The elements of political economy

Front matter

Class Book

KB I7i

Copyright N°_

Preface

The public questions of our day in the United States are deeply affected by economic considerations, and yet the training of mind adequate for an intelligent decision upon economic problems has been very slight. No one who looks into the future can escape the conviction that our national prosperity will depend in no slight degree upon the diffusion of satisfactory economic and political education. There is good reason to suppose that public questions and the economic principles which underlie them can, if properly presented, be understood by the average American youth, whose education is restricted to the high-school or the academy, and it is the youth of the present who are to give direction to our national policy.

This book addresses itself to the task of presenting in a plain and simple form the elementary principles of political economy. The main topics are treated ; the fundamental principles are emphasized ; but no effort is made to produce a devi PREFACE.

tailed and exhaustive treatise. A pupil will not become an economist by studying this book alone^ An attempt has been made, however, to present the different branches of the subject in their just proportion and symmetry, so far as the limits of the volume permit.

It has seemed to be an important part of an elementary treatise on economics to make applications of principles to the leading questions of the day. For this reason such topics as Socialism, Taxation, the National Debt, Free Trade and Protection, Bimetallism, United States Notes, Banking, the National Banking System, the Labor Problem, and Co-operation, have been treated in a brief and simple manner in Part II.

With the assumption that Political Economy is inhuman and pitiless, the reader will find no sympathy in these pages, because such a belief is founded on an inadequate understanding of what the principles of a science really are, and principles can not be regarded as having personal qualities. On the contrary, it seems clear that the fundamental principles of economics are, when ultimately analyzed, but expressions of Christian truth. With this conviction, the '' labor problem " has been here treated, not as a question to be settled by legislation, but as one to be met by all the forces which make for Christian character and self-mastery.

PREFACE. vii

Teachers may use the book for a long or a short course. When there is time for no more than, perhaps, twenty-five lessons, Part I will be sufficient, as it completes the study of the principles. If a greater number of lessons is desired, selections may be made from the practical portions of Part II. A still more extensive course is possible. The outline here presented may be completed by collateral reading from some of the books mentioned in the reference list.

The questions and problems at the end of each chapter in Part I are intended to stimulate the pupil to think out applications of principles. These questions are not provided in Part II, because its chapters are in themselves applications of principles.

Preface To The Revised Edition

The present edition is intended to bring the book, both as regards theory and practical data, up to date. The experience of the years since this volume first appeared strengthens the belief that the general principles of political economy can be successfully taught to high school classes. The accomplishment of this purpose requires a statement of the principles so succinct that it will not pass beyond the space allotted to it in an over-crowded curriculum. The temptation

Vlll

PREFACE.

to add more matter has been great ; but it has been yielded to only so far as to introduce a discussion of the law of satiety, final utility, and its relationship to expenses of production in the theory of value ; an explanation of the industrial system wherein the time element has created a different organization from that of primitive society ; an adjustment of consumption to the general economic principles ; an enlarged statement of the development of division of labor ; and a brief discussion of large production and so-called "trusts."

The clear exposition of a body of principles has always been kept in view, in the hope that the teacher could add the local data which would illustrate each principle as it is taken up. To crowd the chapters of the first part with historical and descriptive matter would, in my judgment, confuse the student, and lead to cramming. As much space as possible, therefore, has been allowed to the work of training in the principles rather than to imparting

merely useful information.

J. L. L.

Chapter I. Page

Wealth 3

I. What society does for its members. 2. With what political economy is concerned. 3. Material wealth. 4. Immaterial wealth. 5. Property in wealth. 6. Money only a part of wealth. 7. Exercises.

CHAPTER n.

The Industrial System 9

8. Division of labor. 9. Interdependence of industries. 10. Different forms of division of labor. 11. The time element in modern industry. 12. Advantages of division of labor. 13. Disadvantages of division of labor. 14. Exercises.

Chapter III

15. Utility. 16. Demand and supply. 17. Sacrifices of production. 18. Law of satiety and final utility. 19. Reciprocal gain by trade. 20. Disutility of production. 21. Demand measured by goods possessed. 22. Wants unlimited. 23. Final consumption. 24. Changes in consumption do not change total of production. 25. New wants must be met by new production. 26. Law of demand and supply. 27. Exercises.

