept
out. Of Prussian companies in 1846, entrance was compulsory
only in those of East Prussia and Posen. In Würtemberg
compulsion since 1773; confirmed in 1853. Also in Zurich,
Jan. 24, 1832; in Schaffhausen Nov. 27, 1835. In Berne, only
for state, municipal and mortgaged houses; for the latter
only so far as it was not expressly left to the creditor.
Introduced into Baden in 1807, after most of the parishes
(_Gemeinden_) had voluntarily accepted it; confirmed in
1840. The provision that at least no judicial hypothecation
should be made on an un-insured house is found in the
Darmstadt law of 1777, § 13, and in that of Mainz of 1780,
art. I, § 15. _Rau_, Lehrbuch, II, § 25 a., finds compulsion
in the case of property in common and in that of property
belonging to other persons very appropriate. It is a matter
worthy of thought, that, in cities like Berlin, Breslau,
Thorn and Stettin, compulsory fire insurance is still
retained. In Upper Silesia, the abolition of compulsory
provisions has had for effect to cause 52 per cent. of all
buildings to be insured. (Press Zeitschr, 1867, 329).]
[Footnote 237c-4: Question of introducing state insurance
into Hungary. As a cultured land, and one rich in capital,
is better adapted to insurance, it would be folly to
"emancipate" ones self from Trieste, etc. in this respect.
But, on the other hand, only state-insurance can attract the
Hungarians and make them feel universally the want of
insurance. A reconciliation of these opposing views might be
effected by compelling the peasantry to insure their farm
houses, and allowing complete liberty in the cities and with
reference to movable property.]
[Footnote 237c-5: Even _Bergins_, Polizei und Cameralmag.,
III, 80, 1768 ff., doubts the possibility of the insurance
of movable property. Insurance of movable property of the
Evangelical clergy in the electorate of Mark, in which,
however, only movable property of the value of 400 thalers
is considered. But by this provision the changeableness of
the object, which so facilitates fraud, was done away with.
Hamburg joint-stock company for the insurance of movable
property, 1779. Electorate of Saxony fire-fund for movable
property, 1784-1818, which, however, made good, as a rule,
only 25 per cent. of the damage caused. In Prussia, in 1814,
there were only 12 insurance companies in which movable
property could be insured. In the aggregate even they were
but of little extent, and had generally a partnership,
guild, or communal basis. (_Jacobi_, loc. cit, 123.) On the
other hand, in 1869, there were in all the mutual insurance
companies, 530,600,000 thalers worth of movable property
insured, besides 2,814,800,000 thalers worth of immovable
property, and 366,100,000 thalers worth of property of a
mixed nature, partly movable and partly immovable. (Preuss.
Statist. Zeitschr., 1876, 298.)]
SECTION CCXXXVII (_d_).
REQUISITES OF A GOOD SYSTEM OF FIRE INSURANCE.
Among the chief requisites of a good fire insurance system are the
following:
A. The adoption in insuring of measures for the prevention of criminal
abuse on the part of the insured. No one should be benefited by the
burning of his insured goods.[237d-1] Hence, the rates of insurance
should be rigidly fixed according to the real value in exchange.[237d-2]
In the case of houses, the value of the incombustible elements of value
should be deducted; also the value of the ground and the value it
possesses from being advantageously situated, etc. The simultaneous
insurance of the same object in several companies without proper notice
being given should be unconditionally prohibited.[237d-3] The control of
all this may be greatly facilitated by requiring foreign insurance
companies to obtain a special permit to carry on their business in the
country, and to allow them to effect insurance only through responsible
home agents.[237d-4] Most insurance companies exclude from insurance
personal property which may be easily secreted, such, for instance, as
jewels, cash money, valuable documents, etc.
B. There should be a just proportion between the insurance premium and
the risk. This depends not only on the style of building of the houses
themselves and of those in the neighborhood,[237d-5] on the situation,
the too great intricacy (_Complicirung_) of which extends the ravages of
fire, as its too great isolation makes assistance difficult;[237d-6] but
also on the nature of the business carried on in them,[237d-7] and on
the condition of the local development of fire police. Highly cultured
places, especially large cities, are really much less exposed to damage
from fire. To not take this into account would be not only to
compulsorily dole out charity to the poorer classes of the people, and
to the less cultivated portions of the country,[237d-8] but it would
indirectly put an obstacle in the way of a transition to the massive
construction of houses, and of good, that is, as a rule, of costly
fire-extinguishing institutions.[237d-9] On the other hand,
administration must be rendered much more difficult by the taking of
risks of many degrees of danger, especially as it is scarcely possible,
for a long time, to even hope for a statistically unassailable basis of
a tariff graded in exact accordance with the risk.[237d-10] If those
objects especially exposed to danger should be excluded altogether, the
common utility of the institution would be largely diminished; and the
insured least exposed to danger would nevertheless have to complain of a
relatively too high contribution.[237d-11] If every peculiar class of
risks were to be treated as one whole, the insuring principle itself
would suffer.[237d-12] Where the nation or municipality engages in the
business of compulsory insurance, its too rigid system of rate-fixing
has something inequitable in it, inasmuch as it makes the most provident
housekeeper suffer from the danger from fire of his neighbor's
establishment, a gas factory, for instance.
C. The certainty of compensation for damage suffered. The government
should see to it that the institution does not promise more than it can
perform with its joint-stock capital and by means of its
premiums.[237d-13] The good will of foreign institutions to keep their
promises to the letter is best assured by requiring them as a condition
precedent of carrying on their business in a country, to bind themselves
to litigate only in the home courts. They protect themselves against the
risk of very large insurances by the system of re-insurance, by
transferring a portion of the premium as well as of the risk to one or
more other insurance companies.[237d-14]
D. In all highly cultured quarters, the almost entirely voluntary
fire-extinguishing system, in which the people turned out in a body to
battle with the flames, made way for the fire-militia system; and if the
latter should make place for what we may designate as a standing
fire-army which is most easily attained in connection with the
fire-insurance system, we should reach the ideal of such a system,
especially if the business of insurance was in the hands of the state or
of the municipality. Such a system would be in accordance with the
principle of the division of labor, and, also, with the fact that
usually the most vital interest is the greatest spur to action.[237d-15]
[Footnote 237d-1: The former almost unrestricted liberty of
the American system of insurance has recently been
curtailed, in most of the states, by a rigid governmental
superintendence, by special insurance boards with power to
permit companies to engage in the business of insurance, and
endowed with the right of imposing proper penalties, but of
declaring the privilege forfeited at the end of any year.
Compare _Brämer_ in III, Ergänzungshefte der Preuss.
Statist. Ztschr. und Mitth., 1871, No. 1.]
[Footnote 237d-2: The first fire insurance provisions or
regulations paid little attention to the danger of
over-valuation. Similarly _v. Justi_, Abh. von der Macht,
Glückseligkeit, etc., eines Staats. 1860, 81. Also
_Krünitz_, Oekonom. Encyclopædie, 1788, XIII, considers it
improbable that any one would have his home insured at a
higher than its real value. On the other hand, there were
formerly bitter complaints made in the United States that
the agents, on whom the determination of the rate of premium
and the control of the insurance-sum depended chiefly, were
led to make over-valuations in furtherance of their own
interests. (Mitth., 1871, 3; 1874, 95.)]
[Footnote 237d-3: If the valuation were made to depend on
the purchase price or on the cost of replacing or restoring
the damaged property, even this would be some temptation to
not entirely upright men. Hence the Baden law of 1840
expressly provides that instead of this, the selling price
shall be the basis; the law of 1852, § 17, the medium cost
of the combustible parts, after deduction made of the
diminution in value caused by age. The fixing of premiums in
the case of houses should be repeated from time to time on
account of wear. According to the Calenb. Grubenh. law of
1823, § 21, every 10 years. According to the Baden law of
1852, § 28, 33, and the Württemberg law of 1853, § 12, the
city council should examine annually in what cases a new
valuation was necessary. The more certainly over-insurance
is avoided, the less need is there of the superintendence
policy adapted to a rather barbarous state of insurance,
that only a part of the value shall be made good. The
Phœnix fire insurance company in Baden for the insurance
of movable property has reserved the right to investigate at
any time and to satisfy itself as to the value of the
insured object, and to lower the amount insured in
accordance with its own opinion. The provision that the
valuation shall be made by the authorities of the place, or
that it shall be approved by them is frequently found. In
Saxony, for instance (law of Nov. 14, 1835), the Leipzig
city council gives its approval when it finds the amount
insured in keeping with the means of the insured, and
entertains no suspicions as to his honesty. To what a bad
state of things a less liberal course leads, see in
_Masius_, loc. cit., 85. This indeed is only difficult in
large cities. It is also to be considered that it is not so
much the many small amounts, but the few large ones that are
dangerous to insurance. The Prussian scheme wanted to give
up the police superintendence of insurance, but to punish
over-insurance of more than 5 per cent. of the common value,
by imposing a fine equal to the amount of over-insurance on
the insured, the agents, and on the conductors of the
business. (_Jacobi_, in II. Ergänzhefte der Preuss. Statist.
Ztschr., 1869.) The provision that the amount paid as
damages for a burned house shall be immediately employed in
rebuilding, is to be explained in part by requisite A; in
part also by the same police-guardianship against presumed
negligence which introduced compulsory insurance.]
[Footnote 237d-4: Compare _Brügemann_, Die Mobiliar V. in
Preussen nach dem G. von 1837.]
[Footnote 237d-5: _Oberländer_, loc. cit. 108, calls
insurance without classification of risks, a "mutual
benevolent institution;" and one rigidly classified
according to the probable period of burning, "an institution
for the making of advances" (_Vorschuss-Anstalt._) In Baden,
even in 1737, there was no difference made between a massive
building and a wooden hut with a straw roof in the Black
forest. (_Rau_, Archiv., III, 324.) Here, there was in 1844
to 1849, an average damage by fire in houses with brick
roofs of 1,302 florins, with thatch roofs of 1,786 florins,
with shingle roofs of 2,292 florins, to say nothing of the
greater frequency of such damage in each succeeding class.
(_Rau_, Lehrbuch, II, 1, § 26, a.) In Württemberg, before
1843, the owners of insured personal property, in houses
with thatch roofs, had, in the same time, received 22 per
1,000 compensation for damage; in houses with brick roofs,
from 8 to 9 per 1,000. (_Rau_, loc. cit.) In 17 German
insurance companies, between 1866 and 1869, massive
buildings with hard roofs paid 1,003,000 thalers and
received 612,000 thalers; the not massive with hard roofs
paid 1,544,000 thalers and received 1,339,000; houses with
soft roofs paid 2,420,000 and received 2,792,000. (Preuss,
Statist. Zeitschr. 1861, 327.) Similar observations made in
Berne during 23 years.]
[Footnote 237d-6: While in most English insurance companies,
there are only three classes: common, hazardous, and doubly
hazardous, in Rhenish Prussian insurance companies, there
are seven, according to the style of building, and in each
class two subdivisions, according to the location.]
[Footnote 237d-7: According to an English average of 15
years, there is some damage from fire yearly in the
following classes of buildings and on the following
percentages:
_Of the whole number_.
Match factories, 30.00
Lodging houses, 16.5
Hat makers, 7.7
Cloth makers, 2.6
Candle makers, 3.8
Smiths, 2.4
Carpenters, 2.2
Oil and color dealers, 1.5
Book dealers, 1.1
Coffee houses, 1.2
Beer houses, 1.3
Bakeries, 0.75
Wine dealers, 0.61
Small dealers in spices, 0.34
Eating houses, 0.86
(Quart. Rev., 1854, 23.) There is indeed a difference in the
intensity of these fires. For instance, in inns, there have
been a great many; but the damage has been for the most part
insignificant.]
[Footnote 237d-8: In Paris the houses insured had a value of
2,370,000,000 francs, but the damage from fire amounted to
only 0.016 per 1,000! (Dictionn. d'Econ. politique, I, 89.)
On an average, the premiums in France amount to 0.85 per
1,000. In Prussia, 1867-69 on an average: in the province of
Prussia, 9.46 per 1,000; Posen, 3.75; Brandenburg, Berlin
not included, 2.82; Pomerania, 2.52; Westphalia, 2.15;
Schleswig-Holstein, 2.09; Hanover, 1.99; Silesia, 1.68;
Saxony, 1.47; Hesse-Nassau, 1.46; the Rhine country, 1.34;
Sigmaringen, 0.56; city of Berlin, 0.28 per 1,000. (Preuss.
Statist. Zeitschr., 1871, 289.) How largely a higher
civilization tends to arrest the spread of fire by the
reason of the great facilities of rendering assistance is
shown by the fact that for 100 buildings totally consumed in
Posen, in 1837-40, there were 13.4 only injured: in 1866-69,
32 were injured for 100 totally consumed. In Prussian
Saxony, 1839-44, 34; 1867-69, 57. (loc. cit., 329.) In
Baden, the district called the _Seekreis_ got from the
fire-fund, in 1845-49, 80 per cent. more than it contributed
to it; the middle Rhine district contributed 37 per cent.
more than it received. The Bavarian Reza district, 1828-29,
received only 11.4 per cent. for damages, and paid 19 per
cent. of all premiums; the Lower Danube district, 10 and 8.8
per cent. (_Rau_, Lehrbuch, II, § 28, 26.) The city of
Leipzig contributed from 1/19 to 1/17 of the insurance paid,
1864-68, to the insurance companies taking risks on real
property in the kingdom of Saxony, and received back only
from 1/662 to 1/114, although its fire extinguishing
institutions cost, in 1870, 26,182 thalers. (Official.)]
