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accordingly call for some notice. On the side of free trade
are two schools, of whose leading principles respectively the
late Amasa Walker's ' Science of Wealth,' now in its seventh
edition, and Mr. Perry's ' Elements of Political Economy ' and
' Introduction to Political Economy,' may be said to contain
the best expositions. Mr. Walker's treatise fully deserves its



Political Economy in the United States. 143

popularity and circulation, but is so nearly in accordance with
the views of the majority of English economists, unless with
respect to population, as to need no special description. Mr.
Perry, on the other hand (Professor of History and Political
Economy in Williams' College, Massachusetts), claims to belong
to a newer school, of which Bastiat is the chief light. The
lines of his system seem, by Mr. Perry's own account, to have
been somewhat hastily traced in his mind. The study of
Bastiat's ' Harmonies Economiques ' had, he says, been recom-
mended to him : ' I had scarcely read a dozen pages in that
remarkable book,' he adds, ' when, closing it, and giving myself
to an hour's reflection, the field of political economy in all its
outlines and landmarks lay before my mind, just as it does
to-day. From that hour political economy has been to me a
new science.' That the clearness with which a conception is
entertained gives evidence of its truth is a proposition for
which the maxim of an illustrious philosopher might be cited :
* Credidi me,' said Descartes, ' pro regula generali sumere posse
omne id quod valde dilucide et distincte concipiebam verum esse.'
Modern logic, nevertheless, rejects the presumption, and, as
Mr. Mill has observed, no one can have examined the sources of
fallacious thought without becoming deeply conscious that a
nice coherence and concatenation of our ideas are apt to pass off
with us for evidence of their truth. Political economy, in
Mr. Perry's view, is simply a science of value, and value is
never the result of natural agencies apart from human effort and
service, because God's gifts are gratuitous. Rent, accordingly,
is a payment, not for the use of a natural agent, but for a
service rendered by the owner to the cultivator. To the obvious
objection that land varies in value from natural causes Mr. Perry
replies, that 'A high degree of natural fertility has been scattered
with so bountiful a hand, and lands naturally less fertile have
such comparative advantages of another sort, that under a broad
view the degree of original fertility becomes a common factor
cancelled in price.' In other words, land has everywhere some
natural advantage or other of fertility, situation, aspect, climate,
water-power, mineral wealth, &c., so that there is a general



144 Political Economy in the United States.

equality in respect of natural gifts, and land rent is never the-
price of their monopoly. Mr. Perry has visited the British
Islands, and might have learned that even within their narrow
compass the gifts of nature are most unequally distributed, and
that the barren mountains of Donegal or the Shetland rocks
have ' no compensating advantage of another sort ' to redress
the balance.

A chain of filiation connects Mr. Perry's system with one
which, on the question of free trade, is fundamentally opposed
to it; for Mr. Perry's doctrin'^s are derived directly from
Bastiat ; and Carey, not without reason, claimed that Bastiat
owed to him his leading ideas respecting the harmony of
economic interests, the value of land, and the economic results
of the growth of population and civilization. Carey himself
owed not a little to Herbert Spencer, though he strangely
metamorphosed some of the conceptions he drew from that
great thinker's philosophy. A personal element, however,
combined to mould Carey's economic ideas. Throughout the
history of political economy, indeed, the personal history,
education, and character, of particular writers has borne no small
part in its developments and forms.* Dr. William Elder, one of
Carey's most zealous supporters, remarks that, besides being a
philosoi^her, he was an American and a patriot, and that his
passionate hostility to the British system of foreign trade, and
to the subsidiary British system of political economy, takes
something of the temper and tone of national prejudice.! Dr.
Elder adds : * His father was an Irish patriot and a political
exile from the land of his birth. Something hereditary may be
detected running with much of the pristine force of blood
through the life and character of his son.' J

* For instances in the cases of Adam Smith, Quesnay, 'Gournay, and J. S. Mill,
see the Essay in the present volume entitled, The Folitical Economy of Adam Smith,.
pp. 30-34, and also pp. 55-56.

t Memoir of Henry C. Carey. ByTVilliara Elder, Philadelphia, 1880, pp. 30-1.

