First principles of political economy, concisely presented for the use of classes in high schools and academies

Front matter

S held 071 d' Co77fpa7iy's Text-!Books,

IlilVs Elements of Mhetoric and Comjiosition

By D. J. Hill, A.M., President Lewisburg University, author of tlie Science of Rhetoric. Beginning with the selection of a theme, this book conducts the learner through every process of composition, including the accumulation of material, its arrangement, the choice of words, the construction of sentences, the variation of expression, the use of figures, the formation of paragraphs, the preparation of manuscript, and the criticism of the completed composition.

II. Wayland's Elements

OF

POLITICAL ECO]SrOMY.

Recast, and revised by Aakon L. Chapin, President of Beloit College.

FOR COLLEGE USE.

One volume. 12mo. 425 pages.

Copyright, 1879, By SHELDON & CO.

Electrotyped by Rand, Avery, 6^ Co., Boston.

PEEFACE.

From several quarters, there came a call for a concise compend of the principles of Political Economy, which could be used as a text-book for advanced classes in high schools and academies. In this little book, the author has attempted to respond to that call. He has not tried to make a book for children, nor to make the science easy for youth of more maturity; but he has endeavored simply and clearly, in as few words as possible, to present the subject for the study of persons who have learned something of the power of language, and have been trained to think and reason for themselves.

The '* Exercises " thrown in all along are not intended to furnish teachers with questions on the text. Every one fit to teach this and kindred subjects will frame his; own questions best. But they are designed, like theproblems in arithmetic or algebra, to suggest practical applications of the principles and topics of discussion which will introduce some diversity of opinions, and extend the range of the subject somewhat beyond the limits of the text-book.

The book is a condensed presentation of the matter

iii iv PREFACE.

contained in the larger work recently issued as a modification of Wayland's Elements of Political Economy ; and, for a fuller treatment of the topics noticed, reference is made to that book. It is desirable that every teacher should also have at hand for reference one or more other ■works of prominent writers, such as those of Adam Smith, McCulloch, Mill, Fawcett, Thornton, and Jevons, of England ; Roscher of Germany (an excellent translation of which has recently appeared) ; and those of Bowen, Perry, Carey, Thompson, Bascom, A. Walker, F. A. Walker, Sumner, and D. A. Wells, of our own country.

Generally the author's aim has been to give a clear statement of principles, avoiding the advocacy of one side or the other of disputed questions. In the last chapter, however, positive opinions are expressed on the issue between protection and free trade, partly as an example of the application of principles to pending questions, and partly to indicate the present strong drift of both philosophical and practical economists on that question. If it shall serve to elicit opposite views for full discussion in the class-room, the author's aim will be best accomplished; for it is his earnest hope that this introduction of this important branch of science to the study of our schools may tend to a more intelligent apprehension of economic laws on the part of our people generally.

Beloit CoLiiEGE, Jan. 1, 1880.

CONTEIsTTS.

Introduction

DEFINITIONS AND DIVISIONS.

PAGE

Political Economy defined 6

Fundamental truths.

Wealth defined 6

Sources of wealth, original, secondary.

How increased.

Value defined 7

Its maximum and minimum limits.

Divisions of the Science 8

exebgises 10

Part I. Production

Threefold Subdivision 11

Chapter I

section i. — of labor.

Labor defined 11

Kinds of labor : 1. Physical labor. 2. Mentallabor.

What physical labor does.

What mental labor does directly : 1. Discovery. 2. Invention. 3. Oversight.

Mental labor indirectly concerned in production. Changes effected by Labor 13

1. Transmutation. 2. Transformation. 3. Transportation. Exercises 15

V

VI CONTENTS.

section ii. — means for increasing the effectiveness of labor.

Agents of Nature most available .... 16

Animal power, sunlight, gravitation, wind, steam, gunpowder, &c., electricity and galvanism, chemical forces.

