Political economy, designed for use in Catholic colleges, high schools, and academies

Front matter

Class HB

COPYRIGHT DEPOSm

POLITICAL ECONOMY

Chapter I

DEFINITION. METHOD. SCHOOLS. Pages 1-3 i

I. Definition of Political Economy.

Definition and explanation Political Economy a science .

Political Economy a practical science Political Economy subject to Ethics Political Economy distinct from Ethics Political Economy subordinate to Political Science

II. Method of Political Economy.

Subject matter of Political Economy Method of Political Economy

III. Schools of Political Economy.

The Mercantile System .

The Liberal School :

Tenets

Branches of the Liberal School : (i) Physiocrats

(2) Adam Smith and his followers

(3) French School .

(4) Manchester School .

(5) Moderate Liberal School .

(6) Eclectic School

(7) Austrian School

(8) Mathematical School The Socialist School :

Explanation and definition Principles of Socialism Defenders of Socialism Branches of Socialism : (i) Agrarian Socialists .

(2) State Socialists

(3) Evangelical Socialists

(4) Anarchists The Catholic School :

Representatives ....

Position of the Catholic School .

Principles of the Catholic School The Historical School :

Explanation ....

Principles of the Historical School .

13 15 16

17 18

19 19

20 21

29 29

Vi CONTENTS

Chapter II

THE STUDY OF ECONOMICS. WEALTH. VALUE.

PRICE. Pages 32-65

PAGE

I. The Study of Economics.

Divisions of Political Economy 32

II. Wealth.

Definition of wealth 33

Wants 33

Objects capable of satisfying wants 34

Objects procured by labor 35

Objects exchangeable . 35

Immaterial goods as wealth -36

Money as wealth 36

III. Value.

Value in general 37

Economic value ......... 38

Value in use ; value in exchange ...... 38

Cause of value 39

Various theories of value 40

Labor as a cause of value 40

Marginal value 42

IV. Price.

Definition and explanation of price ..... 44

Scholastic doctrine of price 45

Market price . 47

Variations of prices 51

Prices and competition . 56

Monopoly price 61

Price fixed by law 63

Chapter III

PRODUCTION. FACTORS OF PRODUCTION. Pages 66-99

I. Production.

Definition and factors . 66

Kinds of production 67

Product 67

Cost of production 68

Productive industries 69

End of production 70

Laws of production 71

Factors of production . . . . . . » -72

Vll

II. Nature.

Place of Nature in production Law of Diminishing Returns .

Intensive and extensive production Law of Diminishing Returns illustrated

III. Labor.

Definition of labor .

Requisites of labor :

(i) Movement .

(2) Toil or pain

(3) Time .

Laboring Class Efficiency of labor :

(i) Physical helps

(2) Mental helps

(3) Moral helps Hierarchy of labor

Law of Population — Doctrine of Malthus Doctrine of Malthus rejected Hindrances to production Division of labor :

(i) In the nation

(2) In the workshop .

Advantages and disadvantages of the division of labor Machinery

Advantages of machinery Disadvantages of machinery

IV. Capital.

Definition of capital Capital essential to production Capital requires labor .

Capital results from saving .

Capital is consumed in production Kinds of capital . . . , Increase of capital . . . .

PAGE

73 74 75

77 78 78 79

79 80 80 81 82 86 88

89 90

91 92 92 93

94 95 95 96

97 97 97

IV

MONEY. Pages 105-118

PAGE

Origin and Development of Money.

Development of money ........ 105

Properties of gold and silver as money . . . . . 107

Definitions of money 107

Kinds of Money.

Coin or value money 109

Paper or credit money . . , . . . . .109 (i) Defects of paper money ...... no

(2) Effect of paper money on national wealth . . .111

(3) Signs of over-issue of paper money , . . .112

Money of Account . 113

Kinds of money in the United States . • . . . 113

Functions of Money.

Medium of exchange . . . . . . . • nS

Measure of value 116

. 117

Standard of deferred payments

Coinage.

Definition .....

Seigniorage .....

" Right," " heavy," " light " money

117 117 118

Chapter VI I

II.

MONEY AND PRICES. GRESHAM'S

LAW.

Pages 119-]

. Money and Prices.

Relation between money and prices

Variations in money

Laws of prices

Supply of money .

Demand for money

Stringency

Commodities and prices

Laws of prices illustrated

Distribution of money .

. Gresham's Law.

Statement of Gresham's Law

How money disappears .

.

Historical instances

.

Operation oi Gresham's Law .

.

Limitation of Gresham's Law

.