(ix)

X CONTENTS.

Chapter IV

pag'e

The Nature and Requisites of Production ... 29 28. Our wants are various and unlimited. 29. Production is reciprocal : meaning of a market. 30. The requisites of production. 31. Land. 32. Labor. 33. Capital. 34. Exercises.

Chapter V

Diminishing Returns from Natural Agents • • • 35 35. Natural agents include more than land. 36. Wealth increases only through the requisites of production. 37. Land limited in quantity. 38. Land varies in quality. 39. Law of diminishing returns. 40. Objection to the law. 41. The law as applied to mines, 42. Improvements counteract the law. 43. Exercises.

Chapter VI

44. More produced when men utilize nature's forces. 45. Who compose the laboring classes. 46. Physical qualities. 47. Mental qualities. 48. Moral qualities. 49. Law of Malthus. 50. Checks on population. 51. Increase of worst classes unfortunate. 52. Standard of living. 53. Distinction between productive and unproductive labor. 54. Exercises.

Chapter VII

55. Distinction between wealth and capital. 56. Capital necessary to labor. 57, Capital the result of saving. 58. Capital constantly consumed. 59. Capital employs labor. 60. Fixed and circulating capital. 61. Growth of capital depends on the amount which can be saved. 62. And on the disposition to save. 63. Exercises.

CONTENTS. xi

Chapter VIII. Page

64. Causes affecting the amount of wealth produced. 65. The ownership of land. 66. Large demand. 67. Large production. 68. Managing ability. 69. The corporation. 70. "Trusts." 71. Why large establishments succeed. 72. Objections to " trusts." 73. Demand not controlled by the producer. 74. Control of abuses of power. 75. Exercises.

Chapter IX

76. The object of Book II. 77. Value is purchasing power. 78. Value is a ratio. 79. Why an article has value. 80. To have value, an article must be transferable. 81. A sacrifice must be necessary to get it. 82. It must satisfy some human desire. 83. A common denominator of value. 84. Price is value expressed in money. 85. There cannot be a general rise or fall of values. 86. There can be a general rise or fall of prices. 87. Exercises.

Chapter X

88. Money and credit the tools of exchange. 89. Money

.a common denominator of value. 90. Money must possess

value. 91. Difficulty arising from the lack of a medium of

exchange. 92. Different articles used as money. 93. Why

gold and silver make the best money. 94. Coining money.

95. Gold and silver not a just standard for long contracts.

96. The value of money varies. 97. The multiple standard. 98. An increase of money no advantage. 99. The dollar changes in value. 100. Distinction between wealth, capital, and money. loi. Exercises.

xii CONTENTS.

Chapter XI. Page

Home and Foreign Trade loi

I02. Trade exists to satisfy human wants. 103. Trade due to division of labor. 104. Complexity of trade due to the variety of desires. 105. Buying and selling. 106. Producers and consumers not different classes. 107. Separation of employments necessitates stores, or markets. 108. The expense of merchants necessary for the exchange of goods. 109. Exchange in actual practice, no. Division of labor according to capacity and natural resources, in. Men buy most by producing that vv'hich is produced to most advantage. 112. Comparative ease of production the cause of foreign trade. 113. Home and foreign trade depend upon the same principles. 114. The gain from home and foreign trade. 115. Gain by transportation. 116. Exercises.

Chapter XII

117. Our object to find the laws of value. 118. Under the supposition that competition is free. 119. Demand and supply. 120. General demand and supply. 121. General overproduction impossible. 122. Overproduction of a particular commodity. 123. The law of demand and supply as affecting value. 124. Exercises.

Chapter XIII

125. Three classes of commodities. 126. True and popular use of the phrase "cost of production." 127. The sacrifice of the capitalist in production. 128. The sacrifice of the laborer in production. 129. Sacrifice different from remuneration. 130. Remuneration in proportion to sacrifice, if competition is free. 131. Cost of production not made up of wages and interest. 132. Cost of production analyzed. 133. Normal value depends upon cost of production, when competition is free. 134. Market value fluctuates about normal value. 135. Normal value of manufactured goods tends to decline. 136. Expenses of production. 137. Exercises.