X Ibid. Of the fervour of Carey's utterances Dr. Elder says : — ' He sometimes
clinched his deliverances with expletives and epithets something out of fashion in
society.' An English writer who visited him, after favourably describing him on
the whole to the writer of this essay, added : ' He is a man of plain speech, and
swears like a bargeman whenever Mill's name is mentioned,'



Political Economy in the United States. 145

The main doctrine of Carey is, that under a proper national
economy all the productive powers of a country and its people
are harmoniously developed, and continual progress is achieved
both in every branch of production and in the equity of
distribution. An industrial nation contains three great funda-
mental classes : the agricultural, the manufacturing, and the
commercial. All three should be developed and exist in equi-
librium. In a rude state of the social organism there is no
differentiation of functions ; every man is warrior, hunter, fisher,
builder, and carpenter. In an advanced and harmoniously-
developed society all the leading industries are canned on by
distinct classes, dependent on each other. Up to this point the
advocate of free trade, looking on civilized society as embracing
all civilized nations, might concur in the doctrine. The point
of separation is, that Carey regarded each nation as a distinct
social organism, containing the appointed natural means of
independent development. 'No one,' says the chief living
expositor of Carey's ideas (Mr. Robert Ellis Thompson, Pro-
fessor of Social Science in the University of Philadelphia, and
editor of the ' Penn Monthly'), 'who believes in the continual
government of the world by Divine Will can doubt that nations
exist in consequence of that will. " He fixeth the bounds of
the nation." Each State, like each man, has a vocation. Every
nation is a chosen people. It has a peculiar part to play in the
moral order of the world.' Unless in the sense that whatever is
is right, and exists by divine ordinance — in which case Carey's
followers must concede that free trade itself may be a divine
institution — it can hardly be maintained that the boundaries of
nations have been providentially ordained. A witty countryman
of Professor Thompson has * guessed ' that ' if ever the lion lies
down with the lamb, it will be with the lamb inside ; ' and such
is in reality the manner in which the bounds of the nations have
for the most part been settled. They have swallowed up their
weaker neighbours. History, too, is one long contradiction
of the fixity of national boundaries. The limits of no great
civilized empire, the United States not excepted, are what they
were the year before the ' Wealth of Nations ' was published

L



146 Political Economy in the United States.

and American Independence declared. How, then, can every
State contain within confines which are frequently changed the
' providential ' conditions of independent economic existence ?
Carey argues further that great waste in carriage is saved by
bringing the farm and the factory into close proximity to each
other, and that a return is thereby made to the soil, which is
thus not robbed of its constituents as it is by the exportation of
its produce. But in the United States the chief iron and coal
mines and factories are at one side of the continent ; the richest
soils and the most productive farms are many hundred miles off
at the other side ; considerable cost of carriage is incurred, and
no return of constituents is made to the land in the west from
produce sold in the east.

Carey's system is, in fact, Pennsylvanian rather than national
economy ; it is a product of Pennsylvania, like its iron and coal,
and has gained little acceptance in its entirety beyond the limits
of that State, as may be gathered from the names of its principal
supporters. In other States the most popular exposition of
economic principles on the protectionist side is Mr. Bo wen's
' American Political Economy,' a title assumed on the ground
that the system expounded by English writers is really the
political economy of England alone, while America needs an
American political economy adapted to what is special in its
physical conditions and institutions. Yet Mr. Bowen's own
system is after all, in the main, English political economy, with
an incongruous admixture of Pennsylvanian doctrine in relation
to foreign trade. His treatise contains a clear exposition of
principles long generally accepted in England, and its protec-
tionism, like an artificial limb, can be detached without hurting
or altering the rest of the structure. Mr. Bo wen, it ought to be
added, pronounces emphatically in favour of a metallic standard,
and advocates a resumption of specie payments ; while Carey
regarded issues of inconvertible paper-money as streams of
productive wealth. Carey's followers, in general, have been
charged with adhesion to this doctrine, but it is repudiated by
Professor Thompson, who advocates convertibility and deprecates
an inflation of the currency. Soft money seems to have little