[Footnote 237d-9: Even premium-institutions have frequently
very different rates for the same risk, according as they
fear greater or less competition, or desire to recommend
themselves in a new place, etc. Hence the tricks of the
trade with which most of them surround their tariff.]
[Footnote 237d-10: In Würtemberg, theaters, powder mills,
places where brick and lime are burned, porcelain factories,
iron-works, etc. cannot be insured at all. In
Calenb-Grubenh. and Bremen-Verden, shingle-roofed houses can
be insured only at 2/3 of their real value.]
[Footnote 237d-11: Thus, for instance, in the electorate of
Mark, each of the four classes of houses bears its own loss
alone. To the fourth class, for instance, belong smithies,
brick factories, and buildings with steam engines, etc. The
Baden law of 1852 puts the same burthen in the same place,
upon houses exposed to danger in a greater or lesser degree;
but provides for 4 classes (_Gemeindeclassen_) with
different rates of contribution, and assigns each _Gemeinde_
every year, according to the relative magnitude of the
losses of the previous year, to one of those classes. How
risky it is for large cities to confine their insurance,
because of the ordinarily small amount of damage to them
from fire, only to insurance institutions of their own, is
shown by the case of Hamburg in the year 1842, where three
joint stock insurance companies could pay only from 75 to 80
per cent., and the Bieber Mutual Insurance Company, only 20
per cent.]
[Footnote 237d-12: In the case of buildings, the greater
risk is generally calculated by correspondingly multiplying
the insurance-value, but in case of damage by fire, it is
simply made good.]
[Footnote 237d-13: In the insurance companies specified by
_Masius_, loc. cit., 176, the aggregate amount of their
insurance, stood to the amount necessary to cover it, by
means of receipts from premiums, reserve, and joint-stock
capital:
In the Leipzig Fire Insurance Company, as 100:1.87
In the Trieste Fire Insurance Company, as 100:1.80
In the Elberfeld Fire Insurance Company, as 100:1.19
In the Aix-Munich Fire Insurance Company, as 100:1.15
In the Cologne Colonia Fire Insurance Company, as 100:2.44
In the Karlsruhe Phœnix Fire Insurance Company, as 100:3.7
In the Berlin Fire insurance Company, as 100:6.3
In the Gotha, about as 100:2.6
(including the four fold after payment note)
In the same companies the amount of damage and of expense
for the last preceding year were, on every 100 thalers, of
insurance, 46 pfennigs (1/300 thalers), 44, 29, 48, 67, 55,
35, 42; an average of 45, that is 1½ per 1,000. Besides,
much depends on the degree to which the joint-stock capital
can be applied. Thus, for instance, in Berlin, on every
1,000 thalers 200 are paid in cash, and a note
(_Solawechsel_) given for the rest, payable in two months
after notice. Where the unpaid remaining stock is but a mere
book-debt, and may even be evaded by disclaiming the stock
itself, it of course affords very little security.]
[Footnote 237d-14: Compare _Volz._ Tübinger Zeitschr. 1847,
349 ff.]
[Footnote 237d-15: The preparatory steps towards this ideal
were taken long ago. Thus, for instance, the
personal-property insurance companies have offered premiums
for special merit in extinguishing fires (Calenb.-Grubenh.,
1814, § 35), saving things from a burning house is looked
after by the agents of personal property insurance
companies; compensation is almost universally made not only
for the damage done by fire, but also that caused while the
fire is being extinguished. The excellent fire-extinguishing
institutions of England are maintained by the common action
of the insurance companies. There have been complaints,
however, that they have shown a preference for insured
objects. (Mitth., 1874, 113.)]
BOOK V.
ON POPULATION.
CHAPTER I.
THEORY OF POPULATION.
SECTION CCXXXVIII.
INCREASE OF POPULATION IN GENERAL.
That amid the thousand dangers which threaten the existence of the
individual the species may endure, the Creator has endowed every class
of organic beings with such reproductive power, and so much pleasure in
propagating their kind, that if the action of these were entirely
unrestricted, it would soon fill up the earth.[238-1] In the case of the
human race, also, the physiological possibility of propagation has very
wide limits.[238-2] It would be nothing extraordinary that a healthy
pair, living in wedlock from the 20th to the 42nd year of the woman's
life, that is, during the whole time of her full capacity to bear
children, should rear six children to the age of puberty. This would,
therefore, suffice to treble the population in a single generation;
provided that all who had grown up should marry. According to
Euler,[238-3] when the births were 5 per cent. and the deaths 2 per
cent., the population doubled in not quite 24 years; when the increase
was 2½ per annum, in 28 years; when 2, in 35 years, and when 1½
per cent. in 47 years.
The United States furnish us with a striking illustration of this
doctrine, and on the grandest scale. There the natural increase of the
white population, from 1790 to 1840, was 400.4 per cent.; that is in the
first decade 33.9 per cent. of the population in 1790; in the second
33.1, in the third 32.1, in the fourth 30.9, in the fifth 29.6 per
cent.[238-4] [238-5]
[Footnote 238-1: Thus, for instance, the sturgeon can,
according to _Leuckart_, produce 3,000,000 eggs in a year.
According to _Burdach_, the posterity of a pair of rabbits
may be over 1,000,000 in four years; and that of a
plant-louse, according to _Bonnet_, over a 1,000,000,000 in
a few weeks. The prolificacy of a species of animals is wont
to be greater in proportion as the structure-material
(_Bildungsmaterial_) saved within a given time during the
course of individual life, is greater, and as material wants
during the embryonic period are limited; also
(teleologically), in proportion as to the danger the
individual is exposed to. Compare _Leuckart_ in _R.
Wagner's_ physiolog. Wörterbuch, Art. Zeugung.
Teleologically, _Bastiat_ says: _cette surabondance parait
calculée partout en raison inverse de la sensibilité, de
l'intelligence et de la force avec laquelle chaque espèce
résiste à la déstruction_. (Harmonies, ch. 16.)]
[Footnote 238-2: The researches of modern physiology make it
probable that an ovum is detached from the ovaries at each
period of healthy menstruation. (_Bischoff_, Beweis der von
der Begattung unabhängigen periodischen Reifung und Lösung
der Eier bei den Säugethieren und Menschen, 1844.) It is
hardly possible to ascertain how many of these ova are
capable of fecundation. Among the animals, on which the
greater number of accurate observations have been made, that
is in the case of horses, it has been found that, in the two
districts of Prussia most favorably conditioned, of 100
mares that had been lined, 63.3 became pregnant, and 53.5
gave birth to live foals; in the rest of the Prussian
monarchy, the births were only 46 per cent. Compare
_Schubert_, Staatskunde, VII, 1, 98. In the Belgian _haras_
(places for breeding horses), between 1841 and 1850, about
30 per cent. of the "leaps" proved fruitful, from 2 to 3 per
cent. aborted, the rest were either probably or certainly
unfruitful. (_Horn._, Statist. Gemälde, 171.) In the human
species, also, the great number of first-born generated in
the first weeks of marriage, bears witness to a high degree
of procreative susceptibility.
On the other hand, the healthy male semen ejected during a
single act of coition contains innumerable germs, a very few
of which are sufficient to produce fecundation. (_Leuckart_,
loc. cit, 907.) According to _Oesterlen_, Handbuch der
medicischen Statistik, 1865, 196, from 10 to 20 per cent. of
all marriages were childless. In the United Kingdom, _Farr_,
report on the Census of 1851, estimated that in a population
of 27,511,000, there were 1,000,000 childless families, when
the term is allowed to embrace widows and widowers as well
as married couples.]
[Footnote 238-3: See the exhaustive table in _Euler_,
Mémoires de l'Académie de Berlin 1756, in _Süssmilch_,
Göttl. Ordnung, I, § 160. Bridge has constructed the
following formula:
Log. A = Log. P + n x Log.(1+(m-b)/mb). Here P stands for
the actually existing population, 1/m = the ratio between
the annual mortality and the number of the living, 1/b, the
ratio of the number of annual births to the number of the
living, n the number of years, A, the population at the end
of three years, the quantity sought for.]
[Footnote 238-4: _Tucker_, Progress of the United States,
89, ff. 98. Here deduction is already made of immigrants and
their posterity, who after subtracting the loss by
emigration back to the old country, amounted to over
1,000,000. It probably amounted to more yet. If, as
_Wappäus_ does (Bevölekerungsstatistik, 1859, I, 93, 122
ff.), we calculate the rate of increase per annum, we have
an average during the first decade of 2.89, during the
second of 2.83, the third of 2.74, the fourth of 2.52, the
seventh of 2.39, the eighth (1860-70) of probably 2.25 per
cent. On the still greater ratio of increase in earlier
times, see _Price_, Observations on reversionary Payments,
1769, 4 ed. 1783, I, 282 seq., I, 260.
It was nothing unheard of to see an old man with a living
posterity of 100. (_Franklin_, Observations concerning the
Increase of Mankind, and the Peopling of New Countries,
1751.) It is said that in the region about Contendas, in
Brazil, there were on from 70 to 80 births a mortality of
from 3 to 4 per annum (how long?), and an unfortunate birth
(_unglücklichen_) was scarcely ever heard of. Mothers 20
years of age had from 8 to 10 children; and one woman in the
fifties had a posterity of 204 living persons. (_Spix und
Martius_, Reise III, 525).]
[Footnote 238-5: Immense increase of the Israelites in
Egypt. (Genesis 46, 27; Numbers, 1.)]
SECTION CCXXXIX.
LIMITS TO THE INCREASE OF POPULATION.
There is certainly one limit which the increase of no organic being can
exceed: the limit of the necessary means of subsistence. But, so far as
the human race is concerned, this notion is somewhat more extensive,
inasmuch as it embraces besides food, also clothing, shelter, fuel, and
a great many other goods which are not, indeed, necessary to life, but
which are so considered.[239-1] We may illustrate the matter by a simple
example in the rule of division. If we take the aggregate of the means
of subsistence as a dividend, the number of mankind as divisor; then the
average share of each is the quotient. Where two of these quantities are
given, the third may be found. Only when the dividend has largely
increased can the divisor and quotient increase at the same time
(prosperous increase of population). If, however, the quotient remains
unchanged, the increase of the divisor can take place only at the
expense of the quotient (proletarian increase of population).[239-2]
Hence it is to be expected that the quantity of the means of subsistence
being given and also the requirement of each individual, the number of
births and the number of deaths should condition each other. Where, for
instance, the number of church livings has not been increased, only as
many candidates can marry as clergymen who held such livings have died.
The greater the average age of the latter is, the later do the former
marry, in the average, and _vice versa_. And so, in the case of whole
nations, when their economic consumption and production remain
unaltered.[239-3] A basin entirely filled with water can be made to
contain more only in case it is either increased itself, or a means is
found to compress its contents. Otherwise as much must flow out on the
one side as is poured in on the other.
And so, everything else remaining stationary, the fruitfulness of
marriages must, at least in the long run, be in the inverse ratio of
their frequency. (See § 247.)[239-4] [239-5]
[Footnote 239-1: When it is known that, in the Hebrides,
one-third of all the labor of the people has to be employed
in procuring combustible material (_McCulloch_, Statist.
Account, I, 319), it will no longer excite surprise that,
according to Scotch statistics, some parishes increase in
population after coal has been found in them, and others
decrease when their turf-beds are exhausted.]
[Footnote 239-2: Compare _Isaias_, 9:3. According to
_Courcelle-Seneuil_, Traité théorique et pratique d'Economie
politique, I, 1858, the _chiffre nécessaire de la population
égal à la somme des revenus de la société diminuée de la
somme des inégalités de consommation et divisée par le
minimum de consommation_: P=(R-J)/M.]
[Footnote 239-3: Thus _Süssmilch_, Göttliche Ordnung in den
Veränderungen des menschlichen Geschlechts, 1st ed., 1742,
4th ed., 1775, I, 126 ff., assumes that one marriage a year
takes place, on from every 107 to every 113 persons living.
On the other hand, 22 Dutch towns gave an average of 1 in
every 64. This abnormal proportion is very correctly
ascribed by _Malthus_, Principles of Population, II, ch. 4,
to the great mortality of those towns: viz., a death for
every 22 or 23 persons living, while the average is 1:36.
The Swiss, _Müret_, (in the Mémoires de la Société
économique de Berne, 1766, I, 15 ff.), could not help
wondering that the villages with the largest average
duration of life should be those in which there were fewest
births. "So much life-power and yet so few procreative
resources!" Here too, _Malthus_, II, ch. 5, solved the
enigma. The question was concerned with Alpine villages with
an almost stationary cow-herd business: no one married until
one cow-herd cottage had become free; and precisely because
the tenants lived so long, the new comers obtained their
places so late. Compare _d'Ivernois_, Enquête sur les Causes
patentes et occultes de la faible Proportion de Naissances à
Montreux: yearly 1:46, of the persons living, while the
average in all Switzerland was 1:28.
