The elements of political economy

Front matter

Sheldon & Company's Text-Sooks.

PROF. CALVIN PATTERSON'S BOOKS: 1st. Batter son's Common School Speller-, 2d. si Speller and Analyzer, or Test Words

and School Etymology. 3d. Patterson's Elements of Grammar, with Practical Exercises.

CHAPTER II. Definitions and Divisions

Wealth, — Errors respecting it 8

1. Not identical with Money. 2. Does not include human beings and capacities. 3. Evidences of debt no part of general wealth. 4. Includes some things not tangible and durable.

Sources of Wealth— Original — Secondary 10

How Wealth is increased 11

Value, — its strict definition . 11

Distinct from Price, and from Utility.

Limits of Value — Utility — Cost 18

Law of Supply and Demand — Monopolies 14

The Practical End of the Science 15

Its four leading Divisions 15 nil CONTENTS.

FIr\ST DIVISION.

CHAPTER III. Production

Mfit

Its Elements — Nature's Gifts — Human Labor 17

Threefold Subdivision 18

Labor — Capital — The Cooperation of these two forces.

CHAPTER IV. Labor

Definition — A Measure of Value 19

Kinds of Labor. 1. Physical labor. 2. Mental labor 20

What Physical labor does 20

What Mental labor does directly 21

1. Discovery. 2. Invention. 3. Oversight.

Labor indirectly concerned in production 24

Labor as Productive or Unproductive 25

This distinction discarded.

Changes effected by Labor . . 26

1. Transmutation. 2. Transformation. 3. Transportation.

Their Relation to each other 28

CHAPTER V. Means for Increasing the Effectiveness of Human Labor

Natural Agents defined 32

Agents which create Momentum 35

Animate Agents 35

Inanimate Agents 36

1. Gunpowder, Dynamite. 2. Wind. 3. Water-power.

4. Steam.

Adrantages of Inanimate over Animate Agents 4C

1. Amount of Momentum. 2. Continuity. 3. Economy.

4. Personal Safety. 5. Freedom from Pain. 6. Increased

Velocity.

CONTENTS. IX

FAOE

Agents by which Momentum is applied 48

Effects produced 45

1. Change of Direction. 2. Power for Velocity. 3. Power concentrated. 4. Delicate operations. 5. Power accumulated. 6. Sudden force made continuous. Lord Jeffrey's description of the Steam-engine il

CHAPTER VI. Division of Labor

The Principle — how illustrated 48

Essential to Civilization 49

The Principle implies two things 51

1. Analysis. 2. Distribution of parts.

Advantages of Division of Labor. 51

1. Shortens apprenticeship. 2. Saves time in changing operations. 3. Saves time in adjusting tools. 4. Increases skill. 5. Suggests inventions. 6. Employs diverse capacities.

Application to Intellectual Labor 56

CHAPTER VII. Limitations to Division of Labor

Pour Restrictions 58

1. The Nature of the Process. 2. Deficiency of Capital.

3. Limited demand — Circumstances affecting demand. a. Number of Consumers, b. Wealth of people, c. Cost of the article, d. Facilities of Transportation.

4. Limits of Executive Capacity.

Evils incident to Division of Labor 64

1. Danger to Health. 2. Contraction of Mind. 3. Loss of Independence. 4. Combinations.

International Division of Labor 66

Conditions of increase of Wealth 71

1. Understanding Nature's Laws. 2 Means of applying them. 3. Adjustment of Labor. 4. Regard to local Re sources.

Z CONTEXTS.

CHAPTER VIII. Capital

MM

Definition of Capital 73

Not identical with wealth — Not synonymous with Money.

In Oiigin, the fruit of past labor saved 74

Forms of Capital 76

1. Materials. 2. Implements and Machinery. 3. Means of Sustenance. 4. Finished products.

Consumption of Capital 7S

Destruction necessary to production of value.

Productive and Unproductive Capita] 81

This distinction discarded.

Fixed and Circulating Capital ... 83

The line of distinction not absolute. The tendency to turn circulating into fixed capital involves two dangers — 1. That of over-production. 2. That of too sudden absorption of available means. Money to be classed aa fixed capital.