Agents fob directing Power 17

How Natural Agents make Labor Effective . . 18 Division of Labor defined . . . ... .19

It implies analysis and distribution of parts. Advantages of Division of Labor .... 20

1. Shortens apprenticeship. 2. Saves time. 3. Increases dexterity. 4. Suggests inventions. 6. Employs diverse capacities.

SECTION ni. — labor IN GREAT MANUFACTURING

establishments.

"What such Establishments require .... 23 1. Large capital. 2. Many laborers. 3. Rapid production.

4. "Wide markets. 5. Executive ability in superintendence ; in finances.

Why not set up at once in a New Country? . . 24 How they promote the General "Welfare . . 25 1. They multiply and cheapen products. 2. Increase variety of gratifications. 3. Favor certain employment for laborers. 4. Balance diff'erent branches of industry. Evils incident to Division of Labor .... 26 1. Endangers physical health. 2. Dwarfs minds. 3. Impairs independence. 4. Risk of sweeping disaster.

5. Fosters jealousies and antagonisms.

Chapter II

of capital.

Capital defined . .30

Mistakes corrected : 1. Capital not synonymous with wealth. 2. Nor with money. 3. Does not include human qualities.

Origin of Capital, the Fruit of Labor saved . .32

Forms of Capital 33

1. Implements and machinery. 2. Materials. 3. Means of subsistence. 4. Finished products.

Consumption OF Capital .34

Destruction passing on all its forms.

CONTENTS. Vii

Productive and Unproductive Capital ... 36

Fixed and Circulating Capital 36

CHAPTER III. the co-operation of labor and capital.

Labor and Capital Partners 39

Most harmoniously united in one person.

Why this cannot be Universal 39

1. Capital tends to increase. 2. Men's tastes differ. 3. Large

establishments necessary to some forms of production.

Conditions which favor the Union of Capital and

Labor 41

1. General distribution of capital. 2. Ratio of capital to number of laborers. 3. Assurance of just reward to each. This depends on, a, division of property; b, just laws ; c, freedom to both capital and labor. 4. Intellectual and moral culture.

PART n.

CONSUMPTION.

The Nature of Consumption 45

Kinds of Consumption 46

CHAPTER I.

involuntary consumption.

Natural Consumption 46

Accidental Consumption 47

What insurance does.

Immaterial and Notional Consumption ... 48

CHAPTER II.

VOLUNTARY CONSUMPTION.

Two Objects, Reprodu(3tion, Gratification . . 50

section i. — consumption for reproduction.

The Rule of Economy 51

For capital; a. Use no more than necessary, b. Use the

cheapest possible, c, Exhaust all utilities. For labor: a, Use no more than is needed, b, Use labor adapted to the purpose, c, See that the labor ia performtid.

vm CONTENTS.

Cakeful Study of Processes essential to Economy, 53 Restrictions on either Labor or Capital against

Economy 53

Economy promotes the General Welfare ... 53

SECTION II. — CONSUMPTION FOB GRATIFICATION. Kinds of Gratification 55

1. Those which preserve health and life. 2. Those which delight the senses. 3. Intellectual gratifications. 4. Social gratifications. 5. Moral gratifications. The Rule of Economy applicable to all ... 57 a, Consume only the needed amount, b, Make consumption perfect, c, Select carefully the gratifications. The Reciprocal Relation of Consumption and Production 58

Extreme frugality and extreme luxury to be avoided. Exercises 60

CHAPTER III. public consumption.

The Nature of Public Consumption . . * ,61

The Purposes to which it is applied .... 62

1. For support of government. 2. For public improvements.

3. To advance science, and difi'use intelligence. 4. For

popular education. 5. For care of afflicted classes.

6. To relieve poverty. 7. For a nation's defence.

Two Rules of Economy in Public Consumption . 65

Part III. Distribution

Distribution defined .67

The Parties to be recognized ..... 67

Laborers, owners of capital, the government. Subdivisions 68

CHAPTER I.

the remuneration of labor.