.

IX

Chapter VII

BIMETALLISM AND MONOMETALLISM. Pages 134-142

Definitions ........

Kinds of bimetallism

Historical sketch of bimetallism in the United States Arguments of the bimetal! ists .....

Arguments of the monometallists ....

CHAPTER VHI

INFLATION AND CONTRACTION. DEPRECIATION. MULTIPLE TENDER. Pages 143-159

I. Inflation and Contraction.

Inflation ....

Contraction ....

Effects on productive industries Crises .....

Remedy in long-term contracts

II. Depreciation of Money.

Explanation of depreciation ....

Historical sketch of the precious metals World's production of gold and silver .

Effect of depreciation on society .

Instances in history of great increase of money III. Multiple Tender.

Money as a standard of deferred payments . Remedy proposed : Multiple tender

145 146

148 149 151 153 156

157 157

Chapter IX

CREDIT. Pages 160-170

Definition

. 160

Instruments of Credit :

I. Book credit . . . ...

. 160

2. Promissory notes ......

. 160

3. Checks

. 161

4. Bank notes

. 162

. 162

Kinds of bills of exchange ....

. 163

Use of bills of exchange ....

. 163

Origin and function of bills of exchange

. 163

Rate of exchange ......

. 166

Factors determining rate of exchange .

. 167

Favorable and unfavorable rate of exchange

. 168

Variation of rate of exchange . . . .

. 169

X

Chapter X

BANKS AND BANKING. Pages i 71-193

Definition ....

Kinds of banks Organization and nature : (i) Federal reserve banks

(2) National banks .

(3) State banks

(4) Private banks

(5) Loan and trust companies

(6) Savings banks Functions of federal reserve banks Functions of other commercial banks

(i) Discounting negotiable paper

(2) Receiving deposits

(3) Buying and selling exchange, coin, and bullion

(4) Making loans ....

(5) Giving bank credit to merchants

(6) Loaning money on farm land

(7) Establishing branch banks in foreign countries Functions of loan and trust companies Functions of savings banks .

PAGE

171 171

172 176 182 182 182

183 184

Chapter XI

HISTORY OF BANKING. Pages 194-221

I. History of Banking in General

II. History of Banking in the United States :

1. Bank of the United States .....

2. Independent treasury system .....

3. State banks ........

4. National bank system :

Constitution and growth .....

Defects of the national bank system : (i) Origin of the national bank system

(2) Isolation of the several banks

(4) Congestion of money in money centers

(5) The independent treasury system

(6) Inelastic currency .....

(7) Lack of banks in many districts .

Remedies proposed for the evils of the national bank

system : (i) Reestablishment of the United States Bank

(2) A federated bank

(3) Aldrich plan

(4) Branch banks

195 197

203'

209 210 210 212

XI

PAGE

(5) Government guarantee of deposits . . . 213

(6) Asset or credit currency 215

(7) Emergency currency 217

5. Federal reserve system 219

Chapter XII

POSTAL SAVINGS BANKS. LAND BANKS. BANKING SYSTEMS OF OTHER COUNTRIES. Pages 222-231

Postal savings banks 222

Federal land banks and joint stock land banks . . . .225 Banking systems of some other countries: England . . .227

France 228

Scotland 230

Chapter XIII

INTERNATIONAL TRADE. BALANCE OF TRADE AND BALANCE OF ACCOUNTS. CUSTOMS DUTIES. Pages 232-247

I. International Trade.

Causes .....

Effects

Advantages ....

Extent of international trade Domestic commerce Consular service Foreign payments . 11. Balance of Trade and Balance of Accounts Balance of trade ......

Items entering into the balance of accounts . Correlation between imports and exports

III. Customs Duties.

Definitions

Tariff

Protectionist poHcy of the United States

Methods to replace protection

Contractual system .....

232 233 233 234 235 236

239 241

243 246 246

Chapter XIV

PROTECTION AND FREE TRADE. Pages 248-275

Historical Sketch.

Historical sketch of protection . .

Xll

II. Effects and Principles of Protection.

Protection invites capital to take up new industries

Does protection increase the labor and capital in a country?

Protection establishes less productive industries

Protection should be temporary .....

The burden of raised prices under protection falls on the consumer ........

Protection should be limited ......

Protection reduces foreign trade .....

Protection causes international animosities 9. Protection does not increase the general rate of wages in a country .........

III. Arguments for Protection.

General argument .

More specific arguments

IV. Arguments for Free Trade . . . . .

I.