In France according to _Quételet_, Sur l'Homme, 1835, I, 83
ff., there was:
===============+===================+============+================
| _One marriage_ | _Children_ | _One death_
_In_ | _a year_ | _to a_ | _yearly _
| _for every_ | _marriage_ | _for every_
---------------+-------------------+------------+----------------
4 Departments |110-120 inhabitants| 3.79 |35.4 inhabitants
15 " |120-130 " | 3.79 |39.2 "
23 " |130-140 " | 4.17 |39.0 "
18 " |140-150 " | 4.36 |40.6 "
10 " |150-160 " | 4.43 |40.3 "
9 " |160-170 " | 4.48 |42.7 "
6 " |170 and more " | 4.48 |46.4 "
=================================================================
The two departments of Orne and Finisterre present a very
glaring contrast: in the former, one birth per annum on
every 44.8 (1851 = 51.6), a marriage on every 147.5, a death
on every 52.4 (1851 = 54.1) living persons; in the latter,
on the contrary, on every 26 (1851 = 29.8), 113.9 and 30.4
(1851 = 34.2). In Namur, the proportions were 30.1, 141,
51.8; in Zeeland, 21.9, 113.2, 28.5. (_Quételet_, I, 142.)
The Mexican province, Guanaxuato, presents the most
frightful extreme: one birth per annum on every 16.08 of the
population living, and one death in every 19.7. (_Quételet_,
I, 110.)]
[Footnote 239-4: Compare even _Steuart_, Principles, I, ch.
13. _Sadler_, Law of Population, 1830, II, 514:
=======================================+=============+===========
|_Marriages_ |_Children_
| _per annum_ |_on every_
| _on every_ | _100_
| _10,000_ |_Marriages_
|_inhabitants_|
---------------------------------------+-------------+-----------
In the purely Flemish provinces | |
of Belgium | 128 | 481
In the purely Wallonic provinces | |
of Belgium | 139 | 448
In the mixed provinces of Belgium | 152 | 425
In Holland | 148 | 476
In Lombardy | 166 | 489
In Bohemia | 173 | 413
In the kingdom of Saxony | 170 | 410
=======================================+=============+===========]
[Footnote 239-5: Compare _Horn_, Bevölkerungswissenschaftliche
Studien, I, 162 ff., 191, 252 ff. In most countries, there
is a much larger number of children to a marriage in the
rural districts than in the cities; but at the same time,
marriages are much less frequent there. In Saxony, however,
where the cities show a greater marital productiveness, the
rural districts present a large number of marriages. Of the
10 countries compared by _Wappäus_, II, 481 ff., only
Prussia and Schleswig are exceptions to the rule.]
SECTION CCXL.
INFLUENCE OF AN INCREASE OF THE MEANS OF SUBSISTENCE.
The sexual instinct and the love for children are incentives of such
universality and power, that an increase of the means of subsistence is
uniformly followed by an increase in the numbers of mankind. _Partout,
où deux personnes peuvent vivre commodément, il se fait un mariage._
(_Montesquieu._) Thus after a good harvest, the number of marriages and
births is wont to considerably increase; and conversely to diminish
after bad harvests.[240-1] [240-2] [240-3] In the former case, it is
rather hope than actual possession which constitutes the incentive to
the founding of new families. Hence the greatest increase is not found
in connection with the absolutely lowest price of corn, but with those
prices which present the most striking contrast to those of a previous
bad year.[240-4]
The introduction of the potato has promoted the rapid increase of
population in most countries. Thus, the population of Ireland in 1695,
was only 1,034,000; in 1654, when the cultivation of the potato became
somewhat more common it was 2,372,000; in 1805, 5,395,000; in 1823,
6,801,827; in 1841, 8,175,000. In 1851, after the fearful spread of the
potato-rot it fell again to 6,515,000.[240-5] In general, every new or
increasing branch of industry, as soon as it yields a real net product
is wont to invite an increase of population. Machines, however, have not
this effect only when they operate to produce rather a more unequal
division of the national income than an absolute increase of that
income.[240-6]
[Footnote 240-1: That rich food directly increased
prolificacy is proved from the fact that, for instance, our
domestic animals are much more prolific than wild ones of
the same species. Compare _Villermé_, in the Journ. des
Economistes VI, 400 ff. The months richest in conceptions
fall universally in the spring, and again in the pleasant
season immediately following the harvest. On the other hand,
during the seasons of fast in the Catholic church the number
of cases of conception is below the average. (Jour. des
Econ., 1857, 808).]
[Footnote 240-2: Thus the annual mean number of marriages
amounted to:
=============================================
| _Between 1841_ | _In 1847_
| _and 1850._ | _alone._
--------------+----------------+-------------
In Saxony, | 15,505 | 14,220
In Holland, | 22,352 | 19,280
In Belgium, | 28,968 | 24,145
In France, | 280,330 | 249,797
=============================================
_Horn_, loc. cit. I, 167. In the governmental district
(_Regierungsbezirke_) of Düsseldorf, there was in the years
of scarcity, 1817 and 1818, one marriage for every 134 and
137 souls; on the other hand, in 1834 and 1835, in every 103
and 105. (_Viebahn_, I, 120 seq.) In England, the variations
in the yearly price of corn are reflected in the variations
in the number of yearly marriages. Thus, in 1800, 114
shillings per quarter; 1801, 122 shillings; 1802 (Peace of
Amiens), 70 shillings; 1803, 58 shillings. The number of
marriages in the four years respectively was 69,851, 67,288,
90,396, 94,379. (_Porter_, Progress of the Nation, III, ch.
14, 453.)
Similarly in Germany, in 1851, the conclusion of peace
increased the number of marriages, and the scarcity of 1817
diminished it. In Prussia, in 1816, there was one marriage
for every 88.1 of the population; in 1828, for every 121.4;
in 1834 (origin of the great Zollverein), for every 104; in
1855, for every 136.4; in 1858 (hope of a new era), in every
105.9. (_v. Viebahn_, Statistik des Zollvereins II, 206.)
In Austria, the price of rye was:
==============================================
| _Per Metze._ | _No. of_
| | _Marriages._
----------+--------------+--------------------
In 1851, | 2.47 florins | 336,800
In 1852, | 2.11 " | 316,800
In 1853, | 3.38 " | 283,400
In 1854, | 4.36 " | 258,000
In 1855, | 4.43 " | 245,400 (_Czörnig._)
==============================================
On Sweden, see Wargentin in _Malthus_, II, ch. 2.
The decreased number of births in consequence of a bad
harvest, and _vice versa_, appears of course only during the
following calendar year. Thus, in 1847, as compared with the
average of the years 1844 and 1845, there were fewer
children born in England by 4 per 1,000, in Saxony by 7 per
1,000, in Lombardy by 59, in France by 63, in Prussia by 82,
in Belgium by 122, in Holland by 159 per 1,000. (_Horn_, I,
239 ff.) In Germany, the conscription-years corresponding to
the scarcity time, 1816-17, gave a _minus_ of 25 per cent.
in many places below the average. (_Bernouilli_,
Populationistik, 219.) In the case of marriage, the relative
increase or decrease is still more characteristic, so far as
our purpose is concerned, than the absolute increase or
decrease. Thus in Belgium, for instance, against 1,000
marriages dissolved by death, there were, in 1846, only 971
new ones contracted, and in 1847 only 747; while in 1850
there were 1,500. The falling off in Flanders alone was
still greater. Thus, in 1847, there were only 447 marriages
contracted for 1,000 dissolved. (_Horn_, I, 170 ff.)
However, _Berg_, using Sweden as an illustration, rightly
calls attention to the fact, that the variations in the
number of marriages and births is determined in part by the
number of adults, that is, of the number of births 20 and
more years before. Compare _Engel's_ Statist. Zeitschr.,
1869, 7.]
[Footnote 240-3: Sometimes, a sudden increase in the
frequency of marriages may have very accidental and
transitory causes. Thus, for instance, in France in 1813,
when the unmarried were so largely conscripted, the number
of marriages rose to 387,000, whereas the average of the
five previous years was 229,000. (_Bernouilli_,
Populationistik, 103.)]
[Footnote 240-4: Thus, for instance, in nearly all countries
affected by the movement of 1848, there were, during the
last months of that year, an unusually large number of
conceptions. (_Horn_., I, 241 seq.) According to
_Dieterici_, Abh. der Berliner Akademie, 1855, 321 ff.,
there was one birth a year for the number of persons living.
========================================================
| _Ten years' average._ | _1849 alone._
------------+----------------------------+--------------
In France, | 36.19 | 35.79
In Tuscany, | 24.42 | 22.82
In Saxony, | 24.51 | 23.08
In Prussia, | 25.5 | 23.62
========================================================
The great majority of men at that time believed all they
liked to believe.]
[Footnote 240-5: _Marshall_, Digest of all Accounts, I, 15.
_Porter_, I, ch. I, 9.]
[Footnote 240-6: _Wallace_, in this respect, places industry
far behind agriculture. (On the Numbers of mankind in
ancient and modern Times.) The county of Lancashire had, in
1760, that is shortly before the introduction of the great
machine industry, 297,000 inhabitants; in 1801, 672,000; in
1831, 1,336,000; in 1861, 2,490,000. Saxony has, in almost
every place, a relatively large number of births in
proportion as in any locality, commerce and industry
preponderate over agriculture, and _vice versa_. See
_Engel_, Bewegung der Bevölkerung im K. Sachsen, 1854. But
this should not be generalized into a universal law. For
instance, Prussia and Posen have an average number of births
greater than that of the Rhine country and Westphalia. (_v.
Viebahn_, Statistik des L. V, II, 222.)]
SECTION CCXLI.
EFFECT OF WARS ON POPULATION.
We may now understand why it is that only those wars which are
accompanied by a diminution of the sources of the means of support
decrease population. The loss in the numbers of mankind produced by
wars, hardships, etc., would, as a rule, be readily made up for by
increased procreation.[241-1] Thus, for instance, in Holland, the long
Spanish war permitted an increase of the population for the reason that
the national wealth increased at the same time; while the short war with
Cromwell, which curtailed commerce, caused 3,000 houses in Amsterdam
alone to remain empty.[241-2] In England and Wales, the population
increased during the most frightful war of modern times, from 8,540,000
in 1790, to over 12,000,000 in 1821; in France, from, probably,
26,000,000 or 27,000,000 in 1791, to 29,217,000 in 1817. England,
indeed, was itself never the seat of war, and its commerce was increased
by the war in some directions as much as it was diminished by it in
others. France's own territory was devastated only in the first and in
the last years of the war. But the Revolution had, on the whole, once
the storms of the Reign of Terror were over, not only more equally
divided the means of subsistence in France, but it had developed them in
a higher degree.[241-3] [241-4]
It cannot even be unconditionally predicated of emigration, that it
hinders the increase of population. As soon as people have begun to
calculate upon emigration, as a resort for themselves in case of
distress, or upon the emigration of others, by which they would be left
a larger field for action at home, a number of marriages is contracted
and a number of children born; which would otherwise not have been the
case. Most men, especially when young and enamoured, hope for the
realization of all their wishes. Favorable chances, open to a great
number of men alike and which every one thinks himself competent to
calculate, are commonly over-estimated by the majority.[241-5] (See §
259.)
[Footnote 241-1: The war of 1870-71 cost Germany 44,890
lives. (Preuss. Statist. Ztschr., 1872, 293.) This number is
not quite 20 per cent. of the excess of births (794,206)
over deaths (563,065) in Prussia in the year 1865. On the
other hand, in from 1856 to 1861 there were 10,000 cases of
murder and manslaughter in all Europe, Turkey excepted.
(_Hausner_, Vergl. Statistik, I, 145.) About the end of the
last century, it was estimated that about 1,000,000 children
were born annually in France. (_Necker_, Administration des
Finances, I, 256.) Of these, about 600,000 outlived their
18th year. (_Peuschet_, Essai de Statistique, 31.) There
were, annually, about 220,000 marriages. Hence the number of
the unmarried was increased annually by 80,000 young men,
who, according to _Peucshet_ (32), amounted to over
1,450,000. According to this, the number of recruits, per
annum, might amount to hundreds of thousands without causing
any appreciable diminution in the number of births and
marriages. Compare _Malthus_, Principle of Population, II,
ch. 6. On the other hand, long continued wars have the
effect of keeping the men physically strongest from
marriage, and so to deteriorate the race.]
[Footnote 241-2: Richesse de Hollande, I, 149. During the
Amsterdam commercial crisis, from 1795 to 1814, there were
for every 4 births an average of 7 deaths. So that the
population, in 1795, was still 217,000, and in 1815, only
180,000. (_Bickes_, Bewegung der Bevölkerung Anhang, 28.)]
[Footnote 241-3: On the other hand, the population of East
Prussia, between 1807 and 1815 diminished 14 per cent. (_v.
Haxthausen_, Ländl. Verfassung der Preuss. Monarchie, I,
93.) The battles of the Seven Years' War are said to have
consumed 120,000 Russians, 140,000 Austrians, 200,000
Frenchmen, 160,000 Englishmen, Hanoverians, etc., 25,000
Swedes, 28,000 of the troops of the empire, and 180,000
Prussians. Yet the population of Prussia fell off 1,500,000.
(_Frédéric_, Œuvres posthumes, IV, 414; Preuss. Gesch.
Friedrich's M., II, 349.) During the Thirty Years' War, the
population of Bohemia fell from 3,000,000 to 780,000.