Political Economy in the United States. 147

support now from any school of economists. Protection, however,
has much deeper roots ; a majority of the Republican party still
leans to it, and the intelligence of the country is to be found
chiefly in the ranks of that party. The line between protection-
ists and free-traders, it should be observed, does not coincide
with that between Republicans and Democrats. In Pennsylvania
both Republicans and Democrats are protectionists, while in the
city of New York many of both parties are free-traders. The
most able and energetic supporters of both free trade and
protection are Republicans.

Differing on some fundamental points from the systems that
have been described is the theory set forth in a work published
last year at San Francisco, entitled ' Progress and Poverty,' the
author of which, according to the statement of American news-
papers, has lately been appointed Professor of Political Economy
in the University of California. From a passage in his book it
appears that he was formerly a working-man in a trade,* and
if this is to be understood in the ordinary sense, his learning
and literary power are truly astonishing and admirable. Among
other gifts he possesses a fertile imagination, suppljdng him
readily with pertinent illustration. Want of imagination is one
of the causes of the inability of many economists to emancipate
themselves from old abstractions, generalizations, and formulas.
Their minds do not enable them to realize actual phenomena,
and to test theories on all sides by a multitude of instances.
Mr. Greorge's work, however, calls for notice not only on account
of its ability, and because it contains internal evidence of being
a product of the economic history of California, but because also
of the magnitude of the problem it propounds, and the nature of
the solution it proposes. It seeks to discover the cause that
makes poverty the constant companion of wealth, and to find at
the same time the explanation of recurring seasons of industrial
and commercial paralysis and distress. Its author is opposed to
protection, and to various notions which, he says, are rapidly
gaining ground in the United States, ' that there is a necessary



Trogress and Poverty, p. 283.
L 2



148 Political Economy in the United States.

conflict between capital and labour ; that machinery is an evil,
that competition must be restrained and interest abolished ; that
wealth may be created by the issue of money ; that it is the duty
of Grovernment to furnish capital or to furnish work.' He often
reasons deductively in the old-fashioned ' orthodox ' way, as
confidently as Eicardo or Mr. Senior, from the assumption that
every man follows his pecuniary interest by the shortest and
easiest road. It is surprising to an English reader, accordingly,
to find that his main theory is, that the cause of the accompani-
ment of great wealth by great poverty, and of the succession of
commercial depression to commercial prosperity, is the existence
of private property in land.

Poverty, Mr. George argues first of all, is never the
consequence of either a deficiency of capital or an excess of
labourers. The labourer produces his own wages, and is not
paid out of pre-existing capital, although the fact is concealed
by the separation of employments and the complexity of the
process of exchange. When a division of labour first takes place
in early society, and, instead of every man as before supplying
his own wants, one hunts, another fishes, a third gathers fruit, a
fourth makes weapons or tools, a fifth clothing ; each really
produces his own maintenance, though he exchanges the produce
of his own labour for other things. So, in a more advanced
stage, an exchange is really going on between the producers in
different occupations, and the labourer gets his subsistence in
exchange for his own productive work, and does not derive it
from capital, though the capitalist conducts the exchange. And
an increase in the number of labourers causes a more than
proportionate increase instead of a diminution in the rate of
production. Twenty men working together where nature is
niggardly will produce more than twenty times the wealth one
can produce where nature is most bountiful. The denser the
population, the more minute becomes the subdivision of labour,
the better the economy of work. It is true the growth of
numbers necessitates recourse to inferior soils and other natural
agents, but the increase of the power of the human factor more
than compensates for the decline in power of the natural factor.