3- 4-

6. 7-

PAGE

254 256

258 260 261 262

266 267

Chapter XV

TRANSPORTATION. RAILROADS. Pages 276-293

Transportation aids production ......

. 276

Kinds of transportation . ......

. 277

Growth of railroads .......

. 278

Cost of railroads ........

Conditions affecting railroad building ....

Groups of railroads

Business of railroads . . . . . • , •

Railroads as private concerns and as public concerns

Consequences of these two facts .....

Power of railroad managers ......

Overcapitalization

Railroad charges ........

Classification

Discrimination

Chapter XVI

REMEDIES FOR RAILROAD EVILS. GOVERNMENT

OWNERSHIP OF RAILROADS Pages 294-306 Remedies for Railroad Evils.

Evils of railroads 294

Remedies

1. Action at law . . . .

2. State commissions

3. Interstate Commerce Commission

A.

XUl

II. Government Ownership of Railroads.

Arguments for government ownership . . . , Railroads in foreign countries . . . . , Motives for government ownership in foreign countries Objections to government ownership . . . .

PAGE

299 300 303 304

Chapter XVII

CORPORATIONS. TRUSTS. Pages 307-324

I. Corporations.

Methods of doing business

1. Individual establishment

2. Partnership .

3. Corporation .

The corporation charter

4. Trust ....

Advantages of corporations .

Objections to corporations

308 308 309 309 309 310

II. Trusts.

Definition and explanation 314

Motives for the formation of trusts 315

The trust problem 317

Remedies for the evils of trusts :

(2) Sherman Antitrust Law 320

(3) Clayton Trust Bill 321

(4) Federal control of trusts 322

(5) Federal Trade Commission 323

Chapter XVIII

GOVERNMENT REVENUE. TAXATION. PUBLIC DEBTS. Pages 325-348

1. Sources of Revenue.

Public domains and public businesses 325

Fees 327

Assessments 329

Taxes 329

XIV

II. Taxation.

PAG£

Right of the state to tax ....

• 330

Kinds of taxes

• 33<^

Direct taxes :

(i) Poll tax

• 331

(2) Property tax

• 331

(3) Occupation tax ....

• 332

(4) Income tax

• 333

(5) Inheritance tax ....

• 334

(6) Corporation tax ....

• 335

Indirect taxes :

(i) Internal revenue taxes

. 335

(2) Export duties

. . • 336

(3) Import duties

• 336

(4) Stamp taxes on papers

• 337

Incidence and shifting of taxes

• 337

Principles of taxation

. 340

. Public Debts.

Public loans

. 346

Public debts

. 346

Chapter XIX

INSURANCE. Pages 349-369

Definition .....

History .....

Present extent of insurance business Nature and advantages Theory .....

Joint-stock companies Mutual companies Premium .....

Policy .....

Reinsurance ....

Kinds of insurance :

(i) Personal insurance .

(2) Property insurance .

Tife insurance ....

Fire insurance . . .

Industrial insurance :

(i) Workingmen's insurance in general

(2) Definition of industrial insurance

(4) Advantages

(5) Objections to the system .

(6) Answers to the objections

349 349

358 358

359 361

363 364 365 365 365 366

• CHAPTER XX

CONSUMPTION. SPENDING. SAVING. INVESTING. POVERTY. Pages 370-382

PAGE

I. Consumption.

Kinds of consumption ........ 370

Subjects discussed under consumption 372

II. Spending.

Means of reducing expenditure :

(i) Living in common 372

(2) Cooperative associations 373

(3) Building associations ....... 373

III. Saving.

Conditions for saving 374

Institutions for saving '375

IV. Investing.

Ways of investing :

(i) Loans 375

Conditions for investing :

(i) Security 376

V. Poverty.

Explanation of poverty ........ 377

Causes of poverty . . . 378

Remedies for poverty . . . . . . . -379

Relief of the unemployed 380

Chapter XXI

DISTRIBUTION. RENT. INTEREST. Pages 383-413 Distribution.

Explanation .......

The Catholic view .....

Socialist solution of the problem of distribution : (i) Equal sharing .....

(2) Sharing according to wants .

(3) Sharing according to merits or capacities

(4) Sharing according to labor .

Cooperation .......

The Catholic School .....

Parties to distribution

383 385

XVI

II. Rent.

Definition

Ricardo's theory of rent

III. Interest.

Definition Historical sketch .

Consideration of the attitude

interest Objections to interest Theories of interest : (i) Productivity

(3) Abstinence .

(4) Labor .

(5) Time .

The Socialist theory

Rate of interest of the Church with regard to

393 395

400 401

404 408