CONTENTS. xiii

Chapter XIV. Page

The Value of Commodities affected by the Law of

Diminishing Returns 141

138. The problem as to the value of agricultural commodities. 139. The law of value for this class. 140. Market fluctuations due to demand and supply. 141. Durability of gold and silver. 142. Principles governing the value of gold and silver. 143. Upward tendency of the prices of agricultural commodities. 144. Forces operating against this tendency. 145. Exercises.

CHAPTER XV. The Value of Commodities where Competition is not

Free . 150

146. Absence of free competition. 147. If supply is fixed, value depends on demand. 148. Artificial limitation of the supply. 149. No free competition of laborers. 150. Nor of capital. 151. Where competition is not free, rewards in production are on different levels. 152. Reciprocal demand governs value between non-competing groups, 153. This law also controls exchanges between countries. 154. Goods are exchanged against goods. 155. Exports tend to balance imports. 156. Final utility is a regulator of value, 157. Human costs cannot be eliminated. 158. Exercises.

Chapter XVI

159. Credit is confidence. 160. A borrower really borrows wealth, not money. 161. Credit leads to more efB'^.ient production. 162. Book-credit. 163. Bills of exchange. 164. Banks buy and sell bills. 165. Promissory notes. 166. Checks. 167. Checks based on the deposit system. 168. Clearing-house. 169. Normal credit does not change general prices. 170. Relations of goods, money, and credit.

171. The extension of credit before a commercial crisis.

172. The subtraction of credit in the collapse. 173. The state of depression. 174. Exercises.

xiv CONTENTS.

Chapter XVII. Pagb

Paper Money i8o

175. Origin of convertible paper money. 176. Definition of convertible paper. 177. Legal-tender quality. 178. Inconvertible paper. 179, Fiat money. 180. Causes which give value to inconvertible paper money. 181. Under Gresham's Law, inconvertible paper drives out coin. 182. Such paper causes speculation. 183. And causes extravagance. 184. High paper prices favor debtors. 185. Exercises.

CHAPTER XVIII. The Problem of Distribution 195

186. .Distribution into interest, wages, and rent. 187. The share of the landlord and the payments for taxes and insurance. 188. The amount to be distributed described. 189. The total value to be distributed may vary. 190. For the same capital and labor the value of the product may vary. 191. The reasons for the great productiveness of an industry. 192. Why wages and interest may be higher in one country than in another. 193. Industries vary as regards the amount of labor required. 194. Exercises.

Chapter XIX

195. Interest the share of capital. 196. Insurance for risk. 197. Insurance to place an industry on the level of safe ones. 198. The market rate dependent on the rate earned by producers. 199. Manner in which the market rate conforms to that earned by producers. 200. Principle determining the relative shares of labor and capital.

201. Effect of the rate of interest on accumulations.

202. Rapidity of circulation of capital. 203. Absolute rate of interest varies with the value of the product. 204. Why wages and interest are both high in new countries. 205. Interest tends to fall. 206. Effect of interest on prices of land and securities. 207. Exercises.

CONTENTS, XV

Chapter XX. Pagb

208. Real and money wages defined. 209. Standard of living. 210. Division of the product betvi^een labor and capital. 211. Working of this principle of division. 212. More hands do not alone produce more wealth. 213. Effect on wages of an increase of capital. 214. General law of wages. 215. Certain actions of labor organizations are at the expense of other workmen. 216. Wages in different industries affected relatively by reciprocal demand. 217. The share of capital relatively to labor tends to decrease. 218. Exercises.

Chapter XXI

Wages of Different Classes of Laborers .... 224 219. Division of the general sum of wages among the various classes of laborers. 220. Industrial classes. 221. Numbers diminish as we go upward in the scale. 222. Wages of unskilled laborers low, because their numbers are large relatively to the demand for them. 223. The demand for unskilled laborers. 224. Remedy for low wages. 225. Non-competing groups of laborers. 226. Supply of skilled laborers. 227. Demand for skilled laborers. 228. Reason for higher wages of skilled laborers. 229. Skilled laborers may suffer by a withdrawal of demand. 230. Considerations affecting wages when the same skill is required. 231. Women's wages. 232. Exercises.