Political Economy in the United States. 149

The richest countries are not those where nature is most prolific,
but where labour is most efficient, not Mexico but Massachusetts,
not "Brazil but Great Britain. The cause, then, of the depression
of both the wages of labour and the interest on capital, and of
the growth of poverty, as society advances, is not the increase
of population, and does not lie in the conditions of production.
It must, therefore, lie in distribution. The rise of rent is the
real cause of the fall of both wages and interest, while the pro-
ductive powers of society, so far from declining, are improving.
Where the value of land is low, there may be a small production
of wealth, and yet a high rate of both wages and interest, as we
see in new countries. In California, where wages were higher
than anywhere else in the world, so also was interest higher ;
but rent was non-existent ; wages and interest have since gone
down together, while rent has risen with startling rapidity.
Where land is free, wages will consist of the whole produce, less
the part necessary to induce the storing up of labour as capital.
Where land, on the contrary, is all monopolized, wages may be
forced down to a minimum. Three parties divide the produce,
the labourer, the capitalist, and the landowner. If, with an
increase of production, the labourer gets no more, the capitalist
no more, but even less, the inference is that the landowner gets
the whole increment. It is not the total produce, but the net
produce after rent has been deducted, that determines what can
be divided as wages and interest. Free trade has enormously
increased the total wealth of Great Britain without lessening-
pauperism, because it has simply raised rent. To extirpate
poverty, to make wages what justice commands they should be,
the full earnings of the labourer, we must substitute for the
individual ownership of land a common ownership : we must
make land common property. For this purpose it is only
necessary for the State to appropriate rent, not to dispossess the
holders of land of its occupation.

Such, in brief, is the substance of Mr. George's argument.
And so far as the proposition is concerned, that the labourer
produces his own wages, it is true, as an American economist



150 Political Economy in the United States.

has sliown in a work of great ability,* that in new countries
labourers are often paid after the harvest, or by the year, and
therefore out of the produce of their labour. Even in that case,
however, the fund out of which the labourer is maintained
while his wages are being earned, though his own, is the
produce of past labour, not of the labour he is actually per-
foiming. In old countries th.e majority of the labourers
engaged in long operations have not wherewithal to maintain
themselves until the product is sold ; but if they had, this fund
would be a product of previous labour ; it would be pre-existing
wealth productively employed ; that is to say, capital in the
sense intended by Mr. Mill in his proposition that industry is
limited by cajoital — a proposition which Mr. George coufounds
with the doctrine of the wages fund, now rejected by almost all
English economists. Piers the Plowman, in Langland's poem,
had barely enough food saved from the previous produce of his
little farm to keep soul and body together until harvest time,
while hired labourers beside him had strong ale and fresh meat
and fish, hot and hot, twice a-day, because they were paid out
of the savings of their employers. Piers himself could have
fared equally well if, instead of waiting on his own crops to
dight his dinner as he liked best, he had gone into the labour
market for a share of the last year's corn, and of beef and mutton
which had taken years to grow. In the England of our own
day labourers not only get wages from capitalists long before
their own work is finished and sold, but are many of them dead
and gone before then. Sometimes the product is destroyed by
an accident after the workmen have been paid wages in full,
but before the employer has made anything by it. In the
agricultural districts of California tbere was, as Mr. George
saj's, a total failure of crops in 1877 ; and of millions of sheep,,
nothing remained but their bones. The farmers, nevertheless,
hired labourers for the next crop, and he argues that they could
not have done so out of past produce which was lost. The case

* The Wages Question, by Francis A. "Walker. See an Article by the same-
writer, 2{orth American Review, January 1875.



Political Economy in the United States, 151

really tells at both ends against Mr. Greorge's conclusion ; for it
is clear that the labourers who helped to produce the crops that
perished were not paid for that year's work, or maintained
during it out of its produce ; and the funds which the farmers
borrowed to resume their operations must have been the produce
of previous work, not of work the fruits of which were not yet
forthcoming.