(_Mailath_, Gesch. von Oesterr, III, 455.) Württemberg,
according to the military recruiting lists had a population,
in 1622, of 300,000 inhabitants. (_Spittler_, Werke, XII,
34.) In 1641, the population was only 48,000; according to a
promotion-speech of _J. B. Andreä_. But between 1628 and
1650, more than 58,000,000 florins were lost by war
contributions, and about 60,000,000 florins by plunder;
about 36,000 private houses were in ruins. (_Spittler_,
Württ. Gesch., 254.) On Alsace, Freisingen and Göttingen,
see _Londorp_, Bellum sexenn., II, 563; _Zschocke_,
Bayerische Geschichte, III, 302; _Spittler_, Hanov. Gesch.,
II, 37 ff., 114. On Germany generally, see _R. F. Hanser_,
Deutschland nach dem dreissigjährigen Kriege, 1862. However,
many estimates of the diminution of the population are
exaggerated, because it has not been considered that a great
part of the men who disappeared in one place fled to
another, for the time being more secure. Compare _Kius_ in
_Hildebrand's_ Jahrb., 1870, I ff.
The population of Massachusetts increased 8,310 yearly,
before the War of Independence; during the war, only 1,161,
although the enemy scarcely ever entered the country.
(_Ebeling_, Gesch. und Erdbeschreib. der V. Staaten I, 236.)
Russia had a mortality during the war years, 1853-55, of
2,272,000, 2,148,000, and 2,541,000; in the years of peace
previous, 2,000,000 at most.]
[Footnote 241-4: Besides the mere loss of men, war operates
destructively on production, since it affects especially the
most productive classes as to age, while pestilence, famine,
etc., carry off children, old people, and the feeble. Hence,
a people's public economy recovers more readily from the
last named misfortune than from war.]
[Footnote 241-5: Compare _Giov. Botero_, Della Cause della
Grandezza della Città, L. II, and Ragion di Stato, VIII, 95;
where colonization is compared to the swarming of bees. _W.
Raleigh_, Discourse of War in general, Works VIII. 257 ff.
Similarly _Child_, Discourse of Trade, 371 ff. _Ustariz_,
Teoria y Practica del Commercio, 1724, ch. 4. _Franklin_,
Observations on the Increase of Mankind, which reminds one
of the continued growth of polyps.]
SECTION CCXLII.
COUNTER TENDENCIES TO THE INCREASE OF POPULATION.
The extension of economic production is always a labor; the surrender of
one's ordinary means of subsistence to new comers, a sacrifice; but, on
the other hand, the procreation of children is a pleasure. Hence it
seems to be incontestably true that the powers of increase of
population, considered from an entirely sensuous point of view, tend to
go beyond the bounds of the field of food. Malthus gave expression to
this fact by saying that population had a tendency to increase in a
geometrical progression, but the means of subsistence, even under the
most favorable conditions, only in an arithmetical progression.[242-1]
If the word "tendency" be correctly understood in the sense in which
Malthus employed it, so that the reality appears as the product of
several and partly opposite tendencies,[242-2] the first half of his
allegation can scarcely be contested.[242-3] If a father has three sons,
and each of the three three in turn, the love of procreation and the
power of procreation, all being in the normal condition of health, are
precisely three times as great in the second generation as in the first,
and nine times as great in the third, etc. The second half of Malthus's
principle is more open to doubt. If it be true, as has been asserted,
that man's means of subsistence consist solely of animals and plants,
and these, as well as man, increase in a geometrical ratio, and usually
even with a much larger multiplier, yet it is here, surprisingly enough,
overlooked that their natural increase is interrupted by the consumption
of them by man. On the other hand, it is true that even raw material, by
means of more skillful technic processes (§ 134, 157), and the values by
which man ennobles them, may always increase in a greater ratio than a
merely arithmetical one. (§ 33).[242-4] But, that, in the long run, the
means of subsistence should keep pace with the extreme of sensuous
desire and of physiological power, is utterly incredible. Hence, the
latter tendency is limited by others.
A. And indeed, firstly, by repressive counter-tendencies. As soon as
there is a larger population in existence than can be supported, the
surplus population must yield to a mournful necessity; in a favorable
case, to that of emigration, but usually to hunger, disease and misery
generally.
"The earth," says Sismondi, "again swallows the children she cannot
support." It is the weakest especially who are elbowed off the bridge of
life, over which we pass from birth to the normal death from old age,
because there is not room enough on it for all. Hence the frightful
mortality among the poorer classes and in childhood. Now it is the
absence of a healthy habitation,[242-5] or of proper clothing, or, in
the case of children, of rational superintendence[242-6] which sows the
germs of a thousand diseases; and now the absence of proper care, rest
etc., which intensifies these diseases. Every bad harvest is wont, when
its consequences are not alleviated by a high and healthy civilization,
to increase mortality. (§ 246, 9). Thus, in Sweden, during the second
half of the 18th century, the average yearly mortality was = 1:39-40. On
the other hand, in the bad year 1771 = 1:35.7; 1772 = 1:26.7, and in
1773, as an after consequence, 1:19.3. In this last, although it was a
fertile year, there were only 48 births to every 100 deaths.[242-7]
Among nations low down in civilization, the repressive counter tendency
may assume a very violent character. How many cases of murder, human
sacrifice, and even war, have been occasioned by over-population and
famine.
B. Secondly, by preventive counter tendencies.[242-8] The person who
believes himself unable to support children refrains from begetting
them. This, we may call one of the most natural of duties. We might even
say that the person who begets a child which he knows he is not in a
condition to support, is guilty of a grievous sin against civil society,
and of a still more grevious one against his poor child. Strange! To
beget a child with countless wants, with an immortal soul! That is
certainly an act the most pregnant with consequences which any ordinary
man can perform in his life; and yet how thoughtlessly it is performed
by the majority!
This counter-tendency is to be found only in the case of man. Plants and
animals yield to the sexual instinct regardless of everything.[242-9]
Where there is no question whatever of having food enough to support
children, as is the case with the better-to-do classes, the dread of
losing the decencies of life, or of "losing caste," acts as a
preventive[242-10] [242-11] to the founding a family, or increasing the
numbers of one. Unfortunately, abstinence from the procreation of
children may be exercised not only in accordance with the moral
law,[242-12] but also, in contravention of it.[242-13] There is a
necessary connection between human reason and human freedom and the
possibility of misusing them. And it is certainly the inevitable fate of
man either to place a morally rational check on the sexual impulse, or
to be forcibly held within the limits of the means of subsistence, since
they cannot be over-stepped by him--through the agency of vice and
misery.[242-14] [242-15]
[Footnote 242-1: Principle of Population, I, ch. I. Adam
Smith also implicitly held the view that the demand for the
means of subsistence is always in advance of them. Wealth of
Nat., I, ch. II, pref. and P. I.]
[Footnote 242-2: This may be represented by what physicists
call the "parallelogram of forces." Compare _Senior_,
Outlines, 47. _Malthus'_ own explanation of "tendency," in
his letter at the end of _Senior_, Two Lectures on
Population, 1829.]
[Footnote 242-3: On the inaccuracy of the expression,
"geometrical progression," in the present case, see _Moser_,
Gesetze des Lebensdauer, 1839, 132.]
[Footnote 242-4: _Weyland_, Principles of Population and
Production, 1816, 25 ff.]
[Footnote 242-5: In Paris the mortality is greater in the
_arrondissements_ in proportion to their poverty, of which
the relative numbers of untaxed dwellings afford a
criterion. According to this, between 1822 and 1826,
=========================================================
_The | _Had a yearly mortality | _Locations
Arrondissement_| of 1 in every_ | non imposées._
---------------+-------------------------+---------------
II, | 71 of population. | 0.07
III, | 67 " | 0.11
I, | 66 " | 0.11
IV, | 62 " | 0.15
XI, | 61 " | 0.19
VI, | 58 " | 0.21
V, | 64 " | 0.22
VII, | 59 " | 0.22
X, | 49 " | 0.23
IX, | 50 " | 0.31
VIII, | 46 " | 0.32
XII, | 44 " | 0.38
=========================================================
_Villermé_, in the Journal des Econ., Novbr. 1853. The
average house-rent in _arrondissement_ II, amounted to 605
francs per annum; in III, to 426; in I, to 498; in IX, to
172; in VIII, to 173; in XII, to 148 francs. Doctor Holland
divided all the streets in Manchester into three classes,
and each class, in turn, into three sub-classes, according
to the qualities of the dwellings. The yearly mortality in I
a was 1:51; in I b = 1:45; I c = 36; II a = 1:55; II b =
1:38; III c = 1:25. (Report of Inquiry into the State of
large Towns and Populous Districts, 1843.)]
[Footnote 242-6: In Prussia, the Jewish population, between
1822 and 1840, increased 34½ per cent.; the Christians
only 28½ per cent.; although among the Jews there was
only one marriage a year in every 139, and one birth in
every 28; among the Christians, in every 112 and 25. This is
accounted for, mainly by the favorable circumstances that
Jewish mothers leave their homes seldomer to work outside,
and thereby devote more attention, even in the lower
classes, to the care of their children.]
[Footnote 242-7: _Wappäus_, Allg. Bevölkerungsstatistik, I,
315. In Thurgau, in 1815, the mortality was = 2,143, in 1817
= 3,440; in Luzerne, in 1820 = 1,543, in 1817 = 3,511.
(_Bernouilli_, Populationistik, 219.) And so in London
between 1601 and 1800, when the five dearest and five
cheapest years of each decade are taken together, the
aggregate mortality in the dearest was 1,971,076, in the
cheapest, 1,830,835. (_Farr_, in the Statist. Journal, 1846,
163 ff.) The rule did not apply to the time 1801-1820; but
it did again to the time 1821-1840 (l. c., 174). Compare
_Messance_, Recherches sur la Population, 311; _Roscher_,
Kornhandel und Theuerungspolitik, 54 ff. When scarcity
continues a longer time, the mortality sometimes decreases
on account of the largely diminished number of small
children. In Lancashire, the number of deaths during the
commercial crisis, 1846-47, was 36 per cent. greater than
the average of the three last preceding years; in 1857-8 it
was 11.9 per cent. greater. (_Ausland_, 1862, No. 44.)]
[Footnote 242-8: _Malthus_ uses the word "preventive check,"
while he calls the repressive counter-tendencies "positive."
_R. Mohl_, Polizeiwissenschaft, I, 88, speaks of preventive
and destructive causes. Anteriorly and subsequently
operating causes. (_Knapp_).]
[Footnote 242-9: Hence the infinite productiveness of
irrational organisms is limited only by their mutual
struggle for the means of support. That which cannot live
there dies. "In this case there can be no artificial
increase of food, and no prudential restraint from
marriage." (_Darwin_, Origin of species, 4 ed. 1866, 73.)
Compare _B. Franklin_, Observations concerning the Increase
of Mankind, § 21. _Lamennais_, indeed, asserts that no plant
and no animal takes away food from any other; that the earth
has room for all!]
[Footnote 242-10: The rule that population tends to extend
everywhere as far as the means of subsistence will permit,
_Sismondi_, N. Principes, VII, ch. 3, has taken occasion to
ridicule, basing himself on the example of the Montmorency
family. This family has, notoriously, always lived in
superabundance, and is, notwithstanding, on the verge of
extinction. _Sismondi_ here forgets the relativity of the
idea "means of subsistence." Persons occupying an exalted
social position not only think that they want more in this
respect, but they are wont in forming marriage contracts to
use the greatest and frequently exaggerated caution. Hence
it is that families of this rank become, relatively
speaking, frequently extinct; and, moreover, such a fact is
here most frequently taken notice of. _Sadler_, Law of
Population, 1830, infers from the frequent extinction of
English noble families, that wealth leads to sterility; and,
on the other hand, poverty (but not famine!) to prolificacy;
and _Doubleday's_ (True Law of Population, 12 ff.)
suggestion, in explanation hereof, that over-fed animals and
over-manured plants are sterile, as ably refuted in the
Edinburg Rev., LI. It is there shown that the marriages of
the English peers are fruitful above the average; that their
extinction is partly due to the fact that the younger sons
seldom married, and that hence there is a lack of collateral
relations. But, in great part, such extinction is only
apparent; since such a family is said to be extinct when
only the male stem is extinct. The French nobility, from the
9th to the 11th century, continually increased in number.
After this, the succession of females and cases of
extinction became more frequent, because the nobility, in
order to keep their estates together, began to not desire
many sons. _Sismondi_, Hist. des Français, V, 182. Compare
_Benoiston de Châteauneuf_, De la Durée des Familles nobles
en France, in the proceedings of the Académie des Sciences
morales et politiques, II, 792 ff. Besides, between 1611 and
1819, 763 English baronet families became actually extinct,
653 continued to exist, and 139 had been raised to the
peerage; an average of from 3 to 4 peer families became
extinct yearly. (Statist. Journal, 1869, 224.) There were,
about 1569 2,219 Venetian _nobili_; in 1581, 1,843 (_Daru_,
VI, 240 ff.); in Addison's time (1705), only 1,500. On the
decrease of the Roman patricians, see _Dionys._, Hal., I,
85; _Tacit._, Ann., XI, 25; on that of the Spartan knights:
_Clinton_, Fasti Hellenici, II, 407 ff.; of the _ehrbaren
Geschlechter_, at Nürnberg: _Hegel_, N. Stadtchroniken,
1862, 214. Compare, also, Westminster Rev., Oct., 1849.]
[Footnote 242-11: How, in England, not only many
distinguished persons, but also their servants, are kept
from marriage in this way, because they are sure of not
being able to satisfy the wants of their bachelorhood as
fathers of families, see in _Malthus_, P. of P., II, ch. 8.
A description of the general misery which would result if
all men consumed only that which was physically
indispensable, in _Senior_, Outlines, 39.]
[Footnote 242-12: See _Bastiat's_ beautiful words, in which
he characterizes the holy ignorance of children, the modesty
of young maidens, the severity of public opinion, etc., as a
law of limitation: (Harmonies, 437 seq.)]
