Economics, or the science of wealth

Preface

I HAVE been induced to undertake this work by a conviction, the result of many years of experience as a teacher, that, to a considerable extent, the definitions in use in the science of which I have attempted to treat are indeterminate. Especially has it seemed to me, that while in all our treatises the subject matter of the science is assumed to be wealth, that word is either left without any satisfactory definition, or if a valid definition is given, it is not applied to the whole group of phenomena embraced in it. The words labor and capital also seem to me to have been so loosely defined, as to give an aspect of indefiniteness to the whole science. I can hardly be mistaken on this point. I have constantly seen the evidence in each successive class, and whatever text-book I have employed, that intelligent minds are aware of this indefiniteness, and their interest in the science is diminished by it. The same thing is apparent in the general public. Many intelligent minds either deny that any science of Economics exists, or if they admit its existence, they regard it as so vague and indeterminate as hardly to deserve to be called a science. I am compelled to admit that these complaints are not altogether ground-

IV PREFACE.

less. If I am right in this admission, the ground of such objections can only be removed by more accurate definitions, and a more logical method. Such definitions I have attempted to frame ; such a method I have sought to pursue. I have endeavored to present the whole science as a logical development of a single law of nature. Such I am sure it is, whether I have succeeded in so presenting it or not. If I have failed in what I have attempted, some other one more fortunate will surely succeed. With this frank statement of the motives which have induced me to write this treatise, I submit my work to the candid judgment of the American public. Surely no people ever had more urgent need of sound economic knowledge than we have at the present time.

J* M. S.

• Illinois College, Sept. 3d, 1877.

Contents

JV. B. The figtires refer to the sections.

Introduction

FIRST PRINCIPLES. PAG

Fundamental natural law, i. All ownership acquired bylabor, 2, Two distinct sciences evolved from the same fundamental law, 3. Definition of Wealth, 3. Definition defended, 4 and 5. Definition of Labor, 6. Labor divided into two classes, 6. Name of the Science, 7. Definition of Economics, 7. Science consists of three parts, 8. Social and moral conditions assumed by the Science, 8a.

Chapter I

STIMULI TO LABOR. IT

A rational soul, 9. Impulse of appetite, 10. Need of clothing, shelter, etc., ii. Love of acquisition and ownership, 12, Love of the beautiful, 13. Love of humanity. 13. All men's powers must be brought into use, 14. Satisfaction of aitificial wants, 15. Necessity of Government, 16.

VI CONTENTS.

Chapter II

CAPITAL. PAGE 19

Love of gain insatiable, and why, 17. Definition of Capital, 18. Subdivisions and other definitions, 18. These definitions explained and justified, 19. Sole function of Capital, 20. How Capital aids Labor, first sustains the laborer, second furnishes tools, third provides machinery, 21. All human beings laborers, 22. Wealth not national, 23. Aid rendered by Capital to Labor unlimited, 24. Partial limitation in Agriculture, 25. Land the fixed Capital of Agriculture, 25.

Chapter III

Principle proved, 26. Illustrated by the estate of A. T. Stewart, 27. Individual gratification the compensation of the capitalist, 28. Promotes improvement in architecture, 28. How men become public treasurers, 28. Public treasurers unfaithful, 29. Public liberality, 30. Recapitulation, 31.

Chapter IV

Diversity of natural endowments necessary to society, 32. Law of habit, 33. Definition of division of Labor, 33. Origin of do., 33. Extension of the principle in modern manufactures, 34. Economic advantages of it, 35. Increases skill, 35. Saves time in learning trades and in adjusting tools and adjusts compensation to skill, 35. Limitations of division of Labor, viz., Nature of the process. Want of sufficient capital, and Demand for the product, 36. Division of labor not national, 37. Combination of labor, 38. Other classifications of labor, 38a.

CONTENTS. VU

PART IL— Exchange.