CHAPTER IX. Co-operation of Labor and Capital

Labor and Capital true Partners 88

Most harmoniously united in one person 89

Reasons why this cannot be universal 90

1. Capital tends to rapid increase. 2. Men have diverse capacities and tastes. 3. Large establishments necessary to some forms of production.

Conditions which favor the Union of Labor and Capital .... 92

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. Unrestricted freedom. 4. Intellectual

and Moral culture.

Combinations and Co-operative Associations 110

CONTENTS. XI

SECOND DIVISION.

CHAPTER X. Consumption

PAGE

The Nature of Consumption 112

Involuntary Consumption 113

1. Natural. 2. Accidental. 3. Immaterial and Notional.

Voluntary Consumption 115

Consumption for Reproduction 116

Economic rules — for Capital — for Labor.

Consumption for Gratification 118

Kinds of Gratification. 1. Those essential to health and life. 2. Those which delight sense and taste. 3. Intellectual gratifications. 4. Social gratifications. 5. Moral gratifications. Rule of economy in gratifications 120

The Reciprocal relation between Production and Consumption

for gratification 122

Public Consumption — its nature 123

Purposes to which it is applied 125

1. Government support. 2. Public improvements. 3. For advance of science and intelligence. 4. Popular education. 5. Care of defective classes. 6. To relieve poverty. 7. For the nation's defense.

Scale and Agents of National Expenditures 131

CHAPTER XL Over-production or Under- consumption.

What is Over-production ? 132

Its causes 133

a. Increased facilities of production, b. Large profits, c. Restricted desire, d. Reduced ability, e. Obstructions to transportation.

Xll CONTENTS.

PAGE

Means of Relief 134

a. Suspend production, b. Increase the number of consumers.

Can there be Universal Over-production ? 136

Under-consumption 138

Over-production not the chief cause of stagnation in business. . . 139

THIRD DIVISION.

CHAPTER XII. Distribution

Ownership of Land 141

Labor in appropriation establishes a right of property 142

The claim extends beyond first-fruits 143

The question of practical expediency 144

Land in savage life — under the Feudal system — England's landed aristocracy — proposed nationalization of land — lands held in common-fee-simple in those who occupy and till the land.

Lands for other than agricultural purposes 147

Lands held for speculation 148

Distribution — conflict of interests *. 149

Definition and scope of Distribution 150

Communism and Socialism 152

Parties to be recognized 153

Subdivisions . 153

CHAPTER XIII. The Remuneration of Labor

Terms used — Wages — Salaries — Fees 154

Distinction of Nominal and Real Wages 156

The difference caused by, 1. Fluctuations in purchasing power of money. 2. Forms of payment. 3. Regularity of employment. 4. Duration of power to labor.

CONTENTS. Xlil

PAGE

Nominal and Real Cost of Labor 160

Difference in industrial efficiency caused by, 1. Peculiarities of race. 2. Qualities of diet. 3. Personal habits.

4. Intelligence of the laborer. 5. Technical education and environment. 6. Cheerfulness and hopefuluess in labor.

Leading Considerations determining Wages 166

1. Cost of living. 2. Value of products — the wage-fund theory. 3. Customary rate of wages. 4. Most influential of all, competition. Combinations to resist competition — Strikes — Trades -unions — Combinations of employers.

5. The Golden Rule.

The General Law of Wages 181

CHAPTER XIV. Variations in tha Remuneration of Labor

Special Circumstances affecting Wages 182

Ease or difficulty of employment — Skill required — Confidence reposed — Constancy of employment — Certainty of success.

Salaries, Commissions and Fees 185

Self-made men — Educated men — The learned professions — Artists, Authors — Force of Custom — Offices of honor.

Remuneration for Women's labor 190

a. Physical and mental constitution, b. Home sphere. c. Prospective marriage, d. The actual organization of industry, e. Feminine instincts. /. Partial sup port from friends.

The case of women of genius — Conclusions, 1. Absolute equality between the sexes unattainable. 2. Present inequality unreasonable. 3. The true aim of efforts for reform. 4. Woman an equal partner in the home.