Terms used, "Wages, Salaries, Commissions, Fees . 69

section i. — nominal and real wages. The Distinction between Nominal and Real Wages, 70

CONTENTS. IX

Causes of the Difference 70

1. Money fluctuations. 2. Forms of payment. 3. Regularity of employment. 4. Duration of power to labor.

section ii. — the efficiency of labor.

The Distinction between Nominal and Real Cost

OP Labor 72

Causes of Difference of Efficiency .... 72 1. Race-qualities. 2. Diet and clothing. 3. Personal habits.

4. Degree of intelligence. 5. Technical education. 6. Cheerfulness.

SECTION III. — considerations WHICH DETERmine the rate of wages.

"Wages imply a Contract 76

Considerations which determine the Rate . . 76 1. Cost of living, necessary wages. 2. Value of the products, maximum limit. 3. Custom. 4. Competition, most influential of all. 5. The Golden Rule. Combinations to resist Competition .... 80

Strikes, trades-unions, combinations of employers. Exercises 84

section iv. — causes of variation in the remuneration of labor.

Circumstances affecting Competition .... 85 1. Ease or diflBculty of the employment. 2. Skill required. 3. Trust involved. 4. Constancy of employment.

5. Probability of success.

Salaries, Commissions, and Fees 87

Labor so compensated involves : 1. Superior natural gifts.

2. Personal character.

Extraordinary Compensation in Learned Professions 88

The Case of Authors and Artists .... 89 Offices of Honor, Clergymen, and Scientists . . 89 Be»iuneration fob Women's Labor .... 90 Reasons why it is less than that of Men ... 90 1. Physical and mental constitution. 2. Home sphere.

3. Prospective marriage. 4. The actual organization of industry. 5. Feminine instincts. 6. Partial support from friends.

The Case of Women of Genius . . . . . 92

X CONTENTS.

Conclusions 92

a, Absolute equality unattainable, b, Present inequality unreasonable, c, How relief is to come, d, Woman queen in the home.

EXEBCISES 94

CHAPTER II.

the eemunekation of capital.

The Justice of Reiviuneratign for Capita_l . . 95 Threefold Subdivision 96

SECTION I. — RENT.

Rent defined 97

Rent of Agricultural Lands 97

Productiveness depends on Fertility and Situation, 97

Rent of City Property depends on Location . . 98

Why Rents rate less than Interest .... 98 section ii. — interest and dividends.

Interest defined 100

The Term implies a Mutual Advantage . . . 101

Interest on Capital not Wrongful Usury . . 102

Circumstances which determine Rates of Interest, 102

1. Bisk, depending on: a, personal character; b, character

of the business ; c, character of the government. 2.

Convenience of the investment: a, facility of transfer;

b, permanency; c, punctuality in payment of interest.

3. The profits of industry. 4. Ratio of demand to

supply of capital.

Why Interest is High in a New Country. . . 106

Usury Laws explained 106

Why Usury Laws are Unreasonable .... 106 1. They violate a right of property. 2. Civil law cannot fix

prices. 3. The jjrice of capital most variable. 4. These

laws increase burdens. 5. Such laws never enforced.

Dividends defined . . 108

They depend on success of industry. They include interest

and profits.

Exercises 109

CHAPTER IIL

DISTRIBUTION OF PROFITS.

Profits defined Ill

CONTENTS. xi

Items of Expense to be deducted from Proceeds . Ill 1. Wages. 2. Salaries. 3. Interest. 4. Insurance. 5. Taxes.

Percentage on Capital not a True Measure of

Profits 112

Three Members of the Partnership to be recognized 113

Capital, executive agency, labor.

A Fair Distribution of Profits harmonizes Labor AND Capital 114

Co-operative Associations .116

Chapter IV

revenues of the government.

