The political economy of natural law

Front matter

BOOKS BY HENRY WOOD

THE POLITICAL ECONOMY

OF

Preface

This is no attempt to make people content with things as they are, but to turn the search for improvement in a promising direction. Unrest and agitation are vastly better than stagnation, but to bring the best results they must be wisely practical and in harmony with Law.

The general purpose of this volume is the outlining of a political economy which is natural and practical, rather than artificial and theoretical. While independent of professional methods, it aims to be usefully suggestive to the popular mind. As a treatise, it is not scholastic, statistical, or historic, but rather an earnest search for inherent laws and principles.

In 1887 the author issued a small book entitled " Xatural Law in the Business World," which was well received and passed through several editions. The present volume is substantially a new work, although a portion of the original matter has been retained, somewhat changed in form. If it contains any larger measure of truth, the writer will congratulate himself upon any seeming inconsistency.

The different factors of society need to be drawn together and not rent more widely apart. Negative condi-

6 PREFACE.

tions exist ; but they will not be improved by stimulating their realism, or by the assumption that they are inherent. Idealism is as wholesome in sociology as elsewhere. True sympathy for prevailing ills does not express itself in a morbid pessimism, but in pointing out the road to improvement and in inspiring hope and courage.

Conventional political econom}-, as professionally formulated, lacks a practical element which renders it of little utility in actual experience. Not being fitted into the nature and constitution of man, it is largely a mass of fine-spun intellectual abstraction. If the absorption of ponderous tomes of scholastic political economy does not add to one's equipment for the practical business of life, it is not easy to discover its usefulness.

The " cause of labor " has been injured by crowding under its banner many fallacies, and even more by the assumption that its interest is naturally antagonistic to that of other social elements. Society is a complex organism, or Greater Unit, and '^when one member suffers, all suffer." The mischievous doctrine of a necessary diversity is largely responsible for prevailing frictions and antagonisms. The fault is not with the "social system," but with abuses which are the fruitage of moral delinquency in personal character. Labor and capital, when deepl}' defined, melt into each other.

The " labor problem " will never be solved by mere sentimental and professional treatment. The laborer often suffers more from the mistaken action of his professed champions than from the natural ills of his condition, and this will continue so loner as he is led into a moral and

PREFACE. 7

economic antagonism. A deep and diligent search for causes and remedies should take the place of a mere superficial rehearsal of woes. Not only the human constitution, but the world in general, would have to be made over before the chimerical plans of professional '' labor reformers'" could be made operative. Artifice can never be substituted for evolution and Natural Law,

The writer will yield to no one in the intensity of his desire to promote, not only the public weal, but the interest of labor in its completeness. In whatever way superficial critics may construe detached statements of this book, the fact will remain that its deepest intent and aninuis is the true welfare of the workingman.

The recognition of the universality of Law is the greatest achievement and inspiration of modern times, and it is no less regnant in social economics than in physical science. Circumstances and conditions change, but the orderly sequences of Natural Law continue uniform. All improvement must come through a better interpretation of and conformity to its immutable lines.

Contents

PAGE

I. General Principles 11

II. Supply and Demand 23

I. General Principles

Before entering upon anj^ sj^stematic study of tlie inherent economic laws wliioli permeate and shape the business Avorhl as it is at present constituted, it is well to suggest that many existing limitations at some future period may he outgrown. Natural Law is never suspended or repealed l)y an}" force Avhich can be exerted upon the saine plane ; but it is axiomatic that a higher law may overcome a lower one. AVhen we lift a weight, gravitation is not suspended, but its force is overcome by the superior law of the human will. Tree-life causes the sap to ascend, not by repealing gravity, but by surmounting it. The predominant motive of social economy, on the present plane of human development, is self-interest ; but this does not always amount to selfishness, nor does it imply that individual interests are necessaril}- antagonistic to each other. Normal self-interest is not only honest, but entirely compatible with philanthropy. But Avhen, in the hoped-for golden period of the future, humanity comes into a general recognition of the higher law of unselfishness, this superior force will reach down and overcome many laAvs that are inherent and unrepealable on their own plane. Such an advanced condition of society is to be earnestly labored for ; but any present study of business tendencies must be made in the light of existing conditions and developments. Nationalists and communists, even though well-intentioned — as the great majority undoubtedly are — will never be able to galvanize unselfishness upon humanity from the outside, through governmental legislation or communistic social framework. It will only be unfolded as the natural outward expression of higher internal character.