Chapter I

VALUE. PAGE 49

Definition of Exchange, 39. Importance of definition of value, 40. Definition of Competition, 41. Definition of Value, Do. of Cost, Do, of Price, Do. of Supply and Demand, 42. Relation of Cost to Value, 43. Competition the only test of Value, 44. Objections to Competition as a universal test of Value, 45.

Chapter II

Two causes of fluctuations of Value. First cause, variation of cost of production, by improvement in machinery, by increased facilities of communications 46. By changes in the cost of material, 47. Second, variation of the ratio of Supply and Demand, 48, Ratio of Supply to Demand may be increased or diminished temporarily or permanently, 48. When Supply can be increased without increased cost, 48, When Supply cannot be increased without increased cost, 49. When Supply cannot be increased, 50.

Chapter III

Money the tool of Exchange, 51. Not the invention of a single mind, 52. Definition of Money, 53. Money mercantile fixed Capital, 53. Gold and Silver suitable for Money, ■ Universal desirableness ; scarce and obtained by great labor. One suited for large Exchanges the other for small. Capability of minute division, 54. Little subject to fluctuations of Value, 55. Money cosmopolitan, 56. Indications of designing mind, 57.

CONTENTS.

Chapter IV. The Relation Of The Government To The Medium Of

. EXCHANGE. PAGE 78

Chimerical theories, 58, Right of the Government to prescribe a legal tender, 59. Notes of the United States made legal tender, 60. Why? 60. Government may not interfere with contracts, 6r. Should never make its own promises legal tender, 61. Obligation to redeem greenbacks, 62. Greenbacks a depreciated currency, 63, Produce great fluctuations, 63. No natural limit of their amount, 64. Value varies inversely as the amount, 64. An elastic currency impossible, 65. Communism, 65. Unstable currency injurious to trade, 66.

Chapter V

CREDIT AND PAPER MONEY. QO

Credit founded in human nature, 67. Always present in the relation of capital to labor, 67. Definition of credit, 67. Banks of deposit, 68. Facilitate exchanges, 69. Credit cosmopolitan, 69. Banks of loan, 70. Banks of issue, Paper money, 71. Convenience of paper money, 71. Unstable, 72. Credit and legislation, 72. National currency, 73. Security for its redemption, 73. Not a satisfactory solution of the banking question, 74. Depends on the credit of the government, 74. No security for the payment of deposits, 74. Credit should be left to its natural development, 74. Why not a national bank, 75.

Chapter VI. Functions Of Credit. 102

Great influence of credit, 76. Quickens exchanges, 76. Unites skill and capital, 77. Diminishes the amount of money

CONTENTS. ix

needed, 78. By book accounts. By checks and drafts, 78. By bank notes, 78. The real advantage of paper money

79. Will facilitate our return to specie payments, 79. Power of credit to control prices, 80. Dangerous element

80. Financial crisis of 1837, 80. Binds the whole civilized world together, 81.

Chapter VII

MONOPOLIES. PAGE IIO

Foreign exchanges not international, 82. Definition of monopoly, 82. What monopolies are defensible, 83. The monopoly of protection, 84. The word protection used unfairly, 85. Competition the enemy of no legitimate business, 85. Tends to the perfection of the product, 86. General principles of the science adverse to "protection," 87. Human race one family, 87. Theoretical and practical, 88.

Chapter VIII

FREE TRADE, OBJECTIONS CONSIDERED. IIQ

Definition of free trade, 89. Variety of industry said to be a condition of national prosperity, 90. Not universally, 90. Which is cause and which effect, go. In the beginning of society variety of industry impossible, 90. Free trade only opposed to unprofitable industry, 91. Protection said to be necessary for infant manufactures, 92. Free trade said to deprive land of manure, 93. Free trade said to be destructive of national independence. 94. What is national independence, 94. Dependence of nations mutual 95. Free trade tends to universal peace, 96. It is said free trade should be reciprocal, 97. Self-destructive retaliation, 97. Protection said to encourage skilled labor, 98.

CONTENTS.