CHAPTER XXIL

233. The manager a necessity of modern industrial conditions. 234. Large production demands skillful management. 235. The manager not necessarily a capitalist. 236. Supply of managers small relatively to the demand for them. 237, Large " profits " mainly wages of management. 238. The conflict not between labor and capital, but between different classes of laborers. 239. Unusual gains and losses as affecting wages. 240. Doctrine of " equivalency of profits " emended. 241. Exercises.

xvi CONTENTS.

Chapter XXIII. Page

242. Resume of laws of value. 243. Expenses of production and cost of labor. 244. Cost of labor is the relation of the outlay to the return. 245. Efficiency of labor may raise both wages and "profits." 246. Under efficiency should be included natural resources, machinery, etc. 247. Relation of efficiency to prices. 248. Changes of wages in particular industries will affect prices. 249. Exercises.

CHAPTER XXIV. Rent 264

250. Rent defined. 251. Rent based on the law of diminishing returns. 252. Meaning of superior and inferior soils. 253. Grain grown on rich and poor soils sold at the same price. 254. The law of rent. 255. The law illustrated on different grades of land. 256. The kw illustrated by successive " doses " of labor and capital on the same land. 257. Norent land, or the "margin of cultivation." 258. Rent estimated by the surplus above the product on the margin of cultivation. 259. Rent does not increase the price of food.

260. Connection of population and improvements with rent.

261. Case where the farmer is also the owner, 262. Ground-rent. 263. The supposition of free competition. 264. Exercises.

PART 11.

DESCRIPTIVE POLITICAL ECONOMY.

Chapter XXV

265. Part II deals with applications of economic principles. 266. Relation of the state to economics. 267. Essence of socialism is the appeal to the state. 268. The state cannot know the different industrial capacities of individuals. 269. Socialism opposed to self-help. 270. Self-help illustrated in supplying London with provisions. 271. Interference

CONTENTS. xvu

PAGE of the State to be restricted so far as possible. 272. The desire of socialists to have the State control all capital. 273. Socialistic communities within the State.

Chapter XXVI

274. Reasons for the existence of taxes. 275. Canons of taxation. 276. Direct and indirect taxation. 277. The income-tax. 278. Tax on personal property. 279. Rules for indirect taxation. 280. Discriminating taxes. 281. Revenues of the United States. 282. Articles on which the United States levies import duties. 283. Criticism on these duties.

Chapter XXVII

284. Beginning of the national debt. 285. Effects of the War of 1812 and of the Mexican War. 286. In the Civil War the policy of borrowing was adopted, 287. Kinds of obligations issued. 288. The debt in 1865. 289. Refunding of the debt. 290. Present form of the debt. 291. Need of reducing the surplus revenue. 292. Debts of foreign countries.

Chapter XXVIII

293. Protection appeals to the national feeling. 294. Free trade based on the gains arising from division of labor. 295. Protection against foreign competition. 296. Some foreign imports desirable. 297. Protection to infant industries.

298. The argument that protection does not raise prices.

299. The tariff protects the workingman. 300. Growth of a country affected by other things than a tariff. 301. The industry abandoned under free trade will be the least productive. 302. Extent of unprotective industries. 303. Protection takes from the most productive and adds to the least productive industries. 304. Workingmen not protected from immigration. 305. Protection gives diversity of industries. 306. Sacrifice of real for doubtful benefits in adopting protection. 307. Diversity of industries arises from division of labor.

xviii CONTENTS.

Chapter XXIX. Page

308. Monetary questions in the United States. 309. Meaning of legal tender. 310. Value of gold and silver affected by different causes. 311. Gresham's law. 312. Free coin- ^g6. 313. Act of 1792. 314. Fall in the value of silver. 315. Act of 1834. 316. Act of 1853. 317. Adoption of the single gold standard in 1 873-1 874. 318. Fall in the value of silver. 319. Bland- Allison bill of 1878. 320. Appreciation of gold. 321. Causes affecting commodities, not gold. 322. International Monetary League.