Natural Law, as it is considered in this work, embraces in its scope the forces and tendencies which are at present operative. To hasten the evolution of higher social and economic conditions, a beginning must be made among the existent underlying antecedents which will produce them. Any inversion of this natural order will retard the coming ideal. To spend our time and energy on the outside, is only to whiten the '' sepulchre." Higher attainments in any department are helped forward by the faithful use of those already actualized. When the grand reign of unselfishness is finally ushered in, it will come as an evolutionary growth, "without observation." It will be just as "natural," in its due course, as any of the loAver accomplishments which preceded. Forces now operative will never I^ repealed in their own province, but gradually outgrown. The hope of the future lies entirely in the expansion and upliftment of character. When altruism and brotherhood are kindled in the human soul, they will find outward manifestation, and nothing can prevent it. All growth is from within, outward, for such is the eternal order, and no human power can reverse it. The unnatural cannot be made natural, or grapes gathered from thistles. The most ideal and perfect legislation that it is possible to conceive is powerless to raise men from the plane of self-interest. Lifting force comes from internal education and evolution.

The present " social system " — bearing in mind that its abuses are no real part- of it- — is the only one thut will serve humanity in its present stage of development. As well fit an artificial shell to the back of a tortoise, as to frame any new external order to suit present ethical conditions and necessities. There are many such artificial shells proposed, each of which is warranted to fit — in fact to be a universal panacea — for existing ills. Among them are, land in common, governmental transportation, an income tax, limited fortunes, unlimited silver, gold monometallism, unlimited '' greenbacks," a high tariff, a low tariff, free trade — all these and many more. Without any argument at present as to the merits or demerits of these proposed measures, the point is only made in this connection that it is beyond their power and range to remedy existi:ig economic ills. If ever the time arrives when true socialism pure and simple is practical, as a form of government, neither it nor any other external system will be needed. At that high evolutionary stage every man can and may be a law unto himself. Non-resistance and unselfishness will then comprise the brief but unwritten code of humanity. At j)resent, any new or forced artificial social framework would rather retard than aid a natural growth towards more ideal conditions.

Economic evils, now so prominent and universal, are not the outcome of the present '' social system," but of the abuses which fasten themselves to it, consequent upon general moral delinquency. They are not a real part of it, but are like barnacles on the bottom of a ship. Human pride is reluctant to look within for deficiencies, but will roam to the ends of the earth to locate them outside. There is no social system, or any other human institution, so perfect, that abuses do not creep in. Stealing and cheating are abuses. They are not a normal but an abnormal part of the present order. These reflections are pertinent because sentimental theorists make our social system the scapegoat for almost every overt violation of the Decalogue.

Every genuine has its counterfeit, and every positive its negative. The present order, in its purity, is the only one for existing conditions, because it is their natural index and outcome. It fits what is back of it as the photograph represents the negative. The outer must correspond with the inner, else law and sequence would be at fault, and the chain which binds cause and effect be severed.

In political economy, as elsewhere, an intelligent study of phenomena is only possible in the light of its unseen though ever potent laws and causation. The most useful knowledge that is attainable in any realm embraces primarily the comprehension of its underlying relations and chains of sequence. The scientific standpoint from which to view human manifestations takes iu, not merely present activities, but those which reach backward and forward. Phenomena are the exact fruitage of antecedents. Science formerly made but slow progress, because its attention was fixed upon superficial manifestations, while hidden beneath them were the universal and immutable forces of law. The effort has always been made to " patch up " from the outside, whereas real growth takes place in layers from the centre outward.