The accumulation of capital is, then, necessary for the
maintenance of labourers, though it may be accumulated by
themselves ; and in a country like France, where land is to a
large extent held by the productive classes, including labourers,
capital is in good part accumulated out of rent. In France,
too, rent in the case of a majority of families is an addition to,
not a deduction from, wages and interest or profit ; and were
any government to seek to abolish private property in land,
there are several million Frenchmen would ' know the reason
why.' Nor is it true that wages and interest uniformly decline
as rent advances. All three have been higher during the last
thirty years in England than they were a hundred and thirty
years ago — a fact which overthrows Mr. George's whole theory.
In Holland all three have considerably risen in our own time ;
and although it is cited by one economist after another as the
country where interest is lowest, the rate of interest is now
considerably higher than in England, or than it was in Holland
itself fifty years ago. A simple illustration will show how this
may take place. Suppose a district contains ten million acres,
yielding at a low stage of husbandry ten bushels an acre, and
ten million acres of better land yielding fifteen bushels an acre,
and therefore five bushels per acre as rent. Let agricultural
art advance along with population, so as to double the produc-
tiveness of the whole district, and the poorer land will now
yield twenty, the best land thii'ty bushels an acre. Ten bushels
per acre instead of five will now be payable in rent for the best
land ; yet the whole labouring population may be better clothed,
housed, and fed, in consequence of the improvemeuts attending
the division of labour ; and the farmer may get a higher return
on his capital. The entire amount of rent may also be received



152 Political Economy in the United States.

\)y farming and labouring families, whom its very existence
may have stimulated to the industry and thrift that led to the
increased production. It is overlooked, one may add, by writers
who treat the fall of interest as society advances as an established
historical fact, that in old times most people could get no interest
at all on their savings, and hoarded them for lack of productive
investments.

On behalf of abolishing the private ownership of land, and
giving an equal share in the bounty of nature to all, Mr. George
urges that it is ' but carrying out in letter and spirit the self-
evident truth enunciated in the Declaration of Independence,
that all men are created equal ; that they are endowed by their
Creator with certain inalienable rights ; that among them are
life, liberty, and the pursuit of happiness.' The age of the
Declaration of Independence was indeed one in which philoso-
phers believed in inalienable natural rights ; and, if we are to
be guided by the ideas of its framers, nothing is more certain,
than that they included among * natural rights ' the right of
every man to acquire property in both land and movables.
Only by a theory of dynamical inspiration, such as has been
applied to the Bible, can we get any other meaning out of the
Declaration than its authors intended. Coming down to more
recent times, Mr. George cites the actual procedure of the first
miners in California, who, he says, falling back upon ' first
principles, primitive ideas, and natural perceptions of justice/
declared that the gold-bearing land should remain common
property, of which no one might take more than he could use,
or hold for a longer time than he actually used it. It may be
that the land system of every country calls for reform, but it
may be hoped that civilized men will not seek precedents for it
in the infancy of the race, or in ' primitive ideas.' Mr. George
can but have hastily studied the works of Sir Henry Maine,
whom he cites, if he supposes that early communities recognised
any common right in mankind, permanent or temporary, to the
use of the soil. Each little tribe jealously excluded every other
to the best of its power, and recognised no right in a human
being, as such, to property of any kind, or even to liberty or



Political Economy in the United States. 153

life. If, however, the natural perceptions of j ustiee really lead
to common ownership, the citizens of California are bound to
admit Chinamen without number to a share in the land of the
State. Had Mr. George confined himself to contending that
the governments of new countries have committed a grievous
blunder in allowing their territory to be appropriated in
perpetuity by the first comers for a nominal payment, he would
have found allies among the advocates of private property in
land. Even in old countries like England, whose territory has
been appropriated by a small number of owners with the full
-sanction of the State, and contracts, and dealings, and invest-
ments of capital, have gone on for centuries on this foundation,
all the requirements of justice and expediency would be met
were it enacted that at a remote date— say four generations



Online LibraryT. E. Cliffe (Thomas Edward Cliffe) LeslieEssays in political economy → online text (page 14 of 41)