Chapter IX

OBJECTIONS TO PROTECTION CONSIDERED. PAGE I35

Aim of protection, Means inadequate, 99. Injurious to public morals 99. Constructs the economic fabric on a false principle, 100. Corrupts our national legislation, loi. Destructive of statesmanship, loi. In its own nature unsocial, 102. Dangerous to our future, 102. Self-contradictory and self-destructive, 103. Raises the price of protected articles 103. Benefits no class, 104.

Chapter I

PRELIMINARY PRINCIPLES. I45

Exchange and distribution distinguishable, 106. Distribution defined, 106. Controlled by competition, 107. Recapitulation, 107. Two-fold division, 108.

CHAPTER XL

WAGES DETERMINED BY COMPETITION. I50

Wages defined, 109. Labor and capital often in the same person, 109. Employer and employe, 110. Location of the conflict, no. Wages not controlled by the employer, III. Both parties controlled by competition, 112. Needle-women cannot be relieved of competition, 113. Wages above the rate of competition injurious to employes, 113. Minimum and maximum of wages, 114.

CONTENTS. XI

Chapter III

WAGES AS AFFECTED BY COMBINATION. PAGE l6o

Combination of laborers, 115. Of capitalists, 115. The competing unit individual not social, 115. Strike 'defined,

116. When it can and when it cannot succeed, 116. Trades-unions, their objects, 117. Often monopolies,

117. Consequences if successful, 118. Success impossible, 119. Cannot control all workmen, 119. Will arrest accumulation, 120. Employers cannot resist competition by combination, 12 1. Must have the reputation of paying fair wages, 121. Violence must not be used, 122.

Chapter IV

VARIATION OF THE RATE OF WAGES. I70

Causes of the varying results of competition, 123. First cause, change of the number of laborers in proportion to capital,

124. The greater the capital the greater the demand for laborers, and vice versa, 124. When both labor and capital vary wages depend on the ratio of one to the other,

125. Employers and employes not natural enemies, 125. Labor-saving machinery another cause, 126. Increases the demand for labor, 126. Chimerical expectations, 127. Exception for agricultural labor, 128. Wages vary with the cost of living, 129. Not merely with the cost of the necessaries of life, 129.

Chapter V. Causes Of The Variation Of Wages For Particular

PERSONS AND CLASSES. l8o

First cause, diversity of natural gift, 130. Profits of eminent professional men, 130. Second cause, cost of acquiring skill, 131. Wages proportioned to skill, 131. Third

XH CONTENTS,

cause, amount of confidence reposed, 132. Honor of position reduces wages, 132. Numerous causes, 133. Excessive competition in certain occupations, 134. Competing unit, 134. Living of some of the competitors not at stake, 134. Obscure and subtle causes affect wages, 135. Vicious celibacy, 135. Science not opposed to marriage, 136, Alleged injustice of the wages of women, 137. Said to receive less wages for the same work, 137. Why not pay women the same wages as men, 138. Competition a guide to one's proper occupation, 139. Applicable to the Christian Ministry, 139.

Chapter VI

OWNERSHIP OF LAND. PAGE I92

Two parties in distribution, 140. Ownership of land must depend on a natural law, 141. Case of land different from that of air and water, 142. Nations own water on which they bestow labor, 142. Ownership of land acquired by labor bestowed, 143. Not merely temporary, 143. Government title not procured by purchase from savages, 144. Savage tribes not nations, 145. Higher law, 145. What shall be done with the Indian, 146. Origin of the government title, 147. Right of political jurisdiction, 147. Objection to this view. Labor of subduing land said to be over compensated, 148. Not true, 148. Not relevant if true, 148. Another objection. Prospective enhancement of value, 149. Allowed for in rent, 149.

Chapter VII

Gains of the capitalist are either interest, rent or profit, 150. Interest defined, 150, Consists of two elements, 150. Why interest must be paid, 151. Legislative interference with, 151. A violation of ownership, 151. Controlled

CONTENTS. XIU

by competition, 152. Various causes of fluctuation, 153. Tenure of land affects the rate of interest, 153. Different rates in different countries, 154. Declines with the progress of civilization, 155. Stationary condition of capital not to be apprehended, 156. Demands for capital inversely as the rate of interest, 157. Cosmopolitan nature of capital sustains the rate of interest, 158. Also labor-saving invention, 158.