The phenomena of electricity have been before the eyes of the world for all the past centuries, but until recently there was little systematic study of its laws. Now that these are beginning to be grasped, it ceases to be mere uninterpreted manifestation, and becomes a tamed and beneficent agent of utility. The world has been almost surprised to find that Natural Law can invariably be relied upon. In the whole illimitable cosmos, material and immaterial, there is nothing capricious or uncertain. At first glance, there is much that seems to happen ; but it may be safely assumed, that no event ever took place without an endless chain of causation leading up to it, link by link.

The scope of orderly law being unlimited, it manifestly includes every side and phase of social economics. In the economic domain, statistics, tariffs, coinage, currency, capital, and labor have received abundant study ; but all these are only the multiform visible expressions of the working of natural law. Either of them when considered by itself, outside of its larger unitary relations, becomes disproportionate and misleading. Events are unimportant except as their significance is interpreted. Statistics are only finger-boards to show the way to law -fulness. Their meaning and relation is the real problem pressing for solution. On the troubled surface of the sea of finance there is a confused array of facts, events, ups and downs, sentiments, and opinions, which are well-nigh valueless so long as they lack orderly translation.

If Natural iLaw in its immutable tendencies be reliable, and also serviceable when intelligently comprehended, it is important that its hidden leadings be searched for and discovered. But to successfully accomplish this, we must divest ourselves of all prejudice, and seek the truth for its own inherent value. Its deep lines can never be bent or distorted, but owing to preconceived theories numerous subjective illusions and inversions are possible. The desire to find a certain opinion true, often clouds the reality. To truly learn, it is necessary to unlearn. The vital truth is always beneficent, even if at first sight it have an unwelcome, or possibly an adverse aspect. To find the "whys and wherefores "' of any fact is a long step towards divining its place and use. Take the law of competition. Viewed superficially — especially when applied to labor — it has liard and repulsive aspects. Shall Ave then deny the existence of such a law, and denounce all competitive eifort as unmitigated selfishness, or not rather look deeper to see if correct interpretation will reveal utility and even beneficence ? Is there constructive competition as well as that which is destructive ".' May it not be its abuse which is adverse, and will not a more discerning view show that it supplements co-operation ? Is there not healthful competition as well as that which is unhealthful ? Can there not be competitive giving, being, and doing, as well as getting and monopolizing ? It is far wiser to rightly adjust any universal principle than to deny its place, or, perhaps, hastily conclude that it is only "cruel."

Competition between two market-men may help to feed a whole needy neighborhood. Every thing has its place in the general unitary Whole, and when its true relations are disclosed its seemingly adverse features become neutralized or even transformed. A perfect sphere has roundness and smoothness, but its detached fragments are each irregular and jagged. A fact or principle viewed out of its logical environment does not show its truth. Any intelligent synthetic method is far too rare. To analyze, dissect, and sever, often snaps the ties of relationship and leads to unprofitable dogmatism. Natural Law, as applied to the domain of Political Economy, is defined by Webster as " a rule of conduct arising out of the natural relations of human beings, established by the Creator, and existing prior to any positive precept." Natural Law in the economic realm is not different from that which runs through physics, morals, mechanics, and science. It is but one of the many subdivisions of Universal Natural Law, or the grand Unity of Truth. In other words, the principles which reign in the department of political economy are not artificially fenced off in a field by themselves, but they have a most intimate connection with all the other subdivisions of orderly facts. There is also a corresponding kinship in error. With false premises and a colored medium, not only one truth is subjectively transformed, but all its relations are also distorted and colored to correspond. In this way systems of negation are built up ; for with one error for a basis, a whole series must be evolved to harmonize with it.