The Claims of Government take Precedence of

OTHER Claims 118

Taxation, the Maxim of Free Government . . 119

Adam Smith's Maxims 119

Direct and Indirect Taxation 120

Tariffs defined 121

Duties, Specific and Ad Valorem 121

National and State Taxation in the United States, 122

National Taxes 123

a. Excises, b, Stamps, c, Licenses, d. Income tax.

State Taxation, how lmposed 125

Equitable Taxation should reach All Kinds of

Property 126

Liability to Double Taxation 126

Part IV. Exchange

IsrPORTANCE OF THIS DEPARTMENT 129

CHAPTER L

NATURE, NECESSITY, AND AGENTS OF EXCHANGE.

Exchange defined 130

Value the Central Term 131

The Law of Supply and Demand 131

Three Classes of Commodities 131

1. Things which cannot be multiplied. 2. Things easily multiplied. 3. Things multiplied at extraordinary cost.

XU CONTENTS.

Fundamental Principles stated by Mill . . .132 1. Value a relative term. 2. Market value depends on supply and demand. 3. Cost defines natural value. 4. The natural value of some things a scarcity value. 5. Things that have a scarcity value not easily increased. 6. A monopoly value is a scarcity value. 7. The natural value of an article equals the cost value of the most costly portion. 8. The condition of stable equilibrium in exchange is that things exchange at their cost value.

Necessity of Exchange 134

Between individuals ; between nations.

The Agents of Exchange 136

Merchants, Retailers, Middle-Men .... 137

Factors, jobbers, shipping-merchants, importers, bankers,

brokers, underwriters.

Outgoing and iNCoanNG Currents of Trade . . 138

CHAPTER II.

MONEY AN INSTRUMENT OF EXCHANGE.

Difficulties of Exchange by Barter .... 142 Money defined 143

section I. — THE functions OF MONEY.

Money as a Standard of Value 144

Money as a Medium of Exchange 145

Essential Qualities of Money 146

1. Stabilitjr of value. 2. Universal acceptableness. 3. Divisibilitj'^ without loss of value. One Substance should fulfil both Functions . . 147 Money not necessary as a Medium of Every Exchange . . . 147

Every Thing comes to have its Price 148

Articles used as Money 148

Uniformity of Money throughout the World desirable . . « 149 section II. — SPECIE.

Qualities which fit Gold and Silver for Money . 153 1. They have intrinsic utility. 2. They cost labor. 3. They concentrate great value in small bulk. 4. They are divisible without loss. 5. They are of uniform quality. 6. They can be easily verified. 7. They are indestructible. 8. They are adapted to each other.

CONTENTS. xiii

Legitimatb Agency of Government respecting Money I55

1. To name a legal tender. 2. To regulate coinage. Things to be regarded in Coinage .... 156 1. Quality of the metal. 2. Size of coins. 3. Form of coins.

Seigniorage I57

What may be done with Worn Coins and Foreign

Coins 158

The Question of a Double Standard .... 169

Gold for main standard, silver as subsidiary. General Truths respecting Money .... 160 1. The cost of money equals the cost of the article exchanged for it. 2. Freedom of commerce equalizes the supply of money. 3. The amoimt of money small in proportion to exchanges made. 4. Increase of money in a country not of itself advantageous. 5. Abundance of money not an index of prosperity. 6. A false maxim refuted.

Exercises 162

CHAPTER III.

CREDIT AN INSTRUMENT OF EXCHANGE.

Credit defined 164

section I. — THE forms OF CREDIT.

The Leading Forms in which Credit appears . . 165 1. Book-accounts, 2. Loans. 3. Mercantile paper. 4. Bank-deposits. 5. Stocks. 6. Bonds. 7. Circulating notes.

section II. — the useful functions of credit.

Mistakes corrected 167

Credit is not capital, — does not create capital.