Chapter XXX

323. Dislike of paper money in 1789. 324. Treasury notes. 325. Demand notes of 1861. 326. Arguments for and against paper money in 1861. 327. First legal-tender act, February, 1862. 328. Suspension of specie payments. 329. Second issue, July, 1862. 330. Results of the issues. 331. Relation of the depreciation of the United States notes to the sale of bonds. 332. United States notes regarded as a temporary expedient, 333. Evils resulting from their issue. 334. The inflation movement. 335. Prohibition of further contraction in 1878. 336. Resumption of specie payments.

Chapter XXXI

337. Convenience of banks for deposit. 338. Liabilities and resources of a bank. 339. Capital. 340. How a bank makes profit. 341. A deposit a right to draw money. 342. Connection between discount and deposit. 343. Cash reserve. 344. The ability to lend depends upon the ratio of reserve to deposits. 345. The three functions of banking, viz., deposit, discount, and issue. 346. Notes a demand liability. 347. Why country banks prefer the issue of notes. 348. Why city banks make little use of notes.

CONTENTS. xix

Chapter XXXII. Page

The National Banking System 359

349. Origin of the system. 350. The deposit of bonds.

351. Provisions for the immediate redemption of notes.

352. Means of contracting its issues. 353. Reserves required. 354. Free banking. 355. No " double profits" received by the banks. 356. Performance of its other functions.

CHAPTER XXXIII. The Labor Problem 364

357. Aims of labor organizations. 358. Strikes. 359. Influence of non-union men on the success of strikes. 360. Other causes affecting the success of strikes. 361. Conciliation and arbitration. 362. The real labor problem a conflict of laborers, 363. Saving, 364. Industrial education. 365. Christian character.

Chapter XXXIV

366. Forms of co-operation. 367. Advantages of co-operative stores. 368. Rules for establishing such stores. 369. Successful experiments. 370. Productive co-operation; its difficulties, 371. Examples, 372. Profit-sharing. 373. Influence on the character of the workmen. 374. Building associations.

Index To Charts

I. — Westward Movement of Population in the

United States 50

II. — Production of Gold and Silver . . .92 III.— Occupations of American Laborers . . 104 IV. — Course of Prices from 1850 to 1885 . . 139 V. — Exports and Imports of Merchandise from

AND INTO THE UNITED STATES . . -159

VII. — Revenues of the United States . . Face 294

VIII. — Public Debt of the United States . " 302

IX. — National Debts of Principal Countries '• 308

X. — Ratio of Gold to Silver since 1687 . " 328

XX

A TEACHER'S LIBRARY.

General Treatises.

Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Editions by both McCulloch and J. E. T. Rogers are good.

D. Ricardo. The Works of Ricardo. Edited by McCulloch (1886). J. S. Mill. Principles of Political Economy (2 vols., 1848, sixth

edition, 1865).

J. E, Cairnes. Leading Principles of Political Economy (1874); Character and Logical Method of Political Economy (1875).

A. Marshall. Principles of Political Economy, Vol. I (2d ed., 1891).

S. Newcomb. Principles of Political Economy (1886).

F.A.Walker. Political Economy (1888).

Henry George. Progress and Poverty (1879).

A. T. Hadley. Economics (1896).

S. M. Macvane. The Working Principles of Political Economy (1890).

R. T. Ely. Outlines of Economics (1893).

H. J. Davenport. Outlines of Economic Theory (1896). .,^ C. J. Bullock Introduction to the Study of Economics (1897).

J. B. Say. Traite d'Economie politique (8th ed., 1876); also translated into English (Philadelphia, 1827).

A.-E. Cherbuliez. Precis de la Science economique (Paris, 1862. 2 vols.).

Courcelle-Seneuil. Traite theorique et pratique d'Economie politique (1858. 2d ed., 1867. 2vols.).

C. Gide. Principes d'Economie politique (3d ed., 1891). Translated into English (Boston, 1892).

P. Leroy-Beaulieu. Traite d'Economie politique (1896).

W. Roscher. System der Volkswirthschaft, I. Grundlagen (20th ed., 1892). Translated into English (New York, 1878. 2 vols.).

G. Cohn. System der Nationalokonomie. I. Grundlagen (1885).

A. Wagner. Grundlegung der Politischen Oekonomie (3d ed., 1892).

E. von Philippovich. Volkswirthschaftspolitik. I. Theil (1900).

xxi xxii A TEACHER'S LIBRARY.