CHAPTER XV. Remuneration of Capital

Capital entitled to Remuneration 197

Rent — its Definition 199

Several kinds of rent — Ricardo's theory.

XIV CONTENTS.

PAGE

Rent of agricultural lands depends on 202

1. Productiveness, by reason of a. Fertility, b. Situation.

2. Growth and Concentration of Population.

3. Incidental circumstances, a. Natural beauty of situation, b. Character of neighborhood, c. Improvements.

Rent of Mining Lands 209

Rents in Cities 210

The Fashionable quarter — Business centres.

Why Rent is less than Interest 212

1. Security of property in land. 2. Title easily established. 3. Influence of landholders. 4. Prevalent desires of men. 5. Prospective increase of value.

CHAPTEE XVI.

Interest

Definition 215

Considerations determining Rate of Interest 218

1. Risk, depending on a. Mode of employing capital.

b. Character of borrowers, c. Character of government.

2. Convenience of investment 221

a. Facility of transfer, b. Permanency of investment.

c. Punctuality of Payment.

3. Productiveness of capital 223

a. Fertility of land. b. Productiveness of industry. c. Demand for exchange.

4. Ratio of Demand to Supply of Capital 224

Why Interest in a new country is high 225

Advance of Settlement reduces Interest 226

Freedom of Capital adjusts Supply and Demand 227

Rate of Interest not an index of Prosperity 228

1. Interest raised by risk indicates adversity. 2. Raised by increased productiveness, prosperity. 3. Reduced by diminished risk, prosperity. 4. Reduced by stagnation, adversity.

COHTEHT&. XV

PAGE

Usury Laws unreasonable 230

1. They violate the right of property. 2. Impossible to fix a price for capital. 3. The price of money especially variable. 4. Usury laws increase fluctuations of interest. 5. They cannot be enforced.

Dividends — Definition 234

Dividends include Interest and Profits. 237

CHAPTER XVII. Distribution of Profits

Definition of Profits 239

Profits increased by spending less or producing more. Percentage on capital not a true measure of profits.

Capital may not claim all the Profits 243

Co-operative Associations 245

Capitalists, Managers and Laborers to share Profits 246

CHAPTER XVIII. Revenues of the Government

A Problem of Political Economy 248

Taxation — Adam Smith's Maxims 249

Direct and Indirect Taxation 250

Heavy taxes on injurious articles 252

Tariffs — Specific and Ad valorem Duties 253

Two Systems of Taxation in America 254

National Taxation chiefly Indirect by duties 255

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

State Taxation— Direct 258

Mode of assessment and collection.

Taxing Evidences of Debt involves double Taxation 259

XVI CONTENTS.

FOURTH DIVISION.

CHAPTER XIX. . Exchange

PAGE

Nature of Exchange 263

Value the central term 264

Purchasing power — A relative term — Distinct from price — Implies utility and cost — Maximum and minimum limits — The general formula of value.

The effect of variation of demand and supply depends on a. Durability of the article, b. Ease of increasing supply, c. The article as a necessity or a luxury, d. "Relation to fashion.

J. S. Mill's Fundamental Principles of Exchange 267

Three classes of articles. 1. Things which cannot be increased. 2. Things multiplied at moderate expense. 3. Things multiplied at extraordinary cost. Respecting these it is to be observed, 1. Value is a relative term, hence a general rise or fall of all values impossible. 2. Market value depends on demand and supply. 3. Things have a natural value towards which market value tends. 4. Natural value = cost value except with some things which have a scarcity value. 5. Things which cannot be increased have a permanent scarcity value. 6. Monopoly value means scarcity value. 7. The cost value of a thing = cost value of the most costly portion of it, sold. 8. Causes of permanent high value.

The Necessity of Exchange 270

International Exchange 272

Retail merchants — Middle-men — Factors— Jobbers — Shipping merchants — Importers — Bankers— Brokers — Underwriters.

CONTENTS. XY11

CHAPTER XX. Money an Instrument of Exchange

PAGE

Difficulties of Exchange by Barter 282

Money Defined — Its two Functions 284

A Standard of value — A Medium of exchange.