[Footnote 242-13: Compare _Proudhon_, Contradictions, ch.
13.]
[Footnote 242-14: That want of employment or of business has
rather a preventive tendency, see _Malthus_, Principle of
Population, VII, ch. 14.]
[Footnote 242-15: _Malthus_, P. of P., II, ch. 13. I
formerly called this natural law by the name of the
investigator who earned the largest share of scientific
merit in connection therewith. It cannot, indeed, be said,
that he was the first to observe it. Compare even
_Machiavelli_, Discorsi (between 1515 and 1518), II, 5. And
so _Giovanni Botero_ taught that the number of the
population depended not so much on the number of
_congiungimenti_ so much as on the rearing of children.
(Ragion di Stato, 1592, VII, 93 ff.) The _virtù generativa
degli uomini_, which is always the same, is found face to
face with the _virtù nutritiva delle citta_. The former
would continue to operate _ad infinitum_, if the latter did
not limit it. The larger a city is, the more difficult it is
to provide it with the means of subsistence. In the last
instance, the slave-sales of Guinea, the cannibalism of the
Indians, the robber-system of the Arabians and the Tartars,
the migration of nations, crimes, litigation, etc., are
traced back to the narrowness of the means of subsistence.
(Delle Cause della Grandezza delle Città, 1598, Libr. III.)
Sir Walter Raleigh (ob. 1618), was of opinion that the earth
would not only be full but overflowing with human beings
were it not that hunger, pestilence, crime, war, abstinence
welcome sterility, etc. did away with the surplus
population. (History of the World, I, ch. 8, 4. Discourse of
war: Works, VII, 257 ff.) According to _Child_, Discourse of
Trade, 371 ff., 149, the population is always in proportion
to the amount of employment.
If England could employ only 100 men while 150 were reared,
50 would have to emigrate or perish; and so, too,
conversely, occasional vacancies would soon be filled.
Similarly _Davenaut_, Works II, 233, 185; who, however, in
the practical application of this law of nature, adopts the
error of his contemporary, G. King, the statistician,
according to whom the population of England would increase
to 11,000,000 (II, 176) only after 600 years. _Benjamin
Franklin's_ Observations Concerning the Increase of Mankind,
Peopling of new Countries, etc., 1751, are very good.
Franklin here shows that the same tables of mortality do not
apply to town and country, nor to old nations and new ones.
The nation increases more rapidly in proportion as it is
easy to contract marriage. Hence the increase is smallest in
luxurious cities and thickly populated countries. Other
circumstances, being equal, hunting nations require the
largest quantity of land for the purpose of subsistence, and
industrial nations least. In Europe, there was a marriage in
every 100 of the population per annum; in America, on every
50; 4 children to a marriage in the former, and 8 in the
latter.
Population diminishes as a consequence of subjugation, bad
government, the introduction of slavery, loss of territory,
loss of trade and food. He who promotes the opposite
advantages may well be called the "father of his country."
Further, _D. Hume_, Of the Populousness of the Ancient
Nations: Discourses No. 10. _Per contra, Wallace_, On the
Numbers of Mankind in Ancient and Modern Times, in which the
superior populousness of antiquity is maintained, 1753.
_Wallace_ relied chiefly on the more equable distribution of
land, and the smaller luxury of the ancient nations.
_Herbert_, Essai sur le Police des Grains (1755), 319 ff.
Les Intérêts de la France mal entendus, par un Citoyen
(Amsterd., 1757), I, 197.
_Steuart_ threw light especially on the connection between
mortality and the number of marriages (Principles, I, 13);
and he claims, with the utmost confidence, that only the
want of the means of subsistence, using the expression in
its broadest sense (I, 15), can put a limit to the increase
of population (I, 14). He calls wrongful procreation
(_falsche Zeugung_) the chief cause of pauperism (II, 1),
and his views on public charity have a strong Malthusian
complexion (I, 14). Compare further _A. Young_, Political
Arithmetics (1774), I, ch. 7. _Townsend_, Dissertation on
the Poor Laws (1786), makes a happy use of the example of
the Island of Juan Fernandez, in which a colony of goats was
developed, first alone, and afterwards in a struggle with a
colony of dogs, to illustrate the laws of the development of
population as limited by the supply of food. Compare the
same author's Journey through Spain, II, 8 seq.; 358 ff.,
III, 107. _G. M. Ortes_, Riflessioni sulla Popolazione,
delle Nazione per rapporto all'Economia nazionale, 1790,
ascribes geometrical progression to the increase of
population (cap. I) precisely as in the case of other
animals; only, in the case of the latter, a limit is put to
their increase by _forza_, and in the case of man, by
_ragione_. When the population of a country has attained its
proper development, celibacy is as necessary in order to
keep it so as marriage. Otherwise the door would be opened
to extreme pauperism, to the debauchery of the "venus vaga,"
to eunuchism and polygamy (4). Strangely enough, _Ortes_
asserts that no people are richer per capita than any other.
The distribution of wealth among the apparently richer,
operates to make individuals heap wealth together in greater
quantities (8).
_Malthus_ himself wrote his classical work under the
influence of a very intelligible reaction (1st ed., 1798; 2d
ed., 1803). For a whole generation, the European public had
had no other view broached but that the tree of human kind
might keep on growing even until it reached the heavens, if
care were only taken to manure the ground, to water the
roots and prune the branches according to the latest
world-improving recipes. _Malthus_, in opposition thereto,
called attention to the limits placed by nature to the
number of mankind. He demonstrated that it was not merely
arbitrary laws which opposed the Utopian happiness of all,
but in part the niggardliness of nature; and in greater part
the passions and sins of men themselves. If he sometimes
described the limits as narrower than they really are, and
if an occasional coarse expression escaped him, we need not
wonder. His polemic was well founded, and he was at the time
still a young man (born 1766, ob. 1834). He modified much in
the later editions of his work. For instance, he stopped the
unsavory sentence in which he says that a man born into the
world already occupied, whose family cannot support him, and
whose labor society does not need, has not the smallest
right to demand the smallest particle of food, and is really
superfluous in the world; that there is no place for him at
the great banquet of nature; that nature bids him go hence
and does not hesitate herself to execute the command. _P.
Leroux_ in a small pamphlet in answer to _Malthus_, quotes
this sentence at least forty times. Moreover, _Möser_, who
certainly is not considered a misanthrope, was not only
acquainted with the Malthusian law, but develops it in
words, and with consequences which strongly recall the very
words which raised such a storm against _Malthus_. Compare
Patr. Phant. I, 42; II, 1; IV, 15 (against vaccination); V,
26.
The opinions of political economists in our own day are, as
might be expected, divided on some of Malthus' expressions
and on his practical counsels. He has indeed but few such
one-sided followers as _Th. Chalmers_, On Political Economy
in Connexion with the moral State and moral Prospects of
Society, 1832. Malthus' fundamental views, however, are
truly scientific. (Κτῆμα ἐς ἀεὶ!) Compare _Baudrillart_,
Manuel, 424 seq., and _A Walker_, Science of Wealth, who
strangely enough (452) opposes Malthus, and yet is (458)
virtually of the same opinion. Even the better class of
socialists base themselves on the same view, without,
however, thanking Malthus for it. Thus for instance, _K.
Marlo_, System der Weltökonomie (1848, 52), passim. For an
excellent history of the theory of population, see _R.
Mohl_, Gesch. und Literatur der Staatswissenschaften, III,
409 ff. (1858).]
SECTION CCXLIII.
OPPONENTS OF MALTHUS.
Of Malthus' opponents, John Stuart Mill has said, that a confused notion
of the causes which, at most times and places, keep the actual increase
of mankind so far behind their capacity for increase, has every now and
then given birth to some ephemeral theory, speedily forgotten; as if the
law of the increase of population were a different one under different
circumstances, and as if the fecundity of the human species, by direct
divine decree, was in keeping with the wants of society for the time
being.[243-1]
The majority of such theories are based, on the proof that Malthus'
description of one stage of civilization is not true of another,
although the great discoverer, who, with his admirable many-sidedness,
had investigated the law of population in and throughout all the stages
of civilization, had, as a rule, himself given due weight to all of
this. The objection of unwarranted generalization applies to Malthus
much less than to the majority of his opponents. Since, for instance, in
young colonies, even the natural forces, which are in themselves limited
or exhaustible, afford a wide field of operation for a long time; many
American writers have supposed that labor alone was the source of
wealth, and that, to say the least, wealth should increase in the same
ratio as mankind; and even in a still greater ratio, since the division
of labor grows easier as population increases in density.[243-2] But
here it is forgotten that in every instance of economic production,
there are many factors engaged, each one of which can take the place of
another only up to a certain point. There are others, especially Grahame
and Carey,[243-3] who allude to the possibility of emigration, which is
still so far from being exhausted. But Malthus had nothing to say of the
impossibility of emigration. He spoke only of the great difficulties in
its way. (III. ch. 4.) There are many writers who would wish simply to
ship emigrants off, like a great many doctors who send their patients
away to die! (§ 259 ff.) When Sadler says that human prolificacy,
circumstances remaining the same, is inversely as the density of
population, he uses, to say the least, a very inaccurate mode of
expression.[243-4] The grain of truth hidden in this assertion does
certainly not come from Gray's theory, that in the higher stages of
civilization, the better living usual is a hinderance to the increase of
population, and that the prevailing influence of large cities increases
mortality;[243-5] but from influences, or, to speak more correctly, from
free human considerations, on which no one has thrown so much light as
Malthus. And indeed, where is the man who has better understood or more
warmly recommended the "aristocratic" impulse which should, in well
ordered civil society, hold the sexual instinct in equilibrium?[243-6]
Malthus himself pleasantly derides his opponents, who, to explain how
the same rifle, charged with the same powder and provided with the same
ball, produces an effect varying with the nature of the object at which
it is fired, prefer, instead of calculating the force of resistance of
the latter, to take refuge in a mysterious faculty by virtue of which
the powder has a different explosive force, according to the greater or
less resistance the ball meets when it strikes.[243-7] The peculiarity
of Godwin's polemics may be inferred from the fact that he considered it
very doubtful whether the population of England had increased during the
four preceding generations; and that he traces the increase of the
population of the United States to the influence of emigration almost
exclusively, and allows the desertion of whole English regiments in 1812
ff. to play a part in accounting for that increase.[243-8]
Malthus has been accused of rejoicing over the evils which are wont to
decimate surplus population; but the same charge might be brought
against those physicians who trace the diseases back to the causes that
produce them. He has also been branded as the enemy of the lower
classes, spite of the fact that he is the very first who took a
scientific interest in their prosperity.[243-9] As John Stuart Mill has
said, the idea that all human progress must at last end in misery was so
far from Malthus' mind, that it can be thoroughly combated only by
carrying Malthus' principles into practice.[243-10]
[Footnote 243-1: _J. S. Mill_, Principles I, ch. 10.]
[Footnote 243-2: _Everett_, New ideas on population, with
remarks on the theories of Malthus and Goodwin, 1823.
Similarly _Carey_, Principles of Social Science, I, 88 ff.,
who, with a "natural philosophical" generalization, shows
that the more the matter existing on the earth takes the
form of men, the greater becomes the power of the latter to
give direction to natural forces with an ever accelerated
movement. So also _Fontenay_, in the Journal des
Economistes, Oct., 1850, says: _un nombre de travailleurs
doublé produit plus du double et ne consomme pas le double
de ce que produisaient et consommaient les travailleurs de
l'époque précédente_. Even _Bastiat_ inclines to the same
over-estimation of one factor of production. He promises in
the introduction to his Harmonies économiques to prove the
proposition: _toutes choses égales d'ailleurs, la densité
croissante de population équivaut à une facilité croissante
de production_. (Absolutely it is true, but whether
relatively, quære.)]
[Footnote 243-3: _Grahame_, Inquiry into the Principle of
Population, 1816; _Carey_, Rate of Wages, 236 ff.]
[Footnote 243-4: Varies inversely as their numbers: _M. Th.
Sadler_, The Law of Population, a treatise in Disproof of
the Superfecundity of human Beings, and developing the real
Principles of their Increase, III, 1830. There were, for
instance--
===================================================
| _Inhabitants_ | _Number of_
| _per English_ | _children to a_
| _sq. mile_ | _marriage_
------------------+---------------+----------------
The Cape | 1 | 5.48
The United States | 4 | 5.22
Russia in Europe | 23 | 4.94
Denmark | 73 | 4.98
Prussia | 100 | 4.70
France | 150 | 4.22
England | 160 | 3.66
===================================================
Most of these figures are very uncertain; and even if they
were true, they would afford a very bad proof of his
assertion. Besides, _Sadler_ was one of those extreme tories
who resorted almost to Jacobin measures in opposition to the
reforms advocated by Huskisson, Peel and Wellington. Like
Sadler, _A. Guillard_, Eléments de Statistique humaine ou
Démographie comparée, 1855. But, for instance, in Saxony,
population has for a long time increased most rapidly, in
those places where it is already densest. Compare _Engel,_
loc. cit. The five German kingdoms and Mecklenburg-Strelitz
hold the same relative rank, on a ten-year average, in
relation to the number of births that they do to density of
population, (_v. Viehbahn_, Statistik des Z. V., II, 321
seq.)]
[Footnote 243-5: _Gray_, The Happiness of States, or an
Inquiry concerning Population, 1875. _Weyland_, Principles
of Population and Production, 1816, had already ascribed to
industry in itself a tendency to make the increase of
Population less rapid!]