GENERAL PillNCIPLES. 19

Natural Law is everywhere. Its lines as the}^ permeate the business Avorld may not be so easily traceable as in material science, but the evidence of their existence and rule is no less positive and unquestionable. But their relations are more complex. They are so interlaced and mingled with human or legislative law on the one hand, and a purely mental and moral economy on the other, that any study of one is impossible, except in its connection. They sliade into each other so perfectly that no line of demarcation is visible.

The general perception of the uniform and universal reign of law has grown with the growtli of knowledge, and at the present time the highest aim of science is its fuller discovery and interpretation. Natural Law is but another name for the methods of the Creator ; and that being admitted, it is evident that all just and wholesome human enactment must be founded upon it. That this true foundation is more generally recognized and built upon at the present time than in any past age, is obvious ; and this is especially true where constitutional and democratic forms of government prevail. Human law is the will of society in an effort to interpret natural metliod ; and although it may put limits on individual will, it is yet indispensable to human welfare. There has been a steady improvement in legislation and government, in proportion as Natural Law has been understood. Step by step the patriarchal, tribal, and monarchal forms of government have played their part, and led up to the modern republic, which is the most Avholesome framework of society yet evolved. Further improvement will follow in proportion as the lines of Natural Law shall be wrought into the warp and woof of the social fabric. The key to progress and approximate perfection in every department, whether physical, mental, moral, or even spiritual, is conformity to law. Take a few illustrations : A thorough observance of mental and physical hygienic law

20 THE rOLLTICAL ECOXO-MY OF XATITRAL LAW.

tends directly to healthful and normal individual development. A greater or less transgression brings a proportionate penalty. The penalty must be paid whether the violation be knowingly or ignorantly committed. A headache and nervous depression are very certain to follow a prolonged drunken revelry, but no more so than are panic and business stagnation to come after an era of wild speculation. That physical" disease, the effect of which is to gradually thin the blood toAvard a Avatery condition. Avhen it contiiixies unchecked, is no less certain in its logical results than will be the degradation of our monetary system to a silver or greenback basis, if at any time a process of dilution indefinitely continues. Legislation may for a while prevent the full assertion of law, but it is nevertheless an active, living force, unceasingly pressing in the direction of its natural fuliilment. A stream may be dammed on its way to the ocean, but the final tide-level of its waters is not a matter of question. It would be as reasonable to expect to increase the efficiency of one blade of a pair of shears by the mutilation of its companion, as to benefit either capital or labor by an antagonistic policy toward the other. Illustrations might be multiplied.

Some think it practicable to transgress natural principles with impunity, so long as they avoid the open violation and penalty of human legislation ; forgetting that the penalty of the former is the inevitable sequence of the transgression. One may try to persuade himself that even eternal principles are elastic and subject to exceptions, for the reason that they sometimes seem to fail to assert their rule. But if they do not vindicate themselves speedily, we may be sure that they are always pressing in that direction, and will never be satisfied till the end is reached. TTe confine Avater in a tube, but its tendency to seek a level continues, and no human poAver can diA'est it of this inclination. ZSTatural LaAv is a living force, persistent, reliable, ahvays in its place and pressing to do its work. It is this invariableness which enables us to use it, and make it serviceable. While, therefore, it is true that we are always under its sovereignt}', it is no less a fact that when we comply with its conditions, it becomes our most valuable and indispensable co-worker. Its powerful aid, like that of steam or electricity, is always in Avaiting, only we must not dictate its methods of ojjeration. We make mistakes, and our lines of action are often inharmonious and contrary, while the operations of Natural Law are consistent and harmonious. Its different factors may modify, or counteract, but never oppose each other, for truth cannot be in opposition to truth. Its only warfare is with error, and its complete victory is simply a question of time.

SUPPLY AND DEMAND.

" Every natural force which we call a law is itself invisible — the

idea of it in the mind arising by way of necessary inference out of an

observed order of facts.''''

The Duke of Argyll.