Whatever measures Value must possess Value 285

Essential qualities of a Medium of Exchange 287

Stability and precision of value — Universal acceptableness — Divisibility.

Articles used as Money 289

Necessary qualities of Money 290

Qualities which fit Gold and Silver for the purpose 293

1. Intrinsically desirable. 2. They cost labor. 3. Large value in small bulk. 4. Divisible without loss. 5. Quality uniform. 6. Value easily verified. 7. Indestructible. 8. Adapted to each other.

General Truths concerning Money 296

1. Money and the article exchanged for it equal in cost.

2. Universal commerce equalizes cost and supply of money.

3. The amount of money small in proportion to the whole trade. 4. Increase of production and trade demands increase of money. 5. Abundance of money not a certain index of prosperity. 6. A false maxim refuted.

Agency of Government respecting Money 299

1. To define a legal tender. 2. To coin the metals. Coinage must have regard to, 1. Purity of metal. 2. Size. 3. Form.

Seignorage — A uniform international coinage desirable.

The question of a Double Standard 305

Experience of the United States 308

OHAPTEE XXI.

Credit an Instrument of Exchange.

The Nature of Credit 310

The Forms of Credit 311

1. Book Accounts. 2. Loans. 3. Mercantile Paper. 4. Bank Deposits. 5. Stocks. 6. Bonds. 7. Notes for Circulation.

XV111 CONTENTS.

PAGE

The Useful Functions of Credit 314

1. It brings wealth into use as capital. 2. Gives efficiency to industrial talent. 3. Quickens exchanges. 4. A direct instrument of exchange. 5. Credit may under limitations enter into currency.

For all, a basis of sound money indispensable.

The Mischievous Abuses of Credit 322

1. Too freely granted. 2. Used for wild speculation. 3. Extravagance of debtors. 4. Confidence operations. 5. Over-estimate of assets. 6. Betrayal of trusts. 7. Excessive issue of currency.

Consequent Mischiefs 326

a. Fluctuating prices. b. Enhanced risks of business. c. Trade made a game of chance, d. Moral sense deadened, e. Force of contracts relaxed.

CHAPTEE XXII.

Banks and Currency.

Banks, Agents of Credit 330

Three Offices of Banks 330

1. To collect and hold money in safe keeping. 2. To loan and discount money. 3. To issue circulating notes.

Facts from the History of Banks 333

Bank of Venice — of Genoa — of Amsterdam and Hamburg — of England— Scotch Banking System — Bank of France.

Banks in the United States 337

State Banks — The Suffolk bank system — Safety-fund banks— Free banking — Two United States banks — The National bank system — Private banks — Savings banks.

The Liabilities and Resources of our National Banks 342

Liabilities. 1. Capital Stock. 2. Circulation. 3. Deposits. 4. Balances due other banks. 5. Reserves. G. Undivided Profits. 7. Miscellaneous liabilities.

Resources. 1. Loans. 2. U. S. bonds deposited for circulation. 3. Bonds and stocks held as investments. 4. Balances due from other banks. 5. Real estate. 6. Cash items. 7. Currency. 8. Funds to redeem circulation. 9. Miscellaneous items.

CONTENTS. XIX

PAGE

The Sources of Profits of National Banks 344

1. Interest — a. On U. S. bonds, b. On circulating notes. c. On remaining capital, d. On deposits loaned.

2. Premiums on exchange. 3. Commissions for collections.

Currency — Four Kinds 345

1. Value currency. 2. Mercantile currency. 3. Mixed currency — Distinction between ultimate redemption and immediate convertibility — Precautionary measures of Bank of England. 4. Credit currency — transfers without paying debts — Cannot go abroad — Keeps prices fluctuating — Lays a direct tax on the people — Is a forced loan — Disturbs commerce and industry — Demoralizes a people.

CHAPTER XXIII.

Protection or Free-Trade.

Definition of the two terms 355

The Presumption in favor of Free-Trade 356

1. Freedom a general economic law. 2. The right of property implies freedom. 3. Social instincts prompt free exchange. 4. Free-trade favors peace of nations. 5. Nature's varied gifts designed for one human family.