[Footnote 243-6: Compare _Rossi_, Cours d'Economie
politique, I, 303 ff.]
[Footnote 243-7: _Malthus_, Principle of Population, V, ch.
3. Thus _J. B. Say_ asks those population-mystics: if in
thickly populated countries the power of procreation
diminishes of itself, how comes it that even here the
extraordinary voids made by pestilence, etc. are so rapidly
filled up?]
[Footnote 243-8: _Godwin_, Inquiry concerning the Power of
Increase in the Numbers of Mankind, III, 1821; III, ch. IV.
Compare the same socialistic writer's essay: Inquiry
concerning public Justice (II, 1793), which in part provoked
Malthus' book. _David Booth_ (in Godwin's first book) had
the misfortune to ridicule Malthus by comparing his law with
the law of gravitation, which he said did not freely operate
in nature and was undemonstrable in space void of air! From
a better point of view, Bastiat says of Malthus' traducers,
that they might as well blame Newton when they were injured
by a fall.]
[Footnote 243-9: Principle of Population, III, ch. 13. His
moral severity in other respects is apparent especially in
IV, ch. 13, towards the end.]
[Footnote 243-10: Every good family takes care of their
children even before their birth. How far from practical is
the view that the means of subsistence come as a matter of
course, provided only that men are here before them!]
CHAPTER II.
HISTORY OF POPULATION.
SECTION CCXLIV.
HISTORY OF POPULATION.--UNCIVILIZED TIMES.
In the case of those wild tribes which can only use the forces of nature
by way of occupation, the small extent of the field of food is filled up
by even a very sparse population. And the principal means by which
population is there limited are the following: the overburthening and
ill treatment of the women,[244-1] by which the simultaneous rearing of
several small children is rendered impossible;[244-2] the inordinately
long time that children are kept at the breast;[244-3] the wide-spread
practice of abortion;[244-4] numerous cases of murder, especially of the
old and weak;[244-5] everlasting war carried on by hunting nations to
extend their hunting territory, found in conjunction with cannibalism in
many tribes.[244-6] Besides, nations of hunters are frequently decimated
by famine and pestilence, the latter generally a consequence of
never-ending alternation between gluttony and famine.[244-7]
Most negro nations live in such a state of legal insecurity that it is
impossible for a higher civilization with its attendant increase of the
means of subsistence to take root among them. At the same time, their
sexual impulses are very strong.[244-8] Here the slave-trade constituted
the chief preventive of over-population. If this traffic were suppressed
simply and no care taken through the instrumentality of commerce and of
missions to improve the moral and economical condition of the negroes,
the only probable but questionable gain would be that the prisoners made
in the numberless wars generated by famine would be murdered instead of
being sold.
Nomadic races, with their universal chivalry, are wont to treat their
women well enough to enable them bear children without any great
hardship.[244-9] But the mere use of natural pasturage can never be
carried to great intensity. The transition to agriculture with its
greater yield of food but with the diminished freedom by which it is
accompanied is a thing to which these warlike men are so averse that it
directs the surplus population by the way of emigration into neighboring
civilized countries, where they either obtain victory, booty and
supremacy, or are rapidly subjugated. Such migrations are a standing
chapter in the history of all Asiatic kingdoms; they for a long time
disturb declining civilized states, finally conquering them, and begin
the same cycle in the new kingdom.[244-10] Where nomadic races see
themselves cut off from such migrations their marriages are wont to be
unfruitful.[244-11]
[Footnote 244-1: In New Holland they are beaten by their
husbands even on the day of their confinement. Their heads
are sometimes covered with countless scars. _Collins_ says
that for mere pity one might wish a young woman there death
rather than marriage. (Account of N. S. Wales, 560 ff.)
South American Indian women actually kill their daughters,
with a view of improving the condition of women. (_Azara_,
Reisen in S. Amerika, II, 63.) How the women among the
aboriginal inhabitants of North America were oppressed is
best illustrated by the absence of ornaments among the
women, while the men were very gaudily decked, and carried
small hand-mirrors with them. (_Prinz Neuwied_, N. A. Reise,
II, 108 seq.) The early decay of female beauty among all
barbarous nations is related to the ill-treatment they
receive.]
[Footnote 244-2: The custom of killing one of twins
immediately after birth or of burying a child at the breast
with its mother, prevails extensively among savage nations.
On New Holland, see _Collins_, 362; on North America,
Lettres édifiantes, IX, 140; on the Hottentots, _Kolb_, I,
144.]
[Footnote 244-3: In many Indian tribes, children are kept at
the breast until their fifth year. (_Klemm_,
Kulturgeschichte I, 236; II, 85.) Among the Greenlanders,
until the third or fourth year (_Klemm_, I, 208); among the
Laplanders and Tonguses, likewise (_Klemm_, III, 57); among
the Mongols and Kalmucks, longer yet. (_Klemm_, III, 171.)]
[Footnote 244-4: The New Hollanders have a special word to
express the killing of the fœtus by pressure.
(_Collins._) Among certain of the Brazilian tribes, this is
performed by every woman until her 30th year; and in many
more the custom prevails for a woman when she becomes
pregnant to fast, or to be frequently bled. (_Spix und
Martius_, Reise, I, 261.) Compare _Azara._, II, 79.]
[Footnote 244-5: On the Bushmen, see _Barrow_, Journey in
Africa, 379 ff.; on the Hottentots, among whom even the
wealthy aged are killed by exposure, see _Kolb_, Caput bonæ
Spei, 1719, I, 321; on the Scandinavian, old Germans,
Wendes, Prussians, _Grimm_, D. Rechtsalterthümer, 486 ff.;
on the most ancient Romans, _Cicero_, pro Rosc. Amer, 35,
and Festus v. Depontani, Sexagenarios; on Ceos, _Strabo_, X,
486; on the ancient Indians, _Herodot._, III, 38, 99; on the
Massagetes, _Herodot._, I, 216; on the Caspians, _Strabo_,
XI, 517, 520. Touching picture of an old man abandoned in
the desert, unable to follow his tribe compelled to emigrate
for want of food: _Catlin_, N. American Indians, I, 216 ff.
We here see how the killing of helpless old people may be
considered a blessing among many nations. Death is also
sometimes desired by reason of superstition. For instance,
the Figians think that after death they will continue to
live of the same age as that at which they died.
(_Williams_, Figi and the Figians, I, 183.) The Germans who
died of disease did not get to Walhalla! (_W. Wackernagel_,
Kl. Schriften, I, 16.)]
[Footnote 244-6: On the frightful cannibalism practiced on
the upper Nile, see _Schweinfurth_ in _Petermann's_ geogr.
Mettheilungen, IV, 138, seq. Australian women seldom outlive
their 30th year. _Lubbock_, Prehistoric Times, 449. Many are
eaten by the men as soon as they begin to get old.
(Transactions of the Ethnolog. Society, New Series, III,
248.) A chief of Figi Islands who died recently had eaten
872 men in his lifetime. _Lawry_, Visit to the Friendly and
Fejee Islands, 1850. Even the more highly civilized Mexicans
had preserved this abomination. According to _Gomara_,
Cronica de la N. Espana, 229, there were here from 20,000 to
25,000 human sacrifices a year; according to _Torquemada_,
Indiana, VII, 21, even 20,000 children a year. _B. Diaz_, on
the other hand, puts the number down at 2,500 only. Compare
_Klemm_, Kulturgeschichte, V, 103, 207, 216.]
[Footnote 244-7: The usual coldness, so much spoken of, of
the Indians, seems to have an economic rather than a
physiological cause. At least, it has also been observed
among the Hottentots. (_Levillant_, Voyage, I, 12 seq.), and
under favorable economic conditions the Indians have
sometimes increased very rapidly. (Lettres édifiantes, VIII,
243.) Whether the practice in vogue among the Botocuds to
carry the organ of generation continually in a rather narrow
envelope, or that among the Patachos of lacing the foreskin
with the tendrils of a plant, is not a "preventive check,"
quære. Compare _Prinz Neuwied_, Bras. Reise, II, 10; I,
226.]
[Footnote 244-8: On the gold coast, people become fathers in
their 12th year even, and mothers at 10. (_Ritter_,
Erdkunde, I, 313.) In the whole of the Soudan the climate is
so exciting that the intercourse of the sexes is said to be
a "physical necessity," and an unmarried man of eighteen is
universally despised. But, indeed, the individual is little
valued in Africa, on account of the great prolificacy of the
African race. (_Ritter_, I, 385.)]
[Footnote 244-9: _Herodot._, IV, 26.]
[Footnote 244-10: Compare _Machiavelli_, at the beginning of
his Istoria Fiorentina. The migration of the Germani is
accounted for simply by the family and marriage relations of
the Germans, which necessarily favored prolificacy: _Severa
matrimonia ... singulis uxoribus contenti sunt ... septae
pudicitia ... paucissima adulteria ... publicatae pudicitiae
nulla venia ... nemo vitia ridet ... numerum liberorum
finire, flagitium habetur ... sua quemque mater uberibus
alit ... sera juverum Venus eoque inexhausta pubertas ...
quanto plus propinquorum, tanto gratiosior senectus._
_Tacit._, Germ., 14. Entirely similar in character were the
migrations of the Normans, which lasted just as long as the
resistance to the countries they would invade, seemed to
them a matter of less difficulty than the transition to a
higher civilization in their own country. _Malthus_ has
corrected the extravagant notions concerning the former
density of population in the North--the _vagina nationum_,
according to Jornandes! (_Malthus_, I, ch. 6.) Compare,
however, _Friedrich M._, in Antimachiavel, ch. 21, and the
later view: Ouevres, IX, 196.]
[Footnote 244-11: Among the Bedouins even three children are
considered a large family; and they even complain of that
number. (_Burckhardt._)]
SECTION CCXLV.
INFLUENCE OF A COMMUNITY OF WOMEN AND POLYGAMY.
Most barbarous nations live very unchaste;[245-1] so that, as Tacitus
observes, the ancient Germans were a brilliant exception to the
rule.[245-2] Vices of unchastity always limit the otherwise natural
increase of population. Premature enjoyment exhausts the sources of
fruitfulness in the case of many.[245-3] The life of the child conceived
in sin is generally little valued by its parents. Hence the numerous
instances of exposure and infanticide.[245-4] We have already seen how
closely, psychologically speaking, a community of goods is allied to a
community of women. (§ 85.) And, indeed, in the lower stages of
civilization, we find as close an approximation to the latter as to the
former; and it is difficult to believe that, among men living in a state
of nudity, the marriage of one man to one woman could properly
exist.[245-5] But it is as little possible to reconcile a community of
women with density of population as great national wealth with a
community of goods. Any one acquainted with the condition and capacities
of new born children knows that the weak little flame easily goes out
when not nursed by family care.[245-6]
Polygamy also is a hinderance to the increase of population. Abstract
physiology must, indeed, admit that a man may, even without any danger
to his health, generate more children than a woman can bear.[245-7] But,
in reality, the simultaneous enjoyment of several women leads to excess
and early exhaustion;[245-8] and if one of them is married after the
other, the older who might still bear children for a long time are
neglected by the man.[245-9] Monogamy is, doubtless, the Creator's law,
since only in monogamous countries can we expect to find the intimate
union of family life, the beauties of social intercourse and free
citizenship.[245-10] "God made them male and female."[245-11] And yet in
all countries with which we are statistically acquainted, there is a
somewhat larger number of boys than of girls born;[245-12] but this
excess is removed by the time that puberty sets in, by reason of the
greater mortality of boys. Only extraordinary conditions which thin the
ranks of males, such as war and emigration, leave a preponderance of the
number of women.[245-13] Hence, among barbarous nations, who live in
everlasting strife (§§ 67, 70), polygamy is very generally established.
Men are seldom deterred therefrom by a solicitude concerning what they
shall eat, since the women are treated as slaves, and rather support the
men than are supported by them.[245-14] But in the civilized countries
of the east, the polygamy of the great may actually lead to the
compulsory singleness of many of the lower classes, as a species of
compensation.[245-15] The monstrous institution of eunuchism, which has
existed time out of mind in the east, is a consequence of this condition
of things as well as of the natural jealousy of the harem.[245-16]
[Footnote 245-1: Impurity of the Kamtschatdales, bordering
on a community of women. (_Klemm_, Kulturgeschichte, I, 287
ff., 350 ff.; II, 206, 297 seq.) On Lapland, see _Klemm_,
III, 55. In their purely nomadic period, even the Getes,
afterwards remarkable for their noble character (_Horat._,
Carm., III, 24), have had very loose relations of the sexes.
(_Menander_, in _Strabo_, VII, 297.)]
[Footnote 245-2: Very unlike the Celts: _Strabo_, IV, 199.
But the Germans even at the time when the compensation
system alone prevailed, imposed a disgraceful death on the
_corpore infames. (Tacit._, Germ., 12.) In keeping with this
purity of the Germans was the deep gravity and the genuine
heartiness of their ancient nuptial ceremonies. (_Tacit._,
Germ., 18.) Similarly, in England throughout the middle
ages. (_Lappenberg_, Engl., Gesch. I, 596.) Great moral
severity of the Scandinavians (_Weinhold_, Altnord. Leben,
255), so that the gratification of the sexual appetite
outside of marriage was punishable with death. (_Adam
Brem._, IV, 6, 21.)]