Chapter VIII

RENT. PAGE 2l8

Rent defined, 159. No risk in rent, 159, Rent less than interest without risk. Reason why, 159. Ricardo's theory of rent stated, 160, Rent in new settlements, 161, Reason why, 161. Progress of cultivation, 162. Fallacy of Ricardo's theory, 163. Why rent rises with the progress of society, 164. Law of diminishing returns, 165. Rent an element in the cost of agricultural produce, 165a. Abolition of rent impossible, 166. Rent offset by transportation, 167. Fawcett's admission, 168. Same fallacy applied to minerals, 169.

Chapter IX

Profit defined, 170. How differs from interest, 170. Rate declines with advancing civilization, T70. Competition the supreme law, 171. Rate different in different occupations, 172. Each occupation has its natural rate of profit, 172. Combinations of capital to resist competition, 173. Free Trade the best antidote, 173. Particular combinations. Petroleum, 174. Great Railways, 175. General Railway law, 176. Wisdom of the managers not a sufficient public protection, 177. Question complicated and difficult, 178. No effectual protection against such combinations, 178. Great advantages of large combinations of capital, 179.

XIV CONTENTS.

Chapter X

UNDERLYING CONDITIONS OF FREE COMPETITION. PAGE 245

Three conditions, i8o. First condition, freedom of exchange, especially in land, 1 80. Required by the law of ownership, 181. Limitation of it injurious to both parties, 181. Desire of the agricultural laborer to own land, 182. Life hopeless without it, 182, Relative profit of large and small farming, 183. Comparison of English and American tillage, 184. Land more valuable in small proprietorships, 184. Why the number of holdings in England is diminishing, 185. Difficulty of the question, 185. Second condition, intelligence in both parties, 186. Competition impossible without it, 186. Relation of our science to public education, 187. Proper limits of public education, 187. Public education of itself not sufficient, 188. Agricultural population of New England, 189. Third condition, moral integrity, 190.

CHAPTER XL

Malthus' theory of population, 191. False in practice, 192. Two results of free competition, 192. First result, universal dissemination of civilization, 193. This law recently developed, 193. English colonization, 193. Why this law was little known in antiquity, 194. Not manifested in some modern nations, 194. Depends on quality of emigration, 195. True economic lesson, 195. Law applicable to capital, 196. Second result, human race propagated from best specimens, 197. Four strata in civilized society, 197. First and second contribute little to population, 198. Fourth class contributes little, 199. Population chiefly derived from the third class, 199. Conditions most favorable, [99. Propagates the highest civilization, 200. The law of wages beneficent, 200. Darwin's natural selection, 200. Future of the human race secured, 201.

CONTENTS. XV

Chapter XII. Economic Conditions Of General Peace, Page 273

Economic importance of the peace of the world, 202. Degraded masses dangerous to internal tranquillity, 203. Dangerous to international harmony, 204. All must demand and expect the comforts of life, 205. Strong to repel invasion, weak for aggression, 205. The one condition of general peace, 206.

Chapter XIII

SUBSTITUTES FOR COMPETITION. SOCIALISM. 2S0

Public mind unquiet. Cooperation, 207. Socialism, pure and simple, 207. A denial of our fundamental law, 208. Modified socialism 209. Relies on competition while it rejects it, 2og. Dispensing with the services of middle men,

210. Allowing laborers a share of profits, 2ii. The true agricultural cooperation, 211. Education not sufficient,

211. Laborers should be stockholders, 211. True cooperation not kindred to socialism, 212. Competition the only hope for the laborer, 212. Abolition of private ownership of land, 213. National baiikruptcy and anarchy,

213. Logical consequence of unjust laws of land tenure,

214. Should government find employment for the unemployed, 215. Abolition of the right of property, 215.

Chapter XIV

No logical place for it, 216. Government a partner in all production, 216. Protection of person and property not the only political function, 217. Postal service. Streets, thoroughfares, etc., 217. Local taxation, by whom levied, 217. Expense of public education, 218. Limits of, 218, Care of the unfortunate, 219, How far gratuitous, 21,9.