Arguments for Protection 359

The general argument — Protection a necessity to secure varied industry —

a. Every country has varied resources, b. Also diversity of talent, c. Men have diverse wants, d. Varied industry makes a home-market, e. Promotes social and moral advancement.

Foreign Competition Crushes out Home Production 361

a. Superior advantages, b. Control of the market, c. The course of English manufacturers, d. England repudiates protection after reaping its advantages, e. A new manufacture a costly experiment. /. Protective tariffs temporary, g. Competition reduces wages of labor.

2. Protection a means of National Independence 363

3. It makes a home-market for agricultural products 364

4. Favors Division of Labor and Skill 364

XX CONTENTS.

PAGE

5. A means of Retaliation 365

6. Sanctioned by usage and wise men 365

Free-traders value diversified industry, but deny that Protection

is necessary to secure it 366

a. Industry has a natural growth, b. Free competition favors it. c. Capital and Labor as they increase, develop all resources, d. Personal interest for accumulation a safe guide, e. Reactions follow unnatural forcing. /. Foreign products purchased with fruits of most effective labor, g. Industry naturally developed able to defy competition, h. A forced industry sickly and uncertain.

What Protection cannot do 369

No Industry once protected ready to go alone 371

" Pauper labor," a bugbear , 372

Protection favors isolation, not true independence 373

A home market forms itself with increasing wealth and population 374

Retaliation may work both ways 376

False notions originated and sustain protection 376

Positive objections to the Protective system 378

1. Fosters antagonism of industries. 2. By unnatural stimulus leads to over-production. 3. A tax on the people, without benefit to the government. 4. It is an unstable policy. 5. Demoralizes legislation. 6. Corrupts public morals and the public service.

Historical results 382

Free-trade between the States of our Union a successful experiment.

Roscher quoted 384

CHAPTER XXIV.

Railway Corporations.

Benefits of Railways, words of Judge Paine *. 386

Nature of a Railway Corporation 387

1. A creature of the State. 2. An agent of the State. 3.

A practical monopoly.

CONTENTS. XXI

PAGE

Relations of Railway Corporations to general industry 390

1. They give the last addition of value. 2. Enlarge the market. 3. Quicken exchanges. 4. Depend on productiveness of industry. 5. As monopolies, may diminish returns of industry.

Administration of Railway Corporations 391

A few managers wield great power.

Abuses in the management 392

Reckless expenses and credit — Interests of stockholders sacrificed by leases and combinations— Credit Mobilier — Stock speculations — Watering stock — Ruinous competitions — Carrying legislation by bribery.

Statesmanship and public sentiment must correct evils 394

OHAPTEE XXV.

Commercial Crises,

Speculation the prime cause 396

A Panic the turning point 397

The Gold Bank and Trust Company of San Francisco — The Tea speculation of 1839 in England — Tobacco -raisers on the Connecticut River — Western land speculations and the crisis of 1837.

The practical problem of commercial crises 402

Economic principles to be regarded.

The world-wide financial derangement from 1875-8 403

Causes, 1. Increased production by labor-saving machinery. 2. Expansion of credit necessary to large establishments. 3. Extravagant ways of business and of living. 4. Increased expense of wars and expanded national credit. 5. The United States war of the Rebellion and Franco German war.

POLITICAL ECONOMY.

Chapter I. Preliminary Observations

Origin of the Name. — Mankind are constituted

mutually dependent and cooperative. Hence by necessity, they live in Society and the highest good of the individual is identified with a common good. The first and simplest form of society is the Family, living under a common house-roof. Thus, very naturally, the Greeks, whose inquisitive minds pried into the philosophy of all things, grouped the elementary principles of men's social life under the term omovofiia, — economy, the law of the house. They used the term with reference mainly to a thrifty provision of comforts for the well-being of the members of the household.

As individuals make up families, so families make up cities and states. The elementary principles of the broader association are essentially the same with those of the primary societies. Hence the term Political Economy, applied to the community, in a body politic, as domestic economy is to the household. Aristotle first used the term with a signification vague and general. It has come now to have a technical meaning. Usage has recognized its intrinsic fitness to indicate that department of truth which is concerned with the well-being of men in society as affected by wealth. It is not likely to give plac* to any substitute. The adjective "Political" mean* simply pertaining to the city or state. It implies nothing of politics in the ordinary sense of that word.