[Footnote 245-3: Abuse of young girls in New Holland
(_Collins_, 563); among the American aborigines
(_Charlevoix_, Histoire de la N. France, III, 304; Lettres
édifiantes, VII, 20 ff.); among the negroes (_Buffon_,
Histoire naturelle de l'Homme, VI, 255).]
[Footnote 245-4: Infanticide in Kamtschatka, _Klemm_, I,
349.]
[Footnote 245-5: In most mythical histories, the
institutions of property and of marriage are ascribed to the
same name (Menes Cecrops, the Athenian Thesmophories.) Among
the Indian tribes of Terra Firma, the exchange of wives and
the _jus primæ noctis_ of the chiefs are very common.
(_Depons_ Voyage, I, 304, ff.) In North America, the Indians
are very eager to rent out their wives for a glass of
brandy. (_Prinz Neuwied_, N. A. Reise, I, 572 seq.) Compare
_Lewis_ and _Clarke_, Travels to the Source of the Missouri
and the Pacific Ocean, 1804-1806. Almost always on entering
a higher age-class it is one of the principal conditions to
leave one's wife for a time to the more distinguished. On
feast days, prayer days, etc., the women give themselves
publicly up to vice; and this can be commuted only by a
gift. (_Prinz Neuwied_, I, 129 ff., 272.) Community of women
in California. (_Bagert_, Nachrichten von der Halbinsel C.
1772.) In many of the South Sea Islands, the youth of the
higher classes were wont to form themselves into so-called
_arreyo-societies_, the object of which was the most
unlimited intercourse of the sexes (a pair being united
generally only from 2 to 3 days), and the murder of the new
born children. The girls principally were murdered, and
hence the missionaries at Otaheite (New Cytheria) found only
1/5 as many women as men. _Chaque femme semble être la femme
de tous les hommes chaque homme le mari de toutes les
femmes._ (_Marchand_, I, 122.) The many governing queens
here are characteristic. Compare _Forster_, Reise II, 100,
128; _Kotzebue_, Reise, III, 119; European Magazine, June,
1806; _Reybaud_, Voyages, et marines, 128, and the
quotations in _Klemm_, Kulturgesch., IV, 307.
Similar customs are found among the nomads. The Bedouins
dissolve their marriages so easily that a man forty-five
years old had 50 wives; family secrets are a thing unknown
there. (_Burckhardt_, Notes on the Bedouins, 64; Travels
app. II, 448; _Ritter_, Erdkunde, XII, 205, 211, 983.) On
the Libyans, see _Herodot._, IV, 168, 172, 186, 180: on the
Massagetes, _Herodot._, I, 216; on the Taprobanes, _Diod._,
II, 58; on the Troglodytes, _Pomp, Mella._, I, 8,
_Agatharch_, 30. Community of women among the ancient
Britons, _Caesar_, B. G. V, 14 seq.; also among the naked,
tatooed Caledonians, _Dio Cass._, LXXVI, 12; probably also
among the cannibal Irish. _Strabo_, IV, 201. Great laxity of
the marriage tie in Moelmud's laws of Wales, (_Palgrave_,
Rise and Progress of the English Commonwealth, I, 458 ff.)
in which country a species of tenure in common of land and
servants was customary. (_Wachsmuth_, Europ. Sittengesch.
II, 225.) In Russia, in very ancient times, only the Polanes
had real marriages. (_Nestor v. Schlözer_, I, 125 seq.)
Something very analogous even among the Spartans: same
education for boys and girls, admittance for men to the
female gymnasiums; marriage in the form of an abduction, and
afterwards fornication. (_Xenoph._, De rep. Laced. I, 6:
_Plutarch_, Lycurg. 15.) Adultery tolerated by law in
countless cases. (_Xenoph._, II, 7 ff.; _St. John_, The
Hellenes, I, 394.) History of the origin of the so-called
Partheniæ; _Strabo_, VI, 279. (_Supra_, § 83.) The custom
which prevails among so many barbarous nations to designate
one's progeny by the name of the mother, _Sanchoniathan_
traces to the licentiousness of women. (p. 16, Orell.)
Traces of this also in Egypt: _Schmidt_, Papyrusurkunden,
321 ff. Avunculus means little grand-father. Many proofs
which _Peschel_, Völkerkunde, 243 seq. explains otherwise,
but which seem to me to point to an original community of
wives.]
[Footnote 245-6: The relation existing between the so-called
organization of labor (§ 82) and a community of wealth is
repeated in the relation of a community of wives to the
situation in Dahomey, where every man has to purchase his
wife from the king. _Gumprecht_, Afrika, 196. Similarly
among the Incas: _Prescott_, Hist. of Peru, I, 159. Even the
sale of wives is a step in advance as compared with a
community of wives (§ 67 seq).]
[Footnote 245-7: It is said that a German prince of the 18th
century had 352 natural children. (_Dohm_, Denkwürdigkeiten,
IV, 67.) Feth Ali, shah of Persia, had made 49 of his own
sons provincial governors, and he had besides 140 daughters.
(_Ker Porter_, II, 508.)]
[Footnote 245-8: Turkish married men are frequently impotent
at the age of 30. (_Volney_, Voyage dans la Turquie, II,
445.) Similarly in Arabia. (_Niebuhr,_ Beschreibung, 74.)
The use of aphrodisiac means very wide-spread in the East.
According to _Niebuhr_ (76), monogamous marriages produced
absolutely more children than polygamous. Compare _G.
Botero_, Ragion di Stato, VIII, 93 ff.; _Montesquieu_,
Lettres Persanes, N., 114; _Süssmilch_, Göttl. Ordnung, I,
Kap., 11. On the other hand, _Th. L. Lau_, Aufrichtiger
Vorschlag von ... Einrichtung der Intraden (1719), 6,
recommends the allowing of polygamy as a means of increasing
population.]
[Footnote 245-9: Rehoboam had 18 wives and 60 concubines,
and only 88 children (II Chron., 11, 21); that is not much
more than one child by each.]
[Footnote 245-10: The high esteem for woman requisite to
true love seems to be almost irreconcilable with polygamy.
The wife stands to the husband in the relation of a
mistress; and, in reference to the latter, fidelity has
scarcely any meaning. The husband also has no confidence in
his wife; and hence the seclusion of the harem. But the
domestic tyrant is easily made the slave of a higher power.
And what becomes of fraternal love with the half-brother
feeling of children of different mothers?]
[Footnote 245-11: Genesis 1, 27; 5, 12; 7, 13.]
[Footnote 245-12: Compare _J. Graunt_, Natural and Political
Observations on the Bills of Mortality (1662). During the
course of the 19th century, according to averages made from
long series of years, there were, for every 1,000 girls born
alive in Lombardy, 1,070 boys; in Bohemia, 1,062; in France,
1,058; in Holland, 1,057; in Saxony, 1,056; in Belgium,
1,052; in England, 1,050; in Prussia, 1,048. On the whole,
the ratio in 70,000,000 children born alive was as 100 :
105.83. The excess of males over females in bastards is
smaller than in the case of legitimate children, in towns
than in the country. Everything considered, the number of
boys born seems to be greater than the number of girls in
proportion as the father is in advance of his wife in years.
Compare _Sadler_, Law of Population, II, 343. _Hofacker_,
Ueber die Eigenschaften die sich vererben, 51 ff. _Wappäus_,
Allg. Bevölkerungstatistik, II, 151, 160 ff., 306 ff. _Per
contra_, we have _Legoyt's_ supposition that the number of
boys born is greater in proportion as the parents are more
nearly of an age: Statistique comparée, 500.]
[Footnote 245-13: According to the censuses between 1856 and
1861, there are for every 1,000 men in Belgium 994 women; in
Austria, 1,004; in Prussia, 1,004; in France, 1,001; in
England, 1,039; in Holland, 1,038. The majority of the
latter seems to have diminished everywhere the greater the
distance in time from the most recent great wars; and to
belong only to those age-classes which were coeval with
those wars. (Preuss. amtliche Tabellen für 1849, I, 292.) In
the United States there were, 1800-1844, for every 1,000
women, 1,033-1,050 men; mainly accounted for by large
immigration. Between 1819 and 1855 the immigration was
2,713,391 men and 1,720,305 women. (_W. Bromwell_, History
of Immigration to the United States, New York, 1856.) In
Switzerland, among the population belonging to the cantons,
there were for every 1,000 men, 1,038 women; among the
foreign Swiss, 970; among foreigners, 650. (_Bernouilli_,
Populationistik, 31.) Compare _Horn_, loc. cit., I, 105 ff.,
who supposes a natural principle of equilibrium: the greater
the preponderance of the number of women, the more does it
happen that only the younger women are married; the greater
consequently the difference between the ages of the married
couple, and the more probable the birth of boys, and _vice
versa_. (115 ff.)]
[Footnote 245-14: Compare _Catlin_, N. American Indians, I,
118 ff. Even Strabo believed that among the Median
mountaineers each man had five wives! (XI, 526.)]
[Footnote 245-15: Concerning Solomon's 700 wives and 300
concubines, see I Kings, 11, 3; according to the Canticle of
Canticles, only 60 wives and 80 concubines. According to
_Mirkhond_ and _Khondemir_, there was in the place in which
the Sassand shah resided, 3,000 women of the harem and
12,000 female slaves. Polygamy among the latter class is
seldom possible or thought of. Of 2,800 Moslems in Bombay,
only 100 lived in polygamy, and only 5 had three wives each.
(_Ritter_, Erdkunde, 1088.) I lay no weight here on the
assertion so frequently repeated of travelers in the east,
that more girls than boys are born there; for the reason
that there is there no real statistics, and that the infidel
travelers can be permitted few glimpses into the secrecy of
family life. _Lady Sheil_ indeed assures us that in Persia
itself the opinion prevails that there are a great many more
women than men. Glimpses of Life and Manners in Persia,
1855. Similar pretense among the Mormons.]
[Footnote 245-16: We find, even on Egyptian temples,
pictures representing the castration of prisoners. _Franck_,
in the Mémoires sur l'Egypte, IV, 126. On Babylon, see
_Hellanicus_, apud. Donat. ad Terent. Eunuch., I, 2, 87.
This province, besides Assyria (the ancient seat of sultan
glory), delivered 500 castrated boys per annum to the king
of Persia. (_Herodot._, III, 92.) Of the califs, Soliman is
said to be the first (at the beginning of the 8th century)
who had his harem superintended by eunuchs; a very sensual
master who frequently changed his wives. (_Reiske Z.
Abulfeda_, I, 109 ff.; _Weil_, Gesch. der Kalifen, I, 573.)
At an audience which the calif Moktadir gave to a Byzantine
ambassador, there appeared 4,000 white and 3,000 black
eunuchs. (_Rehm._, Gesch. des Mittelalters, I, 2, 32.) In
the harems of the present Persian persons of rank, there are
usually from 6 to 8 eunuchs. _Rosenmüller_, Altes und Neues
Morgenland, IV, 290. In Upper Egypt, the castration of
handsome boys by monks (!) is a regular trade. About 2 per
cent. die in consequence of the operation, the others rise
in consequence in price from 200-300 to 1,000 piasters.
(_Ritter_, Erdkunde, I, 548.) In the Frankish middle age,
the merchants of Verdun castrated persons to sell them in
Spain. Compare _Liutprand_, Hist., VI, 3, in _Muratori_,
Script. Rerum Ital., II, 1, 470.]
SECTION CCXLVI.
HISTORY OF POPULATION.--IN HIGHLY CIVILIZED TIMES.
The conditions of population among mature and flourishing nations is
characterized by this, that the moral and rational preventive tendencies
counter to over-population decidedly preponderate. Here so much value is
attached to the life, and to the healthy and comfortable life of human
beings already in existence that even the majority of the lower classes
take care to bring no more children into the world than can be properly
supported, nor to bring them into being in advance of food. Here, too,
mortality is relatively small, which when population is stationary is
found in connection with a higher average duration of human life.[246-1]
While among savage and semi-savage nations, travelers are struck by no
phenomenon as much as by the total absence of old men,[246-2] in most
European nations the average duration of life has, during the last
centuries, seemed to noticeably increase. In France, for instance,
between 1771 and 1780, on a population of 29,000,000 at most, there were
as many deaths as on 35,000,000 between 1844 and 1853.[246-3] In Sweden,
the classic land of statistics relating to population, mortality from
1749 to 1855 had diminished 0.107 per cent. per annum.[246-4] [246-5]
No reasonable man considers mere living the highest good; but, from an
average prolongation of life, we may with great probability infer an
improvement in the means of subsistence, in hygienic measures, etc.,
even for the lower classes, who everywhere constitute the great majority
of the population. _Aisance est vitalité!_--at least on the supposition
that morality remains the same.[246-6] How great may not have been the
effect, for instance, of the healthier mode of the building of modern
cities, of the disappearance of the greater number of fortifications
etc., the more rational character of the healing art, the extension of
vaccination,[246-7] the hygienic measures adopted by governments,[246-8]
the better care of the poor and especially the asylums for small
children! The modern system of agriculture and of the corn trade make
famines less destructive of life.[246-9] (§ 115). The modern
quarantine-system has protected us entirely against a number of plagues;
and the worst epidemics of our day cannot be compared with those of
earlier periods or in less civilized countries. In the second half of
the 17th century, it was estimated in London that a plague would occur
once in every 20 years, each of which swept away one-fifth of the entire
population.[246-10] And in that very city the annual mortality between
1740 and 1750 varied three-fifths, during the second half of the 18th
century only one-third, during the 19th century only one-fifth in the
same decade; a clear proof of the diminished fatality of
epidemics.[246-11] [246-12]
[Footnote 246-1: The so-called _Populationistikers_ are wont
to distinguish between the average and probable duration of
life (_vie moyenne--vie probable_); and understand by the
former the number of years which, on an average, have been
accorded to one deceased; by the latter, the number of years
after the expiration of which one-half of a given number of
human beings have disappeared. If _x_ deceased persons have
lived an aggregate of _s_ years, their average duration of
life = _s_/_x_. In the case of a whole people, indeed, even
the many-years' average of the duration of life of those
deceased expresses the true average duration of life only
when (a rare case) the aggregate population remains
stationary. For, when the population is increasing, the
average age of the deceased is smaller than the average
duration of life, and, when population is decreasing,
larger. In the saddest case of all, when there are no births
whatever, and the nation is gradually dying out, there would
be an increase from year to year of the average age. In all
such cases, strictly speaking, only the actual observation
and following up of those born, until they die; can afford a
safe result. This is _Hermann's_ method, introduced into
Bavaria since 1835. Compare the XIII. and XVII. numbers of
the official Bavarian statistics with _G. Meyer's_ criticism
in _Hildebrand's_ Jahrbüchern, 1867, I. And indeed _Hopf_,
Preuss. Statist. Zeitschr., says that a complete table of
mortality can be made, according to the best method, only
after centuries of observation.