" All are needed by each one ; Nothing is fair or good alone.''''

Emerson.

Extremes in nature equal ends produce ; In man they join to some mysterious use.''

The wings of time are black and white, Pied with morning and loith night.

Mountain tall and ocean deep Trembling balance duly keep.

In changing moon, in tidal wave, Glows the feud of Want and Have.''''

Pope.

Emerson.

II. Supply And Demand

Supply is positive, and demand negative. All negatives are seeking for satisfaction and completeness in their corresponding positives. Evil is a demand for good, disorder for order, and darkness for light. Ugliness seeks beauty ; weakness, strength; and hunger, food. All positives are waiting to bestow themselves. These two principles never rest easily until united. Each will wander to the end of the earth to find compensation in its counterpart.

The law of supply and demand is perhaps the most general and fundamental of all the brotherhood of natural laws, and we have direct relations with it at all times and under all circumstances. It lies at the foundation of all modern commerce, civilization, invention, and science. It has been the main-spring in every transaction, trade, and exchange, back to the time when man existed under the most primitive conditions. It was the basis of the first exchanges of ilint arrow-heads and skins among savage and barbarous tribes, as it also is of all the multiform currents and counter-currents of modern economic life. Its force cannot be measured. Its pressure impels mankind to work its behests, in gathering, transporting, and exchanging the products of the globe, in order that these two principles may meet and find satisfaction. Men will penetrate to the heart of tropical Africa, or the frigid regions of the Arctic zone ; they will dive to the bottom of the sea, or delve in the bowels of the earth, to bring forth all the complex materials of supply, in order to meet the grand aggregate of

Zb THE POLITICAL ECONOMY OP NATURAL LAW.

universal demand. No enterprise is too venturesome, no effort too daring.

Supply and demand are like the halves of a sphere, neither being complete without the other, and each waiting for the other, as necessary to produce roundness and perfection. Throughout the whole cosmic economy each of these factors is not only incomplete without the other, but each is evidence of the existence of the other. Even in the spiritual world, universal analogy teaches that as man was created with a natural desire or demand for future existence, that this demand will be satisfied. Demand was created for supply, and supply for demand, and they have an unerring affinity for each other. A vacuum is a demand for air, and cold for heat. Man's natural constitution has many demands, and all these are easily supplied when it is in a normal condition.

Applying these principles more specifically, let us for illustration take the problem of furnishing the food supplies of a great city like London or New York. We find that just the required amount and variety are forthcoming from every quarter of the globe, and all without any system, design, or forethought. The Chinaman is. gathering the tea, the Brazilian the coffee, the Dakota farmer is raising the wheat, and every other quarter and country of the globe are striving to make up the supply to fit this never ending demand. It does this as perfectly as if it were regulated by a pair of colossal balances. The element of price comes in and smooths off the inequalities, so that the two surfaces come together perfectly as though polished for the purpose. If a temporary, or even expected, surplus of any article occurs, the price drops just enough to increase the demand to the point of perfect equilibrium. If there be a temporary or foreseen future deficiency, the price rises, and the inevitable equilibrium is restored as before. It is the element of price which always determines the point at which the equilibrium is reached, and price is modified by still another element, wliich is competition. In the event of a tendency toward excess, competition takes place among sellers ; and, on the other hand, a predominance of demand causes competition among buyers. All commercial transactions and prices, not only of material products, but of everything that has value, like rates of interest, rents, salaries, brainwork, as well as that of muscle, are so regulated. The salary of the clergyman, the fees of the lawyer, and rates of transportation, as well as wages for manual labor, are all controlled by this law. Great talent brings a high price because of its scarcity. Price is a relative quantity, and not an abstract amount. Competition among buyers may cause strawberries to bring a dollar a quart in April, and among sellers may bring them down to ten cents in June. They were relatively as cheap at the one time as the other, the price at which supply and demand became equal varying by so much in the different iRonths.