XVI CONTENTS.

State must protect its own existence, 220. Its promises bind individual conscience, 220. Abuse of the power of taxation, 221. Mode of taxation, 222. Revenue duties, 222. Should not interfere with trade, 222. Taxation of debts, 223. Creditor should pay, 224, to the State that protects, 224. Dangers of excessive taxation, 225.

Chapter XV. Pauperism, Page 3 12

An anomaly. No logical place for it, 226. Always attends civilization, 226, No modification of economic law can provide for it, 227. Moral forces require consideration. Inadequate, 228. The economist insists on two prohibitions. No ownership without labor. Men must not be relieved from the fear of want, 229. Out-door relief to be avoided, 230. Relief establishments should not undersell in the market, 230. Objections to out-door aid, 231. Tend to increase pauperism, 231. Paupers should not be voters, 231. Relief establishments should be reformatories, 232. Vicious self-indulgence should be restrained, 232. If society countenances vices it should support the pauperism they produce, 233.

Chapter XVI

Supplementary topics, 234. Necessary and disposable products, 235. Stimulants and narcotics, 236. In great demand, 236. No reasons to justify this vast expenditure, 237. Eminently dangerous, 237. Economy enters no protest against the love of the beautiful, 238. False modes of ornamentation, 238. Fashion, 239. Peculiarly potent in democratic society, 240. Subject worthy of the consideration of the wealthy, 240. Adverse to correct taste, 241. Under freedom the people arbiters of their own destiny, 242. Relation to national character, 242. The wealthy not to lead useless lives, 243.

CONTENTS.

Chapter XVII

PUBLIC LIBERALITY. PAGE 334

Love of social prosperity a natural impulse, 244. Laws of exchange not adequate to supply all social m ant, 244. Governments cannot supply them, 244. Low rate of interest favorable to public liberality, 245. Intelligence of the community important to capital, 246. The rich should be voluntary public treasurers, 246. Public charities not to hold land by inalienable tenure, 247. Higher Institutions of education should be controlled by the highest culture, 248. Government inadequate to it, 248. Tendencies of democratic peoples to lavish expenditure, 249. Public liberality the remedy, 249. Capital so used not withdrawn from the aid of labor, 249.

FIRST PRINCIPLES.

§ I. The science we are about to expound, Is the logical development and application to a special group of phenomena, of a single law of nature, as truly as physical astronomy is the logical development and application to the phenomena of the solar system, of the law of gravitation. The law of nature to which we refer may be thus enunciated :

f^ Eve7'y man ozvns himself^ and all which he produces l_^'the voluntary exertion of his own powers.

Every science must assume something. Ours must assume that the idea of ownership is perfectly clear and intelligible to every one. It is a simple intuition, which originates in the spontaneous action of every human mind, and is therefore undefinable. It ranks in this respect with the idea of personality, of moral obligation and of causation. As the being we call self is -conscious of its own wants, and exerts its own powers to supply them, it necessarily discerns the idea of possession, and begins to understand the meaning of possessive pronouns and learns correctly to apply them.

§ 2. This is our only idea of ownership. You cannot convince any human being, that another person may properly claim the possession of any thing as exclusively his own, unless his claim can be traced back to an origin in the natural law just enunciated.