G. Schonberg. (Editor) Handbuch der Politischen Oekonomie (3d ed., 1891). A co-operative treatise by twenty-one writers.

Treatises on Special Subjects. /

L. Cossa. Introduction to the Study of Political Ecdnomy. Translated into English (1893). A summary of books ai>ci authors in all periods.

J. B. Clark. The Distribution of Wealth: a Theory of Wages, Interest and Profits (1899).

J. A. Holson. The Economics of Distribution (1900).

F. W. Taussig. Wages and Capital : an Examination of the Wages- Fund Doctrine (1896).

■--C. Bucher. Industrial Evolution (1901). The translation of Die Entstehung der Volkswirthschaft (3d ed., 1900).

F. A. Walker. The Wages Question (1876).

E. Cannan. History of Theories of Production and Distribution

E. von Bohm-Bawerk. Capital and Interest (1890); Positive

Theory of Capital (1891).

K. Marx. Capital. Translated into English (1889). W. Smart. Introduction to the Theory of Value (1891).

F. von Wieser. Natural Value. Translated into English (1893). J. N. Keynes. Scope and Method of Political Economy (1891).

P. Leroy-Beaulieu. Traite de la Science des Finances (5th ed., 1892. 2 vols.).

A. Wagner. Lehrbuch und Handbuch der Politischen Oekonomie. I. Theil. Finanzwissenschaft (3d ed., 1883).

G. Cohn. Science of Finance. Translated into English by T. B. Veblen (1895).

C. F. Bastable. Public Finance (1892).

E. R. A. Seligman. Essays in Taxation (1895).

H. C. Adams. Public Debts (1887).

C. C. Plehn. Introduction to Public Finance (1896).^

Tooke and Newmarch. History of Prices (i 837-1 856. 6 vols.).

E. Atkinson. Report on Bimetallism in Europe. Contains a translation by F. W. Taussig of A. Soetbeer's Materials on the Economic Conditions affecting the Precious Metals (1887).

C. F. Dunbar. Laws of the United States relating to Currency, Finance, and Banking (1891); Theory and History of Banking (1891).

English Blue-Books. Report of the Royal Commission on Gold and Silver (1888).

A TEACHER'S LIBRARY, xxiii

W. G. Sumner. History of Banking in the United States. In one of four volumes issued by Journal of Commerce (New York, 1896). C. A. Conant. History of Modern Banks of Issue (1896). W. S. Jevons. Money and Mechanism of Exchange (1880).

F. A. Walker. Money (1878).

H. White. Money and Banking (1895).

J. L. Laughlin. History of Bimetallism in the United States (4th ed., 1896).

J. J. Knox. United States Notes (1884).

J. S. Nicholson. Money and Monetary Problems (3d ed,, 1895).

G. J. Goschen. Theory of Foreign Exchanges (8th ed., 1875).

C. F. Bastable. Theory of International Trade (1887).

W. Hill. First Stages of the Tariff Pohcy of the United States (Baltimore, 1893).

F. W. Taussig. The Tariff History of the United States (1889).

W. G. Sumner. History of Protection in the United States (1884) ; Protectionism (1885).

R. E. Thompson. Protection to Home Industry (1886).

R. Mayo-Smith. I. Statistics and Sociology (1895); ^I* Statistics and Economics (1899). ■*>rC. D. Wright. The Industrial Evolution of the United States

J. Rae. Contemporary Socialism (enlarged ed., 1901).

R. T. Ely. French and German Socialism (1883).

A. Schaffle. The Quintessence of Socialism. Translated into English (1891).

F. J. Stimson. Labor in its Relations to Law (1895).

J. W. Jenks. The Trust Problem (1900).

E. von Halle. Trusts, or Industrial Combinations in the United States (1895).

A. T. Hadley. Railroad Transportation (1885).

D. A. Wells. Recent Economic Changes (1889); Decay of our Ocean Mercantile Marine (1884).

N. P. Gilman. Profit Sharing (1889).

Dictionaries.

McCulloch. Commercial Dictionary (new ed., 1882). Say. Dictionnaire des Finances (1891-1892). Coquelin and Guillaumin. Dictionnaire de I'Economie politique (1851-1853, 3d ed., 1864), in two large volumes.

xxiv A TEACHER'S LIBRARY.