Borrower and lender cannot use the same capital at once. The Useful Functions of Credit stated . . . 168

1. It brings wealth into use as capital. 2. It draws out industrial talent. 3. It quickens exchanges. 4. It is a direct instrument of exchange between individuals, between distant cities, between nations. 5. It may be put into paper-money.

section hi. — the ABUSES OF CREDIT.

Some Abuses of Credit stated 172

1. Too freely granted. 2. By wild speculations of borrowers. 3. By extravagant living of debtors. 4. By confidence-operations. 6. By betrayal of trusts. 6. By over-estimate of assets. 7. By excessive issue of paper-money.

XIV CONTENTS.

Mischiefs caused by these Abuses .... 174 a, Fluctuating prices; 6, Honest men pay for bad debts; c, Trade made a game of chance ; d. Moral sense deadened; e, Force of contracts relaxed.

EXBBCISES 175

CHAPTER IV.

BAimS AIKD PAPER-MONEY.

Banks, Agents of Credit .177

section i. — offices of banks.

Four Offices of Banks 178

1. To collect and keep money-deposits. 2. To negotiate money-exchanges, — peculiarity of British exchange.

3. To make loans and discounts. 4. To issue circulating notes.

section n. — the united-states national-bank system.

Main Features of the Law . . . . . . 182

The Liabilities of National Banks .... 184

1. The capital stock. 2. Circulating notes. 3. Deposits.

4. Balances due other banks. 5. Surplus funds and issues. 6. Undivided profits. 7. Miscellaneous liabilities.

The Resources of National Banks .... 185 1. Loans. 2. United-States bonds to protect circulation. 3. Bonds and stocks held as investments. 4. Balances due from other banks. 5. Real estate. 6. Exchanges and cash items. 7. Currency. 8. Funds to redeem circulation. 9. Miscellaneous items.

The Sources of Profits of Banks . ... . 185 1. Interest: a, on United-States bonds; 6, on circulating notes; c, on capital and reserves; d, on deposits loaned. 2. Premiums on exchange. 3. Commissions for collections.

Private Banking Houses and Savings Banks . . 186

section iii. ^-paper-money. Distinction between Paper-money and Money-paper, 187

Kinds of Paper-money 188

1. Mercantile currency. 2. National-bank currency. 3. Mixed currency. 4. Credit currency. 5. Paper-money secured by real estate.

CONTENTS. %.y

Chaeacteristics of Paper-money 190

1. Convenient. 2. Economical. 3. Involves always credit. 4. Can never serve as a standard of value. 5. Can circulate only in the country where it is issued. 6. Liable to fluctuations. 7. Causes prices to fluctuate. 8. Governments tempted to issue it without limit. 9. Made a legal tender, it is a forced loan. 10. A cause of panics. 11. Tends to make commerce a game of chance. 12. Blunts the pubUc conscience.

CHAPTER V. international trade.

Fundamental Propositions 195

1. All nations of one blood. 2. Earth and its resources given to the one human race. 3. Earth's resources best developed when each country produces that for which it is best adapted. 4. Earth's blessings best distributed by free mutual exchanges. New Facilities for Intercommunication welcomed . 196 False Doctrines formerly prevalent on International Trade 197

The Theories of Protection and Free Trade distinctly stated . . 198

Arguments for Protection considered . . . 199 1. Protection necessary to Varied Industry . . 199 Varied industry admitted to be a blessing, a, Every country has varied resources; b, also diversity of talent; c, men have diverse wants ; d, varied industry makes a home-market ; e, it favors social and moral advancement.

Fur Protection is not necessary to Varied Industry 201

a, Industry has a natural growth, b, Free competition the healthy stimulus to that growth, c, Varied industry springs up as fast as increase of labor and capital warrant, d, The instinct for accumulation a safe guide. €, Artificial stimulus produces re-action. /, Foreign products are purchased with fruits of most effective labor, g, Foreign competition cannot crush natural growth, h, Artificial nursing makes a sickly growth. Pi'otection cannot add to natural resources, nor create capital, nor create men of skill. It can only change the direction of capital and labor.

yvi CONTENTS.