If it can be so traced back, no man in his senses will call in question its validity. The ownership may have passed by voluntary gift or exchange, the nature of which transaction will hereafter be explained, through many hands ; but if the ownership really exists, it must have been originally acquired by the exertion of some one's individual powers, to render the thing claimed serviceable to human well-being. The human mind instinctively discerns that in this way absolute ownership is acquired, and that the acquisition of any real ownership in any other way is impossible. The powers of nature are the free gift of God to all, and cannot be possessed. All those objects whereby man's wants are capable of being supplied by his own superadded efforts, are given in impartial liberality alike to all. The air, the water, the land, the spontaneous productions of the earth, the primeval forest, the game, the wild fruits are free to all. It is only when man has put forth his own efforts to render that helpful to human well being which was not so before, that the idea of ownership arises. Man's indisputable claim to the results of his own exerted powers carries along with it the material substance which by his exertion has been made fit for human use. The wild fruits as they hang upon the bush can be owned by no one. He who gathers them, by gathering becomes their owner. The nugget of gold that lies on the surface in some sequestered gorge of the mountains has no owner, any more than the atmospheric air which circulates around it. He who has made a journey to those unfrequented regions of desolation, discovered and picked up the precious thing, and carried it to the haunts of men, has become its owner, however great its value, just as he owned the ripe blackberry as soon as he had plucked it from its native bush. He who has entered on land never before subjected to human culture, has acquired the possession of all which by his own toil he has subdued and rendered capable of producing food for man. The savage who for generations roamed over it in pursuit of game, and lived on its spontaneous productions, acquired no ownership, because he did nothing to increase its capability of supplying human want. We do not expect to obtain full credence for these propositions without further proof than we can give in these preliminary statements. As we proceed in the development of the subject, there will be occasion more fully to illustrate and substantiate the principle. It is only appropriate here to give it its place among the fundamental principles of the science.

All owner sJiip of material things consists essentially in our unquestioned claim to possess and enjoy the results of that labor which we have expended tpon them.

§ 3. Two distinct sciences result from the development and application of this natural law. The being that owns these powers is capable of moral obligation, and is a subject of m.oral law. To point out the moral laws to which he is amenable in the exercise of these powers, is the sphere of the science of ethics. To develop the same fundamental law in the direction of the multiplication and exchange of objects fitted to satisfy human desire, and the distribution of them among all those who cooperate in their production, is the sphere of the science we are proposing to expound.

In constructing a system of science, it is necessary first to draw its extreme bounding lines. This can only be done by forming a comprehensive concept, which shall embrace precisely and only all the phenomena with which the science is to deal. We think that writers on our science have often failed to do this, and that much of the vagueness and indefiniteness with which it is charged is due to this cause. For the expression of that comprehensive concept we select the word wealth. We propose to write a treatise on the science of wealth. We must therefore define that word.

At the present stage of our inquiries, we can scarcely afford space for any controversy with those who think with Professor Perry, that it is impossible to frame any definition of wealth which will render the word fit for scientific use. Professor Perry has written a book which contains much clear thought and instructive suggestion. But it greatly lacks the scientific character, precisely for the reason that, instead of applying his acute mind to the definition of wealth, he has written about it without defining it. It is of no avail to say that the meaning of the word is unsettled. That only shows that it is necessary to settle it. The science itself will always be to a greater or less extent vague and indefinite, unworthy to be called a science, till the precise meaning of that word is determined by accurate definition. If the word wealth cannot be defined, then the science of wealth is simply impossible. Nor do we escape the difficulty by adopting Archbishop Whately's definition of the science, — "the science of exchange." We must still meet the question, what is wealth ? for to wealth only is exchange applicable. We give therefore the following :

"' Definition, Wealth is anything which can be owned and exchanged f 07' an equivalent.

This definition embraces,

First, All human powers to adapt the materials of the world to the satisfaction of human desire by voluntary efi"ort ; for the scare owned and can be exchanged for an equivalent. A man can exchange his power to produce such changes, for a day, for a year, for a life-time, for so many dollars, or for so much of any other desirable thing as may be agreed on between himself and the other party to the exchange.

Second, All tools, instruments and machines by which human labor is assisted.

Third, All objects which have been rendered capable by human effort of gratifying human desire, which remain at any time unconsumed, whether the process of fitting them for human use is completed, or in progress. Into precisely these three classes all wealth is divisible, and into one of them every thing of which the science properly treats will naturally fall.