Palgrave. Dictionary of Political Economy — the latest (3 vols., I 893-1 900).

Reports and Statistics.

The " Compendiums of the Census" for 1840, 1850, i860, and 1870, are desirable. The volumes of the tenth census (1880) are of great value for all questions; as is also F. A. Walker's "Statistical Atlas" (1874); and Scribner's " Statistical Atlas of the United States," based on the census of 1880. The volumes of the eleventh census (1890) are on a large scale, and contain a "Statistical Atlas" (1898).

The United States Bureau of Statistics issues quarterly statements; and annually a report on " Commerce and Navigation," and another on the " Internal Commerce of the United States."

The " Statistical Abstract " is an annual publication, by the same department, compact and useful. It dates only from 1878.

The Director of the Mint issues an annual report dealing with the precious metals and the circulation. Its tables are important.

The Comptroller of the Currency (especially during the administration of J. J. Knox) has given important annual reports upon the banking systems of the United States.

The reports of the Secretary of the Treasury deal with the general finances of the United States. These, with the two last mentioned, are bound together in the volume of " Finance Reports," but often shorn of their tables.

There are valuable special reports to Congress of commissioners on the tariff, shipping, and other subjects, published by the Government.

The report on the "International Monetary Conference of 1878" and the " Report of the Monetary Commission" (1898, H. H. Hanna, Indianapolis) contain a vast quantity of material on monetary questions.

The British parliamentary documents contain several annual " Statistical Abstracts" of the greatest value, of which the one relating to other European states is peculiarly convenient and useful. These can always be purchased at given prices.

A. R. Spofford's "American Alman?c " is an annual of great usefulness.

A useful catalogue of Govtrnr lent publications, entitled " United States Publications," is issued by W. H. Lowdermilk & Co., Washington.

PART I,

PRINCIPLES OF POLITICAL ECONOMY.

INTRODUCTION.

CHAPTER L

WEALTHo

1. Men are constantly laboring to satisfy their wants. The manner in which these wants are supplied is a very curious and interesting process. " Let us take, by way of illustration, a man in the humble walks of life — a village cabinetmaker, for instance — and observe the various services he renders to society, and receives from it ; we shall not fail to be struck with the enormous disproportion between them. This man employs his day's labor in planing boards, and making tables and chests of drawers. What does he receive from society in exchange for his. work ? First of all, on getting up in the morning, he dresses himself; but he has himself made none of his clothing. In order to put at his disposal this clothing, simple as it is, an enormous amount of labor and many ingenious inventions must have been employed. Americans must have produced cotton, Indians indigo, Englishmen wool and flax, Brazilians hides; and all these materials must have been transported to various towns, where they have been worked up, spun, woven, dyed, etc. He sends his son to school, and the simple teaching which is given there is itself due to the work of many thousand minds. If he undertakes a journey, he finds that, in order to save him time and exertion, other men have removed and leveled up the soil, filled up valleys, hewed down mountains, united the banks of rivers, and brought the power of stearn into subjection to human wants. It is impossible not to be struck with the measureless disproportion which exists between the enjoyments which this man derives from society and what he could obtain by his own unassisted exertions. The social mechanism, then, must be very ingenious and very powerful, since it leads to this singular result, that each man, even he whose lot is cast in the humblest condition, obtains things every day which he could not himself produce in many ages,"*

2. Suppose one man weaving baskets and another working with a hammer making nails. Each person, by making some one thing which other people want, is thus enabled to buy with the results of his own work many of other men's products which he wants. If one makes baskets or nails, which meet the desires of men about him, he is producing wealth. We can see, then, that in the wonderful mechanism of society, men are working to produce wealth, and to satisfy one another's material wants. All the world, so far as they are thus engaged in supplying their material wants, are doing things with which Political Economy is concerned. If men are occupied with other affairs than these, they are not things with which the economist is concerned. For example, if I were to row a long distance merely to see a ship launched, wealth would not result from my exertions. So, also, if I always keep a clear conscience, it may be a very desirable thing, but it is not an economic fact. A discussion as to whether congressmen or the President should appoint to office, is also outside of Political Economy. Thus we see that Political Economy deals only with questions connected