Its Definition. — Political Economy is that branch of Social Science which treats of the production and application of wealth to the well-being of men in society. It is a branch of true science.

By Science, as the word is here used, we mean a Systematic arrangement of the laws which God has established, so far as they have been discovered, of any department of human knowledge. It is obvious, upon the slightest reflection, that the Creator has subjected the accumulation of the blessings of this life to some determinate laws. Every one, for instance, knows that no man can grow rich, without industry and frugality. Political Economy, therefore, is a systematic arrangement of the laws by which, under our present constitution, the relations of man, whether individual or social, to the objects of his desire, are governed. Man's hand joins with the hand of fellow-man and with the powers of nature to produce wealth. Hence the processes and the legitimate end of the science imply a combination of the laws of the material world with the laws of man's social nature.

Fundamental Laws. — The science is based on four fundamental laws.

1. God has made man a creature of desires and con* stituted the material world in which he lives with qualities and powers available for the gratification of those desires. As men advance in individual and social development, their desires are multiplied. At the same time by their increased intelligence and ingenuity, the resources of nature are unfolded in full proportion. Desire stimu-

PRELIMINARY OBSERVATIONS. 5

lates invention and successful invention wakes new desires. There is no assignable limit to the development of either men's desires or nature's resources.

2. For desires above the very simplest wants of the animal, man must, by Labor, force nature to yield her hid* den resources. Things most essential to mere animal life are furnished by nature in available form, demanding, on the part of men, only such exertion as is necessary to take and use them. We can hardly avoid the light, or refrain from breathing the air. Water bubbles up from the ground to quench thirst, and the spontaneous vegetation of the earth offers something already prepared for food. But for those desires which unfold with the exercise of our rational faculties, from anticipations of the future, from the conception of possible enjoyments, from the choice of a freewill making selection according to taste, from the love of admiration, from the love of power, from the spirit of benevolence — for these, nature hides the means of gratification and yields them only to the toil of contriving mind and muscular force. The conveniences and comforts of civilized life are the fruits of human Labor.

3. The exertion of labor establishes a right of Property in the fruits of labor, and the idea of exclusive possessions a necessary consequence. Personal rights begin with the consciousness of individual being and of individual achievement ; and the idea of labor expended in the production underlies directly or indirectly the property-right to anything. Originally the thing produced belongs to him who produced it by an intuitive conception of right, and the act yt appropriation is as instinctive as the act of breathing.

4. With the right of property, comes also the possibility and the right of Exchange, or the mutual transfer of possessions between man and man, and between different communities and countries. One may do what he will with his own. 'The transfer in good faith and perpetuity of an object gained by labor constitutes a title to possession aa well grounded as that which rests immediately on labor performed. We are brought thus into the sphere of man's social life with its manifold and complicated relations, from which proceed the most powerful incitements to stimulate desire, to nerve up labor, to maintain rights and to multiply and distribute the innumerable elements of wealth.

Materials of the Science. — The materials of this branch of science lie fixed in the nature of man, and of the physical world which he controls, and in the structure of human society. They are drawn out by the study of men's wants, the investigation of nature's resources, the study of statistics of human invention and industry, and the defining of principles for common and reciprocal agencies in social relations. This science combines elements of both physical and metaphysical philosophy. It differs from the purely physical sciences in that the phenomena of human volition are continually involved in the system. It differs from the branches of intellectual and moral science in that it contemplates all soul-phenomena with reference mainly to certain physical results. Its leading propositions must often express tendencies rather than actual facts. Its conclusions must rest often on the balance of probabilities, rather than on pure and perfect demonstrations.

The Motive to Effort. — Political Economy regards self-interest as a universal motive of human action, and it studies the mutual relations and intercourse of men as governed by that motive. It assumes that labor is irksome, and that every body desires the utmost possible gratification with the least possible exertion. Its great problem is to find a common interest which, as the resultant of individual self-interest, properly combines and regulates the separate forces. Its principles point to the golden rule of

PRELIMINARY OBSERVATIONS. 7

Christ as the formula by which the problem must be finally solved.