Compare _Kopf_, in the 3d edition of _Kolb's_ Handbuch der
Statistik, and the solid works of _G. F. Knapp_, Ueber die
Ermittelung der Sterblichkeit (1868) and Die Sterblichkeit
in Sachsen (1869). _Price's_ mode of calculation of which
_Deparcieux_ is the real author, which divides the number of
the living by the arithmetical mean of the number of births
and deaths is not only inaccurate (_Meyer_, loc. cit., 43
ff.) but erroneous in principle, since it allows two
countries of equal population to be the same, the one of
which has 120,000 births and a mortality of 80,000, and the
other, on the contrary, 80,000 births and a mortality of
120,000. _Engel_ recommends as the measure of real vitality
the ratio between the "living years" and the "dead years,"
meaning by the former the sum of the years which those still
living have lived through, and by the latter the sum of the
years lived through by those who have died within a given
period. (Preuss. Statist. Zeitschr., 1861, 348 ff.) But the
inference which may be drawn from a high or a low average of
life is altogether ambiguous. A high average may as well be
produced by a great mortality among children as by a
favorable mortality among those of mature age; and a low
average as well by a relatively small number of births as by
a relatively short duration of life. (_Meyer_, loc. cit.,
23, 24.)]
[Footnote 246-2: On the aborigines of America, see Lettres
édifiantes, VII, 317 ff. _Cook,_ Third Voyage, III, ch. 2.
_La Pérouse_, Voyage, ch. 9. _Robertson_, Hist. of America
B., IV. _Raynal_, Histoire des Indes L., XV. On the African
negroes: _M. Park_, ch. 1. They are said to manifest the
symptoms of old age at 40, and very seldom to live to be
over 55 or 60 years of age.]
[Footnote 246-3: _Necker_, De l'Administration des Finances
de la France, 1784, I, 205 ff., gives for 1771-80 the
average number of births, per annum, 940,935; of deaths,
818,391; the population at 24,229,000. _Legoyt_, Statist.
Comp., estimates the last, in 1784, at at least 26,748,843,
probably even at 28,718,000. During the period, 1844-53,
35,000,000 to 36,000,000 Frenchmen had only about as many
births (956,317) and deaths (815,723) as a much smaller
population before the Revolution--the latter numbers,
according to official estimation, omitting the
still-born--which _Necker_ also scarcely took into
consideration. _C'est la différence entre un peuple de
prolétaires et une nation, dont les deux tiers jouissent des
bienfaits de la propriété. (Moreau de Jonnès)._ In France,
there was one death, in 1784, on every 30 living; in 1801,
on every 35.8 living; in 1834-5, on every 38 living; in
1844, on every 39.9 living; in 1855-57 (average), on every
41.1 living; in 1860-65 (average), on every 43.7 living. It
is also probable, that the average duration of life in
France increased from the fact that, from 1800 to 1807, the
number of persons subject to conscription was only 45 per
cent. of the whole corresponding number of births; but that
from 1822 to 1825 it was 61 per cent. (_Bernoulli_,
Populationistik, 452.) On Paris alone, see _Villermé_,
Mémoire lu à l'Académie des Sciences, 29 Nov., 1824. Compare
_supra_, § 10.]
[Footnote 246-4: _Wappäus_, Allg. Bevölkerungsstatistik. In
Prussia, in the less cultured provinces (the eastern), the
mortality and number of births is greatest; but in the whole
country the relative mortality seems to have remained
stationary since 1748. (_Engel_, Preuss. Statist. Zeitschr.,
1861, 336 seq.) And even the average age of the deceased
decreased even between 1820 and 1860 (344 ff.) In Berlin
alone, the arithmetical mean of the number of births and
deaths shows no improvement, at least (loc. cit. 1862,
195).]
[Footnote 246-5: In Geneva, where there have been almost
uninterrupted tables of mortality, giving the age at the
time of death, the average duration of life during the 2d
half of the 16th century is estimated at 21-1/6 years;
during the 17th century, at 25¾ years; from 1701 to 1750,
at 32-7/12 years; from 1750 to 1800, at 34½ years; from
1814 to 1833, at 40-2/3 years. Compare _Mallet_, Recherches
historiques et statistiques sur la Population de Genève,
1837, 98 ff., 104 ff., and _Bernouilli_, Schweiz, Archiv.,
II, 77; _per contra, d'Ivernois_, sur la Mortalité
proportionelle des peuples considérée comme Mesure de leur
Aisance et Civilization, 1833, 12 ff. But little can be
inferred from this, on account of the large immigration, of
adults for the most part. Geneva is said to have had, in the
16th century, never much more than 13,000 inhabitants; at
the end of the 17th century it had 17,000; in 1789, 26,000;
between 1695 and 1795 there was an increase of 6,000 at
least from abroad. (_Bernouilli_, Populationistik, 369 seq.)
Compare _Wappäus_ in the Götting. Gesellsch. der Wissensch.
Bd., VIII, 1860, who, however, as well as _Neison_,
Contributions to Vital Statistics, VI ff., is too skeptical
as regards modern progress in vitality.]
[Footnote 246-6: Higher civilization, indeed, instead of
leading to higher vitality, may lead to immoderate toil and
immoderate enjoyment. (_Schäffle_, in the D.
Vierteljahrsschrift, April, 1862, 340.) _Engel_ says that,
in general, life is more intense in our day, and hence leads
to a more rapid exhaustion of individual life-force.
(Preuss. Statist. Ztschr., 1862, 53.) According to English
experience of the well-fed classes, those have the greatest
duration of life who otherwise live in modest circumstances.
Thus, for instance, clergymen thirty years of age have still
an average expectation of life of 39.49 years; members of
the learned professions, 38.86; country gentlemen, 40.22;
members of the aristocracy, 37.31; princes of the blood,
only 34.04; sovereigns, only 27.16 (Statist. Journal, 1859,
356 ff.); while agricultural laborers, who have sufficient
means and intelligence to participate in the so-called
friendly societies, have an expectation of life of 40.6
years after their thirtieth year. (_Neison_, loc. cit.) On
the whole, it seems to be in harmony with the democratic
leveling tendencies of our own age, that the better care of
children and of the sick has lengthened short lives, and
that the unrest of the times has shortened the long lives,
although the level of the general average continually rises,
notwithstanding. Thus, in Geneva, the proportion of those
who outlived their thirtieth year was: in the 16th century,
after 1549, 29.87; in the 17th century, 37.29; in the 18th
century, 49.39; in the 19th century, until 1833, 58.85 per
cent. of the number of births. On the other hand, the
expectation of life of those who had attained their 80th
year, was in these four centuries respectively 6.22, 5.87,
4.40 and 3.84 years. (_Mallet_, l. c., and Statist. Journal,
1851, 316 ff.) In keeping with this is, that according to
_Guy's_ researches, the average duration of life of the
English peerage and baronetage was, in 1500-1550, 71.27
years; 1550-1600, 68.25 years; 1600-1650, 63.95 years;
1650-1700, 62.40 years; 1700-1745, 64.13 years. (Statist.
Journal, 1845, 74.) However, we may most directly infer a
favorable condition of things from the diminished mortality
of children, for the reason that this, far more directly
than the mortality of adults, is conditioned by the quality
of food. The younger a child is, the more exclusively is its
life-force the product of these two factors: the physical
constitution of its parents and the care bestowed upon it.
Compare _F. J. Neumann_, Die Gestaltung der mittleren
Lebensdauer in Preussen, 1865, 26 ff. In Prussia, in
1751-60, only 312 in 1,000 outlived their tenth year; in
1861-70, 633 in 1,000. Yet, since 1856, the mortality of
children has again begun to increase. (_Knapp_,
Mittheilungen des Statist. Bureaus, VIII, p. 8.)]
[Footnote 246-7: _Duvillard_, Analyse ou Tableau de
l'Influence da la petite Vérole, 1806, is of opinion that
before vaccination only 4 per cent. of those over 30 years
of age were spared by the small-pox; that two-thirds of all
new-born children were attacked by the disease sooner or
later, and that from one-eighth to one-seventh of those
attacked died; and of small children even one-third. Hence,
in many countries, the average duration of life was
increased 3½ years by reason of vaccination. In London,
between 1770 and 1779, of 1,000 deaths, 102 were caused by
the small-pox; in from 1830 to 1836, only 25 in 1,000.
(_Porter_, Progress of the Nation, I, 1, 39.) In Berlin,
between 1792 and 1801, 4,999 persons died of the small-pox;
between 1812 and 1822, only 555. (_Casper._) That this is
really a consequence of vaccination is proved by the facts
of the Chemnitz small-pox epidemic of 1870-71, during which,
in four of the streets principally visited by it, 9 per
cent. were taken ill. Of 4,375 persons who had been
vaccinated, 2.12 per cent. were attacked; of 644 who were
not vaccinated, 54.38 per cent. Of those attacked, 2.1 per
cent. of the former and 11.3 per cent. of the latter died.
(Leipzig Tageblatt, 5 Mai, 1871.)]
[Footnote 246-8: Among the earliest institutions of medical
police are the following: the Swedish Collegium medicum
under Charles XI; the Prussian, 1724; the Danish, 1740; the
quarantine law of Louis XIV., of 1683; the Parisian bureau
of nurses, 1715; lying-in establishments since 1728; French
institutions for the saving of drowned persons, 1740;
English institutions for the saving of persons in cases of
apparent death, 1744; bathing largely promoted by government
since the eighteenth century; prohibition by Maria Theresa
of burial in churches and of locating cemeteries too near
dwelling houses, in 1778. Even _Thomasius_, De Jure
Principum circa Sepultur., § 8, had advised this; and, in
Italy, _Fr. Patricius_, De Inst. Republ. V, 10. On ancient
medical police, see _Pyls_ Repertorium für öffentliche und
gerichtliche Arzneiwissenschaft, II 167, ff. III, 1 ff.]
[Footnote 246-9: In France, the number of deaths in the
cheap years, 1816 and 1819, amounted to an average of
755,877; of the dear years, 1817 and 1818, to an average of
750,065. (Ann. d'Economie politique, 1847, 333.) Thus, the
same scarcity in Pomerania increased its otherwise smaller
mortality relatively less than in Posen. (_Hildebrand's_
Jahrbb. 1872, I, 292.) It is a good sign that in Altenburg,
between 1835 and 1864, the variation in the price of corn
had no influence on its mortality, although the number of
marriages and of births was conditioned by it. (_v. Scheel_
in _Hildebrand's_ Jahrbb., 1866, I, 161 ff.)]
[Footnote 246-10: _Sir W. Petty_, Several Essays, 31 seq.
Great regularity of epidemics in the tropical world:
_Humboldt_, N. Espagne, II, 5. The great plague in the
middle of the 14th century is said to have destroyed 2/3 of
the population of Norway, of Upland, 5/6; in the mountain
districts of Wermeland only 1 boy and 2 girls were left.
(_Geijer_, Schwed. Gesch., I, 186.) According to _Sismondi_,
Gesch. der Italien. Republiken, VI, 27, 3/5 of the whole
population of Europe died at that time. How the cholera
would have raged among our forefathers in the middle ages!
Certainly, as it does now in the East Indies; since, when of
those really attacked by the disease among ourselves so many
die, we cannot attribute our small number of deaths from
cholera to the smaller intensity of the disease or to the
greater skill of our doctors, but chiefly to the better
nourishment of our people, to their better dwellings and
greater cleanliness. Compare _Heberden_, On the Increase and
Decrease of Disease, 1801.]
[Footnote 246-11: _Bernouilli_, Populationistik, 363, seq.
Whether, on this account, we can infer the increased health
of the people, is very much doubted by the aged _laudatores
temporis acti_. They would have us believe that it is
possible that the prolongation of the average of human life
is to be explained by taking into account the case of
numerous valetudinarians who formerly died early, but who
are _now_ preserved to drag out a miserable existence. The
relative number of those who have died of old age did not
noticeably increase between 1816 and 1860 either in Berlin
or in the Prussian state. (_Engel_, Zeitschr., 1862, 222.)
Compare, per contra, _Marx_, Ueber die Abnahme der
Krankheiten durch die Zunahme der Civilization: transactions
of the Göttinger
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