2. Protection maintains National Independence . 204

Two kinds of independence. Protection fosters independence of isolation.

3. Agricultural Products need a Home-market . 206

Free trade the condition of a healthy home-market. Positive Objections to Protection .... 208 1. It fosters antagonism of industries. 2. It leads to over-production. 3. It reduces revenues of the State. 4. It is an unstable policy. 5. It demoralizes legislation. 6. It corrupts public morals.

The Experiment of Free Trade between our

States 210

The Golden Rule applicable to Nations . . .211 Exercises . . 212

INTRODUCTION.

DEFINITIONS AND DIVISIONS.

Political Economy is the science which shows how things intended to satisf}^ our wants are produced, and how they are consumed ; how they are distributed among a people, and how they are exchanged one for another all over the world,

The science springs from four fundamental truths :

1. God has made men creatures of many wants, and filled the world in which they live with means for satisfying those wants.

2. The labor of men is necessary to draw out the materials of nature, and to fit them for use in meeting men's wants.

3. The exertion of labor establishes for the laborer a right of property in the things which he produces.

4. The right of propert}' implies the right of exchange or sale, and diversity of labor necessitates between men exchanges of the fruits of their labor.

Three desires in men contend for the master}' : —

1. Desire of ease. This tends to repress labor.

2. Desire of present gratification. This tends to

consume the fruits of labor at once.

3. Desire of means for future gratifications. This tends to stimulate labor, and to save its fruits.

A man or a nation grows rich only as the third of these desires overrules the other two.

Wealth is the collective name for all useful things which can be owned and exchanged. Some things are ver}^ useful, yet the}^ form no part of wealth, because they cannot be exclusivel}^ appropriated. Such are air, sunlight, and commonl}^ water. Other things, such as bread, salt, cloth, iron, houses, &c., are capable both of satisfying wants, and of being exclusively possessed and exchanged. Only these are properlj^ accounted wealth.

The original source of wealth is the bounty of God in nature.

The secondary source of wealth is human labor directed to bring forth the bounty of nature in form, in time, and in i;)lace, to meet the wants of men.

Wealth is increased only by constant reproduction, i.e., by destroying some useful articles to bring forth others. Thus the wheat that is sown must die, in order that a new crop may spring from it, yielding thirty, sixty, or a hundred fold : the leather in the hide must be cut up to make shoes, in which form it meets wants. If a man consumes all his wheat, he willhave none to sow. The tanner prepares his leather, expecting it to be used up for shoes. Abstinence and foresight attend all productive labor. Thus industry and frugality are indispensable conditions of the increase of wealth.

INTRODUCTION. 7

Value is purchasing power, or that quality in an object which gives it power to command other objects in exchange. The term supposes alwaj's a comparison of two objects with reference to an exchange. Thus vahie is a relative, not an absolute, quality.

Two things are combined in this qualit}' of value, — first, utility, that is, adaptedness to satisfy want or gratif}^ desire ; second, cost, that is, some labor necessarj' to produce the object. We can think of nothing which has greater utility than air and light ; but the}' have no value, because they are so freel}^ supplied to all that the}^ cost no labor. If one has spent a daj^'s labor in making a table, he will not give it to his neighbor for air or light which he can have for nothing ; nor will he exchange it for a box which he could make with half a day's labor. So, in general, the value of an article is determined very much by the labor which it costs to produce or procure it. Things are exchanged at what is called their natural value, when the terms are adjusted by the relative cost, labor for labor.

The utilit}" of an object is its desirableness for gratification. This maj' vary with circumstances, such as individual taste, the fashion of the day, the emergenc}" of the hour, &c. To one who cannot read, a book will have no use ; for his own gratification he will give nothing for it. One will readily give a gold watch for a loaf of bread when there is no other means of saving him from starvation ; then the value, the purchasing power, of the loaf, rises a thousand-fold above its actual cost.