§ 4. If to this definition it is objected that the word wealth is not ordinarily employed in so comprehensive a sense, the fact is admitted, but it is denied that this is any valid objection to the definition. In many sciences we are under the necessity of employing technical terms as comprehensive concepts of the phenomena with which any science has to do, which terms do not agree in the extent of their meaning with any terms which are in popular use. The popular mind has never formed that precise group of ideas with which the science has to do, and therefore has no term which expresses it. In every such case we have our choice of two expedients, either to select a new term not in popular use, more commonly derived from the storehouse of classical learning, or to choose a word in popular use which comes nearest to the desired meaning, and then limit it by a definition to a precise technical import. In the moral and social sciences we have for the most part pursued the course last indicated. Thus in Psychology the term perception is almost never used in popular speech in that precise meaning in which it is employed to express the acquisition of a knowledge of the material world through the senses. We have in this "case selected a word from popular speech, and by a definition invested it with a precise technical meaning which it does not bear in common use. Precisely such liberty has been taken with the word wealth in our definition. Such a use of words finds innumerable justifications in all the moral and social sciences.

§ 5. If it is further objected to our definition of wealth, that it arranges in the same class things that are incongruous, that it embraces in the same genus things which have no generic likeness, as for example the wealth produced and the powers by which it is produced, our answer is, that the things referred to are not incongruous, that they are united by true generic resemblances. They are alike in the two generic characteristics, that they are capable of being owned and capable of being exchanged. The reason why so much difficulty has been experienced in defining this word is, that men have failed to notice that these are the true characteristics of the genus, and that they pertain alike to all which we have comprehended in our definition. Nothing is more common than such an occurrence as the following. One man has accumulated results of labor which he wishes to employ in trade. But he is infirm with age or otherwise incapacitated for exerting the active force which the business requires. He is therefore quite willing to enter into a partnership, on equal terms, with some one who possesses the requisite, business efficiency, regarding the active powers of his partner as a full equivalent for the accumulated results of his own previous activity. One partner is just as rich in present active power, as the other is in accumulations of wealth. The two are regarded as perfectly homogeneous, and the one is freely exchanged for the other. If one of them is properly called wealth, why not the other? Examples involving and demonstrating the same principle are innumerable.

§ 6. The word labor will be of frequent occurrence in this treatise. We therefore propose the following:

Definition, Labor is the exertion of 7nans naturalT^ powers^ for the purpose of producing such changes as \ conduce to the gratification of human desire and the sup^^/ ply of human want.

All labor is divisible into two classes, viz :

First, That which is employed in constructing the implements and machines by which labor is aided and Tendered efficient, and,

Second, That which is employed in producing changes whereby desire is directly gratified.

§ 7. The science of which we propose to treat is usually called Political Economy. To this name there are grave objections. We cannot help thinking that the continued use of this name is a standing proof, that the aim of the science has been to a certain extent misdirected. The name seems to suggest the idea, that the object of the science is to promote the wealth of the nation, that it always has special reference to the political divisions of the world, to those lines which are the conventional boundaries of nations. Some such idea seems to have been in the mind of Adam Smith, the father of the science, and to have induced him to choose for the title of his great work, " The Wealth of Nations." A recent writer on the subject. Professor Bowen, has chosen for the title of his book, "American Political Economy." In just so far as this idea of nationality has possession of the mind of the writer, it tends to a distorted and erroneous view of the subject. All this is as inappropriate as to speak of national Ethics, or American Astronomy. Science is not national or political. It is Universal. It is Human. Economy means, the law of the household, the family. There is a Human Family. " All ye are brethren." The Science of which we are to treat embraces that whole family, as truly as Ethics does, as truly as Astronomy gives us the science of the heavenly bodies, however separated from each other in immensity. We claim for the science its place among the universal sciences, like Ethics, Esthetics, Physics. Following the analogy according to which these names are constructed, we claim for our science ^he name Economics. We give the following :