Conflicting Desires. — Three desires inherent in every man contend for the mastery.

1. Desire of Ease.

2. Desire of Present Gratification.

3. Desire of Means to ensure Future Gratification. The resultant of these conflicting desires measures for

any one his interest in the accumulation of wealth. The degree in which the other two are held subordinate to the third determines the productive activity of a community.

Chapter II. Definitions And Divisions

Wealth. — This is the central term in Political Economy. The word is commonly used loosely and vaguely.

A clear and strict definition of it is important for a right understanding of this science.

The generic term Wealth emir aces all useful things which can be appropriated and exchanged. This definition combines two qualities, first, Utility or fitness to gratify desire ; second, Appropriability, or fitness to be seized and held in exclusive possession. Whatever has both these qualities in any degree, is a part of wealth. Whatever lacks either is excluded from wealth. Perhaps we cannot say of anything that it has absolutely no utility, for God has made nothing in vain. But in their place, relatively to gratifying any desire of man, the sand on the sea shore, the crags of the mountain-top, the debris of a demolished building are without utility. No accumulation of such things can become wealth. On the other hand, such things as the air and the sunlight have the very highest utility, insomuch that they are essential to the very life of every man, but their universal diffusion precludes their being appropriated as the exclusive possession of any. Therefore they form no part of wealth.

Errors respecting Wealth. — 1. It is an error to Identify wealth with money. Money, though it measures all things, and is a medium of exchange for all, itself forma

DEFINITIONS AND DIVISIONS. 9

but a small part of the sum of wealth. It is desirable not for its own sake but for the wealth in other forms which it can purchase. The so-called "Mercantile System" which long ruled the policy of nations with mischievous effects, rested upon this radical error. Its doctrine was that whatever tends to heap up money or bullion in a country adds to its wealth, and whatever sends the precious metals out of a country impoverishes it. Hence commerce was conducted with a sole view to bringing gold and silver into a country. That system is now exploded, but the false idea still lingers in many minds to confuse and complicate problems of both private and public finance.

2. It is an error to class as wealth human beings or their native capacities or acquired abilities. Physical strength, intellectual genius, moral character, professional skill are possessions of highest worth. But they are an inseparable part of one's own being. They cannot be directly transferred from one to another. They are powers for the production of wealth, but only the products which come from their exercise can be counted into the sum of wealth.

3. It is an error to regard mortgages, bonds, stocks and the like as a part of general wealth. These things only indicate a title to possession, a mode in which some real wealth is distributed. The mortgage which one holds simply divides the farm on which it rests between the nominal owner and his neighbor. The wealth is in the farm. It is not increased a whit by the mortgage itself. A bond of the United States for one thousand dollars, only gives its holder a lien on the solid wealth of the country for that amount, to be drawn some day from the tax-payers. A. B.'s certificate for fifty shares of stock in a railroad, means that he is the owner of that proportion of the land, the rails, the engines, the cars and whatever else constitutes the property of that corporation. Its division into one hundred thousand shares distributed to one thousand different persons makes no more of that wealth than if a Vanderbilt owned it all. In the estimate of one's individual property, he may count in all that he owns of this kind. The fact to be noted is that these do not add to the sum of general wealth, but only show how some portion oi wealth is distributed. They are Symbols not Substance. Many a mischievous illusion comes from mistaken views )f these things.

4. It is an error to exclude from the category of wealth everything which is not tangible and durable. The song of a Jenny Lind and the eloquence of a Wendell Philips impart a high gratification which can be appropriated by those who gain admittance to the hall where they are produced. The song is produced by labor applied to the air, which develops hidden properties of sound, viz., tone, melody, rhythm, which meet a human desire. What more can be said of a coat made by a tailor ? The two products diffei only in that the coat gives a moderate pleasure, prolonged for months, and may be laid up in store ; while the song gives a keen, it may be ecstatic enjoyment for an hour, only the cherished memory of which can be retained. It is wealth, impalpable, evanescent, consumed as soon as produced. It meets our definition, though it cannot be stored or counted.