These laws are elastic and beneficent ; and they adapt themselves to all conditions in a natural and easy way, if allowed to operate without interference. Not that they will do away with all the ills of society, or give to every man employment at good wages, or always give success in business ; for all such drawbacks are incidental to human fallibility and imperfection. The effect, however, of an attempt to put any forced or artificial laws in their place, is to increase tenfold the friction and difficulty. Such an effort always reacts, and is harmful to those who mistakenly hope for benefit. Let us adduce a few illustrations. Legislative interference in trying to fix rates of interest — or rather, one might say, in trying to take aAvay the freedom of individual contract — in the different States, is now generally admitted to be worse than useless, although years ago it was regarded as necessary. The effort to substitute artificial rates for natural ones, under penalty, not only did not accomplish the purpose intended, but actually made interest dearer, by obstructing supplies, injuring confidence, and by natural reaction. When the peculiar conditions in any State make money worth really more than the maximum legal rate, the practical rate is still further enhanced, to equal the risk of the penalty which the lender incurs. Both parties also feel that they do no moral wrong by evading a statute which interferes with the first principles of personal freedom. So generally does this view of the case now prevail, that this form of legislative interference with Natural Law is practically a dead letter, although in some States the ill-advised statutes are nominally still in force.

Legislative interference — except to enforce impartiality — with rates of transportation, and with passenger, telegraph, and telephone service, is in the same line, and will, in the long run, be found to produce similar results. Aside from legislative enactment (which will be considered more fully in the chapter on Economic Legislation),^he most formidable attempts to force artificial prices occur in the cases of railway pools or combinations, speculative corners in food products and coal, and in labor unions. The results of these efforts are in the main unsuccessful, and in any case but temporary, and, of course, they lack the moral dignity of legislative interference. In the case of railway combinations, statistics show that in all instances where pool rates were put at a point much above that which may be regarded as normal, they were very short-lived. Such a variety of disintegrating and competitive influences come in, that even the most binding agreements to maintain artificial rates soon have to yield. In the case of speculative combinations and corners, or efforts to control market prices, it may be admitted that in a few instances they have been apparently successful, but in a vastly greater number they have not succeeded, and often have ruined their projectors. In the successful cases, where one clique of operators has succeeded in cornering the

SUPPLY AND DEMAKD. 29

market, or in establishing artificial prices, it has only been in consequence of another clique selling for future delivery what it did. not possess — in common parlance of the commercial world called '' selling short," — which is in itself an abnormal condition. Any effort to artificially advance prices against natural consumption alone is rarely attempted, for to have any chance of success there must be the opposing clique of '•' short sellers," or those who are trying to artificially depress the market. Even with the large amount of " short selling," attempts to corner the market for food products are becoming more and more infrequent, owing to the increased rapidity of transportation, which has a strong equalizing tendency. Wherever such combinations have temporarily succeeded, the result has been brought about by peculiar conditions, and in a forcible manner, before iSTatural Law had time to assert itself. It was like Ijfting a heavy weight in spite of gravitation.

There is much popular misapprehension regarding the power which can be exerted by " combines " to change natural tendencies. We often see newspaper headlines like the following : '' The West is holding back its grain ; " or, " Chicago speculators are trying to force up the foreign markets ; " or, " Wall Street has combined to get up a boom ; " and many other similar announcements. The idea that the millions of farmers in the West, or that the tiiousands of operators in Chicago or Wall Street, could come to any general understanding in regard to a uniform policy is absurd. Instead of any such condition of unity ever existing, there are always two parties, knoAvn in common parlance as " bulls " and " bears," each of Avhich is a balance to the other, like the two elements under consideration. The bears represent the principle of supply, and the bulls that of demand ; and, as elsewhere, the higher or lower prices determine the point of equilibrium between them. So far from combination, not only each party, but every individual, is trying to excel all others in making the most correct estimate of the natural drift and tendency of existing conditions, and how to profit thereby.