These two elements thus define the extreme limits of value. The most one will give for an object is determined b}^ his estimate of its utility, or the gratification it will afford him. The least a man will ordinarily take for an object is determined by its cost, or the labor necessar}^ to produce it.

Between these limits value may temporarily fluctuate, as the relations of supply and demand vary. When the supply of an object is small, and many persons desire it, the purchasing power of that object is increased by competition among the bu3'ers. When a larger quantity of an article has been produced than is wanted, the purchasing power of that article is diminished by competition among the sellers. But this state of things, in either case, will not continue long ; for free competition tends always to settle the value of all things upon the natural basis of cost.

Divisions. — Political economy treats of the production of things to satisfy wants. Hence the two leading divisions of the science are Production and Consumption.

Production is the process of labor applied to objects of nature to adapt them to the satisfaction of wants. We can neither create nor annihilate any part of matter; but we can modify almost every thing so as to impart to it some utility, — that is, we can create value. Under this division, therefore, are considered the processes and laws by which labor gives value to things. The substances thus brought out are called products.

Consumption is the act of destroying utilities

INTRODUCTION. 9

either for immediate gratifications, or to produce some new utility for future gratifications. The actual destruction of values is necessaril}' involved. Under this division are considered the laws which govern the economical use of w^ealth to satisfy w^ants or gratify desires.

There are among men great diversities of capacity for labor. It is therefore good economy of productive effort to unite the labors of many persons on a particular product, so that each may contribute the part which he can do best. Yet each person has a variet}^ of wants, while his own labor is devoted to one thing. He must therefore get what he needs in exchange for what he makes. Hence arise two other branches of our science, logically subordinate to those just mentioned, though practicall}' of the highest importance. They are Distribution and Exchange.

Distribution embraces questions of equity and practical methods pertaining to the assignment to different laborers of their respective shares of values produced. Here are considered the difficult problems growing out of the mutual relations of employers and employed.

Exchange is the act of transferring things from one to another, according to their values. Each individual is busied in creating one utilit}', and wants a thousand. Each countr}' produces of certain articles far more than it needs, and needs many others which it cannot produce at all. Hence the necessity of universal and ceaseless exchange. Under this division are considered the instruments, the laws, and the processes, which relate to the mutual transfer of values.

The most difficult problems of political economybelong to the departments of distribution and exchange.

EXERCISES.

1. Mention some articles of wealth.

2. Tell what you know of the manner in which they are produced.

3. Name what you can of the utilities of each.

4. Do savages, or civilized men, have the most wants? Why?

5. Why has air no value ?

6. When and why may water have value ?

7. How does iron exist in nature ?

8. State wliat you can of the processes of labor which render iron useful.

9. If a farmer gives a bushel of wheat for a razor, why is it a fair bargain ?

10. Wlience comes the great value of the diamond ?

11. Why does the value of an article decline as it goes out of fashion ?

12. What events in Europe may enhance the value of the American farmer's wheat-crop ? Why ?

13. Why has cotton less value than wool ?

14. What different kinds of labor are represented in a yard of calico?

15. How are the ten cents paid for that yard of calico distributed to the several parties who have labored to produce it ?

16. How does a merchant's labor add value to the goods he sells ?

17. Why are strawberries and peaches generally cheapest in the market Saturday afternoon ?

18. How does foreign commerce benefit our agriculturists and manufacturers ?

19. How do railroads help to develop the wealth of a country ?

POLITICAL ECONOMY.

Part I. Production

Production is the process of drawing out means to satisf}^ human wants b}^ labor applied to natural objects. Labor is the first essential. Some products of former labor are also requisite to begin with. To these the name Capital is given. This branch of political economy will therefore be best presented under three subdivisions. The first will treat of Labor, the second of Capital, and the third of the co-operation of these two factors.